<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 33-55379
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE +
+TIME A FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PROSPECTUS SUPPLEMENT +
+AND THE PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION +
+OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY +
+STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO +
+REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED SEPTEMBER 22, 1994
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 15, 1994)
$200,000,000
LINCOLN NATIONAL CORPORATION
% DEBENTURES DUE , 2024
-----------
Interest on the % Debentures due , 2024 (the "Debentures") is
payable semiannually on and of each year,
beginning , 1995. The Debentures may be redeemed, as a whole or in
part, at the election of the Company at any time on or after , 2004
at a redemption price equal to the principal amount plus accrued interest to
the date fixed for redemption, plus a premium if the date fixed for redemption
is before , 2014. See "Description of Debentures--Redemption." The
Debentures are not entitled to any sinking fund.
The Debentures will be issued in fully-registered book-entry form. Ownership
interests in the Debentures will be shown only on, and transfers thereof will
be effected only through, records maintained by The Depository Trust Company,
as Depository, and its participants. Owners of beneficial interests in the
Debentures will be entitled to physical delivery of Debentures in certificated
form equal in principal amount to their respective beneficial interests only
under the limited circumstances described under "Description of Debentures--
Book-Entry Debenture." Settlement for the Debentures will be made in
immediately available funds. The Debentures will trade in the Depository's
Same-Day Funds Settlement System until maturity or until the Debentures are
issued in certificated form, and secondary market trading activity in the
Debentures will therefore settle in immediately available funds. All payments
of principal and interest will be made by the Company in immediately available
funds. See "Description of Debentures--Same-Day Settlement and Payment."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT (2) COMPANY (1)(3)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture.................... % % %
- ---------------------------------------------------------------------------
Total............................ $ $ $
- ---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 1994.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $200,000.
-----------
The Debentures are offered by the Underwriters, subject to prior sale, when,
as and if issued to and accepted by them. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole or in part.
It is expected that delivery of the Debentures will be made on or about October
, 1994 through the facilities of The Depository Trust Company.
-----------
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
-----------
The date of this Prospectus Supplement is , 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY IN THE OVER-THE-COUNTER MARKET OR OTHERWISE AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended December
31, 1993, Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1994 (as amended on Form 10-Q/A) and Current Reports on Form 8-K,
dated March 29, 1994 and September 22, 1994 filed with the Commission pursuant
to Section 13 of the Exchange Act are incorporated herein by reference.
USE OF PROCEEDS
The Company will use the net proceeds from the sale of the Debentures to
repay a portion of the approximately $440 million short-term indebtedness
outstanding as of September 19, 1994. Such short-term indebtedness, which
includes commercial paper and bank loans, has various maturities through
November 21, 1994 and, as of September 19, 1994, bears interest at a weighted-
average rate of 4.82% per annum.
S-2
<PAGE>
CAPITALIZATION
The capitalization of the Company and its consolidated subsidiaries at June
30, 1994 and as adjusted for the issuance of the Debentures offered hereby and
the application of the estimated proceeds thereof (without giving effect to the
payment of expenses and underwriting discount) is set forth below:
<TABLE>
<CAPTION>
JUNE 30, 1994
--------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term debt (including current maturities of long-term
debt).................................................... $ 474.0 $ 274.0
======== ========
Long-term debt less current portion:
% Debentures due 2024................................ $ -- $ 200.0
7 1/8% Notes due 1999................................... 99.1 99.1
7 5/8% Notes due 2002................................... 99.0 99.0
9 3/4% Notes due 1995................................... 100.2 100.2
Mortgages and other notes............................... 22.2 22.2
-------- --------
Total long-term debt (less current portion)....... 320.5 520.5
Shareholders' Equity:
Preferred Stock, without par value:
Authorized: 10,000,000 shares.........................
Issued and outstanding:
$3.00 Convertible Cumulative Preferred Stock, Series
A (45,566 shares).................................. 1.5 1.5
5 1/2% Cumulative Convertible Exchangeable Preferred
Stock, Series E and F (2,201,443 and 2,216,454
shares, respectively).............................. 309.9 309.9
Common Stock, without par value:
Authorized: 800,000,000 shares........................ 566.1 566.1
Issued and outstanding (94,774,640 shares)............
Earned surplus.......................................... 2,415.3 2,415.3
Foreign currency translation adjustment................. 4.6 4.6
Net unrealized gain on securities available-for-sale.... 51.6 51.6
-------- --------
Total shareholders' equity........................ 3,349.0 3,349.0
-------- --------
Total capitalization.............................. $3,669.5 $3,869.5
======== ========
</TABLE>
The Company's $3.00 Convertible Cumulative Preferred Stock, Series A (without
par value) is entitled to a liquidation preference in the amount of $80.00 per
share, or approximately $3,645,000 plus accrued dividends in the aggregate at
June 30, 1994. The 5 1/2% Cumulative Convertible Exchangeable Preferred Stock,
Series E and F are entitled to liquidation preferences of $68.85 and $71.604
per share, respectively, or $151,569,000 and $158,707,000 plus accrued
dividends in the aggregate at June 30, 1994.
S-3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following information for each of the years in the three-year period
ended December 31, 1993 and the six months ended June 30, 1994 and 1993 are
derived from the Company's consolidated financial statements. The unaudited
financial information presented below for the six months ended June 30, 1994
and 1993, reflect all material and normal recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of the Company's
results of operations and financial position. Operating results for the six
months ended June 30, 1994 are not necessarily indicative of the results that
may be expected for the entire year ending December 31, 1994. This summary is
qualified in its entirety by, and should be read in conjunction with, the
financial statements and notes thereto included in the documents incorporated
herein by reference. See "Incorporation of Certain Documents By Reference" in
the Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1994 1993 1993 1992 1991
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue:
Premiums and fees........ $ 2,464.4 $ 2,674.7 $ 5,827.2 $ 5,708.4 $ 7,087.6
Net investment income.... 989.4 1,035.4 2,146.5 1,987.3 1,799.3
Realized gains on
investments and sale of
subsidiaries............ 20.6 55.4 169.9 176.9 28.1
Other.................... 76.9 75.4 146.2 161.5 254.0
--------- --------- --------- --------- ---------
Total revenue.......... 3,551.3 3,840.9 8,289.8 8,034.1 9,169.0
Total benefits and
expenses................ 3,327.6 3,591.7 7,702.0 7,609.4 8,970.2
Income before Federal
income taxes and
cumulative effect of
accounting change....... 223.7 249.2 587.8 424.7 198.8
Cumulative effect of
accounting
change.................. -- (96.4) (96.4) -- --
Net Income............... 197.8 99.8 318.9 359.2 201.9
<CAPTION>
JUNE 30, DECEMBER 31,
------------------- ------------------------------
1994 1993 1993 1992 1991
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total cash and
investments............. $27,960.9 $27,636.3 $30,441.7 $26,540.8 $23,528.5
Total assets............. 47,821.9 43,365.1 48,380.4 39,547.3 34,013.1
Policy liabilities and
accruals................ 12,254.0 13,031.3 13,510.8 12,105.0 11,427.6
Contractholder funds..... 15,805.9 14,127.7 14,872.1 12,849.3 10,694.7
Liabilities related to
separate
accounts................ 13,094.9 9,967.8 12,430.6 8,368.1 6,207.7
Short-term debt.......... 474.0 143.8 351.4 433.4 677.3
Long-term debt........... 320.5 426.1 335.1 423.0 252.6
Total shareholders'
equity.................. 3,349.0 3,239.4 4,072.3 2,826.8 2,655.8
Total shareholders'
equity
excluding impact of
carrying
securities at market.... 3,297.4 3,014.4 3,157.6 2,664.1 2,445.8
</TABLE>
S-4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below are the Company's historical ratios of earnings to fixed
charges for each of the years in the five-year period ended December 31, 1993
and the six months ended June 30, 1994 and 1993. In addition, set forth below
are pro forma ratios giving effect to the sale of the Debentures and
application of the estimated proceeds thereof (without giving effect to the
payment of expenses and underwriting discount):
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------- -------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Annuities and
Financial Products/1/
Historical............................ 7.90 8.99 10.35 6.69 3.04 3.04 4.01
Pro Forma/2/.......................... 6.92 9.06
Including Interest on Annuities and
Financial Products/3/
Historical............................ 1.33 1.36 1.43 1.32 1.16 1.18 1.34
Pro Forma/2/.......................... 1.33 1.42
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends/4/
Historical.............................. 1.31 1.34 1.40 1.30 1.15 1.17 1.31
Pro Forma/2/............................ 1.31 1.39
</TABLE>
- --------
/1/For purposes of determining this ratio, earnings consist of income before
federal income taxes and cumulative effect of accounting change adjusted
for the difference between income or losses from unconsolidated equity
investments and cash distributions from such investments, plus fixed
charges. Fixed charges consist of interest expense on debt and the portion
of operating leases that are representative of the interest factor.
/2/Pro forma ratios are after giving effect to the net increase in interest
expense due to the issuance of the Debentures at a maximum assumed rate of
9 1/4% per annum less the repayment of $200.0 million of short-term debt at
a weighted average interest rate of 4.82% per annum. A decrease of 1/8 of
1% in the assumed interest rate for the Debentures increases the ratio
described in note 1 above by 0.04 for both the six months ended June 30,
1994 and the year ended December 31, 1993, and there would be no change in
the ratios described in notes 3 and 4 below.
/3/Same as the ratio of earnings to fixed charges, excluding interest on
annuities and financial products, except fixed charges and earnings include
interest on annuities and financial products.
/4/Same as the ratio of earnings to fixed charges, including interest on
annuities and financial products, except that fixed charges include the
pre-tax earnings required to cover preferred stock dividend requirements.
S-5
<PAGE>
DESCRIPTION OF DEBENTURES
GENERAL
The following description of the particular terms of the Debentures offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus.
The Debentures offered hereby will be limited to $200,000,000 aggregate
principal amount and will be issued under an Indenture, dated as of September
15, 1994 (the "Indenture"), between the Company and The Bank of New York, as
trustee (the "Trustee"). The Debentures will be unsecured obligations of the
Company and will mature on , 2024. Each Debenture will bear interest at the
rate per annum stated on the cover page hereof, payable semiannually on
and of each year, commencing on , 1995, to the person in whose name
the Debenture is registered at the close of business on the next preceding
and , respectively, subject to certain exceptions.
The Debentures will be issued only in fully-registered book-entry form,
without coupons, in denominations of $1,000 and integral multiples thereof,
through the facilities of The Depository Trust Company, New York, New York (the
"Depository"). Transfers or exchanges may be effected only through a
participating member of the Depository. See "Book-Entry Debenture" below.
Payments on Debentures will be made to the Depository or its nominee in
accordance with the arrangements then in effect between the Trustee and the
Depository. See "Book-Entry Debenture" below.
REDEMPTION
The Company may not redeem any Debentures prior to , 2004. The Debentures
may be redeemed, as a whole or in part, at the election of the Company at any
time on or after , 2004, upon not more than 60 days nor less than 30 days
notice, at the following redemption prices (expressed as percentages of the
principal amount) during the 12-month period beginning of the years
indicated,
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2004.......................... %
2005..........................
2006..........................
2007..........................
2008..........................
2009..........................
2010..........................
2011..........................
2012..........................
2013..........................
</TABLE>
and thereafter at a redemption price equal to 100% of the principal amount,
together in each case, with accrued interest (except if the date of redemption
is a scheduled payment date) to the date of redemption. Partial redemption must
be in an amount not less than $1,000,000 aggregate principal amount of the
Debentures.
The Debentures may not be redeemed at the option of any holder. The
Debentures are not entitled to any sinking fund.
S-6
<PAGE>
BOOK-ENTRY DEBENTURE
The Debentures will be issued in the form of fully-registered Debentures in
the aggregate principal amount of $200,000,000 (collectively, the "Book-Entry
Debenture") which will be deposited with, or on behalf of, the Depository and
registered in the name of the Depository's nominee. Except as set forth below,
the Book-Entry Debenture may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
nominee to a successor of the Depository or a nominee of such successor.
The Depository had advised the Company that it is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934, as amended. The
Depository was created to hold securities for persons that have accounts with
the Depository ("participants") and to facilitate settlement of securities
transactions among its participants, such as transfers and pledges in such
deposited securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. The Depository's "direct participants"
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
which (and/or their representatives) own the Depository. Access to the
Depository's book-entry system is also available to others, such as banks,
securities brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
The Depository has also advised the Company and the Trustee that, upon the
issuance of the Book-Entry Debenture, the Depository will credit the respective
principal amounts of the Debentures represented by the Book-Entry Debenture to
the accounts of participants. The accounts to be credited will be designated by
the applicable Underwriter. Purchases of Debentures under the Depository's
system must be made by or through direct participants, which will receive a
credit for the Debentures on the Depository's records. The ownership interest
of each actual purchaser of each Debenture ("beneficial owner") is in turn to
be recorded on the direct and indirect participants' records. Beneficial owners
will not receive written confirmation from the Depository of their purchase,
but beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the direct and indirect participant through which the beneficial owner
entered into the transaction. The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Book-Entry Debenture.
So long as the Depository for the Book-Entry Debenture, or its nominee, is
the registered owner of the Book-Entry Debenture, the Depository or its
nominee, as the case may be, will be considered the sole owner or holder of the
Debentures represented by the Book-Entry Debenture for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in the
Book-Entry Debenture will not be entitled to have Debentures represented by
such Book-Entry Debenture registered in their names, will not receive or be
entitled to receive physical delivery of such Debentures in certificated form
and will not be considered the owners or holders thereof under the Indenture.
Principal and interest payments on the Debentures represented by the Book-
Entry Debenture will be made by the Company to the Depository or its nominee,
as the case may be, as the registered owner of such Book-Entry Debenture.
Neither the Company, the Trustee, the Paying Agent (as defined in the
Indenture) nor any Registrar (as defined in the Indenture) for the Debentures
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of
the
S-7
<PAGE>
Book-Entry Debenture, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that the
Depository or its nominee, upon receipt of any payment of principal or interest
in respect of the Book-Entry Debenture, will credit immediately the accounts of
the relevant participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interest in such Book-
Entry Debenture as shown on the records of the Depository or its nominee. The
Company also expects that payments by participants to beneficial owners in the
Book-Entry Debenture held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such participants.
Conveyance of notices and other communications by the Depository to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to the Depository or its nominee. If less
than all of the Debentures are being redeemed, the Depository's practice is to
determine by lot the amount of the interest of each direct participant in such
issue to be redeemed.
If (i) the Depository is at any time unwilling, unable or ineligible to
continue as depository and a successor depository is not appointed by the
Company within ninety days, (ii) the Company executes and delivers to the
Trustee an order to the effect that a Book-Entry Debenture shall be so
exchangeable, or (iii) an Event of Default has occurred and is continuing with
respect to the Debentures, the Company will issue the Debentures in
certificated form in exchange for such Book-Entry Debenture. In any such
instance, an owner of a beneficial interest in the Book-Entry Debenture will be
entitled to physical delivery in certificated form of the Debentures equal in
principal amount to such beneficial interest and to have such Debentures
registered in its name. Debentures so issued in certificated form will be
issued in denominations of $1,000 or any larger amount that is an integral
multiple thereof and will be issued in registered form only, without coupons.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the
Debentures will trade in the Depository's Same-Day Funds Settlement System
until maturity or until the Debentures are issued in certificated form, and
secondary market trading activity in the Debentures will therefore be required
by the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Debentures.
PAYING AGENT AND REGISTRAR
Pursuant to the terms of the Indenture, the Company has appointed The Bank of
New York to act as paying agent and registrar with respect to the Debentures
under the Indenture.
REGARDING THE TRUSTEE
The Trustee is a participant in the Company's revolving credit agreement, and
the Company has maintained other banking relationships with the Trustee in the
normal course of business. The Company anticipates that in the near future The
Bank of New York will become the successor trustee for the Company's 7 1/8%
Notes due July 15, 1999 and 7 5/8% Notes due July 15, 2002, for which The Bank
of New York already serves as paying agent.
S-8
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the Debentures (the "Underwriting Agreement") among the Company and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc.
and Salomon Brothers Inc (the "Underwriters"), the Company has agreed to sell
to the Underwriters, and the Underwriters have severally agreed to purchase,
the respective principal amounts of the Debentures set forth opposite their
names below. In the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
the Debentures offered hereby if any of such Debentures are purchased. In the
event of default by an Underwriter, the Underwriting Agreement provides that,
in certain circumstances, the purchase commitments of the nondefaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... $
J.P. Morgan Securities Inc. ................................
Salomon Brothers Inc........................................
------------
Total.................................................. $200,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Debentures to the public at the public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not in excess of . % of the principal amount of the
Debentures. The Underwriters may allow, and such dealers may reallow, a
discount not in excess of . % of the principal amount of the Debentures to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The Debentures are new issues of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the Debentures, but are not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the Underwriters may be required to make in
respect of such liabilities.
In the ordinary course of their respective businesses, certain of the
Underwriters have in the past, and may in the future, engage in commercial and
investment banking transactions with the Company and its affiliates.
VALIDITY OF THE DEBENTURES
The validity of the Debentures offered hereby will be passed upon for the
Company by Gardner, Carton & Douglas, 321 North Clark Street, Chicago, Illinois
60610 and for the Underwriters by Sullivan & Cromwell, 125 Broad Street, New
York, New York 10004. Gardner, Carton & Douglas and Sullivan & Cromwell will
rely on the opinion of Jack D. Hunter, Esq., Executive Vice President and
General Counsel of the Company, as to matters of Indiana law. See "Legal
Opinions" in the Prospectus.
S-9
<PAGE>
LINCOLN NATIONAL CORPORATION
COMMON STOCK, PREFERRED STOCK AND DEBT SECURITIES
----------------
Lincoln National Corporation (the "Company") from time to time may offer up
to $500,000,000 aggregate public offering price (or the equivalent in foreign
denominated currencies or composite currencies) of its (i) unsecured securities
consisting of notes, debentures and or other unsecured evidences of
indebtedness ("Debt Securities"), (ii) Preferred Stock (without par value)
("Preferred Stock"), or (iii) Common Stock (without par value) ("Common
Stock"). The Debt Securities, Preferred Stock and Common Stock (collectively,
the "Securities") may be offered either together or separately and will be
offered in amounts, at prices and on terms to be determined at the time of
offering. The Company may sell Securities directly, through agents designated
from time to time, through dealers or one or more underwriters, or through a
syndicate of underwriters managed by one or more underwriters. See "Plan of
Distribution."
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered ("Offered Securities") are set forth in the
accompanying Prospectus Supplement ("Prospectus Supplement"), including, where
applicable, the initial public offering price of the Securities, the listing on
any securities exchange, other special terms, and (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, the
denomination, maturity, premium, if any, the rate (which may be fixed or
variable), time and method of calculating payment of interest, if any, the
place or places where principal of, premium, if any, and interest, if any, on
such Debt Securities will be payable, the currency in which principal of,
premium, if any, and interest, if any, on such Debt Securities will be payable,
any terms of redemption at the option of the Company or the holder, any sinking
fund provisions and any terms for conversion or exchange into Common Stock and
(ii) in the case of Preferred Stock, the specific title and stated value, any
dividend, liquidation, redemption, voting and other rights and any terms for
exchange for Debt Securities or conversion or exchange into Common Stock. The
Prospectus Supplement sets forth the names of any underwriters, dealers or
agents involved in the distribution of the Offered Securities and any
applicable discounts, commissions or allowances. If so specified in the
applicable Prospectus Supplement, Offered Securities may be issued in whole or
in part in the form of one or more temporary or permanent global securities.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
----------------
The date of this Prospectus is September 15, 1994
<PAGE>
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus or any Prospectus Supplement and, if given or made, such information
or representations must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither this Prospectus nor any
Prospectus Supplement constitutes an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities to which it
relates or an offer to sell or a solicitation of an offer to buy such
securities in any circumstance in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus or any Prospectus Supplement nor any
sale made hereunder or thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or thereof or that the information contained or incorporated by
reference herein or therein is correct as of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and are
also available for inspection and copying at the regional offices of the
Commission located at 75 Park Place, New York, New York 10007 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400 , Chicago,
Illinois 60661. Copies of such information can also be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, such information can
be inspected at the offices of the New York Stock Exchange, Inc. at 20 Broad
Street, New York, New York 10005, at the offices of the Chicago Stock Exchange,
Inc. at 440 South LaSalle Street, Chicago, Illinois, 60603 and at the offices
of the Pacific Stock Exchange, Inc. at 301 Pine Street, San Francisco,
California 94104.
This Prospectus constitutes a part of a registration statement filed on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement for further information
with respect to the Company. Any statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of each document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Company is not
required to, and does not, provide annual reports to holders of its debt
securities unless specifically requested by a holder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended December
31, 1993, Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1994 (as amended on Form 10-Q/A) and Current Report on Form 8-K dated
March 29, 1994 filed with the Commission pursuant to Section 13 of the Exchange
Act are incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offerings of the Common Stock, Preferred Stock and
Debt Securities made by the prospectuses included in the Registration Statement
are deemed incorporated herein by reference and such documents shall be deemed
to be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that any statement contained herein or in any
subsequently filed document which also is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge, upon written or oral request, to
each person to whom a copy of this Prospectus is delivered a copy of any of the
documents incorporated by reference herein (not including the exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents). Requests should be directed to C. Suzanne Womack, Secretary,
Lincoln National Corporation, 200 East Berry Street, Fort Wayne, Indiana,
46802-2706, telephone number (219) 455-3271.
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
IN CONNECTION WITH ANY OFFERINGS OF COMMON STOCK, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK, CHICAGO OR
PACIFIC STOCK EXCHANGES OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
THE COMPANY
The Company is an insurance holding company with consolidated assets at June
30, 1994 of approximately $47.8 billion and shareholders' equity of
approximately $3.3 billion. The Company, through its subsidiaries, provides
property-casualty insurance, life insurance and annuities and life-health
reinsurance to its customers.
The Property-Casualty segment's products are comprised substantially of
exposures that tend to produce claims that are reported and settled in the
short-term. Products are distributed nationally, with an emphasis on desirable
business environments, and target small and medium-sized commercial accounts
and preferred personal line customers.
The Life Insurance and Annuity segment provides a broad range of life
insurance and annuity contracts through a variety of distribution channels.
This segment attempts to differentiate its products through quality service
and flexibility. Universal life is the dominant life insurance product. Both
fixed and variable annuities have registered strong growth during the past
several years.
For the six months ended June 30, 1994 and for the year ended December 31,
1993, the Company's consolidated revenue and net income were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1994 DECEMBER 31, 1993
------------------- --------------------
REVENUE NET INCOME REVENUE NET INCOME
-------- ---------- -------- ----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C>
Property-Casualty................... $1,002.8 $ 67.8 $2,240.6 $225.7
Insurance and Annuities............. 1,255.6 57.1 2,858.3 234.6
Life-Health Reinsurance............. 913.5 29.2 1,930.5 17.3
Employee Life-Health Benefits/1/ ... 314.9 14.4 1,297.3 55.3
Other Operations/2/ ................ 64.5 29.3 (36.9) (214.0)
Total............................... $3,551.3 $197.8 $8,289.8 $318.9
</TABLE>
- --------
/1/Data Shown for the six months ended June 30, 1994 is for the January 1,
1994 through March 21, 1994 (the date on which the Company sold to the
public 64% of the outstanding shares of the subsidiary involved in this
segment).
/2/Net Income for "Other Operations" for the year ended December 31, 1993
consist of $19.8 million in net realized capital gains, a loss of $98.5
million from the sale of a subsidiary, a charge of $96.4 million for the
adoption of an accounting charge (post-retirement benefits) and $38.9
million of corporate expenses and interest on corporate debt.
Lincoln National Corporation is an Indiana corporation with its principal
office at 200 East Berry Street, Fort Wayne, Indiana 46802-2706. Its telephone
number is (219) 455-2000.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds to the Company from the sale of Securities offered hereby will be
used for general corporate purposes and may be used for the repayment of
short-term debt, or to fund future acquisitions, capital expenditures or
working capital needs. Specific allocations of the proceeds for the various
purposes have not been made at this time, and the amount and timing of such
offerings will depend upon the Company's requirements and the availability of
other funds. All or a portion of the proceeds may be invested on a temporary
basis in short-term, interest-bearing securities. The specific allocations of
the proceeds of a particular series or issuance of Securities will be
described in the Prospectus Supplement relating thereto.
3
<PAGE>
RISK FACTORS RELATING TO CURRENCIES
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in foreign currency exchange rates. These risks may
vary depending upon the currency or currencies involved. These risks will be
more fully described in the Prospectus Supplement relating thereto.
HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------- -------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding interest on annuities and
financial products/1/................... 7.90 8.99 10.35 6.69 3.04 3.04 4.01
Including interest on annuities and
financial products/2/................... 1.33 1.36 1.43 1.32 1.16 1.18 1.34
Ratio of earnings to combined fixed
charges and preferred stock
dividends/3/............................ 1.31 1.34 1.40 1.30 1.15 1.17 1.31
</TABLE>
- --------
/1/For purposes of determining this ratio, earnings consist of income before
federal income taxes and cumulative effect of accounting change adjusted for
the difference between income or losses from unconsolidated equity
investments and cash distributions from such investments, plus fixed
charges. Fixed charges consist of interest expense on debt and the portion
of operating leases that are representative of the interest factor.
/2/Same as the ratio of earnings to fixed charges, excluding interest on
annuities and financial products, except fixed charges and earnings include
interest on annuities and financial products.
/3/Same as the ratio of earnings to fixed charges, including interest on
annuities and financial products, except that fixed charges include the pre-
tax earnings required to cover preferred stock dividend requirements.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued in one or more series under an Indenture
(the "Indenture"), between the Company and The Bank of New York, as trustee
(the "Trustee"), a copy of which is included as an exhibit to the Registration
Statement filed with the Commission with respect to the Debt Securities. The
following summaries of certain provisions of the Indenture are not complete
and are subject to, and are qualified in their entirety by reference to, all
provisions of the Indenture. Certain terms defined in the Indenture are
capitalized in this Prospectus. Parenthetical references are to the Indenture.
GENERAL
The Debt Securities will be unsecured and will rank on the parity with all
other unsecured and unsubordinated indebtedness of the Company.
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued up to the
aggregate principal amount which may be authorized from time to time by the
Company. Reference is made to the Prospectus Supplement for the following
terms of Debt Securities being offered thereby; (i) the title, aggregate
principal amount and authorized denominations of Debt Securities; (ii) the
percentage of their principal amount at which such Debt Securities will be
issued; (iii) the date or dates on which Debt Securities will mature; (iv) the
rate or rates per annum (which may be fixed or variable), if any, at which
Debt Securities will bear interest (or the method of determination or
4
<PAGE>
calculation thereof); (v) the times at which any such interest will be payable;
(vi) the currency or units based on or relating to currencies in which the Debt
Securities are denominated and in which principal, premium, if any, any
interest and Additional Amounts (as defined below) will or may be payable;
(vii) the dates, if any, on which and the price or prices at which the Debt
Securities will, pursuant to any mandatory sinking fund provisions, or may,
pursuant to any optional sinking fund provisions, be redeemed by the Company,
and other terms and provisions of such sinking fund; (viii) any redemption
terms or any terms for repayment of principal amount at the option of the
holder; (ix) whether and under what circumstances the Company will pay
additional amounts ("Additional Amounts") in respect of certain taxes imposed
on certain holders or as otherwise provided; (x) the terms and conditions upon
which such Debt Securities may be convertible into shares of Common Stock or
other securities of the Company, including the conversion price, conversion
period and other conversion provisions; (xi) the defeasance provisions, if any,
that are applicable to such Debt Securities; (xii) whether the Debt Securities
are to be issuable in global form and, if so, the terms and conditions, if any,
upon which interests in such Debt Securities in global form may be exchanged,
in whole or in part, for the individual Debt Securities represented thereby and
the initial Depository with respect to such global Debt Security; (xiii) the
person to whom any interest on a Registered Security is payable, if other than
the registered holder thereof, or the manner in which any interest is payable
on a Bearer Security if other than upon presentation of the coupons pertaining
thereto, as the case may be; or (xiv) any other specific terms of such Debt
Securities.
Principal, interest and premium and Additional Amounts, if any, will be
payable in the manner, at the places and subject to the restrictions set forth
in the Indenture, the Debt Securities and the Prospectus Supplement relating
thereto.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Debt Securities will be issued in fully registered form without coupons. Where
Debt Securities of any series are issued in bearer form, the special
restrictions and considerations, including special offering restrictions and
special Federal income tax considerations, applicable to any such Debt
Securities and to payment on and transfer and exchange of such Debt Securities
will be described in the applicable Prospectus Supplement.
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or at a rate which at the time of issuance is below market
rates) to be sold at the substantial discount below their stated principal
amount. Federal income tax consequences and other special considerations
applicable to any such discounted Debt Securities will be described in the
Prospectus Supplement relating thereto.
If the purchase price of any Debt Securities is payable in one or more
foreign currencies or currency units or if any Debt Securities are denominated
in one or more foreign currencies or currency units or if the principal of,
premium, if any, or interest, if any, on any Debt Securities is payable in one
or more foreign currencies or currency units, the restrictions, elections,
certain Federal income tax considerations, specific terms and other information
with respect to such issue of Debt Securities and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
Debt Securities may be presented for exchange, and registered Debt Securities
may be presented for transfer, in the manner, at the places and subject to the
restrictions set forth in the Indenture, the Debt Securities and the Prospectus
Supplement relating thereto. Debt Securities in bearer form and the coupons, if
any, appertaining thereto will be transferable by delivery. No service charge
will be made for any transfer or exchange of Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. (Section 2.06)
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indenture and the Debt Securities would not
necessarily afford Holders of the Debt Securities protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect Holders.
If the Debt Securities are convertible into shares of Common Stock, the
conversion price payable and the number of shares purchasable upon conversion
may be subject to adjustment in certain events as set forth in the applicable
Prospectus Supplement.
5
<PAGE>
FORM, REGISTRATION, TRANSFER AND EXCHANGE
The Debt Securities of a series may be issued solely as Registered
Securities, solely as Bearer Securities (with or without coupons attached) or
as both Registered Securities and Bearer Securities. Debt Securities of a
series may be issuable in whole or part in the form of one or more global Debt
Securities ("Global Securities"), as described below under "Book-Entry Debt
Securities."
Registered Securities of any series will be exchangeable for other Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. In addition, if Debt Securities of any
series are issuable as both Registered Securities and as Bearer Securities, at
the option of the holder, subject to the terms of the Indenture, Bearer
Securities (accompanied by all unmatured coupons, except as provided below, and
all matured coupons in default) of such series will be exchangeable for
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. Unless otherwise indicated in the
applicable Prospectus Supplement, any Bearer Security surrendered in exchange
for a Registered Security between a record date or a special record date for
defaulted interest and the relevant date for payment of interest will be
surrendered without the coupon relating to such date for payment of interest
and interest will not be payable in respect of the Registered Security issued
in exchange for such Bearer Security, but will be payable only to the holder of
such coupon when due in accordance with the terms of the Indenture. Bearer
Securities will not be issued in exchange for Registered Securities. (Sections
2.06, 2.12 and 4.01)
Debt Securities may be presented for exchange as provided above, and unless
otherwise indicated in the applicable Prospectus Supplement, Registered
Securities may be presented for registration of transfer (duly endorsed, or
accompanied by a duly executed written instrument of transfer), at the office
of any transfer agent designated by the Company for such purpose with respect
to any series of Debt Securities and referred to in the applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such transfer or exchange
will be effected upon such transfer agent being satisfied with the documents of
title and identity of the person making the request. The Company may at any
time rescind the designation of any transfer agent, provided, however, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for Debt
Securities of such series. The Company may at any time designate additional
transfer agents with respect to any series of Debt Securities. (Sections 2.06
and 4.02)
In the event of any redemption of Debt Securities of any series, the Company
will not be required to (i) register the transfer of or exchange Debt
Securities of that series during a period of 15 days next preceding the
selection of securities of such series to be redeemed; (ii) register the
transfer of or exchange any Registered Security, or portion thereof, called for
redemption, except the unredeemed portion of any Registered Security being
redeemed in part; or (iii) exchange any Bearer Security called for redemption
except, to the extent provided with respect to any series of Debt Securities
and referred to in the applicable Prospectus Supplement, to exchange such
Bearer Security for a Registered Security of that series and of like tenor and
principal amount that is immediately surrendered for redemption. (Section 2.06)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal, premium, if any, interest and Additional Amounts, if any, on
Registered Securities will be made at the office of such paying agent or paying
agents as the Company may designate from time to time, except that at the
option of the Company payment of any interest and any Additional Amounts may be
made by check or draft mailed to the address of the Person entitled thereto as
such address shall appear in the Debt Security Register. Unless indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Securities will be made to the Person in whose name such Registered
Security is registered at the close of business on the record date for such
interest. (Section 4.01)
6
<PAGE>
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal and interest or Additional Amounts, if any, on Bearer Securities
will be payable, subject to any applicable laws and regulations, at the offices
of such paying agents outside the United States as the Company may designate
from time to time, or by check or by transfer to an account maintained by the
payee outside the United States. Unless otherwise indicated in the applicable
Prospectus Supplement, any payment of interest on any Bearer Securities will be
made only against surrender of the coupon relating to such interest
installment. (Sections 2.06 and 4.02)
Any paying agents in or outside the United States initially designated by the
Company for the Debt Securities will be named in the applicable Prospectus
Supplement. If the Debt Securities of a series are listed on a stock exchange
located outside the United States, and such stock exchange shall so require,
the Company will maintain a paying agent with respect to such series in London,
Luxembourg or any other city so required located outside the United States so
long as the Debt Securities of such series are listed on such exchange. The
Company may at any time designate additional paying agents or rescind the
designation of any paying agent, provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment. (Section 4.02)
All monies paid by the Company to a paying agent for the payment of principal
of or interest or Additional Amounts, if any, on any Debt Security which remain
unclaimed at the end of one year after such principal, interest or Additional
Amounts shall have become due and payable will be repaid to the Company and the
holder of such Debt Security or any coupon will thereafter look only to the
Company for payment thereof. (Section 4.03)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depository or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding Debt
Securities of the series to be represented by such Global Security or Global
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a Global Security may not, subject to certain
exceptions, be registered for transfer or exchange except to the Depository for
such Global Security or a nominee of such Depository. (Section 2.06)
The specific terms of the depository arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that the
provisions described below will be applicable to depository arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depository will be represented by a Global Security
registered in the name of such Depository or its nominee. Upon the issuance of
such Global Security and the deposit of such Global Security with or on behalf
of the Depository for such Global Security, the Depository will credit on its
book-entry registration and transfer system the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depository or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interest by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depository for such Global Security. Ownership of beneficial
interests in such Global Security by persons that hold through participants
will be show on, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
7
<PAGE>
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. The
foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, at
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the holders thereof for any purposes under the Indenture. (Sections
2.06 and 11.03) Accordingly, each person owning a beneficial interest in such
Global Security must rely on the procedures of the Depository and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest to exercise any rights of a holder under the
Indenture. The Company understands that, under existing industry practices, if
the Company requests any action of holders or an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a holder
is entitled to give or take under the Indenture, the Depository would authorize
the participants to give such notice or take such action, and participants
would authorize beneficial owners owning through such participants to give such
notice or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Principal of and any premium, interest and Additional Amounts on a Global
Security, will be payable in the manner described in the applicable Prospectus
Supplement.
LIMITATION ON LIENS ON STOCK OF RESTRICTED SUBSIDIARIES
The Company will not, nor will it permit any Restricted Subsidiary to, issue,
assume or guarantee any indebtedness for borrowed money (hereinafter referred
to as "Debt") secured by a mortgage, security interest, pledge, lien or other
encumbrance upon any shares of stock of any Restricted Subsidiary without
effectively providing that the Debt Securities (together with, if the Company
shall so determine, any other indebtedness of or guarantee by the Company
ranking equally with the Debt Securities and then existing or thereafter
created) shall be secured equally and ratably with such Debt. (Section 4.06).
For purposes of the Indenture, "Restricted Subsidiary" means each of American
States Insurance Company and The Lincoln National Life Insurance Company so
long as it remains a subsidiary, as well as any successor to all or a principal
part of the business of any such subsidiary and any other subsidiary which the
Board of Directors designates as a Restricted Subsidiary. (Section 1.01) The
Restricted Subsidiaries accounted for approximately 56% of the consolidated
revenues of the Company during the year ended December 31, 1993, and 85% of the
consolidated assets of the Company at December 31, 1993.
LIMITATION ON ISSUANCE OR DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES
The Company will not, nor will it permit any Restricted Subsidiary to, issue,
sell, assign, transfer or otherwise dispose of, directly or indirectly, any
Capital Stock (other than nonvoting preferred stock) of any Restricted
Subsidiary, except for (i) the purpose of qualifying directors; (ii) sales or
other dispositions to the Company or one or more Restricted Subsidiaries; (iii)
the disposition of all or any part of the Capital Stock of any Restricted
Subsidiary for consideration which is at least equal to the fair value of such
Capital Stock as determined by the Company's Board of Directors (acting in good
faith); or (iv) an issuance, sale, assignment, transfer or other disposition
required to comply with an order of a court or regulatory authority of
competent jurisdiction, other than an order issued at the request of the
Company or any Restricted Subsidiary. (Section 4.07)
For the purposes of the Indenture, "Capital Stock" means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock. (Section
1.01)
8
<PAGE>
DEFAULTS AND REMEDIES
An Event of Default with respect to Debt Securities of any series is defined
in the Indenture as being: (a) default for 30 days in payment of any interest
or Additional Amounts on the Debt Securities of such series; (b) default in
payment of principal or premium, if any, on the Debt Securities of such series
when due either at maturity, upon redemption, by declaration or otherwise
(except a failure to make payment resulting from mistake, oversight or transfer
difficulties not continuing for more than 3 Business Days beyond the date on
which such payment is due); (c) default in payment of any sinking fund
installment when due and payable (except a failure to make payment resulting
from mistake, oversight or transfer difficulties not continuing for more than 3
Business Days beyond the date on which such payment is due); (d) default by the
Company in the performance or breach of any other covenant or warranty of the
Company in respect of the Debt Securities of such series for a period of 60
days after notice thereof to the Company or Trustee; (e) certain events
involving the bankruptcy or insolvency of the Company; or (f) other Events of
Default as specified in the Supplemental Indenture or Board Resolution under
which such series of Debt Securities was issued. (Section 6.01)
The Indenture provides that (1) if an Event of Default described in clauses
(a), (b), (c) or, in the event of a default with respect to less than all
Outstanding series under the Indenture, (d) above shall have occurred and be
continuing with respect to one or more series, either the Trustee or the
holders of 25 percent in principal amount of the Debt Securities of such series
then Outstanding (each such series voting as a separate class) may declare the
principal (or, in the case of original issue discount Debt Securities, the
portion thereof specified in the terms thereof) of all Outstanding Debt
Securities of such series and the interest accrued thereon and Additional
Amounts payable in respect thereof, if any, to be due and payable immediately
and (2) if an Event of Default described in clause (d) (in the event of a
default with respect to all Outstanding series) or (e) above shall have
occurred and be continuing, either the Trustee or the holders of 25 percent in
principal amount of all Debt Securities then Outstanding (voting as one class)
may declare the principal (or, in the case of original issue discount Debt
Securities, the portion of the principal amount thereof specified in the terms
thereof) of all Debt Securities then Outstanding and the interest accrued
thereon and Additional Amounts payable in respect thereof, if any, to be due
and payable immediately, but upon certain conditions such declarations may be
annulled and past defaults (except for defaults in the payment of principal of,
or premium, interest or Additional Amounts, if any, on such Debt Securities)
may be waived by the holders of a majority in principal amount of the Debt
Securities of such series (or of all series, as the case may be) then
Outstanding. (Sections 6.01 and 6.10)
Holders may not enforce the Indenture or the Debt Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Debt Securities unless it receives indemnity satisfactory to it. Subject to
certain limitations, holders of a majority in principal amount of the Debt
Securities of any series may direct the Trustee in its exercise of any trust or
power. The Company is required to deliver annually to the Trustee an officer's
statement indicating whether the signer knows of any default by the Company in
performing any of its obligations under the Indenture. The Trustee may withhold
from Holders notice of any continuing default (except a default in payment of
principal, premium, if any, interest or Additional Amounts, if any, or any
sinking or purchase fund installment) if it determines that withholding notice
is in their interest. (Sections 4.05, 6.06, 6.09, 6.11, 7.01 and 7.05).
DEFEASANCE
Unless otherwise described in a Prospectus Supplement with respect to any
series of Debt Securities, the Company, at its option, (a) will be discharged
from any and all obligations in respect of such Debt Securities (except in each
case for certain obligations to register the transfer or exchange of such Debt
Securities, replace stolen, lost or mutilated Debt Securities, maintain paying
agencies and hold moneys for payment in trust) on the ninety-first day after
satisfaction of all conditions thereto or (b) effective upon the satisfaction
of all conditions thereto, need not comply with certain restrictive covenants
(including any covenants or agreements
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applicable with respect to a particular series of Debt Securities) under the
Indenture and will not be limited by any restrictions with respect to merger,
consolidation or sales of assets, in each case if the Company deposits with the
Trustee, in trust, (x) money or (y) Government Obligations or a combination of
(x) and (y) which, through the payment of interest thereon and principal
thereof in accordance with their terms, will in the written opinion of
independent public accountants selected by the Company, provide money in an
amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and interest and Additional Amounts, if any, and premium, if
any, on, such Debt Securities on the dates such payments are due in accordance
with the terms of such series. (Section 8.02) In order to avail itself of
either of the foregoing options, no Event of Default shall have occurred and be
continuing under the Indenture and the Company must provide to the Trustee (i)
an opinion of counsel to the effect that holders of the Debt Securities of such
series will not recognize income, gain or loss for Federal income tax purposes
as a result of the Company's exercise of its option and will be subject to
Federal income tax on the same amount and in the same manner, and at the same
time as would have been the case if such option had not been exercised and, in
the case of Debt Securities being discharged, such opinion shall be accompanied
by a private letter ruling to that effect received from the United States
Internal Revenue Service (the "Service") or a revenue ruling pertaining to a
comparable form of transaction to that effect published by the Service, (ii) an
officers' certificate to the effect that no Event of Default or event which
with the giving of notice or lapse of time, or both, would become an Event of
Default, with respect to such Debt Securities shall have occurred and be
continuing on the date of the deposit, and (iii) if the Debt Securities are
listed on the New York Stock Exchange, an opinion of counsel to the effect that
the exercise of such option will not cause the Debt Securities to be delisted.
(Section 8.02) "Government Obligations" means generally direct noncallable
obligations of the government which issued the currency in which the Debt
Securities of the applicable series are denominated, noncallable obligations
the payment of the principal of and interest on which is fully guaranteed by
such government, and noncallable obligations on which the full faith and credit
of such government is pledged to the payment of the principal thereof and
interest thereon. (Section 1.01). In addition, the Company may obtain a
discharge under the Indenture with respect to all the Debt Securities of a
series by depositing with the Trustee, in trust, moneys or Government
Obligations sufficient to pay at maturity or upon redemption principal of,
premium, if any, and any interest and Additional Amounts on, all of the Debt
Securities of such series, provided that all of the Debt Securities of such
series are by their terms to become due and payable within one year or are to
be called for redemption within one year. No opinion of counsel or ruling
relating to the tax consequences to holders is required with respect to a
discharge pursuant to the provisions described in the immediately preceding
sentence. (Section 8.01) In the event of any discharge of Debt Securities
pursuant to the terms of the Indenture described above, the holders of such
Debt Securities will thereafter be able to look solely to such trust fund, and
not to the Company, for payments of principal, premium, if any, and interest
and Additional Amounts, if any. (Sections 8.01 and 8.02)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into, or sell, lease or convey
all or substantially all of its assets to, another corporation unless (i) the
successor or transferee corporation, which shall be a corporation organized and
existing under the laws of the United States or a State thereof, assumes by
supplemental indenture all the obligations of the Company under the Debt
Securities and the Indenture and (ii) the Company or successor corporation, as
the case may be, will not, immediately after such consolidation or merger or
sale, lease or conveyance, be in default in the performance of any covenant or
condition with respect to the Debt Securities or the Indenture. The Company
will deliver to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture comply with the terms of the Indenture. Upon any consolidation or
merger, or any sale, lease or conveyance of all or substantially all of the
assets of the Company, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture. (Sections 5.01 and 5.02). Thereafter all
obligations of the predecessor corporation shall terminate. (Section 5.01)
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MODIFICATION OF THE INDENTURE
The Indenture permits the Company and the Trustee to amend or supplement the
Indenture or the Debt Securities without notice to or consent of any holder of
a Debt Security for certain purposes, including without limitation, to cure any
ambiguity, defect or inconsistency, to comply with Section 5.01 (relating to
when the Company may consolidate, merge or sell all or substantially all of its
assets), to provide for uncertificated Debt Securities, to establish the form
or terms of Debt Securities of any series or to make any change that does not
adversely affect the rights of any holder of a Debt Security. (Section 9.01)
Certain modifications and amendments of the Indenture may be made by the
Company and the Trustee only with the consent of the holders of at least a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series issued under the Indenture which is affected by the modification or
amendment (voting as one class). However, no such modification or amendment
may, without the consent of the holder of each Debt Security affected thereby,
(i) reduce the aforesaid percentage of Debt Securities whose holders must
consent to an amendment, supplement or waiver; (ii) reduce the rate or rates or
extend the time for payment of interest or Additional Amounts, if any, on any
Debt Security; (iii) reduce the principal of or premium, if any, on or extend
the fixed maturity of any Debt Security; (iv) modify or effect in any manner
adverse to the holders of Debt Securities the terms and conditions of the
obligations of the Company in respect of its obligations under the Indenture;
(v) waive a default in the payment of principal of or premium or interest or
Additional Amounts, if any, on any Debt Security; (vi) impair the right to
institute a suit for the enforcement of any payment on or with respect to any
series of Debt Securities; (vii) change a Place of Payment; or (viii) make any
Debt Security payable in currency other than that stated in the Debt Security.
(Section 9.02)
REGARDING THE TRUSTEE
The Trustee is a participant in the Company's revolving credit agreement, and
the Company has maintained other banking relationships with the Trustee in the
normal course of business. The Trustee also acts as paying agent for the
Company's 7 1/8% Notes due July 15, 1999, and 7 5/8% Notes due July 15, 2002.
DESCRIPTION OF PREFERRED STOCK AND COMMON STOCK
GENERAL
The Company may issue, separately or together with other Securities, shares
of Common Stock or Preferred Stock, all as set forth in the Prospectus
Supplement relating to the Common Stock or Preferred Stock for which this
Prospectus is being delivered. In addition, if the Prospectus Supplement so
provides, the Debt Securities or Preferred Stock may be convertible into or
exchangeable for Common Stock.
The Company's Articles of Incorporation currently authorize the issuance of
800,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock
("Preferred Stock"). The Company's Preferred Stock may be issued from time to
time in one or more series by resolution of the Board of Directors. At the
present time, the Company has outstanding three series of Preferred Stock,
consisting of the Company's $3.00 Cumulative Convertible Preferred Stock,
Series A (without par value) (the "Series A Preferred Stock") and its 5 1/2%
Cumulative Convertible Exchangeable Preferred Stock, Series E and F (without
par value) ("Series E Preferred Stock" and "Series F Preferred Stock"
respectively). At June 30, 1994, the Company had issued and outstanding
94,774,640 shares of Common Stock, 45,556 shares of Series A Preferred and
2,201,443 and 2,216,454 shares of Series E and F Preferred Stock, respectively.
The following descriptions of the classes of the Company's capital stock are
summaries, do not purport to be complete, and are subject, in all respects, to
the applicable provisions of the Indiana Business Corporation Law and the
Company's Articles of Incorporation (including the Certificate of Resolution by
the Board of Directors of the Company Designating the Rights and Preferences of
the Series A Preferred Stock), Articles of Amendment Designating the Rights and
Preferences of the Series E and F Preferred Stock, and the Rights Agreement,
referred to below, with The First National Bank of Boston, which, in each case,
are included as Exhibits to the Registration Statement of which this Prospectus
forms a part.
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COMMON STOCK
Holders of the Company's Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors after all dividends accrued on all
preferred or special classes of shares entitled to preferential dividends have
been paid or declared and set apart for payment out of funds legally available
therefor. Upon liquidation, dissolution or winding up of the affairs of the
Company, whether voluntary or involuntary, holders of Common Stock are entitled
to receive pro rata any net assets of the Company remaining after the claims of
creditors and preferences of the Series A, E, and F Preferred Stock, and any
other series of Preferred Stock at the time outstanding, have been paid in
full. The Company's Articles of Incorporation provide that holders of Common
Stock and holders of any series of Preferred Stock from time to time
outstanding shall each have the right at every meeting of shareholders to one
vote for each share of Common Stock and/or Preferred Stock so held, and holders
of Common Stock and holders of Preferred Stock shall so vote as one class.
Under certain circumstances as provided by law, the Company's Articles of
Incorporation or the terms of the Preferred Stock, certain series of Preferred
Stock may vote as a separate class or classes. The Company's Bylaws presently
provide for three classes of directors, with directors in each class serving
staggered three-year terms. The holders of Common Stock do not have any
preemptive rights to subscribe for additional shares, and the Common Stock does
not have cumulative voting rights.
The Company's Common Stock is listed on the New York, Chicago, Pacific,
London and Tokyo Stock Exchanges. The outstanding shares of Common Stock are,
and the Common Stock offered hereby when issued will be, validly issued, fully
paid and non-assessable. The Company will take appropriate action to list the
Common Stock offered hereby as described in the Prospectus Supplement relating
to any issuance of Common Stock.
Common Stock Purchase Rights. Under a Rights Agreement between the Company
and The First National Bank of Boston ("Common Rights Agreement"), each
outstanding share of Common Stock is coupled with a right (the "Common Rights")
entitling the holder to purchase from the Company one share of Common Stock at
a price of $75.00 per share, subject to adjustment.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (other than the
Company or certain related persons or approved purchasers) (an "Acquiring
Person") acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding Common Stock or (ii) 10 days following the
commencement or announcement of an intention to make a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of affiliated or associated persons of 30% or more or such
outstanding Common Stock (the earlier of such dated being called the
"Distribution Date"), the Common Rights will be transferred with and only with
the Common Stock. As soon as practicable following the Distribution Date,
separate certificates evidencing the Common Rights ("Common Rights
Certificate") will be mailed to holders of the Common Stock as of the close of
business on the Distribution Date and such separate Common Right Certificates
alone will evidence the Common Rights. The Common Rights are not exercisable
until the Distribution Date. The Common Rights will expire on November 21,
1996, unless earlier redeemed by the Company as described below.
The Common Right purchase price payable, and the number of shares of Common
Stock or other Securities or property issuable, upon exercise of the Common
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock, (ii) upon the grant to holders of the
Common Stock of certain rights or warrants to subscribe for the Common Stock or
convertible Securities at less then the current market price of the Common
Stock, or (iii) upon the distribution to holders of the Common Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
out of earnings or retained earnings theretofore paid or dividends payable in
Common Stock) or of subscription rights or warrants (other than those referred
to above).
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In the event that the Company were acquired in a merger or other business
combination transaction in which more than 50% of its assets or earning power
were sold, proper provision will be made so that each holder of a Common Right
shall thereafter have the right to receive upon the exercise thereof at the
then current exercise price of the Common Right, that number of shares of
common stock of the acquiring company which at the time of such transaction
would have a market value of two times the exercise price of the Common Right.
In the event an Acquiring Person merges into the Company, the Company is the
surviving corporation and the Company's Common Stock is not changed into or
exchanged for stock or other Securities of the Company or any other person or
cash or any other property and (i) an Acquiring Person engages in one of a
number of self-dealing transactions specified in the Common Rights Agreement or
(ii) during such time as there is an Acquiring Person, there is a
reclassification of Securities, reverse stock split, recapitalization of the
Company, merger or consolidation of the Company with any of its subsidiaries or
any other transaction involving the Company or its subsidiaries which has the
effect of increasing by more than 1% the proportionate equity Securities
ownership of the Company or any of its subsidiaries by an Acquiring Person,
proper provision will be made so that each holder of a Common Right, other than
Common Rights that were beneficially owned by the Acquiring Person on the
earlier of the Distribution Date or the date of the public announcement that an
Acquiring Person acquired 20% or more of the outstanding shares of Common
Stock, will thereafter have the right to receive upon exercise that number of
shares of Common Stock having a market value of two times the exercise price of
the Common Right.
With certain exceptions, no adjustment in the Common Right purchase price
will be required until cumulative adjustments require an adjustment of at least
1% in such Common Right purchase price. No fractional shares will be issued and
in lieu thereof an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
At any time prior to the time that any person becomes an Acquiring Person,
the Company may redeem the Common Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price") payable in cash. Immediately upon
the action of the Board of Directors electing to redeem the Common Rights, the
Company shall make an announcement thereof, and upon such election, the right
to exercise the Common Rights will terminate and the only right of the holders
of Common Rights will be to receive the Redemption Price. Until a Common Right
is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including, without limitation, the right to vote or to receive
dividends.
Certain Provisions of the Company's Articles of Incorporation. The Company's
Articles of Incorporation provide that the affirmative vote of the holders of
three-fourths of the Company's voting stock is required to amend Article VII,
which deals with the number, classification, qualifications and removal of
directors. Article VII provides that the number of directors may be fixed in
the Bylaws, that qualifications for directors may be set in the Bylaws, and
that the Bylaws may provide for classification of the Board. The Bylaws can be
amended only by action of the Board. Article VII also provides that directors
can be removed, with or without cause, at a meeting of shareholders called
expressly for that purpose upon the affirmative vote of the holders of at least
three-fourths of the Company's voting stock.
The provisions of Article VII requiring the affirmative vote of three-fourths
of the Company's voting stock to amend Article VII could make it difficult for
the shareholders to change the existing provision of that Article, which, in
turn, could discourage proxy contests and tender offers and make it more likely
that incumbent directors will maintain their positions.
The Articles of Incorporation also contain a "fair price" provision which
requires, subject to certain exceptions, certain kinds of business combinations
involving the Company and any shareholder holding 10% or more of the Company's
voting stock (or certain affiliates of such shareholder) to be approved by the
holders of at least three-fourths of the Company's voting stock, unless (i) the
transaction is approved by a majority of the members of the Board of Directors
of the Company who are not affiliated with the 10% shareholder making the
proposal, or (ii) the transaction meets certain minimum price and procedural
requirements (in either of which cases, only the normal shareholder and
director approval requirements of the Indiana Business
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Corporation Law would govern the transaction). The "fair price" provision may
be amended or repealed only upon the affirmative vote of the holders of at
least three-fourths of the Company's voting stock. The "fair price" provision
is intended to increase the likelihood that all shareholders of the Company
will be treated similarly if certain kinds of business combinations are
effected. The "fair price" provision may have the effect of making a takeover
of the Company more expensive and may therefore discourage tender offers for
less than three-fourths of the Company's stock and acquisitions of substantial
blocks of the Company's stock with a view to acquiring control of the Company.
Certain State Law Provisions. Chapter 43 of the Indiana Business Corporation
Law also restricts business combinations with interested shareholders. It
prohibits certain business combinations, including mergers, sales of assets,
recapitalizations, and reverse stock splits, between certain corporations
having 100 or more shareholders that also have a class of voting shares
registered with the Securities and Exchange Commission under Section 12 of the
Exchange Act (which includes the Company) and an interested shareholder,
defined as the beneficial owner of 10% or more of the voting power of the
outstanding voting shares of that corporation, for five years following the
date the shareholder acquired such 10% beneficial ownership, unless the
acquisition or the business combination was approved by the board of directors
in advance of such date. Moreover, the acquisition or business combination must
meet all requirements of the corporation's articles of incorporation, as well
as the requirements specifically set out in the Indiana Business Corporation
Law. After the five-year period expires, a business combination with an
interested shareholder that did not receive board approval prior to the
interested shareholder's acquisition date may take place only if such
combination is approved by a majority vote of shares not held by the interested
shareholder or its affiliates or if the proposed combination meets certain
minimum price requirements based upon the highest price paid by the interested
shareholder. The aggregate amount of cash and the market value of non-cash
consideration to be received by holders of all outstanding stock other than
common stock is to be determined under criteria similar to those for common
stock, except that the minimum price to be received by such shareholders cannot
be less than the highest preferential amount per share to which holders of such
class of stock are entitled in the event of voluntary dissolution, plus
dividends declared or due. The consideration to be received by holders of a
particular class must be distributed promptly and paid in cash or in the same
form as the interested shareholder used to acquire the largest number of shares
it owns in that class. Finally, the interested shareholder must not have become
the beneficial owner of any more voting shares of stock since it became an
interested shareholder, with certain exceptions.
Chapter 42 of the Indiana Business Corporation Law includes provisions
designed to protect minority shareholders in the event that a person acquires,
pursuant to a tender offer or otherwise, shares giving it more than 20%, more
than 33 1/3%, or more than 50% of the outstanding voting power ("Control
Shares") of corporations having 100 or more shareholders. Unless the
corporation's articles of incorporation or bylaws provide that Chapter 42 does
not apply to control share acquisitions of shares of the corporation before the
control share acquisition, an acquirer who purchases Control Shares without
seeking and obtaining the prior approval of the board of directors cannot vote
the Control Shares until each class or series of shares entitled to vote
separately on the proposal, by a majority of all votes entitled to be cast by
that group (excluding the Control Shares and any shares held by officers of the
corporation and employees of the corporation who are directors thereof),
approve in a special or annual meeting the rights of the acquirer to vote the
Control Shares. An Indiana corporation otherwise subject to Chapter 42 may
elect not to be covered by the statute by so providing in its articles of
incorporation or bylaws. The Company is currently subject to the statute.
Indiana insurance laws and regulations provide that no person may acquire
voting securities of the Company if after such acquisition such person would
directly or indirectly be in control of the Company, unless such person has
provided certain required information to the Indiana Insurance Commissioner
(the "Indiana Commissioner") and the Indiana Commissioner has approved the
acquisition. Control of the Company is presumed to exist if any person
beneficially owns 10% or more of the voting securities of the Company.
Furthermore, the Indiana Commissioner may determine, after notice and hearing,
that control exists notwithstanding the absence of a presumption to that
effect. Consequently, no person may acquire,
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directly or indirectly, 10% or more of the voting securities of the Company to
be outstanding after the Offerings, or otherwise acquire control of the
Company, unless such person has provided such required information to the
Indiana Commissioner and the Indiana Commissioner has approved such
acquisition.
Transfer Agent and Registrar. The First National Bank of Boston serves as
Transfer Agent and Registrar for shares of the Company's Common Stock.
PREFERRED STOCK
The Company's Preferred Stock has, upon issuance, preference over the Common
Stock with respect to the payment of dividends and the distribution of assets
in the event of liquidation, dissolution or winding up of the company. Other
relative rights, preferences and limitations of each series of Preferred Stock,
including dividend, redemption, liquidation, sinking fund, conversion and other
provisions, are determined by the Board of Directors in the resolutions
establishing and designating such series and as described in the Prospectus
Supplement relating to the series of Preferred Stock. The Series A Preferred
Stock and the Series E and F Preferred Stock constitute the only series of
Preferred Stock currently authorized for issuance by the Board of Directors.
The Company's Articles of Incorporation provide that each holder of Preferred
Stock of any series from time to time outstanding shall be entitled to one vote
per share upon all matters submitted to vote at every meeting of shareholders
of the Company. Further, in the event that six or more quarterly dividends,
whether or not consecutive, on any series of Preferred Stock shall be in
default, the holders of any outstanding series of Preferred Stock as to which
such default exists shall be entitled, at the next annual meeting of
shareholders, to vote as a class to elect two directors of the Company. Such
right shall continue with respect to shares of cumulative Preferred Stock,
including the Series A Preferred and Series E and F Preferred Stock, until all
accumulated and unpaid dividends on all such shares, the holders of which were
entitled to vote at the previous annual meeting of shareholders, have been paid
or declared and set aside for payment and, with respect to shares of non-
cumulative Preferred Stock, if any, until any non-cumulative dividends have
been paid or declared and set apart for payment for four consecutive quarterly
dividend periods on all such shares, the holders of which were entitled to vote
at the previous annual meeting of shareholders.
The approval of the holders of record of at least two-thirds of the
outstanding shares of all series of Preferred Stock of the Company, voting as a
class, will be required to (a) amend the Company's Articles of Incorporation to
create or authorize any stock ranking prior to or on a parity with such
Preferred Stock with respect to the payment of dividends or distributions upon
dissolution, liquidation or winding up, or to create or authorize any security
convertible into shares of any such stock; (b) amend, alter, change or repeal
any of the express terms of the Preferred Stock, or any series thereof, in any
prejudicial manner (provided only holders of two-thirds of the outstanding
shares of the series prejudiced by such change or repeal need consent to such
action); (c) merge or consolidate with another corporation whereby the Company
is not the surviving entity, if thereby the rights, preferences or powers of
the Preferred Stock would be adversely affected or Securities would thereupon
be authorized or outstanding which could not otherwise have been created
without the approval of such Preferred Stockholders; or (d) authorize, or
revoke a previously authorized, voluntary dissolution of the Company, approve
any limitation of the term of the existence of the Company or authorize the
sale, lease, exchange or other disposition of all or substantially all of the
property of the Company.
In the event of voluntary or involuntary dissolution, liquidation or winding-
up of the Company, the holders of each series of the Preferred Stock will be
entitled to receive out of the assets of the Company available for distribution
to its shareholders, before distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to such series of Preferred
Stock upon liquidation, a liquidating distribution in an amount per share as
set forth in the Prospectus Supplement relating to such series of Preferred
Stock, plus accrued and unpaid dividends.
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The Preferred Stock, when issued, will be fully paid and non-assessable.
Unless otherwise specified in the Prospectus Supplement relating to the
particular series of a Preferred Stock, each series of Preferred Stock will be
on a parity in all respect with other series of Preferred Stock.
SERIES A PREFERRED STOCK
At June 30, 1994, the Company had issued and outstanding 45,556 shares of
Series A Preferred Stock. Cumulative dividends are payable quarterly, as
declared by the Board of Directors, on shares of Series A Preferred Stock at
the per annum rate of $3.00 per share. Upon the liquidation, dissolution or
winding up of the Company, the Series A Preferred Stock is entitled to a
liquidation preference of $80.00 per share, or approximately $3,644,480 in the
aggregate at June 30, 1994, plus accrued dividends, before any assets may be
distributed to holders of Common Stock or any other stock ranking junior to the
Series A Preferred Stock. The Series A Preferred Stock may be redeemed at any
time at the option of the Company, in whole or in part, at a redemption price
of $80.00 per share plus accrued dividends, and the Series A Preferred Stock is
convertible into Common Stock at the option of the holder at a rate of eight
shares of Common Stock (subject to adjustment) for each share of Series A
Preferred Stock. In the six months ended June 30, 1994, 1,723 shares of Series
A Preferred Stock were converted into shares of the Company's Common Stock.
SERIES E AND F PREFERRED STOCK
The Company issued to The Dai-ichi Mutual Life Insurance Company ("Dai-
ichi"), a mutual insurance company organized under the laws of Japan, 2,201,443
shares of Series E Preferred Stock on July 6, 1990 and 2,216,454 shares of
Series F Preferred Stock on May 31, 1991. The holders of the Series E and F
Preferred Stock are entitled to receive, when and as declared by the Company's
Board of Directors, cumulative cash dividends at the annual rate of 5 1/2% of
the Liquidation Preference (as defined below) payable quarterly on the 5th day
of March, June, September and December.
Each share of Series E and F Preferred Stock may, at the option of the
holder, be converted into that number of fully paid and non-assessable shares
of Common Stock obtained by dividing the Liquidation Preference of each such
share of Preferred Stock being converted by the Conversion Price. The
Liquidation Preferences of the Series E and F Preferred Stock are $68.850 and
$71.604, respectively. The Conversion Prices of the Series E and F Preferred
Stock are $34.425 and $35.802, respectively, but are increased by 4 1/6% on
July 6, 1995 and 4% on July 6, 1998.
The shares of Series E and F Preferred Stock are subject to both mandatory
and optional redemption provisions. The shares are subject to mandatory
redemption on July 6, 2002 by payment in cash of the respective Liquidation
Preference plus accrued dividends, if any. In lieu of mandatory redemption, the
Company may, at its option, issue in exchange for its then outstanding shares
of Series E and F Preferred Stock shares of non-convertible Preferred Stock or
Common Stock, which in either case are freely tradable and have a fair market
value equal to the respective Liquidation Preference of the shares of Series E
and F Preferred Stock plus any accrued dividends. The Company may, at its
option, redeem in cash, in whole or in part, any of the Series E and F
Preferred Stock which is not owned by Dai-ichi or its wholly-owned subsidiaries
at a redemption price per share equal to the respective Liquidation Preference
plus accrued dividends.
In connection with its purchase of the shares of Series E and F Preferred
Stock, Dai-ichi has agreed to vote its shares of such stock, together with any
shares of Common Stock owned by Dai-ichi, in accordance with the recommendation
of the Company's Board of Directors, or under certain circumstances, in the
same proportion as all other voting Securities voting on the particular matter.
Dai-ichi may dispose of such shares only upon certain conditions, including
that the shares first be offered for sale to the Company and that the Shares be
sold in a manner that would ensure a wide distribution of the shares.
Registration Rights. Pursuant to an Investment Agreement between the Company
and Dai-ichi, dated as of June 25, 1990 (the "Investment Agreement"), Dai-ichi
and certain subsequent holders of Dai-ichi's shares
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are entitled to certain registration rights covering such Preferred Stock, all
shares of Common Stock into which such Preferred Stock is convertible and all
shares of Common Stock or other Securities distributed with respect to such
shares of Preferred Stock or Common Stock (the "Registrable Securities").
Under the Investment Agreement, Dai-ichi (or certain subsequent holders of
Registrable Securities) has the right (the "Demand Right"), exercisable up to
three times, to require the Company to use its best efforts to effect the
registration of all or part of the Registrable Securities under the Securities
Act in connection with a public offering of such Registrable Securities. The
Demand Right may be exercisable at any time unless (i) the request for
registration is made within 120 days after the most recent registration
pursuant to exercise of a Demand Right, (ii) registration of the Registrable
Securities would adversely affect a public financing contemplated by the
Company at the time the request for registration is made, in which case a
"black out" period of up to 60 days would apply, (iii) audited financial
statements necessary for registration are unavailable or (iv) registration
would require disclosure of material information which the Company wishes to
delay for a bona fide business purpose.
In addition, Dai-ichi or any subsequent holder of Registrable Securities has
the right, exercisable one time only, to include their Registrable Securities
in a registration by the Company of any of its Securities having the ordinary
power to vote in the election of the director of the Company (including a
proposed registration of Common Stock) under the Securities Act, unless (i) in
the reasonable judgment of the Company, inclusion of any Registrable Securities
in the Company's registration statement at that time would adversely affect the
Company's own financing, (ii) the Company's registration statement is withdrawn
or (iii) the Company's registration of Securities is in connection with a
merger, acquisition, exchange offer or subscription offer, stock option or a
dividend reinvestment, or other employee benefit plan. The Company is required
to bear all registration expenses in connection with the registration of the
Registrable Securities pursuant to the Investment Agreement.
Common Share Equivalent Purchase Rights. The Company is party to a Rights
Agreement with The First National Bank of Boston, which relates to the Series E
and F Preferred Stock (the "Preferred Rights Agreement"). In general, the
Preferred Rights are intended to provide the holders of the Series E and F
Preferred Stock with the same rights as they would have had if they had owned
the shares of Common Stock into which the shares of Series E and F Preferred
are convertible. One common share equivalent purchase right (the "Preferred
Rights") was issued for each share of Series E and F Preferred Stock. In
accordance with the Preferred Rights Agreement, the Preferred Rights entitle
the holders of such Rights to purchase that number of shares of Common Stock
into which the shares of Series E and F Preferred Stock are convertible at a
price of $75 per share, subject to the same adjustments described with respect
to the Common Rights. Upon the occurrence of the same triggering events
outlined with respect to the Common Rights, each holder of a Preferred Right
shall be entitled to receive that number of common shares of an Acquiring
Person obtained by multiplying the current purchase price of the Preferred
Rights by the total number of shares of Common Stock for which the Preferred
Rights may be exercised, and dividing the product by 50% of the current per
share market price of the common share of the other person. Alternatively, if a
person beneficially owning 20% of the Common Stock acquires the Company by
means of a reverse merger in which the Company survives or such person engages
in certain "self-dealing" transactions, each Preferred Right not owned by the
20% holder becomes exercisable for the number of shares of Common Stock which
at the time would have a market value of two times the exercise price of the
Preferred Rights. The Preferred Rights expire on November 21, 1996 and are
subject to redemption and cancellation.
REGULATION
State Supervision. The Company's insurance affiliates are subject to
regulation and supervision by the states, territories and foreign countries in
which they are admitted to do business. These jurisdictions generally maintain
supervisory agencies with broad discretionary powers relative to granting and
revoking licenses to transact business, regulating trade practices, licensing
agents, prescribing and approving policy forms, regulating premium rates for
some lines of business, establishing premium requirements, regulating
17
<PAGE>
competitive matters, prescribing the form and content of financial statements
and reports, determining the reasonableness and adequacy of capital and surplus
and regulating the type and amount of investments permitted. The Company's
insurance subsidiaries conduct business in numerous jurisdictions and,
accordingly, are subject to the laws and regulations of each of those
jurisdictions. Most of the Company's principal insurance subsidiaries,
including Lincoln National Life Insurance Company and American States Insurance
Company, are domiciled in Indiana and are primarily regulated by the Indiana
Commissioner.
As an insurance holding company, the Company is also subject to regulatory
requirements of the states where its insurance subsidiaries are domiciled. For
example, certain transactions involving an affiliated insurance company, such
as loans, extraordinary dividends or investments, in some cases may require the
prior approval of such company's primary regulators. Additionally, these
requirements restrict the ability of any person to acquire control of the
Company or any of its subsidiaries engaged in the insurance business without
prior regulatory approval. Control is generally deemed to exist if an entity
beneficially owns 10% or more of the voting securities of a company. Such
requirements may have the effect of preventing an acquisition of the Company.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby by any one or more
of the following methods: (i) through underwriters or dealers; (ii) directly to
one or more purchasers; (iii) through agents; or (iv) to both investors and/or
dealers through a specific bidding or auction process or otherwise. The
Prospectus Supplement with respect to the Securities sets forth the terms of
the offering of the Securities, including the name or names of any
underwriters, the purchase price of the Securities and the proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers, any bidding or auction
process, any Securities exchanges on which the Securities may be listed and any
restrictions on the sale and delivery of Securities in bearer form to U.S.
persons.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by underwriters. The specific
underwriter or underwriters or managing underwriter or underwriters, as the
case may be, will be set forth on the cover of the Prospectus Supplements
relating to such Securities and the members of the underwriting syndicate, if
any, will be named in such Prospectus Supplement. Unless otherwise set forth in
the Prospectus Supplement, the obligations of the underwriters to purchase the
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all the Securities if any are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Securities may be sold directly by the Company or through agents designated
by the Company from time to time. Any agent involved in the offer or sale of
the Securities in respect of which this Prospectus is delivered will be named,
and any commissions payable by the company to such agent will be set forth, in
the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the
period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contract will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
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<PAGE>
Dealers, agents and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Acts, or to
contribution with respect to payments which the dealers, agents or underwriters
may be required to make in respect thereof. Dealers, agents and underwriters
may be customers of, engage in transactions with, or perform services for the
Company in the ordinary course of business.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Gardner, Carton & Douglas, 321 North Clark Street, Chicago, Illinois
60610. Gardner, Carton & Douglas will rely on the opinion of Jack D. Hunter,
Esq., Executive Vice President and General Counsel of the Company, as to
matters of Indiana law. As of August 16, 1994, Mr. Hunter beneficially owned
57,298 shares of Common Stock of the Company, including shares held in the
Lincoln National Corporation Savings and Profit-Sharing Plan and the Lincoln
National Corporation Employees' and Agents' Stock Bonus Plan, and holds options
to acquire an additional 55,602 shares of Common Stock, which options are
currently exerciseable except for options to acquire: 8,250 shares in each of
1995 and 1996; 5,750 shares in 1997; and 3,000 shares in 1998.
EXPERTS
The consolidated financial statements and schedules of Lincoln National
Corporation and subsidiaries appearing in the Lincoln National Corporation's
Annual Report (Form 10-K) for the year ended December 31, 1993, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements and schedules are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPO-
RATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN CONNEC-
TION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DE-
LIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HERE-
UNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SO-
LICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Incorporation of Certain Documents by Reference............................ S-2
Use of Proceeds............................................................ S-2
Capitalization............................................................. S-3
Summary Financial Information.............................................. S-4
Ratio of Earnings to Fixed Charges......................................... S-5
Description of Debentures.................................................. S-6
Underwriting............................................................... S-9
Validity of the Debentures................................................. S-9
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Risks Relating to Currencies............................................... 4
Historical Ratio of Earnings to Fixed Charges.............................. 4
Description of Debt Securities............................................. 4
Description of Preferred Stock and Common Stock............................ 11
Regulation................................................................. 17
Plan of Distribution....................................................... 18
Legal Opinions............................................................. 19
Experts.................................................................... 19
</TABLE>
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$200,000,000
[LOGO OF LINCOLN NATIONAL CORPORATION]
% DEBENTURES DUE , 2024
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
, 1994
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