SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1995 Commission File Number 1-6028
LINCOLN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-1140070
(State of incorporation) (I.R.S. Employer Identification No.)
200 East Berry Street, Fort Wayne, Indiana 46802-2706
(Address of principal executive offices)
Registrant's telephone number (219) 455-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class which registered
Common Stock (Without Par Value) New York, Chicago, Pacific,
London and Tokyo Stock
Exchanges
Common Share Purchase Rights New York, Chicago and Pacific
Stock Exchanges
$3.00 Cumulative Convertible Preferred New York and Chicago Stock
Stock, Series A (Without Par Value) Exchanges
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ x ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ x ]
As of March 1, 1996, 104,233,132 shares of common stock were outstanding. The
aggregate market value of such shares (based upon the closing price of these
shares on the New York Stock Exchange) held by nonaffiliates was approximately
$5,719,800,000.
Select materials from the Proxy statement for the Annual meeting of
Shareholders, scheduled for May 9, 1996, have been incorporated by reference
into Part III of this Form 10-K.
The exhibit index to this report is located on page 80.
Page 1 of 446
<PAGE> -2-
PART I
Item 1. Business
Lincoln National Corporation ("LNC") is a holding company. Through subsidiary
companies, LNC operates multiple insurance and investment management
businesses. LNC is the 48th largest (based on assets) U.S. Corporation (1994
Fortune 500 rankings). Operations have been divided into four business
segments, 1) Life Insurance and Annuities, 2) Reinsurance 3) Property-Casualty
and 4) Investment Management. The Investment Management segment was added in
April of 1995 following the acquisition of Delaware Management Holdings, Inc.
(see note 11 to the consolidated financial statements on page 65). Prior to
the sale of 71% of its direct writer of employee life-health coverages in the
first quarter of 1994, LNC conducted business in a business segment entitled
Employee Life-Health Benefits. After the sale, the earnings from the 29%
minority interest retained were included in "Other Operations" as described
below. Although one of the subsidiaries held by LNC was formed as early as
1905, LNC itself was formed in 1968. LNC is an Indiana corporation with its
principal office at 200 East Berry Street, Fort Wayne, Indiana 46802-2706. As
of December 31, 1995, there were 225 persons on the staff of LNC. Total
employment of Lincoln National Corporation at December 31, 1995 on a
consolidated basis was 10,250.
Although acquisition and disposition activity has occurred, there has been no
activity of this nature during the past five years involving all or
predominately all of a business segment except as described above.
Numeric presentations showing revenues, pre-tax income, and assets for LNC's
major business segments and other operations in which LNC engages through its
subsidiaries are included in this report as part of the consolidated financial
statements (see note 9 to the consolidated financial statements on page 62).
The LNC "Other Operations" category includes the financial data for an
unconsolidated affiliate (subsequent to the first quarter of 1994 and prior to
the sale of this holding in October of 1995) engaged in the employee life-
health benefits business, certain other operations that are not directly
related to the business segments and unallocated corporate items (i.e.,
corporate investment income, interest expense on short-term and long-term
borrowings, and unallocated corporate overhead expenses).
Following is a brief description of the four business segments:
1. Life Insurance and Annuities
The primary companies within this business segment are The Lincoln National
Life Insurance Company ("Lincoln Life") and Lincoln National (UK) plc. Other
companies within this business segment include, First Penn-Pacific Life
Insurance Company ("First Penn")and American States Life Insurance Company
("American States Life").
Lincoln Life, which is among the 10 largest U.S. stockholder-owned life
insurance companies based on revenues (1994 Fortune Rankings of 50 Largest
Life Insurance Companies by Revenues) and the 11th largest based on assets
(Best's Review Life-Health Edition, October 1995), is an Indiana corporation
headquartered in Fort Wayne, Indiana. A network of 38 life insurance
agencies, independent life insurance brokers, insurance agencies located
within financial institutions and specifically trained employees sells fixed
annuities, variable annuities, pension products, universal life, variable
universal life, long-term care insurance, disability income and other
individual insurance coverages in most states of the United States. The
distribution network includes approximately 1,900 career agents, 18,500
brokers and access to 52,000 stockbrokers and financial planners. During
1995, LNC announced that it would stop selling disability income coverage on a
direct basis and that the runoff of the existing business would be moved to
its Reinsurance segment.
Lincoln National (UK) is a United Kingdom company headquartered in Uxbridge,
England, that is licensed to do business throughout the United Kingdom. The
principal products produced by this operation, unit-linked life and pension
products, are similar to U.S. produced variable life products. The
distribution network includes approximately 1,800 sales representatives.
Lincoln National (UK) is the 12th largest writer of unit-linked new business
<PAGE> -3-
premiums in the UK as measured in 1994 (Money Management Survey-New Business
Trends, published in June 1995). After adding the unit-linked business from
the acquisitions completed in the first half of 1995 (see note 11 to the
consolidated financial statements on page 65), to its existing business,
Lincoln National (UK) advanced to the 10th largest writer of unit-linked new
business premiums.
First Penn is an Indiana Corporation headquartered in Oakbrook Terrace,
Illinois. Its products include universal life products distributed through
independent marketing companies, term insurance distributed through brokers
and the sale of Lincoln Life's deferred annuities through insurance agencies
located within financial institutions. These products are marketed in most
states of the United States.
American States Life is an Indiana corporation headquartered in Indianapolis,
Indiana. Its products, principally universal life and term insurance, are
marketed through independent agencies (which also offer property-casualty
insurance) in most states of the United States.
Approximately 4,875 employees are involved in this business segment.
2. Reinsurance
This segment offers a broad range of risk management products and services to
insurance companies, HMOs, self-funded employers and other primary market risk
accepting organizations throughout the United States and economically
attractive international markets. Marketing efforts are conducted primarily
through the efforts of a reinsurance sales staff. Some business is presented
by reinsurance intermediaries and brokers. The reinsurance organization is
the leading life-health reinsurer worldwide measured on gross premiums, net of
ceded (Swiss Re, Economics Studies, June 1995).
The primary companies within this business segment are Lincoln National
Reassurance Company ("LNRAC"), Lincoln National Health & Casualty Insurance
Company ("LNH&C"), Lincoln Life, Lincoln National Reinsurance Company Ltd
(Bermuda) and Lincoln National Reinsurance Company Ltd (Barbados). LNRAC and
Lincoln Life offer reinsurance programs for individual life, group life, group
medical, disability income, personal accident and annuity products to U.S. and
international clients. LNH&C offers group medical products and services on
both a direct and reinsurance basis. The insurance companies in Bermuda and
Barbados offer specialized reinsurance programs for life, health and annuity
business, and offer funded cover programs to property-casualty carriers in the
U.S. and select international markets.
Other companies in this business segment include various general business
corporations which are used to support the segment's sales, service and
administration efforts.
Approximately 610 employees are involved in this business segment.
3. Property-Casualty
Property-Casualty insurance includes both personal lines (auto, homeowners,
multi-peril and other) and commercial lines (business owners policies, auto,
multi-peril, workers' compensation, general liability and other).
Most of LNC's property-casualty business is conducted through American States
Insurance Company and its property-casualty subsidiaries ("American States"),
headquartered in Indianapolis, Indiana. These companies operate a multi-line
property-casualty insurance business in most states of the United States
through 20 semi-autonomous division offices with broad authority for
underwriting, agency contracting, marketing and claims settlement for most
lines of business. The distribution network involves approximately 5,000
independent agencies. In November 1995, American States announced it would be
consolidating the activities of its divisional offices into four regional
offices.
A company within this business segment not owned by American States is Linsco
Reinsurance Company which is licensed to write property-casualty reinsurance.
This company is involved in servicing a closed block of business.
Approximately 3,630 employees are involved in this business segment.
<PAGE> -4-
4. Investment Management
The companies within this business segment include Lincoln National Investment
Companies, Inc. ("LNIC"), Delaware Management Holdings, Inc. ("Delaware"),
Lincoln Investment Management, Inc. ("Lincoln Investment"), Lynch & Mayer,
Inc. ("L&M") and Vantage Global Advisors, Inc. ("Vantage"). LNIC is a second-
tier holding company that owns the operating companies within this segment.
The operating companies provide a variety of asset management services to
institutional and retail customers including other insurance companies,
pension plans, college endowment funds, individuals and trusts. These
companies serve as investment advisor to approximately 500 pension funds and
other institutional accounts; act as investment manager/national distributor
and shareholder services agent for 38 registered, open-end funds; and serve as
investment manager for 4 registered, closed-end funds.
Approximately 910 employees are involved in this business segment.
LNC's insurance subsidiaries protect themselves against losses greater than
the amount they are willing to retain on any one risk or event, by purchasing
reinsurance from unaffiliated insurance companies (see note 7 to the
consolidated financial statements on page 57).
All the areas of business activity in which LNC is involved are highly
competitive because of the market structure and the large number of competing
companies.
At the end of 1994, the latest year for which data is available, there were
more than 1,800 life insurance companies in the United States and Lincoln Life
was among the 20 largest stock and mutual life insurance companies in the
United States based on revenues (1994 Fortune Ranking of 50 Largest U.S. Life
Insurance Companies by Revenues).
At the end of 1994, the latest year for which data is available, there were
approximately 1,200 groups and unaffiliated individual companies selling
property and casualty insurance. LNC's group of companies writing
property-casualty insurance ranked 30th in net written premiums for 1994 (A.M.
Best Aggregates and Averages) among all such groups and companies.
The business of LNC's life insurance and annuities, reinsurance and property-
casualty business segments, in common with those of other insurance companies,
is subject to regulation and supervision by the states, territories and
foreign countries in which they are admitted to do business. The laws of these
jurisdictions generally establish supervisory agencies with broad
administrative 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 reserve requirements, regulating competitive matters, prescribing
the form and content of financial statements and reports, regulating the type
and amount of investments permitted, and prescribing minimum levels of
capital. The ability to continue an insurance business is dependent upon the
maintenance of the licenses in the various jurisdictions.
LNC's investment management companies in common with other investment advisors
are subject to regulation and supervision by the Securities and Exchange
Commission, National Association of Securities Dealers and the jurisdictions
of the states, territories and foreign countries in which they are admitted to
do business.
Because of the nature of the insurance and investment management businesses,
there is no single customer or group of customers upon whom the business is
dependent. Factors such as backlog, raw materials, patents (including
trademarks, licenses, franchises, and any other concessions held),
seasonality, or environmental impact do not have a material effect upon such
businesses. However, within LNC's Reinsurance segment, Lincoln National Risk
Management, Inc. does hold a patent for "The Method and Apparatus for
Evaluating a Potentially Insurable Risk" and markets multiple knowledge based
underwriting products which rely on this product. LNC does not have a
separate unit that conducts market research. Research activities related to
new products or services or the improvement of existing products or services
<PAGE> -5-
is completed by persons within the business segments. Expenses related to
such activities are not material. Also, sales are not dependent upon select
geographic areas. LNC has foreign operations which are significant in
relationship to the consolidated group (see note 9 to the consolidated
financial statements on page 63).
Liabilities for claims and claim expenses for the property-casualty
business segment are estimated at the end of each accounting period using
case-basis evaluations and statistical projections. These liabilities
include estimates for the ultimate cost of claims 1) which have been reported
but not settled and 2) which have been incurred but not yet reported. A
provision for inflation is implicitly considered in the estimated liability as
the development of the estimated liability is based on historical data which
reflects past inflation and on other factors which are judged to be
appropriate modifiers of past experience. Adjustments to previously
established estimates are reflected in current operating results along with
initial estimates for claims arising within the current accounting period.
A reconciliation of the beginning of year and end of year liability for claims
and claim expenses is included in this report as part of the financial
statements (see note 5 to the consolidated financial statements on page 50).
The liability for claims and claim expenses included in this report is shown
on a basis prescribed by generally accepted accounting principles ("GAAP").
Such liabilities differ from that reported to state insurance regulators. A
reconciliation of the GAAP liability and the corresponding liability reported
to state insurance regulators is as follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Liability reported to state insurance regulators --- $2,443.4 $2,532.1
Increase (decrease) related to:
Estimated salvage and subrogation recoveries ------- (37.1) (37.3)
Amount recoverable from reinsurers ----------------- 189.0 203.1
Other ---------------------------------------------- -- 4.6
Liability reported on a GAAP basis --------------- $2,595.3 $2,702.5
</TABLE>
The table on page 6 shows the development of the estimated liability for claim
and claim expenses for the ten year period prior to 1995. Each column shows
the liability as originally estimated and cumulative data on payments and re-
estimated liabilities for that accident year and all prior accident years,
making up that calendar year-end liability; and all amounts are reflected net
of reinsurance recoverable for all years. The resulting redundancy
(deficiency) is also a cumulative amount for that year and all prior years.
Conditions and trends that have affected the development of these liabilities
in the past may not necessarily recur in the future; therefore, it would not
be appropriate to use this cumulative history in the projection of future
performance.
<PAGE> -6-
<TABLE>
Analysis of Combined Property-Casualty Claims and Claim Expense Development.
December 31 (in millions)
<CAPTION>
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
Liability for unpaid claims and claim expenses, net of reinsurance
recoverable:
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$1,370 $1,730 $2,020 $2,372 $2,669 $2,246 $2,502 $2,673 $2,585 $2,499 $2,406
</TABLE>
<TABLE>
<CAPTION>
Liability re-estimated as of: (First column represents number of years later)
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,410 1,692 1,984 2,347 2,690 2,258 2,549 2,634 2,506 2,474 --
2 1,439 1,753 1,990 2,382 2,718 2,303 2,571 2,607 2,553
3 1,566 1,790 2,026 2,403 2,767 2,384 2,563 2,686
4 1,595 1,833 2,054 2,443 2,847 2,403 2,673
5 1,636 1,863 2,104 2,538 2,869 2,522
6 1,672 1,910 2,199 2,551 2,986
7 1,713 2,003 2,210 2,604
8 1,805 2,012 2,311
9 1,813 2,113
10 1,907
</TABLE>
<TABLE>
<CAPTION>
Cumulative redundancy (deficiency)
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(537) (383) (291) (232) (317) (276) (171) (13) 32 25 --
</TABLE>
<TABLE>
<CAPTION>
Change in cumulative amount
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
154 92 59 (85) 41 105 158 45 (7) (25)
</TABLE>
<TABLE>
<CAPTION>
Cumulative amount of liability paid through:
(First column represents number of years later)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 531 571 649 750 1,430* 809 839 849 728 689 --
2 842 935 1,012 1,650* 1,862 1,253 1,325 1,294 1,156
3 1,036 1,160 1,568* 1,875 2,088 1,542 1,596 1,581
4 1,177 1,508* 1,700 1,996 2,255 1,709 1,796
5 1,390* 1,593 1,776 2,095 2,355 1,839
6 1,450 1,647 1,840 2,154 2,439
7 1,488 1,694 1,877 2,157
8 1,525 1,721 1,914
9 1,546 1,751
10 1,571
*Includes the release of reserves for National Reinsurance Corporation due to
the sale of that company during April 1990. The reserves released for LNC's
period of ownership of National Re were $139 million, $241 million, $386
million, $526 million and $665 million in 1985, 1986, 1987, 1988 and 1989,
respectively.
</TABLE>
Item 2. Properties
LNC and the various Fort Wayne operating businesses owned or leased
approximately 1.4 million square feet of office space in the Fort Wayne area.
The operating businesses in Indianapolis, Indiana; Oakbrook Terrace, Illinois;
Philadelphia, Pennsylvania; and Uxbridge and Gloster, England owned or leased
another 1.3 million square feet of office space. In addition, branch offices
owned or leased for all of the operating businesses referenced above as well
as the space for some smaller operations total approximately 1.8 million
square feet. The square feet of office space utilized for this third group
will be reduced by approximately 750,000 square feet over the next few years
due to the consolidation of operating offices within the Property-Casualty
segment (see note 11 to the consolidated financial statements on page 65). As
shown in the notes to the consolidated financial statements (see note 7 to the
consolidated financial statements on page 57), the rental expense on operating
leases for office space and equipment for continuing operations totaled $65.6
million for 1995 of which $57.3 million was for office space. This discussion
regarding properties does not include information on investment properties.
<PAGE> -7-
Item 3. Legal Proceedings
LNC and its subsidiaries are involved in various pending or threatened legal
proceedings arising from the conduct of their business. In some instances,
these proceedings include claims for punitive damages and similar types of
relief in unspecified or substantial amounts in addition to amounts for
alleged contractual liability or requests for equitable relief. After
consultation with counsel and a review of available facts, it is management's
opinion that these proceedings ultimately will be resolved without materially
affecting the consolidated financial statements of LNC.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of 1995, no matters were submitted to security
holders for a vote.
PART II
<TABLE>
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Stock Market and Dividend Information
<CAPTION>
Common Stock Data: (per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
1995 Data:
<S> <C> <C> <C> <C>
High -------------------------------- $41.375 $46.250 $47.250 $53.750
Low --------------------------------- 34.625 39.875 38.750 42.625
Dividend declared ------------------- $.43 $.43 $.43 $.46
1994 Data:
High -------------------------------- $44.375 $43.875 $43.750 $39.250
Low --------------------------------- 38.375 36.750 35.500 34.625
Dividend declared ------------------- $.41 $.41 $.41 $.43
<FN>
Notes:
<F1>
1. At December 31, 1995, the number of shareholders of record of LNC's
common stock was 13,810.
<F2>
2. The payment of dividends to shareholders is subject to the restrictions
described in notes 5, Supplemental Financial Data, and 7, Restrictions,
Commitments and Contingencies to the consolidated financial statements (see
pages 51 and 56, respectively) and is discussed in the Management's Discussion
and Analysis of Financial Condition (see page 32).
<F3>
Exchanges: New York, Chicago, Pacific, London and Tokyo.
<F4>
Stock Exchange Symbol: LNC
</TABLE>
Dividend Guideline:
The dividend on LNC's common stock is determined each quarter by the
Corporation's Board of Directors. The Board takes into consideration the
financial condition of the Corporation, including current and expected
earnings, projected cash flows and anticipated financing needs. The Board
also considers the ability to maintain the dividend through bad times as well
as good so that the dividend would need to be reduced only under unusual
circumstances. One guideline that the Board has found useful is to consider a
dividend approximately equal to five percent of the book value per share with
such book value computed excluding the impact of marking its securities
available-for-sale to fair value.
<PAGE> -8-
<TABLE>
Item 6. Selected Financial Data
<CAPTION>
(Millions of dollars, except per share data)
Year Ended December 31 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total revenue (1) -------------- 6,633.3 6,179.9 7,392.8 7,267.7 8,181.8
Income before cumulative effect
of accounting change (2) ------ 482.2 349.9 415.3 359.2 201.9
Net income (2) ----------------- 482.2 349.9 318.9 359.2 201.9
Per Share Information:
Income before cumulative
effect of accounting
change (2) ------------------ $4.63 $3.37 $4.06 $3.86 $2.23
Net income (2) --------------- $4.63 $3.37 $3.12 $3.86 $2.23
Common stock dividend (2) ---- $1.75 $1.66 $1.55 $1.475 $1.385
December 31 1995 1994 1993 1992 1991
Assets (1) and (2) ------------ 63,257.7 48,864.8 47,825.1 39,042.2 33,660.3
Long-term debt ---------------- 659.3 474.2 422.2 489.8 284.7
Shareholders' equity (2) ------ 4,378.1 3,042.1 4,072.3 2,826.9 2,655.8
Market value of
common stock (2) ------------- $53.75 $35.00 $43.50 $37.00 $27.37
<FN>
Notes to Select Financial Data:
<F1>
(1) Total revenue and assets for the years 1991-1994 includes
reclassifications to conform to the 1995 presentation (see note 2 to the
consolidated financial statements on page 44).
<F2>
(2) Factors affecting the comparability of income before cumulative effect of
accounting change and net income for the 1991-1995 period are shown below
(see "Supplemental Data"). Assets and shareholders' equity as of
December 31, 1995, 1994 and 1993 include the effect of carrying
securities available-for-sale at their fair values (see Consolidated
Statements of Shareholders' Equity on page 37). Per share amounts were
affected by the issuance in May 1991 and February 1993 of 2,216,454
shares of Series F preferred stock and 9,200,000 shares of common stock,
respectively, and the retirement of 500,000 shares of common stock in
November 1994.
<F3>
(3) For other factors affecting comparability see the review of operations for
each segment.
</FN>
</TABLE>
<TABLE>
Supplemental Data
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income from operations* -------------- $306.5 $389.8 $343.5 $240.6 $177.7
Realized gain (loss) on investments,
net of related amortization
and taxes --------------------------- 136.4 (88.7) 170.3 118.6 113.3
Gain (loss) on sale of affiliates/
operating property, net of taxes ---- 39.3 48.8 (98.5) -- (89.1)
Cumulative effect of accounting
change (postretirement benefits) ---- -- -- (96.4) -- --
Net Income ------------------------ $482.2 $349.9 $318.9 $359.2 $201.9
<FN>
<F1>
*Income from operations is defined as "Net Income" less realized gain (loss)
on investments, gain (loss) on sale of affiliates/operating property and
cumulative effect of accounting change, all net of taxes.
</FN>
</TABLE>
<PAGE> -9-
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The pages to follow review LNC's results of operations and financial condi-
tion. Historical financial information is presented and analyzed. Where
appropriate, factors that may affect future financial performance are
identified and discussed. Actual results could differ materially from those
indicated in forward-looking statements due to, among other specific changes
currently not known, subsequent significant changes in: the company (e.g.
acquisitions and divestitures), financial markets (e.g. interest rates and
securities markets), legislation (e.g. taxes and product taxation),
regulations (e.g. insurance and securities regulations), acts of God (e.g.
hurricanes, earthquakes and storms), other insurance risks (e.g. policyholder
mortality and morbidity) and competition.
On pages 10 through 19, the financial results of LNC's four business segments
and other operations are presented and discussed. Within these business
segment discussions, reference is made to "Income from Operations" (see
definition in Item 6 above). Pages 20 through 32 discuss factors that have
affected specific elements of the consolidated financial statements as well as
information pertaining to LNC as a whole.
This "Management's Discussion and Analysis of Financial Condition and Results
of Operations" should be read in conjunction with the audited financial
statements, including the notes thereto, presented on pages 34 through 66.
<PAGE> -10-
<TABLE>
Review of Operations: Life Insurance and Annuities
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Lincoln Life/First Penn - Annuities - $149.3 $120.0 $ 96.5 $ 73.9 $ 45.5
Lincoln Life - Pensions ------------- 22.1 22.4 30.6 15.5 12.8
Lincoln Life/First Penn - Insurance - 31.1 34.2 37.8 46.8 31.5
Lincoln Life - Disability Income ---- (18.3) (14.9) 3.5 (19.6) (1.6)
Lincoln National (UK) --------------- 45.9 17.2 11.8 9.2 14.3
American States Life ---------------- 13.0 12.4 12.1 11.1 10.2
Security-Connecticut Life ----------- -- -- 16.6 21.4 16.7
Other ------------------------------- 8.5 (5.5) (33.6) (7.4) (11.4)
Income from Operations* ----------- 251.6 185.8 175.3 150.9 118.0
Realized Gain (Loss) on Investments** 83.1 (91.7) 59.3 -- --
Gain (Loss) on Sale of Affiliates/
Operating Property ----------------- (.6) -- -- -- --
Net Income* ----------------------- $334.1 $ 94.1 $234.6 $150.9 $118.0
</TABLE>
<TABLE>
<CAPTION>
December 31 (in billions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Account Values:
Lincoln Life/First Penn - Annuities -$30.316 $24.604 $20.923 $16.327 $12.362
Reinsurance Ceded - Annuities ------- (1.778) (1.536) (.690) (.207) --
Lincoln Life - Pensions ------------- 8.011 7.409 6.972 6.267 5.510
Lincoln Life/First Penn - Universal
and Variable Life Insurance -------- 2.629 2.392 2.207 1.988 1.791
American States Life ---------------- .317 .286 .255 .217 .178
Total U.S. Account Values --------- 39.495 33.155 29.667 24.592 19.841
Lincoln National (UK) - Unit-Linked-- 4.307 1.320 1.235 .652 .669
Total Account Values --------------$43.802 $34.475 $30.902 $25.244 $20.510
<FN>
<F1>
*Income from operations and net income of the annuities and pension sub-
segments for 1993 include the impact of a change in estimate of net
investment income (see note 2 to the consolidated financial statements on
page 43).
<F2>
**Prior to 1993, all realized gain (loss) on investments was included in
Other Operations. Realized gain (loss) on investments for 1993 includes the
effect of a change in accounting for the impairment of mortgage loans (see
note 2 to the consolidated financial statements on page 43).
</FN>
</TABLE>
The Life Insurance and Annuities segment reported its sixth consecutive year
of record earnings in 1995. Income from operations increased 35% to $251.6
million, compared with $185.8 million in 1994. This growth was produced
through a combination of expanded annuity business in the United States and
acquisitions in the United Kingdom.
Profile
The Life Insurance and Annuities segment is composed of the direct operations
of Lincoln National Life ("Lincoln Life"), Lincoln National (UK) plc, First
Penn-Pacific ("First Penn") and American States Life.
Lincoln Life is the 11th largest life insurer in the United States as
measured by assets (Best's Review, Life-Health Edition, October 1995).
Lincoln Life is in the midst of a transformation process to better serve four
target markets: small-to-medium-sized businesses; not-for-profit
organizations; retirees with investable assets; and individuals with high net
worth. The transformation process, expected to be completed by the end of
1997, is designed to create major improvements in service, products and
expense levels.
Lincoln National (UK) is the 12th largest unit-linked life insurer in the
United Kingdom as measured by 1994 premiums of those companies writing
predominantly unit-linked life and pension business (Money Management, June
1995). Unit-linked business is comparable to variable life policies in the
United States.
First Penn is a mid-sized insurance company with specialized skills in
customizing interest-sensitive products. It also has expertise in term life
insurance. First Penn complements Lincoln Life's operations by meeting needs
<PAGE> -11
in niche financial services markets. American States Life serves the income
protection needs of individuals who are clients of independent agencies
associated with American States Insurance Company, LNC's property-casualty
affiliate.
Varied Distribution
Breadth of distribution sets the Life Insurance and Annuities segment apart
from the competition. Many life insurers rely largely upon a single
distribution channel. However, the four companies in the Life Insurance and
Annuities segment offer products through a varied distribution system that
includes career agents, independent agencies, insurance brokers, banks,
stockbrokers and financial planners in the U.S. and, in the U.K., a direct
sales force and tied agents.
Lincoln Life's broad range of asset accumulation and income protection
products are sold in 49 states through approximately 1,900 career agents,
18,500 insurance brokers and more than 52,000 stockbrokers and financial
planners. The product portfolio includes: fixed and variable annuities;
term, universal and variable universal life insurance; long-term care
coverage; and 401(k) plans.
Lincoln Life is strongly committed to growing its career agent system,
Lincoln Financial Group. The career agent system is supported by 38 regional
offices housing market specialists easily accessible to the career agent sales
force. Each office is essentially a "home office in the field." A good
measure of Lincoln Life's reputation as a "career shop" is its attractiveness
to seasoned agents. More than 50% of the agents recruited by Lincoln Life
each year have prior experience as agents.
First Penn sells universal life, universal life with long-term care riders,
term life and fixed annuities through banks, savings and loans,
broker/dealers, stockbrokers and financial planners. Five thousand
independent property-casualty agencies offer the universal and term life
coverage and annuity products of American States Life. Lincoln National (UK)
sells life, investment, income protection and retirement planning products
through approximately 1,800 direct sales representatives and tied agents. Its
sales force is the sixth largest among life insurers in the United Kingdom
(Money Management, July 1995).
Annuities
The combined annuity earnings of Lincoln Life and First Penn grew 24% to a
record $149.3 million in 1995. At the heart of this growth was a 23%
increase in annuity account values, which reached more than $30 billion at
the end of the year. Lincoln Life and First Penn amassed $3.7 billion in new
annuity deposits in 1995, a 16% decrease from 1994. The decrease is
attributable to intense competition in the financial institutions sector.
Lincoln Life's career agents produced 45% of its new annuity deposits in
1995. Stockbrokers and financial planners generated 41% and continue to be
the company's dominant distributors of variable annuities. Deposits through
stockbrokers hit new highs, with substantial increases in the fourth quarter,
as the stock market thrived in 1995. Distribution through banks and other
financial institutions produced 14% of annuity deposits. According to the
most recent statistics available, Lincoln Life was the nation's leading writer
of individual fixed annuities and the third largest writer of individual
variable annuities in 1994 (Best's Policy Reports, July 1995).
Pensions
Lincoln Life's 401(k) sales continued a dramatic series of strong annual
increases. 401(k) account values grew 35% annually from 1990 to 1994 and
were up another 30% in 1995. Total 401(k) deposits were up 37% over the
previous year. This marked increase in volume has put extreme pressure on
service capacity. The need to rapidly build more service capacity has put
temporary pressure on 401(k) profits. The remainder of Lincoln Life's
pension operations in 1995 consisted of guaranteed interest contracts (GICs)
and group pension annuities (GPAs). Lincoln Life announced in the third
quarter of 1995 that it would cease writing GICs and GPAs because neither fit
its sharper focus in the retirement planning market.
U.S. Life Insurance
Income from life insurance operations of Lincoln Life and First Penn was
$31.1 million, a slight decrease from 1994. Lincoln Life's and First Penn's
combined universal and variable universal life account values increased 10% in
<PAGE> -12-
1995 to $2.6 billion. Variable universal life continues to represent an
increasing portion of new sales. First Penn introduced a new term life
product in July 1995. In the first quarter of 1996, Lincoln Life introduced a
term life product administered by First Penn. Term life is expected to
produce a growing share of new sales. American States Life reported earnings
of $13.0 million on life insurance and annuity operations in 1995, a slight
increase from 1994 earnings. Account values were up 11% to $317 million.
Lincoln National (UK)
Income from operations for Lincoln National (UK) advanced to $45.9 million in
1995, from $17.2 million in 1994. This growth was generated by the
acquisitions of Liberty Life Assurance Co. Ltd. and Laurentian Financial Group
plc and the successful initial steps to integrate these two companies with
existing operations. A primary goal in 1996 is to complete the integration.
Operating efficiencies are already apparent. The three separate companies
budgeted a total of $210 million for operating expenses in 1995. The merged
companies have budgeted $120 million for 1996, a reduction of 43%. A
substantial portion of these savings were realized in 1995.
Disability Income
In 1995, Lincoln Life reached a decision to stop writing disability income
coverage on a direct basis effective March 31, 1996. Lincoln Life has
entered into an agreement with Provident Life and Accident Insurance Company
("Provident") to make Provident's disability income insurance products
available to Lincoln Life agents and brokers. Provident is a recognized
leader among individual disability income insurers. LNC's reinsurance
operation will be administering the disability income business previously
written on a direct basis.
Outlook
In the first quarter of 1996, Lincoln Life announced an agreement to acquire
the group tax-sheltered annuity business of two UNUM Corporation affiliates.
The acquisition will boost Lincoln Life's total annuity account values by
approximately $3 billion, or about 10%. The transaction, subject to
regulatory approval, is expected to be completed by late summer. Lincoln Life
looks forward to continued sales growth in 401(k) plans, variable life
insurance and fixed and variable annuities in 1996. Lincoln Life anticipates
earnings growth in 1996, despite higher expenses in the short-term related to
its transformation process. Lincoln National (UK) is well-positioned for
long-term earnings growth in what, by U.S. standards, is an underserved life
insurance and pension market.
<TABLE>
Review of Operations: Reinsurance
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Individual and Group Markets ------- $54.8 $50.2 $44.2 $44.4 $22.7
International Markets -------------- 13.8 12.8 9.9 4.5 5.6
Financial Reinsurance -------------- 10.2 15.5 20.5 16.3 14.4
Other ------------------------------ .7 (1.9) (1.7) .4 (1.5)
Income from Operations,
excluding Disability Income ----- 79.5 76.6 72.9 65.6 41.2
Disability Income* ----------------- (132.2) (10.0) (54.0) (7.3) (8.2)
Income from Operations* ---------- (52.7) 66.6 18.9 58.3 33.0
Realized Gain (Loss) on Investments** 10.7 .5 (1.6) -- --
Net Income (Loss)* --------------- $(42.0) $67.1 $17.3 $58.3 $33.0
Sales and In-Force
Individual Life Sales (in billions) $22.7 $19.9 $17.3 $14.0 $17.0
December 31 (in billions) 1995 1994 1993 1992 1991
Life Insurance In-Force ------------ $142.8 125.6 $118.0 $113.6 $102.2
<FN>
<F1>
*Income from operations and net income for 1995 and 1993 include the impact
of a change in estimate of the reserve level needed for LNC's
disability income business (see note 2 to the consolidated financial
statements on page 44).
<F2>
**Prior to 1993, all realized gain (loss) on investments was included in
Other Operations.
</FN>
</TABLE>
<PAGE> -13-
The Reinsurance segment is conducted through Lincoln National Reinsurance
Companies ("LNRC").
LNRC's reported income from operations, absent a fourth quarter charge against
earnings related to LNC's direct and reinsurance disability income business,
increased 3.5% to $68.9 million in 1995. Including the disability income
reserve strengthening of $121.6 million, after-tax, LNRC reported a loss from
operations of $52.7 million in 1995.
Profile
LNRC is the leading life-health reinsurer worldwide, based on net premium
income (Swiss Re, Economic Studies, June 1995). In 1995, LNRC reported to
regulatory authorities consolidated, worldwide net premium income of $2.9
billion, a 21% increase over 1994.
However, a full appreciation of the segment's standing among reinsurers
cannot be gleaned from financial reports alone. LNRC does not compete on the
basis of price. Nor does it peg its stature on its position as the net
premium income leader. Rather, LNRC seeks to understand the unique risk
management needs of each of its customers. It designs plans for risk
transfer and capital management that build long-term partnerships with client
companies. LNRC has the depth of expertise necessary to deal with
complexities and craft creative solutions that assist clients in meeting
their business goals. Simply stated, LNRC delivers value. Strengths in
knowledge management and product development, as well as a sharp customer
focus and innovative alliances with service providers, combine to provide
value.
Disability Income
LNC took a series of decisive actions related to its disability income
insurance business in 1995. In August, LNC announced Lincoln Life's
withdrawal from the difficult direct market for disability income coverages.
The withdrawal took effect in early 1996. In November, LNC announced that: 1)
the block of disability income business written on a direct basis would be
consolidated within LNRC's disability income operations to take advantage of
the Reinsurance segment's expertise in both risk and claims management; and 2)
it would take a charge against earnings of $121.6 million, after-tax, in the
fourth quarter to strengthen reserves related to its direct and reinsurance
individual disability income business.
Although it is extremely selective in its underwriting, LNRC remains in the
disability income reinsurance marketplace. Moreover, LNRC is a source for
"best practices" to help client companies improve their disability income
results. In this way, LNRC's research capability is leveraging knowledge
throughout the insurance industry.
Knowledge Management
Another prominent instance of such leveraging is the wide utilization of
underwriting manuals developed by LNRC. In a very real sense, LNRC "wrote
the book" on life and health risk selection. These manuals assist
underwriting decisions at approximately 500 U.S. and Canadian life and health
insurers.
Additionally, LNRC's patented Life Underwriting System ("LUS") was licensed to
5 more life insurance carriers in 1995, bringing the number of LUS licensees
to 49. LUS, a state-of-the-art risk management technology, provides decision
support to underwriters. Carriers licensed on LUS issue one-quarter of the
normally underwritten life insurance policies in the United States and one-
half of all such life policies in Canada. Virtually every case underwritten
by LNRC in 1995 was processed on LUS, significantly speeding the turnaround
time for those policies that required individual reinsurance underwriting.
<PAGE> -14-
Individual and Group Markets
Superior customer service, particularly the information flow provided by LUS,
differentiates LNRC in the increasingly competitive individual and group
markets. LNRC enjoyed especially strong operating results of $54.8 million in
these markets in 1995, the fourth consecutive year of favorable mortality and
morbidity. Individual life sales volume, as measured by face amount of new
business, grew 14% to $22.7 billion. LNRC's annualized premium in the group
market remained essentially flat in 1995.
International Markets
International markets have been an area of recent growth for LNRC. Income
from operations increased 8% in 1995 to $13.8 million, and several steps were
taken to position LNRC for future growth worldwide. LNRC signed a memorandum
of understanding with an Indonesian reinsurer and entered into an agreement to
be represented by an individual life underwriting office in Tel Aviv. A
London office was opened to provide personal accident underwriting and
administrative services worldwide. LNRC pursues a niche marketing strategy
globally, developing partnerships and alliances as new opportunities are
identified.
Financial Reinsurance
Financial reinsurance continues to contribute strong earnings to LNRC,
generating $10.2 million in 1995. LNRC's largest financial reinsurance
agreement in 1995 involved transfer of more than $500 million of assets and
reserves to LNRC. The agreement exposes LNRC to limited underwriting risk
while offering an opportunity for a significant profit on investment results.
Financial reinsurance opportunities are evolving as the direct marketplace
shifts its emphasis to asset accumulation products. A notable synergy has
developed between LNRC and LNC's newly formed Investment Management segment.
LNRC is well-positioned, in cooperation with Lincoln Investment Management, to
provide comprehensive solutions to annuity writers seeking assistance in
managing investments, risk and capital.
Service-Provider Alliances
LNRC has alliances with nearly three dozen entities that are not life or
health insurers, such as medical equipment suppliers, direct marketing
organizations, electronic information providers and specialty vendors
servicing variable life and annuity business. These service-provider
alliances, unique among reinsurers, enable LNRC to fashion creative solutions
for its traditional client base of insurance companies in the U.S. and select
international markets, health maintenance organizations and self-funded
employer groups.
Distribution
Account executives and sales specialists acting in a consultative role are
the key distributors of LNRC products. LNRC also accepts business from
reinsurance intermediaries in select specialty markets.
Outlook
LNRC will concentrate on revenue growth in 1996 through a multiplicity of
strategies in all of its markets. General strategies include: alliances for
new products in individual markets; an emphasis on increased market share and
the promotion of non-medical products in group markets; revenue growth through
target marketing internationally; and continued attention to opportunities
related to the popularity of asset accumulation products in the direct
marketplace.
<PAGE> -15-
<TABLE>
Review of Operations: Property-Casualty
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Underwriting Loss:
Personal Insurance -------------- $(21.2) $(30.2) $(13.5) $(31.8) $(56.7)
Commercial Insurance ------------ (26.9) (19.5) (68.2) (133.3) (102.1)
Reinsurance --------------------- -- -- -- -- (12.8)
Investment Income ----------------- 200.7 208.5 217.0 242.4 229.6
Other ----------------------------- -- -- (1.4) .3 1.2
Income from Operations ---------- 152.6 158.8 133.9 77.6 59.2
Realized Gain on Investments* ----- 32.1 12.8 91.8 -- --
Loss on Sale of Affiliates/
Operating Property --------------- (18.4) -- -- -- --
Net Income ---------------------- $166.3 $171.6 $225.7 $ 77.6 $ 59.2
Catastrophe Losses $80.3 $71.9 $ 58.3 $106.9 $ 61.8
Combined Loss and Expense Ratios**
Personal Insurance --------------- 104.8% 107.8% 103.0% 105.5% 111.8%
Commercial Insurance ------------- 105.0% 104.4% 110.3% 116.5% 111.0%
Reinsurance ---------------------- -- -- -- -- 124.3%
Consolidated Combined Ratio ------ 104.9% 105.7% 107.5% 112.7% 111.9%
Consolidated Combined Ratio
Excluding Catastrophe Losses --- 100.1% 101.5% 104.3% 107.6% 109.1%
<FN>
<F1>
*Prior to 1993, all realized gain (loss) on investments was included in
Other Operations.
<F2>
**The combined loss and expense ratio is the ratio of losses and loss expenses
to earned premiums plus the ratio of underwriting expense to premiums
written.
</FN>
</TABLE>
LNC's Property-Casualty segment consists primarily of American States
Insurance Company ("American States").
Absent a special charge for the realignment of American States' field
structure, the Property-Casualty segment reported income from operations of
$166.3 million in 1995. This was a 5% increase over the previous year's
strong earnings.
The results were particularly impressive considering the frequency and
severity of U.S. insured property losses in 1995, the third costliest year on
record in terms of weather-related property damage. American States' incurred
loss for Hurricane Opal, the single most destructive weather event of 1995,
was limited to $15.0 million of Opal's estimated $2.1 billion total insured
property damage.
The Property-Casualty segment's total net written premium was essentially
flat in 1995, following decreases in the years from 1991 to 1994. Net
investment income contributed $200.7 million to the segment's income from
operations, a slight decline from 1994.
Profile
American States offers a broad spectrum of personal and commercial lines
property-casualty insurance throughout the United States. The company's
market focus is on providing commercial insurance to small-to-medium-sized
businesses and preferred personal lines coverages to individuals. Its
greatest concentration of business and market share is in the Midwest and
Northwest. Headquartered in Indianapolis, American States is the 30th largest
property-casualty insurer in the U.S. (A.M. Best Aggregates & Averages, 1995).
Distribution
American States has strong, long-term relationships with nearly 5,000
independent local agencies. On average, these agencies have maintained
relationships with the company for more than 10 years. American States views
its policyholders as "shared customers" with the agencies.
Realignment
In November 1995, American States announced a realignment of its field
structure designed to reduce expenses and enhance growth. Under the
realignment, American States will continue to provide sales, claims and
<PAGE> -16-
technology support services from approximately 225 locations. However, over
the next two years, management of those functions and most of the
underwriting will be moved from 20 division offices to four regional offices.
Additionally, American States has created 24 field executive positions to
maintain and enhance its working relationships with its agencies.
LNC's income from operations for 1995 includes a one-time special charge of
$13.7 million, after-tax, related to the realignment of American States'
division offices.
Combined Ratio
The Property-Casualty segment's combined ratio improved for the third
straight year to 104.9%, compared with 105.7% in 1994. Absent the special
charge, the combined ratio for 1995 was 103.6%. Catastrophes contributed 4.8
points to the combined ratio in 1995, compared with 4.2 points in 1994.
Personal Lines
Personal lines business represented 41% of the Property-Casualty segment's
total net written premiums for 1995. The personal lines underwriting loss
was $21.2 million in 1995, with a $9.0 million improvement in underwriting
income over 1994. The combined ratio in personal lines improved 3 points for
the year to 104.8%. Catastrophe losses for personal lines business were
somewhat lower in 1995 than in 1994.
Preferred private passenger automobile and homeowners' coverage comprise 80%
of American State's personal lines business. Private passenger auto insurance
results continued to improve. Homeowners' earnings showed some improvement
due to better pricing, but this business remains unprofitable. American
States will focus on writing more private passenger auto business, but will
take a cautious and conservative approach to homeowners coverage.
Commercial Lines
Commercial lines business represented 59% of the Property-Casualty segment's
total net written premiums for 1995. The commercial lines combined ratio
increased to 105.0% in 1995, up from 104.4% in 1994. However, the combined
ratio excluding catastrophes was nearly a full point better than 1994.
Commercial lines had a $26.9 million after-tax underwriting loss in 1995,
compared with a $19.5 million loss in 1994.
American States targets small-to-medium-sized businesses engaged in retail,
wholesale, service, contracting and other trades. American States'
commercial lines business includes a relatively low concentration of
manufacturing and industrial operations.
Profit Improvement Program
Since embarking on a profit improvement program in 1991, American States has
repositioned its premium base to emphasize lines and geographic areas that
have greater potential for profitability. American States' premium volume
decreased 16% from 1991 to 1995, with a positive impact on the segment's
combined ratio and underwriting income. The Property-Casualty segment's
combined ratio has improved 7 points since 1991, while underwriting income has
improved by nearly $124 million.
Automation Edge
American States is one of the few property-casualty insurers to fully
automate policy production in both personal and commercial lines. The
result: It's easier and more economical for an agent to do business with
American States. The company uses knowledge-based systems in its claims
operation and is implementing knowledge-based underwriting systems in its
personal lines business. American States also is developing knowledge-based
applications for selected commercial lines business. The company's strides in
automation are enabling it to consolidate offices and more effectively
facilitate decision-making.
Outlook
American States is prepared to broaden its position in commercial and
personal lines in 1996. It will focus on the Midwest and Northwest, where
its business is most profitable. Additionally, American States will target
marketing efforts in other states where the company's presence and a
favorable environment give it potential for additional profitable growth.
Finally, American States will continue to pursue reductions in operating
expenses as its primary strategy to lower its combined ratio.
<PAGE> -17-
<TABLE>
Review of Operations: Investment Management*
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Investment Advisory Fees-External -- $139.6 $ -- $ -- $ -- $ --
Investment Advisory Fees-Internal -- 42.8 -- -- -- --
Income from Operations ------------- $14.7 $ -- $ -- $ -- $ --
Realized Gain on Investments ------- 4.3 -- -- -- --
Net Income ----------------------- $19.0 $ -- $ -- $ -- $ --
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31 (in billions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Assets Managed
Assets Managed-Internal ----------- $56.278 $42.315 $42.873 $34.909 $29.737
Assets Managed-External:
Institutional-Fixed ------------- 7.720 6.284 3.485 2.657 3.015
Institutional-Equity ------------ 20.996 17.880 18.487 17.093 17.322
Mutual Funds-Fixed -------------- 4.995 4.877 5.309 4.587 3.897
Mutual Funds-Equity ------------- 4.906 3.957 4.370 3.670 3.489
Total Assets Managed ---------- 94.895 75.313 74.524 62.916 57.460
Assets Managed by Non-LNC
Affiliates ----------------------- (12.961) (9.447) (9.875) (6.711) (4.501)
Assets Managed by Lincoln
National (UK) -------------------- (5.375) (1.571) (1.503) (.783) (.808)
Total Assets Under Management -
Investment Management Segment $76,559 $64,295 $63.146 $55,422 $52.151
<FN>
*This segment was added in April 1995 following the acquisition of Delaware
Management Holdings, Inc. (see note 11 to the consolidated financial
statements on page 65). Prior to April 1995, LNC's Investment Management
results, which were not material to LNC's consolidated operations, were
included in Other Operations. Assets managed shown above includes data for
Delaware Management Holdings, Inc. prior to the April 1995 acquisition.
</FN>
</TABLE>
Investment Management, conducted through Lincoln National Investment
Companies ("LNIC"), reported income from operations of $14.7 million in 1995.
LNC has reported Investment Management as a separate business segment since
April 1995.
Profile
Although newly established as a distinct business segment, investment
management has long been an expertise within LNC. Widely respected as an
insurance risk manager, LNC has made a long-term commitment to expand its
role in the financial services industry. The establishment of Investment
Management as LNC's fourth business segment is a strategic milestone in
meeting LNC's objective to become a top-tier company in the financial
services business.
LNIC is the holding company for the four companies that comprise the
Investment Management segment. These companies are: Lincoln Investment
Management, Inc.; Delaware Management Holdings, Inc. ("Delaware"); Lynch &
Mayer, Inc. and Vantage Global Advisors, Inc. Lincoln Investment Management
is a fixed-income specialist, while the others focus primarily on equities.
Complementary Approaches
All four companies operate autonomously and are encouraged to preserve their
distinctive investment styles and strengths. Their diversity of skills,
styles and cultures serves to balance the segment's investment performance and
operating results. The breadth of complementary investment styles employed by
our investment companies is a prudent way to diversify risks, especially in
today's sometimes uncertain and volatile investment markets.
Lincoln Investment Management, based in Fort Wayne, Ind., is the investment
advisor for LNC's insurance operations and is best known as a manager of
fixed-income assets for insurance and pension clients. Lincoln Investment
Management specializes in fixed-income investments including public and
private debt, real estate debt and equity and asset/liability management.
Delaware, headquartered in Philadelphia, is best known for a conservative
value investment style that focuses on stocks with above-average dividend
yields. Delaware is also recognized for its small-cap and mid-cap growth
<PAGE> -18-
investment styles and expertise in municipal and high-yield bonds. Delaware's
London operation, which reported asset growth of 36% in 1995, adds to the
international expertise of LNIC.
Lynch & Mayer, based in New York City, pursues a growth investment style.
Vantage Global Advisors, also based in New York, employs a proprietary
quantitative model.
Assets Under Management
Seen as a whole, LNC's new segment already holds a significant presence in
the investment management industry, especially in the institutional sector.
Combined assets under management exceed $76 billion, placing LNIC among the
largest investment managers in the United States. Domestic institutional
assets represent 83% of the total. Domestic retail mutual fund assets account
for 13%. International equity and global bond assets managed by Delaware in
London represent 4%.
Distribution
Multiple distribution channels enable LNIC to deliver a broad range of
products to an expanding community of retail and institutional investors.
Retail mutual funds are marketed through insurance agents, regional and
national broker/dealers, financial planners and banks. Institutional products
are sold primarily through pension consultants and directly to defined benefit
and defined contribution plan sponsors, endowments, foundations and insurance
companies. Expanding and selectively integrating the Investment Management
segment's distribution networks is viewed as vital to achieving benchmark
growth and service.
Investment Performance
The complementary blend of styles contributed to LNIC's solid investment
performance in its debut year. The composite returns of Vantage Global
Advisors and Delaware scored in the top quartile of their peer groups of
equity managers. The Delaware mutual funds experienced several ranking
upgrades in 1995. They now include five retail funds with a ranking of four
or five stars from Morningstar, Inc., a service that assigns rankings from one
star at the lowest to five stars at the highest to mutual funds.
Lincoln Investment Management, LNIC's fixed-income advisor, had a composite
return of 21.1% in 1995. This return outpaced the 20.4% return for a
comparative index of corporate bonds and mortgage-backed securities.
Delaware's value style produced strong results in the core equity category --
a composite return of 37.3% that qualified as top-quartile performance as
measured by the Callan Value Universe. Delaware's international equity
composite return was 13.8%, which exceeded the 11.2% return for its
comparative MSCI EAFE Index. Vantage Global Advisors' growth and income
equity style delivered a 37.0% return, exceeding the 34.6% top quartile
performance of the Morningstar Growth and Income Index. This performance
earned Vantage Global Advisors a 10th-place ranking among 303 funds in the
Morningstar growth and income sector for 1995.
Total Return Philosophy
As the investment manager for the LNC family of insurance companies, Lincoln
Investment Management follows a "total return" investment philosophy. This
approach significantly differs from the "buy-and-hold" approach followed by
many insurance companies. A buy-and-hold investor seeks to maximize current
income by selecting assets with high nominal yields. As a total return
investor Lincoln Investment Management actively manages a broad range of asset
classes with an eye to optimizing total return on assets in conjunction with a
highly disciplined asset/liability management process. This approach also
creates a value-added advantage for LNC.
Outlook
Lincoln National Investment Companies will pursue three clear strategies to
achieve growth and long-term success: development of new products to meet the
needs of institutional and retail clients; capturing larger portions of
current target markets; and active exploration of synergies among LNIC's
autonomous entities and synergies with other LNC affiliates.
Growth in the retail mutual fund market is a priority. New product
introductions, consolidation of the Lincoln Advisor Funds with Delaware's
family of mutual funds, enhancing and expanding distribution relationships
and improving client service are just a few of the steps to achieve this
growth.
<PAGE> -19-
<TABLE>
Review of Other Operations:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Financial Results by Source
Earnings from Unconsolidated Affiliate $ 13.7 $ 14.8 $ -- $ -- $ --
Investment Management* --------------- .3 7.1 6.1 4.7 2.3
LNC Financing ------------------------ (52.7) (31.7) (26.7) (33.8) (34.2)
LNC Operations ----------------------- (19.5) (21.8) (22.3) (18.2) (16.3)
Other Corporate ---------------------- (1.5) (3.9) 4.0 (3.1) 11.8
Corporate Equity Investments --------- -- -- -- (36.6) (39.6)
Loss from Operations --------------- (59.7) (35.5) (38.9) (87.0) (76.0)
Realized Gain (Loss)
on Investments** -------------------- 6.2 (10.6) 19.8 118.6 113.3
Gain (Loss) on Sale of Affiliates/
Operating Property ------------------ 58.3 48.8 (98.5) -- (89.1)
Cumulative Effect of Accounting
Change (Postretirement Benefits) ---- -- -- (96.4) -- --
Net Income (Loss) ----------------- $ 4.8 $ 2.7 $(214.0) $ 31.6 $(51.8)
<FN>
<F1>
*Includes results through March 31, 1995. Activity subsequent to that date
was recorded within the "Investment Management" segment of business.
<F2>
**Prior to 1993, all realized gain (loss) on investments was included in
Other Operations.
</FN>
</TABLE>
The loss from operations shown above includes the earnings from LNC's
investment in an unconsolidated affiliate engaged in the employee life-health
benefits business (prior to the sale of this holding in October 1995, as
described in note 11 to the consolidated financial statements on page 65),
certain other operations that are not directly related to the business
segments and unallocated corporate revenues and expenses (i.e., corporate
investment income, interest expense on short-term and long-term borrowings,
and corporate overhead expenses).
Corporate interest expense included within the LNC financing line above was
more for 1995 than 1994 as the result of additions to long-term debt (see
liquidity and cash flow discussion on page 31).
Net income (loss) shown above for "Other Operations" includes the items
described above under loss from operations plus the cumulative effect of the
1993 accounting change for the consolidated group of companies related to
postretirement benefits, the gain (loss) on sale of affiliates/operating
property (see note 11 to the consolidated financial statements on page 65) and
certain realized gain (loss) on sale of investments.
<PAGE> -20-
REVIEW OF CONSOLIDATED OPERATIONS AND FINANCIAL CONDITION
<TABLE>
<CAPTION>
Summary Information Increase
(Decrease)
Year Ended December 31 (in millions) 1995 1994 1993 1995 1994
<S> <C> <C> <C> <C> <C>
Insurance premiums:
Life and annuity ---------------- $ 764.8 $ 908.9 $ 810.6 (16%) 12%
Health -------------------------- 810.2 1,005.2 1,795.4 (19%) (44%)
Property-casualty --------------- 1,678.9 1,710.6 1,841.4 (2%) (7%)
Insurance fees ------------------ 523.2 449.6 470.4 16% (4%)
Investment advisory fees -------- 138.6 -- --
Net investment income ----------- 2,285.7 2,011.3 2,146.5 14% (6%)
Equity in earnings of
unconsolidated affiliates ------ 12.4 14.7 -- (16%)
Realized gain (loss)
on investments ----------------- 215.6 (130.8) 268.4
Gain (loss) on sale of affiliates/
operating property ------------- 54.2 48.8 (98.5)
Other revenue ------------------- 149.7 161.5 158.6 (7%) 2%
Insurance benefits and expenses:
Life and annuity ---------------- 2,081.7 2,174.0 2,179.6 (4%)
Health -------------------------- 822.0 758.7 1,395.0 8% (46%)
Property-casualty --------------- 1,209.5 1,262.5 1,406.8 (4%) (10%)
Expenses:
Operating expenses -------------- 1,821.0 1,558.8 1,779.3 17% (12%)
Interest ------------------------ 72.5 49.5 44.3 47% 12%
Federal income taxes ------------ 144.4 26.4 172.5
</TABLE>
REVIEW OF CONSOLIDATED OPERATIONS
As indicated in the "Notes to Consolidated Financial Statements" (see note 11
to the consolidated financial statements on page 65), LNC completed the sale
of a life insurance subsidiary and the sale of 71% of its direct writer of
employee life-health coverages in 1994. As noted in the following "Review of
Consolidated Operations," these sales have affected the comparability of
select line items within the Consolidated Statements of Income.
Insurance Premiums
Life and annuity premiums decreased $144.1 million or 16% in 1995 compared
with 1994. This decrease is the net result of an increase in business volume
from the Reinsurance segment (9% increase) being more than offset by a
decrease in volume from the U.S. portion of the Life Insurance and Annuities
segment (10% decrease) and a decrease from the United Kingdom component of the
Life Insurance and Annuities segment (51% decrease). This decrease in the
United Kingdom component was the net result of 1) increases from the premiums
generated by the newly acquired U.K. companies (see note 11 to the
consolidated financial statements on page 65) and 2) decreases due to
modifying, on a prospective basis, the classification of premiums associated
with unit-linked transactions within Lincoln National (UK) to more closely
conform to the classification used for universal life transactions within the
U.S. operations. As noted below, there is a corresponding decrease in life
and annuity benefits. Prior period data was not reclassified because the
amounts involved are not material to consolidated revenue. Excluding the
impact of the subsidiaries sold in 1994 (see note 11 to the consolidated
financial statements on page 65), life and annuity premiums increased 22% in
1994. This increase was the result of increases in the volume of transactions
in the Life Insurance and Annuities segment and Reinsurance segment. Barring
the passage of unfavorable tax legislation that would eliminate the tax-advan-
tages for some of LNC's life and annuity products, LNC expects life and
annuity premium growth for its domestic operations in 1996. The UK operations
should also experience growth in 1996 due to the results of companies acquired
in 1995 being included for the entire year.
<PAGE> -21-
Excluding the impact of the subsidiary sold in 1994 (see note 11 to the
consolidated financial statements on page 65), LNC's health premiums increased
$97.5 million or 14% in 1995 and $126.4 million or 22% in 1994 as the result
of increased volumes of business in the Reinsurance segment.
Property-casualty premiums decreased 2% in 1995 and 7% in 1994. These
decreases were the result of reevaluating underwriting actions, focusing on
account selection, risk evaluation and the establishment of appropriate
premiums. The volume of premium that this segment will produce in 1996 is
dependent upon whether the pricing within the property-casualty insurance
market place allows price increases that are necessary to maintain and improve
profitability.
Insurance Fees
Insurance fees from universal life, other interest-sensitive life insurance
contracts and variable life insurance contracts increased $73.6 million or 16%
in 1995. Excluding the impact of a life subsidiary sold in 1994 (see note 11
to the consolidated financial statements on page 65), insurance fees increased
$83.4 million or 22% in 1994. The growth in fees from this business is
expected to continue in 1996.
Investment Advisory Fees
This line was added to the statements of income in the second quarter of 1995
following LNC's purchase of Delaware Management Holdings, Inc. (see note 11 to
the consolidated financial statements on page 65).
Net Investment Income
Net investment income increased $274.4 million or 14% in 1995 as the net
result of a 14% increase in mean invested assets and a decrease in the yield
on investments from 7.14% to 7.05% (all calculations on a cost basis). Net
investment income decreased $135.2 million or 6% in 1994. This is the net
result of a 4% increase in mean invested assets less the impact of the overall
yield on investments dropping from 7.93% to 7.14%. The increase in mean
invested assets for both years was the net result of increased volumes of
business in the Life Insurance and Annuities segment being partially offset by
reduced volumes of business in the Property-Casualty segment. In addition,
the net investment income for 1994 from the proceeds from subsidiaries sold
was less than the net investment income previously earned on the invested
assets held by the subsidiaries that were sold (see note 11 to the
consolidated financial statements on page 65).
Equity in Earnings of Unconsolidated Affiliates
This line was added to the statements of income in 1994 to report the
earnings from the remaining 29% ownership following LNC's sale of 71% of the
ownership of its primary writer of employee life-health benefit coverages (see
note 11 to the consolidated financial statements on page 65). Due to the
October 1995 sale of the 29% ownership in this company, the future activity
in this account will be minimal, as this holding represented the bulk of LNC's
unconsolidated affiliates (see note 11 to the consolidated financial
statements on page 65).
Realized Gain (Loss) on Investments
Realized gain (loss) on investments in 1995 and 1994 was $215.6 million and
$(130.8) million, respectively. The gain (loss) in 1995 and 1994 was $136.4
million and $(88.7) million, net of related amortization and taxes,
respectively. These gains and losses were the result of the sale of
investments, write-downs and provisions for losses. The losses in 1994 were
the result of net realized investment gains being more than offset by 1)
realized investment losses and 2) writedowns of security investments and
provisions for losses for mortgage loans and real estate. The investment
losses in 1994, primarily in the second and third quarters, were the result of
realizing investment losses to recover capital gains taxes paid in prior
years.
The write-downs of fixed maturity and equity securities in 1995 and 1994 were
recorded when the securities were deemed to have declines in value that were
other than temporary. The fixed maturity securities to which these write-
downs apply were generally of investment grade quality at the time of purchase
but, with the exception of interest only mortgage-backed securities, were
classified as "below investment grade" at the time of the write-downs.
Allowance for losses on mortgage loans on real estate, real estate and other
<PAGE> -22-
investments in 1995 and 1994 were established when the underlying value of the
property was deemed to be less than the carrying value. The amount of these
write-downs and provisions for losses is disclosed within the notes to the
accompanying financial statements (see note 3 to the consolidated financial
statements on page 45).
Gain (Loss) on Sale of Affiliates/Operating Property
In 1995, LNC recorded the gain on sale of the remaining 29% of the employee
life-health benefits company. Also in 1995, LNC recorded a provision for the
expected loss related to its decision to sell certain of its operating
properties used in its Property-Casualty segment. Finally, LNC recorded a
provision for the expected loss on the sale of an operating property used in
its Lincoln National (UK) operations. In 1994, LNC recorded a gain on the
sale of 71% of its interest in its primary writer of employee life-health
benefits. In 1993, LNC recorded a provision for loss on the sale of a life
insurance subsidiary. See note 11 to the consolidated financial statements on
page 65 for additional information.
Other Revenue
Other revenue decreased $11.8 million or 7% in 1995. This is the net result
of increases in the volume of transactions in the Life Insurance and Annuities
segment being more than offset by the absence of revenues from the investment
management companies that were recorded in this account until the start of the
new segment in the second quarter of 1995. Excluding the impact of the
subsidiaries sold in 1994, other revenue increased 16% in 1994, when compared
to 1993, as a result of increases in the volume of transactions in the Life
Insurance and Annuities segment.
Insurance Benefits and Expenses
Life and annuity benefit and settlement expenses in 1995 decreased $92.3
million or 4% when compared to 1994. This decrease is the net result of an
increase of 6% from the U.S. portion of the Life Insurance and Annuity segment
and decreases of 2% from the Reinsurance segment and 60% from the United
Kingdom component of the Life Insurance and Annuities segment. The decrease
in the United Kingdom component relates to the change in classification of
life and annuity premiums noted above. Excluding the impact of the life
subsidiary sold in 1994 (see note 11 to the consolidated financial statements
on page 65), life and annuity benefits and settlement expenses increased
$168.2 million or 8% in 1994 when compared to 1993. This increase was the
result of increased volumes of business in the Life Insurance and Annuities
segment. The increase in life and annuity benefits expense in 1996 is
expected to parallel the growth in life and annuity premiums.
Excluding the impact of the subsidiary sold in 1994 (see note 11 to the
consolidated financial statements on page 65), and the special addition to the
disability income reserves in 1995 (see note 2 to the consolidated financial
statements on page 44), health benefits increased $92.7 million or 17% in 1995
as the result of increased volumes of business in the Reinsurance segment and
Life Insurance and Annuities segment. Excluding the impact of the subsidiary
sold in 1994 (see note 11 to the consolidated financial statements on page
65), health benefits increased $57.8 million or 12% in 1994. This increase
was the result of increased volumes of business in the Reinsurance segment.
Property-casualty benefits decreased by $53.0 million or 4% in 1995 compared
to 1994. This decrease was the net result of moderate decreases in the volume
of business being partially offset by increases in catastrophe and storm
losses. Property-casualty benefits decreased by $144.3 million or 10% in 1994
compared to 1993. This decrease is the net result of reduced volumes of
insurance being partially offset by an increase in catastrophe and storm
losses. Assuming an average catastrophe and storm loss year in 1996, the
increase in property-casualty benefits is expected to parallel the change in
property-casualty premiums.
Underwriting, Acquisition, Insurance and Other Expenses
Excluding the impact of the subsidiary sold in 1994 (see note 11 to the
consolidated financial statements on page 65), these expenses increased $349.8
million or 23.5% in 1995. The primary driver behind this increase beyond the
general inflation rate was 1) the write-off of deferred acquisition costs
associated with the special additions to the disability reserves and 2) the
higher expenses in the Reinsurance segment and Life Insurance and Annuities
segment due to the increase in business volumes. Also, the expenses for the
<PAGE> -23-
Property-Casualty segment for 1995 included $21.0 million related to the
expected expenses, primarily severance compensation, to consolidate 20
divisional operations into four regional operations. Other than this special
expense item, the expenses for the Property-Casualty segment were essentially
flat with a year ago as staff levels were adjusted to the current level of
business. Excluding the impact of the various subsidiaries sold, these
expenses decreased $35.4 million or 2% in 1994 when compared to 1993. This
decrease was the net result of lower expenses in the Property-Casualty segment
and lower volume related expenses in the Reinsurance segment being partially
offset by increases in the Life Insurance and Annuities segment. In 1996, all
business segments will continue to adjust staff levels as appropriate to
match business volumes.
Interest Expense
Interest expense increased $23.0 million or 47% in 1995. This was the result
of increases in the average debt outstanding less the impact of changes in the
composition of debt outstanding. The higher outstanding debt relates to the
acquisitions of additional companies (see note 11 to the consolidated
financial statements on page 65). The additional leverage created by these
acquisitions resulted in a one step downgrade in LNC's debt ratings. Standard
and Poor's changed its rating from A+ ("Exceptional or Superior") to A
("Excellent") and Moody's changed its rating from A1 to A2 (both "Very Good,
Strong or High"). Interest expense increased $5.2 million or 12% in 1994.
This increase was the net result of higher average debt outstanding and higher
interest rates on debt outstanding being partially offset by the reduction in
interest expense which resulted from the calling of the 8% notes (due in 1997)
in March 1994. Although partially dependent on the level of short-term
interest rates, interest expense is expected to be higher in 1996 than in 1995
due to a full year of interest on debt issued or assumed in April 1995 in
connection with the acquisition of additional companies.
Federal Income Taxes
Federal income taxes increased $118.0 million in 1995. This increase was the
result of higher pre-tax earnings and the fact that 1994 taxes were lower
because no tax expense was recorded on the 1994 gain on sale of 71% of its
direct writer of employee life-health benefit coverages (see note 11 to the
consolidated financial statements on page 65). LNC's Federal income taxes
decreased $146.1 million in 1994 compared to 1993. This decrease was
primarily the result of lower pre-tax earnings in 1994 and the lack of tax
expense on the gain on sale of 71% of its direct writer of employee life-
health benefit coverages in 1994. An additional item affecting this
comparison is the fact that LNC did not receive a tax benefit from the loss on
sale of a life insurance subsidiary in 1993. The reduction in pre-tax
earnings in 1994 is the result of the absence of earnings from subsidiaries
sold (see note 11 to the consolidated financial statements on page 65) and the
realization of losses on the sale of investments during 1994 versus the
realization of gains on investments in 1993. The tax benefits from the
realized losses result from the carryback of such losses to realized gains
recognized in prior years.
Summary
Net income for 1995 was $482.2 million compared with $349.9 million in 1994.
Excluding realized gain (loss) on investments and gain on sale of
affiliates/operating property, LNC earned $306.5 million for 1995 compared to
$389.8 million in 1994. This decrease is the net result of increased earnings
in the Life Insurance and Annuities segment and Investment Management segment
being more than offset by decreases within the Reinsurance and Property-
Casualty segments. Excluding the special additions to the disability income
reserves (see note 2 to the consolidated financial statements on page 44) and
the after-tax impact of expenses associated with realignment of division
offices in the Property-Casualty segment, LNC earned $441.8 million for 1995.
Net income for 1994 was $349.9 million compared with $318.9 million in 1993.
Excluding realized gain (loss) on investments, gain (loss) on sale of
affiliates/operating property and the cumulative effect of implementing the
postretirement accounting change in 1993, all net of taxes, LNC earned $389.8
million for 1994 compared to $343.5 million in 1993. All the business
segments contributed to this increase.
<PAGE> -24-
REVIEW OF CONSOLIDATED FINANCIAL CONDITION
Investments
The investment portfolio, excluding cash and invested cash, is comprised of
fixed maturity securities; equities; mortgage loans on real estate; real
estate, either wholly owned or joint ventures; and other long-term
investments. LNC purchases investments for its segmented portfolios which
have yield, duration and other characteristics that take into account the
liabilities of the products being supported. The total investment portfolio
increased $5.0 billion in 1995. This increase was the result of increases in
the fair value of securities available-for-sale, the addition of the
investment portfolios of the companies acquired in 1995 (see note 11 to the
consolidated financial statements on page 65) and by new purchases of
investments from cash flow generated by the business units.
LNC maintains a high-quality fixed maturity securities portfolio. As of
December 31, 1995, $11.5 billion or 45.7% of its fixed maturity securities
portfolio had ratings of AA or better and only $1.6 billion or 6.1% had
ratings below investment grade (BB or less) (see note 3 to the consolidated
financial statements on page 46). The below investment grade fixed maturity
securities represent only 4.9% of LNC's total investment portfolio. The
interest rates available on these below investment grade securities are
significantly higher than are available on other corporate debt securities.
Also, the risk of loss due to default by the borrower is significantly greater
with respect to such below investment grade securities because these
securities are generally unsecured, often subordinated to other creditors of
the issuer and issued by companies that usually have high levels of
indebtedness. LNC attempts to minimize the risks associated with these below
investment grade securities by limiting the exposure to any one issuer and by
closely monitoring the credit worthiness of such issuers. For the year ended
December 31, 1995, the aggregate cost of such investments purchased was $1.0
billion. Aggregate proceeds from such investments sold were $768.8 million,
resulting in a realized pre-tax gain (loss) at the time of sale of ($14.9)
million.
LNC's entire fixed maturity and equity securities portfolio is classified as
"available-for-sale" and is carried at fair value. Changes in fair values,
net of related deferred acquisition costs, amounts required to satisfy
policyholder commitments and taxes, are charged or credited directly to
shareholders' equity. Note 3 to the consolidated financial statements (see
page 45) shows the gross unrealized gains and losses as of December 31, 1995.
LNC's fixed maturity securities available-for-sale include mortgage-backed
securities. The mortgage-backed securities included in LNC's investment
portfolio are subject to risks associated with variable prepayments or delayed
repayments. This may result in these securities having a different actual
cash flow and maturity than planned at the time of purchase. Securities that
have an amortized cost greater than par which are backed by mortgages that
prepay faster than expected will incur a reduction in yield or a loss. Those
securities that have an amortized cost lower than par that prepay faster than
expected will generate an increase in yield or a gain. Repayments occurring
slower than expected have the opposite impact. The degree to which a security
is susceptible to either gains or losses is influenced by the difference
between its amortized cost and par, the relative sensitivity of the underlying
mortgages backing the assets to prepayment or delayed repayments in a changing
interest rate environment and the repayment priority of the securities in the
overall securitization structure.
LNC limits the extent of its risk on mortgage-backed securities by generally
avoiding securities whose cost significantly exceeds par, by purchasing
securities which are backed by stable collateral, and by concentrating on
securities with enhanced priority in their trust structure. Such securities
with reduced risk typically have a lower yield (but higher liquidity) than
higher-risk mortgage-backed securities. At selected times, higher-risk
securities may be purchased if they do not compromise the safety of the
general portfolio. At December 31, 1995, LNC did not have a significant
amount of higher-risk mortgage-backed securities. There are negligible
default risks in the mortgage-backed securities portfolio as a whole as the
vast majority of the assets are either guaranteed by U.S. government-sponsored
entities or are supported in the securitization structure by junior securities
enabling the assets to achieve high investment grade status. See note 3 to
the consolidated financial statements on page 46 for additional detail about
the underlying collateral.
<PAGE> -25-
As of December 31, 1995, mortgage loans on real estate and investments in real
estate represented 10.0% and 2.4% of the total investment portfolio. As of
December 31, 1995, the underlying properties supporting the mortgage loans on
real estate consisted of 21.2% in commercial office buildings, 28.6% in retail
stores, 21.0% in apartments, 14.2% in industrial buildings, 5.0% in
hotels/motels and 10.0% in other. In addition to the dispersion by type of
property, the mortgage loan portfolio is geographically diversified throughout
the United States.
Investment in Unconsolidated Affiliates
This line was added to the balance sheet in 1994 following LNC's sale of 71%
of the ownership of its primary writer of employee life-health coverages. The
decrease in this balance at December 31, 1995 is due to the October 1995 sale
of the remaining 29% ownership in this company. See note 11 to the
consolidated financial statements on page 65.
Cash and Invested Cash
Cash and invested cash increased by $531.3 million in 1995. This increase is
the result of a portion of the operating cash flow being invested temporarily
in short-term investments pending the placement of funds in longer term
investments.
Assets Held in Separate Accounts
This asset account, as well as the corresponding liability account, increased
by $8.5 billion, reflecting the acquisition of a United Kingdom company (see
note 11 to the consolidated financial statements on page 65) and a continued
increase in annuity and pension funds under management for all existing
companies.
Federal Income Taxes
Federal income taxes payable at December 31, 1995 of $128.4 million compares
to Federal income taxes recoverable of $396.9 million at December 31, 1994.
This change is the net result of 1) a decrease in the recoverable deferred
taxes applicable to the increase in unrealized gains on available-for-sale
securities and 2) the receipt of a tax refund of $147.4 million in the first
quarter of 1995, which resulted from the realization of capital losses in 1994
to recover capital gains taxes paid in prior years, being partially offset by
increases related to recoverable deferred taxes from life insurance reserve
differences, discounting of unpaid losses, additions to the investment
reserves and the absence of a valuation allowance at December 31, 1995.
Federal income taxes recoverable at December 31, 1994 of $396.9 million
represents a change of $547.9 million compared to the Federal income taxes
payable at December 31, 1993. This is primarily the result of recoverable
deferred taxes applicable to LNC's available-for-sale securities which were in
an unrealized loss position at December 31, 1994 compared to an unrealized
gain position at December 31, 1993. Other factors affecting this change
relate to deferred taxes from life insurance reserve differences, discounting
of unpaid losses, changes in investment reserves and postretirement
obligations, and the current taxes recoverable related to the realization of
losses on securities during 1994. A significant portion of the deferred tax
benefits related to the December 31, 1994, unrealized loss on securities was
not recognized due to the establishment of a valuation allowance (see note 4
to the consolidated financial statements on page 49).
Amounts Recoverable from Reinsurers
The increase in amounts recoverable from reinsurers was the result of an
increased volume of business ceded in the Life Insurance and Annuities
segment.
Goodwill
The increase in goodwill in 1995 relates to LNC's acquisition of additional
operating businesses in 1995. Goodwill decreased $82.8 million in 1994
primarily as a result of the sale of subsidiaries during 1994. See note 11 to
the consolidated financial statements on page 65.
Other Intangible Assets
The increase in this balance sheet account in 1995 relates to LNC's
acquisition of additional operating businesses (see note 11 to the
consolidated financial statements on page 65).
<PAGE> -26-
Other Assets
The increase in other assets of $315.0 million is the result of having a
higher receivable related to investment securities sold in the last few days
of 1995 versus the end of 1994.
Total Liabilities
Total liabilities increased by $13.1 billion in 1995. This increase reflects
1) an increase in business activity as evidenced by an increase in policy
liabilities and accruals of $2.4 billion, an increase of $1.5 billion in
contractholder funds and an increase of $8.5 billion in the liabilities
related to separate accounts, 2) an increase in debt of $251.3 million and 3)
an increase in all other liabilities of $409.7 million.
Policy liabilities at December 31, 1995 and 1994 included liabilities for
environmental claims of $256 million and $201 million, respectively. At
December 31, 1995 and 1994, these amounts include approximately $127 million
and $81 million of reserve for claims that have been incurred but not reported
and approximately $43 million and $37 million of related claim expenses,
respectively. Because of the limited coverages that have been written by LNC,
these environmental claims represent only 10% of LNC's total property-casualty
policy liabilities (3% based on claim counts of direct business) and less than
2% of LNC's total policy liabilities. Paid environmental claims and claim
expenses totalled approximately $15.5 million in 1995 compared with
approximately $15.0 million in 1994.
The percentages and amounts referenced above are at these levels due to LNC's
concentration on writing coverages for small to medium-size companies rather
than the larger companies that tend to incur most of the environmental and
product liability claims. LNC's management challenges environmental claims in
cases of questionable liability and reviews the level of the environmental
liabilities on an on-going basis to help insure that the liability maintained
is adequate. Nonetheless, establishing liabilities for environmental claims is
subject to significant uncertainties because of the long reporting delays,
lack of historical data and the unresolved complex legal and regulatory issues
that are involved (see note 7 to the consolidated financial statements on page
56). However, based on available information, it is management's judgement
that the appropriate level of liabilities have been recorded and that any
unrecorded liability would not be material to LNC's future results of
operations, liquidity or financial condition.
The increase in other liabilities relates to an increase in the expected
payouts for security investments purchased in the last few days of 1995 versus
a lower volume of such transactions late in 1994.
Shareholders' Equity
Total shareholders' equity increased $1.3 billion during the year ended
December 31, 1995. Excluding the increase of $1.0 billion related to net
unrealized gain (loss) on securities available-for-sale, shareholders' equity
increased $326.8 million. This increase in shareholders' equity was the net
result of increases due to $482.2 million of net income, $24.1 million from
the issuance of common stock related to benefit plans, $6.5 million related to
an increase in the accumulated foreign exchange gain and a decrease of $186.0
million related to the declaration of dividends to shareholders.
Capital adequacy is a primary measure used by insurance regulators to
determine the financial stability of an insurance company. In the U.S., risk-
based capital guidelines are used by the National Association of Insurance
Commissioners to determine the amount of capital that represents minimum
acceptable operating amounts related to insurance and investment risks.
Regulatory action is triggered when an insurer's statutory-basis capital falls
below the formula-produced capital level. At December 31, 1995, statutory-
basis capital for each of LNC's U.S. life and property-casualty insurance
subsidiaries was substantially in excess of regulatory action levels of risk-
based capital required by the jurisdiction of domicile except for one
property-casualty company which is involved in servicing a closed block of
business.
As noted above, shareholders' equity includes net unrealized gain (loss) on
securities available-for-sale. At December 31, 1995, the book value of $41.89
per share included $6.68 of unrealized gains on securities and at December 31,
1994 the book value of $29.35 per share included $3.00 of unrealized losses on
securities.
<PAGE> -27-
Gains or losses, whether realized or unrealized, on securities that support
long-term life insurance, pension and annuity contracts are expected to be
applied to contract benefits. Net income and shareholders' equity now
include, respectively, realized and unrealized gains and losses on securities,
part of which will be used in determining contract benefits. Current
accounting standards do not require or permit adjustment of policyholder
reserves to recognize the full effect of these realized and unrealized gains
and losses on future benefit payments in the absence of a contractual
obligation requiring their attribution to policyholders.
Market Risk Exposures of Financial Instruments
Asset-Liability Context. LNC analyzes and manages the risks arising from
market exposures of financial instruments, as well as other risks, in an
integrated asset-liability context, taking diversification into account. By
aggregating the potential effect of market and other risks of the entire
enterprise, LNC estimates and manages the risk to its earnings and shareholder
value. The risks of market exposures of financial instruments, and the
related risk management processes, are most important in the Life Insurance
and Annuities segment, where most of the invested assets support accumulation
and investment oriented insurance products. Additional market exposures exist
in LNC's other general account insurance products and in its debt structure
and derivatives positions. The primary sources of market risk are
substantial, relatively rapid and sustained increases or decreases in interest
rates, a period of greater than normal default experience, and a sharp drop in
equity market values, as discussed below. Specific market risk exposures as
they relate to derivatives is included in the Derivatives section of
Management's Discussion and Analysis on page 29.
Accumulation and Investment Oriented Insurance Products. General account
assets supporting accumulation and investment oriented insurance products
total $21 billion or 66% of total invested assets. With respect to these
products, LNC seeks to earn a stable and profitable spread between investment
income and interest credited to account values. If LNC has adverse experience
on investments that cannot be passed through to customers, its spreads are
reduced. The interest rate scenarios of concern are those in which there is a
substantial, relatively rapid, increase or decrease in interest rates which is
then sustained over a long period.
Assets of $13 billion supports the biggest category of accumulation and
investment oriented insurance products, fixed deferred annuities. For these
products, LNC may adjust renewal crediting rates monthly or annually subject
to guaranteed minimums ranging from 3.0% to 4.5%. The higher minimums apply
to in-force blocks of older products that no longer are sold. LNC has $2.5
billion in assets supporting universal life insurance on which it has the
right to adjust renewal crediting rates subject to guaranteed minimums ranging
from 4% to 5% at December 31, 1995. Annuity and universal life insurance
customers have the right to surrender their policies at account value less a
surrender charge that grades to zero over periods ranging from 5 to 10 years
from policy issue date or, in some cases, the date of each premium received.
LNC also has assets totaling $5.5 billion supporting guaranteed interest
contracts, pension buy-out annuities and immediate annuities. Generally, the
cash flows expected on these liabilities do not vary with fluctuations in
market interest rates and are not adjustable by LNC. Accordingly, if
experience on the assets supporting these products is more adverse than the
assumptions used in pricing the products, spreads will tend to be below
expectations. LNC limits exposure to interest rate risk by managing the
duration and maturity structure of each investment portfolio in relation to
the liabilities it supports.
Other General Account Insurance Products. LNC also has $11 billion of assets
supporting general account products, including disability income, property
casualty insurance and term life insurance. For these products, the liability
cash flows may have actuarial uncertainty but their amounts and timing do not
vary significantly with interest rates. LNC limits interest rate risk by
analyzing the duration of the projected cash flows and structuring investment
portfolios with similar durations.
<PAGE> -28-
Debt. LNC has short-term and long-term debt of which $768.8 million is at
fixed rates and $316.9 million is at floating rates. LNC manages the timing
of maturities and the mixture of fixed-rate and floating-rate debt as part of
the process of integrated management of interest rate risk for the entire
enterprise.
Interest Rate Risk--Falling Rates. After rising in 1994, interest rates fell
in 1995. For example, the five-year Treasury yield rose from 5.2% to 7.8% in
1994 and fell back to 5.4% in 1995. Under scenarios in which interest rates
continue falling and remain at levels significantly lower than those
prevailing at December 31, 1995, minimum guarantees on annuity and universal
life insurance policies could cause spreads to deteriorate. The earned rate
on the annuity and universal life insurance portfolios averaged 7.8% and 7.9%,
respectively, at December 31, 1995, providing a cushion for further decline
before the earned rates would be insufficient to cover minimum guaranteed
rates plus the target spread. The maturity structure and call provisions of
the related portfolios are structured to afford protection against erosion of
this cushion for a period of time, but spreads would be at risk if interest
rates continued to fall and remained lower for a long period. LNC manages
these exposures by maintaining a suitable maturity structure and by limiting
its exposure to call risk in each respective investment portfolio.
Exposure to call risk was reduced in 1995, principally by reducing exposure to
mortgage-backed securities ("MBS"). LNC believes that the portfolios
supporting its accumulation and investment oriented insurance products have a
prudent degree of call protection in the context of each category of liability
as well as on a consolidated basis. The MBS portion of the portfolio,
including collateralized mortgage obligations ("CMOs"), represents a total of
$4.8 billion or 23% of the $21 billion of general account assets supporting
such products. LNC's MBS portfolio has better call protection than the MBS
pass-through market in general because of its 55% concentration in protected
amortization class CMOs. Of $15 billion in corporate obligations, only $.7
billion or 4%, are subject to call.
Interest Rate Risk--Rising Rates. For both annuities and universal life
insurance, a rapid and sustained rise in interest rates poses risks of
deteriorating spreads and high surrenders. The portfolios supporting these
products have fixed-rate assets laddered over maturities generally ranging
from one to 10 years or more. Accordingly, the earned rate on each portfolio
lags behind changes in market yields. As rates rise, the lag may be increased
by slowing of MBS prepayments. The greater and faster the rise in interest
rates, the more the earned rate will tend to lag behind market rates. If LNC
sets renewal crediting rates to earn the desired spread, the gap between its
renewal crediting rates and competitors' new money rates may be wide enough to
cause increased surrenders. If it credits more competitive renewal rates to
limit surrenders, its spreads will narrow. LNC devotes extensive effort to
evaluating these risks by simulating asset and liability cash flows for a wide
range of interest rate scenarios. Such analysis has led to adjustments in the
target maturity structure and to hedging the risk of rising rates by buying
out-of-the-money interest rate cap agreements (see Derivatives section of
Management's Discussion and Analysis on page 29). With this hedge, the
potential adverse impact of a sustained rise in rates is kept within corporate
risk tolerances. LNC believes that the risks of rising interest rates are
also mitigated by its emphasis on periodic premium products.
Default Risk. In assessing the risk that the rate of default losses for each
category of asset may be worse than the rates assumed in pricing its products,
LNC considers the entire $32 billion portfolio of invested assets, taking
diversification into account. Of this total, $15.2 billion are corporate
bonds and $3.2 billion are commercial mortgages. LNC manages the risk of
adverse default experience on these investments by applying disciplined credit
evaluation and underwriting standards, prudently limiting allocations to
lower-quality, higher-yielding investments, and diversifying exposures by
issuer, industry, region and property type. For each counter-party or
borrowing entity and its affiliates, LNC's exposures from all transactions are
aggregated and managed in relation to formal limits set by rating quality and
industry group. LNC remains exposed to occasional adverse cyclical economic
downturns during which default rates may be significantly higher than the
long-term historical average used in pricing.
<PAGE> -29-
Equity Market Exposures. At December 31, 1995, LNC owned equities consisting
of $1.2 billion of common stocks, $776 million of real estate, and $100
million of other equity interests. While LNC invests in these categories with
the expectation of achieving higher returns than would be available in its
core fixed-income investments, the returns on, and values of, these equity
investments are subject to somewhat greater market risk than its fixed income
investments.
The fee revenues of LNC's Investment Management segment and fees earned from
variable annuities are exposed to the risk of a decline in the equity market
values. Investment advisory fees are generally a fixed percentage of the
market value of assets under management. In a severe equity market decline,
fee income could be reduced by not only reduced market valuations but also by
customer withdrawals. Such withdrawals from equity funds and accounts might
be offset, in part, by transfers to LNC's fixed-income accounts and through
the transfer of funds to LNC by customers from competitors.
Derivatives
As indicated in note 7 to the consolidated financial statements (see page 58),
LNC has entered into derivative transactions to reduce its exposure to
interest rate fluctuations, the widening of bond yield spreads over comparable
maturity U.S. Government obligations and foreign exchange risk. A discussion
of LNC's five significant programs using derivative agreements and contracts
follows. All these programs are used within the Life Insurance and Annuities
segment except for the foreign exchange risk on an investment in a foreign
subsidiary which is used within Other Operations.
1) LNC uses interest rate cap agreements to hedge against the negative impact
of a significant and sustained rise in interest rates. Interest rate caps are
contracts that require counterparties to pay LNC at specified future dates the
amount, if any, by which a specified market interest rate exceeds the cap rate
stated in the agreements, applied to a notional amount. As of December 31,
1995, LNC had agreements with notional amounts of $5.1 billion with cap rates
ranging from 138 to 498 basis points above prevailing interest rates. These
agreements expire in 1997 - 2003. The cap rates in some contracts increase
over time.
The revenue that LNC receives from interest rate caps depends on the future
levels of interest rates on U.S. Treasury securities with maturities of two,
five, seven and 10 years; U.S. dollar swap rates for similar maturities; and
the London Interbank Offered Rate ("LIBOR"). The table below analyzes the
amount of cap revenue LNC would receive if those rates were 1%, 2%, 3%, or 4%
higher than they were at December 31, 1995 and remain at those levels
throughout the remaining lives of the caps owned by LNC. In relation to the
level of these rates at December 31, 1995, the cap rates were from 1.38% to
4.98% out of the money, i.e., higher. Revenue from interest rate caps under
these scenarios is as follows:
<TABLE>
<CAPTION>
Year Ended December 31 (in millions) 1996 1997 1998 1999 2000 Thereafter
<S> <C> <C> <C> <C> <S> <C>
No change $ -- $ -- $ -- $ -- $ -- $ --
Up 1% -- -- -- -- -- --
Up 2% .1 .1 .1 .1 -- --
Up 3% .8 .3 .3 .3 -- --
Up 4% 18.3 14.9 9.1 1.9 -- --
</TABLE>
2) LNC uses spread-lock agreements to hedge a portion of the value of its
fixed maturity securities against the risk of widening in the spreads between
their yields and the yields of comparable maturity U.S. Government
obligations. The actual risk being hedged is the potential widening of bond
spreads that would be caused by widening swap spreads. Under each of these
agreements, LNC assumes the right and the obligation to enter into an interest
rate swap at a future date in which LNC would pay a fixed rate equal to a
contractually specified spread over the yield of a specified U.S. Treasury
security and receive a floating rate. As of December 31, 1995, LNC had
spread-lock agreements with an aggregate notional amount of $600 million with
10 years remaining in the exercise periods.
<PAGE> -30-
Over the past five years, swap spreads have typically traded within an annual
range of 30 basis points, i.e., a range of plus or minus 15 basis points
around the mean level. At December 31, 1995, the cash-settlement value of the
spread locks would have changed by approximately $5.0 million for each 15
basis point change in swap spreads.
3) LNC uses exchange-traded financial futures contracts and options on
financial futures to hedge against interest rate risks and to manage duration
of a portion of its fixed maturity securities. Financial futures contracts
obligate LNC to buy or sell a financial instrument at a specified future date
for a specified price and may be settled in cash or through delivery of the
financial instrument. Cash settlements on the change in market values of
financial futures contracts are made daily. Put options on a financial
futures contract give LNC the right, but not the obligation, to assume a long
or short position in the underlying futures contract at a specified price
during a specified time period.
At December 31, 1995, LNC had long positions in the March 1996 five year note,
10 year note, and bond futures with an aggregate face amount of $106.7
million. As the yields on the underlying Treasury securities rise (fall), the
value of these long positions to LNC will decrease (increase) by approximately
$.9 million for each 10 basis point parallel shift in the yield curve.
4) LNC uses foreign exchange forward contracts to hedge against foreign
exchange risk related to LNC's investment in its foreign subsidiary, Lincoln
National (UK). The foreign exchange forward contracts obligate LNC to deliver
a specified amount of currency at a future date at a specified exchange rate.
The value of the foreign exchange forward contracts at any given point
fluctuate according to the underlying level of exchange rate and interest rate
differentials. At December 31, 1995, LNC had contracts in place with
notional amounts of $398.8 million. Assuming no difference in the underlying
interest rates, the value of these contracts will rise (fall) by approximately
$4.0 million for each 1% change in the exchange rate.
5) LNC uses a combination of foreign exchange forward contracts, foreign
currency options, and foreign currency swaps to hedge some of the foreign
exchange risk related to its investments in fixed maturity securities
denominated in foreign currencies. The foreign currency forward contracts
obligate LNC to deliver a specified amount of currency at a future date at a
specified exchange rate. As of December 31, 1995, LNC had a short position in
foreign exchange forward contracts with a notional amount of $15.7 million.
Foreign currency options give LNC the right, but not the obligation, to buy or
sell a foreign currency at a specific exchange rate during a specified time
period. At December 31, 1995, LNC had a long position in foreign currency
options with a notional amount of $99.2 million.
A foreign currency swap is a contractual agreement to exchange the currencies
of two different countries pursuant to an agreement to re-exchange the two
currencies at the same rate of exchange at a specified future date. As of
December 31, 1995, LNC had a foreign currency swap with a notional amount of
$15 million.
The value of the foreign exchange contracts, foreign currency options and
foreign currency swaps, which are used to reduce the risk of reduction of the
value in U.S. dollars of investments denominated in foreign currencies that
might result from an adverse change in currency exchange rates, fluctuate
according to the underlying level of exchange rates. At December 31, 1995,
LNC had notional amounts of contracts in place of $129.9 million. If the U.S.
dollar were to appreciate (depreciate) 1% in relation to each of the
currencies involved in these contracts, the value of these positions would
rise (fall) by $1.3 million.
<PAGE> -31-
The first three programs discussed above are designed to help LNC achieve more
stable margins while providing competitive crediting rates to policyholders
during periods when interest rates are rising or corporate bond spreads are
widening. Failure to maintain competitive crediting rates could result in
policyholders withdrawing their funds for placement in more competitive
products. The other two programs discussed above are designed to reduce LNC's
risk related to changes in foreign currency exchange rates.
LNC is depending on the ability of derivative product dealers and their
guarantors to honor their obligations to pay the contract amounts under
interest rate cap agreements and other over-the-counter derivative products
such as spread-lock agreements, foreign currency exchange contracts, foreign
currency options and foreign currency swaps. In order to minimize the risk of
default losses, LNC diversifies its exposures among several dealers and limits
the amount of exposure in accordance with the credit rating of each dealer or
its guarantor. With the exception of one cap agreement counterparty, at
December 31, 1995, the dealers providing interest rate caps or their
guarantors were rated single A or better by Standard & Poors and Moody's. In
fact, 84% of the notional amount of caps were from dealers which, giving
effect to guarantees, were rated AA or better by those agencies. One
counterparty with an aggregate notional amount of $500 million and an
aggregate replacement value of approximately $.1 million, had its rating
lowered from A3 to Baa1 by one of the major rating agencies during 1995. This
counterparty continues to hold an A rating from another major rating agency.
In addition to continuing existing programs, LNC may use derivative products
in other strategies to limit risk and enhance returns, particularly in the
management of investment spread businesses. LNC has established policies,
guidelines and internal control procedures for the use of derivatives as tools
to enhance management of the overall portfolio of risks assumed in LNC's
operations.
LIQUIDITY AND CASH FLOW
Liquidity refers to the ability of an enterprise to generate adequate amounts
of cash from its normal operations to meet cash requirements with a prudent
margin of safety. Because of the interval of time from receipt of a deposit
or premium until payment of benefits or claims, LNC and other insurers employ
investment portfolios as an integral element of operations. By segmenting its
investment portfolios along product lines, LNC enhances the focus and
discipline it can apply to managing the liquidity as well as the interest rate
and credit risk of each portfolio commensurate with the profile of the
liabilities. For example, portfolios backing products with less certain cash
flows and/or withdrawal provisions are kept more liquid than portfolios
backing products with more predictable cash flows.
The Consolidated Statements of Cash Flows on page 39 indicate that operating
activities provided cash of $1.9 billion, $1.2 billion and $.8 billion in
1995, 1994 and 1993, respectively. This statement also classifies the other
sources and uses of cash by investing activities and financing activities and
discloses the amount of cash available at the end of the year to meet LNC's
obligations.
Although LNC generates adequate cash flow to meet the needs of its normal
operations, periodically LNC may issue debt or equity securities to fund
internal expansion, acquisitions, investment opportunities and the retirement
of LNC's debt and equity. In 1995, LNC filed a shelf registration for $600
million with the Securities and Exchange Commission that would allow LNC to
issue debt or equity securities. This registration included an aggregate of
$100 million of securities which had not been utilized from a 1994
registration. Also, cash funds are available from LNC's revolving credit
agreement which provides for borrowing up to $500 million (see note 5 to the
consolidated financial statements on page 51).
Transactions such as those described in the preceding paragraph that occurred
recently included the issuance of $200 million in debt in May 1995. Proceeds
from this offering were used to pay down short-term debt that had been
incurred in April 1995 related to the acquisition of additional operating
businesses (see note 11 to the consolidated financial statements on page 65).
<PAGE> -32-
In order to maximize the use of available cash, the holding company (Lincoln
National Corporation) maintains a facility where subsidiaries can borrow from
the holding company to meet their short-term needs and can invest their
short-term funds with the holding company. Depending on the overall cash
availability or need, the holding company invests excess cash in short-term
investments or borrows funds in the external financial markets. In addition
to facilitating the management of cash, the holding company receives dividends
from its subsidiaries, invests in operating companies, maintains an investment
portfolio and pays shareholder dividends and certain corporate expenses.
<TABLE>
Holding Company Cash Flow
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Dividends from subsidiaries:
Lincoln Life ----------------------------------- $ 310.0 $ 125.0 $ 12.0
American States -------------------------------- 199.0 215.0 60.0
Other ------------------------------------------ 29.5 4.5 4.0
Net investment income ---------------------------- 2.9 1.2 4.3
Operating expenses ------------------------------- (41.7) (33.7) (19.5)
Interest ----------------------------------------- (57.3) (44.3) (39.0)
Net sales (purchases) of investments ------------- 16.6 (22.1) 31.6
Increase (decrease) in cash collateral on
loaned securities ------------------------------- (4.5) 14.3 9.5
Additional investment in subsidiaries ------------ (697.1) (2.7) (105.8)
(Investment in) sale of unconsolidated affiliate - 194.0 (103.5) --
Net increase (decrease) in debt ------------------ 217.1 15.9 (207.2)
Increase in receivables from subsidiaries -------- (.3) (3.9) (14.2)
Increase (decrease) in loans from subsidiaries --- (42.4) 271.8 (127.6)
Decrease (increase) in loans to subsidiaries ----- (107.0) (20.5) 34.7
Federal income taxes received (paid) ------------- (38.3) 65.6 (270.0)
Net tax receipts from (payments to) subsidiaries - 61.5 (61.1) 319.8
Dividends paid to shareholders ------------------- (178.8) (172.2) (156.2)
Common stock issued for benefit plans ------------ 24.1 30.0 26.2
Public offering of common stock ------------------ -- -- 316.1
Retirement of common stock ----------------------- -- (18.4) --
Other -------------------------------------------- 56.4 20.5 (2.8)
Cash and invested cash - December 31 ------------- $ 466.8 $ 523.1 $271.7
Other investments - December 31 ------------------ 20.3 28.7 43.9
Debt - December 31 ------------------------------- 1,402.1 1,227.5 939.8
</TABLE>
The table above shows the cash flow activity for the holding company from
1993 through 1995. The line, "net tax receipts from (payments to)
subsidiaries", recognizes that the holding company receives tax payments from
subsidiaries, pays the consolidated tax liability and reimburses subsidiaries
for the tax effect of any taxable operating and capital losses.
LNC's insurance subsidiaries are subject to certain insurance department
regulatory restrictions as to the transfer of funds and payments of dividends
to the holding company (see note 7 to the consolidated financial statements on
page 56). However, these restrictions pose no short-term liquidity concerns
for the holding company. The financial strength and stability of the
subsidiaries permit ready access to short-term or long-term credit sources for
the holding company.
Effect of Inflation
As indicated earlier in this review of consolidated operations, inflation
affects LNC's revenues and expenses. LNC's insurance affiliates, as well as
other companies in the insurance industry, attempt to minimize the effect of
inflation by anticipating inflationary trends in the pricing of their
products. Inflation, except for changes in interest rates, does not have a
significant effect on LNC's balance sheet due to the minimal amount of dollars
invested in property, plant and equipment and the absence of inventories.
<PAGE> -33-
<TABLE>
Item 8. Financial Statements and Supplementary Data
<CAPTION>
Operating Results by Quarter
(in millions, except per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
<S> <C> <C> <C> <C>
1995 Data
Premiums and other considerations --- $ 909.6 $1,000.3 $1,032.7 $1,135.2
Net investment income --------------- 530.1 583.6 567.7 604.3
Realized gain on investments -------- 44.1 62.3 68.1 41.1
Gain on sale of affiliates/
operating property ----------------- -- -- -- 54.2
Net income -------------------------- 134.8 117.9 154.3 75.2
Net income per share ---------------- $1.30 $1.13 $1.48 $ .72
1994 Data
Premiums and other considerations* -- $1,221.7 $ 921.7 $ 930.7 $1,176.4
Net investment income --------------- 501.8 487.6 510.0 511.9
Realized gain (loss) on investments - 38.1 (66.3) (74.2) (28.4)
Gain on sale of affiliates/
operating property ----------------- 44.1 4.7 -- --
Net income -------------------------- 151.0 46.8 58.4 93.7
Net income per share ---------------- $1.46 $.45 $ .56 $ .90
<FN>
*Premiums and other considerations shown for the 1994 quarters are after
reclassification of revenues and expenses to conform to the 1995 presentation
(see note 2 to the consolidated financial statements on page 44). This
reclassification reduced 1994 revenues and expenses by $201.1 million, $196.7
million, $195.1 million and $211.7 million for the first through fourth
quarters, respectively. The fourth quarter of 1995 includes a change in
estimate related to LNC's disability income business (see note 2 to the
consolidated financial statements on page 44).
</FN>
</TABLE>
Consolidated Financial Statements
The consolidated financial statements of Lincoln National Corporation and
Subsidiaries follow on pages 34 through 66.
<PAGE> -34-
<TABLE>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31 (000s omitted) 1995 1994
ASSETS
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity
(cost: 1995-$23,935,527; 1994-$22,194,079) - $25,834,476 $21,644,154
Equity
(cost: 1995-$936,124; 1994-$948,135) ------- 1,164,844 1,038,617
Mortgage loans on real estate ---------------- 3,186,872 2,853,083
Real estate ---------------------------------- 775,912 706,854
Policy loans --------------------------------- 602,573 550,672
Other investments ---------------------------- 371,765 175,121
Total Investments -------------------------- 31,936,442 26,968,501
Investment in unconsolidated affiliates -------- 5,562 97,054
Cash and invested cash ------------------------- 1,572,855 1,041,583
Property and equipment ------------------------- 243,763 185,471
Deferred acquisition costs --------------------- 1,436,685 2,069,975
Premiums and fees receivable ------------------- 537,979 551,679
Accrued investment income ---------------------- 462,737 428,959
Assets held in separate accounts --------------- 22,769,068 14,301,684
Federal income taxes --------------------------- -- 396,888
Amounts recoverable from reinsurers ------------ 2,495,189 2,152,327
Goodwill --------------------------------------- 471,465 145,844
Other intangible assets ------------------------ 528,934 42,773
Other assets ----------------------------------- 797,054 482,022
Total Assets ----------------------------- $63,257,733 $48,864,760
</TABLE>
See notes to the consolidated financial statements on pages 40 - 65.
<PAGE> -35-
<TABLE>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
-CONTINUED-
<CAPTION>
December 31 (000s omitted) 1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Liabilities:
Policy liabilities and accruals:
Future policy benefits, claims
and claim expenses ------------------------- $12,922,547 $10,536,512
Unearned premiums --------------------------- 813,380 804,987
Total Policy Liabilities and Accruals ----- 13,735,927 11,341,499
Contractholder funds -------------------------- 18,784,508 17,250,423
Liabilities related to separate accounts ------ 22,769,068 14,301,684
Federal income taxes -------------------------- 128,426 --
Short-term debt ------------------------------- 426,848 360,177
Long-term debt -------------------------------- 659,303 474,201
Other liabilities ----------------------------- 2,375,531 2,094,716
Total Liabilities ------------------------- 58,879,611 45,822,700
Shareholders' Equity:
Series A preferred stock
(1995 liquidation value - $3,252) ------------ 1,335 1,420
Series E preferred stock ---------------------- -- 151,206
Series F preferred stock ---------------------- -- 158,707
Common stock ---------------------------------- 889,476 555,382
Retained earnings------------------------------ 2,775,718 2,479,532
Foreign currency translation adjustment ------- 13,413 6,890
Net unrealized gain (loss) on
securities available-for-sale ---------------- 698,180 (311,077)
Total Shareholders' Equity ---------------- 4,378,122 3,042,060
Total Liabilities and
and Shareholders' Equity ----------------- $63,257,733 $48,864,760
</TABLE>
See notes to the consolidated financial statements on pages 40 - 65.
<PAGE> -36-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31 (000s omitted) 1995 1994 1993
<S> <C> <C> <C>
Revenue:
Insurance premiums ------------------ $3,253,833 $3,624,648 $4,447,397
Insurance fees ---------------------- 523,237 449,643 470,395
Investment advisory fees ------------ 138,584 -- --
Net investment income --------------- 2,285,681 2,011,351 2,146,519
Equity in earnings of
unconsolidated affiliates ---------- 12,361 14,652 --
Realized gain (loss) on investments - 215,623 (130,820) 268,422
Gain (loss) on sale of affiliates/
operating property ----------------- 54,195 48,842 (98,500)
Other ------------------------------- 149,742 161,534 158,524
Total Revenue --------------------- 6,633,256 6,179,850 7,392,757
Benefits and Expenses:
Benefits and settlement expenses ---- 4,113,143 4,195,243 4,981,379
Underwriting, acquisition,
insurance and other expenses ------- 1,821,022 1,558,806 1,779,248
Interest expense -------------------- 72,516 49,520 44,301
Total Benefits and Expenses ------- 6,006,681 5,803,569 6,804,928
Income Before Federal Income
Taxes and Cumulative Effect
of Accounting Change ------------- 626,575 376,281 587,829
Federal income taxes ------------------ 144,389 26,383 172,546
Income Before Cumulative Effect
of Accounting Change ------------- 482,186 349,898 415,283
Cumulative effect of accounting
change (postretirement benefits) ----- -- -- (96,431)
Net Income ------------------------ $ 482,186 $ 349,898 $ 318,852
</TABLE>
<TABLE>
<S> <C> <C> <C>
Earnings Per Share:
Income before cumulative
effect of accounting change ---------- $4.63 $3.37 $4.06
Cumulative effect of accounting
change (postretirement benefits) ----- -- -- (.94)
Net Income ------------------------ $4.63 $3.37 $3.12
</TABLE>
See notes to the consolidated financial statements on pages 40 - 65.
<PAGE> -37-
<TABLE>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Year Ended December 31 (000s omitted) 1995 1994 1993
<S> <C> <C> <C>
Preferred Stock:
Series A Preferred Stock:
Balance at beginning of year ----------- $ 1,420 $ 1,553 $ 1,896
Conversion into common stock ----------- (85) (133) (343)
Balance at End of Year --------------- 1,335 1,420 1,553
Series E Preferred Stock:
Balance at beginning of year ----------- 151,206 151,206 151,206
Conversion into common stock ----------- (151,206) -- --
Balance at End of Year --------------- -- 151,206 151,206
Series F Preferred Stock:
Balance at beginning of year ----------- 158,707 158,707 158,707
Conversion into common stock ----------- (158,707) -- --
Balance at End of Year --------------- -- 158,707 158,707
Common Stock:
Balance at beginning of year ------------ 555,382 543,659 200,986
Conversion of series A preferred stock -- 85 133 343
Conversion of series E and F
preferred stock ------------------------ 309,913 -- --
Public offering of common stock --------- -- -- 316,100
Issued for benefit plans ---------------- 26,888 30,616 26,930
Shares forfeited under benefit plans ---- (2,792) (631) (700)
Retirement of common stock -------------- -- (18,395) --
Balance at End of Year --------------- 889,476 555,382 543,659
Retained Earnings:
Balance at beginning of year ------------ 2,479,532 2,303,731 2,147,691
Net income ------------------------------ 482,186 349,898 318,852
Dividends declared:
Series A preferred stock -------------- (123) (134) (146)
Series E preferred stock -------------- (4,168) (8,336) (8,336)
Series F preferred stock -------------- (4,364) (8,729) (8,729)
Common stock -------------------------- (177,345) (156,898) (145,601)
Balance at End of Year --------------- 2,775,718 2,479,532 2,303,731
Foreign Currency Translation Adjustment:
Accumulated adjustment at
beginning of year ---------------------- 6,890 (1,214) 3,643
Change during the year ------------------ 6,523 8,104 (4,857)
Balance at End of Year --------------- 13,413 6,890 (1,214)
Net Unrealized Gain (Loss) on Securities
Available-for-sale:
Balance at beginning of year ----------- (311,077) 914,679 162,742
Cumulative effect of accounting change - -- -- 768,419
Other change during the year ---------- 1,009,257 (1,225,756) (16,482)
Balance at End of Year --------------- 698,180 (311,077) 914,679
Total Shareholders' Equity
at End of Year ----------------------$4,378,122 $3,042,060 $4,072,321
</TABLE>
See notes to the consolidated financial statements on pages 40 - 65.
<PAGE> -38-
<TABLE>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - continued
<CAPTION>
Year Ended December 31 (Number of Shares) 1995 1994 1993
<S> <C> <C> <C>
Preferred Stock:
(10,000,000 shares authorized)
Series A Preferred Stock:
Balance at beginning of year -------- 43,218 47,289 57,716
Conversion into common stock -------- (2,572) (4,071) (10,427)
Balance Issued and Outstanding
at End of Year ------------------- 40,646 43,218 47,289
Series E Preferred Stock:
Balance at beginning of year ------- 2,201,443 2,201,443 2,201,443
Conversion into common stock ------- (2,201,443) -- --
Balance Issued and Outstanding
at End of Year ------------------ -- 2,201,443 2,201,443
Series F Preferred Stock:
Balance at beginning of Year ------- 2,216,454 2,216,454 2,216,454
Conversion into common stock ------- (2,216,454) -- --
Balance Issued and Outstanding
at End of Year ------------------ -- 2,216,454 2,216,454
Common Stock:
(Shares authorized: 1995 and
1994 - 800,000,000; 1993 - 400,000,000)
Balance at beginning of year ---------- 94,477,942 94,183,190 84,142,458
Conversion of series A preferred stock- 20,576 32,568 83,416
Conversion of series E and F
preferred stock ---------------------- 8,835,794 -- --
Public offering of common stock ------- -- -- 9,200,000
Issued for benefit plans -------------- 905,361 778,587 786,192
Shares forfeited under benefit plans -- (54,556) (16,403) (28,876)
Retirement of common stock ------------ -- (500,000) --
Balance Issued and Outstanding
at End of Year ---------------------104,185,117 94,477,942 94,183,190
Common Stock (assuming conversion of
series A, E and F preferred stock):
End of Year --------------------------104,510,285 103,659,480 103,397,296
Average for the Year -----------------104,115,650 103,863,196 102,307,356
</TABLE>
<TABLE>
<CAPTION>
Dividends Per Share:
<S> <C> <C> <C>
Series A preferred stock -------------- $3.00 $3.00 $3.00
Series E preferred stock -------------- 1.89 3.79 3.79
Series F preferred stock -------------- 1.97 3.94 3.94
Common stock -------------------------- 1.75 1.66 1.55
</TABLE>
See notes to the consolidated financial statements on pages 40 - 65.
<PAGE> -39-
<TABLE>
LINCOLN NATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31 (000s omitted) 1995 1994 1993
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income ------------------------------ $ 482,186 $ 349,898 $ 318,852
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred acquisition costs ----------- (44,990) (199,419) (23,961)
Premiums and fees receivable --------- (15,087) (7,777) (62,201)
Accrued investment income ------------ (41,268) (44,171) 23,441
Policy liabilities and accruals ------ 147,989 11,487 6,797
Contractholder funds ----------------- 1,631,192 1,674,888 1,369,129
Amounts recoverable from reinsurers--- (435,776) (776,408) (710,038)
Federal income taxes ----------------- 268,338 (59,611) (96,469)
Equity in undistributed earnings of
unconsolidated affiliates ----------- (11,493) (12,408) --
Provisions for depreciation ---------- 59,835 58,689 58,893
Amortization of goodwill and other
intangible assets ------------------- 74,229 9,274 8,851
Realized (gain) loss on investments -- (300,840) 212,201 (292,153)
(Gain) loss on sale of affiliates/
operating property ------------------ (54,195) (48,842) 98,500
Cumulative effect of accounting
change ------------------------------ -- -- 96,431
Other -------------------------------- 160,180 14,365 12,998
Net Adjustments -------------------- 1,438,114 832,268 490,218
Net Cash Provided by
Operating Activities -------------- 1,920,300 1,182,166 809,070
Cash Flows from Investing Activities:
Securities available-for-sale:
Purchases ----------------------------- (15,327,959)(13,383,236) (9,158,159)
Sales --------------------------------- 14,253,858 10,352,938 8,834,823
Maturities ---------------------------- 1,051,471 1,106,687 45,937
Fixed maturity securities held for investment:
Purchases ----------------------------- -- -- (6,626,937)
Sales --------------------------------- -- -- 3,205,203
Maturities ---------------------------- -- -- 1,858,044
Purchase of other investments ----------- (1,770,790) (1,696,570) (1,360,779)
Sale or maturity of other investments --- 1,103,380 1,755,113 733,585
Sale of affiliates ---------------------- 186,900 417,367 --
Purchase of affiliates ------------------ (736,966) -- --
Increase (decrease) in cash collateral on
loaned securities ---------------------- (39,223) (149,597) 30,906
Other ----------------------------------- (148,029) 94,566 257,943
Net Cash Used in Investing Activities-- (1,427,358) (1,502,732) (2,179,434)
Cash Flows from Financing Activities:
Principal payments on long-term debt ---- (14,182) (142,065) (2,805)
Issuance of long-term debt -------------- 197,785 199,482 35,035
Net increase (decrease) in
short-term debt ------------------------ 25,785 (59,698) (112,579)
Universal life and investment
contract deposits ---------------------- 2,142,043 2,429,113 2,467,540
Universal life and investment
contract withdrawals ------------------- (2,158,392) (1,613,780) (1,509,108)
Public offering of common stock --------- -- -- 316,100
Common stock issued for benefit plans --- 24,096 29,985 26,230
Retirement of common stock -------------- -- (18,395) --
Dividends paid to shareholders ---------- (178,805) (172,157) (156,235)
Net Cash Provided by Financing
Activities --------------------------- 38,330 652,485 1,064,178
Net Increase (Decrease) in Cash ------- 531,272 331,919 (306,186)
Cash at Beginning of Year --------------- 1,041,583 709,664 1,015,850
Cash at End of Year ------------------- $1,572,855 $1,041,583 $ 709,664
</TABLE>
See notes to the consolidated financial statements on pages 40 - 65.
<PAGE> -40-
LINCOLN NATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation. The accompanying consolidated financial statements
include Lincoln National Corporation ("LNC") and its majority-owned
subsidiaries. Through subsidiary companies, LNC operates multiple insurance
and investment management businesses. Operations are divided into four
business segments (see note 9 on page 62). Less than majority-owned entities
in which LNC has at least a 20% interest are reported on the equity basis.
These consolidated financial statements have been prepared in conformity with
generally accepted accounting principles.
Use of Estimates. The nature of the insurance and investment management
businesses requires management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.
Investments. LNC classifies its fixed maturity and equity securities (common
and non-redeemable preferred stocks) as available-for-sale and, accordingly,
such securities are carried at fair value. The cost of fixed maturity
securities is adjusted for amortization of premiums and discounts. The cost
of fixed maturity and equity securities is adjusted for declines in value that
are other than temporary.
For the mortgage-backed securities portion of the fixed maturity securities
portfolio, LNC recognizes income using a constant effective yield based on
anticipated prepayments and the estimated economic life of the securities.
When estimates of prepayments change, the effective yield is recalculated to
reflect actual payments to date and anticipated future payments. The net
investment in the securities is adjusted to the amount that would have existed
had the new effective yield been applied since the acquisition of the
securities. This adjustment is reflected in net investment income.
Mortgage loans on real estate are carried at the outstanding principal
balances less unaccrued discounts and net of reserves for declines that are
other than temporary. Investment real estate is carried at cost less
allowances for depreciation. Such real estate is carried net of reserves for
declines in value that are other than temporary. Real estate acquired through
foreclosure proceedings is recorded at fair value on the settlement date which
establishes a new cost basis. If a subsequent periodic review of a foreclosed
property indicates the fair value, less estimated costs to sell, is lower than
the carrying value at the settlement date, the carrying value is adjusted to
the lower amount. Policy loans are carried at aggregate unpaid balances.
Any changes to the reserves for mortgage loans on real estate and real estate
are reported as realized gain (loss) on investments.
Cash and invested cash are carried at cost and include all highly liquid debt
instruments purchased with a maturity of three months or less.
Realized gain (loss) on investments is recognized in net income, net of
related amortization of deferred acquisition costs, using the specific
identification method. Changes in the fair values of securities carried at
fair value are reflected directly in shareholders' equity after deductions for
related adjustments for deferred acquisition costs and amounts required to
satisfy policyholder commitments that would have been recorded if these
securities would have been sold at their fair value, and after deferred taxes
or credits to the extent deemed recoverable.
Derivatives. LNC hedges certain portions of its exposure to interest rate
fluctuations, the widening of bond yield spreads over comparable maturity U.S.
Government obligations and foreign exchange risk by entering into derivative
transactions. A description of LNC's accounting for its hedge of such risks
is discussed in the following two paragraphs.
The premium paid for an interest rate cap is deferred and amortized to net
investment income on a straight-line basis over the term of the interest rate
cap. Any settlement received in accordance with the terms of the interest
rate caps is recorded as investment income. Spread-lock agreements, interest
rate swaps and financial futures which hedge fixed maturity securities
available-for-sale, are carried at fair value with the change in fair value
<PAGE> -41-
reflected directly in shareholders' equity. Realized gain (loss) from the
settlement of such derivatives is deferred and amortized over the life of the
hedged assets as an adjustment to the yield. Foreign exchange forward
contracts, which hedge LNC's investment in its foreign subsidiary, Lincoln
National (UK), are carried at fair value with the change in fair value and
realized gain (loss) on such contracts reflected directly in the foreign
currency translation adjustment component of shareholders' equity. Foreign
exchange forward contracts, foreign currency options and foreign currency
swaps, which hedge some of the foreign exchange risk of investments in fixed
maturity securities denominated in foreign currencies, are carried at fair
value with the change in fair value reflected in earnings. Realized gain
(loss) from the settlement of such derivatives is also reflected in earnings.
Hedge accounting is applied as indicated above after LNC determines that the
items to be hedged expose LNC to interest rate fluctuations, the widening of
bond yield spreads over comparable maturity U.S. Government obligations and
foreign exchange risk; and the derivatives used are designated as a hedge and
reduce the indicated risk by having a high correlation of changes in the value
of the derivatives and the items being hedged at both the inception of the
hedge and throughout the hedge period. Should such criteria not be met, the
change in value of the derivatives is included in net income.
Property and Equipment. Property and equipment owned for company use is
carried at cost less allowances for depreciation.
Premiums and Fees. Revenue for universal life and other interest-sensitive
life insurance policies consists of policy charges for the cost of insurance,
policy initiation and administration, and surrender charges that have been
assessed. Traditional individual life-health and annuity premiums are
recognized as revenue over the premium-paying period of the policies. Group
health and property-casualty premiums are prorated over the contract term of
the policies.
As specified in the investment advisory agreements with the mutual funds, fees
are determined and recognized as revenues monthly, based on the average daily
net assets of the mutual funds managed. Investment advisory contracts
generally provide for the determination and payment of advisory fees based on
market values of managed portfolios at the end of a calendar month or quarter.
Investment management and advisory contracts are renewable annually with
cancellation clauses ranging from 30 to 90 days.
Assets Held in Separate Accounts/Liabilities Related to Separate Accounts.
These assets and liabilities represent segregated funds administered and
invested by LNC's insurance subsidiaries for the exclusive benefit of pension
and variable life and annuity contractholders. The fees received by LNC's
insurance subsidiaries for administrative and contractholder maintenance
services performed for these separate accounts are included in LNC's
consolidated statements of income.
Deferred Acquisition Costs. Commissions and other costs of acquiring
universal life insurance, variable universal life insurance, traditional life
insurance, annuities, group health insurance and property-casualty insurance
which vary with and are primarily related to the production of new business,
have been deferred to the extent recoverable. Acquisition costs for universal
and variable universal life insurance policies are being amortized over the
lives of the policies in relation to the incidence of estimated gross profits
from surrender charges and investment, mortality, and expense margins, and
actual realized gain (loss) on investments. That amortization is adjusted
retrospectively when estimates of current or future gross profits to be
realized from a group of products are revised. The traditional life-health
and annuity acquisition costs are being amortized over the premium-paying
period of the related policies using assumptions consistent with those used in
computing policy reserves. Deferred acquisition costs for property-casualty
policies are amortized over the contract term of the policies; property-ca-
sualty acquisition costs that are not recoverable from future premiums and
related investment income are expensed.
Expenses. Expenses for universal and variable universal life insurance
policies include interest credited to policy account balances and benefit
claims incurred during the period in excess of policy account balances.
Interest crediting rates associated with funds invested in the insurance
company's general account during 1993 through 1995 ranged from 6.1% to 8.25%.
<PAGE> -42-
Goodwill and Other Intangible Assets. The cost of acquired subsidiaries in
excess of the fair value of net assets (goodwill) is amortized using the
straight-line method over periods that generally correspond with the benefits
expected to be derived from the acquisitions. Goodwill recorded subsequent to
1994 is amortized over 20 to 25 years. Goodwill arising prior to 1995 is
generally amortized over 40 years.
The present value of business in-force is an asset that is recorded in
connection with the acquisition of an insurance company or a block of
policies. The initial value is determined actuarially by discounting
estimated future gross profits as a measure of the value of business in-force
purchased. The resulting asset is amortized on a constant yield basis over
the expected revenue recognition period of the business acquired, with the
accrual of interest added to the unamortized balance at rates ranging from 8%
to 9%.
Other intangible assets (i.e. institutional customer relationships, covenants
not to compete and mutual fund customer relationships) have been recorded in
connection with the acquisition of an asset management services company.
These assets are amortized on a straight-line basis over 6 to 15 years.
The carrying value of goodwill and other intangible assets is reviewed
periodically for indicators of impairment in value.
Policy Liabilities and Accruals. The liabilities for future policy benefits
and expenses for universal and variable universal life insurance policies
consist of policy account balances that accrue to the benefit of the
policyholders, excluding surrender charges. The liabilities for future policy
benefits and expenses for traditional life policies and immediate and deferred
paid-up annuities are computed using a net level premium method and
assumptions for investment yields, mortality and withdrawals based principally
on company experience projected at the time of policy issue, with provision
for possible adverse deviations. Interest assumptions for traditional direct
individual life reserves for all policies range from 2.3% to 11.7% graded to
5.7% after 30 years depending on time of policy issue. Interest rate
assumptions for reinsurance reserves range from 5.0% to 11.0% graded to 8.0%
after 20 years. The interest assumptions for immediate and deferred paid-up
annuities range from 4.5% to 8.0%.
The liability for unpaid property-casualty claims is based on estimates of
payments to be made for individual claims reported and unreported claims,
reduced by estimated recoveries from salvage and subrogation. With respect to
its policy liabilities and accruals, LNC carries on a continuing review of its
1) overall reserve position, 2) reserving techniques and 3) reinsurance
arrangements, and as experience develops and new information becomes known,
liabilities are adjusted as deemed necessary. The effects of changes in
estimates are included in the operating results for the period in which such
estimates occur.
Reinsurance. LNC's insurance companies enter into reinsurance agreements with
other companies in the normal course of their business. LNC's insurance
subsidiaries may assume reinsurance from unaffiliated companies and/or cede
reinsurance to such companies. Assets/liabilities and premiums/benefits from
certain reinsurance contracts which grant statutory surplus to other insurance
companies have been netted on the balance sheets and income statements,
respectively, since there is a right of offset. All other reinsurance
agreements are reported on a gross basis.
Depreciation. Provisions for depreciation of investment real estate and
property and equipment owned for company use are computed principally on the
straight-line method over the estimated useful lives of the assets.
Postretirement Medical and Life Insurance Benefits. LNC accounts for its
postretirement medical and life insurance benefits using the full accrual
method.
Stock Options. LNC recognizes compensation expense for its stock option
incentive plans using the intrinsic value method of accounting. Under the
terms of the intrinsic value method, compensation cost is the excess, if any,
of the quoted market price of the stock at the grant date, or other
measurement date, over the amount an employee must pay to acquire the stock.
<PAGE> -43-
Foreign Exchange. LNC's foreign subsidiaries' balance sheet accounts and
income statement items are translated at the current exchange and average
exchange rates for the year, respectively. Resulting translation adjustments
are reported as a component of shareholders' equity. Other translation
adjustments for foreign currency transactions that affect cash flows are
reported in earnings.
2. Changes in Accounting Principles, Changes in Estimates and
Reclassifications
Postretirement Benefits Other than Pensions. Effective January 1, 1993, LNC
changed its method of accounting for postretirement medical and life insurance
benefits for its eligible employees and agents from a pay-as-you-go method to
a full accrual method in accordance with Financial Accounting Standard No. 106
entitled "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ("FAS 106"). This full accrual method recognizes the estimated
obligation for retired employees and agents and active employees and agents
who are expected to retire in the future. The effect of the change for 1993
was to increase net periodic postretirement benefit cost by $9,200,000 and
decrease income before cumulative effect of accounting change by $6,000,000
($.06 per share). The implementation of FAS 106 resulted in a one-time charge
to first quarter 1993 net income of $96,400,000 ($146,100,000 pre-tax) or $.94
per share for the cumulative effect of the accounting change. See note 6 on
page 53 for additional disclosures regarding postretirement benefits other
than pensions.
Accounting by Creditors for Impairment of a Loan. Financial Accounting
Standard No. 114 entitled "Accounting by Creditors for Impairment of a Loan"
("FAS 114") issued in May 1993, was adopted by LNC effective January 1, 1993.
FAS 114 requires that if an impaired mortgage loan's fair value as described
in note 3 on page 46 is less than the recorded investment in the loan, the
difference is recorded in the mortgage loan allowance for losses account. The
adoption of FAS 114 resulted in additions to the mortgage loan allowance for
losses account and reduced first quarter 1993 income before cumulative effect
of accounting change and net income by $42,300,000 or $.41 per share
($64,100,000 pre-tax). See note 3 on page 47 for further mortgage loan
disclosures. Most of the effect of this change in accounting was within the
Life Insurance and Annuities segment.
Accounting for Certain Investments in Debt and Equity Securities. Financial
Accounting Standard No. 115 entitled "Accounting for Certain Investments in
Debt and Equity Securities" ("FAS 115") issued in May 1993, was adopted by LNC
as of December 31, 1993. In accordance with the rules, the prior year
financial statements have not been restated to reflect the change in
accounting principle. Under FAS 115, securities can be classified as
available-for-sale, trading or held-to-maturity according to the holder's
intent. LNC classified its entire fixed maturity securities portfolio as
"available-for-sale." Securities classified as available-for-sale are carried
at fair value and unrealized gains and losses on such securities are carried
as a separate component of shareholders' equity. The ending balance of
shareholders' equity at December 31, 1993 was increased by $768,400,000 (net
of $384,600,000 of related adjustments to deferred acquisition costs,
$62,900,000 of policyholder commitments and $412,400,000 in deferred income
taxes, all of which would have been recognized if those securities would have
been sold at their fair value, net of amounts applicable to Security-
Connecticut Corporation) to reflect the net unrealized gain on fixed maturity
securities classified as available-for-sale previously carried at amortized
cost. Prior to the adoption of FAS 115, LNC carried a portion of its fixed
maturity securities at fair value with unrealized gains and losses carried as
a separate component of shareholders' equity. The remainder of such
securities were carried at amortized cost.
Change in Estimate for Net Investment Income Related to Mortgage-backed
Securities. At December 31, 1993, LNC had $6,062,000,000 invested in
mortgage-backed securities. As indicated in note 1 on page 40, LNC recognizes
income on these securities using a constant effective yield based on
anticipated prepayments. With the implementation of new investment software
in December 1993, LNC was able to significantly refine its estimate of the
effective yield on such securities to better reflect actual prepayments and
estimates of future prepayments. This resulted in an increase in the
amortization of purchase discount on these securities of $58,600,000 and,
after related amortization of deferred acquisition costs ($18,500,000) and
<PAGE> -44-
income taxes ($14,100,000), increased 1993's income before cumulative effect
of accounting change and net income by $26,000,000 or $0.25 per share. Most
of the effect of this change in estimate was within the Life Insurance and
Annuities business segment.
Change in Estimate for Disability Income Reserves. During the fourth quarter
of 1993, income before cumulative effect of accounting change and net income
decreased by $32,800,000 or $0.32 per share as the result of strengthening
reinsurance disability income reserves by $50,500,000. The need for this
reserve increase within the Reinsurance segment was identified as the result
of management's assessment of current expectations for morbidity trends and
the impact of lower investment income due to lower interest rates.
During the fourth quarter of 1995, LNC completed an in-depth review of the
experience of its disability income business. As a result of this study, and
based on the assumption that recent experience will continue in the future,
income before cumulative effect of accounting change and net income decreased
by $121,600,000 or $1.17 per share ($187,000,000 pre-tax) as a result of
strengthening disability income reserves by $142,700,000 and writing-off
deferred acquisition costs of $44,300,000 in the Reinsurance segment.
Reclassifications. During the first quarter of 1995, in accordance with
management's current judgement of the economic effect of certain reinsurance
contracts which provide statutory surplus relief to other insurance companies,
changes have been made in the classification of assets, liabilities, revenues,
and total benefits and expenses to reflect deposit accounting for such
contracts. Amounts for prior periods have been reclassified to conform to the
1995 presentation. Net income and shareholders' equity are not affected by
these reclassifications. The reclassifications reduced assets/liabilities and
revenues/total benefits and expenses as follows:
December 31 (in millions) 1994 1993
Assets/liabilities ----------------------------------- $465.3 $555.3
Year Ended December 31 (in millions) 1994 1993
Revenues/total benefits and expenses ----------------- $804.5 $897.0
<TABLE>
3. Investments
<CAPTION>
The major categories of net investment income are as follows:
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Fixed maturity securities --------------------- $1,853.6 $1,614.9 $1,757.6
Equity securities ----------------------------- 30.3 29.9 28.9
Mortgage loans on real estate ----------------- 272.0 277.2 297.2
Real estate ----------------------------------- 117.9 104.4 82.3
Policy loans ---------------------------------- 37.9 34.0 37.3
Invested cash --------------------------------- 83.6 55.8 39.6
Other investments ----------------------------- 43.2 54.5 33.4
Investment revenue -------------------------- 2,438.5 2,170.7 2,276.3
Investment expense ---------------------------- 152.8 159.4 129.8
Net investment income ----------------------- $2,285.7 $2,011.3 $2,146.5
</TABLE>
<TABLE>
<CAPTION>
The realized gain (loss) on investments is as follows:
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Fixed maturity securities available-for-sale:
Gross gain ----------------------------------- $ 257.7 $ 87.8 $ 142.3
Gross loss ----------------------------------- (95.8) (331.2) (13.3)
Equity securities available-for-sale:
Gross gain ----------------------------------- 160.6 92.6 225.8
Gross loss ----------------------------------- (60.0) (80.8) (69.1)
Fixed maturity securities held for investment:
Gross gain ----------------------------------- -- -- 248.9
Gross loss ----------------------------------- -- -- (75.8)
Other investments------------------------------ 61.9 19.6 (166.7)
Related restoration or amortization of deferred
acquisition costs and provision for policy-
holder commitments --------------------------- (108.8) 81.2 (23.7)
Total -------------------------------------- $ 215.6 $(130.8) $ 268.4
</TABLE>
<PAGE> -45-
Provisions (credits) for write-downs and net changes in provisions for losses,
which are included in the realized gain (loss) on investments shown above, are
as follows:
<TABLE>
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Fixed maturity securities --------------------- $ 19.9 $ 19.5 $ 60.0
Equity securities ----------------------------- 3.7 8.7 1.6
Mortgage loans on real estate ----------------- 14.2 18.2 140.6
Real estate ----------------------------------- (9.2) 14.9 33.4
Other long-term investments ------------------- (4.6) 1.7 4.3
Guarantees ------------------------------------ (2.6) 2.5 1.4
Total --------------------------------------- $ 21.4 $ 65.5 $241.3
</TABLE>
The change in unrealized appreciation (depreciation) on investments in fixed
maturity and equity securities is as follows:
<TABLE>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Fixed maturity securities available-for-sale - $2,448.9 $(2,295.1) $1,717.5
Equity securities available-for-sale --------- 138.2 (93.3) (32.7)
Fixed maturity securities held for investment -- -- (1,130.3)
Total -------------------------------------- $2,587.1 $(2,388.4) $ 554.5
</TABLE>
The cost, gross unrealized gain and loss, and fair value of securities
available-for-sale are as follows:
<TABLE>
<CAPTION>
Fair
December 31 (in millions) Cost Gain Loss Value
1995:
<S> <C> <C> <C> <C>
Corporate bonds -------------------- $14,011.4 $1,262.3 $ 31.2 $15,242.5
U.S. Government bonds -------------- 1,033.1 115.0 .1 1,148.0
Foreign governments bonds ---------- 1,273.2 98.6 9.7 1,362.1
Mortgage-backed securities:
Mortgage pass-through securities - 1,175.0 45.6 3.4 1,217.2
Collateralized mortgage
obligations --------------------- 4,089.0 266.9 3.8 4,352.1
Other mortgage-backed securities - 2.7 .4 .1 3.0
State and municipal bonds ---------- 2,238.1 154.0 2.0 2,390.1
Redeemable preferred stocks -------- 113.0 7.0 .5 119.5
Total fixed maturity securities -- 23,935.5 1,949.8 50.8 25,834.5
Equity securities ------------------ 936.1 232.4 3.7 1,164.8
Total ---------------------------- $24,871.6 $2,182.2 $ 54.5 $26,999.3
</TABLE>
<TABLE>
<CAPTION>
1994:
<S> <C> <C> <C> <C>
Corporate bonds -------------------- $12,166.7 $170.8 $ 544.9 $11,792.6
U.S. Government bonds -------------- 1,673.1 7.5 47.8 1,632.8
Foreign governments bonds ---------- 624.3 6.1 18.5 611.9
Mortgage-backed securities:
Mortgage pass-through securities - 1,265.0 7.9 46.8 1,226.1
Collateralized mortgage
obligations --------------------- 3,944.4 83.3 153.6 3,874.1
Other mortgage-backed securities - 6.1 1.1 1.0 6.2
State and municipal bonds ---------- 2,386.2 46.2 54.7 2,377.7
Redeemable preferred stocks -------- 128.3 -- 5.6 122.7
Total fixed maturity securities -- 22,194.1 322.9 872.9 21,644.1
Equity securities ------------------ 948.1 135.2 44.7 1,038.6
Total ---------------------------- $23,142.2 $458.1 $ 917.6 $22,682.7
</TABLE>
<PAGE> -46-
Future maturities of fixed maturity securities available-for-sale are as
follows:
<TABLE>
<CAPTION>
1995
Fair
December 31 (in millions) Cost Value
<S> <C> <C>
Due in one year or less ------------------------------ $ 501.3 $ 506.3
Due after one year through five years ---------------- 3,987.7 4,197.9
Due after five years through ten years --------------- 6,421.4 6,873.6
Due after ten years ---------------------------------- 7,758.4 8,684.4
Subtotal ------------------------------------------- 18,668.8 20,262.2
Mortgage-backed securities --------------------------- 5,266.7 5,572.3
Total ---------------------------------------------- $23,935.5 $25,834.5
</TABLE>
The foregoing data is based on stated maturities. Actual maturities will
differ in some cases because borrowers may have the right to call or pre-pay
obligations.
At December 31, 1995, the current par, amortized cost and estimated fair value
of investments in mortgage-backed securities summarized by interest rates of
the underlying collateral are as follows:
<TABLE>
<CAPTION>
Current Fair
December 31 (in millions) Par Cost Value
<S> <C> <C> <C>
Below 7% ------------------------------- $ 374.3 $ 356.8 $ 361.1
7% - 8% -------------------------------- 1,547.4 1,473.7 1,517.2
8% - 9% -------------------------------- 1,710.9 1,660.4 1,770.9
Above 9% ------------------------------- 1,829.4 1,775.8 1,923.1
Total -------------------------------- $5,462.0 $5,266.7 $5,572.3
</TABLE>
The quality ratings of fixed maturity securities available-for-sale are as
follows:
<TABLE>
<CAPTION>
December 31 1995
<S> <C>
Treasuries and AAA ----------------------------------- 34.6%
AA --------------------------------------------------- 11.1
A ---------------------------------------------------- 26.2
BBB -------------------------------------------------- 22.0
BB --------------------------------------------------- 3.2
Less than BB ----------------------------------------- 2.9
100.0%
</TABLE>
Mortgage loans on real estate are considered impaired when, based on current
information and events, it is probable that LNC will be unable to collect all
amounts due according to the contractual terms of the loan agreement. When
LNC determines that a loan is impaired, a provision for loss is established
for the difference between the carrying value of the mortgage loan and the
estimated value. Estimated value is based on either the present value of
expected future cash flows discounted at the loan's effective interest rate,
the loan's observable market price or the fair value of the collateral. The
provision for losses is reported as realized gain (loss) on investments.
Mortgage loans deemed to be uncollectible are charged against the allowance
for losses and subsequent recoveries, if any, are credited to the allowance
for losses.
The allowance for losses is maintained at a level believed adequate by
management to absorb estimated probable credit losses. Management's periodic
evaluation of the adequacy of the allowance for losses is based on LNC's past
loan loss experience, known and inherent risks in the portfolio, adverse
situations that may affect the borrower's ability to repay (including the
timing of future payments), the estimated value of the underlying collateral,
composition of the loan portfolio, current economic conditions and other
relevant factors. This evaluation is inherently subjective as it requires
estimating the amounts and timing of future cash flows expected to be received
on impaired loans that may be susceptible to significant change.
<PAGE> -47-
Impaired loans along with the related allowance for losses are as follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Impaired loans with allowance for losses --------- $150.9 $275.8
Allowance for losses ----------------------------- (29.6) (62.7)
Impaired loans with no allowance for losses ------ 2.2 2.3
Net impaired loans ----------------------------- $123.5 $215.4
</TABLE>
Impaired loans with no allowance for losses are a result of 1) direct write-
downs or 2) collateral dependent loans where the fair value of the collateral
is greater than the recorded investment in loans.
A reconciliation of the mortgage loan allowance for losses for these impaired
mortgage loans is as follows:
<TABLE>
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year -------------------- $ 62.7 $226.6 $134.5
Provisions for losses --------------------------- 14.2 18.2 76.5
Provision for adoption of FAS 114 --------------- -- -- 64.1
Releases due to write-downs --------------------- (11.9) -- --
Releases due to sales --------------------------- (20.2) (163.2) (12.4)
Releases due to foreclosures -------------------- (15.2) (18.9) (36.1)
Balance at end of year ------------------------ $ 29.6 $ 62.7 $226.6
</TABLE>
The average recorded investment in impaired loans and the interest income
recognized on impaired loans were as follows:
<TABLE>
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Average recorded investment in impaired loans ---- $189.6 $498.1 $734.4
Interest income recognized on impaired loans ----- 16.9 38.3 48.5
</TABLE>
All interest income on impaired loans was recognized on the cash basis of
income recognition.
As of December 31, 1995 and 1994, LNC had restructured loans of $62,500,000
and $36,200,000, respectively. LNC recorded $6,300,000 and $800,000 interest
income on these restructured loans in 1995 and 1994, respectively. Interest
income in the amount of $6,600,000 and $3,900,000 would have been recorded on
these loans according to their original terms in 1995 and 1994, respectively.
As of December 31, 1995 and December 31, 1994, LNC had no outstanding
commitments to lend funds on restructured loans.
As of December 31, 1995, LNC's investment commitments for fixed maturity
securities (primarily private placements), mortgage loans on real estate and
real estate were $546,900,000.
Fixed maturity securities available-for-sale, mortgage loans on real estate
and real estate with a combined carrying value at December 31, 1995 of
$8,000,000 were non-income producing for the year ended December 31, 1995.
The cost information for mortgage loans on real estate, real estate and other
long-term investments are net of allowances for losses. The balance sheet
account for other liabilities includes a reserve for guarantees of third-party
debt. The amount of allowances and reserves for such items is as follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Mortgage loans on real estate ------------------------- $ 29.6 $ 62.7
Real estate ------------------------------------------- 58.0 78.6
Other long-term investments --------------------------- 13.6 23.8
Guarantees -------------------------------------------- 7.1 13.1
</TABLE>
<PAGE> -48-
4. Federal Income Taxes
The Federal income tax expense (benefit) before cumulative effect of
accounting change is as follows:
<TABLE>
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Current -------------------------------------- $206.8 $(93.9) $308.2
Deferred ------------------------------------- (62.4) 120.3 (135.7)
Total -------------------------------------- $144.4 $ 26.4 $172.5
</TABLE>
Cash paid for Federal income taxes in 1995, 1994 and 1993 was $38,300,000,
$70,900,000 and $279,700,000, respectively. The cash paid in 1995 is net of a
$147,400,000 cash refund related to the carryback of 1994 capital losses to
prior years.
The effective tax rate on pre-tax income before cumulative effect of
accounting change is lower than the prevailing corporate Federal income tax
rate. A reconciliation of this difference is as follows:
<TABLE>
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Tax rate times pre-tax income ----------------- $219.3 $131.7 $205.7
Effect of:
Tax-exempt investment income ------------------ (70.0) (74.0) (75.8)
Loss (gain) on sale of affiliates/
operating property --------------------------- -- (17.1) 34.5
Other items ----------------------------------- ( 4.9) (14.2) 8.1
Provision for income taxes ------------------ $144.4 $ 26.4 $172.5
Effective tax rate -------------------------- 23% 7% 29%
</TABLE>
The Federal income tax recoverable (liability) is as follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Current ----------------------------------------------- $ (7.2) $ 94.4
Deferred ---------------------------------------------- (121.2) 302.5
Total ----------------------------------------------- $(128.4) $ 396.9
</TABLE>
Significant components of LNC's net deferred tax asset (liability) are as
follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Deferred tax assets:
Policy liabilities and accruals and
contractholder funds --------------------------------- $1,032.2 $ 696.2
Net operating loss ------------------------------------ 120.7 143.9
Loss on investments ----------------------------------- 16.3 30.1
Net unrealized loss on securities available-for-sale -- -- 159.3
Postretirement benefits other than pensions ----------- 56.6 54.6
Other ------------------------------------------------- 91.7 131.3
Total deferred tax assets --------------------------- 1,317.5 1,215.4
Valuation allowance for deferred tax assets ----------- -- (135.6)
Net deferred tax assets ----------------------------- 1,317.5 1,079.8
Deferred tax liabilities:
Deferred acquisition costs ---------------------------- 415.0 741.3
Premiums and fees receivable -------------------------- 44.6 32.8
Net unrealized gain on securities available-for-sale--- 717.0 --
Present value of business in-force -------------------- 148.7 --
Other ------------------------------------------------- 113.4 3.2
Total deferred tax liabilities ---------------------- 1,438.7 777.3
Net deferred tax asset (liability) ------------------ $ (121.2)$ 302.5
</TABLE>
<PAGE> -49
At December 31, 1995, LNC had net operating loss carryforwards of $227,300,000
for income tax purposes related to its foreign life reinsurance companies that
expire in years 2005 through 2009. Delaware Management Holdings, Inc.
("Delaware"), acquired in 1995, has net operating loss carryforwards for
income tax purposes of $117,500,000 at December 31, 1995, which expire during
the periods 2002 through 2010. These carryforwards will only be available to
reduce the respective taxable income of the foreign life reinsurance companies
and Delaware.
LNC is required to establish a "valuation allowance" for any portion of its
deferred tax assets which are unlikely to be realized. At December 31, 1994,
$159,300,000 of deferred tax assets relating to net unrealized capital losses
on fixed maturity and equity securities available-for-sale were available to
be recorded in shareholders' equity before considering a valuation allowance.
For Federal income tax purposes, capital losses may only be used to offset
capital gains in the current year or during a three year carryback and five
year carryforward period. Due to these restrictions, and the uncertainty at
that time of future capital gains, these deferred tax assets were
substantially offset by a valuation allowance of $135,600,000. By December
31, 1995, the fair values of fixed maturity and equity securities available-
for-sale were greater than the cost basis resulting in unrealized capital
gains. Accordingly, no valuation allowance was established as of December 31,
1995, since management believes it is more likely than not that LNC will
realize the benefit of its deferred tax assets.
Prior to 1984, a portion of the life companies' current income was not subject
to current income tax, but was accumulated for income tax purposes in a
memorandum account designated as "policyholders' surplus." The total of the
life companies' balances in their respective "policyholders' surplus" accounts
at December 31, 1983 of $222,400,000 was "frozen" by the Tax Reform Act of
1984 and, accordingly, there have been no additions to the accounts after that
date. That portion of current income on which income taxes have been paid
will continue to be accumulated in a memorandum account designated as
"shareholders' surplus," and is available for dividends to shareholders
without additional payment of tax. The December 31, 1995 total of the life
companies' account balances for their "shareholders' surplus" was
$1,643,800,000. Should dividends to shareholders for each life company exceed
its respective "shareholders' surplus," amounts would need to be transferred
from its respective "policyholders' surplus" and would be subject to Federal
income tax at that time. In connection with the 1993 sale of a life insurance
affiliate (see note 11 on page 65) $8,800,000 was transferred from
policyholders' surplus to shareholders' surplus and current income tax of
$3,100,000 was paid. Under existing or foreseeable circumstances, LNC neither
expects nor intends that distributions will be made from the remaining balance
in "policyholders' surplus" of $213,600,000 that will result in any such tax.
Accordingly, no provision for deferred income taxes has been provided by LNC
on its "policyholders' surplus" account. In the event that such excess
distributions were made, it is estimated that income taxes of approximately
$74,800,000 would be due.
Undistributed earnings of certain LNC foreign subsidiaries that are considered
to be indefinitely reinvested amounted to approximately $135,000,000 at
December 31, 1995. Accordingly, no provisions for U.S. income taxes have been
provided thereon. Upon distribution of those earnings in the form of
dividends or otherwise, LNC would be subject to both U.S. income taxes
(subject to adjustments for foreign tax credits) and withholding taxes payable
to the applicable foreign countries. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable because of
the complexities associated with its hypothetical calculations.
<PAGE> -50-
5. Supplemental Financial Data
<TABLE>
The balance sheet captions, "Real Estate" and "Property and Equipment," are
shown net of allowances for depreciation as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Real estate ----------------------------------------- $ 58.7 $ 41.9
Property and equipment ------------------------------ 228.5 221.0
</TABLE>
At December 31, 1995, property and equipment is also net of a $28,300,000
valuation allowance for operating property held-for-sale.
<TABLE>
Details underlying the balance sheet caption, "Contractholder Funds," are as
follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Premium deposit funds ------------------------------- $18,489.6 $16,982.6
Undistributed earnings on participating business ---- 91.9 63.5
Other ----------------------------------------------- 203.0 204.3
Total --------------------------------------------- $18,784.5 $17,250.4
</TABLE>
<TABLE>
A reconciliation of the present value of business in-force for LNC's insurance
subsidiaries included in other intangible assets is as follows:
<CAPTION>
December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year ----------------- $ 38.0 $ 67.7 $ 27.7
Acquisitions of insurance companies ---------- 388.7 -- 49.3
Divestitures of insurance companies ---------- -- (25.5) --
Interest accrued on unamortized balance ------ 30.7 3.6 3.2
Amortization of asset ------------------------ (50.0) (7.8) (12.5)
Balance at end of year --------------------- 407.4 38.0 67.7
Other intangible assets (non-insurance) ------ 121.5 4.8 5.8
Total other intangible assets
at end of year ---------------------------- $528.9 $ 42.8 $ 73.5
</TABLE>
<TABLE>
Future estimated amortization of the present value of business in-force for
LNC's insurance subsidiaries is as follows (in millions):
<CAPTION>
<S> <C> <S> <C> <S> <C>
1996 - $66.5 1998 - $40.4 2000 - $ 38.2
1997 - 60.1 1999 - 40.1 Thereafter - 162.1
</TABLE>
<TABLE>
A reconciliation of the beginning of year and end of year liability for
property-casualty claims and claim expenses is as follows:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Total liability reported at beginning of year - $2,702.5 $2,810.1 $2,672.5
Reinsurance recoverable following the
adoption of FAS 113 in 1993 ------------------ 203.1 225.5 --
Liability for claims and claim expenses
at beginning of year, net of reinsurance -- 2,499.4 2,584.6 2,672.5
Plus:
Provision for claims and claim expenses arising
in the current year, net of reinsurance ------ 1,234.0 1,340.6 1,433.3
Decrease in estimated claims and claim expenses
arising in prior years, net of reinsurance --- (24.5) (78.2) (26.5)
Total incurred claims and claim expenses,
net of reinsurance ------------------------ 1,209.5 1,262.4 1,406.8
Less:
Claims and claim expense payments arising
in the current year, net of reinsurance ------ 613.2 619.4 633.5
Payments for claims and claim expenses
arising in prior years, net of reinsurance --- 689.4 728.2 861.2
Total payments, net of reinsurance ---------- 1,302.6 1,347.6 1,494.7
Total liability for claims and claim expenses
at end of year, net of reinsurance --------- 2,406.3 2,499.4 2,584.6
Reinsurance recoverable ------------------------ 189.0 203.1 225.5
Total liability reported at end of year ----- $2,595.3 $2,702.5 $2,810.1
</TABLE>
<PAGE> -51-
The reconciliation shows a decrease of $24,500,000, $78,200,000, and
$26,500,000 to the December 31, 1994, 1993 and 1992 liability for claims and
claim expenses, respectively, arising in prior years. Such reserve
adjustments, which affected current operations during 1995, 1994 and 1993,
respectively, resulted from developed claims for prior years being different
than were anticipated when the liabilities for claims and claim expenses were
originally estimated. The favorable development trends are reflective of the
changes in underwriting practices adopted during the last three years. These
development trends have been considered in establishing current year reserves.
<TABLE>
Details underlying the balance sheet captions, "Short-term and Long-term
Debt," are as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Short-term debt:
Commercial paper ------------------------------------ $301.9 $107.2
Other short-term notes ------------------------------ 123.4 152.7
Current portion of long-term debt ------------------- 1.5 100.3
Total short-term debt ----------------------------- $426.8 $360.2
Long-term debt less current portion:
7 1/8% notes payable, due 1999 ---------------------- $ 99.4 $ 99.2
7 5/8% notes payable, due 2002 ---------------------- 99.2 99.1
7 1/4% notes payable, due 2005 ---------------------- 199.0 --
9 1/8% notes payable, due 2024 ---------------------- 199.1 199.1
Mortgages and other notes payable ------------------- 62.6 76.8
Total long-term debt ------------------------------ $659.3 $474.2
</TABLE>
The commercial paper outstanding at December 31, 1995 and 1994, had a weighted
average interest rate of approximately 6.00% and 5.90%, respectively.
Future maturities of long-term debt are as follows (in millions):
1996 - $ 1.5 1998 - $ 18.8 2000 - $ .4
1997 - 21.1 1999 - 100.5 Thereafter - 523.0
LNC maintains a revolving credit agreement with a group of domestic and
foreign banks in the aggregate amount of $500,000,000. At December 31, 1995,
this agreement, which expires in September 2000, provides for interest on
borrowings based on various money market indices. Under the terms of this
agreement, LNC must maintain a prescribed level of adjusted consolidated net
worth. In addition, debt levels must remain below 45% of adjusted
consolidated net worth. At December 31, 1995, LNC had no outstanding
borrowings under this agreement. During 1995, 1994 and 1993, fees paid for
maintaining revolving credit agreements amounted to $649,000, $1,000,000, and
$1,300,000, respectively.
Cash paid for interest for 1995, 1994 and 1993 was $73,200,000, $47,900,000,
and $44,200,000, respectively.
<TABLE>
Reinsurance transactions included in the income statement caption, "Insurance
Premiums," are as follows:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Insurance assumed --------------------------- $1,297.6 $1,159.9 $986.1
Insurance ceded ----------------------------- 448.7 482.9 291.1
Net reinsurance premiums ------------------ $ 848.9 $ 677.0 $695.0
</TABLE>
The income statement caption, "Benefits and Settlement Expenses," is net of
reinsurance recoveries of $422,600,000, $284,700,000 and $174,000,000 for the
years ended December 31, 1995, 1994 and 1993, respectively.
The income statement caption, "Underwriting, Acquisition, Insurance and Other
Expenses," includes amortization of deferred acquisition costs of
$687,300,000, $598,300,000 and $571,800,000 for the years ended December 31,
1995, 1994 and 1993, respectively. An additional $(85,200,000), $81,200,000
and $(23,700,000) of deferred acquisition costs was restored (amortized) and
netted against "Realized Gain (Loss) on Investments" for the years ended
December 31, 1995, 1994 and 1993, respectively.
<PAGE> -52-
6. Employee Benefit Plans
Pensions Plans - U.S. LNC maintains funded defined benefit pension plans for
most of its U.S. employees and, prior to January 1, 1995, full-time agents.
The benefits for employees are based on total years of service and the highest
60 months of compensation during the last 10 years of employment. The
benefits for agents were based on a percentage of each agent's yearly
earnings. The plans are funded by contributions to tax-exempt trusts. LNC's
funding policy is consistent with the funding requirements of Federal law and
regulations. Contributions are intended to provide not only the benefits
attributed to service to date, but also those expected to be earned in the
future. Plan assets consist principally of listed equity securities and
corporate obligations and government bonds.
All benefits applicable to the funded defined benefit plan for agents were
frozen as of December 31, 1994. The curtailment of this plan did not have a
significant effect on net pension cost for 1994. Effective January 1, 1995,
pension benefits for agents have been provided by a new defined contribution
plan. Contributions to this plan are based on 2.3% of an agent's earnings up
to the social security wage base and 4.6% of any excess.
LNC also sponsors three types of unfunded, nonqualified, defined benefit plans
for certain U.S. employees, agents and directors. A supplemental retirement
plan provides defined benefit pension benefits in excess of limits imposed by
Federal tax law. A salary continuation plan provides certain officers of LNC
defined pension benefits based on years of service and final monthly salary
upon death or retirement. A retirement plan for outside directors provides
benefits based on years of service and the amount of the retainer paid during
the last year of service.
<TABLE>
The status of the funded defined benefit pension plans and the amounts
recognized on the balance sheets are as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits ---------------------------------------- $(369.7) $(287.9)
Nonvested benefits ------------------------------------- (20.8) (16.1)
Accumulated benefit obligation ----------------------- (390.5) (304.0)
Effect of projected future compensation increases ------ (99.4) (63.3)
Projected benefit obligation ------------------------- (489.9) (367.3)
Plan assets at fair value ------------------------------ 449.6 356.1
Projected benefit obligations in
excess of plan assets ------------------------------- (40.3) (11.2)
Unrecognized net loss ---------------------------------- 43.2 6.8
Unrecognized prior service cost ------------------------ 3.0 3.1
Prepaid (accrued) pension cost included in
other liabilities ----------------------------------- $ 5.9 $ (1.3)
</TABLE>
<TABLE>
The status of the unfunded defined benefit pension plans and the amounts
recognized on the balance sheets are as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefits --------------------------------------- $(25.4) $(18.1)
Nonvested benefits ------------------------------------ (3.3) (3.1)
Accumulated benefit obligation ---------------------- (28.7) (21.2)
Effect of projected future compensation increases ----- (7.5) (6.7)
Projected benefit obligation ------------------------ (36.2) (27.9)
Unrecognized transition obligation -------------------- .2 .3
Unrecognized net loss --------------------------------- 7.3 1.7
Unrecognized prior service cost ----------------------- .4 .5
Accrued pension cost included in other liabilities -- $(28.3) $(25.4)
</TABLE>
<PAGE> -53-
<TABLE>
The determination of the projected benefit obligation for the defined benefit
plans was based on the following assumptions:
<CAPTION>
December 31 1995 1994 1993
<S> <C> <C> <C>
Weighted-average discount rate ---------------------- 7.0% 8.0% 7.0%
Rate of increase in compensation:
Salary continuation plan ---------------------------- 6.0 6.5 6.0
All other plans ------------------------------------- 5.0 5.0 5.0
Expected long-term rate of return on plan assets ---- 9.0 9.0 9.0
</TABLE>
<TABLE>
The components of net pension cost for the defined benefit pension plans are
as follows:
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Service cost-benefits earned during the year -------- $17.0 $22.1 $20.3
Interest cost on projected benefit obligation ------- 32.0 30.0 27.9
Actual return on plan assets ------------------------ (82.4) 9.7 (42.1)
Net amortization (deferral)-------------------------- 52.4 (40.2) 11.8
Net pension cost ---------------------------------- $19.0 $21.6 $17.9
</TABLE>
Pension Plan - Non U.S. The employees of LNC's primary foreign subsidiary are
covered by a defined benefit pension plan. The plan provides death and
pension benefits based on final pensionable salary. At December 31, 1995,
plan assets exceeded the projected benefit obligations by $9,020,000 and were
included in other assets in LNC's balance sheet. At December 31, 1994, the
projected benefit obligation exceeded plan assets by $3,631,000 and was
included with other liabilities in LNC's balance sheet. Net pension cost for
the foreign plans was $1,727,000, $633,000 and $1,112,000, for 1995, 1994 and
1993, respectively.
401(k) Plan. LNC and its subsidiaries also sponsor contributory defined
contribution plans for eligible U.S. employees and agents. LNC's
contributions to the plans are equal to a participant's pre-tax contribution,
not to exceed 6% of base pay, multiplied by a percentage, ranging from 25% to
150%, which varies according to certain incentive criteria as determined by
LNC's Board of Directors. Expense for these plans amounted to $20,700,000,
$29,400,000 and $26,300,000 in 1995, 1994 and 1993, respectively.
Postretirement Medical and Life Insurance Benefit Plans. LNC sponsors unfunded
defined benefit plans that provide postretirement medical and life insurance
benefits to full-time U.S. employees and agents who, depending on the plan,
have worked for LNC 10 to 15 years and attained age 55 to 60. Medical
benefits are also available to spouses and other dependents of employees and
agents. For medical benefits, limited contributions are required from
individuals retired prior to November 1, 1988; contributions for later
retirees, which can be adjusted annually, are based on such items as years of
service at retirement and age at retirement. The life insurance benefits are
noncontributory, although participants can elect supplemental contributory
benefits.
<TABLE>
The status of the postretirement medical and life insurance benefit plans and
the amount recognized on the balance sheet is as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees -------------------------------------------- $ (88.7) $ (86.6)
Fully eligible active plan participants ------------- (24.2) (21.6)
Other active plan participants ---------------------- (40.0) (34.0)
Accumulated postretirement benefit obligation ----- (152.9) (142.2)
Unrecognized gain ----------------------------------- (6.3) (12.6)
Accrued plan cost included in other liabilities --- $(159.2) $(154.8)
</TABLE>
<PAGE> -54-
<TABLE>
The components of periodic postretirement benefit cost are as follows:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Service cost ------------------------------------------- $ 3.1 $ 4.3 $ 5.0
Interest cost ------------------------------------------ 9.7 10.4 10.7
Amortized cost (credit) -------------------------------- (2.0) .3 --
Net periodic postretirement benefit cost ------------- $10.8 $15.0 $15.7
</TABLE>
The calculation of the accumulated postretirement benefit obligation assumes a
weighted-average annual rate of increase in the per capita cost of covered
benefits (i.e. health care cost trend rate) of 9.5% for 1996 gradually
decreasing to 5.5% by 2004 and remaining at that level thereafter. The health
care cost trend rate assumption has a significant effect on the amounts
reported. For example, increasing the assumed health care cost trend rates by
one percentage point each year would increase the accumulated postretirement
benefit obligation as of December 1995 and 1994 by $11,100,000 and
$10,300,000, respectively, and the aggregate of the estimated service and
interest cost components of net periodic postretirement benefit cost for the
year ended December 31, 1995 by $1,100,000. The calculation assumes a
long-term rate of increase in compensation of 5.0% for both December 31, 1995
and 1994. The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.0% and 8.0% for December
31, 1995 and 1994, respectively.
Incentive Plans. LNC has various incentive plans for key employees and agents
of LNC and its subsidiaries which provide for the issuance of stock options,
stock appreciation rights, restricted stock awards and stock incentive awards.
These plans are comprised primarily of stock option incentive plans. Stock
options granted under the stock option incentive plans are at the market value
at the date of grant and, subject to termination of employment, expire 10
years from the date of grant. Such options are not transferable other than on
death and are exercisable one year from date of grant for options issued prior
to 1992. Options issued subsequent to 1991 are exercisable in 25% increments
on the option issuance anniversary in the four years following issuance.
Financial Accounting Standard No. 123 entitled "Accounting for Stock-Based
Compensation" ("FAS 123") issued in October 1995, was adopted by LNC as of
December 31, 1995. The provisions of FAS 123 allow companies to either
expense the estimated fair value of stock options or to continue their current
practice but disclose the pro forma effects on net income and earnings per
share had the fair value of the options been expensed. LNC has elected to
continue its practice of recognizing compensation expense for its stock option
incentive plans using the intrinsic value based method of accounting (see note
1 on page 42) and to provide the required pro forma information for stock
options granted after December 31, 1994. Accordingly, no compensation expense
has been recognized for stock option incentive plans. Had compensation
expense for LNC's stock option incentive plans for options granted after
December 31, 1994 been determined based on the estimated fair value at the
grant dates for awards under those plans, LNC's pro forma net income and
earnings per share for 1995 would have been $479,786,000 and $4.61,
respectively (a decrease of $2,400,000 and $.02, respectively). The effects
on 1995 pro forma net income and earnings per share of expensing the estimated
fair value of stock options are not necessarily representative of the effects
on reported net income for future years due to such things as the vesting
period of the stock options and the potential for issuance of additional stock
options in future years.
The fair value of options granted after December 31, 1994, used as a basis for
the above pro forma disclosures, was estimated as of the date of grant using a
Black-Scholes option pricing model. The option pricing assumptions include a
dividend yield of 4.4%; an expected volatility of 22%; a risk-free interest
rate of 6.3%; and an expected life of 5 years. The weighted-average fair
value per option granted during 1995 was $7.15.
<PAGE> -55-
<TABLE>
Information with respect to the incentive plans involving stock options is as
follows:
Options Outstanding
Weighted-
Shares Average
Available Exercise
for Grant Shares Price
<S> <C> <C> <C>
Balance at January 1, 1993 ----- 2,020,096 2,150,834 $25.34
Granted ------------------------ (570,600) 570,600 39.75
Exercised ---------------------- -- (260,756) 24.29
Expired ------------------------ (1,000) -- --
Forfeited ---------------------- 28,276 (18,826) 28.68
Restricted stock awarded ------- (144,154) --
Balance at December 31, 1993 - 1,332,618 2,441,852 28.80
Additional authorized ---------- 7,650,000
Granted ------------------------ (442,100) 442,100 39.49
Exercised ---------------------- -- (122,963) 25.43
Expired ------------------------ (7,000) -- --
Forfeited ---------------------- 105,203 (88,800) 33.76
Restricted stock awarded ------- (215,707) --
Balance at December 31, 1994 - 8,423,014 2,672,189 30.56
Granted ------------------------ (510,150) 510,150 42.57
Exercised ---------------------- -- (313,612) 25.70
Expired ------------------------ (5,273) (275) 19.97
Forfeited ---------------------- 175,446 (36,172) 34.64
Restricted stock awarded ------- (335,126) -- --
Balance at December 31, 1995 - 7,747,911 2,832,280 33.21
</TABLE>
<TABLE>
Shares under options that were exercisable at year-end are as follows:
December 31 1995 1994 1993
<S> <C> <C> <C>
Options exercisable ------------- 1,647,872 1,615,839 1,497,502
</TABLE>
<TABLE>
Information with respect to incentive plan stock options outstanding at
December 31, 1995 is as follows:
<CAPTION>
Options Outstanding Options Exercisable
Weighted-
Average Weighted- Number Weighted-
Range of Number Out- Remaining Average Exercisable Average
Exercise standing at Contractual Exercise at Exercise
Prices Dec 31, 1995 Life(Years) Price Dec 31, 1995 Price
<C> <C> <C> <C> <C> <C>
$10-$20 70,330 1.87 $19.25 70,330 $19.25
21- 30 1,325,649 4.30 25.88 1,212,699 25.71
31- 40 940,901 7.14 39.59 357,843 39.66
41- 50 495,400 9.36 42.70 7,000 43.19
$10-$50 2,832,280 1,647,872
</TABLE>
7. Restrictions, Commitments and Contingencies
Statutory Information and Restrictions
<TABLE>
Net income as determined in accordance with statutory accounting practices for
LNC's insurance subsidiaries was as follows:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Life-health insurance --------------------- $314.0 $411.7 $229.7
Property-casualty insurance --------------- 182.0 167.9 247.6
</TABLE>
Life-health insurance statutory net income for 1995, 1994 and 1993, excluding
LNC's foreign life reinsurance companies, was $350,400,000, $411,100,000 and
$267,200,000, respectively.
<TABLE>
Shareholders' equity as determined in accordance with statutory accounting
practices for LNC's insurance subsidiaries was as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Life-health insurance --------------------- $1,908.5 $1,966.7
Property-casualty insurance --------------- 1,004.2 955.7
</TABLE>
<PAGE> -56-
LNC's insurance subsidiaries are subject to certain insurance department
regulatory restrictions as to the transfer of funds and payments of dividends
to LNC. In 1996, LNC's insurance subsidiaries can transfer up to $518,100,000
without seeking prior approval from the insurance regulators.
Environmental Losses
Total property-casualty liabilities for unpaid claims and claim expenses were
$2,595,000,000 and $2,703,000,000 at December 31, 1995 and 1994, respectively.
These liabilities include a liability for environmental losses of $256,000,000
and $201,000,000, respectively. In establishing liabilities for claims and
claim expenses related to environmental matters, management considers facts
currently known and the current state of the law and coverage litigation.
Liabilities are recognized for known claims (including the cost of related
litigation) when sufficient information has been developed to indicate the
involvement of a specific insurance policy and management can reasonably
estimate its liability. In addition, liabilities have been established to
cover additional exposures on both known and unasserted claims. Estimates of
the liabilities are reviewed and updated continually. Developed case law and
adequate claim history do not exist for a portion of LNC's environmental
exposure, especially because significant uncertainty exists about the outcome
of coverage litigation and whether past claims experience will be
representative of future claims experience. Accordingly, although management
believes the estimated reserve provided for environmental losses is adequate,
it is reasonably possible that a change in estimate of required reserve levels
could occur in the near term. It is not possible to provide a meaningful
estimate of a range of possible outcomes at this time.
Disability Income Claims
The liability for disability income claims net of the related asset for
amounts recoverable from reinsurers at December 31, 1995 and 1994 is a net
liability of $1,541,000,000 and $815,800,000, respectively, excluding deferred
acquisition costs. The bulk of the increase to this liability relates to the
assumption of a large block of disability claim reserves and related assets
during the third quarter of 1995. In addition, as indicated in note 2 on page
44, LNC strengthened its disability income reserves and wrote off certain
related deferred acquisition costs in the fourth quarter of 1995. The
reserves were established on the assumption that recent experience will
continue in the future. If incidence levels or claim termination rates vary
significantly from these assumptions, further adjustments to reserves may be
required in the future. It is not possible to provide a meaningful estimate
of a range of potential outcomes at this time. LNC reviews and updates the
level of these reserves on an on-going basis.
Compliance of Qualified Annuity Plans
Tax authorities continue to focus on compliance of qualified annuity plans
marketed by insurance companies. If sponsoring employers cannot demonstrate
compliance and the insurance company is held responsible due to its marketing
efforts, LNC and other insurers may be subject to potential liability. It is
not possible to provide a meaningful estimate of the range of potential
liability at this time. Management continues to monitor this matter and to
take steps to minimize any potential liability.
Group Pension Annuities
The liabilities for guaranteed interest and group pension annuity contracts,
which are no longer being sold, are supported by a single portfolio of assets
which attempts to match the duration of these liabilities. Due to the very
long-term nature of group pension annuities and the resulting inability to
exactly match cash flows, a risk exists that future cash flows from
investments will not be reinvested at rates as high as currently earned by the
portfolio. This situation could cause losses which would be recognized at
some future time.
Leases
Certain of LNC's subsidiaries lease their home office properties through
sale-leaseback agreements. The agreements provide for a 25 year lease period
with options to renew for six additional terms of five years each. The
<PAGE> -57-
agreements also provide LNC with the right of first refusal to purchase the
properties during the term of the lease, including renewal periods, at a price
as defined in the agreements. In addition, LNC has the option to purchase the
leased properties at fair market value as defined in the agreements on the
last day of the initial 25 year lease period ending in 2009 or the last day of
any of the renewal periods.
<TABLE>
Total rental expense on operating leases in 1995, 1994 and 1993 was
$65,600,000, $51,400,000 and $55,900,000, respectively. Future minimum rental
commitments are as follows (in millions):
<S> <C> <S> <C> <S> <C>
1996 - $62.5 1998 - $50.0 2000 - $ 46.2
1997 - 57.0 1999 - 48.3 Thereafter - 402.7
</TABLE>
Insurance Ceded and Assumed
LNC's insurance companies cede insurance to other companies. The portion of
risks exceeding each company's retention limit is reinsured with other
insurers. LNC seeks reinsurance coverage within the business segments that
sell life insurance that limits its liabilities on an individual insured to
$3,000,000. Since 1993, catastrophe reinsurance arrangements for property-
casualty coverages provided for a recovery of an average of approximately 93%
of losses in excess of $30,000,000 up to $180,000,000 per occurrence. To
cover products other than life and property-casualty insurance, LNC acquires
other insurance coverages with retentions and limits which management believes
are appropriate for the circumstances. The accompanying financial statements
reflect premiums, benefits and settlement expenses and deferred acquisition
costs, net of insurance ceded (see note 5 on page 51). LNC's insurance
companies remain liable if their reinsurers are unable to meet their
contractual obligations under the applicable reinsurance agreements.
Certain LNC insurance companies assume insurance from other companies. At
December 31, 1995, LNC's insurance companies have provided $602,900,000 of
statutory surplus relief to other insurance companies under reinsurance
transactions. Generally, such amounts are offset by corresponding receivables
from the ceding company, which are secured by future profits on the reinsured
business. However, LNC's insurance companies are subject to the risk that the
ceding company may become insolvent and the right of offset would not be
permitted.
Associated with these transactions, LNC's foreign insurance companies have
obtained letters of credit in favor of various unaffiliated insurance
companies from which LNC assumes business. This allows the ceding companies
to take statutory reserve credit. The letters of credit issued by the banks
represent a guarantee of performance under the reinsurance agreements. At
December 31, 1995, there were $417,000,000 of outstanding bank letters of
credit. In exchange for the letters of credits, LNC paid the banks
approximately $2,100,000 in fees in 1995.
Vulnerability from Concentrations
At December 31, 1995, LNC did not have a material concentration of financial
instruments in a single investee, industry or geographic location. Also at
December 31, 1995, LNC did not have a concentration of 1) business
transactions with a particular customer, lender or distributor, 2) revenues
from a particular product or service, 3) sources of supply of labor or
services used in the business or 4) a market or geographic area in which
business is conducted that makes it vulnerable to an event that is at least
reasonably possible to occur in the near term and which could cause a severe
impact to LNC's financial condition, except for the market and geographic
concentration described in the following paragraph.
LNC writes personal and commercial lines of property and casualty insurance
throughout the United States. As a result, LNC is always at risk that there
could be significant losses arising in certain geographic areas from
catastrophes, such as earthquakes and hurricanes. LNC seeks to protect itself
from such events by purchasing catastrophe insurance. LNC's policies in-force
providing earthquake, hurricane and related coverage in the midwest, western
and southeastern coastal areas of the United States could expose LNC to losses
exceeding its reinsurance limits. Although the exposure exists, LNC has not
encountered losses in excess of its reinsurance limits during any year.
<PAGE> -58-
Other Contingency Matters
LNC and its subsidiaries are involved in various pending or threatened legal
proceedings arising from the conduct of their business. In some instances,
these proceedings include claims for punitive damages and similar types of
relief in unspecified or substantial amounts, in addition to amounts for
alleged contractual liability or requests for equitable relief. After
consultation with counsel and a review of available facts, it is management's
opinion that these proceedings ultimately will be resolved without materially
affecting the consolidated financial statements of LNC.
Operations in the U.K. include the sale of pension products to individuals.
Regulatory agencies have raised questions as to what constitutes appropriate
advice to individuals who bought pension products as an alternative to
participation in an employer sponsored plan. In cases of inappropriate
advice, LNC may have to do extensive investigation and put the individual in a
position similar to what would have been attained if the individual had
remained in the employer sponsored plan. A liability has been established for
the estimated cost of this issue following regulatory guidance as to
activities to be undertaken. Although the provision is based on various
estimates which are subject to considerable uncertainty and, accordingly, may
prove to be deficient or excessive, it is management's opinion that such
future development will not materially affect the consolidated results of
operation.
The number of insurance companies that are under regulatory supervision has
resulted and is expected to continue to result in assessments by state
guaranty funds to cover losses to policyholders of insolvent or rehabilitated
companies. Mandatory assessments may be partially recovered through a
reduction in future premium taxes in some states. LNC has accrued
for expected assessments net of estimated future premium tax deductions.
Guarantees
<TABLE>
LNC has guarantees with off-balance-sheet risks whose contractual amounts
represent credit exposure. Outstanding guarantees with off-balance-sheet
risks, shown in notional or contract amounts along with their carrying value
and estimated fair values, are as follows:
<CAPTION>
Assets (Liabilities)
Notional or Carrying Fair Carrying Fair
Contract Amounts Value Value Value Value
December 31 (in millions) 1995 1994 1995 1995 1994 1994
<S> <C> <C> <C> <C> <C> <C>
Industrial revenue bonds ------ $ 63.5 $100.9 $ (7.1)$ (2.3) $(13.1) $(12.5)
Real estate partnerships ------ 6.4 20.8 -- -- -- --
Mortgage loan pass-through
certificates ----------------- 63.6 78.2 -- -- -- --
Total guarantees ----------- $133.5 $199.9 $ (7.1)$ (2.3) $(13.1) $(12.5)
</TABLE>
Certain subsidiaries of LNC have invested in real estate partnerships which
use industrial revenue bonds to finance their projects. LNC has guaranteed
the repayment of principal and interest on these bonds. Certain subsidiaries
of LNC are also involved in other real estate partnerships that use
conventional mortgage loans. In some cases, the terms of these arrangements
involve guarantees by each of the partners to indemnify the mortgagor in the
event a partner is unable to pay its principal and interest payments. In
addition, certain subsidiaries of LNC have sold commercial mortgage loans
through grantor trusts which issued pass-through certificates. These
subsidiaries have agreed to repurchase any mortgage loans which remain
delinquent for 90 days at a repurchase price substantially equal to the
outstanding principal balance plus accrued interest thereon to the date of
repurchase. It is management's opinion that the value of the properties
underlying these commitments is sufficient that in the event of default the
impact would not be material to LNC.
Derivatives
LNC has derivatives with off-balance-sheet risks whose notional or contract
amounts exceed the credit exposure. LNC has entered into derivative
transactions to reduce its exposure to fluctuations in interest rates, the
widening of bond yield spreads over comparable maturity U.S. Government
obligations and foreign exchange risks. In addition, LNC is subject to the
risks associated with changes in the value of its derivatives; however, such
changes in the value generally are offset by changes in the value of the items
being hedged by such contracts. Outstanding derivatives with off-balance-
<PAGE> -59-
sheet risks, shown in notional or contract amounts along with their carrying
value and estimated fair values, are as follows:
<TABLE>
<CAPTION>
Assets (Liabilities)
Notional or Carrying Fair Carrying Fair
Contract Amounts Value Value Value Value
December 31 (in millions) 1995 1994 1995 1995 1994 1994
<S> <C> <C> <C> <C> <C> <C>
Interest rate derivatives:
Interest rate cap agreements -- $5,110.0 $4,400.0 $22.7 $5.3 $23.4 $34.5
Spread-lock agreements -------- 600.0 1,300.0 (.9) (.9) 3.2 3.2
Financial futures contracts --- 106.7 382.5 5.1 5.1 (7.5) (7.5)
Interest rate swaps ----------- 5.0 5.0 .2 .2 .2 .2
Total interest rate
derivatives ---------------- 5,821.7 6,087.5 27.1 9.7 19.3 30.4
Foreign currency derivatives:
Forward exchange forward contracts
Foreign subsidiary ----------- 398.8 138.3 (5.4) (5.4) (8.7) (8.7)
Foreign investments ---------- 15.7 21.2 (.6) (.6) .2 .2
Foreign currency options ------ 99.2 -- 1.9 1.4 -- --
Foreign currency swaps -------- 15.0 -- .4 .4 -- --
Total foreign currency
derivatives --------------- 528.7 159.5 (3.7) (4.2) (8.5) (8.5)
Total derivatives ---------- $6,350.4 $6,247.0 $23.4 $5.5 $10.8 $ 21.9
</TABLE>
<TABLE>
A reconciliation and discussion of the notional or contract amounts for the
significant programs using derivative agreements and contracts is as follows:
<CAPTION>
Interest
Rate Caps Spread Locks
December 31 (in millions) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Balance at beginning of year -------- $4,400.0 $3,800.0 $1,300.0 $1,700.0
New contracts ----------------------- 710.0 600.0 800.0 --
Terminations and maturities --------- -- -- (1,500.0) (400.0)
Balance at end of year ------------ $5,110.0 $4,400.0 $ 600.0 $1,300.0
</TABLE>
<TABLE>
<CAPTION>
Foreign Exchange
Forward Contracts
Financial Futures (Foreign
Contracts Options Subsidiary)
December 31 (in millions) 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year- $ 382.5 $ 33.1 $ -- $ -- $138.3 $101.3
New contracts --------------- 1,328.2 1,087.7 181.6 308.0 709.2 37.0
Terminations and maturities - (1,604.0) (738.3) (181.6)(308.0) (448.7) --
Balance at end of year ---- $ 106.7 $382.5 $ -- $ -- $398.8 $138.3
</TABLE>
<TABLE>
<CAPTION>
Foreign Currency Derivatives (Foreign Investments)
Forward Exchange Foreign Foreign
Forward Currency Currency
Contracts Options Swaps
December 31 (in millions) 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year- $ 21.2 $ -- $ -- $ -- $ -- $ --
New contracts --------------- 131.1 38.5 356.6 -- 15.0 --
Terminations and maturities - (136.6) (17.3) (257.4) -- -- --
Balance at end of year ---- $ 15.7 $ 21.2 $ 99.2 $ -- $ 15.0 $ --
</TABLE>
Interest Rate Caps. The interest rate cap agreements, which expire in 1997
through 2003, entitle LNC to receive payments from the counterparties on
specified future reset dates, contingent on future interest rates. For each
cap, the amount of such quarterly payments, if any, is determined by the
excess of a market interest rate over a specified cap rate times the notional
amount divided by four. The purpose of LNC's interest rate cap agreement
program is to protect its annuity line of business from the effect of
fluctuating interest rates. The premium paid for the interest rate caps is
included in other assets ($22,700,000 as of December 31, 1995) and is being
amortized over the terms of the agreements and is included in net investment
income.
Spread Locks. Spread-lock agreements in effect at December 31, 1995 all
expire in 2005. Spread-lock agreements provide for a lump sum payment to or
by LNC depending on whether the spread between the swap rate and a specified
<PAGE> -60-
U.S. Treasury note is larger or smaller than a contractually specified spread.
Cash payments are based on the product of the notional amount, the spread
between the swap rate and the yield of an equivalent maturity U.S. Treasury
security and the price sensitivity of the swap at that time, expressed in
dollars per basis point. The purpose of LNC's spread-lock program is to
protect a portion of its fixed maturity securities against widening spreads.
Financial Futures. LNC uses exchange-traded financial futures contracts and
options on those financial futures to hedge against interest rate risks and to
manage duration of a portion of its fixed maturity securities. Financial
futures contracts obligate LNC to buy or sell a financial instrument at a
specified future date for a specified price and may be settled in cash or
through delivery of the financial instrument. Cash settlements on the change
in market values of financial futures contracts are made daily. Options on
financial futures give LNC the right, but not the obligation, to assume a long
or short position in the underlying futures at a specified price during a
specified time period.
Foreign Exchange Forward Contracts (Foreign Subsidiary). LNC uses foreign
exchange forward contracts, which are traded over-the-counter, to hedge the
foreign exchange risk assumed with its investment in its U.K. subsidiary,
Lincoln National (UK). LNC hedges its exposure to sterling in excess of
$100,000,000 of its investment in Lincoln National (UK). The foreign exchange
forward contracts obligate LNC to deliver a specified amount of currency at a
future date at a specified exchange rate.
Foreign Currency Derivatives (Foreign Investments). LNC uses a combination of
foreign exchange forward contracts, foreign currency options, and foreign
currency swaps, all of which are traded over-the-counter, to hedge some of the
foreign exchange risk of investments in fixed maturity securities denominated
in foreign currencies. The foreign currency forward contracts obligate LNC to
deliver a specified amount of currency at a future date at a specified
exchange rate. Foreign currency options give LNC the right, but not the
obligation, to buy or sell a foreign currency at a specified exchange rate
during a specified time period. A foreign currency swap is a contractual
agreement to exchange the currencies of two different countries pursuant to an
agreement to reexchange the two currencies at the same rate of exchange at a
specified future date.
Additional Derivative Information. Expenses for the agreements and contracts
described above amounted to $9,100,000 and $7,400,000 in 1995 and 1994,
respectively. Deferred losses of $17,900,000 as of December 31, 1995,
resulting from 1) terminated and expired spread-lock agreements, 2) financial
futures contracts and 3) options on financial futures, are included with the
related fixed maturity securities to which the hedge applied and are being
amortized over the life of such securities.
LNC is exposed to credit loss in the event of nonperformance by counterparties
on interest rate cap agreements, spread-lock agreements, interest rate swaps,
foreign exchange forward contracts, foreign currency option and foreign
currency swaps, but LNC does not anticipate nonperformance by any of the
counterparties. The credit risk associated with such agreements is minimized
by purchasing such agreements from financial institutions with long-standing,
superior performance records. The amount of such exposure is essentially the
net replacement cost or market value for such agreements with each
counterparty if the net market value is in LNC's favor. At December 31, 1995,
the exposure was $7.0 million.
8. Fair Value of Financial Instruments
The following discussion outlines the methodologies and assumptions used to
determine the estimated fair value of LNC's financial instruments.
Considerable judgement is required to develop these fair values and,
accordingly, the estimates shown are not necessarily indicative of the amounts
that would be realized in a one time, current market exchange of all of LNC's
financial instruments.
Fixed Maturity and Equity Securities. Fair values for fixed maturity
securities are based on quoted market prices, where available. For fixed
maturity securities not actively traded, fair values are estimated using
values obtained from independent pricing services or, in the case of private
placements, are estimated by discounting expected future cash flows using a
<PAGE> -61-
current market rate applicable to the coupon rate, credit quality, and
maturity of the investments. The fair values for equity securities are based
on quoted market prices.
Mortgage Loans on Real Estate. The estimated fair value of mortgage loans on
real estate was established using a discounted cash flow method based on
credit rating, maturity and future income when compared to the expected yield
for mortgages having similar characteristics. The ratings for mortgages in
good standing are based on property type, location, market conditions,
occupancy, debt service coverage, loan to value, caliber of tenancy, borrower
and payment record. Fair values for impaired mortgage loans are measured
based either on the present value of expected future cash flows discounted at
the loan's effective interest rate, at the loan's market price or the fair
value of the collateral if the loan is collateral dependent.
Policy Loans. The estimated fair value of investments in policy loans was
calculated on a composite discounted cash flow basis using Treasury interest
rates consistent with the maturity durations assumed. These durations were
based on historical experience.
Other Investments, and Cash and Invested Cash. The carrying value for assets
classified as other investments, and cash and invested cash in the
accompanying balance sheets approximates their fair value.
Investment Type Insurance Contracts. The balance sheet captions, "Future
Policy Benefits, Claims and Claim Expenses" and "Contractholder Funds,"
include investment type insurance contracts (i.e. deposit contracts and
guaranteed interest contracts). The fair values for the deposit contracts and
certain guaranteed interest contracts are based on their approximate surrender
values. The fair values for the remaining guaranteed interest and similar
contracts are estimated using discounted cash flow calculations based on
interest rates currently being offered on similar contracts with maturities
consistent with those remaining for the contracts being valued.
The remainder of the balance sheet captions, "Future Policy Benefits, Claims
and Claim Expenses" and "Contractholder Funds," that do not fit the definition
of "investment type insurance contracts" are considered insurance contracts.
Fair value disclosures are not required for these insurance contracts and have
not been determined by LNC. It is LNC's position that the disclosure of the
fair value of these insurance contracts is important in that readers of these
financial statements could draw inappropriate conclusions about LNC's
shareholders' equity determined on a fair value basis if only the fair value
of assets and liabilities defined as financial instruments are disclosed. LNC
and other companies in the insurance industry are monitoring the related
actions of the various rule-making bodies and attempting to determine an
appropriate methodology for estimating and disclosing the "fair value" of
their insurance contract liabilities.
Short-term and Long-term Debt. Fair values for long-term debt issues are
estimated using discounted cash flow analysis based on LNC's current
incremental borrowing rate for similar types of borrowing arrangements. For
short-term debt, the carrying value approximates fair value.
Guarantees. LNC's guarantees include guarantees related to industrial revenue
bonds, real estate partnerships and mortgage loan pass-through certificates.
Based on historical performance where repurchases have been negligible and the
current status, which indicates none of the loans are delinquent, the fair
value liability for the guarantees related to the mortgage loan pass-through
certificates is insignificant. Fair values for all other guarantees are based
on fees that would be charged currently to enter into similar agreements,
taking into consideration the remaining terms of the agreements and the
counterparties' credit standing.
Derivatives. LNC's derivatives include interest rate cap agreements, spread-
lock agreements, foreign currency exchange contracts, financial futures
contracts, options on financial futures, interest rate swaps, foreign currency
options and foreign currency swaps. Fair values for these contracts are based
on current settlement values. The current settlement values are based on
quoted market prices for the foreign currency exchange contracts, financial
futures contracts and options on financial futures, and on brokerage quotes,
which utilized pricing models or formulas using current assumptions, for all
other swaps and agreements.
<PAGE> -62-
Investment Commitments. Fair values for commitments to make investments in
fixed maturity securities (primarily private placements), mortgage loans on
real estate and real estate are based on the difference between the value of
the committed investments as of the date of the accompanying balance sheets
and the commitment date, which would take into account changes in interest
rates, the counterparties' credit standing and the remaining terms of the
commitments.
<TABLE>
The carrying values and estimated fair values of LNC's financial instruments
are as follows:
<CAPTION>
Carrying Fair Carrying Fair
Value Value Value Value
December 31 (in millions) 1995 1995 1994 1994
Assets (liabilities):
<S> <C> <C> <C> <C>
Fixed maturities securities -------- $25,834.5 $25,834.5 $21,664.1 $21,664.1
Equity securities ------------------ 1,164.8 1,164.8 1,038.6 1,038.6
Mortgage loans on real estate ------ 3,186.9 3,371.9 2,853.1 2,776.7
Policy loans ----------------------- 602.6 594.7 550.7 529.8
Other investments ------------------ 371.8 371.8 175.1 175.1
Cash and invested cash ------------- 1,572.9 1,572.9 1,041.6 1,041.6
Investment type insurance contracts:
Deposit contracts and certain
guaranteed interest contracts --- (15,620.2)(15,410.2)(14,294.7)(14,052.5)
Remaining guaranteed interest
and similar contracts ----------- (3,024.0) (3,125.1) (2,485.5) (2,423.9)
Short-term debt -------------------- (426.8) (426.8) (360.2) (360.2)
Long-term debt --------------------- (659.3) (713.4) (474.2) (462.1)
Guarantees ------------------------- (7.1) (2.3) (13.1) (12.5)
Derivatives ------------------------ 23.4 5.5 10.8 21.9
Investment commitments ------------- -- .8 -- (.5)
</TABLE>
As of December 31, 1995 and 1994, the carrying value of the deposit contracts
and certain guaranteed contracts is net of deferred acquisition costs of
$336,000,000 and $399,000,000, respectively, excluding adjustments for
deferred acquisition costs applicable to changes in fair value of securities.
The carrying values of these contracts are stated net of deferred acquisition
costs in order that they be comparable with the fair value basis.
9. Segment Information
LNC has four business segments: Life Insurance and Annuities, Reinsurance,
Property-Casualty and Investment Management. The Life Insurance and Annuities
segment offers universal life, pension products and other individual coverages
through a network of career agents, independent general agencies, and
insurance agencies located within a variety of financial institutions. These
products are sold throughout the United States by LNC's U.S.-based companies
and similar products are offered within the United Kingdom by LNC's U.K.-based
companies. Reinsurance sells reinsurance products and services to insurance
companies, HMOs, self-funded employers and other primary risk accepting
organizations in the U.S. and economically attractive international markets.
Effective in the fourth quarter of 1995, operating results of the direct
disability income business previously included in the Life Insurance and
Annuities segment, is now included in the Reinsurance segment. This direct
disability income business, which is no longer being sold, is now managed by
the Reinsurance segment along with its disability income business. The
Property-Casualty segment writes both commercial and personal coverages
throughout most of the United States through a network of independent
agencies. The Investment Management segment offers a variety of asset
management services to institutional and retail customers primarily throughout
the United States. Prior to the sale of 71% of the ownership of its primary
writer of employee life-health benefit coverages in 1994 (see note 11 on page
65), the Employee Life-Health Benefits segment distributed group life and
health insurance, managed health care and other related coverages through
career agents and independent general agencies. Activity which is not
included in the major business segments is shown as "Other Operations."
"Other Operations" includes operations not directly related to the business
segments and unallocated corporate items (i.e., corporate investment income,
interest expense on corporate debt and unallocated overhead expenses). LNC's
other operations also included 1) the equity in the earnings of a 29% owned
unconsolidated affiliate engaged in the life-health benefit business prior to
<PAGE> -63-
the sale of this interest in 1995 and 2) the earnings of its investment
management companies prior to the formation of the Investment Management
segment in April 1995 as a result of the acquisition of Delaware Management
Holdings, Inc. See note 11 on page 65.
<TABLE>
The revenue, pre-tax income and assets by segment for 1993 through 1995 are as
follows:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Revenue:
Life Insurance and Annuities ----------- $3,058.6 $2,615.4 $2,858.3
Reinsurance ---------------------------- 1,362.4 1,197.4 1,033.5
Property-Casualty ---------------------- 1,954.9 1,971.4 2,240.6
Investment Management ------------------ 192.7 -- --
Employee Life-Health Benefits ---------- -- 314.9 1,297.3
Other Operations ----------------------- 64.7 80.8 (36.9)
Total revenue ------------------------ $6,633.3 $6,179.9 $7,392.8
Income (loss) before income taxes and
cumulative effect of accounting change:
Life Insurance and Annuities ----------- $472.4 $106.7 $344.3
Reinsurance ---------------------------- (65.6) 102.9 27.5
Property-Casualty ---------------------- 190.4 177.2 257.6
Investment Management ------------------ 36.0 -- --
Employee Life-Health Benefits ---------- -- 22.9 86.0
Other Operations ----------------------- (6.6) (33.4) (127.6)
Total income before income taxes
and cumulative effect of
accounting change ------------------- $626.6 $376.3 $587.8
December 31 (in millions) 1995 1994 1993
Assets:
Life Insurance and Annuities ----------- $52,465.8 $40,758.4 $38,711.7
Reinsurance ---------------------------- 5,220.3 2,653.5 2,671.9
Property-Casualty ---------------------- 5,126.0 4,966.6 5,550.5
Investment Management ------------------ 632.4 -- --
Employee Life-Health Benefits ---------- -- -- 679.7
Other Operations ----------------------- (186.8) 486.3 211.3
Total assets ------------------------- $63,257.7 $48,864.8 $47,825.1
</TABLE>
Provisions for depreciation and capital additions were not material.
<TABLE>
Substantially all of LNC's foreign operations are conducted by Lincoln
National (UK) plc, a United Kingdom company. Revenue, income before income
taxes and cumulative effect of accounting change, and assets disclosed above
applicable to LNC's U.K. operations are as follows:
<CAPTION>
Year Ended December 31 (in millions) 1995 1994 1993
<S> <C> <C> <C>
Revenue -------------------------------- $351.5 $409.1 $307.8
Income before income taxes and
cumulative effect of
accounting change --------------------- 72.5 29.1 19.4
December 31 (in millions) 1995 1994 1993
Assets --------------------------------- $6,114.1 $1,788.4 $1,683.8
</TABLE>
All earnings from LNC's U.K. operations have been retained in the U.K.
Foreign intracompany revenue is not significant.
10. Shareholders' Equity
LNC's common and preferred stock is without par value.
All of the issued and outstanding series A preferred stock is $3 Cumulative
Convertible and is convertible at any time into shares of common stock at a
conversion rate of eight shares of common stock for each share of series A
preferred stock, subject to adjustment for certain events. The series A
preferred stock is redeemable at the option of LNC at $80 per share plus
accrued and unpaid dividends.
<PAGE> -64-
Outstanding series A preferred stock has full voting rights, subject to
adjustment if LNC is in default as to the payment of dividends. If LNC is
liquidated or dissolved, holders of series A preferred stock will be entitled
to payments of $80.00 per share. The difference between the aggregate
preference on liquidation value and the financial statement balance for the
series A preferred stock was $1,900,000 at December 31, 1995.
On June 30, 1995, the owner of LNC's series E and F preferred stock (Dai-ichi,
Mutual Life Insurance Company), which was 5 1/2% cumulative convertible
exchangeable, converted its entire holdings of series E and F preferred stock
to LNC common stock. Based on a conversion rate of two shares of common stock
for each share of series E and F preferred stock, 2,201,443 shares of series E
and 2,216,454 shares of series F were converted into 8,835,794 shares of
common stock.
LNC has outstanding one common share purchase right ("Right") on each
outstanding share of LNC's common stock. A Right will also be issued with
each share of LNC's common stock that becomes outstanding prior to the time
the Rights become exercisable or expire. If a person or group acquires
beneficial ownership of 20% or more or announces an offer that would result in
beneficial ownership of 30% or more of LNC's outstanding common stock, the
Rights become exercisable and each Right will entitle its holder to purchase
one share of LNC's common stock for $75. If LNC is acquired in a business
combination transaction, each Right will entitle its holder to purchase, for
$75, common shares of the acquiring company having a market value of $150.
Alternatively, if a 20% holder were to acquire LNC by means of a reverse
merger in which LNC and its stock survive or were to engage in certain
"self-dealing" transactions, each Right not owned by the 20% holder would
entitle its holder to purchase, for $75, common stock of LNC having a market
value of $150. LNC can redeem each Right for one cent at any time prior to
its becoming exercisable. The Rights expire in November 1996. As of December
31, 1995, there were 104,185,117 Rights outstanding.
During February 1993, LNC issued 9,200,000 shares of common stock. The
proceeds of this offering, net of issuance costs, were $316,100,000.
During November 1994, LNC purchased and retired 500,000 shares of common stock
at a total cost of $18,400,000.
During May 1994, LNC's Articles of Incorporation were amended to increase the
number of authorized shares of common stock from 400,000,000 to 800,000,000.
Earnings per share are computed based on the average number of common shares
outstanding during each year (1995 - 104,115,650; 1994 - 103,863,196; 1993 -
102,307,356) after assuming conversion of any outstanding series A, E and F
preferred stock. The effect of stock options is not dilutive in the
computation of earnings per share.
<TABLE>
Details underlying the balance sheet caption "Net Unrealized Gain (Loss) on
Securities Available-for-Sale," are as follows:
<CAPTION>
December 31 (in millions) 1995 1994
<S> <C> <C>
Fair value of securities available-for-sale ------------- $26,999.3 $22,682.7
Cost of securities available-for-sale ------------------- 24,871.6 23,142.2
Unrealized Gain (Loss) -------------------------------- 2,127.7 (459.5)
Adjustments to deferred acquisition costs --------------- (515.3) 162.1
Amounts required to satisfy policyholder commitments ---- (555.0) 14.1
Deferred income credits (taxes) ------------------------- (359.2) 107.8
Valuation allowance for deferred tax assets ------------- -- (135.6)
Net unrealized gain (loss) on securities
available-for-sale ----------------------------------- $ 698.2 $ (311.1)
</TABLE>
Adjustments to deferred acquisition costs and amounts required to satisfy
policyholder commitments are netted against the Deferred Acquisition Costs
asset account and included with the Future Policy Benefits, Claims and Claim
Expenses liability account on the balance sheet, respectively.
<PAGE> -65-
11. Acquisitions and Sales of Affiliates/Operating Property
In December 1993, LNC recorded a provision for loss of $98,500,000 (also
$98,500,000 after-tax) in the "Other Operations" segment for the sale of
Security-Connecticut Corporation ("Security-Connecticut"). The sale was
completed on February 2, 1994 through an initial public offering and LNC
received cash and notes, net of related expenses, totaling $237,700,000. The
loss on sale and disposal expenses did not differ materially from the estimate
recorded in the fourth quarter of 1993. For the year ended December 31, 1993,
Security-Connecticut, which operated in the Life Insurance and Annuities
segment, had revenues of $274,500,000 and net income of $24,000,000.
In 1994, LNC completed the sale of 71% of EMPHESYS (parent company of
Employers Health Insurance Company, which comprised LNC's Employee Life-Health
Benefit segment) for $244,700,000 of cash, net of related expenses, and a
$50,000,000 promissory note. A gain on sale of $48,800,000 (also $48,800,000
after-tax) was recognized in 1994 in "Other Operations". For the year ended
December 31, 1993, EMPHESYS had revenues of $1,304,700,000 and net income of
$55,300,000. EMPHESYS had revenue and net income of $314,900,000 and
$14,400,000, respectively, during the three months of ownership in 1994.
In October 1995, LNC completed the sale of its remaining 29% ownership in
EMPHESYS. As a result of this transaction, LNC received cash of $186,900,000
and recorded pre-tax gain on sale of $89,700,000 ($58,300,000 after-tax) in
the "Other Operations" segment.
In April 1995, LNC completed the acquisition of Delaware Management Holdings,
Inc. ("Delaware"). Delaware provides a variety of asset management services
through its operating companies. The purchase price, including LNC's expenses
associated with the acquisition, was $305,000,000. This acquisition also
involved the assumption of $25,000,000 in short-term debt and $180,000,000
(face amount) in long-term debt. In May 1995, this debt was repaid from the
proceeds of an LNC debt offering of $200,000,000 plus available cash. This
acquisition, which was accounted for using purchase accounting, resulted in
goodwill of $339,900,000 and other intangible assets of $131,500,000. The
results of Delaware's operations are included in LNC's consolidated financial
statements from April 3, 1995. The Delaware acquisition agreement included a
provision for contingent payments of $22,500,000 based on the levels of future
investment management revenues. Any such additional payments would be
accounted for as goodwill.
In January and April 1995, LNC completed the acquisitions of Liberty Life
Assurance Company and Laurentian Financial Group plc, respectively. These
companies provide unit-linked life and pension products in the United
Kingdom. The combined purchase price was $274,500,000 including the
assumption of $44,000,000 in debt. These acquisitions, which were accounted
for using purchase accounting, resulted in other intangible assets of
$388,700,000. The results of these operations are included in LNC's
consolidated financial statements from their respective purchase dates.
In October 1995, LNC approved a realignment plan for its Property-Casualty
segment, which includes consolidating its field operations from 20 divisional
offices to four regional offices. Certain of the locations will remain
service offices. Those office buildings owned by LNC that will not be used as
regional offices are expected to be sold. Management has estimated that the
pre-tax costs of realignment and the loss on sale of the office buildings will
approximate $21,100,000 and $28,300,000, respectively ($13,700,000 and
$18,400,000 after-tax, respectively). Accordingly, income before cumulative
effect of accounting change and net income decreased by $32,100,000 during the
fourth quarter of 1995.
12. Subsequent Event.
In January 1996, LNC announced that it had signed a definitive agreement to
acquire the group tax-sheltered annuity business of UNUM Corporation's
affiliates. This purchase is expected to be completed in the form of a
reinsurance transaction with an initial ceding commission of approximately
$70,000,000. This ceding commission represents the present value of business
in-force and, accordingly, will be classified as other intangible assets upon
the close of this transaction. This transaction, which is expected to close
in the third quarter of 1996, will increase LNC's assets and policy
liabilities and accruals by approximately $3,200,000,000.
<PAGE> -66-
Report of Ernst & Young LLP, Independent Auditors
Board of Directors
Lincoln National Corporation
We have audited the accompanying consolidated balance sheets of Lincoln
National Corporation as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995. Our audits
also included the financial statement schedules listed in the Index at Item
14(a). These financial statements and schedules are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Lincoln National
Corporation at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
As discussed in note 2 to the consolidated financial statements, in 1993 the
Corporation changed its method for accounting for postretirement benefits
other than pensions, accounting for impairment of loans, and accounting for
certain investments in debt and equity securities.
Ernst & Young LLP
Fort Wayne, Indiana
February 7, 1996
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
There have been no disagreements with LNC's independent auditors which are
reportable pursuant to Item 304 of Regulation S-K.
<PAGE> -67-
PART III
Item 10. Directors and Executive Officers of the Registrant
Information for this item relating to directors of LNC is incorporated by
reference to the sections captioned "NOMINEES FOR DIRECTOR", "DIRECTORS
CONTINUING IN OFFICE" and "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND
EXCHANGE ACT OF 1934", of LNC's Proxy Statement for the Annual Meeting
scheduled for May 9, 1996.
Executive Officers of the Registrant as of March 1, 1996 were as follows:
Name Position with LNC and Business Experience
(Age)** During the Past Five Years
Ian M. Rolland Chairman and Director, LNC since 1992.
(63) President and Director, LNC (1975-1991). Chief
Executive Officer, LNC since 1977.
Robert A. Anker President, Chief Operating Officer and Director,
(54) LNC since 1992. President and Chief Executive
Officer, American States* (1990-1991).
Jon A. Boscia President, Chief Operating Officer, Lincoln Life*
(44) since 1994. Executive Vice President, LNC (1991-
1994). President, Lincoln National Investment
Management Company ("LNIC")* (1991-1994).
Executive Vice President, LNIC* (1985-1991).
George E. Davis Senior Vice President, LNC since 1993.
(53) Vice President, Eastman Kodak Co. (1985-1993).
Jack D. Hunter Executive Vice President, LNC since 1986. General
(59) Counsel since 1971.
Barbara S. Kowalczyk Senior Vice President, LNC since 1994.
(45) Senior Vice President, LNIC* (1992-1994). Vice
President LNIC* (1985-1992).
F. Cedric McCurley Chairman and Chief Executive officer, American
(61) States* since 1995. President and Chief
Executive Officer, American States* (1992-1995).
Executive Vice President, American States*
(1986-1991).
H. Thomas McMeekin Executive Vice President, LNC since 1994.
(43) President, LNIC* since 1994. Senior Vice
President, LNC (1992-1994). Executive Vice
President, LNIC* (February 1992-November 1992).
Senior Vice President, LNIC* (1987-1992).
Jeffrey J. Nick Managing Director, Lincoln National (UK) PLC* since
(43) 1992. Senior Vice President, LNC (1990-1993).
Richard S. Robertson Executive Vice President, LNC since 1986.
(54)
Gabriel L. Shaheen Executive Vice President, Lincoln Life* since 1994.
(42) Senior Vice President, Lincoln Life* 1991-1994),
Vice President, Lincoln Life* (1987-1991).
Donald L. Van Wyngarden Second Vice President & Controller, LNC since 1975.
(56)
Richard C. Vaughan Executive Vice President and Chief Financial
(46) Officer, LNC since 1995. Senior Vice President and
Chief Financial Officer, LNC (1992-1994). Senior
Vice President, Lincoln Life* (1990-1992). Vice
President, EQUICOR, Inc. (1988-1990).
* Denotes a subsidiary of LNC
** Age shown is based on nearest birthdate to March 1, 1996.
<PAGE> -68-
There is no family relationship between any of the foregoing executive
officers, all of whom are elected annually.
Item 11. Executive Compensation
Information for this item is incorporated by reference to the section cap-
tioned "EXECUTIVE COMPENSATION" of LNC's Proxy Statement for the Annual
Meeting scheduled for May 9, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information for this item is incorporated by reference to the sections
captioned "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "SECURITY
OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS" of LNC's Proxy
Statement for the Annual Meeting scheduled for May 9, 1996.
Item 13. Certain Relationships and Related Transactions
Information for this item is incorporated by reference to the section cap-
tioned "TERMINATION OF EMPLOYMENT ARRANGEMENT" of LNC's Proxy Statement for
the Annual Meeting scheduled for May 9, 1996.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
Item 14(a)(1) Financial Statements
The following consolidated financial statements of Lincoln National Corpora-
tion and subsidiaries are included in Item 8:
Consolidated Balance Sheets - December 31, 1995 and 1994
Consolidated Statements of Income - Years ended December 31, 1995, 1994 and
1993
Consolidated Statements of Shareholders' Equity - Years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Cash Flows - Years ended December 31, 1995, 1994
and 1993
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
Item 14(a)(2) Financial Statement Schedules
The following consolidated financial statement schedules of Lincoln National
Corporation and subsidiaries are included in Item 14(d):
I - Summary of Investments - Other than Investments in Related Parties
II - Condensed Financial Information of Registrant
III - Supplementary Insurance Information
IV - Reinsurance
V - Valuation and Qualifying Accounts
VI - Supplementary Information Concerning Property-Casualty Insurance
Operations
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions, are inapplicable, or the required information is
included in the consolidated financial statements, and therefore have been
omitted.
<PAGE> -69-
Item 14(a)(3) Listing of Exhibits
The following exhibits of Lincoln National Corporation and subsidiaries are
included in Item 14(c) - (Note: The numbers preceding the exhibits correspond
to the specific numbers within Item 601 of Regulation S-K.):
3(a) The Articles of Incorporation of LNC as last amended May 12,
1994 are incorporated by reference to LNC's Form S-3/A (File No.
33-55379) filed with the Commission on September 15, 1994.
3(b) The Bylaws of LNC as last amended January 1, 1992 are
incorporated by reference to Exhibit 3(b) of LNC's Form 10-K for
the year ended December 31, 1991 filed with the Commission on
March 27, 1992.
4(a) Indenture of LNC dated as of January 15, 1987 (Commission File
No. 33-22658) is incorporated by reference to Exhibit 4(a) of
LNC's Form 10-K for the year ended December 31, 1994, filed with
the Commission on March 27, 1995.
4(b) First Supplemental Indenture dated as of July 1, 1992, to
Indenture of LNC dated as of January 15, 1987, and Specimen
Notes for LNC's 7 1/8% Notes due July 15, 1999 (Commission
File No. 33-22658) are incorporated by reference to Annex B
and Annex C of LNC's Form 8-K filed with the Commission on
July 7, 1992.
4(c) First Supplemental Indenture dated as of July 1, 1992, to
Indenture of LNC dated as of January 15, 1987, and Specimen
Notes for LNC's 7 5/8% Notes due July 15, 2002 (Commission
File No. 33-22658) are incorporated by reference to Annex B
and Annex D of LNC's Form 8-K filed with the Commission on
July 7, 1992.
4(d) Rights Agreement dated November 7, 1986 is incorporated by
reference to Exhibit 4(e) of LNC's Form 10-K for the year ended
December 31, 1994, filed with the Commission on March 27, 1995.
4(e) Indenture of LNC dated as of September 15, 1994, between LNC and
The Bank of New York, as Trustee, is incorporated by reference to
Exhibit No. 4(c) of LNC's S-3/A (File No. 33-55379), filed with
the Commission on September 15, 1994.
4(f) Form of Note is incorporated by reference to Exhibit No. 4(d) to
LNC's Registration Statement on Form S-3/A (File No. 33-55379),
filed with the Commission on September 15, 1994.
4(g) Form of Zero Coupon Security is incorporated by reference to
Exhibit No. 4(f) of LNC's Registration Statement on Form S-3/A
(File No. 33-55379), filed with the Commission on September 15,
1994.
4(h) Specimen of LNC's 9 1/8% Debentures due October 1, 2024
(Commission File No. 33-55379) is incorporated by reference to
Schedule I of LNC's Form 8-K filed with the Commission on
September 29, 1994.
4(i) Specimen of LNC's 7 1/4% Debenture due May 15, 2005 (Commission
File Nos. 33-55379 and 33-59785) is incorporated by reference to
Schedule III of LNC's Form 8-K filed with the Commission on
May 17, 1995.
10(a)* The Lincoln National Corporation 1986 Stock Option Incentive Plan
(Commission File No. 33-13445 and 33-62315) as last amended and
restated effective May 12, 1994 is incorporated by reference to
Exhibit No.1 of LNC's Proxy filed with the Commission on
March 31, 1994.
10(b)* The Lincoln National Corporation 1982 Stock Option Incentive
Plan (Commission File No. 2-77599) as last amended May 7, 1987
is incorporated by reference to Exhibit 10(b) of LNC's Form 10-K
for the year ended December 31, 1993, filed with the Commission
on March 30, 1994.
<PAGE> -70-
10(c)* The Lincoln National Corporation Executives' Salary Continuation
Plan as last amended January 1, 1992 is incorporated by reference
to Exhibit 10(c) of LNC's Form 10-K for the year ended December
31, 1992, filed with the Commission on March 30, 1993.
10(d)* The Lincoln National Corporation Executive Value Sharing Plan is
incorporated by reference to Exhibit No. 4 of LNC's Proxy filed
with the Commission on March 31, 1994.
10(e)* Lincoln National Corporation Executives' Severance Benefit Plan
as last amended and restated effective November 9, 1995.
10(f)* The Lincoln National Corporation Outside Directors Retirement
Plan as last amended March 15, 1990.
10(g)* The Lincoln National Corporation Outside Directors Benefits Plan
is incorporated by reference to Exhibit 10(h) of LNC's Form 10-K
for the year ended December 31, 1992, filed with the Commission
on March 30, 1993.
10(h)* Lincoln National Corporation Executive Savings and Profit
Sharing Plan as amended January 1, 1992 is incorporated by
reference to Exhibit 10(o) of LNC's Form 10-K for the year ended
December 31, 1992, filed with the Commission on March 30, 1993.
10(i)* Lincoln National Corporation 1993 Stock Plan for Non-Employee
Directors (File No. 33-58113) as last amended and restated
effective May 10, 1995.
10(j)* Lincoln National Corporation Executives' Excess Compensation
Benefit Plan is incorporated by reference to Exhibit 10(r) of
LNC's Form 10-K for the year ended December 31, 1993, filed with
the Commission on March 30, 1994.
10(k)* American States Executives Salary Continuation Plan as amended and
restated effective May 2, 1995.
10(l) Lease and Agreement dated August 1, 1984, with respect to the
American States' Home Office property.
10(m) Lease and Agreement dated August 1, 1984, with respect to LNL's
Home Office property located at Magnavox Way, Fort Wayne, Indiana.
10(n) Lease and Agreement dated August 1, 1984, with respect to LNL's
Home Office properties located at Clinton Street and Harrison
Street, Fort Wayne, Indiana.
10(o) Lease and Agreement dated December 1, 1994 with respect to LNC's
Corporate Office located at 200 East Berry Street, Fort Wayne,
Indiana are incorporated by reference to Exhibit 10(p) of LNC's
Form 10-K for the year ended December 31, 1994, filed with the
Commission on March 27, 1995.
*This exhibit is a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form
pursuant to Item 14(c) of this report.
11 Computation of Per Share Earnings.
21 List of Subsidiaries of LNC.
23 Consent of Ernst & Young LLP, Independent Auditors.
27 Financial Data Schedule.
28 Information from Reports Furnished to State Insurance.
Regulatory Authorities. (Data shown on this report is on a
"Combined" basis and does not include data for subsidiaries
sold.)
<PAGE> -71-
Item 14(b)
During the fourth quarter of the year ended December 31, 1995, no reports on
Form 8-K were filed with the Commission.
Item 14(c)
The exhibits of Lincoln National Corporation and subsidiaries are listed in
Item 14(a)(3) above.
Item 14(d)
The financial statement schedules for Lincoln National Corporation and
subsidiaries follow on pages through 72 - 79.
<PAGE> -72-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS
IN RELATED PARTIES
December 31, 1995 (000's omitted)
Col. A Col. B Col. C Col. D
Amount at
Which Shown
in the
Type of Investment Cost Value Balance Sheet
<S> <C> <C> <C>
Fixed maturity securities
available-for-sale:
Bonds:
United States Government
and government agencies
and authorities ------------- $ 1,033,093 $ 1,148,014 $ 1,148,014
States, municipalities and
political subdivisions ------ 2,238,122 2,390,061 2,390,061
Mortgage-backed securities --- 5,266,736 5,572,348 5,572,348
Foreign governments ---------- 1,273,242 1,362,130 1,362,130
Public utilities ------------- 2,852,436 3,072,978 3,072,978
Convertibles and bonds
with warrants attached ------ 181,431 199,658 199,658
All other corporate bonds ---- 10,977,471 11,969,779 11,969,779
Redeemable preferred stocks ---- 112,996 119,508 119,508
Total ----------------------- 23,935,527 25,834,476 25,834,476
Equity securities available-for-sale:
Common stocks:
Public utilities ------------- 18,381 22,170 22,170
Banks, trusts and
insurance companies --------- 97,406 115,586 115,586
Industrial, miscellaneous
and all other --------------- 597,473 771,821 771,821
Nonredeemable preferred stocks - 222,864 255,267 255,267
Total Equity Securities ----- 936,124 1,164,844 1,164,844
Mortgage loans on real estate ---- 3,216,464 3,186,872(A)
Real estate:
Investment properties ---------- 659,390 659,390
Acquired in
satisfaction of debt ---------- 174,551 116,522(A)
Policy loans --------------------- 602,573 602,573
Other investments ---------------- 385,409 371,765(A)
Total Investments ----------- $29,910,038 $31,936,442
<FN>
(A) Investments which are deemed to have declines in value that are
other than temporary are written down or reserved for to reduce their
carrying value to their estimated realizable value.
</FN>
</TABLE>
<PAGE> -73-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
Lincoln National Corporation (Parent Company Only)
December 31 (000's omitted) 1995 1994
<S> <C> <C>
Assets:
Investments in subsidiaries* ------------------ $5,086,708 $3,779,282
Investments ----------------------------------- 20,344 28,726
Investment in unconsolidated affiliate -------- -- 114,345
Cash and invested cash ------------------------ 466,776 523,132
Property and equipment ------------------------ 11,464 9,895
Accrued investment income --------------------- 7,866 211
Receivable from subsidiaries* ----------------- 67,024 66,724
Loans to subsidiaries* ------------------------ 143,462 36,480
Dividends receivable from subsidiaries* ------- -- 45,000
Goodwill -------------------------------------- 338,346 9,355
Other intangible assets ----------------------- 76,052 --
Other assets ---------------------------------- 12,419 10,184
Total Assets -------------------------------- $6,230,461 $4,623,334
Liabilities and Shareholders' Equity
Liabilities:
Cash collateral on loaned securities ---------- $ 199,000 $ 203,531
Dividends payable ----------------------------- 47,726 40,531
Short-term debt ------------------------------- 248,744 229,444
Long-term debt -------------------------------- 595,490 397,705
Loans from subsidiaries* ---------------------- 557,896 600,308
Federal income taxes (recoverable) payable ---- 69,328 (2,387)
Accrued expenses and other liabilities -------- 134,155 112,142
Total Liabilities --------------------------- 1,852,339 1,581,274
Shareholders' Equity:
Series A preferred stock ---------------------- 1,335 1,420
Series E preferred stock ---------------------- -- 151,206
Series F preferred stock ---------------------- -- 158,707
Common stock ---------------------------------- 889,476 555,382
Retained earnings ----------------------------- 2,775,718 2,479,532
Foreign currency translation adjustment ------- 13,413 6,890
Net unrealized gain (loss) on
securities available-for-sale [including
unrealized gain (loss) of subsidiaries:
1995 - $687,904 1994 - $(325,366)] - 698,180 (311,077)
Total Shareholders' Equity ----------------- 4,378,122 3,042,060
Total Liabilities and
Shareholders' Equity ---------------------- $6,230,461 $4,623,334
<FN>
*Eliminated in consolidation.
</FN>
</TABLE>
These condensed financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes of Lincoln
National Corporation and subsidiaries (see pages 34 through 65).
<PAGE> -74-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Continued)
STATEMENTS OF INCOME
Lincoln National Corporation (Parent Company Only)
Year Ended December 31 (000's omitted) 1995 1994 1993
<S> <C> <C> <C>
Revenue:
Dividends from subsidiaries* --------------- $538,515 $309,460 $155,980
Interest from subsidiaries* ---------------- 2,018 1,080 1,730
Equity in earnings of
unconsolidated affiliate ------------------ 5,075 13,119 --
Net investment income ---------------------- 29,260 20,376 14,634
Realized gain (loss) on investments -------- 30,189 (20,016) 27,106
Gain on sale of affiliate/operating
property to subsidiary* ------------------- 74,284 -- --
Other -------------------------------------- 1,292 1,373 (61)
Total Revenue ---------------------------- 680,633 325,392 199,389
Expenses:
Operating and administrative --------------- 41,884 40,919 21,682
Interest-subsidiaries* --------------------- 32,864 23,815 13,811
Interest-other ----------------------------- 63,624 45,976 41,136
Total Expenses --------------------------- 138,372 110,710 76,629
Income before Federal Income Tax Expense
(Benefit), Equity in Income of
Subsidiaries, Less Dividends and
Cumulative Effect of Accounting Change ---- 542,261 214,682 122,760
Federal income tax expense (benefits) -------- 37,780 (36,574) (6,032)
Income Before Equity in
Income of Subsidiaries, Less Dividends
and Cumulative Effect of
Accounting Change ----------------------- 504,481 251,256 128,792
Equity in income of subsidiaries, less
dividends ----------------------------------- (22,295) 98,642 286,491
Income Before Cumulative Effect of
Accounting Change ----------------------- 482,186 349,898 415,283
Cumulative effect of accounting change:
Parent company ------------------------------ -- -- (8,006)
Subsidiaries -------------------------------- -- -- (88,425)
Total Accounting Change ------------------ -- -- (96,431)
Net Income ------------------------------- $482,186 $349,898 $318,852
<FN>
*Eliminated in consolidation.
</FN>
</TABLE>
These condensed financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes of Lincoln
National Corporation and subsidiaries (see pages 34 through 65).
<PAGE> -75-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
STATEMENTS OF CASH FLOWS
Lincoln National Corporation (Parent Company Only)
Year Ended December 31 (000's omitted) 1995 1994 1993
Cash Flows from Operating Activities:
Net income ----------------------------------- $482,186 $349,898 $318,852
<S> <C> <C> <C>
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in income of subsidiaries
less than (greater than)
distributions* --------------------------- 86,889 (63,642) (278,065)
Equity in undistributed earnings of
unconsolidated affiliate ----------------- (5,075) (13,119) --
Realized (gain) loss on investments ------- (30,189) 20,016 (27,106)
Gain on sale of affiliate/
operating property ----------------------- (74,284) -- --
Cumulative effect of accounting change ---- -- -- 8,006
Other ------------------------------------- 47,967 (32,757) 23,375
Net Adjustments ------------------------- 25,308 (89,502) (273,790)
Net Cash Provided by
Operating Activities ------------------- 507,494 260,396 45,062
Cash Flows from Investing Activities:
Net sales (purchases) of investments ------- 16,614 (22,106) 31,648
Cash collateral on loaned securities ------- (4,531) 14,275 9,547
Net investment in subsidiaries* ------------ (697,106) (2,744) (105,846)
Sale of (Investment in) unconsolidated
affiliate --------------------------------- 193,975 (103,470) --
Net (purchase) sale of property
and equipment ----------------------------- (3,158) (5,109) (5,563)
Other -------------------------------------- 17,675 7,379 3,147
Net Cash Used in Investing Activities ---- (476,531) (111,775) (67,067)
Cash Flows from Financing Activities:
Principal payments on long-term debt ------- -- (100,717) --
Issuance of long-term debt ----------------- 197,785 200,000 --
Net increase (decrease) in short-term debt - 19,300 (83,423) (207,231)
Increase (decrease) in loans from
subsidiaries* ----------------------------- (42,413) 271,841 (127,602)
Decrease (increase) in loans to
subsidiaries* ----------------------------- (106,982) (20,455) 34,725
Increase in receivables from subsidiaries* - (300) (3,889) (14,235)
Public offering of common stock ------------ -- -- 316,100
Common stock issued for benefit plans ------ 24,096 29,985 26,230
Retirement of common stock ----------------- -- (18,395) --
Dividends paid to shareholders ------------- (178,805) (172,157) (156,235)
Net Cash Provided by (Used in)
Financing Activities -------------------- (87,319) 102,790 (128,248)
Net Increase (Decrease) in Cash ---------- (56,356) 251,411 (150,253)
Cash at beginning of year -------------------- 523,132 271,721 421,974
Cash at End of Year ---------------------- $466,776 $523,132 $271,721
<FN>
*Eliminated in consolidation.
</FN>
</TABLE>
These condensed financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes of Lincoln
National Corporation and subsidiaries (see pages 34 through 65).
<PAGE> -76-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
Column A Column B Column C Column D Column E Column F Column G
Future Policy Other
Benefits, Policy
Deferred Claims and Claims and Net
Acquisition Claim Unearned Benefits Premium Investment
Segment Costs Expenses Premiums Payable Revenue (A) Income (B)
--------------------------------(000's Omitted)---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1995
Life Insurance and Annuities - $ 901,825 $ 7,408,160 $ 1,187 $ $1,288,002 $1,893,759
Reinsurance ------------------ 396,588 3,009,057 93,189 810,158 164,105
Property-Casualty ------------ 138,272 2,595,328 720,262 1,678,910 238,808
Investment Management (C) ---- 584
Other (incl. consol. adj's.) - (89,998) (1,258) (11,575)
Total ---------------------- $1,436,685 $12,922,547 $813,380 $ -- $3,777,070 $2,285,681
Year Ended December 31, 1994
Life Insurance and Annuities - $1,600,811 $ 6,357,449 $ 11,201 $ $1,030,010 $1,635,891
Reinsurance (D) -------------- 329,042 1,542,857 63,202 1,034,380 125,447
Property-Casualty ------------ 140,122 2,702,537 732,101 1,710,563 241,096
Employee Life-Health Benefits(E) -- -- -- 299,338 10,838
Other (incl. consol. adj's.) - (66,331) (1,517) (1,921)
Total ---------------------- $2,069,975 $10,536,512 $804,987 $ -- $4,074,291 $2,011,351
Year Ended December 31, 1993
Life Insurance and Annuities - $1,176,852 $7,305,262 $ 6,527 $ $ 969,579 $1,717,503
Reinsurance (D) -------------- 299,906 1,491,554 76,606 878,244 124,856
Property-Casualty ------------ 153,073 2,810,037 777,011 1,841,363 250,633
Employee Life-Health Benefits- 320,189 1,228,606 42,931
Other (incl. consol. adj's.) - (124,107) (1,339) 10,596
Total ---------------------- $1,629,831 $11,802,935 $858,805 $ -- $4,917,792 $2,146,519
</TABLE>
<TABLE>
<CAPTION>
Column A Column H Column I Column J Column K
Amortiza-
Benefits, tion of
Claims, Deferred
and Policy Ac- Other
Claim quisition Operating Premiums
Segment Expenses Costs Expenses (B) Written
----------------------(000's Omitted)-----------------
Year Ended December 31, 1995
<S> <C> <C> <C> <C>
Life Insurance and Annuities - $1,815,242 $274,886 $ 499,897
Reinsurance ------------------ 1,088,438 59,910 279,724
Property-Casualty ------------ 1,209,463 352,503 198,758 $1,671,889
Investment Management (C) ---- 156,665
Other (incl. consol. adj's.) - 71,195
Total ---------------------- $4,113,143 $687,299 $1,206,239
Year Ended December 31, 1994
Life Insurance and Annuities - $1,904,352 $ 89,916 $ 514,384
Reinsurance (D) -------------- 809,819 147,226 138,988
Property-Casualty ------------ 1,262,400 361,195 169,049 $1,664,483
Employee Life-Health Benefits(E) 218,672 73,355
Other (incl. consol. adj's.) - 114,213
Total ---------------------- $4,195,243 $598,337 $1,009,989
Year Ended December 31, 1993
Life Insurance and Annuities - $1,883,656 $139,824 $ 371,756
Reinsurance (D) -------------- 774,429 42,549 311,690
Property-Casualty ------------ 1,406,781 384,185 187,654 $1,766,649
Employee Life-Health Benefits- 916,513 294,810
Other (incl. consol. adj's.) - 5,274 85,807
Total ---------------------- $4,981,379 $571,832 $1,251,717
<FN>
<F1>
(A) Includes insurance fees on universal life and other interest sensitive products.
<F2>
(B)
The allocation of expenses between investments and other operations are based on a number of assumptions and estimates.
Results would change if different methods were applied.
<F3>
(C) Includes data from the April 1, 1995 date when Investment Management segment was initiated because of the purchase of
Delaware Management Holdings, Inc.
<F4>
(D) Amounts for 1993 and 1994 have been reclassified to conform to the 1995 presentation.
<F5>
(E) Includes data through the March 21, 1994 date of sale of the direct writer of employee life-health coverages.
</FN>
</TABLE>
<PAGE> -77-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE (A)
Column A Column B Column C Column D Column E Column F
Ceded Assumed Percentage of
Gross to Other from Other Net Amount Assumed
Amount Companies Companies(B) Amount to Net
-------------------------(000's Omitted)-----------------------
Year Ended December 31, 1995
<S> <C> <C> <C> <C> <C>
Life insurance in force ------------ $109,817,000 $34,292,000 $118,875,000 $194,400,000 61.1%
Premiums:
Life insurance (C) --------------- $ 934,121 $ 182,519 $ 536,400 $ 1,288,002 41.6%
Health insurance ----------------- 308,189 212,472 714,441 810,158 88.2
Property-casualty insurance ------ 1,685,815 53,695 46,790 1,678,910 2.8
Total -------------------------- $2,928,125 $ 448,686 $1,297,631 $ 3,777,070
Year Ended December 31, 1994
Life insurance in force ------------ $93,505,000 $35,366,000 $106,161,000 $164,300,000 64.7%
Premiums:
Life insurance (C) --------------- $1,040,134 $ 47,022 $ 365,364 $1,358,476 26.9%
Health insurance ----------------- 668,091 357,536 694,697 1,005,252 69.1
Property-casualty insurance ------ 1,689,070 78,381 99,874 1,710,563 5.8
Total -------------------------- $3,397,295 $482,939 $1,159,935 $4,074,291
Year Ended December 31, 1993
Life insurance in force ------------ $144,054,000 $46,255,000 $89,712,000 $187,511,000 47.8%
Premiums:
Life insurance (C) --------------- $1,086,349 $139,013 $ 351,435 $1,298,771 27.1%
Health insurance ----------------- 1,376,038 80,731 482,351 1,777,658 27.1
Property-casualty insurance ------ 1,760,560 71,472 152,275 1,841,363 8.3
Total -------------------------- $4,222,947 $291,216 $ 986,061 $4,917,792
<FN>
<F1>
(A)
Special-purpose bulk reinsurance transactions have been excluded.
<F2>
(B) Life and health insurance premiums assumed from other companies for the years ended December 31, 1993 and 1994
has been reclassified to conform to the 1995 presentation.
<F3>
(C) Includes insurance fees on universal life and other interest sensitive products.
</FN>
</TABLE>
<PAGE> -78-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at (1) (2) Balance at
Beginning Charged to Costs Charged to Other Deductions- End of
Description of Period Expenses(A) Accounts-Describe Describe(B) Period
------------------------------(000's Omitted)--------------------------------
Year Ended December 31, 1995
<S> <C> <C> <C> <C>
Deducted from Asset Accounts:
Reserve for Mortgage Loans
on Real Estate -------------------- $ 62,675 $ 2,288 $(35,371) $ 29,592
Reserve for Real Estate ------------ 78,638 (9,203) (11,406) 58,029
Reserve for Other Long-term
Investments ----------------------- 23,776 (2,415) (7,717) 13,644
Reserve for Property and
Equipment Held-for-Sale ----------- -- 28,350 -- 28,350
Included in Other Liabilities:
Investment Guarantees -------------- 13,076 (2,617) (3,360) 7,099
Year Ended December 31, 1994
Deducted from Asset Accounts:
Reserve for Mortgage Loans
on Real Estate -------------------- $226,639 $ 18,232 $(182,196) $ 62,675
Reserve for Real Estate ------------ 121,427 14,861 (57,650) 78,638
Reserve for Other Long-term
Investments ----------------------- 27,196 1,726 (5,146) 23,776
Included in Other Liabilities:
Investment Guarantees -------------- 18,535 2,480 (7,939) 13,076
Year Ended December 31, 1993
Deducted from Asset Accounts:
Reserve for Mortgage Loans
on Real Estate -------------------- $134,476 $140,568 $(48,405) $226,639
Reserve for Real Estate ------------ 131,060 33,389 (43,022) 121,427
Reserve for Other Long-term
Investments ----------------------- 40,307 4,321 (17,432) 27,196
Included in Other Liabilities:
Investment Guarantees -------------- 30,033 1,427 (12,925) 18,535
<FN>
<F1>
(A) Excludes charges for the direct write-offs of assets. The negative amounts represent improvements in the
underlying assets and guarantees for which valuation accounts had previously been established.
<F2>
(B) Deductions reflect sales or foreclosures of the underlying holdings.
</FN>
</TABLE>
<PAGE> -79-
<TABLE>
<CAPTION>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
SCHEDULE VI - SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS
Column A Column B Column C Column D Column E Column F Column G
Deferred Reserves for Discount,
Affiliation Policy Unpaid Claims if any Net
with Acquisition and Claim Deducted in Unearned Earned Investment
Registrant Costs Expenses Column C Premiums Premium Income
----------------------------(000's Omitted)-----------------------------------
Consolidated subsidiaries:
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1995 $138,272 $2,595,328 $ -- $720,262 $1,678,910 $238,808
Year Ended December 31, 1994 $140,122 $2,702,537 $ -- $732,101 $1,710,563 $241,096
Year Ended December 31, 1993 $153,073 $2,810,037 $ -- $777,011 $1,841,363 $250,633
</TABLE>
<TABLE>
<CAPTION>
Column A Column H Column I Column J Column K
Claims and Claim
Expenses (Credits) Amortization
Incurred Related to of Deferred Paid
Affiliation (1) (2) Policy Claims
with Current Prior Acquisition and Claim Premium
Registrant Year Years Costs Expenses Written
----------------------(000's omitted)--------------------------
Consolidated subsidiaries:
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1995 $1,234,000 $(24,500) $352,503 $1,302,600 $1,671,889
Year Ended December 31, 1994 $1,340,600 $(78,200) $361,195 $1,347,600 $1,664,483
Year Ended December 31, 1993 $1,433,270 $(26,489) $384,185 $1,494,764 $1,766,649
</TABLE>
<PAGE> -80-
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX FOR THE ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 1995
Exhibit
Number
3(a) Articles of Incorporation of LNC as last amended
May 12, 1994.*
3(b) Bylaws of LNC as last amended January 1, 1992.*
4(a) Indenture of LNC due January 15, 1987.*
4(b) Indenture for 7 1/8% due July 15, 1999 and
Specimen Notes.*
4(c) Indenture for 7 5/8% Notes due July 15, 2002 and
Specimen Notes.*
4(d) Rights Agreement dated November 7, 1986.*
4(e) Indenture of LNC dated as of September 15, 1994.*
4(f) Form of Note dated as of September 15, 1994*
4(g) Form of Zero Coupon Security dated as of September 15, 1994*
4(h) Specimen Debenture for 9 1/8% Notes due October 1, 2024.*
4(i) Specimen of 7 1/4% Debenture due May 15, 2005*
10(a) Lincoln National Corporation 1986 Stock Option
Incentive Plan.*
10(b) Lincoln National Corporation 1982 Stock Option
Incentive Plan.*
10(c) The Lincoln National Corporation Executives'
Salary Continuation Plan.*
10(d) The Lincoln National Corporation Executive Value
Sharing Plan.*
10(e) Lincoln National Corporation Executives' Severance
Benefit Plan as last amended November 9, 1995.
10(f) The Lincoln National Corporation Outside Directors
Retirement Plan as last amended March 15, 1990.
10(g) The Lincoln National Corporation Outside Directors
Benefits Plan.*
10(h) The Lincoln National Corporation Executive Savings and
Profit Sharing Plan as last amended January 1, 1992.*
10(i) Lincoln National Corporation 1993 Stock Plan for Non-
Employee Directors as last amended May 10, 1995.
10(j) Lincoln National Corporation Executives' Excess
Compensation Benefit Plan.*
10(k) American States Executives' Salary Continuation Plan as last
amended May 2, 1995.
10(l) Lease and Agreement dated August 1, 1984, with respect
to the American States' home office property.
10(m) Lease and Agreement dated August 1, 1984, with respect
to LNL's home office property.
10(n) Lease and Agreement dated August 1, 1984, with respect
to additional LNL home office property.
10(o) Lease dated February 14, 1991, with respect to LNC's
Corporate Offices.*
11 Computation of Per Share Earnings.
21 List of Subsidiaries of LNC.
23 Consent of Ernst & Young LLP, Independent Auditors.
27 Financial Data Schedule.
28 Information from Reports Furnished to State Insurance
Regulatory Authorities. [Data shown on this report is on
a "Combined" basis and does not include data for
subsidiaries sold.]
*Incorporated by Reference
<PAGE> -81-
Signature Page
LINCOLN NATIONAL CORPORATION
Pursuant to the requirements
of Section 13 or 15(d) of
the Securities Exchange Act By /s/ Ian M. Rolland March 14, 1996
of 1934, LNC has duly caused Ian M. Rolland,
this report to be signed on (Chairman, Chief Executive Officer and
its behalf by the under- Director)
signed, thereunto duly
authorized. By /s/ Robert A. Anker March 14, 1996
Robert A. Anker,
(President, Chief Operating Officer and
Director)
By /s/ Richard C. Vaughan March 14, 1996
Richard C. Vaughan,
(Executive Vice President and Chief
Financial Officer)
By /s/ Donald L. Van Wyngarden March 14, 1996
Donald L. Van Wyngarden
(Second Vice President and Controller)
Pursuant to the requirements By /s/ J. Patrick Barrett March 14, 1996
of the Securities Exchange J. Patrick Barrett
Act of 1934, this report
has been signed below by By /s/ Thomas D. Bell, Jr. March 14, 1996
the following Directors Thomas D. Bell, Jr
of LNC on the date indicated.
By /s/ Daniel R. Efroymson March 14, 1996
Daniel R. Efroymson
By /s/ Harry L. Kavetas March 14, 1996
Harry L. Kavetas
By /s/ M. Leanne Lachman March 14, 1996
M. Leanne Lachman
By /s/ Earl L. Neal March 14, 1996
Earl L. Neal
By /s/ John M. Pietruski March 14, 1996
John M. Pietruski
By /s/ Jill S. Ruckelshaus March 14, 1996
Jill S. Ruckelshaus
By /s/ Gordon A. Walker March 14, 1996
Gordon A. Walker
By /s/ Gilbert R. Whitaker,Jr. March 14, 1996
Gilbert R. Whitaker,Jr.
Exhibit 10(e)
LINCOLN NATIONAL CORPORATION
Executives' Severance Benefit Plan
(As effective November 9, 1995)
Section 1. History, Plan Name and Effective Date. Effective August 12,
1982, the Board of Directors (the "Board") of Lincoln National Corporation
(the "Corporation") established the Lincoln National Corporation Executives'
Severance Benefit Plan (the "Plan"). The following provisions constitute an
amendment, restatement and continuation of the Plan, effective as of
November 9, 1995.
Section 2. Purpose. The Corporation recognizes that the possibility of an
unforeseen change of control is unsettling to its executives and the executives
of its Affiliates. Therefore, this Plan is established to provide assurance
to (i) encourage the attraction and continued employment of the executives,
and assure their continuing dedication to their duties notwithstanding the
threat or occurrence of a change of control; (ii) enable the executives,
should the Corporation receive unsolicited proposals from third parties with
respect to its future, to assess and advise the Board what action on those
proposals would be in the best interests of the Corporation, its shareholders
and the policyholders and other customers of its Affiliates, and to take such
action regarding those proposals as the Board might determine appropriate,
without being influenced by the uncertainties of their own situation;
(iii) demonstrate to the executives of the Corporation and its Affiliates
that the Corporation is concerned with the welfare of the executives and
intends to assure that loyal executives are treated fairly; and
(iv) provide the executives with compensation and benefits arrangements upon
a change of control which are designed to ensure that the compensation and
benefits expectations of the executives will be satisfied.
Section 3. Employees Eligible to Participate. Individuals from a select
group of key employees of the Corporation and its Affiliates shall be
eligible to participate in the Plan. Members of the Corporation's Senior
Management Committee (including any successor committee or other body having
substantially similar responsibilities), as it shall be constituted from time
to time, shall always be eligible to participate in the Plan. The
Compensation Committee of the Board may specify additional employees at any
time as eligible.
Section 4. Effective Date of Executive's Participation. An employee
shall become a participant in the Plan on the date specified in the Joinder
Agreement executed by the employee and the Corporation. An employee who
participates in the Plan is an "Executive."
Section 5.Termination of Participation. If before a Change of Control
(as hereinafter defined) of the Corporation occurs, (i) the Executive's
employment terminates with the Corporation and its Affiliates, (ii) the
Executive is no longer a member of the Corporation's Senior Management
Committee (including any successor committee or other body having
substantially similar responsibilities), or (iii) the Compensation Committee
determines that an Executive otherwise is no longer eligible to
participate in the Plan, the Executive shall thereafter not be entitled
to any benefits under the Plan and all rights hereunder shall be forfeited;
provided, however, that if the Executive can reasonably demonstrate that the
change in his status (as described in subsections (i) through (iii)
above) (y) was at the request of a third party who had taken steps reasonably
calculated to effect a Change of Control, or (z) arose at the request or by
action of the Corporation in connection with or anticipation of a Change of
Control, then the Executive shall be deemed to have been a participant
in the Plan on the date of the Change of Control and entitled to all the
benefits provided in this Plan. An Executive whose change in status in the
Plan, as described above, occurred within six (6) months before a Change of
Control is presumed to have had a change of status in anticipation
of a Change of Control.
Section 6. Amount of Severance Benefit. The amount of the severance
benefit shall be the greater of 200% of the Executive's Annual Compensation
(as hereinafter defined) or 299.99% of the Executive's "base amount" as this
term is defined in Sections 280G(b)(3)(A), 280G(d)(1) and
280G(d)(2) of the Internal Revenue Code of 1986, as amended (the "Code").
"Annual Compensation" means the highest amount of all consideration paid or
payable to the Executive by the Corporation and all Affiliates during
(i) either of the two calendar years immediately preceding the year in which
the Change of Control occurred, or (ii) the calendar year immediately
preceding the year in which his employment was terminated, as reflected on
his Form W-2 filed with the Internal Revenue Service for the calendar year so
determined and adding thereto compensation deferred at the Executive's
election and excluding therefrom any payments he received for purposes of
equalizing his after tax income with what he would have received had he been
in the United States.
Section 7.Change of Control. As used in this Plan, "Change of Control"
means: (a) The acquisition by any individual, entity or group (as defined in
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (as
defined in Rule 13d-3 promulgated under the Exchange Act) of twenty
percent (20%) or more of (A) the then outstanding shares of common stock of
the Corporation (the "Outstanding Corporation Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Corporation other than an acquisition by virtue
of the exercise of a conversion privilege, (B) any acquisition by the
Corporation, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation, or any entity controlled
by the Corporation, or (D) any acquisition by any entity or corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions described
in clauses (A), (B) and (C) of subsection (c) of this Section 7 are
satisfied; or (b) Individuals who, as of the beginning of any period of two
consecutive years, constitute the Board of Directors of the Corporation
(the "Board"), cease for any reason to constitute at least a majority of the
directors of the Corporation; provided, however, that any individual becoming
a director subsequent to the beginning of such period whose election, or
nomination for election by the Corporation's shareholders, was approved by a
vote of at least two-thirds of the Board at the beginning of such period,
shall be considered as though such individual were a member of the Board as
of the beginning of such period, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or (c) Approval by the shareholders of the
Corporation of a reorganization, merger or consolidation, unless, following
such reorganization, merger or consolidation, (A) more than sixty
percent (60%) of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is immediately thereafter then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities immediately prior
to such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (B) no
Person (excluding the Corporation, any employee benefit plan or related
trust of the Corporation, or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation and,
directly or indirectly, twenty percent (20%) or more of the Outstanding
Corporation Common Stock or Outstanding Corporation Voting Securities, as
the case may be) beneficially owns, directly or indirectly, twenty percent
(20%) or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the execution of the
initial agreement providing for such reorganization, merger or consolidation;
or (d) Approval by the shareholders of the Corporation of (A) a complete
liquidation or dissolution of the Corporation or (B) the sale or other
disposition of all or substantially all of the assets of the Corporation,
other than to a corporation, with respect to which following such sale
or other disposition (1) more than sixty percent (60%) of, respectively, the
then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (2) no Person (excluding
the Corporation and any employee benefit plan or related trust of the
Corporation, or such corporation and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly,
twenty percent (20%) or more of the Outstanding Corporation Common Stock or
Outstanding Corporation Voting Securities, as the case may be) beneficially
owns, directly or indirectly, twenty percent (20%) or more of, respectively,
the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and
(3) at least a majority of the members of the board of directors of such
corporation were members of the Board at the time of the execution of the
initial agreement or action of the Board providing for such sale or other
disposition of assets of the Corporation; or (e) The closing of a
transaction, as defined in the documents relating to, or as evidenced by a
certificate of any state or federal governmental authority in connection
therewith, approval of which by the shareholders of the Corporation would
constitute an "acquisition of control" under subsection (c) or (d) of this
Section 7 of this Plan.
Section 8. Payment of Benefits. (a) If within a three-year period
commencing on the date of a Change of Control (the "Benefit Period"),
(i) the Corporation or any Affiliate terminates the employment of the
Executive for any reason other than Cause, death or total and permanent
disability (as defined in Section 18 hereof), or (ii) the Executive
terminates his employment for Good Reason (as defined in Section 8(c)
hereof), the amount of the severance benefit determined in accordance with
Section 6 shall be paid as a cash lump sum within 30 calendar days. An
Executive who has a change in status as set forth in Section 5 prior to the
Change of Control and who is still a participant in the Plan because of the
provisions of Section 5 shall be treated as if the change in status occurred
one day after the Benefit Period commenced.
(b) The Corporation may terminate an Executive for Cause during the
Benefit Period. As used in this Plan, "Cause" means:
(i) conviction of a felony, or other fraudulent or willful misconduct
materially and demonstrably injurious to the business or reputation of the
Corporation by the Executive, or
(ii) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Corporation or one of its
Affiliates (other than such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief
Executive Officer of the Corporation which specifically identifies the
manner in which the Board or Chief Executive Officer believes that the
Executive has not substantially performed his duties.
For purposes of this Section 8(b), no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Corporation.
Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Corporation or based upon the
advice of counsel for the Corporation shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Corporation. An Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to him and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the Executive was
guilty of conduct set forth above in (i) or (ii) above and specifying the
particulars thereof in detail.
(c) The Executive's employment may be terminated by the Executive for Good
Reason during the Benefit Period. As used in this Plan, "Good Reason" means,
without the Executive's written consent:
(i) a change in the Executive's status, positions or responsibilities
which, in his reasonable judgment, does not represent a promotion from his
status, position or responsibilities as in effect prior to such change;
(ii) the assignment to the Executive of any duties or responsibilities
which, in his reasonable judgment, are inconsistent with the Executive's
position (including status, office, titles and reporting requirements)
authority, duties or responsibilities; or other action by the Corporation or
any Affiliate which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied promptly after receipt of notice thereof given by the Executive;
(iii) a reduction in the Executive's base salary as in effect on the date he
became a participant in the Plan, or as the same may be increased from time
to time during the term of his participation, or the Corporation's or any
Affiliate's failure to increase within twelve (12) months of the Executive's
last increase in base salary the Executive's base salary in an amount which at
least equals, on a percentage basis, the average percentage increase in base
salary for all executive and senior officers of the Corporation effected in
the preceding twelve (12) months;
(iv) the relocation of the principal executive offices of the Corporation or
any Affiliate, whichever entity on behalf of which the Executive performs a
principal function of that entity as part of his employment services, to a
location more than thirty-five (35) miles from where it was, or the
Corporation's requiring him to be based at any place other than the location
at which he performed his duties before the Change of Control, except for
required travel on the Corporation's or any Affiliate's business to an extent
substantially consistent with his business travel obligations at the time of
the Change of Control;
(v) the failure to continue in effect this Plan, or to continue to provide the
Executive all incentive, savings and retirement, bonus or other compensation
plans, practices, policies or programs applicable generally to other peer
executives of the Corporation or any Affiliate, but in no event shall such
plans, practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement opportunities, in each case, less
favorable in the aggregate, than the most favorable of those provided by
the Corporation and its Affiliates for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Change of Control or if more favorable to
the Executive, those provided generally at any time after the Change of
Control to other peer executives of the Corporation and its Affiliates;
(vi) the failure to continue to provide the Executive and/or the Executive's
family, as the case may be, with benefits under welfare benefit plans,
practices, policies and programs provided by the Corporation and any of its
Affiliates (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
plans and programs) to the extent applicable generally to other peer
executives of the Corporations and its Affiliates, but in no event shall such
plans, practices, policies and programs provide the Executive and/or the
Executive's family, as the case may be, with benefits that are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Change of Control or,
if more favorable to the Executive, those provided generally at any time
after the Change of Control to other peer executives of the Corporation
and its Affiliates;
(vii) the failure to provide or continue in effect benefits, including,
without limitation, paid vacations, tax and financial planning services,
payment of club dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans, practices,
policies and programs of the Corporation and its Affiliates in effect for the
Executive at any time during the 120-day period immediately preceding the
Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Corporation and its Affiliates;
(viii) the failure to provide an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial
and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Corporation or its Affiliates at any
time during the 120-day period immediately preceding the Change of Control
or, if more favorable to the Executive, as provided generally at any time
thereafter to other peer executives of the Corporation and its Affiliates;
(ix) the failure of any successor or assign of the Corporation to assume
and expressly agree to perform the obligations under this Plan in the same
manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place;
(x) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination (as defined in Section 8(d)
hereof) and a resolution satisfying the requirements of Section 8(b) hereof;
and for purposes of this Plan, no such purported termination shall be
effective; or
(xi) any request by the Corporation or any Affiliate that the Executive
participate in an unlawful act or take any action constituting a breach of
the Executive's professional standard of conduct.
For purposes of this Section 8(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this Plan
to the contrary notwithstanding, a termination of employment by the Chief
Executive Officer or the Chief Operating Officer of the Corporation for any
reason during the Benefit Period shall be deemed to be a termination for
Good Reason for all purposes of this Plan.
(d) Any termination by the Corporation for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other party to
the Joinder Agreement given by hand delivery, registered or certified mail,
return receipt requested, postage prepaid, to the last known home address of
the Executive or to the address of the principal office of the Corporation,
copy to the General Counsel. For purposes of this Plan, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision relied upon, (ii) to the extent applicable, sets forth
in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the date of termination is other than the date of
receipt of such notice, specifies the termination date (which date shall be
not more than thirty (30) days after the giving of such notice). The failure
by the Executive or the Corporation to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Corporation,
respectively, hereunder, or preclude the Executive or the Corporation,
respectively, from asserting such fact or circumstance in enforcing the
Executive's or the Corporation's rights hereunder.
Section 9. Other Plans. (a) In the event benefits are payable to an
Executive in accordance with Section 8, (i) the Executive shall (A) be paid
all amounts due to the Executive under any incentive plan of the Corporation
or any Affiliate (or successor plans) in which he participated immediately
before the Change of Control, as provided in any such plan, and
(B) immediately be paid an additional amount such that when added to amounts
due to the Executive under (A), the Executive shall have received the maximum
stated benefit for each performance period in progress, pro-rated to the end
of the most recently completed calendar quarter;
(ii) the Executive's accrued benefits, if any, under the terms of all excess
benefit plans (as defined in Section 3(36) of ERISA) and supplemental
retirement plans maintained by the Corporation or any Affiliate shall
immediately vest and be payable as provided in those plans;
(iii) the Executive shall be entitled for the two year period following his
termination of employment to participate at no charge and on the same basis
(including family coverage) in all employee welfare benefit plans (as
defined in Section 3(1) of ERISA) maintained by the Corporation or any
Affiliate as of the date of the Change of Control, provided that any
benefits to which the Executive may be entitled pursuant to this subsection
(iii) shall terminate automatically at any time the Executive secures and
begins alternate employment and becomes entitled to substantially equivalent
benefits; and, provided further, that the Executive (and his spouse) shall
be entitled to retiree medical and dental coverage beginning on the date
he attains age 55 and until his death, on the basis provided to similar
retirees on the date of the Change of Control and at no additional cost to
the Executive, if on the date of the Change of Control, the Executive has
twenty-five years of service with the Corporation or any of its Affiliates,
or has attained age 50;
(iv) the Executive shall immediately be paid a lump sum amount equal to the
value of any outstanding stock options which by their terms cannot be
exercised the day following the Executive's termination of employment (the
value of each option shall be equal to the higher of (y) the average of the
high and low price of a share of stock, as quoted on the composite transactions
table covering transactions on the New York Stock Exchange on the first date
that the stock was traded on that Exchange which next precedes the date the
Executive's employment terminated, or (z) if the stock is no longer traded,
the price per share paid in the transaction giving rise to the Change of
Control minus, in either case, the stock option's exercise price);
(v) the Executive shall, upon the tender to the Secretary of the Corporation of
any restricted stock awards and dividend equivalents, be paid a lump sum
amount equal to the value of any unvested shares of restricted stock as if
all restrictions had been removed the day preceding the Change of Control,
to the extent that such restricted stock award agreement does not provide
for the immediate vesting of the restricted stock awards and dividend
equivalents upon the Change of Control;
(vi) the Executive shall be entitled, for the two year period beginning the day
after termination, to relocation benefits of $75,000.00 less any amounts
actually received from another employer as payment of, or reimbursement for,
relocation expenses;
(vii) the Executive shall be entitled to outplacement services, the scope and
provider of which shall be selected by the Executive in his sole discretion,
at the sole expense of the Corporation as incurred to a maximum of 15% of the
Executive's Annual Compensation; and
(viii) the Executive's rights under any other benefit plan maintained by the
Corporation or any Affiliate (or successor) shall be governed by the terms of
that plan as in effect on the day immediately preceding the Change of Control.
(b) In the event the Accounting Firm (as defined in Section 10(b) hereof) shall
make a bona fide determination that immediate cash payment to an Executive of
any of the benefits provided for in Section 9(a) above would destroy an
otherwise bona fide "pooling" transaction for financial reporting and tax
purposes, then the Executive shall be paid the maximum in cash he can be paid
without destroying pooling and all remaining amounts shall be paid in cash to
the Executive as soon as such payments can be made, together with interest at
the applicable federal rate (as defined in Section 1274(d) of the Code),
without destroying "pooling."
Section 10. Certain Additional Payments by the Corporation. (a) Anything in
this Plan to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Corporation to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, but determined
without regard to any additional payments required under this Section 10)
(a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such
taxes), including without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 10(c), all determinations required to
be made under this Section 10, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Ernst & Young or
such other nationally recognized certified public accounting firm as may be
designated by the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Corporation and the Executive
within 15 business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the
Corporation or the Executive. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control or the Corporation, the Executive shall
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Corporation. Any Gross-Up
Payment, as determined pursuant to this Section 10, shall be paid by the
Corporation to the Executive within two business days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Corporation and the Executive. In the event that
the Corporation exhausts its remedies pursuant to Section 10(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly pad by the Corporation
to or for the benefit of the Executive.
(c) The Executive shall notify the Corporation in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
the Corporation of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Corporation of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gave such notice to the
Corporation (or such shorter period ending on the date that any payment
of taxes with respect to such claim is due). If the Corporation notifies
the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall:
(i) give the Corporation any information reasonably requested by the
Corporation relating to such claim,
(ii) take such action in connection with contesting such claim as the
Corporation shall reasonably request in writing from time to time, including;
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Corporation,
(iii) cooperate with the Corporation in good faith to contest such claim, and
(iv) permit the Corporation to participate in any proceedings relating to
such claim, provided, however, that the Corporation shall bear and pay
directly all costs and expenses (including additional interest, deemed
interest with respect to interest-free advances, and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 10(c), the Corporation shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Corporation shall determine; provided, however,
that if the Corporation directs the Executive to pay such claim and sue for
a refund, the Corporation shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to
be due is limited solely to such contested amount. Furthermore, the
Corporation's control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 10(c), the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall
(subject to the Corporation's complying with the requirements of Section
10(c)) promptly pay to the Corporation the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the
Corporation pursuant to Section 10(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
the Corporation does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required
to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
Section 11. Reimbursement of Legal Fees. The Corporation shall pay directly
or reimburse an Executive (at the Executive's option) for any and all legal
fees and expenses incurred by such Executive relating to the enforcement or
enforceability of any obligations of the Corporation and its Affiliates
under the Plan or relating to enjoining the Board from amending the Plan in
a manner which is inconsistent with Section 15.
Section 12. Confidential Information. Each Executive who receives a
severance benefit under this Plan agrees to retain in confidence any secret
or confidential information known to him relating to the Corporation, its
Affiliates and their respective businesses, which shall have been obtained
by the Executive during his employment by the Corporation or any of its
Affiliates and shall not be or become public knowledge (other than by acts of
the Executive or a representative of the Executive in violation of this
Plan). After termination of the Executive's employment with the Corporation
or any of its Affiliates, the Executive shall not, without prior written
consent of the Corporation or as may otherwise be required by law or legal
process, communicate or divulge any such information, knowledge or data to
anyone other than the Corporation and those designated by it. In no event
shall a violation or an asserted violation of the provisions of this Section
12 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Plan.
Section 13. Right or Title to Funds. In the event of a Change of Control,
the Corporation shall immediately set aside, earmark, and contribute
sufficient funds in cash to pay for any obligations it may have under this
Plan as determined by the Accounting Firm, including no less than
$5,000,000.00 to satisfy any obligation of the Corporation under Section 11,
in a "Rabbi Trust". An Executive, and any successor in interest to him,
shall be and remain a general creditor of the Corporation with respect to any
promises to pay under this Plan in the same manner as any other creditor who
has a general claim for an unpaid liability, provided, however, that the
Executive shall have such rights against assets held in the Rabbi Trust that are
provided in such Rabbi Trust agreement. The Corporation shall not make any
loans or extend credit to an Executive which will be offset by benefits
payable under this Plan.
Section 14. Binding Plan. The obligations under this Plan shall be binding
upon and inure to the benefit of an Executive, his beneficiary or estate,
the Corporation and any successor to the Corporation.
Section 15. Amendment, Suspension or Termination of Plan. This Plan may be
amended at any time and from time to time by and on behalf of the Corporation
by the Board, but no amendment shall operate to give the Executive, either
directly or indirectly, any interest whatsoever in any funds or assets of the
Corporation, except the right upon fulfillment of all terms and conditions
hereof, as such terms and conditions may be amended, to receive the payments
herein provided. No amendment, suspension or termination of this Plan shall
operate in any way to reduce, diminish, or affect any of the benefits
provided to any Executive if such amendment, suspension or termination
(i) arose by action of the Corporation in connection with or anticipation
of a Change of Control, (ii) occurs coincident with a Change of Control, or
(iii) occurs after a Change of Control has occurred. Any such amendment,
suspension or termination that occurs within six (6) months before a Change
of Control is presumed to have been in anticipation of a Change of Control.
Section 16. No Effect on Employment. This Plan shall supplement and shall
neither supersede any other contract of employment, whether oral or in
writing, between the Executive and the Corporation or any Affiliate, nor
affect or impair the rights and obligations of the Executive and the
Corporation or any Affiliate, respectively, thereunder; and nothing contained
herein shall impose any obligation on the Corporation or Affiliate to continue
the employment of the Executive.
Section 17. No Waiver. Neither the failure nor the delay on the part of
the Executive in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, nor shall any single or partial exercise
of any such right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege hereunder.
No remedy conferred hereunder is intended to be exclusive of any other remedy
and each shall be cumulative and shall be in addition to every other remedy
now or hereafter existing at law or in equity.
Section 18. Definitions and Rules of Construction. Except where the context
clearly indicates to the contrary, the following terms have the meanings
specified:
(a) "Joinder Agreement" means the document, in substantially the form
attached as Exhibit A, agreed to by the Corporation by which the Executive
affirmatively requests participation in the Plan according to its terms and
conditions.
(b) "Affiliate" means any corporation which directly or indirectly
controls or is controlled by or is under common control with the Corporation.
For purposes of this definition control means the power to direct or cause
the direction of the management and policies of a corporation through the
ownership of voting securities.
(c) "Total and permanent disability" means the inability of the Executive
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which can be expected to last for a continuous period of not less
than 12 months. The determination of whether an Executive is totally and
permanently disabled shall be made by a physician selected by the Corporation
or its insurers and acceptable to the Executive or the Executive's legal
representative.
(d) The pronouns "he," "him," and "his" include the other sex.
(e) This Plan may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one instrument.
(f) The headings in this Plan are for purposes of reference only and shall
not limit or otherwise affect any of the terms hereof.
LINCOLN NATIONAL CORPORATION
Exhibit A
LINCOLN NATIONAL CORPORATION
Executives' Severance Benefit Plan Joinder Agreement
I, ____________________________________, hereby agree to the terms and
conditions of Lincoln National Corporation's Executives' Severance Benefit Plan
(the "Plan"), as established on [_________________] and as it may be amended,
and request participation thereunder effective as of _____________, 199__.
I acknowledge that, so long as a Change of Control (as defined in the Plan)
has not occurred, the Corporation is under no obligation to continue the Plan
or my participation therein and that being a participant thereunder in no way
guarantees my employment.
My participation in the Plan shall become effective as of the effective
date above stated without further notice upon receipt and approval of this
document by the Corporation.
Date Signature of Executive
Lincoln National Corporation agrees to the terms and conditions of the
Plan and participation in that Plan by the above named Executive and
acknowledges his/her participation this ____ day of __________________, 199__.
LINCOLN NATIONAL CORPORATION
By
Chief Executive Officer
APPROVED:
Chairman of the Compensation Committee
Board of Directors
Lincoln National Corporation
INDS01 JAS 134710/111029
Exhibit 10(f)
Lincoln National Corporation
Outside Directors Retirement Plan
Directors, who are not employees of the Corporation or any of its
subsidiaries, are eligible for retirement benefits. The annual benefits
payable to a director is equal to 10% of the director s retainer paid
during the last year he/she was a director multiplied by the number of
years of service (with a maximum of 10 years). Individuals who were
directors on January 1, 1987, were given credit for all years of past
service. The benefit is payable either in a single lump sum or monthly
beginning at the later of age 65 or when the director retires from the
Corporation s Board. In the event of a director s death prior to the
commencement of retirement benefits, a death benefit is paid to a
beneficiary.
The director must sign an election agreement indicating the form of
payment
February, 1991.
EXHIBIT 10(i)
[Historical note: Effective May 12, 1994, Lincoln National Corporation
(the Corporation ) established the 1993 Stock Plan for Non-Employee
Directors (the Plan ). The following provisions constitute an
amendment, restatement, and continuation of the Plan effective as of May
10, 1995.]
LINCOLN NATIONAL CORPORATION
1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I - PURPOSE OF PLAN
1.1 Purpose of Plan. Lincoln National Corporation (the "Corporation")
has adopted the 1993 Stock Plan for Non-Employee Directors (the "Plan")
to provide for payment in shares of the Corporation's Common Stock
("Stock") of a portion of the retainer fee payable to members of the
Board of Directors of the Corporation who are not employees of the
Corporation or any of its affiliates or subsidiaries ("Non-Employee
Directors") and to allow Non-Employee Directors to elect to defer
receipt of all or a portion of their retainer and/or meeting fees. The
Plan also provides a restricted stock bonus in the form of Restricted
Stock for Non-Employee Directors. The Plan is intended to provide
Non-Employee Directors with a larger equity interest in the Corporation
in order to attract and retain well-qualified individuals to serve as
Non-Employee Directors and to enhance the identity of interests between
Non-Employee Directors and the shareholders of the Corporation.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.1 Eligibility and Participation. Only Non-Employee Directors of the
Corporation and its subsidiaries shall be eligible to participate in the
Plan, and participation in the Plan is mandatory for all Non-Employee
Directors. Except as specifically provided herein, a Non-Employee
Director may not elect to increase or decrease the portion of the
retainer fee payable in Stock.
ARTICLE III - RETAINER STOCK AWARDS AND DEFERRAL ELECTIONS
3.1 Retainer Stock Awards.
(a) Amount of Award. On each July 1 after the Effective Date through
and including July 1, 2004 (each such date hereinafter a "Grant
Date"), in lieu of the retainer fee payable to a Non-Employee
Director with respect to the calendar quarter beginning on the
Grant Date determined without regard to the Plan ("Retainer"), and
in consideration for services rendered as a Non-Employee Director,
the Corporation shall issue to each Non-Employee Director a whole
number of shares of Stock (a "Stock Award") equal to the number of
shares determined by dividing (a) a sum of (I) twenty-five percent
(25%) of the Retainer established by resolution of the Board of
Directors of the Corporation and payable for services prior to July
1, 1995, plus (ii) one hundred per cent (100%) of any increase in
the Retainer adopted by the Board of Directors of the Corporation
for services after July 1, 1995 (provided, however, that this
clause (ii) shall take effect with respect to each such increase
only upon the effective date of such increase), by (b) the Fair
Market Value of the Stock on such Grant Date. For purposes of this
Plan, the "Fair Market Value" of Stock on any business day shall be
the average of the high and low sales prices of the Stock quoted on
the New York Exchange Composite Listing on the next preceding
business day on which there were such quotations for the day in
question. To the extent that the formula described in this Section
3.1(a) does not result in a whole number of shares of Stock, the
result shall be rounded upwards to the next whole number such that
no fractional shares of Stock shall be issued under the Plan. Such
shares shall be restricted from sale or transfer as provided in
Section 3.1(b).
(b) Restrictions on Stock Awards. A stock certificate representing the
Stock Award shall be registered in each Non-Employee Director's
name. The Non-Employee Director shall have all rights and
privileges of a shareholder as to such Stock Award, including the
right to vote such Restricted Shares, except that the following
restrictions shall apply: (I) no dividends shall be payable on the
shares, however, a Dividend Equivalent Payment, as defined in
Article V, below, shall be credited to an account established under
the Plan, invested in Stock Units, as described under Section
3.2(b) and shall have the same restrictions as the relevant
restricted shares, (ii) none of the Restricted Shares may be sold,
transferred, assigned, pledged, or otherwise encumbered or disposed
of during the Restricted Period, and (iii) except as provided in
Section 3.1(c), all of the Restricted Shares and Dividend
Equivalent Payments shall be forfeited and all rights of the
Non-Employee Director to such Restricted Shares shall terminate
without further obligation on the part of the Corporation and its
subsidiaries upon the Non-Employee Director's ceasing to be a
director of the Corporation and its subsidiaries.
(c) Termination of Directorship.
(I) Vesting of Shares. If a Non-Employee Director ceases to be a
director of the Corporation and its subsidiaries by reason of
Disability, Death, Retirement or Change of Control, the
Restricted Shares granted to and Dividend Equivalent Payments
on such shares accumulated for such Non-Employee Director
shall immediately vest. If a Non-Employee Director ceases to
be a director of the Corporation and its subsidiaries for any
other reason, the Non-Employee Director shall immediately
forfeit all Restricted Shares, except to the extent that a
majority of the Board of Directors of the Corporation other
than the Non-Employee Director approves the vesting of such
Restricted Shares. Upon vesting, except as provided in
Article X, all restrictions applicable to such Restricted
Shares shall lapse.
(ii) Disability. For purposes of this Section 3.1(c), "Disability"
shall mean a permanent and total disability as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended.
(iii) Retirement. For purposes of this Section 3.1(c),
"Retirement" shall mean ceasing to be a director of the
Company (A) on or after age 70, or (B) on or after age 65
with the consent of a majority of the members of the
Board of Directors of the Corporation other than the
Non-Employee Director.
(iv) Change of Control. For purposes of this Section 3.1(c),
"Change of Control" shall have the same meaning as in the
Lincoln National Corporation Executives' Severance Benefit
Plan on the date that is six (6) months immediately preceding
the "Change of Control."
3.2 Deferral of Retainer and/or Fees.
(a) Deferral Elections. Commencing on the effective date of the Plan,
payment of all or part of the Retainer (excluding Stock Awards pursuant
to Section 3.1(a)) and/or fees payable to a Non-Employee Director for
meetings of the Board of Directors of the Corporation or Board
Committees or for extraordinary services may be deferred by election of
the Non-Employee Director. Each such election must be made prior to
the start of the calendar year for which the Retainer and/or fees will
be paid and must be irrevocable for the affected calendar year,
provided, however, that for 1994, each Non-Employee Director shall be
permitted to elect deferred payment of all or a portion of the Retainer
and/or the fees earned after the effective date of the Plan and before
December 31, 1994, provided such Non-Employee Director has made an
irrevocable election to this effect prior to stockholder approval of the
Plan. In addition, each election to defer payment of any amount of the
Retainer and/or fees payable in cash shall be made at least six (6)
months in advance of the date such election is to be effective and shall
be continuous and irrevocable except upon a subsequent irrevocable
election that takes effect at least six (6) months after the date of
such subsequent election, to the extent necessary to satisfy the
requirements of Rule 16b-3(d) promulgated under the Securities Exchange
Act of 1934 ("1934 Act"), as the same may be hereafter amended.
(b) Crediting Stock Units to Accounts. Amounts deferred pursuant to
Section 3.2(a) shall be credited as of the date of the deferral to
a bookkeeping reserve account maintained by the Corporation
("Account") in units which are equivalent in value to shares of
Stock ("Stock Units"). The number of Stock Units credited to an
Account with respect to any Non-Employee Director shall equal a
number of Stock Units equal to any deferred cash amount divided by
the Fair Market Value of the Stock on the date on which such cash
amount would have been paid but for the deferral election pursuant
to Section 3.2(a).
(c) Fully Vested Stock Units. All Stock Units credited to a
Non-Employee Director's Account pursuant to this Section 3.2 shall
be at all times fully vested and nonforfeitable.
(d) Payment of Stock Units. Stock Units credited to a Non-Employee
Director's Account pursuant to this Article III shall be payable in
an equal number of shares of Stock or cash in a single lump sum
distribution or annual installment payments made at such time
specified by the Non-Employee Director in the applicable deferral
election, provided that the designated payment date with respect to
any election must be the first day of a subsequent calendar year
which is no earlier than twelve (12) months following the
establishment of the affected Stock Unit.
(e) Payment of Stock Units Upon a Change of Control. Stock Units
credited to a Non-Employee Director s Account shall be
automatically distributed in a single lump sum amount of shares of
Stock, with fractional Stock Units being distributed in cash, upon
a Change of Control.
ARTICLE IV - RESTRICTED STOCK BONUS
4.1 Restricted Stock Bonus for Non-Employee Directors on July 1, 1994.
Each Non-Employee Director serving as such on the date of shareholder
approval of the Plan shall be awarded a whole number of restricted
Shares of Stock (a "Stock Bonus") equal to $10,000 divided by Fair
Market Value of Common Stock in consideration for services rendered as a
Non-Employee Director of the Corporation and its subsidiaries. To the
extent that the formula described in this Section 4.1 does not result in
a whole number of Shares of Stock, the result shall be rounded upwards
to the next whole number such that no fractional shares shall be issued
under the Plan. The restrictions on the Stock Bonus shall be the same
as those restrictions described in Section 3.1(b).
4.2 Restricted Stock Bonus for Non-Employee Directors After July 1,
1994. Each Non-Employee Director who commences serving a new three year
term after July 1, 1994 shall be issued an additional Stock Bonus equal
to $10,000 divided by the Fair Market Value of Common Stock as of the
July 1 on which he or she begins serving a new term as a Non-Employee
Director, and thereafter until the Plan is terminated. A new Non-
Employee Director who is appointed or elected to an unexpired term,
shall receive a partial Stock Bonus on the next succeeding July 1 after
his or her appointment or election to such partial term in an amount
equal to the Fair Market Value of Stock on such July 1 of $10,000
multiplied by a fraction the numerator being the number of months
remaining in the unexpired term since being so appointed or elected and
the denominator being 36. To the extent that the formula described in
this Section 4.2 does not result in a whole number of Shares of Stock,
the result shall be rounded upwards to the next whole number such that
no fractional shares shall be issued under the Plan. This Stock Bonus
shall contain the same restrictions as specified in Section 3.1(b).
ARTICLE V - DIVIDEND EQUIVALENT PAYMENTS
5.1 Dividend Equivalent Payments. As of each dividend payment date
with respect to Stock, each Non-Employee Director shall receive
additional Stock Units ("Dividend Equivalent Payment") equal to the
product of (I) the per-share cash dividend payable with respect to each
share of Stock on such date, and (ii) the total number of Restricted
Shares issued in his or her name and Stock Units credited to his Account
as of the record date corresponding to such dividend payment date,
divided by the Fair Market Value. Fractional Stock Units may be
awarded. The Dividend Equivalent Payments with respect to Restricted
Shares shall contain the same restrictions as specified in Section
3.1(b).
ARTICLE VI - DELIVERY OF STOCK CERTIFICATES
6.1 Stock Awards. As soon as practicable following the expiration of
the restrictions, but in no event sooner than six (6) months from such
Grant Date, the Corporation shall deliver to the Non-Employee Director
unrestricted Stock certificate with respect to the shares of Stock
issued pursuant to such Stock Award and Stock Bonus. During any six (6)
month period after the Grant Date and before delivery of the Stock
certificate after the restrictions have lapsed, the Non-Employee
Director shall have all the rights of a shareholder with respect to such
Stock, except for the right to receive dividend payments and except that
such Stock shall not be transferable by the Non-Employee Director other
than by will or the laws of descent and distribution.
6.2 Stock Unit Payments. The Corporation shall issue and deliver to
the Non-Employee Director cash or a Stock certificate, as elected by the
Non-Employee Director for payment of Stock Units as soon as practicable
following the date on which Stock Units are payable in accordance with
Section 3.2(d). No fractional shares will be distributed.
ARTICLE VII - STOCK
7.1 Stock. The aggregate number of shares of Stock that may be issued
under the Plan shall not exceed one hundred fifty thousand (150,000)
shares, unless such number of shares is adjusted as provided in Article
VIII of this Plan. In addition to the foregoing limit, the aggregate
number of restricted shares that may be granted during the term of the
Plan shall not exceed fifty thousand (50,000) shares, unless such number
of shares is adjusted as provided in Article VIII of this Plan. To the
extent that an award lapses or the rights of the Non-Employee Director
terminate or the award is settled in cash (e.g. cash settlement of Stock
Units) any shares of Common Stock subject to such award shall again be
available for the grant of an award.
ARTICLE VIII - ADJUSTMENT UPON CHANGES IN CAPITALIZATION
8.1 Adjustment Upon Changes in Capitalization. In the event of a stock
dividend, stock split or combination, reclassification, recapitalization
or other capital adjustment of shares of Stock, the number of shares of
Stock that may be issued pursuant to Stock Awards, Stock Bonuses, and
Stock Units and the number of Stock Units credited to Accounts shall be
appropriately adjusted by the Board of Directors of the Corporation,
whose determination shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan on account of
any adjustment specified herein. The grant of Stock Awards, Stock
Bonuses, or Stock Units pursuant to this Plan shall not affect in any
way the right or power of the Corporation to issue additional Stock or
other securities, make adjustments, reclassifications, reorganizations
or other changes in its corporate, capital or business structure, to
participate in a merger, consolidation or share exchange or to transfer
its assets or dissolve or liquidate.
ARTICLE IX - TERMINATION OR AMENDMENT OF PLAN
9.1 In General. The Board of Directors of the Corporation may at any
time terminate, suspend or amend this Plan. However, except as
otherwise determined by the Board of Directors of the Corporation, no
such amendment shall become effective without the approval of the
stockholders of the Corporation to the extent stockholder approval is
required in order to comply with Rule 16b-3 under the 1934 Act.
9.2 Amendment No More than Once in Six (6) Months. Those provisions of
this Plan that set forth the amounts and the formula for determining the
amounts, prices and timing of Stock Awards, Stock Bonuses, and Stock
Units, respectively, may not be amended more than once every six (6)
months.
9.3 Written Consents. No amendment may adversely affect the right of
any Non-Employee Director to receive any Stock previously issued as a
Stock Award, Stock Bonus, or to receive any Stock of Dividend Equivalent
Payments pursuant to an outstanding Stock Unit without the written
consent of such Non-Employee Director.
9.4 Termination of Stock Awards. Unless the Plan is sooner terminated,
no Stock Award or Stock Bonus shall be granted after July 1, 2004. The
termination of the Plan shall have no effect on outstanding Stock
Awards, Stock Bonuses or Stock Units.
ARTICLE X - GOVERNMENT REGULATIONS
10.1 Government Regulations.
(a) The obligations of the Corporation to issue any Stock granted under
this Plan shall be subject to all applicable laws, rules and
regulations and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Board of
Directors of the Corporation.
(b) Except as otherwise provided in Article IX of this Plan, the Board
of Directors of the Corporation may make such changes as may be
necessary or appropriate to comply with the rules and regulations
of any governmental authority.
ARTICLE XI - MISCELLANEOUS
11.1 Unfunded Plan. The Plan shall be unfunded with respect to the
Corporation's obligation to pay any amounts due pursuant to Stock Units
and Dividend Equivalent Payments, and a Non-Employee Director's rights
to receive any payment of any Stock Unit or Dividend Equivalent Payment
shall be not greater than the rights of an unsecured general creditor of
the Corporation.
11.2 Assignment; Encumbrances. The right to receive a Stock Award,
Stock Bonus or Stock Unit and the right to receive payment with respect
to a Stock Unit under this Plan are not assignable or transferable and
shall not be subject to any encumbrances, liens, pledges or charges of
the Non-Employee Director or his or her creditors. Any attempt to
assign, transfer or hypothecate any Restricted Stock Award, Stock
Bonus, or Stock Unit or any right to receive a Stock Award, Stock Bonus
or Stock Unit shall be void and of no force and effect whatsoever.
11.3 Designation of Beneficiaries. A Non-Employee Director may
designate a beneficiary or beneficiaries to receive any distributions
under the Plan upon his or her death.
11.4 Applicable Law. The validity, interpretation and administration
of this Plan and any rules, regulations, determinations or decisions
made hereunder, and the rights of any and all persons having or claiming
to have any interest herein or hereunder, shall be determined
exclusively in accordance with the laws of the State of Indiana, without
regard to the choice of laws provisions hereof.
11.5 Headings. The headings in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.
11.6 Notices. All notices or other communications made or given
pursuant to this Plan shall be in writing and shall be sufficiently made
or given if hand-delivered or mailed by certified mail, addressed to
any Non-Employee Director at the address contained in the records of the
Corporation or to the Corporation in care of the Corporation s
Secretary, 200 East Berry Street, Fort Wayne, IN 46802-2706.
ARTICLE XII - EFFECTIVE DATE OF PLAN
12.1 Effective Date of Plan. This Plan shall become effective on the
date on which it is approved by the affirmative vote of the holders of a
majority of the votes cast by shareholders of the Corporation present,
or represented and entitled to vote, at the next annual meeting of the
shareholders of the Corporation duly held in accordance with the laws of
the State of Indiana.
Exhibit 10(k)
AMERICAN STATES
Executives' Salary Continuation Plan
(As Amended and Restated May 2, 1995)
Section
1. Plan Name and Effective Date. The American States
Executives' Salary Continuation Plan hereinafter referred to as "Plan",
was established by American States Insurance Company, American Economy
Insurance Company and American States Life Insurance Company
(hereinafter collectively called the "Company") by Board of Directors'
Resolutions on September 15, 1978, effective January 1, 1979, and was
amended and completely restated on May 3, 1988 and again on May 2, 1995.
Section 2. Purpose. The Plan was established because certain
highly-compensated employees have been and will be key persons in the
successful operation of the Company, and because the Company desires (a)
to assure that it will have the benefit of their services until
retirement; and (b) after retirement, but prior to age 65, to deter
their employment by any competitor of the Company, and to give them an
incentive to refrain from entering the employ of a competitor (unless
agreed to by the Company).
Section
3. Employees Eligible to Participate. Individuals from
a select group of highly-compensated employees shall be eligible to
participate in the Plan as determined by the Chief Executive Officer.
Such an eligible employee who participates in the Plan is hereinafter
called the "Executive".
Section
4. Effective Date of Executive's Participation. The Plan
shall become effective for an Executive on the date specified in the
Joinder Agreement signed by the Executive and agreed to by the Company.
Section 5. Amount of Salary Continuation Benefit. The amount of
salary continuation benefit shall be based on 2% of the Executive's
final monthly salary multiplied by the total number of years of
participation in the Plan up to a maximum of 10% of the Executive's
final monthly salary. An Executive's final monthly salary shall be that
monthly rate of salary which is being paid at retirement unless the
Executive retires after age 65, in which case, the final monthly salary
shall be the monthly rate of salary which is being paid at the time the
Executive attains age 65. Effective December 31, 1992, the maximum
final monthly salary used to calculate the salary continuation benefit
shall be the greater of $16,667.00 and the monthly salary in effect on
December 31, 1991. Years of participation shall be counted beginning
with the effective date of Executive's participation as described in
Section 4. A year of participation shall be a 12 month period beginning
with the effective date of Executive's participation and ending with the
day preceding the first anniversary of such effective date. Each
succeeding 12 month period of participation shall be counted as a year
of participation in the Plan. An Executive who does not have five full
years of participation in the Plan and who retires while participating
will be granted a full year of participation for any final partial year.
Section 6. Salary Continuation Benefits upon Retirement at or
after Age 65. Upon retirement with the Company at or after age 65, the
Company agrees to pay salary continuation benefits to the Executive in
the amount calculated in Section 5.
Section 7. Salary Continuation Benefits upon Retirement prior to Age 65.
Upon retirement prior to age 65 and under circumstances entitling him or her
to receive retirement benefits in accordance with the provisions of the
Company's employees' retirement plan, the Company agrees to pay salary
continuation benefits to the Executive. The amount of such benefit shall be
the amount calculated in Section 5, actuarially reduced in accordance with
the following table and with such linear interpolations as shall in the sole
discretion of the Company be necessary to take into account the exact age
(including fractions) of the Executive at the date of retirement:
<TABLE>
Applicable Factor Applicable Factor Applicable Factor
If the Executive has If the Executive has If the Executive has
at least 25 Vesting 20 to 25 Vesting fewer than 20 Vesting
Years of Service Years of Service Years of Service
Under the Company's Under the Company's Under the Company's
Retirement Employees' Retirement Employees' Retirement Employees' Retirement
Age Plan Plan Plan
<C> <C> <C> <C>
65 1.00 1.00 1.00
64 1.00 .92 .91
63 1.00 .85 .83
62 1.00 .79 .75
61 .95 .74 .67
60 .90 .70 .60
59 .85 .66 .55
58 .80 .62 .50
57 .75 .58 .45
56 .69 .54 .40
55 .63 .50 .35
</TABLE>
Section
8. Method and Duration of Payment of Benefits. Benefit
payments under Sections 6 and 7 shall be made on the first day of the
first calendar month following the date of retirement and on the first
day of each calendar month thereafter so long as the Executive shall
live; provided, however, that in no event shall the Company make less
than one hundred twenty (120) such payments, whether to the Executive
or to the Beneficiary.
Section 9. Death Benefit Before Retirement and Before Age 65. For
Executives who signed a Joinder Agreement on or before December 31,
1991, if the Executive dies prior to retiring and prior to attaining age
65, all of the rights of the Executive hereunder shall terminate, except
that the beneficiary shall receive a payment equal to 25% of the
Executive's final annual rate of salary, immediately upon receipt by the
Company of satisfactory proof of death, and an equal amount thereafter
on the yearly anniversary of the Executive's death until the Executive,
if alive, would have attained age 65, or until a total of at least ten
(10) payments have been made. Effective January 1, 1992, the annual
salary used to calculate the death benefit shall not exceed the greater
of $200,000 and the annual salary in effect as of December 31, 1991.
Section 10. Death Before Retirement but After Age 65. If the
Executive dies before retiring but after attaining age 65, all rights
of the Executive hereunder shall terminate except that the Company shall
upon receipt of satisfactory proof of the Executive's death immediately
pay to the Beneficiary and thereafter pay on the monthly anniversary of
the Executive's death, an amount calculated in accordance with Section
5 for an aggregate of one hundred twenty (120) payments.
Section
11. Death After Retirement. If the Executive dies after
retiring and prior to receiving one hundred twenty (120) salary
continuation benefit payments, the Company shall continue such payment
to the Beneficiary, if living, until the combined payments to the
Executive and the Beneficiary shall total one hundred twenty (120)
payments.
Section 12. Payments to an Estate. If the Executive fails to
designate a valid Beneficiary in the Joinder Agreement or if there is
no designated Beneficiary surviving the Executive, then any remaining
payments due shall be commuted and paid to the Executive's estate. If
the Beneficiary shall die after receiving one or more payments, but
before all payments have been made, any remaining payments shall be
commuted and paid to such Beneficiary's estate.
Section
13. Voluntary Termination of Service. If the Executive
voluntarily terminates employment with the
Company
(a) prior to attaining age 55, or
(b) after attaining age 55, but prior to attaining 65 and
completing 5 years of service,
neither the Executive nor any Beneficiary shall be entitled to any
benefits under this Plan.
Section
14. Involuntary Termination of Service. If the Executive
involuntarily terminates employment with the Company primarily from
circumstances not within the control of the Executive, but other than
by death or disability, and if he or she continues to provide exclusive
consultative services after such termination of employment, his or her
salary continuation benefit shall be paid to the Executive beginning on
the first day of the first calendar month following the date the
Executive reaches age 65 and on the first day each calendar month
thereafter so long as the Executive shall live; provided, however, that
after payments begin at age 65, in no event shall the Company make less
than one hundred twenty (120) such payments, whether to the Executive
or to the Beneficiary. If the terminated Executive dies before age 65,
no benefit shall be paid under this Plan.
Section 15. Termination of Service After a Change in Control. In
the event of a voluntary or involuntary termination of service of the
Executive within two years subsequent to a change of control of the
Company or its parent, as defined in the LNC Executive Severance Benefit
Plan, in effect immediately preceding such change of control, such
Executive shall be treated as continuing employment with the Company
until age 65, and the conditions for benefits in Section 16, below,
shall not apply.
Section 16. Conditions for Benefits. In the event of an
Executive's involuntary termination of service, all benefits as provided
in this Plan shall be forfeited if the Executive fails to act, directly
or indirectly, as an exclusive consultant to the Company until age 65;
provided, however, that the Company may waive the requirements of this
Section 16 in a written document signed by its Chief Executive Officer.
Section 17. No Right or Title to Funds. The Company shall have
no obligation to set aside, earmark, or entrust any fund, policy, or
money with which to pay any obligations under this Plan. The Executive,
and any successor in interest to him, shall be and remain simply a
general creditor of the Company with respect to any promises to pay
under this Plan in the same manner as any other creditor who has a
general claim for an unpaid liability. Neither the Executive nor any
Beneficiary shall acquire any right in or title to any funds or assets
of the Company otherwise than by and through the actual payment of the
monthly or annual payments hereunder. The Company shall not make any
loans or extend credit to an Executive which will be offset by benefits
payable under this Plan.
Section 18. Definitions and Rules of Construction. Except where
the context clearly indicates to the contrary, the following terms have
the meanings specified:
(a) "Beneficiary" means the beneficiary or beneficiaries
designated in the Joinder Agreement by the Executive. The designation
of beneficiary by the Executive in the last Joinder Agreement executed
prior to death shall control. Payments under this Plan to the last
designated beneficiary or his or her estate shall relieve the Company
from all responsibility to any beneficiary designated in a prior Joinder
Agreement.
(b) "Joinder Agreement" means the document agreed to by the
Company by which the Executive affirmatively demonstrates a desire to
participate in the Plan according to the terms and conditions herein and
designates a Beneficiary.
(c)
"Affiliate" means any corporation which directly or indirectly
controls or is controlled by or is under common control with the
Company. For purposes of this definition control means the power to
direct or cause the direction of the management and policies of a
corporation through the ownership of voting securities.
(d) The terms "herein," "hereof," and "hereunder" refer to the
Plan in its entirety.
(e)
This Plan may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(f)
The headings in this Plan are for purposes of reference only
and shall not limit or otherwise affect any of the terms hereof.
Section
19. No Assignments, etc. Neither the Executive nor a
Beneficiary, shall have power to transfer, assign, anticipate, mortgage
or otherwise encumber in advance any of the payments provided by this
Plan; nor shall said payments be subject to seizure for the payment of
any debts, judgments, alimony or separate maintenance, or be
transferable by operation of law in event of bankruptcy, insolvency or
otherwise. Upon the occurrence of any event in violation or attempted
violation of this provision, any payments thereafter payable hereunder
shall, in the sole and uncontrolled discretion of the Company, be
subject to cancellation; whereupon, the Company may, but need not, make
such payments to someone else deemed by it to be a natural object of the
bounty of the Executive, and such payments shall relieve the Company of
any further or other obligation hereunder.
Section 20. Amendment, Suspension or Termination of Plan. This
Plan may be amended at any time and from time to time by the Company,
but no amendment shall operate to give the Executive, or his or her
Beneficiary, either directly or indirectly, any interest whatsoever in
any funds or assets of the Company, except the right upon fulfillment
of all terms and conditions hereof to receive the payments herein
provided. Likewise, no amendment, suspension or termination of this
Plan shall, in and of itself, result in the forfeiture of any salary
continuation benefit promise accrued to an Executive who is in the
active employment of the Company at such time or to an Executive who has
been involuntarily terminated as described in Section 14 and no
amendment, suspension or termination of this Plan shall operate to
reduce or diminish any benefit after payment of such benefit has begun.
Section 21. No Effect on Employment. This Plan shall not
supersede any other contract of employment, whether oral or in writing,
between the Company and the Executive, nor shall it affect or impair the
rights and obligations of the Company and the Executive, respectively,
thereunder; and nothing contained herein shall impose any obligation on
the Company to continue the employment of the Executive.
Section 22. Transfer between Affiliates. If an Executive
transfers to the Company from an Affiliate which has a similar salary
continuation plan in which he or she was participating, total years of
participation in this Plan shall include prior years of participation
in such a plan.
Transfer of employment from the Company to an Affiliate offering
a similar plan in which he or she is eligible to participate terminates
all benefit rights of the Executive or Beneficiary under this Plan.
If an Executive transfers to an Affiliate and is not eligible to
participate in a similar plan, the Executive's salary continuation
benefit promise accrued shall be established as of the date of transfer
and be payable in accordance with this Plan; however, no death benefit
will be paid under Section 9 in the event the Executive dies subsequent
to the time of transfer.
IN WITNESS WHEREOF, the Company has caused its name to be hereunto
subscribed, pursuant to due and proper authority granted by its Board
of Directors.
AMERICAN STATES INSURANCE COMPANY
AMERICAN ECONOMY INSURANCE COMPANY
AMERICAN STATES LIFE INSURANCE COMPANY
By___________________________________
F. Cedric McCurley, Chairman
Attest:
______________________________
Thomas M. Ober, Secretary
<PAGE>
Exhibit 10(l)
LEASE AND AGREEMENT
Between
CLINTON STREET LIMITED PARTNERSHIP,
as Lessor
And
AMERICAN STATES INSURANCE COMPANY,
as Lessee
Dated as of August 1, 1984
Location of Leased Premises: 500 North Meridian St.
Indianapolis, IN 46204-1275
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Title and Condition. . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Use of Leased Premises; Quiet Enjoyment. . . . . . . . . . . . . . . 2
4. Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . 4
7. Taxes and Assessments; Compliance with Law . . . . . . . . . . . . . 6
8. Liens; Grants of Easements . . . . . . . . . . . . . . . . . . . . . 7
9. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . 10
11. Alterations and Additions. . . . . . . . . . . . . . . . . . . . . . 11
12. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14. Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15. Reimbursement for Alterations and Additions;
Purchase of Unimproved Land. . . . . . . . . . . . . . . . . . . . 28
16. Procedure Upon Purchase. . . . . . . . . . . . . . . . . . . . . . . 34
17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . 35
18. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . 36
19. Conditional Limitations; Default Provision . . . . . . . . . . . . . 38
20. Additional Rights of Lessor. . . . . . . . . . . . . . . . . . . . . 43
21. Notices, Demands and Other Instruments . . . . . . . . . . . . . . . 44
22. Estoppel Certificates; Consents and Financial Statements . . . . . . 45
23. No Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
24. Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
25. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
26. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
27. Table of Contents, Headings. . . . . . . . . . . . . . . . . . . . . 48
28. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
29. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 48
30. Lessee's Options; Right of First Refusal . . . . . . . . . . . . . . 50
31. Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
SCHEDULE A - Property Description and Permitted Exceptions
SCHEDULE B - Basic Rent Payments
SCHEDULE C - Computation of Purchase Prices
<PAGE>
THE LEASE AND AGREEMENT, dated as of August 1, 1984 (this Lease) between
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein,
together with its successor and assigns, called Lessor), having an address c/o
Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006 and
AMERICAN STATES INSURANCE COMPANY, an Indiana corporation (herein, together
with any corporation succeeding thereto by consolidation, merger or acquisition
of all or substantially all its assets, called Lessee), having an address at
500 North Meridian Street, Indianapolis, Indiana 46207. Certain words or
phrases having initial capitals have the meanings set forth in paragraph 29.
1. Demise of Premises. In consideration of the rents and covenants
herein stipulated to be paid and performed, Lessor hereby demises and lets to
Lessee, and Lessee hereby lets from Lessor, for the terms herein described, the
premises (herein called the Leased Premises) consisting of (i) the land
described in Schedule A hereto (herein called the Land Parcel), (ii) all
buildings, structures and other improvements thereon, including all building
equipment and fixtures, if any, owned by Lessor (herein collectively called the
Improvements), but excluding trade equipment, fixtures and other personal
property owned by Lessee and Lessee's Improvements (as hereinafter defined in
paragraph 11(c)), and (iii) all easements, rights and appurtenances relating
thereto, all upon the terms and conditions herein specified.
2. Title and Condition. The Leased Premises are demised and let
subject to (a) the rights of any parties in possession and the existing state
of the title as of the commencement of the term of this Lease, (b) any state of
facts which an accurate survey or physical inspection thereof might show, (c)
all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
<PAGE>
by any governmental authority having jurisdiction, and (d) the condition of any
buildings, structures and other improvements located thereon, as of the
commencement of the term of this Lease, without representation or warranty by
Lessor. Lessee represents that it has examined the title to and the condition
of the Leased Premises and has found the same to be satisfactory.
3. Use of Leased Premises; Quiet Enjoyment. (a) Lessee may occupy and
use the Leased Premises for any lawful purpose.
(b) If and so long as Lessee shall observe and perform all covenants,
agreements and obligations required to be observed and performed by it
hereunder, Lessor covenants that it will not and will not permit any party
claiming by, through or under Lessor, to interfere with the peaceful and quiet
possession and enjoyment of the Leased Premises by Lessee; provided, that
Lessor and its agents may, upon prior notice to Lessee (unless Lessor has
reason to believe a default or Event of Default hereunder has occurred, in
which case no such notice shall be necessary), enter upon and examine the
Leased Premises at reasonable times. Lessee shall have the right to accompany
Lessor and its agents during any such examination of the Leased Premises. Any
failure by Lessor to comply with the foregoing warranties shall not give Lessee
any right to cancel or terminate this Lease, or to abate, reduce or make
deduction from or offset against any Basic Rent, as hereinafter defined, or
additional rent or other sum payable under this Lease, or to fail to perform or
observe any other covenant, agreement or obligation hereunder.
4. Terms. Subject to the terms and conditions hereof, Lessee shall have
and hold the Leased Premises for (a) an interim term (herein called the Interim
Term) commencing on August 30, 1984 and ending at midnight on August 31, 1984;
and (b) a primary term (herein called the Primary Term) commencing on September
1, 1984, and ending at midnight on August 31. 2009. Thereafter,
2
<PAGE>
Lessee shall have the rights and options to extend this Lease for 6
consecutive extended terms of 5 years each (herein called Extended Terms, and
together with the Interim Term and the Primary Term, called the Term) unless
this Lease shall be sooner terminated pursuant to the provisions hereof. Each
such Extended Term shall commence on the day immediately succeeding the
expiration date of the preceding Primary Term or Extended Term, as the case may
be, and shall end at midnight on the day immediately preceding the fifth
anniversary of the first day of such Extended Term. Each such option to extend
this Lease shall conclusively be deemed to have been exercised by Lessee unless
Lessee shall give written notice to the contrary to Lessor at least three
hundred sixty-five days prior to the end of the then Term of this Lease. No
instrument of renewal need be executed, provided that no Extended Term shall
take effect unless this Lease is in full force and effect and no default or
Event of Default exists and is continuing immediately prior to the commencement
thereof. If Lessee gives notice of its intention not to extend this Lease, the
term of this Lease shall terminate at the end of the then Term of this Lease
and Lessee shall have no further option to extend this Lease. If Lessee gives
such notice not to extend this Lease, then Lessor shall have the right during
the remainder of the Term of this Lease to advertise the availability of the
Leased Premises for sale or reletting and to erect upon the Leased Premises
signs appropriate for the purpose of indicating such availability, provided
that such signs do not unreasonably interfere with the use of the Leased
Premises by Lessee. The phrase "Term of this Lease" or "Term hereof" means the
Interim Term and the Primary Term, plus any Extended Term with respect to which
the right to extend has been exercised.
5. Rent. (a) Lessee covenants to pay to Lessor, as instalments of
rent for the Leased Premises during the Term of this Lease, the amounts set
3
<PAGE>
forth in Schedule B hereto (herein called the Basic Rent) on the dates set
forth in said Schedule (herein called the Basic Rent Payment Dates), and to pay
in immediately available funds the same at Lessor's address set forth above or
at such other place within the continental United States and/or to such other
person as Lessor from time to time may designate to Lessee in writing, in
lawful money of the United States of America.
(b) Lessee covenants that all other amounts, liabilities and obligations
which Lessee assumes or agrees to pay or discharge pursuant to this Lease
(except amounts payable as the purchase price for the Leased Premises or any
part thereof pursuant to any provision of this Lease and amounts payable as
liquidated damages pursuant to paragraph 19(j) or paragraph 19(g)), together
with every fine, penalty, interest and cost which may be added for nonpayment
or late payment thereof, shall constitute additional rent hereunder. In the
event of any failure by Lessee to pay or discharge any of the foregoing, Lessor
shall have all rights, powers and remedies provided herein or by law in the
case of nonpayment of Basic Rent. Lessee also covenants to pay to Lessor on
demand as such additional rent (A) interest at the rate of 18.00% per annum (or
the maximum not prohibited by law, whichever is less), calculated on the basis
of a 360-day year of twelve equal months, on all overdue instalments of Basic
Rent from the due date thereof (without regard to any grace period) until paid
in full and (B) interest at the rate of 16.00% per annum (calculated as set
forth in clause (A) above) on all overdue amounts relating to any other aspects
of additional rent arising out of obligations which Lessor shall have paid on
behalf of Lessee from the date of such payment by Lessor until paid in full.
6. Net Lease; Non-Terminability. (a) This is an absolutely net lease
and the Basic Rent, additional rent and all other sums payable hereunder
4
<PAGE>
by Lessee, whether as the purchase price for the Leased Premises or otherwise,
shall be paid without notice (except as expressly provided herein), demand,
set-off, counterclaim, abatement, suspension, deduction or defense.
(b) Any present or future law to the contrary notwithstanding, this
Lease shall not terminate, nor shall Lessee have any right to terminate this
Lease (except as otherwise expressly provided herein), nor shall Lessee be
entitled to any abatement or reduction of rent hereunder (except as otherwise
expressly provided herein), nor shall the obligations of Lessee under this
Lease be affected, by reason of (i) any damage to or destruction of all or any
part of the Leased Premises from whatever cause, (ii) the taking of the Leased
Premises or any portion thereof by condemnation, requisition or otherwise,
(iii) the prohibition, limitation or restriction of Lessee's use of all or any
part of the Leased Premises, or any interference with such use, (iv) any
eviction by paramount title or otherwise, (v) Lessee's acquisition or ownership
of all or any part of the Leased Premises otherwise than as expressly provided
in paragraphs 12(b), 14(c) or 15 herein, (vi) any default on the part of Lessor
under this Lease, or under any other agreement to which Lessor and Lessee may
be parties, (vii) the failure of Lessor to deliver possession of the Leased
Premises on the commencement of the Term hereof or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties hereto that the obligations of Lessee hereunder shall be separate and
independent covenants and agreements, that the Basic Rent, additional rent and
all other sums payable by Lessee hereunder shall continue to be payable in all
events and that the obligations of Lessee hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease.
5
<PAGE>
(c) Lessee agrees that it will remain obligated under this Lease in
accordance with its terms, and that it will not take any action to terminate,
rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, or
winding-up or other proceeding affecting Lessor or its successor in interest,
(ii) any action with respect to this Lease which may be taken by any trustee or
receiver of Lessor or its successor in interest or by any court in any such
proceeding.
(d) Lessee waives all rights which may now or hereafter be conferred
law (i) to quit, terminate or surrender this Lease or the Leased Premises or
any part thereof, or (ii) to abate, suspend, defer or reduce the Basic Rent,
additional rent or any other sums payable under this Lease, except as otherwise
expressly provided herein.
7. Taxes and Assessments; Compliance with Law. (a) Lessee shall pay
or discharge each of the following items on or prior to the last day on which
such items may be paid without interest or penalty: (i) all Impositions; (ii)
all transfer taxes, recording fees and similar charges payable in connection
with a conveyance hereunder to Lessee; (iii) all gross receipts or similar
taxes imposed or levied upon, assessed against or measured by the Basic Rent,
additional rent or any other sums payable by Lessee hereunder or levied upon or
assessed against the Leased Premises, to the extent that such tax, assessment
or other charge would be payable if the Leased Premises were the only property
of Lessor subject thereto, and (iv) any tax, assessment, charge or levy of any
nature whatsoever imposed or levied upon or assessed against Lessor or the
Leased Premises in substitution for or in place of an Imposition. Lessee shall
not be required to pay any franchise, corporate, estate, inheritance,
succession, transfer, income, excess profits, or revenue
6
<PAGE>
taxes of Lessor which are not described in the preceding sentence. Lessee
agrees to furnish to Lessor, within thirty days after written demand therefor,
evidence of all payments due under this paragraph 7(a). In the event that any
Imposition levied or assessed against the Leased Premises and payable by Lessee
becomes due and payable during the Term hereof and may legally be paid in
instalments, Lessee may pay such Imposition in instalments and shall be
liable only for those installments which become due and payable during the Term
hereof.
(b) Lessee shall, at its expense, comply with and shall cause the
Leased Premises to comply with, in all material respects, all governmental
statutes, laws, rules, orders, regulations and ordinances the failure to comply
with which at any time would affect the Leased Premises or any part thereof,or
the use thereof, including those which require the making of any structural,
unforeseen or extraordinary changes, whether or not any of the same involve a
change of policy on the part of the body enacting the same (collectively, the
Legal Requirements). Lessee shall, at its expense, comply with all Required
Insurance (as defined in paragraph 13), and with the provisions of all
contracts, agreements, instruments and restrictions existing at the
commencement of the Term of this Lease or thereafter suffered or permitted by
Lessee affecting the Leased Premises or any part thereof or the ownership,
occupancy or use thereof.
8. Liens; Grants of Easements. (a) Lessee will not, directly or
indirectly, create or permit to be created or to remain, and will promptly
remove and discharge, at its expense, any mortgage, lien, encumbrance or charge
on, pledge of, or conditional sale or other title retention agreement with
respect to, the Leased Premises or any part thereof or Lessee's interest
therein or the Basic Rent, additional rent or other sums payable by Lessee
7
<PAGE>
under this Lease, other than (1) any encumbrances permitted by the Senior
Permitted Mortgage described in Paragraph 29(j), (2) any mortgage, lien,
encumbrance or other charge, pledge, conditional sale or other title retention
agreement created by or resulting from any act or failure to act of Lessor or
any agent or assignee of Lessor without the agreement of Lessee and (3) any
encumbrance or charge permitted in subparagraph (b) below. Nothing contained in
this Lease shall be construed as constituting the consent or request, expressed
or implied, by Lessor to the performance of any labor or services or the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of all of the Leased Premises or any part thereof by any
contractor, subcontractor, laborer, materialman or vendor. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone holding the Leased
Premises or any part thereof, and that no mechanic's or other liens for any
such labor, services or materials shall attach to or affect the interest of
Lessor in and to the Leased Premises.
(b) Lessor hereby appoints Lessee its agent and attorney-in-fact and
authorizes Lessee (i) to grant easements, licenses, rights-of-way and other
rights and privileges in the nature of easements, (ii) to release existing
easements and appurtenances which are for the benefit of the Leased Premises,
(iii) to grant party wall rights for the benefit of any land adjoining the Land
Parcel and (iv) to execute and deliver any instrument necessary or appropriate
to confirm such grants, releases or consents to any person, with or without
consideration (in each case, however, only upon compliance with the provisions
of the Senior Permitted Mortgage), provided, that (x) such grant, release or
consent shall not materially impair the use of the Leased Premises or
materially reduce their value, and (y) the consideration, if any, received
8
<PAGE>
by Lessee for such grant, release or consent shall be paid to Lessor and
applied pursuant to paragraph 12(c), as if such consideration were a Net Award
from an event of Condemnation. Lessee agrees that Lessee will remain obligated
under the terms of this Lease to the same extent as if such action had not been
taken, and that Lessee will perform all obligations of the grantor, releasor or
transferor under any such instrument.
9. Indemnification. Lessee shall defend all actions or claims
against Lessor, or any partner of Lessor, or any assignee of Lessor, or any
partner, officer, director or shareholder of any assignee of Lessor
(collectively, the Indemnified Parties) with respect to, and shall pay,
protect, indemnify and save harmless the Indemnified Parties from and against
any and all liabilities, losses, damages, costs, expenses (including all
reasonable attorney's fees and expenses of the Indemnified Parties), causes of
action, suits, claims, demands or judgments of any nature whatsoever (i)
arising from any injury to, or the death of, any person or any damage to
property on the Leased Premises or upon adjoining sidewalks, streets or ways,
in any manner growing out of or connected with the use, non-use, condition or
occupation of the Leased Premises or any part thereof or resulting from the
condition thereof or of adjoining sidewalks, streets or ways, so long as not
occasioned by the affirmative act of Lessor, its agents, servants, employees or
assigns, and/or (ii) arising from violation by Lessee of any agreement or
condition of this Lease, or any contract or agreement to which Lessee is a
party or any restriction, law, ordinance or regulation, in each case affecting
the Leased Premises or any part thereof or the ownership, occupancy or use
thereof, so long as not occasioned by the intentional fault of Lessor, its
agents, servants, employees or assigns. If Lessor or any other Indemnified
Party shall be made a party to any such litigation commenced against Lessee,
9
<PAGE>
and if Lessee, at its expense, shall fail to provide Lessor or any other such
Indemnified Party with counsel (upon Lessor's or such Indemnified Party's
request) approved by Lessor or such Indemnified Party, as the case may be,
which approval shall not be unreasonably withheld, Lessee shall pay all costs
and reasonable attorneys' fees and expenses incurred or paid by Lessor or any
other such Indemnified Party in connection with such litigation. Lessor shall
give prompt written notice to Lessee of any claim asserted against Lessor, but
to Lessor's knowledge not also asserted against Lessee, which, if sustained,
may result in liability of Lessee hereunder, but failure on the part of Lessor
to give such notice shall not relieve Lessee from Lessee's obligation to
exonerate, protect, defend, indemnify and save harmless the Indemnified Parties
as aforesaid.
10. Maintenance and Repair. (a) Lessee acknowledges that it has
received the Leased Premises in good condition, repair and appearance. Lessee
agrees that, at its expense, it will keep and maintain the Leased Premises and
any Lessee's Improvements, including any altered, rebuilt, additional or
substituted buildings, structures and other improvements thereto, in good
condition, repair and appearance, except for ordinary wear and tear, and it
will promptly make all structural and nonstructural, foreseen and unforeseen,
and ordinary and extraordinary changes and repairs of every kind which may be
required to be made to keep and maintain the Leased Premises and any Lessee's
Improvements in such good condition, repair and appearance and it will keep the
Leased Premises and any Lessee's Improvements orderly and free and clear of
rubbish. Lessor shall not be required to maintain, repair or rebuild, or to
make any alterations, replacements or renewals of any nature to the Leased
Premises, or any part thereof, whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen, or to maintain the Leased Premises
10
<PAGE>
or any part thereof in any way. Lessee hereby expressly waives the right to
make repairs at the expense of Lessor which may be provided for in any law in
effect at the time of the commencement of the Term of this Lease or which may
thereafter be enacted. If Lessee shall abandon the Leased Premises, it shall
give Lessor and any Permitted Mortgagee immediate notice thereof.
(b) If any Improvements situated on the Leased Premises at any time
during the Term of this Lease shall encroach upon any property, street or
right-of-way adjoining or adjacent to the Leased Premises, or shall violate the
agreements or conditions contained in any restrictive covenant affecting the
Leased Premises or any part thereof, or shall impair the rights of others under
or hinder or obstruct any easement or right-of-way to which the Leased Premises
are subject, then, promptly after the written request of Lessor or any person
affected by any such encroachment, violation, impairment, hindrance or
obstruction, Lessee shall, at its expense, either (i) obtain effective waivers
or settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, impairment, hindrance or obstruction whether the same
shall affect Lessor, Lessee or both, or (ii) make such changes in the
Improvements on the Leased Premises and take such other action as shall be
necessary to remove such encroachments, hindrances or obstructions and to end
such violations or impairments, including, if necessary, the alteration or
removal of any Improvement on the Leased Premises. Any such alteration or
removal shall be made in conformity with the requirements of paragraph 11(a) to
the same extent as if such alteration or removal were an alteration under the
provisions of paragraph 11(a).
11. Alterations and Additions. (a) Lessee may, at its expense, (x)
after not less than forty-five days written notice to Lessor of its plans
(provided, however, that no such notice shall be required as to plans for work
11
<PAGE>
the estimated cost of which is less than $500,000), make non-structural
additions to and alterations of the Improvements to the Leased Premises, and
make non-structural substitutions and replacements therefor, provided, that (i)
the use, structural integrity and market value of the Leased Premises shall not
thereby be materially lessened as certified in writing by an appropriate
officer of Lessee, and (ii) such actions shall be performed in a good and
workmanlike manner; and (y) after not less than forty-five days written notice
to Lessor of its plans, make structural additions to and alterations of the
Improvements to the Leased Premises, and make structural substitutions and
replacements therefor, provided that (i) such actions shall be performed in a
good and workmanlike manner under the supervision of a licensed architect or
engineer in accordance with plans and specifications as approved by Lessor and
accepted by Lessee, (ii) no such structural change or alteration shall be made
unless Lessor's prior written consent shall have been obtained, (iii) none of
the buildings or structures constituting the Leased Premises shall be
demolished unless Lessee shall have first furnished Lessor with such surety
bonds or other assurances acceptable to Lessor as shall be necessary to assure
rebuilding of the Leased Premises and unless Lessor's prior written consent
shall have been obtained, and (iv) such additions, alterations, substitutions
and replacements shall be expeditiously completed in compliance with all Legal
Requirements (as defined in paragraph 7(b)) and Required Insurance (as defined
in paragraph 13(a)); provided that Lessor shall not withhold its written
consent to Lessee's plans, including plans and specifications, under this
clause (y) if and so long as the use, structural integrity and market value of
the Leased Premises shall not be materially lessened by such plans as certified
in writing by an appropriate officer of Lessee. Lessee shall promptly pay all
costs and expenses of each such
12
<PAGE>
addition, alteration, substitution or replacement, discharge all liens arising
therefrom and procure and pay for all permits and licenses required in
connection therewith. Failure by Lessor to give written approval or disapproval
within forty-five days of receipt of such notice from Lessee under clause (y)
shall be deemed Lessor's consent to such plans. All such alterations and
additions to the Improvements shall be and remain part of the realty and the
property of Lessor and subject to this Lease.
(b) Lessee may, at its expense, install, assemble or place any items
of trade fixtures, machinery, equipment or other personal property upon the
Leased Premises. Such trade fixtures, machinery, equipment or other personal
property shall be and remain the property of Lessee and Lessee may remove the
same from the Leased Premises at any time prior to the termination of this
Lease, provided that (i) Lessee shall repair any damage to the Leased Premises
resulting from such removal, and (ii) such removal shall not materially impair
the value and use of the Leased Premises.
(c) Lessee may, at its expense, upon 45 days prior notice to Lessor,
construct improvements on any portion of the Land Parcel on which there is not
already a permanent structure for which improvements it has not and will not
obtain reimbursement pursuant to paragraph 15 hereof (Lessee's Improvements),
provided that upon completion thereof, the use and market value of the
remaining Leased Premises shall not thereby be materially lessened. The
Lessee's Improvements shall be and remain the property of Lessee and Lessee may
make additions and alterations to Lessee's Improvements and substitutions and
replacements thereof which are otherwise in compliance with the provisions of
this subparagraph (c).
12. Condemnation. (a) Subject to the rights of Lessee set forth in
this paragraph 12, Lessee hereby irrevocably assigns to Lessor any award or
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compensation payment to which Lessee may become entitled by reason of Lessee's
interest in the Leased Premises if the use, occupancy or title of the Leased
Premises or any part thereof is taken, requisitioned or sold in, by or on
account of any actual or threatened eminent domain proceeding or other action
by any person having the power of eminent domain, provided, however, that
Lessee may retain any award or compensation payment relating to Lessee's
Improvements. Lessee shall appear in any such proceeding or action to
negotiate, prosecute and adjust any claim for any award or compensation on
account of any such taking, requisition or sale; and Lessor shall collect any
such award or compensation. The Net Award (as defined in paragraph 12(f)) shall
be applied pursuant to this paragraph 12. Lessee shall pay all reasonable costs
and expenses (including any legal fees of any Permitted Mortgagee required by
any Permitted Mortgage to be paid by Lessor) in connection with each such
proceeding, action, negotiation and prosecution, for which costs and expenses
Lessee shall be reimbursed out of any award or compensation received. Lessor
shall be entitled to participate in any such proceeding, action, negotiation or
prosecution and the reasonable expenses thereof (including counsel fees and
expenses) shall be paid by Lessee.
(b) If an occurrence of the character referred to in paragraph 12(a)
shall affect all or a substantial portion of the Leased Premises and shall, in
the good faith judgment of Lessee, render the Leased Premises unsuitable for
restoration for continued use and occupancy in Lessee's business during the
Primary Term or any Extended Term, then Lessee shall, not later than 30 days
after such occurrence, deliver to Lessor (i) notice of its intention to
terminate this Lease on the next Basic Rent Payment Date (the Termination Date)
which occurs not less than 210 days nor more than 360 days after the delivery
of such notice and (ii) a certificate by the President or any Vice
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President of Lessee describing the event giving rise to such termination and
stating that its board of directors (or an executive committee thereof) has
determined that such event has rendered the Leased Premises unsuitable for
restoration for continued use and occupancy in Lessee's business. If the
Termination Date occurs during the Interim or Primary Term, such notice to
Lessor shall be accompanied by an irrevocable offer by Lessee to purchase the
Leased Premises on the Termination Date at a price determined in accordance
with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such
Purchase Offer by notice given to Lessee not later than the 30th day prior to
the Termination Date or (2) the Termination Date occurs during an Extended
Term, this Lease shall terminate on the Termination Date, except with respect
to obligations and liabilities of Lessee hereunder, actual or contingent, which
have arisen on or prior to the Termination Date, upon payment by Lessee of all
Basic Rent, additional rent and other sums then due and payable hereunder to
and including the Termination Date, and the Net Award shall belong to Lessor;
provided that the amount of such Net Award, if any, related to any portion of
the Improvements constructed by Lessee at its expense (and for which it has not
obtained reimbursement pursuant to paragraph 15 hereof) shall be paid to
Lessee, as determined by the Appraisal Procedure. Unless Lessor shall have
rejected such Purchase Offer in accordance with this paragraph, Lessor shall be
conclusively presumed to have accepted such offer, and, on the Termination Date,
shall convey the remaining portion of the Leased Premises, if any, to Lessee or
its designee and shall assign to Lessee or its designee all of its interest in
the Net Award, pursuant to and upon compliance with paragraph 16.
(c) If during any Term (i) a portion of the Leased Premises shall be
taken by condemnation or other eminent domain proceedings, which taking is not
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sufficient to require that Lessee give a Purchase Offer or (ii) the use or
occupancy of the Leased Premises or any part thereof shall be temporarily taken
by any governmental authority, then this Lease shall continue in full effect
without abatement or reduction of Basic Rent, additional rent or other sums
payable by Lessee hereunder notwithstanding such partial or temporary taking.
Except as hereinafter set forth, Lessee shall (whether or not it has received
any portion of the Net Award), promptly after any such temporary taking ceases,
at its expense, repair any damage caused thereby in conformity with the
requirements of paragraph 11(a), so that, thereafter, the Leased Premises shall
be, as nearly as possible, in a condition and have a market value as good as
the condition and market value thereof immediately prior to such taking. Lessee
shall not be required to repair any damage to Lessee's Improvements so long as
such failure shall not materially lessen the use or value of the remaining
Leased Premises; provided, however, that if, in Lessee's good faith judgment,
such damage is substantial, then Lessee shall demolish those affected portions
of Lessee's Improvements if Lessee shall not have repaired the same. After an
occurrence of the character referred to in paragraph 12(a), any Net Award
payable in connection with such occurrence shall be paid to the Proceeds
Trustee (as defined in paragraph 12(e), provided, that if no Proceeds Trustee
has been named pursuant to paragraph 12(e) at the time of payment of the Net
Award, such Net Award shall be paid to the Senior Permitted Mortgagee (as
defined in paragraph 29(m)), and if there is no Senior Permitted Mortgagee then
to Lessor, in all events for application pursuant to this paragraph 12(c).
Lessee shall be entitled to receive the Net Award but only against certificates
by the President or any Vice President of Lessee delivered to Lessor and the
Proceeds Trustee from time to time as such work of rebuilding, replacement and
repair progresses, each such certificate
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describing the work for which Lessee is requesting payment and the cost
incurred by Lessee in connection therewith and stating that Lessee has not
theretofore received payment for such work, provided that Lessee shall be
entitled to receive any Net Award in an aggregate amount of up to $100,000 in
connection with any one occurrence without providing Lessor with such
certificates. To the extent that any Net Award remaining after such repairs
have been made is less than $250,000, such remaining Net Award shall be paid to
Lessee. If such remaining Net Award equals or exceeds $250,000, all of the
remaining Net Award shall be retained by the Proceeds Trustee, the Senior
Permitted Mortgagee or by Lessor, as applicable, and shall be applied in
reduction of the principal amount of the indebtedness secured by any Senior
Permitted Mortgage then outstanding. To the extent that any Net Award is not
paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in
Schedule C shall be reduced in accordance with Schedule C, and (ii) each
installment of Basic Rent payable on or after the first Payment Date occurring
two months or more after the final payment to Lessee for such restoration
(including Extended Terms thereafter) shall be reduced by an amount equal to
the amount of such installment multiplied by a fraction, the numerator of which
shall be an amount equal to the remaining Net Award not paid to Lessee, and the
denominator of which shall be the applicable amount set forth in Schedule C
prior to its reduction pursuant to clause (i) above, provided that (i) the
Basic Rent shall not be reduced to an amount less than $4.00 per square foot of
remaining rentable space, and (ii) during the Primary Term the amount by which
such installments of Basic Rent shall be so reduced shall not exceed the amount
by which the amount scheduled to be due on or about such date on any
indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect
the revised amortization thereof after giving effect to the
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corresponding prepayment of such indebtedness by Lessor (it being understood
that in case the Senior Permitted Mortgage is retired or otherwise refinanced
prior to such prepayment, such limitation shall be calculated as if such
mortgage indebtedness had remained outstanding, was so prepaid and the
amortization thereof revised as provided therein). In the event of any
temporary requisition, this Lease shall remain in full effect and Lessee shall
be entitled to receive the Net Award allocable to such temporary requisition;
except that such portion of the Net Award allocable to the period after the
expiration of the Term of this Lease shall be paid to Lessor. If the cost of
any repairs required to be made by Lessee pursuant to this paragraph 12(c)
shall exceed the amount of such Net Award, the deficiency shall be paid by
Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c)
for so long as any default shall have happened and shall be continuing under
this Lease.
(d) Notwithstanding the foregoing, Lessee, at its cost and expense,
shall be entitled to claim separately, in any condemnation proceeding, any
damages payable for moveable trade fixtures paid for and installed by Lessee
(or any persons claiming under Lessee) without any contribution or
reimbursement therefor by Lessor, and for Lessee's loss of business, and for
Lessee's relocation costs, provided Lessor's award is not reduced or otherwise
adversely affected thereby.
(e) The trustee (the Proceeds Trustee) of the Net Award and Net
Casualty Proceeds (as defined in paragraph 14(a)) shall be The Connecticut Bank
and Trust Company, National Association, or its successor under the Collateral
Trust Indenture, dated as of the date hereof (the Indenture) from Clinton
Holding Corporation to The Connecticut Bank and Trust Company, National
Association and F. W. Kawam, as trustees, or if such Indenture shall
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be terminated, the holder of the first mortgage lien on the Leased Premises,
who shall be an institutional lender, or if there shall not be such a lien, or
if such lien shall be held by a person other than an institutional lender, then
() or a bank or trust company, designated by Lessee and acceptable to Lessor,
having an office in the State of Indiana. The Proceeds Trustee shall have a
combined capital and surplus of at least $100,000,000 and shall be duly
authorized to act as such trustee. All charges and fees of the Proceeds Trustee
shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and
Net Casualty Proceeds (as hereinafter defined) pursuant to such mutual
agreement as may be made between Lessor and Lessee.
(f) For the purposes of this Lease the term "Net Award" shall mean:
(i) all amounts payable as a result of any condemnation or other eminent domain
proceeding, less all expenses of such proceeding and the collection of such
amounts not otherwise paid by Lessee and (ii) all amounts payable pursuant to
any agreement with any condemning authority (which agreement shall be deemed to
be a taking) which has been made in settlement of or under threat of any
condemnation or other eminent domain proceeding affecting the Leased Premises
(except Lessee's Improvements), less all expenses incurred (including any
reasonable costs incurred by Lessor in connection therewith) as a result
thereof or in connection with the collection of such amounts and not otherwise
paid by Lessee.
(g) Any minor condemnation or taking of the Leased Premises for the
construction or maintenance of streets or highways shall not be considered a
condemnation or taking for purposes of this paragraph 12 so long as the Leased
Premises shall not be materially adversely affected, ingress and egress for the
remainder of the Leased Premises shall be adequate for the business of Lessee
thereon and compliance is made with the provisions of any Permitted Mortgage
relating thereto.
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13. Insurance. (a) Lessee shall maintain, or cause to be
maintained, at its sole expense, the following insurance on the Leased
Premises (herein called the Required Insurance):
(i) Insurance against loss or damage by fire, lightning and other
risks from time to time included under "extended coverage"
policies, including, without limitation, vandalism and malicious
mischief coverage, in amounts sufficient to prevent Lessor or
Lessee from becoming a co-insurer of any loss under the
applicable policies but in any event in amounts not less than the
full insurable value of the Leased Premises. The term "full
insurable value", as used herein, means actual replacement value
less uninsurable items.
(ii) General public liability insurance against claims for bodily
injury, death or property damage occurring on, in or about the
Leased Premises and the adjoining streets, sidewalks and
passageways, such insurance to afford protection to Lessor of not
less than $1,000,000 with respect to bodily injury or death to
any one person, not less than $5,000,000 with respect to any one
accident, and not less than $1,000,000 with respect to property
damage.
(iii) Worker's compensation insurance covering all persons employed in
connection with any work done on or about the Leased Premises
with respect to which claims for death or bodily injury could be
asserted against Lessor, Lessee or the Leased Premises, complying
with the laws of the State of Indiana.
(iv) Boiler and pressure vessel insurance on all equipment, parts
thereof and appurtenances attached or connected to the Leased
Premises, if any, which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding, in the
minimum amount of $1,000,000 for damage to property resulting
from such perils. Such insurance may, at the option of Lessee and
as permitted by applicable law, be included within the coverage
of insurance policies referred to in clause (i) above.
(v) Such other insurance on the Leased Premises in such amounts and
against such other hazards which at the time are commonly
obtained in the case of property similar to the Leased Premises
in the state in which the Leased Premises are located, including
war risk insurance (at and during such times as war risk
insurance is commonly obtained in the case of property similar to
the Leased Premises), when and to the
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extent obtainable from the United States Government or any agency
thereof.
(vi) Flood insurance in an amount equal to the full insurable value
(as defined in clause (i) above) of the Leased Premises or the
maximum amount available, whichever is less, if the area in which
the Leased Premises are located has been designated by the
Secretary of Housing and Urban Development as having special
flood hazards, and if flood insurance is available under the
National Flood Insurance Act.
(b) The Required Insurance shall be written by companies having an
A.M. Best rating of at least A:XV which are authorized to do an insurance
business in the State of Indiana and shall name as the insured parties
thereunder Lessor, Lessee and any Permitted Mortgagee, as their respective
interests may appear, provided, however, that so long as Lessee maintains a net
worth determined in accordance with generally accepted accounting principles of
not less than $267,542,000, Lessee may self-insure as to the types of insurance
referred to in clauses (i) through (v) of this paragraph. Neither Lessor nor
any Permitted Mortgagee shall be required to prosecute any claim against, or to
contest any settlement proposed by, an insurer. Lessee may, at its expense,
prosecute any such claim or contest any such settlement in the name of Lessor,
Lessee or both, and Lessor will join therein at Lessee's written request upon
the receipt by Lessor of an indemnity from Lessee against all costs,
liabilities and expenses in connection therewith.
(c) Insurance claims by reason of damage to or destruction of any
portion of the Leased Premises shall be adjusted by Lessee, but Lessor and any
Permitted Mortgagee shall have the right to join with Lessee in adjusting any
such loss.
(d) Every policy referred to in clauses (i), (iv) and (v) of
paragraph 13(a) shall bear a first mortgagee endorsement in favor of the then
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Senior Permitted Mortgagee (if any); and any loss under any such policy shall
be made payable to the Proceeds Trustee, provided that any recovery for damage
or destruction under any such policy shall be applied by the Proceeds Trustee
in the manner provided in paragraph 14. Every policy of Required Insurance
shall contain an agreement that the insurer will not cancel such policy except
after thirty days' written notice to Lessor and any Permitted Mortgagee and
that any loss otherwise payable thereunder shall be payable notwithstanding any
act or negligence of Lessor or Lessee which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) any foreclosure or other action taken by a Permitted
Mortgagee pursuant to any provision of any Permitted Mortgage upon the
happening of a default or an event of default thereunder, or (ii) any change in
ownership of the Leased Premises.
(e) Lessee shall deliver to Lessor promptly after the delivery of
this Lease the original or duplicate policies or certificates of insurers,
reasonably satisfactory to any Senior Permitted Mortgagee, evidencing all of
the Required Insurance. Lessee shall, within thirty days prior to the
expiration of any such policy, deliver to Lessor other original or duplicate
policies or such certificates evidencing the renewal of any such policy. If
Lessee fails to maintain or renew any Required Insurance, or to pay the premium
therefor, or to so deliver any such policy or certificate, then Lessor, at its
option, but without obligation to do so, may, upon five days' notice to Lessee,
procure such insurance. Any sums so expended by Lessor shall be additional rent
hereunder and shall be repaid by Lessee within five days after notice to Lessee
of such expenditure and the amount thereof.
(f) Neither Lessee nor Lessor shall obtain or carry separate
insurance covering the same risks as any Required Insurance unless Lessee,
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Lessor and any Permitted Mortgagee are included therein as named insureds, with
loss payable as provided in this Lease. Lessee and Lessor shall immediately
notify each other whenever any such separate insurance is obtained and shall
deliver to each other the policies or certificates evidencing the same.
(g) Anything contained in this paragraph 13 to the contrary
notwithstanding, all Required Insurance may be carried under (1) a "blanket" or
"umbrella" policy or policies covering other properties or liabilities of
Lessee, its parent company, or any of its parent company's subsidiaries,
provided, that such policies otherwise comply with the provisions of this Lease
and specify the coverage and amounts thereof with respect to the Leased
Premises, and (2) a policy or policies providing for self-insurance of
deductible amount of up to $1,000,000.
14. Casualty. (a) Lessee hereby irrevocably assigns to Lessor any
compensation or insurance proceeds to which Lessee may become entitled by
reason of Lessee's interest in the Leased Premises if the Leased Premises or
any part thereof are damaged or destroyed by fire or other casualty, provided,
however, that Lessee may retain any insurance proceeds or compensation relating
to Lessee's Improvements. If the Leased Premises or any part thereof shall be
damaged or destroyed by fire or other casualty, and if the estimated cost of
rebuilding, replacing or repairing the same shall exceed $100,000, Lessee
promptly shall notify Lessor thereof. Lessee shall negotiate, prosecute and
adjust any claim for any compensation or insurance payment on account of any
such damage or destruction; and Lessor shall collect any such compensation or
insurance payment. All amounts paid in connection with any such damage or
destruction shall be applied pursuant to this paragraph 14, and
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all such amounts (except such amounts with respect to Lessee's Improvements)
paid or payable in connection therewith (minus the expenses of collecting such
amounts) are herein called the Net Casualty Proceeds. Lessee shall pay all
reasonable costs and expenses (including any legal fees of any Permitted
Mortgagee required to be paid by Lessor pursuant to any Permitted Mortgage) in
connection with each such negotiation, prosecution and adjustment, for which
costs and expenses Lessee shall be reimbursed out of any compensation or
insurance payment received. Lessor shall be entitled to participate in any such
negotiation, prosecution and adjustment, and the reasonable expenses thereof
(including counsel fees and expenses) shall be paid by Lessee.
(b) After an occurrence of the character referred to in paragraph
14(a), except as hereinafter set forth, Lessee shall (whether or not it has
received any Net Casualty Proceeds), at its expense, rebuild, replace or repair
any damage to the Leased Premises caused by such event in conformity with the
requirements of paragraph 11 (a) so as to restore the Leased Premises (as
nearly as practicable) to the condition and market value thereof immediately
prior to such occurrence. Lessee shall not be required to rebuild or replace
any damage to Lessee's Improvements so long as such failure shall not
materially lessen the value or use of the remaining Leased Premises; provided,
however, that if, in Lessee's good faith judgment, such damage is substantial,
then Lessee shall demolish those affected portions of Lessee's improvements if
Lessee shall not have repaired the same. After an occurrence of the character
referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection
with such occurrence shall be paid to Proceeds Trustee, and this Lease shall
continue in full effect, provided, that if no Proceeds Trustee has been named
pursuant to paragraph 12(e) at the time of payment of
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Net Casualty Proceeds, such Net Casualty Proceeds shall be paid to the Senior
Permitted Mortgagee, and if there is no Senior Permitted Mortgagee then to
Lessor, in all events for application pursuant to this paragraph 14(b). Lessee
shall be entitled to receive the Net Casualty Proceeds, but only against
certificates of the President or any Vice President of Lessee delivered to
Lessor and Proceeds Trustee from time to time as such work of rebuilding,
replacement and repair progresses, each such certificate describing the work
for which Lessee is requesting payment and the cost incurred by Lessee in
connection therewith and stating that Lessee has not theretofore received
payment for such work, provided that Lessee shall be entitled to receive the
Net Casualty Proceeds in an aggregate amount of up to $100,000 in connection
with any one occurrence without providing Lessor with such certificates. To the
extent that any Net Casualty Proceeds remaining after such repairs have been
made are less than $250,000 they shall be paid to Lessee. If such remaining Net
Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be
retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor,
as applicable, and shall be applied in reduction of the principal amount of the
indebtedness secured by any Senior Permitted Mortgage then outstanding. To the
extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the
preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in
accordance with Schedule C, and (ii) each installment of Basic Rent payable on
or after the First Payment Date occurring two months or more after the final
payment to Lessee for such restoration (including Extended Terms thereafter)
shall be reduced by an amount equal to the amount of such installment
multiplied by a fraction, the numerator of which shall be an amount equal to
the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of
which shall be the
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applicable amount set forth in Schedule C prior to its reduction pursuant to
clause (i) above, provided that (i) the Basic Rent shall not be reduced to an
amount of less than $4.00 per square foot of remaining rentable space, and (ii)
during the Primary Term the amount by which each such installment of Basic Rent
shall be so reduced shall not exceed the amount by which the amount scheduled
to be due on or about such date on any indebtedness of Lessor secured by the
Senior Permitted Mortgage is reduced to reflect the revised amortization
thereof after giving effect to the corresponding prepayment of such
indebtedness by Lessor (it being understood that in case the Senior Permitted
Mortgage is retired or otherwise refinanced prior to such prepayment, such
limitation shall be calculated as if such mortgage indebtedness had remained
outstanding, was so prepaid and the amortization thereof revised as provided
therein). If the cost of any repairs required to be made by Lessee pursuant to
this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the
deficiency shall be paid by Lessee.
(c) If the Leased Premises shall be substantially damaged or
destroyed in any single casualty so that, in Lessee's good faith judgment, the
Leased Premises shall be unsuitable for restoration for continued use and
occupancy in Lessee's business, then at Lessee's option in lieu of rebuilding,
replacing and repairing the Leased Premises, Lessee may give notice to Lessor,
within 30 days after the occurrence of such damage or destruction, of Lessee's
intention to terminate this Lease on the next Basic Rent Payment Date which
occurs not less than 210 days after the delivery of such notice (the
Termination Date), provided that, if the Termination Date occurs during the
Primary Term, such notice shall be accompanied by (i) an irrevocable offer of
Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the
Termination Date at a price determined in accordance with Schedule C hereof
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(the Purchase Offer), and (ii) a certificate signed by the President or any
Vice President of Lessee stating that its board of directors (or an executive
committee thereof) has determined that such event has rendered the Leased
Premises unsuitable for restoration, replacement and rebuilding for Lessee's
continued use and occupancy and that the Leased Premises will not be restored.
If Lessor shall reject such offer by notice to Lessee not later than the 30th
day prior to the Termination Date, the Net Casualty Proceeds and the right
thereto shall be assigned to and shall belong to Lessor and this Lease shall
terminate on the Termination Date, except with respect to obligations and
liabilities of Lessee under this Lease, actual or contingent, which have arisen
on or prior to the Termination Date, but only upon payment by Lessee of all
Basic Rent, additional rent, and other sums due and payable by it under this
Lease to and including the Termination Date; provided that the amount of such
Net Casualty Proceeds, if any, related to any portion of the Improvements
constructed by Lessee at its expense (and for which it has not obtained
reimbursement pursuant to paragraph 15 hereof), shall be paid to Lessee as
determined by the Appraisal Procedure. Unless Lessor shall have rejected such
offer in accordance with this paragraph, Lessor shall be conclusively presumed
to have accepted such offer, and on the Termination Date, Lessor shall convey
the remaining portion of the Leased Premises, if any, and all its interest in
the Net Casualty Proceeds in accordance with paragraph 16. If the Termination
Date shall occur during an Extended Term, Lessee shall not be required to offer
to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall
belong to Lessor and this Lease shall terminate; provided that the amount of
such Net Casualty Proceeds, if any, related to any portion of the Improvements
constructed by Lessee at its expense (and for which it has not obtained
reimbursement pursuant to paragraph
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15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure.
If the conditions set forth in the first sentence of this paragraph 14(c) are
fulfilled and Lessee fails to commence to rebuild, replace or repair the Leased
Premises within 30 days after final adjustment of all insurance claims made in
connection therewith (but in no event later than one hundred eighty days after
the occurrence of such damage or destruction), Lessee conclusively shall be
deemed to have made such Purchase Offer and in the absence of a written
Purchase Offer by Lessee the Termination Date shall be deemed to be the next
Basic Rent Payment Date which occurs not less than 210 days after such Purchase
Offer is presumed to have been made; but nothing in this sentence shall relieve
Lessee of its obligation actually to deliver such Purchase Offer.
15. Reimbursement for Alterations and Additions; Purchase of
Unimproved Land. (a) On any one or more dates during the Primary Term, Lessee
may request in writing (herein called a Lessee's Request) that Lessor pay to
Lessee the amount of Lessee's theretofore unreimbursed expenses (herein called
Reimbursable Expenses), which have been incurred by Lessee in connection with
the construction of additional structures on a portion or portions of the
Leased Premises upon which there are no major structures then existing and/or
additions, alterations to, or remodeling of, structures then existing on the
Leased Premises and the acquisition of land adjacent to the Leased Premises
(herein collectively called the Additions), which Additions are permitted by
paragraph 11(a) but are in addition to, and do not constitute, alterations,
additions or remodeling which Lessee is required to make upon the Leased
Premises pursuant to any provision of this Lease, and which Additions conform
to the character and quality of the then existing improvements on the Leased
Premises. Lessee shall have the right to make a Lessee's Request only if (i)
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the construction of any Additions with respect to which such Reimbursable
Expenses have been incurred shall have been completed not more than two years
prior to the date of the Lessee's Request, (ii) the amount of such Reimbursable
Expenses is not less than $500,000, (iii) the value or use of the Leased
Premises shall not be materially impaired by such Additions and (iv) the sum of
such requested Reimbursable Expenses and all Reimbursable Expenses previously
paid to Lessee pursuant to this paragraph 15(a) shall not exceed $10,000,000.
Each Lessee's Request shall be accompanied by architect's drawings and
specifications as previously approved by Lessor pursuant to paragraph ll(a)
hereof and accepted by Lessee, relating to the Additions with respect to which
such Request is made, and a Lessee's Certificate setting forth in reasonable
detail the amount and character of the Reimbursable Expenses with respect to
which such Request is made and a description of such Additions, stating that
the construction of such Additions has been completed in compliance with the
requirements of this paragraph 15, specifying the dates on which the
construction of such Additions were commenced and completed, and stating that
such Reimbursable Expenses are reimbursable in the amount requested under the
terms of this paragraph 15. Upon receipt of such Lessee's Request, Lessor
agrees to use its best efforts to arrange for the financing of such
Reimbursable Expenses on terms and conditions satisfactory to Lessor and Lessee
and consistent with the provisions of any Senior Permitted Mortgage. Lessor and
Lessee shall negotiate in good faith to enable Lessor to finance such
Reimbursable Expenses, having regard to then existing economic, financial and
money market conditions. Within ninety days after the receipt of such Lessee's
Request, drawings, specifications and Certificate, Lessor agrees to pay to
Lessee an amount equal to such Reimbursable Expenses so certified, but
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only if the following further conditions shall have been fulfilled within such
90-day period:
(i) Lessor shall have issued and sold evidence of indebtedness (herein
called the Additional Indebtedness) pursuant to a Senior
Permitted Mortgage, for the purposes of obtaining funds to pay
such Reimbursable Expenses to Lessee;
(ii) The proceeds of the sale of the Additional Indebtedness actually
received by Lessor shall have been not less than the amount of
such Reimbursable Expenses;
(iii) Lessor and Lessee shall have authorized, executed and delivered a
supplement to this Lease, which supplement (herein called the
Lease Supplement) shall: (A) increase the Basic Rent payments
required to be made thereafter during the Primary Term by an
amount which shall be at least sufficient to make each payment,
when due, of principal of, and interest on, the Additional
Indebtedness, (B) increase each Basic Rent payment to be made
during the Extended Terms by an amount which shall be at least
sufficient to make each payment, when due, of principal of, and
interest on, the Additional Indebtedness during the portion of
such Extended Terms that such Additional Indebtedness is
outstanding, and Lessee shall not, and is obligated not to,
cancel its option to extend the term hereof to a date not earlier
than the maturity of the Additional Indebtedness, (C) increase
the purchase prices set forth in Schedule C hereto that would be
payable upon a purchase of the Leased Premises by Lessee pursuant
to paragraph 12(b) or 14(c), in each case by amounts which shall
at all times thereafter be at least sufficient to pay or prepay
the principal amount of the Additional Indebtedness to be then
outstanding (without adjustments for any prepayments made by
Lessor), and (D) make such other changes, if any, as shall be
necessary or appropriate, in the opinion of counsel for holders
of the Additional Indebtedness, by reason of the transactions
contemplated by this paragraph; and
(iv) Lessor shall have received from Lessee such other Lessee's
Certificates, opinions of counsel for Lessee, surveys of the
Leased Premises, title insurance policies, consents to the
assignment and reassignment of this Lease (as supplemented) and
other instruments as Lessor may reasonably request in order to
enable Lessor to finance the cost of such Reimbursable Expenses
by the issuance and sale of the Additional Indebtedness.
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(b) As long as Lessor has used its best efforts to arrange financing as set
forth in subparagraph (a) above, Lessor shall incur no liability to Lessee by
reason of the fact that Lessor does not pay Reimbursable Expenses, and if
Lessor does not pay such Reimbursable Expenses, except as expressly provided in
subparagraph (c) below, this Lease shall continue in full effect, without
modification. All expenses incurred in connection with the issuance by Lessor
of Additional Indebtedness shall be borne by Lessee.
(c) If, after the conditions specified above have been satisfied within 180
days of such Lessee's Request, Lessor shall not have paid to Lessee an amount
equal to such Reimbursable Expenses and if such Additions are either contiguous
to the Improvements or free standing (or subject to a party wall pursuant to an
agreement satisfactory in form and substance to Lessor and any Senior Permitted
Mortgagee) upon unimproved land constituting part of the Leased Premises, then
Lessee shall have the option, to be exercised by giving 90 days' notice to
Lessor, to purchase such portion of the unimproved land (together with any
requisite easements) as is necessary for the construction of such Additions,
provided that such land (together with any land purchased pursuant to paragraph
15(d) hereof, called the Unimproved Land) shall not be improved by any
permanent structure included in the Improvements and provided further that the
remainder of the Leased Premises, after excluding the Unimproved Land, would
(1) constitute an integrated economic unit including sufficient parking and all
necessary utility easements, (2) be a continuous parcel of land, without gap or
hiatus and be separately assessed for tax purposes, (3) have adequate access to
and from public highways, (4) not be in violation of any Legal Requirement or
Required Insurance, and (5) would have a market value at least equal to the
outstanding amount of the Senior Permitted
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Mortgage as of such date. The purchase price for the Unimproved Land shall be
the greater of (x) fair market value attributable to such Unimproved Land, as
unencumbered by this Lease and without regard to any of Lessee's continuing
rights and obligations under this Lease, assuming Lessee shall have extended
the Lease for all Extended Terms, as determined by Lessor and Lessee, and in
the event of their failure to agree, as determined by the Appraisal Procedure
or (y) Lessor's original cost attributable to such Unimproved Land as set forth
in Schedule A hereto. Lessee agrees that it shall bear the costs of the
Appraisal Procedure. On the date for purchase specified in Lessee's notice,
Lessor shall convey such Unimproved Land to Lessee or its designee pursuant to
and in compliance with paragraph 16. In the event of such purchase by Lessee,
Lessee agrees that (x) no improvements will be undertaken upon such Unimproved
Land which would materially reduce the value of the remainder of the Leased
Premises and (y) Lessee will grant such easements to Lessor or enter into such
cross-easement agreements with Lessor relating to the Unimproved Land as are
reasonably necessary to operate the remainder of the Leased Premises as an
integrated economic unit with no material reduction in the value thereof.
(d) In addition to the option contained in 15(c), Lessee shall have the
option to purchase all or any portion of the land described in Part 2 of
Schedule A, and structure or Improvements thereon,* in the manner, at the price
and in accordance with the terms of subparagraph 15(c), provided that such
purchase shall not materially impair the value or use of the remainder of the
Leased Premises. Lessee shall have such option only if (i) Lessee shall have
undertaken in writing to construct improvements on such property for its
- -----------------
* See Schedule A, Part 2, for particulars.
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own use, and (ii) such improvements are not eligible for financing by Lessor
pursuant to the provisions of subparagraph 15(a).
(e) To the extent of the cash price paid to Lessor for Unimproved Land
purchased pursuant to paragraphs 15(c) or (d), (i) the amounts set forth in
Schedule C shall be reduced in accordance with Schedule C, and (ii) each
installment of Basic Rent payable on or after the first Payment Date occurring
two months or more after such purchase (including Extended Terms thereafter)
shall be reduced by an amount equal to the amount of such installment
multiplied by a fraction, the numerator of which shall be such purchase price
paid to Lessor, and the denominator of which shall be the applicable amount set
forth in Schedule C prior to its reduction pursuant to clause (i) above,
provided that (i) the Basic Rent shall not be reduced to an amount of less than
$4.00 per square foot of remaining rentable space, and (ii) during the Primary
Term the amount by which such installments of Basic Rent shall be so reduced
shall not exceed the amount by which the amount scheduled to be due on or about
such date on any indebtedness of Lessor secured by the Senior Permitted
Mortgage is reduced to reflect the revised amortization thereof after giving
effect to the corresponding prepayment of such indebtedness by Lessor (it being
understood that in the case the Senior Permitted Mortgage is retired or
otherwise refinanced prior to such prepayment, such limitations shall be
calculated as if such mortgage indebtedness had remained outstanding, was so
prepaid and the amortization thereof revised provided therein).
(f) In lieu of paying cash for the purchase of Unimproved Land pursuant to
paragraph 15(c) or (d), Lessee may convey to Lessor a substitute parcel of land
(Substitute Land) provided that the following conditions shall be satisfied:
the fair market value of the Substitute Land shall equal or exceed the cash
purchase price which would have been paid for the Unimproved
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Land being purchased by Lessee (such fair market value of the Substitute Land
being determined by agreement of Lessor and Lessee, or failing such agreement,
by the Appraisal Procedure), (ii) all of the conditions set forth in paragraph
15(c) shall be satisfied as to the remaining portion of the Leased Premises
taken together with the Substitute Land, and (iii) Lessor and any Permitted
Mortgagee shall have approved any exceptions to title to the Substitute Land.
All costs and expenses of Lessor and any Permitted Mortgagee incident to the
conveyance to Lessor of Substitute Land shall be borne by Lessee. In the event
that Unimproved Land is purchased pursuant to paragraph 15(c) or (d) in
exchange for Substitute Land rather than the payment of a cash purchase price,
the provisions of paragraph 15(e) shall not apply, and this Lease shall
continue in full effect without modification of Basic Rent or the amounts set
forth in Schedule C hereunder.
16. Procedure Upon Purchase. (a) If Lessee shall purchase the Leased
Premises pursuant to this Lease, Lessor need not convey any better title
thereto than existed on the date of the commencement of the Term hereof and
Lessee or its designee shall accept such title, subject, however, to the state
of title to the Leased Premises on the date of the commencement of the Term
hereof, the condition of the Leased Premises on the date of purchase and all
charges, liens, security interests and encumbrances on the Leased Premises and
all applicable Legal Requirements, but free of the lien of all Permitted
Mortgages and charges, liens, security interests and encumbrances resulting
from acts or failures to act of Lessor taken without the consent of Lessee.
(b) Upon the date fixed for any purchase of the Leased Premises hereunder,
Lessee shall pay to Lessor in immediately available funds the purchase price
therefor specified herein together with all Basic Rent,
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additional rent and other sums then due and payable hereunder to and
including such date of purchase, and Lessor shall deliver to Lessee a
special warranty deed to the Leased Premises and any other instruments
necessary to assign any other property then required to be assigned by
Lessor pursuant hereto. Lessee shall pay all charges incident to such
conveyance and assignment, including reasonable counsel fees, escrow fees,
recording fees, title insurance premiums and all applicable taxes (other
than any income, capital gains or franchise taxes of Lessor) which may be
imposed by reason of such conveyance and assignment and the delivery of
said deeds and other instruments. Upon the completion of such purchase, but
not prior thereto (whether or not any delay or failure in the completion of
such purchase shall be the fault of Lessor), this Lease and all obligations
hereunder shall terminate, except with respect to obligations and
liabilities of Lessee hereunder, actual or contingent, which have arisen on
or prior to such date of purchase.
17. Assignment and Subletting. During the Primary Term only, Lessee may
sublet all or any part of the Leased Premises without the consent of Lessor
(provided, that each such sublease shall expressly be made subject to the
provisions of this Lease) and, may assign all its rights and interests
under this Lease. If Lessee assigns all its rights and interests under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Lessee hereunder in an instrument, approved by Lessor as to
form and substance (which approval will not be unreasonably withheld or
delayed), delivered to Lessor at the time of such assignment. No assignment
or sublease shall affect or reduce any of the obligations of Lessee
hereunder, and all such obligations shall continue in full effect as
obligations of a principal and not as obligations of a guarantor or surety,
to the same extent as though no assignment or subletting had been made,
provided that performance
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by any such assignee or sublessee of any of the obligations of Lessee
under this Lease shall be deemed to be performance by Lessee. No sublease
or assignment shall impose any obligations on Lessor or otherwise affect
any of the rights of Lessor under this Lease. Neither this Lease nor the
Term hereby demised shall be mortgaged by Lessee, nor shall Lessee mortgage
or pledge the interest of Lessee in and to any sublease of the Leased
Premises or the rentals payable thereunder. Any mortgage, pledge, sublease
or assignment made in violation of this paragraph 17 shall be void. Lessee
shall, within ten days after the execution and delivery of any such
assignment or the sublease of all or substantially all of the Leased
Premises, deliver a conformed copy thereof to Lessor. Within ten days after
the execution and delivery of any sublease of all or any portion of the
Leased Premises, Lessee shall give notice to Lessor of the existence and
term thereof, and of the name and address of the sublessee thereunder.
18. Permitted Contests. Lessee shall not be required to (i) pay any
Imposition, (ii) comply with any statute, law, rule, order, regulation or
ordinance, (iii) discharge or remove any lien, encumbrance or charge or
(iv) obtain any waivers or settlements or make any changes or take any
action with respect to any encroachment, hindrance, obstruction, violation
or impairment referred to in paragraph 10(b), so long as Lessee shall
contest, in good faith and at its expense, the existence, the amount or the
validity thereof, the amount of the damages caused thereby, or the extent
of its liability therefor, by appropriate proceedings during the pendency
of which there is prevented (A) the collection of, or other realization
upon, the tax, assessment, levy, fee, rent or charge or lien, encumbrance
or charge so contested, (B) the sale, forfeiture or loss of the Leased
Premises, or any part thereof, or the Basic Rent or any additional rent, or
any portion thereof, (C) any interference with
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the use or occupancy of the Leased Premises or any part thereof, and (D) any
interference with the payment or collection of the Basic Rent or any additional
rent, or any portion thereof. While any such proceedings are pending, Lessor
shall not have the right to pay, remove or cause to be discharged the tax,
assessment, levy, fee, rent or charge or lien, encumbrance or charge thereby
being contested. Lessee further agrees that each such contest shall be promptly
prosecuted to a final conclusion. Lessee shall pay, and save Lessor harmless
against, any and all losses, judgments, decrees and costs (including all
reasonable attorneys' fees and expenses) in connection with any such contest
and shall, promptly after the final settlement, compromise or determination
(including any appeals) of such contest, fully pay and discharge the amounts
which shall be levied, assessed, charged or imposed or be determined to be
payable therein or in connection therewith, together with all penalties, fines,
interests, costs and expenses thereof or in connection therewith, and perform
all acts, the performance of which shall be ordered or decreed as a result
thereof; provided, however, that nothing herein contained shall be construed to
require Lessee to pay or discharge any lien, encumbrance or other charge
created by any act or failure to act of Lessor or the payment of which by
Lessee is not otherwise required hereunder, or to perform any act which Lessee
is not otherwise required to perform hereunder. No such contest shall subject
Lessor or any Permitted Mortgagee to the risk of any criminal liability. Lessee
shall give such reasonable security to Lessor or the Senior Permitted Mortgagee
as may be demmanded by Lessor or such Senior permitted Mortgagee to insure
compliance with the foregoing provisions of this paragraph 18.
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19. Conditional Limitations; Default Provision. (a) Any of the
following occurrences or acts shall constitute an event of default (herein
called an Event of Default) under this Lease:
(i) If Lessee, at any time during the continuance of this Lease (and
regardless of the pendency of any bankruptcy, reorganization,
receivership, insolvency or other proceedings, at law, in equity, or
before any administrative tribunal, which have or might have the
effect of preventing Lessee from complying with the terms of this
Lease), shall (1) fail to make any payment when due of Basic Rent,
additional rent or other sum herein required to be paid by Lessee
hereunder and such failure continues for 5 days, or (2) fail to
observe or perform any other provision hereof or any provision of
the Assignment of Lease and Guaranty, dated as of the date hereof
(the Assignment), from Lessor to Clinton Holding Corporation (the
Company), and consented to therein by Lessee and by Lincoln National
Corporation (Guarantor) or the Reassignment of Lease and Guaranty,
dated as of the date hereof (the Reassignment), from the Company to
The Connecticut Bank and Trust Company, National Association and F.
W. Kawam (the Trustees), and consented to therein by Lessee and
Guarantor, for thirty days after notice to Lessee of such failure
has been given (provided, that in the case of any default referred
to in this clause (2) which cannot with diligence be cured within
such 30-day period, if Lessee shall proceed promptly to cure the
same and thereafter shall prosecute the curing of such default with
diligence, then upon receipt by Lessor of a Lessee's Certificate
stating the reason such default cannot be cured within thirty days
and stating that Lessee is proceeding with diligence to cure such
default, the time within which such failure may be cured shall be
extended for such period as may be necessary to complete the curing
of the same with diligence but not to exceed 120 days without
Lessor's written consent which consent shall not be unreasonably
withheld); or
(ii) if any representation or warranty of Lessee or Guarantor set forth
in any notice, certificate, demand, request or other instrument
delivered pursuant to, or in connection with, this Lease, the
Assignment, or the Reassignment shall either prove to be false or
misleading in any material respect as of the time when the same
shall have been made, or with respect to any such representation or
warranty Lessee or Guarantor shall fail to include in such
representation or warranty any fact or statement necessary in light
of
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the circumstances in which such representation or warranty was
made to make such representation or warranty not misleading in any
material respect as of the time when the same shall have been
made; or
(iii) if Lessee or Guarantor shall file a petition commencing a
voluntary case under the Federal Bankruptcy Code or any other
federal or state law (as now or hereafter in effect) relating to
bankruptcy, insolvency, reorganization, winding-up or adjustment
of debts (hereinafter collectively called Bankruptcy Laws), or if
Lessee or Guarantor shall (A) apply for or consent to the
appointment of, or the taking of possession by, any receiver,
custodian, trustee, United States Trustee or liquidator (or other
similar official) of the Leased Premises or any part thereof or of
any substantial portion of Lessee's property, or (B) generally not
pay their respective debts as they become due, or if either Lessee
or Guarantor admits in writing its inability to pay its respective
debts generally as they become due or (C) makes a general
assignment for the benefit of its respective creditors, or (D)
files a petition commencing a voluntary case under or seeking to
take advantage of any Bankruptcy Law, or (E) fails to controvert
in timely and appropriate manner, or in writing acquiesces to, any
petition commencing an involuntary case against Lessee or
Guarantor or otherwise filed against Lessee or Guarantor pursuant
to any Bankruptcy Law, or (F) takes any corporate action in
furtherance of any of the foregoing, or
(iv) if an order for relief against Lessee or Guarantor shall be
entered in any involuntary case under the Federal Bankruptcy Code
or any similar order against Lessee or Guarantor shall be entered
pursuant to any other Bankruptcy Law, or if a petition commencing
an involuntary case against Lessee or Guarantor or proposing the
reorganization of Lessee or Guarantor under any Bankruptcy Law
shall be filed and not be discharged or denied within 60 days
after such filing, or if a proceeding or case shall be commenced
in any court of competent jurisdiction seeking (A) the
liquidation, reorganization, dissolution, winding-up or adjustment
of debts of Lessee or Guarantor, or (B) the appointment of a
receiver, custodian, trustee, United States Trustee or liquidator
(or any similar official) of the Leased Premises or any part
thereof or of Lessee or Guarantor or of any substantial portion of
Lessee's or Guarantor's property, or (C) any similar relief as to
Lessee or Guarantor pursuant to any Bankruptcy Law, and any such
proceeding or case shall continue undismissed or an order,
judgment or decree approving or ordering any of the foregoing
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shall be entered and continue unstayed and in effect for 60 days; or
(v) if (a) a final judgment for the payment of money in an amount
greater than $50,000 or (b) final judgments for the payment of money
aggregating in an amount greater than $300,000 shall be rendered
against Lessee or Guarantor and Lessee or Guarantor shall not
discharge the same or cause it to be discharged within 60 days
from the entry thereof, or shall not appeal therefrom or from the
order, decree or process upon which or pursuant to which said
judgment was granted, based or entered, and secure a stay of
execution or an appeal bond in the amount of said judgment pending
such appeal; or
(vi) if the Leased Premises shall be left both unattended and without
maintenance as provided herein, for a period of thirty days; or
(vii) if Guarantor shall fail to observe or perform any provision of
the Guaranty or of the Other Guaranties, or pursuant to the terms
thereof shall be deemed to be in default thereunder, and such
failure or default shall continue for thirty days after notice to
Guarantor, provided, however, that the foregoing shall not be
construed as extending the period of time during which the
Guarantor is required to pay or perform any obligation of Lessee
hereunder or under the Assignment or Reassignment.
(b) If an Event of Default shall have happened and be continuing,
Lessor shall have the right at its election to give Lessee written notice
of Lessor's intention to terminate the term of this Lease on a date
specified in such notice. Thereupon, the term of this Lease and the estate
hereby granted shall terminate on such date as completely and with the same
effect as if such date were the date fixed herein for the expiration of the
term of this Lease, and all rights of Lessee hereunder shall terminate, but
Lessee shall remain liable as hereinafter provided.
(c) If an Event of Default shall have happened and be continuing,
Lessor shall have the immediate right, whether or not the term of this
Lease shall have been terminated pursuant to paragraph l9(b), to (i)
re-enter and repossess the Leased Premises or any part thereof by force,
summary proceedings, ejectment or otherwise and (ii) remove all persons and
property
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therefrom. Lessor shall be under no liability by reason of any such
re-entry, repossession or removal. No such re-entry or taking of possession
of the Leased Premises by Lessor shall be construed as an election on
Lessor's part to terminate the Term of this Lease unless a written notice
of such intention be given to Lessee pursuant to paragraph l9(b), or unless
the termination of this Lease be decreed by a court of competent
jurisdiction.
(d) At any time or from time to time after the repossession of the
Leased Premises or any part thereof pursuant to paragraph l9(c), whether or
not the term of this Lease shall have been terminated pursuant to paragraph
l9(b), Lessor may (but shall be under no obligation to) relet the Leased
Premises or any part thereof for the account of Lessee, in the name of
Lessee or Lessor or otherwise, without notice to Lessee, for such term or
terms (which may be greater or less than the period which would otherwise
have constituted the balance of the term of this Lease) and on such
conditions and for such uses as Lessor, in its absolute discretion, may
determine, and Lessor may collect and receive any rents payable by reason
of such reletting. Lessor shall not be responsible or liable for any
failure to relet the Leased Premises or any part thereof or for any failure
to collect any rent due upon any such reletting.
(e) No termination of the term of this Lease pursuant to paragraph
19(b), by operation of law or otherwise, and no repossession of the Leased
Premises or any part thereof pursuant to paragraph l9(c) or otherwise, and
no reletting of the Leased Premises or any part thereof pursuant to
paragraph 19(d), shall relieve Lessee of its liabilities and obligations
hereunder, all of which shall survive such expiration, termination,
repossession or reletting.
(f) In the event of any such termination or repossession, Lessee will
pay to Lessor the Basic Rent, additional rent and other sums required to
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be paid by Lessee to and including the date of such termination or
repossession; and, thereafter, Lessee shall, until the end of what would
have been the term of this Lease in the absence of such termination or
repossession, and whether or not the Leased Premises or any part thereof
shall have been relet, be liable to Lessor for, and shall pay to Lessor, as
liquidated and agreed current damages: (i) the Basic Rent, additional rent
and other sums which would be payable under this Lease by Lessee in the
absence of such termination or repossession, less (ii) the net proceeds, if
any, of any reletting effected for the account of Lessee pursuant to
paragraph 19(d), after deducting from such proceeds all Lessor's expenses
incurred in connection with such reletting (including, without limitation,
all repossession costs, brokerage commissions, legal expenses, reasonable
attorneys' fees, employees' expenses, alteration costs and expenses of
preparation for such reletting). Lessee will pay such current damages on
the days on which the Basic Rent would have been payable under this Lease
in the absence of such termination or repossession, and Lessor shall be
entitled to recover the same from Lessee on each such day.
(g) At any time after any such termination or repossession by reason of
the occurrence of an Event of Default, whether or not Lessor shall have
collected any current damages pursuant to paragraph l9(f), Lessor shall be
entitled to recover from Lessee, and Lessee will pay to Lessor on demand,
as and for liquidated and agreed final damages for Lessee's default and in
lieu of all current damages beyond the date of such demand (it being agreed
that it would be impracticable or extremely difficult to fix the actual
damages), an amount by which (a) the Basic Rent, additional rent and other
sums which would be payable under this Lease from the date of such demand
(or, if it be earlier, the date to which Lessee shall have satisfied in
full its obligations
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under paragraph l9(f) to pay current damages) for what would be the
then unexpired Term of this Lease in the absence of such termination or
repossession, discounted at the rate of 8% per annum over (b) the then fair
net rental value of the Leased Premises for the same period discounted at
the rate of 8% per annum. If any statute or rule of law shall validly limit
the amount of such liquidated final damages to less than the amount above
agreed upon, Lessor shall be entitled to the maximum amount allowable under
such statute or rule of law.
(h) Notwithstanding anything to the contrary stated herein, if an Event
of Default shall have happened and be continuing, whether or not Lessee
shall have abandoned the Leased Premises, Lessor may elect to continue this
Lease in effect for so long as Lessor does not terminate Lessee's rights to
possession of the Leased Premises and Lessor may enforce all of its rights
and remedies hereunder including without limitation the right to recover
all Basic Rent, additional rent and other sums payable hereunder as the
same become due.
20. Additional Rights of Lessor. (a) No right or remedy herein
conferred upon or reserved to Lessor is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given hereunder or
now or hereafter existing at law or in equity or by statute. The failure of
Lessor to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in
this Lease shall not be construed as a waiver or a relinquishment thereof
for the future. A receipt by Lessor of any Basic Rent, any additional rent
or any other sum payable hereunder with knowledge of the breach of any
covenant or agreement contained in this Lease shall not be deemed a waiver
of such breach, and no waiver by Lessor of any provision of this Lease
shall be deemed to have been
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made unless expressed in writing and signed by Lessor. In addition to
other remedies provided in this Lease, Lessor shall be entitled, to the
extent permitted by applicable law, to injunctive relief in case of the
violation, or attempted or threatened violation, of any of the covenants,
agreements, conditions or provision of this Lease, or to decree compelling
performance of any of the covenants, agreements, conditions or provisions
of this Lease, or to any other remedy allowed to Lessor at law or in
equity.
(b) To the extent it may lawfully do so, Lessee hereby waives and
surrenders for itself and all those claiming under it, including creditors
of all kinds, (i) any right and privilege which it or any of them may have
under any present or future constitution, statute or rule of law to redeem
the Leased Premises or to have a continuance of this Lease for the term
hereby demised after termination of Lessee's right of occupancy by order or
judgment of any court or by any legal process or writ, or under the terms
of this Lease or after the termination of the term of this Lease as herein
provided, and (ii) the benefits of any present or future constitution,
statute or rule of law which exempts property from liability for debt or
for distress for rent.
(c) In the event an action shall be brought for the enforcement of any
right hereunder, the party cast in judgment shall pay to the prevailing
party all the expenses incurred in connection therewith including
reasonable attorneys' fees.
21. Notices, Demands and Other Instruments. All notices, demands,
requests, consents, approvals and other instruments required or permitted
to be given pursuant to the terms of this Lease shall be in writing and
shall be deemed to have been properly given if (a) with respect to Lessee,
sent by certified or registered mail, postage prepaid, or sent by telegram
or delivered by hand, in each case addressed to Lessee at its address first
above
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set forth, and (b) with respect to Lessor, sent by certified or registered
mail, postage prepaid, or sent by telegram or delivered by hand in each case,
addressed to Lessor at its address first above set forth. Lessor and Lessee
shall each have the right from time to time to specify as its address for
purposes of this Lease any other address in the United States of America upon
giving 15 days' notice thereof, similarly given, to the other party.
22. Estoppel Certificates; Consents and Financial Statements. (a)
Lessee and Lessor will, at any time and from time to time, upon not less than
twenty days' prior request by the other party, execute, acknowledge and deliver
to the other party a Certificate, certifying that this Lease is unmodified and
in full effect (or setting forth any modifications and that this Lease is in
full effect as modified) and the dates to which the Basic Rent, additional rent
and other sums payable hereunder have been paid, and either stating that to the
knowledge of the signer of such certificate no default exists hereunder or
specifying each such default of which the signer may have knowledge; it being
intended, inter alia, that any such certificate may be relied upon by any
mortgagee or prospective purchaser or prospective mortgagee of the Leased
Premises.
(b) From time to time during the term of this Lease, Lessor expects
to secure financings of its interest in the Leased Premises by assigning
Lessor's interest in this Lease and the sums payable hereunder. In the event of
any such assignment to a Permitted Mortgagee, Lessee will, upon not less than
ten days' prior request by Lessor, execute, acknowledge and deliver to Lessor a
consent to such assignment addressed to such Permitted Mortgagee in a form
satisfactory to such Permitted Mortgagee; and Lessee will produce, at Lessee's
expense (but only with respect to the initial financing involving the
45
<PAGE>
interest in this Lease or in such leasehold estate as well as the fee estate in
the Leased Premises or any portion thereof.
24. Surrender. Upon the termination of this Lease, Lessee shall peaceably
surrender the Leased Premises to Lessor in the same condition in which they
were received from Lessor at the commencement of this Lease, except as altered
as permitted or required by this Lease and except for ordinary wear and tear.
Provided that Lessee is not in default hereunder, Lessee shall remove from the
Leased Premises prior to or within a reasonable time after (not to exceed
thirty days) such termination all property not owned by Lessor, and, at
Lessee's expense, shall, at such time of removal, repair any damage caused by
such removal. Property not so removed shall become the property of Lessor.
Lessor may thereafter cause such property to be removed from the Leased
Premises and disposed of. The cost of any such removal and disposition and the
cost of repairing any damage caused by such removal shall be borne by Lessee.
25. Separability. Each and every covenant and agreement contained in this
Lease is separate and independent, and the breach of any thereof by Lessor
shall not discharge or relieve Lessee from any obligation hereunder. If any
term or provision of this Lease or the application thereof to any person or
circumstances or at any time shall to any extent be invalid and unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances or at any time other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
26. Binding Effect. All of the covenants, conditions and obligations
contained in this Lease shall be binding upon and inure to the
47
<PAGE>
benefit of the respective successors and assigns of Lessor and Lessee to the
same extent as if each such successor and assign were in each case named as a
party to this Lease. This Lease may not be changed, modified or discharged
except by a writing signed by Lessor and Lessee.
27. Table of Contents, Headings. The table of contents and headings
used in this Lease are for convenient reference only and shall not to any
extent have the effect of modifying, amending or changing the provisions
of this Lease.
28. Governing Law. This Lease shall be governed by and interpreted
under the laws of the State of Indiana.
29. Certain Definitions.
(a) The term "Appraisal Procedure" means:
Lessee and Lessor shall each select an MAI appraiser. Such value
shall be determined by agreement of the full appraisals of such
two appraisers pursuant to the terms of this Lease; and if no
agreement can be reached by such two appraisers, such value shall
be determined by the full appraisal of a third MAI appraiser, who
shall be selected by the original two appraisers. All reasonable
and necessary costs of the appraisals shall be paid by Lessee.
(b) The term "Guarantor" means:
Lincoln National Corporation, an Indiana corporation.
(c) The term "Guaranty" means:
The Guaranty, dated the date hereof, from Guarantor to Lessor,
guaranteeing performance of Lessee's obligations under this Lease.
(d) The term "Impositions" means:
(i) all taxes, assessments (including assessments for benefits from
public works or improvements, whether or not begun or completed
prior to the commencement of the Term of this Lease and whether or
not to be completed within said Term), levies, fees, water and
sewer rents and charges, and all other governmental charges of
every kind, general and special, ordinary and extraordinary,
whether or not the same shall have
48
<PAGE>
been within the express contemplation of the parties hereto,
together with any interest and penalties thereon, which are, at
any time, imposed or levied upon or assessed against (A) the
Leased Premises or any part thereof, (B) any Basic Rent, any
additional rent reserved or payable hereunder or any other sums
payable by Lessee hereunder, (C) this Lease or the leasehold
estate hereby created or which arise in respect of the operation,
possession, occupancy or use of the Leased Premises:
(ii) any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the Basic Rent, additional rent or
any other sums payable by Lessee hereunder or levied upon or
assessed against the Leased Premises; including without limitation
[reference to Indiana gross receipts tax];
(iii) all sales and use taxes which may be levied or assessed against
or payable by Lessor or Lessee on account of the acquisition,
leasing or use of the Leased Premises or any portion thereof;
and
(iv) all charges for water, gas, light, heat, telephone,
electricity, power and other utilities and communications services
rendered or used on or about the Leased Premises.
(e) The term "Junior Permitted Mortgagees" means American States
Insurance Company, as mortgagee under a mortgage, dated as of the date hereof,
from Lessor, as mortgagor, and its assigns; and Dean Witter Realty Inc., as
mortgagee under a mortgage dated as of the date hereof, from Lessor, as
mortgagor, and its assigns.
(f) The term "this Lease" means:
this Lease and Agreement as amended and modified from time to
time, together with any memorandum or short form of lease entered
into for the purpose of recording.
(g) The term "Lessee's Certificate" means:
a written certificate signed by the Chairman of the Board, the
President or any Vice President of Lessee.
(h) The term "Lessor's Cost" means Lessor's Cost from time to time as
set forth in Schedule C.
49
<PAGE>
(i) The term "Other Guaranties" means:
the Guaranties, dated as of the date hereof, from Guarantor to
Lessor guaranteeing performance of the obligations of Lincoln
National Pension Insurance Company, as lessee, under a Lease and
Agreement, dated as of the date hereof, and the Guaranty, dated as
of the date hereof, from Guarantor to Lessor guaranteeing
performance of the obligations of American States Insurance
Company, as lessee, under a Lease and Agreement, dated as of the
date hereof.
(j) The term "Permitted Mortgage" means:
any mortgage, deed of trust, security agreement, assignment of
lease or other security instrument relating to the Leased Premises
and this Lease, subject to the rights of lessee under this Lease,
and securing the borrowing by Lessor from Clinton Holding
Corporation, a Delaware corporation (the Senior Permitted
Mortgage), made at the time of execution of this Lease, or any
refinancing thereof, or the mortgages to the Junior Permitted
Mortgagees (the Subordinated Permitted Mortgage).
(k) The term "Permitted Mortgagee" means the Senior Permitted
Mortgagee and the Junior Permitted Mortgagees.
(l) The term "Purchase Offer" means:
an offer delivered by Lessee to Lessor, executed by the
president or any vice president of Lessee, irrevocably offering to
purchase the Leased Premises pursuant to the provisions of
paragraphs 12 or 14 on any Termination Date specified in such Offer
at a price determined in accordance with Schedule C.
(m) The term "Senior Permitted Mortgagee" means The Connecticut Bank
and Trust Company, National Association and F. W. Kawam, as
trustees, as assignees of Clinton Holding Corporation, and their
successors and assigns.
(n) The term "Termination Date" means:
any Basic Rent Payment Date.
30. Lessee's Options; Right of First Refusal. (a) If no event of
default hereunder has occurred and is continuing, Lessee shall have the option
to purchase the Leased Premises either (x) on the last day of the Primary Term
50
<PAGE>
or (y) on the last day of the first, second, third, fourth, fifth and sixth
Extended Terms if the Lease has been extended to any such date (any of such
dates for purchase being referred to as the Purchase Date), upon not less than
360 days prior written notice to Lessor of its intention to exercise such
option. The purchase price payable upon the exercise of such option shall be
the fair market value of the Leased Premises as of the Purchase Date, taking
into consideration Lessee's continuing rights and obligations under this Lease
assuming Lessee shall have extended the Lease for all Extended Terms, minus the
enhancement of the fair market value of the Leased Premises due to the
existence of Lessee's Improvements and that portion of the Improvements, if
any, constructed by Lessee at its own expense and for which Lessee has not been
reimbursed pursuant to paragraph 15. If Lessee and Lessor cannot agree as to
such fair market value, such fair market value shall be determined in
accordance with the Appraisal Procedure. Such Appraisal Procedure shall be
completed within 150 days after Lessee's notice as set forth above. Lessee's
option shall be exercisable by giving notice of such exercise to Lessor not
less than 360 days prior to the Purchase Date. On the Purchase Date, Lessor
shall convey the Leased Premises to Lessee pursuant to and upon compliance with
paragraph 16. The foregoing option is personal to Lessee, and such option is
not assignable (except by Lessee to any of its affiliates) notwithstanding any
assignment of the Lease to any other person.
(b) If, at any time during the Primary Term or any Extended Term of
this Lease, Lessor shall receive and be willing to accept a bona fide offer
from a third party to purchase Lessor's interest in the Leased Premises, other
than an offer to purchase such interest at any sale incidental to foreclosure
or other similar proceedings, or if Lessor shall offer to sell its interest in
the Leased Premises to any third party, Lessor shall promptly transmit to
51
<PAGE>
Lessee its written offer to sell such interest to Lessee upon the same terms
and conditions as are set forth in the third party offer or its offer to a
third party, as the case may be, together with a true copy of such offer
(containing the name and address of such third party); provided, however, that
Lessor's offer to Lessee shall be reduced by the enhancement of the fair market
value of the Leased Premises due to the existence of Lessee's Improvements and
that portion of the Improvements, if any, constructed by Lessee at its own
expense and for which Lessee has not been reimbursed pursuant to paragraph 15,
as determined by the Appraisal Procedure. Lessee shall have 30 business days
within which to accept such offer. If Lessee shall accept such offer by written
notice to Lessor within such time, such offer and acceptance shall constitute a
contract between them for the sale by Lessor and the purchase by Lessee of the
Leased Premises, and shall not thereafter be subject to rejection by either
party. On the date of such purchase, Lessor shall convey and assign the Leased
Premises to Lessee, provided that such conveyance and assignment shall be made
subject to the Permitted Exceptions listed in Schedule A hereto, to this Lease,
and to such liens, encumbrances, charges, exceptions and restrictions affecting
the Leased Premises as such third party is willing to accept in such offer, and
provided further that this Lease and any Permitted Mortgage shall continue in
full force and effect. If the offer to sell is not so accepted by Lessee, then
Lessor may sell the Leased Premises to such third party purchaser upon the
terms contained in such original offer by or to such third party and such sale
and transfer must be consummated within 180 days following the expiration of
the time hereinabove provided for the acceptance by Lessee. If the Leased
Premises is sold to a third party, the sale shall be subject to this Lease and
52
<PAGE>
all of the provisions hereof, including, without limitation, all options
granted to Lessee.
31. Schedules. The following are Schedules A, B and C referred to in
this Lease, which are hereby made a part hereof.
53
<PAGE>
SCHEDULE A
TO LEASE
Part 1: Property Description
Part 2: Property subject to the option set forth in paragraph 15(d).
The Lease will include a legal description of certain specific portions
of the Leased Premises which are to be subject to the paragraph 15(d) option.
The amount of indebtedness to be prepaid pursuant to the Senior Permitted
Mortgage in connection with the exercise of such option will be the greater of
(a) the amount herein set forth as the cost attributable to such portion of the
Leased Premises or (b) the fair market value of such portion as determined
pursuant to paragraph 15(c). Such property and amounts will be as follows:
Indianapolis: unimproved land - $1,000,000
<PAGE>
Exhibit A
Indianapolis, Indiana
American States Insurance Company
Parcel I:
Lots Numbered 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 20 and 21 in
Isaac Coe's Subdivision of Square Six (6) of the Donation Lands of the City of
Indianapolis, as per plat thereof recorded in Plat Book 1, page 121, in the
Office of the Recorder of Marion County, Indiana. Also, vacated Superior Street
from the North line of Michigan Street to the South line of North Street, being
adjacent to said Lots 1 thru 8, 9 and 21. Also, vacated Pierson Street from the
North line of Michigan Street to the South line of the First East-West alley
North of Michigan Street, being adjacent to said Lots 10 and 11 thru 15. Also,
part of the first alley, heretofore vacated, North of Michigan Street from the
West line of Meridian Street to the East line of Pierson Street, being adjacent
to said Lots 4, 5, 9, 10, 20 and 21.
Parcel II:
Lots Numbered 5, 6 and 7 in George W. Miller's Resubdivision of Coe's
Subdivision of Square Seven (7) of the Donation Lands of the City of
Indianapolis, as per plat thereof recorded in Plat Book 2, page 50, in the
Office of the Recorder of Marion County, Indiana.
Also, Lots Numbered 1, 2, 3, 4 and 20 in Isaac Coe's Subdivision of Square
Seven (7) of the Donation Lands of the City of Indianapolis, as per plat
thereof recorded in Plat Book 1, page 139, in the Office of the Recorder of
Marion County, Indiana. Also, part of the first alley, heretofore vacated,
North of Michigan Street from the West line of Illinois Street to the East line
of Muskingham Street, being between and adjacent to said Lots 3 and 4.
Parcel III:
Part of Illinois Street in the City of Indianapolis, Marion County, Indiana,
vacated by Declaratory Resolution 80-VAC-33 on December 10, 1980 and recorded
January 6, 1981 as Instrument No. 81-637 in the Office of the Recorder of
Marion County, Indiana, to-wit:
That portion of Illinois Street extending upward from approximately Seventeen
(17) feet above the pavement surface a distance of approximately Thirteen (13)
feet, the horizontal location being described as follows:
Beginning at a point on the West right-of-way line of North Illinois Street
222.0 feet South from the South right-of-way line of West North Street; thence
South along said West right-of-way line of North Illinois Street nine (9.0)
feet; thence East at right angles to said West line 90.00 feet to a point on
the East right-of-way line of North Illinois Street; thence North along said
East line nine (9.0) feet; thence West 90.00 feet to the place of beginning.
<PAGE>
SCHEDULE B
TO LEASE
Basic Rent Payments
1. The instalments of Basic Rent payable for the Leased Premises
during the Interim Term shall be: $13,336.50 per diem (based on a 360-day
year of 12 30-day months), payable on August 31, 1984.
2. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term ending on and including August 31,
1989 shall be $1,382,818 and shall be payable semi-annually in arrears
commencing on February 28, 1985 and thereafter on the last day of each August
and February thereafter to and including August 31, 1989.
3. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1989 and
ending on and including August 31, 1994 shall be $3,143,607 and shall be
payable semi-annually in arrears commencing on February 28, 1990 and
thereafter on the last day of each August and February thereafter to and
including August 31, 1994.
4. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1994 and
ending on and including August 31, 1999 shall be $3,198,376 and shall be
payable semi-annually in arrears commencing on February 28, 1995 and
thereafter on the last day of each August and February thereafter, to and
including August 31, 1999.
5. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1999 and
ending on and including August 31, 2004 shall be $4,881,238 and shall be
<PAGE>
payable semi-annually in arrears commencing on February 29, 2000 and
thereafter on the last day of each August and February thereafter, to and
including August 31, 2004.
6. Each instalment of Basic Rent payable for the Lease to Premises
during that portion of the Primary Term commencing on September 1, 2004 and
ending on and including August 31, 2009 shall be $5,171,650 and should be
payable semi-annually in arrears commencing on February 28, 2005 and
thereafter on the last day of each August and February thereafter to and
including August 31, 2009.
7. Each instalment of Basic Rent for the Leased Premises during the
Extended Terms shall be $2,350,000, and shall be payable semi-annually in
arrears commencing on February 28, 2010 and thereafter on the last day of each
August and February thereafter occurring during the Extended Terms.
If any instalment of Basic Rent shall be payable on a date which
shall not be a business day, then such instalment shall be payable on the
first business day thereafter.
<PAGE>
SCHEDULE C
TO LEASE
COMPUTATION OF PURCHASE PRICES
Upon the purchase of the Leased Premises during the Interim or
Primary Terms pursuant to paragraphs 12(b) or 14(c), the purchase price
payable shall be an amount equal to the amount set forth in column 2 below
opposite the period in which such purchase occurs (the first such amount being
called "Lessor's Cost") (period 1 being the period beginning on the first day
of the Interim Term and ending on and including February 28, 1985, period 2
being the period beginning on March 1, 1985 and ending on and including August
31, 1985, and each succeeding period being the following semiannual period to
and including period 50).
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
Purchase Period Applicable Amount
--------------- -----------------
<S> <C>
1 $49,842,674
2 52,242,603
3 54,132,640
4 56,175,241
5 58,060,719
6 60,046,898
7 61,029,393
8 63,853,382
9 65,734,720
10 67,641,003
11 68,854,073
12 69,027,568
13 69,126,865
14 69,155,036
15 69,185,815
16 69,238,321
17 69,313,908
18 69,414,030
19 69,540,256
20 69,694,271
21 69,823,124
22 69,973,826
23 70,147,359
</TABLE>
<PAGE>
<TABLE>
<S> <C>
24 70,344,760
25 70,567,123
26 70,815,600
27 71,091,410
28 71,395,839
29 71,730,247
30 72,096,071
31 70,692,776
32 69,215,218
33 67,657,828
34 66,014,617
35 64,279,150
36 62,444,507
37 60,503,251
38 58,447,384
39 56,268,312
40 53,956,793
41 51,114,613
42 48,104,718
43 44,915,074
44 41,532,767
45 37,943,935
46 34,133,700
47 30,086,089
48 25,783,956
49 21,208,894
50 16,341,141
</TABLE>
<PAGE>
Upon a partial prepayment of the indebtedness secured by the Senior
Permitted Mortgage referred to in paragraph 12(c), 14(b) or l5(e) of this
Lease, the amounts set forth above shall be reduced by an amount equal to the
amount of the reduction of the principal amount of such indebtedness scheduled
to be outstanding during each purchase period, after giving effect to the
revised amortization thereof resulting from such partial prepayment in
accordance with the terms thereof. (In case such indebtedness is prepaid or
otherwise refinanced, the amounts so determined shall be reduced as if such
indebtedness had remained outstanding.)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
signed as of the date first above written.
CLINTON STREET LIMITED PARTNERSHIP,
as Lessor
By: Liberty Street Limited Partnership - 84,
A General Partner
By: E. DAVISSON HARDMAN, JR.,
---------------------------
E. Davisson Hardman, Jr.,
A General Partner
AMERICAN STATES INSURANCE COMPANY,
as Lessee
By: P. ERNEST BARTHEL
---------------------
NAME: P. Ernest Barthel
TITLE: Treasurer
This document prepared by:
CSAPLAR & BOK
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
Property Location: Indianapolis, Indiana
ASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON STREET LIMITED PARTNERSHIP
To
CLINTON HOLDING CORPORATION
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
ASSIGNMENT OF LEASES AND GUARANTY, dated as of August 1, 1984,
(herein, together with all supplements and amendments hereto, called this
Agreement), from CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership (herein called Owner), having an address c/o Dean Witter Realty
Inc., 130 Liberty Street, New York, New York 10006, to CLINTON HOLDING
CORPORATION, a Delaware corporation, herein, together with its respective
successors and assigns, called Assignee) having an address c/o Dean Witter
Realty Inc., 130 Liberty Street, New York, New York 10006.
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule A hereto (the Land Parcel) and in
the improvements located (the Land Parcel, together with the improvements
located thereon being collectively called the Schedule A Property), Assignor,
simultaneously with the execution and delivery hereof, is borrowing from
Assignee the amount of $33,102,310, such borrowing being evidenced by its (i)
Series A 13.90% Secured Note Due September 1, 1989, in the original principal
amount of $1,320,132 (herein, together with any notes issued in exchange or
replacement thereof, called the Series A Owner's Note), (ii) Series B 14.30%
Secured Note Due September 1, 1994, in the original principal amount of
$12,376,237 (herein, together with any notes issued in exchange or replacement
therefor, called the Series B Owner's Note), (iii) Series C 14.60% Secured
Note Due September 1, 1999, in the original principal amount of $11,485,149
(herein, together with any notes issued in exchange or replacement thereof,
called the Series C Note), (iv) Series D 14.70% Secured Note Due September 1,
1999 in the original principal amount of $5,610,561 (herein, together with any
notes issued in exchange or replacement therefor, called the Series D Owner's
Note), and (v) Series E 15.00% Secured Note Due September 1, 1999 in the
original principal amount of $2,310,231 (herein, together with any notes
<PAGE>
issued in exchange or replacement therefor, called the Series E 0wner's Note;
the Series E Owner's Note, together with the Series A Owner's Note, the Series
B Owner's Note, the Series C Owner's Note and the Series D Owner's Note, are
herein collectively called the Owner's Notes).
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule B hereto and in the improvements
located thereon (the Schedule B Property), Assignor, simultaneously with the
execution and delivery hereof, is borrowing from Assignee the amount of
$16,551,155, such borrowing being evidenced by its (i) Series A 13.90% Secured
Note Due September 1, 1989, in the original principal amount of $660,066, (ii)
Series B 14.30% Secured Note Due September 1, 1994, in the original principal
amount of $6,188,119, (iii) Series C 14.60% Secured Note Due September 1,
1999, in the original principal amount of $5,742,574, (iv) Series D 14.70%
Secured Note Due September 1, 1999 in the original principal amount of
$2,805,280 and (v) Series E 15.00% Secured Note Due September 1, 1999 in the
original principal amount of $1,155,116.
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule C hereto and in the improvements
located (the Schedule C Property), Assignor, simultaneously with the execution
and delivery hereof, is borrowing from Assignee the amount of $50,646,535,
such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due
September l, 1989, in the original principal amount of $2,019,802, (ii) Series
B 14.30% Secured Note Due September 1, 1994, in the original principal amount
of $18,935,644, (iii) Series C 14.60% Secured Note Due September l, 1999, in
the original principal amount of $17,572,277, (iv) Series D 14.70% Secured
Note Due September 1, 1999 in the original principal amount of $8,584,159 and
2
<PAGE>
(v) Series E 15.00% Secured Note Due September l, 1999 in the original
principal amount of $3,534,653.
The Secured Notes of the Owner relating to the Schedule B Property
and Schedule C Property are collectively called the Other Owner's Notes, and
the Schedule A Property together with the Schedule B Property and the Schedule
C Property are collectively called the Properties and individually called a
Property.
The Owner's Notes and the Other Owner's Notes are secured by three
separate Mortgages, each dated as of the date hereof (the Mortgage relating to
the Schedule A Property called the Mortgage and all three Mortgages
collectively called the Mortgages), from Owner, as mortgagor, to Assignee, as
mortgagee, which each creates a lien on a Property. As additional security
for the Owner's Notes and the Other Owner's Notes, Owner is entering into the
undertakings herein set forth. The Schedule A Property has been leased by
Owner to The American States Insurance Company (the Lessee) under a Lease and
Agreement, dated as of the date hereof (herein, together with all supplements
and amendments thereto, and any memorandum or short form thereof entered into
for the purpose of recording, called the Lease), between Owner, as lessor, and
the Lessee, as lessee. The obligations of the Lessee under the Lease and
hereunder has been guaranteed by Lincoln National Corporation (the Guarantor)
pursuant to a Guaranty dated as of the date hereof (the Guaranty). In order
to induce Assignee to purchase the Owner's Notes and the Other Owner s Notes
and accept the Mortgages, Owner is entering into the undertakings herein set
forth with Assignee and is assigning the Lease and the Guaranty to Assignee.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, Owner
agrees as follows:
3
<PAGE>
1. Owner, in furtherance of the covenants of the Mortgages and as
security for the payment of the principal of, premium, if any, and interest and
all other sums payable on the Owner's Notes and the Other Owner's Notes, and of
all other sums payable under the Mortgages, and the performance and observance
of the provisions thereof, has assigned, transferred, conveyed and set over,
and by these presents does assign, transfer, convey and set over to Assignee,
all of Owner's estate, right, title and interest in, to and under the Lease,
and the Guaranty together with all rights, powers, privileges, options and
other benefits of Owner as lessor under the Lease and as beneficiary under the
Guaranty including, but not by way of limitation, (i) the immediate and
continuing right to receive and collect all rents, income, revenues, issues,
profits, insurance proceeds, condemnation awards, moneys and security payable
or receivable under the Lease or the Guaranty pursuant to any of the provisions
of either thereof, whether as rents or as the purchase price of the Schedule A
Property or otherwise (except sums payable directly to any person other than
the lessor under the Lease), (ii) the right to accept any offer by Lessee to
purchase the Schedule A Property, or part thereof, or any award payable in
connection with a taking thereof (provided that such acceptance shall be
permitted by the terms of Section 3.1(a) of the Mortgages), (iii) the right and
power (which right and power are coupled with an interest) to execute and
deliver, as agent and attorney-in-fact of Owner, an appropriate deed or other
instrument necessary to convey the Schedule A Property, any part thereof or any
award payable in connection with a taking thereof to Lessee if Lessee becomes
obligated to purchase the Schedule A Property, any part thereof or any award
payable in connection with a taking thereof, (iv) the right to perform all
other necessary or appropriate acts as said agent and attorney-in-fact with
respect to any purchase and conveyance
4
<PAGE>
referred to in clause (iii) above, (v) the right to make all waivers and
agreements, (vi) the right to give all notices, consents and releases,
(vii) the right to take any legal action upon the happening of a default under
the Lease or the Guaranty including the commencement, conduct and consummation
of proceedings at law or in equity as shall be permitted under any provision of
the Lease or the Guaranty or by law or in equity and (viii) the right to do any
and all other things whatsoever which Owner or any lessor is or may be entitled
to do under the Lease or the Guaranty.
2. The assignment made hereby is executed as collateral security,
and the execution and delivery hereof shall not in any way impair or diminish
the obligations of Owner under the provisions of the Lease nor shall any of
the obligations contained in the Lease be imposed upon Assignee. Upon a
release of the Schedule A Property or part thereof from the lien of the
Mortgage, pursuant to the provisions of the Mortgage, said assignment, and all
rights herein assigned to Assignee shall cease and terminate and all the
estate, right, title and interest of Owner in and to the above-described
assigned property shall revert to Owner, and Assignee shall, at the request of
Owner, deliver to Owner an instrument in recordable form cancelling this
Agreement and reassigning to Owner the above-described assigned property.
Upon the payment of the principal of and premium, if any, and all accrued
interest on the Owner's Notes and the Other Owner's Notes and of all other
sums payable under the Mortgages, or upon a release of all of the Property
from the lien of the Mortgage pursuant to the provisions of the Mortgage, said
assignment and all rights herein assigned to Assignee shall cease and
terminate and all the estate, right, title and interest of Owner in and to the
above-described assigned property shall revert to Owner, and Assignee shall,
at the request of Owner, deliver to Owner an instrument in recordable form
5
<PAGE>
cancelling this Agreement and reassigning to Owner the above-described
assigned property.
3. Owner hereby designates Assignee to receive all payments of Basic
Rent, purchase prices and other sums payable to the lessor under the Lease and
all payments receivable by Owner under the Guaranty and to receive duplicate
original copies of all notices, undertakings, demands, statements, documents
and other communications which the Guarantor is required or permitted to give,
make, deliver to or serve upon assignor under the Guaranty and which the
Lessee is required or permitted to give, make, deliver to or serve upon the
lessor under the Lease. Owner hereby directs the Lessee to deliver to
Assignee, at its address set forth above or at such other address as Assignee
shall designate, duplicate original copies of all such notices, undertakings,
demands, statements, documents and other communications and no delivery
thereof by the Lessee shall be of any force or effect unless made to Owner and
also made to Assignee as herein provided.
4. Owner represents to Assignee that Owner has not executed any
other assignment of the subject matter of this Assignment other than the
Mortgage and that the Lease is in full effect and are not in default.
5. Owner agrees that said assignment and the designation and
direction to the Lessee hereinabove set forth are irrevocable, and that it
will not take any action as lessor under the Lease or as the beneficiary under
the Guaranty which is inconsistent with said assignment, or make any other
assignment, designation or direction inconsistent therewith, and that any
assignment, designation or direction inconsistent therewith shall be void.
Owner will, from time to time upon the request of Assignee execute all
instruments of further assurance and all such supplemental instruments with
respect to this Agreement as the Assignee may specify.
6
<PAGE>
6. Owner hereby agrees, and hereby undertakes to obtain the
agreements of the Lessee to the following matters:
(a) The Lessee consents to the provisions of this Agreement, and
agrees to pay and deliver to Assignee all rentals and other sums assigned to
Assignee pursuant to this Agreement, without offset, deduction, defense,
deferment, abatement or diminution, subject to the provisions of the Lease and
will not, for any reason whatsoever, seek to recover from Assignee any moneys
duly owed and paid to the Assignee by virtue of this Agreement. The Lessee
agrees (i) that all sums payable to Assignee pursuant to the preceding
sentence shall be paid in such manner that Assignee shall have "collected
funds" on each date on which such sums are due and payable, and addressed to
Assignee at its address set forth above or to such other address or manner as
may be specified by Assignee by written notice to the Lessee and (ii) to
deliver to Assignee duplicate original copies of all notices and other
instruments which each may deliver pursuant to the Lease. No such payment or
delivery made by a Lessee shall be of any force or effect (i) unless paid to
Assignee or delivered to Assignee and Owner as provided above and (ii) until
actually received by the Assignee.
(b) Owner and the Lessee will not enter into any agreement
subordinating, amending, modifying or terminating (except as provided in the
Lease) the Lease without the consent thereto in writing of Assignee and any
such attempted subordination, amendment, modification or termination without
such consent shall be void. In the event that the Lease shall be amended as
herein permitted, the Lease as so amended shall continue to be subject to the
provisions of this Agreement without the necessity of any further act by any
of the parties hereto. The Lessee will remain obligated under the Lease in
accordance with its terms, and will not take any action to terminate (except
7
<PAGE>
as expressly permitted by the Lease), rescind or avoid the Lease,
notwithstanding any action with respect to the Lease which may be taken by an
assignee or receiver of Owner or of any such assignee or by any court in any
such proceeding.
(c) If, pursuant to the Lease, Lessee shall offer to purchase the
Schedule A Property (or any part thereof or any award payable in connection
with a taking thereof), notice of acceptance of any such offer shall be deemed
validly given for all purposes if given by Assignee as permitted by paragraph
1(ii) hereof and notice by Owner of rejection of any such offer shall be void
unless accompanied by the written consent of Assignee and no such offer shall
be deemed rejected by Owner without the written consent of Assignee. If
Lessee shall become obligated to purchase the Schedule A Property (or any part
thereof or any award payable in connection with a taking thereof) pursuant to
any provision of the Lease, Lessee will accept a deed and other instruments
conveying and transferring the Schedule A Property (or any part thereof) which
are executed and delivered by Assignee as being in compliance with the
provisions of the Lease, provided that said deed and other instruments shall
otherwise be in compliance with the provisions of the Lease. If it should
become necessary for Assignee or any other party to institute any foreclosure
or other judicial proceeding in order that title to the Schedule A Property
(or any part thereof or any award payable in connection with a taking thereof)
may be conveyed to Lessee, the time within which delivery of the deed or other
instruments relating to such conveyance may be made shall be extended to the
extent necessary to permit Assignee or such other party to institute and
conclude such foreclosure or other judicial proceeding, and the Lease shall
not terminate, but shall continue in full effect until the expiration of such
period of extension.
8
<PAGE>
7. This Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their respective successors and assigns. This
Agreement may be executed in two or more counterparts and shall be deemed
to have become effective when and only when one or more of such counterparts
shall have been signed by or on behalf of each of the parties hereto, although
it shall not be necessary that any single counterpart be signed by or on
behalf of each of the parties hereto, and all such counterparts shall be
deemed to constitute but one and the same instrument. This Agreement shall be
governed by the laws of the State of Indiana.
8. The following are Schedules A, Schedule B and Schedule C referred
to in this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, Owner has caused this Agreement to be executed
and delivered as of the date first above written.
CLINTON STREET LIMITED PARTNERSHIP
By: Liberty Street Limited
Partnership-84,
General Partner,
Witness: ALEXANDER J. JORDAN, JR. By: E. DAVISSON HARDMAN
---------------------
E. Davisson Hardman,
a General Partner
<PAGE>
AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing
Assignment of Lease and Guaranty and hereby accepts and agrees to each of the
provisions set forth in paragraph 6 thereof.
AMERICAN STATES INSURANCE COMPANY
(SEAL)
Attest: By: F. ERNEST BARTHEL
---------------------
By: THOMAS M. OBER NAME: F. Ernest Barthel
---------------------
NAME: Thomas M. Ober TITLE: Treasurer
TITLE: Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Assignment of Lease and Guaranty and hereby accepts and agrees to each of the
provisions set forth in paragraph 6 thereof.
LINCOLN NATIONAL CORPORATION
(SEAL)
By:
Attest: -----------------------
NAME:
By:
-------------------- TITLE:
NAME:
TITLE:
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing
Assignment of Lease and Guaranty and hereby accepts and agrees to each of the
provisions set forth in paragraph 6 thereof.
AMERICAN STATES INSURANCE COMPANY
(SEAL)
Attest: By:
------------------------------
By: NAME:
--------------------------
NAME: TITLE:
TITLE:
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Assignment of Lease and Guaranty and hereby accepts and agrees to each of the
provisions set forth in paragraph 6 thereof.
LINCOLN NATIONAL CORPORATION
(SEAL)
By: MAC A. ROESLER
Attest: -------------------------
NAME: Max A. Roesler
By: PATRICIA A. ADAMS TITLE: Vice President
------------------------
NAME: Patricia A. Adams
TITLE: Assistant Secretary
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this ___ day of August,
A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL
CORPORATION, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned.
CAROL ANN JOHNSTON
---------------------------------
(SEAL) Carol Ann Johnston, Notary Public
My commission expires:
CAROL A. JOHNSTON
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, 1988
<PAGE>
STATE OF INDIANA)
) SS:
COUNTY OF MARION)
Before me, the undersigned, a Notary Public in and for
said County and State, this ________ day of August, 1984, personally
appeared F. Ernest Barthel and Thomas M. Ober, each of whom
acknowledged the execution of the foregoing instrument.
(SEAL)
My commission expires:
VERA IONE KINNEY
MY COMMISSION EXPIRES APRIL 19, 1987
(HENDRICKS COUNTY)
VERA IONE KINNEY
NOTARY PUBLIC
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and
State, personally appeared E. Davisson Hardman, Jr., a general
partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts
limited partnership, which is the general partner of CLINTON
STREET LIMITED PARTNERSHIP, an Indiana limited partnership and
acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of
LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner
acting on behalf of CLINTON STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 28th day of
August, 1984.
Signature JOAN E. HOGAN
------------------------
Printed JOAN E. HOGAN
------------------------
NOTARY PUBLIC
My commission expires:
10-31-86
- ----------------------
<PAGE>
Property Location: Indianapolis, Indiana
REASSIGMMENT OF LEASE AND GUARANTY
From
CLINTON HOLDING CORPORATION
To
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
and
F. W. KAWAM,
as Trustees
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
REASSIGNMENT OF LEASE AND GUARANTY, dated as of August 1, 1984, from
CLINTON HOLDING CORPORATION, a Delaware corporation (herein, together with its
successors and assigns, called the Company) having an address c/o Dean Witter
Realty Inc., 130 Liberty Street, New York, New York 10006, to THE CONNECTICUT
BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an
address at One Constitution Plaza, Hartford, Connecticut 06115, as trustees
(the Trustees) under the Collateral Trust Indenture (the Indenture), dated as
of August 1, 1984, from the Company, as grantor, to the Trustees, as trustees
(the Trustees, together with their successors and assigns, are herein called
the Assignee).
PRELIMINARY STATEMENT
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
(Owner), has entered into a Lease and Agreement, dated as of August 1, 1984
(herein, together with all amendments and supplements thereto and any short
form thereof entered into for purposes of recording, called the Lease), with
American States Insurance Company, an Indiana corporation, as lessee
(Lessee). The obligations of Lessee under the Lease has been guaranteed by
Lincoln National Corporation (Guarantor) pursuant to a guaranty, dated as of
August 1, 1984, from Guarantor to Owner (the Guaranty). The premises leased
pursuant to the Lease consist of the land parcel described in Schedule A
hereto (the Land Parcel), all buildings and other improvements located
thereon, and all easements, rights and appurtenances relating respectively
thereto (collectively, the Property). All right, title and interest of Owner
in and to the Lease and the Guaranty have been assigned to the Company
pursuant to (i) the mortgage, dated as of the date hereof, relating to the
Property (the Mortgage), from Owner, as mortgagor, to the Company, as
<PAGE>
mortgagee, and (ii) an Assignment of Lease and Guaranty, dated as of the date
hereof, relating to the Lease and the Guaranty (herein, together with all
supplements and amendments thereto, collectively called the Assignment), from
Owner, as assignor, to the Company, as assignee, as security for the (i)
Series A 13.90% Secured Notes Due September 1, 1989, in the original principal
amount of $4,000,000, (ii) Series B 14.30% Secured Notes Due September 1,
1994, in the original principal amount of $37,500,000, (iii) Series C 14.60%
Secured Notes Due September l, 1999, in the original principal amount of
$34,800,000, (iv) Series D 14.70% Secured Notes Due September l, 1999, in the
original principal amount of $17,000,000, and (v) Series E 15.00% Secured
Notes Due September 1, 1999, in the original principal amount of $7,000,000 of
Owner.
NOW, THEREFORE, in consideration of the premises and the sum of One
Dollar ($1) and other valuable consideration, receipt whereof is hereby
acknowledged, and in order to secure (i) the due and punctual payment of the
Series A 13.90% Collateral Trust Notes Due September l, 1999, the Series B
14.30% Collateral Trust Notes Due September l, 1994, the Series C 14.60%
Collateral Trust Notes Due September 1, 1999, the Series D 14.70% Collateral
Trust Notes Due September 1, l999 and the Series E 15.00% Collateral Trust
Notes Due September 1, 1999 of the Company, issued by the Company under and
secured by the Indenture and (ii) the performance of the Company's obligations
under the Indenture, the Company has assigned, transferred, conveyed and set
over, and by these presents does hereby assign, transfer, convey and set over,
to the Assignee, all of its rights, title and interest in and to the Lease,
the Guaranty and the Assignment; all without recourse to the Company.
The following is the Schedule A referred to in this Reassignment of
Lease and Guaranty, which Schedule is hereby incorporated by reference herein.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Reassignment of Lease
and Guaranty to be executed and its corporate seal to be hereunto affixed and
attested by its officers thereunto duly authorized, as of the date first above
written.
CLINTON HOLDING CORPORATION
By: E. DAVISSON HARDMAN, JR.
-------------------------------
NAME: E. Davisson Hardman, Jr.
(SEAL) TITLE: President
Attest:
By: ALEXANDER J. JORDAN, JR.
--------------------------------
NAME: Alexander J. Jordan, Jr.
TITLE: Secretary
AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing
Reassignment of Lease and Guaranty.
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
-------------------------
NAME: F. Ernest Barthel
(SEAL) TITLE: Treasurer
Attest:
By: THOMAS M. OBER
-------------------------
NAME: Thomas M. Ober
TITLE: Secretary
<PAGE>
LINCOLN NATIONAL CORPORATION, hereby consents to the foregoing
Reassignment of Lease and Guaranty.
LINCOLN NATIONAL CORPORATION
By: MAX A. ROESLER
--------------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest
By: PATRICIA A. ADAMS
-------------------------------
Name: Patricia A. Adams
Title: Assistant Secretary
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
STATE OF INDIANA)
) SS :
COUNTY OF MARION)
Before me, the undersigned, a Notary Public in and for
said County and State, this ___________ day of August, 1984, personally
appeared F. Ernest Barthel and Thomas M. Ober, each of whom
acknowledged the execution of the foregoing instrument.
(SEAL) VERA IONE KINNEY
---------------------
NOTARY PUBLIC
My commission expires:
VERA IONE KINNEY
MY COMMISSION EXPIRES APRIL 19, 1987
(HENDRICKS COUNTY)
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this
day of August, A.D., 1984, personally appeared Max A. Roesler and
Patricia A. Adams, as Vice President and Assistant Secretary,
respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and
acknowledged the execution of the foregoing instrument as their
free and voluntary act and deed and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein
mentioned.
(SEAL) CAROL ANN JOHNSTON,
---------------------------------
Carol Ann Johnston, Notary Public
My Commission Expires:
CAROL A. JOHNSTON
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, 1988
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and
State, personally appeared E. Davisson Hardman, Jr. and Alexander J.
Jordan Jr., the President and Secretary, respectively, of CLINTON
HOLDING CORPORATION, a corporation organized and existing under
the laws of the State of Delaware, and acknowledged the execution
of the foregoing instrument as such officers acting for and on
behalf of said corporation.
Witness my hand and Notarial Seal this 28th day of
August, 1984.
Signature JOAN E. HOGAN
-----------------
Printed Joan E. Hogan
-----------------
NOTARY PUBLIC
My commission expires:
10-31-86
- ---------------------
<PAGE>
Re: Assignment of Lease and Guaranty
Second Assignment of Lease and
Guaranty
("Indianapolis" site)
850105433
CORRECTION AGREEMENT
THIS AGREEMENT, made this 7th day of November, 1985, by and between:
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having an
address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York,
10006, and CLINTON HOLDING CORPORATION, a Delaware corporation, having an
address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York
10006,
WITNESSETH:
WHEREAS, the parties to this agreement are parties to one or more
instruments, all dated as of August 1, 1984, relating to the leasing by
American States Insurance Company of a certain parcel of land located in
Indianapolis, Marion County, Indiana ("Indianapolis" site) which aforementioned
instruments are as follows:
1. Assignment of Lease and Guaranty
Recorded as Instrument No. 840068010
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: American States Insurance Company
and
Lincoln National Corporation
2. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 8400680l5
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: American States Insurance Company
and
Lincoln National Corporation
WHEREAS, the aforesaid instruments, in addition to the legal
description of the Indianapolis site, make reference by Schedules B and C, in
connection with certain financings, to land located in Fort Wayne, Indiana,
commonly known as the "Harrison" site, and the "Lincoln West" site, and
CROSS REFERENCE
DEC 2 10:27 AM '85
RECEIVED FOR RECORD
BETH O'LAUGHLIN
RECORDER MARION CO.
<PAGE>
-2-
WHEREAS, the legal description of the "Lincoln West" site which is set
forth in Schedule B to each of the foregoing instruments has been determined to
be incomplete and, therefore, incorrect, and
WHEREAS, it is the mutual desire of the parties hereto that the
foregoing instruments be corrected by having appended to each instrument a
complete and correct Schedule B legal description, and that such instruments be
corrected of record.
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid
by each of the parties hereto to each of the other parties hereto, and other
valuable considerations each to the other in hand paid, the receipt and
sufficiency of which is hereby acknowledged, the parties do mutually covenant
and agree:
1. That Schedule B to this agreement be and it hereby is substituted
for Schedule B to all of the foregoing instruments.
2. That all other terms, conditions and covenants of the aforesaid
instruments are and shall remain in full force and effect except as hereby
corrected.
3. That this agreement may be executed in any number of counterparts
and each counterpart shall for all purposes be deemed to be an original; and
all such counterparts shall together constitute but one and the same agreement.
4. That the parties hereto are authorized and directed to attach this
Correction Agreement to each of the foresaid instruments, as a part and
portion thereof, and to record same among the public records in the Office
of the Recorder of Marion County, Indiana, and elsewhere as they shall deem
appropriate.
<PAGE>
-3-
This Agreement shall bind and shall inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
IN WITNESS HEREOF, the parties have caused this instrument to be
executed as of the day and year first above written.
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
----------------------------------
(SEAL) Name: E. Davisson Hardman, Jr.
Title: President
By: ALEXANDER J. JORDAN, JR.
--------------------------------
Name: Alexander J. Jordan, Jr.
Title: Assistant Secretary
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
-----------------------------------
E. Davisson Hardman, Jr.
A General Partner
<PAGE>
-4-
AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing
Correction Agreement.
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
------------------------------
Name: F. Ernest Barthel
Title: Vice President
(SEAL)
Attest:
BY: THOMAS M. OBER
---------------------------
Name: Thomas M. Ober
Title: Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Correction Agreement.
LINCOLN NATIONAL CORPORATION
BY: MAX ROESLER
-----------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
----------------------------
Name: Dolores Prange
Title: Assistant Secretary
<PAGE>
-5-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
)
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan,
Jr., the President and Asst. Secretary respectively, of CLINTON
HOLDING CORPORATION, a corporation organized and existing under the
laws of the State of Delaware, and acknowledged the execution of the
foregoing instrument as such officers acting for and on behalf of
said corporation.
Witness my hand and Notarial Seal this 7th day of
November, 1985
Signature DOLORES M. ANTONINO
------------------------
Printed Dolores M. Antonino
------------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
------------------------------
<PAGE>
-6-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of
LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited
partnership, which is the general partner of CLINTON STREET LIMITED
PARTNERSHIP, an Indiana limited partnership and acknowledged
the execution of the foregoing instrument as such partner to be his
free and voluntary act as such partner of LIBERTY STREET LIMITED
PARTNERSHIP-84, and it as a general partner acting on behalf of
CLINTON STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of
November, 1985.
Signature DOLORES M. ANTONINO
------------------------
Printed Dolores M. Antonino
-------------------------
NOTARY PUBLIC
(SEAL)
My commission expires:
July 25, 1991
------------------------------
<PAGE>
-7-
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as
Vice President and Secretary respectively, of AMERICAN STATES INSURANCE
COMPANY, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned.
DONALD F. BUTLER
---------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
------------------------------
Resident of DeKalb County, lndiana
<PAGE>
-8-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me Donald F. Butler , a Notary Public, this 7th day of November,
1985, personally appeared Max Roesler and Dolores Prange as Vice President and
Assistant Secretary respectively, of LINCOLN NATIONAL CORPORATION, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
---------------------------
Donald F. Butler - NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
------------------------------
Resident of DeKalb County, lndiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801.
<PAGE>
Schedule B
PARCEL 1 Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, together with a part of the Northeast
Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana,
both said parts being more particularly described as follows, to wit:
Commencing at the Northwest corner of said Section 7; thence N 89
degrees-56'-27" E, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of
145.0 feet to the true point of beginning, located on the South right-of-way
line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a
distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41
feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13
degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a
distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43
feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24
degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228
acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N
89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a
distance of 133.98 feet to the Southeast corner thereof, said Southeast corner
being a point situated on the West line of a 60 foot-wide roadway and utility
easement granted in Deed Record 716, pages 150-152 in the Office of the
Recorder of Allen County, Indiana, said easement being known as Magnavox Way as
said name was established in an instrument appearing at Document #70-9781 in
the Office of the Recorder of Allen County, Indiana; thence S 00
degrees-03'-32" E, on and along the West line of said easement, a distance of
275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S
89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W,
a distance of 484.96 feet to an existing line fence; thence S 88
degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line
of Interstate Highway #69; thence Northeasterly, on and along said Easterly
right-of-way line on the following courses and distances:
Northeasterly, on and along the arc of a regular curve to the left having a
radius of 4046.53 feet, and being situated 140.0 feet (measured radially)
Southeasterly of and concentric to the centerline of I-69, an arc distance
of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a
length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04
feet to a point situated 100.0 feet (measured radially), Southeasterly of
said I-69 centerline; thence Northeasterly, on and along the arc of a
regular curve to the left having a radius of 4006.53 feet, and being
situated 100.0 feet (measured radially) Southeasterly of and concentric to
said I-69 centerline, an arc distance of 410.24 feet (the chord of which
bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23
degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 18
degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 14
degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 884.93 feet and being situated 70.0 feet (measured radially)
Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined
by the Southeasterly edge of pavement of an existing 18 foot-wide concrete
ramp, an arc distance of 327.39 feet (the chord of which bears N 26
degrees-38'-02" E, (or a length of 325.53 feet); thence N 35
degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet
(measured at right angles) Southeasterly of said line "S-E-C"; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 666.20 feet and being situated 50.0 feet (measured radially)
Southeasterly of and concentric to said line "S-E-C", an arc distance of
355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length
of 351.75 feet) to the true point of beginning.
<PAGE>
PARCEL 2
An easement for the purpose of ingress and egress and utilities for the benefit
of Parcel 1 created in a deed recorded November 7, 1963 in Deed Record 716,
pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781
and 80-16836 over the following real estate.
A strip of land 60 feet in width lying 30 feet on either side of the line
described as follows:
Beginning at the North Quarter Corner of said Section 7, running thence South
89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence
South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way
line of Frontage Road No. 1, the true point of beginning of this description;
thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a
tangent curve to the right having a central angle of 25 degrees and a length of
250.00 feet; thence South 24 degrees 38' 27" West of 46.88 feet; thence on a
tangent curve to the left having a central angle of 24 degrees 41' 59" and a
length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more
or less to the North line of the South Half of the South Half of the Southeast
Quarter of the Northwest Quarter of Section 7, Township 30' North, Range 12
East, the South line of Inverness Investors, Inc. Property.
PARCEL 3
An easement for the purpose of ingress and egress for the benefit of Parcel 1
created in an Easement recorded November 7, 1963 in Deed Record 716, pages
153-157 and modified by Agreement recorded as Document Numbers 70-9781 and
80-16836 over the following described real estate.
Part of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in
Allen County, Indiana, more particularly described as follows, to wit;
Beginning at the Northeast corner of said South Half of the South Half of the
Southeast Quarter of the fractional Northwest Quarter of Section 7, on the
center line of Getz Road; thence West along the North line of the South Half of
the South Half of the Southeast Quarter of the fractional Northwest Quarter of
said Section 7, a distance of 1323.13 feet to a stone marking the Northwest
corner of the South Half of the South Half of the Southeast Quarter of the
fractional NW Quarter of said Section 7;thence South along the West line
of the East Half of the said fractional Northwest Quarter of Section 7, a
distance of 50.00 feet; thence East and parallel to the North line of said
South Half of the South Half of the Southeast Quarter of the fractional
Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the
center line of Getz Road, 50 feet South of the place of beginning, thence North
on the center line of the Getz Road a distance of 50.0 feet to the place of
beginning; and for the installation and perpetual maintenance of sewer and
water line within the Northern Half of the above described real estate.
<PAGE>
CROSS REFERENCE
Re: Assignment of Lease and Guaranty
Second Assignment of Lease and Guaranty
("Indianapolis" site)
PARTIAL RELEASE 850105434
In consideration of the sum of Ten Dollars ($10.00) and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, as parties to one or more of the
following-described instruments, to-wit:
1. Assignment of Lease and Guaranty
Recorded as Instrument No. 840068010
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: American States Insurance Company
and
Lincoln National Corporation
2. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 840068015
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: American States Insurance Company
and
Lincoln National Corporation
hereby release and discharge the real estate more particularly bounded and
described in Exhibit A hereto from the incumbrance and effect of the
above-described instruments, which instruments were corrected by that certain
Correction Agreement by and among the parties hereto dated November 7, 1985,
and recorded December 2, 1985, in the Office of the Recorder of Marion County,
Indiana, as Instrument No. 85-105433.
The parties hereto agree that this Partial Release may be executed in
any number of counterparts an each counterpart shall for all purposes be deemed
to be an original; and such counterparts shall together constitute but one and
the same instrument.
Dated this 7th day of November, 1985.
RECEIVED FOR RECORD
BETH SHAUGHLIN
RECORDER MARION CO.
DEC 2 10 27 AM '85
<PAGE>
-2-
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
------------------------------
Name: E. Davisson Hardman, Jr.
Title: President
[SEAL]
Attest:
BY: ALEXANDER J. JORDAN JR.
--------------------------------
Name: Alexander J. Jordan Jr.
Title: Assistant Secretary
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
----------------------------------
E. Davisson Hardman, Jr.
A General Partner
<PAGE>
-3-
AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing
Partial Release.
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
-----------------------------
Name: F. Ernest Barthel
Title: Vice President
(SEAL)
Attest:
BY: THOMAS M. OBER
----------------------------
Name: Thomas M. Ober
Title: Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Partial
Release.
LINCOLN NATIONAL CORPORATION
BY: MAX ROESLER
------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
----------------------------
Name: Dolores Prange
Title: Assistant Secretary
<PAGE>
-4-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the
President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
---------------------------
Printed Dolores M. Antonino
---------------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- -------------------------
<PAGE>
-5-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State, personally
appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED
PARTNERSHIP-84 A Massachusetts limited partnership, which is the general
partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
and acknowledged the execution of the foregoing instrument as such partner to
be his free and voluntary act as such partner of LIBERTY STREET LIMITED
PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET
LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
---------------------------------
Printed Dolores M. Antonino
-----------------------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ---------------------------
<PAGE>
-6-
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice
President and Secretary, respectively, of AMERICAN STATES INSURANCE COMPANY, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
----------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- -------------------------
Resident of Dekalb County, Indiana
<PAGE>
-7-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared Max Roesler and Dolores Prange, as Vice President and
Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
----------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- -------------------------
Resident of Dekalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801.
<PAGE>
Exhibit A
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, being more particularly described as
follows:
Commencing at the Northwest corner of said Section 7: thence North 89 deg. 56
min. 27 sec. East, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a
distance of 145.0 feet to the South right of way line of Road #14 (Illinois
Road); thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0 feet;
thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet; thence
South 25 deg. 15 min. 36 sec. West, a distance of 147.78 feet; thence South 13
deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28 deg. 49
min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07 min. 55
sec. East, a distance of 116.43 feet; thence South 67 degrees 37 min. 33 sec.
East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec. East, a
distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a distance
of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed
to Professional Building Corporation of Fort Wayne in a deed appearing at a
Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of
said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner
thereof; thence North 89 deg. 56 min. 19 sec. East, on and along the South
line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast
corner thereof, said Southeast corner being a point situated on the West line
of a 60 foot wide roadway and utility easement granted in Deed Record 716,
pages 150-152 in the Office of the Recorder of Allen County, Indiana, said
easement being known as Magnavox Way as said name was established in an
instrument appearing at Document #70-9781 in the Office of the Recorder of
Allen County, Indiana; thence South 00 deg. 03 min. 32 sec. East, on and along
the West line of said easement, a distance of 200.0 feet to the point of
beginning; thence continuing South 00 deg. 03 min. 32 sec. East 75.00 feet;
thence South 66 deg. 10 min. 20 sec. West, a distance of 1122.16 feet; thence
South 89 deg. 56 min. 27 sec. West, a distance of 18.20 feet; thence North 15
deg. 16 min. 15 sec. East, a distance of 549.10 feet; thence South 89 deg. 54
min. 52 sec. East, a distance of 900.00 feet to the point of beginning,
containing 6.471 acres and subject to Easements and Rights of Way of Record.
Exhibit (m)
LEASE AND AGREEMENT
Between
CLINTON STREET LIMITED PARTNERSHIP,
as Lessor
And
LINCOLN NATIONAL PENSION INSURANCE COMPANY,
as Lessee
Dated as of August 1, 1984
Location of Leased Premises: 1700 Magnavox Way
Fort Wayne, IN 46804
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
l. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Title and Condition . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Use of Leased Premises; Quiet Enjoyment . . . . . . . . . . . . . . 2
4. Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Net Lease; Non-Terminability. . . . . . . . . . . . . . . . . . . . 4
7. Taxes and Assessments; Compliance with Law. . . . . . . . . . . . . 6
8. Liens; Grants of Easements. . . . . . . . . . . . . . . . . . . . . 7
9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . 10
11. Alterations and Additions . . . . . . . . . . . . . . . . . . . . . 11
12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14. Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15. Reimbursement for Alterations and Additions;
Purchase of Unimproved Land . . . . . . . . . . . . . . . . . . . 28
16. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . 34
17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . 35
18. Permitted Contests. . . . . . . . . . . . . . . . . . . . . . . . . 36
19. Conditional Limitations; Default Provision. . . . . . . . . . . . . 37
20. Additional Rights of Lessor . . . . . . . . . . . . . . . . . . . . 43
21. Notices, Demands and Other Instruments. . . . . . . . . . . . . . . 44
22. Estoppel Certificates; Consents and Financial Statements. . . . . . 45
23. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
24. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
25. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
26. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
27. Table of Contents, Headings . . . . . . . . . . . . . . . . . . . . 47
28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
29. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 48
30. Lessee's Options; Right of First Refusal . . . . . . . . . . . . . 50
31. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
SCHEDULE A - Property Description and Permitted Exceptions
SCHEDULE B - Basic Rent Payments
SCHEDULE C - Computation of Purchase Prices
<PAGE>
LEASE AND AGREEMENT, dated as of August 1, 1984 (this Lease) between
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein,
together with its successor and assigns, called Lessor), having an address c/o
Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006 and
LINCOLN NATIONAL PENSION INSURANCE COMPANY, an Indiana corporation (herein,
together with any corporation succeeding thereto by consolidation, merger or
acquisition of all or substantially all its assets, called Lessee), having an
address 1300 South Clinton Street, Fort Wayne, Indiana 46801. Certain words or
phrases having initial capitals have the meanings set forth in paragraph 29.
1. Demise of Premises. In consideration of the rents and covenants
herein stipulated to be paid and performed, Lessor hereby demises and lets to
Lessee, and Lessee hereby lets from Lessor, for the terms herein described,
the premises (herein called the Leased Premises) consisting of (i) the land
described in Schedule A hereto (herein called the Land Parcel), (ii) all
buildings, structures and other improvements thereon, including all building
equipment and fixtures, if any, owned by Lessor (herein collectively called
the Improvements), but excluding trade equipment, fixtures and other personal
property owned by Lessee and Lessee's Improvements (as hereinafter defined in
paragraph ll(c)), and (iii) all easements, rights and appurtenances relating
thereto, all upon the terms and conditions herein specified.
2. Title and Condition. The Leased Premises are demised and let
subject to (a) the rights of any parties in possession and the existing state
of the title as of the commencement of the term of this Lease, (b) any state
of facts which an accurate survey or physical inspection thereof might show,
(c) all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
<PAGE>
by any governmental authority having jurisdiction, and (d) the condition of
any buildings, structures and other improvements located thereon, as of the
commencement of the term of this Lease, without representation or warranty by
Lessor. Lessee represents that it has examined the title to and the condition
of the Leased Premises and has found the same to be satisfactory.
3. Use of Leased Premises; Quiet Enjoyment. (a) Lessee may occupy
and use the Leased Premises for any lawful purpose.
(b) If and so long as Lessee shall observe and perform all covenants,
agreements and obligations required to be observed and performed by
it hereunder, Lessor covenants that it will not and will not permit any party
claiming by, through or under Lessor, to interfere with the peaceful and quiet
possession and enjoyment of the Leased Premises by Lessee; provided, that
Lessor and its agents may, upon prior notice to Lessee (unless Lessor has
reason to believe a default or Event of Default hereunder has occurred, in
which case no such notice shall be necessary), enter upon and examine the
Leased Premises at reasonable times. Lessee shall have the right to accompany
Lessor and its agents during any such examination of the Leased Premises. Any
failure by Lessor to comply with the foregoing warranties shall not give
Lessee any right to cancel or terminate this Lease, or to abate, reduce or
make deduction from or offset against any Basic Rent, as hereinafter defined,
or additional rent or other sum payable under this Lease, or to fail to
perform or observe any other covenant, agreement or obligation hereunder.
4. Terms. Subject to the terms and conditions hereof, Lessee shall
have and hold the Leased Premises for (a) an interim term (herein called the
Interim Term) commencing on August 30, 1984 and ending at midnight on August
31, 1984; and (b) a primary term (herein called the Primary Term) commencing
on September 1, 1984, and ending at midnight on August 31, 2009. Thereafter,
2
<PAGE>
Lessee shall have the rights and options to extend this Lease for 6
consecutive extended terms of 5 years each (herein called Extended Terms, and
together with the Interim Term and the Primary Term, called the Term) unless
this Lease shall be sooner terminated pursuant to the provisions hereof. Each
such Extended Term shall commence on the day immediately succeeding the
expiration date of the preceding Primary Term or Extended Term, as the case
may be, and shall end at midnight on the day immediately preceding the fifth
anniversary of the first day of such Extended Term. Each such option to
extend this Lease shall conclusively be deemed to have been exercised by
Lessee unless Lessee shall give written notice to the contrary to Lessor at
least three hundred sixty-five days prior to the end of the then Term of this
Lease. No instrument of renewal need be executed, provided that no Extended
Term shall take effect unless this Lease is in full force and effect and no
default or Event of Default exists and is continuing immediately prior to the
commencement thereof. If Lessee gives notice of its intention not to extend
this Lease, the term of this Lease shall terminate at the end of the then Term
of this Lease and Lessee shall have no further option to extend this Lease.
If Lessee gives such notice not to extend this Lease, then Lessor shall have
the right during the remainder of the Term of this Lease to advertise the
availability of the Leased Premises for sale or reletting and to erect upon
the Leased Premises signs appropriate for the purpose of indicating such
availability, provided that such signs do not unreasonably interfere with the
use of the Leased Premises by Lessee. The phrase "Term of this Lease" or
"Term hereof" means the Interim Term and the Primary Term, plus any Extended
Term with respect to which the right to extend has been exercised.
5. Rent. (a) Lessee covenants to pay to Lessor, as instalments of
rent for the Leased Premises during the Term of this Lease, the amounts set
3
<PAGE>
forth in Schedule B hereto (herein called the Basic Rent) on the dates set
forth in said Schedule (herein called the Basic Rent Payment Dates), and to
pay in immediately available funds the same at Lessor's address set forth
above or at such other place within the continental United States and/or to
such other person as Lessor from time to time may designate to Lessee in
writing, in lawful money of the United States of America.
(b) Lessee covenants that all other amounts, liabilities and
obligations which Lessee assumes or agrees to pay or discharge pursuant to
this Lease (except amounts payable as the purchase price for the Leased
Premises or any part thereof pursuant to any provision of this Lease and
amounts payable as liquidated damages pursuant to paragraph l9(j) or paragraph
l9(g)), together with every fine, penalty, interest and cost which may be
added for nonpayment or late payment thereof, shall constitute additional rent
hereunder. In the event of any failure by Lessee to pay or discharge any of
the foregoing, Lessor shall have all rights, powers and remedies provided
herein or by law in the case of nonpayment of Basic Rent. Lessee also
covenants to pay to Lessor on demand as such additional rent (A) interest at
the rate of 18.00% per annum (or the maximum not prohibited by law, whichever
is less), calculated on the basis of a 360-day year of twelve equal months, on
all overdue instalments of Basic Rent from the due date thereof (without
regard to any grace period) until paid in full and (B) interest at the rate of
16.00% per annum (calculated as set forth in clause (A) above) on all overdue
amounts relating to any other aspects of additional rent arising out of
obligations which Lessor shall have paid on behalf of Lessee from the date of
such payment by Lessor until paid in full.
6. Net Lease; Non-Terminability. (a) This is an absolutely net
lease and the Basic Rent, additional rent and all other sums payable hereunder
4
<PAGE>
by Lessee, whether as the purchase price for the Leased Premises or otherwise,
shall be paid without notice (except as expressly provided herein), demand,
set-off, counterclaim, abatement, suspension, deduction or defense.
(b) Any present or future law to the contrary notwithstanding, this
Lease shall not terminate, nor shall Lessee have any right to terminate this
Lease (except as otherwise expressly provided herein), nor shall Lessee be
entitled to any abatement or reduction of rent hereunder (except as otherwise
expressly provided herein), nor shall the obligations of Lessee under this Lease
be affected, by reason of (i) any damage to or destruction of all or any part of
the Leased Premises from whatever cause, (ii) the taking of the Leased Premises
or any portion thereof by condemnation, requisition or otherwise, (iii) the
prohibition, limitation or restriction of Lessee's use of all or any part of the
Leased Premises, or any interference with such use, (iv) any eviction by
paramount title or otherwise, (v) Lessee's acquisition or ownership of all or
any part of the Leased Premises otherwise than as expressly provided in
paragraphs 12(b), 14(c) or 15 herein, (vi) any default on the part of Lessor
under this Lease, or under any other agreement to which Lessor and Lessee may be
parties, (vii) the failure of Lessor to deliver possession of the Leased
Premises on the commencement of the Term hereof or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties hereto that the obligations of Lessee hereunder shall be separate and
independent covenants and agreements, that the Basic Rent, additional rent and
all other sums payable by Lessee hereunder shall continue to be payable in all
events and that the obligations of Lessee hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lease.
5
<PAGE>
(c) Lessee agrees that it will remain obligated under this Lease in
accordance with its terms, and that it will not take any action to terminate,
rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, or
winding-up or other proceeding affecting Lessor or its successor in interest,
(ii) any action with respect to this Lease which may be taken by any trustee or
receiver of Lessor or its successor in interest or by any court in any such
proceeding.
(d) Lessee waives all rights which may now or hereafter be conferred
by law (i) to quit, terminate or surrender this Lease or the Leased Premises
or any part thereof, or (ii) to abate, suspend, defer or reduce the Basic
Rent, additional rent or any other sums payable under this Lease, except as
otherwise expressly provided herein.
7. Taxes and Assessments; Compliance with Law. (a) Lessee shall pay
or discharge each of the following items on or prior to the last day on which
such items may be paid without interest or penalty: (i) all Impositions; (ii)
all transfer taxes, recording fees and similar charges payable in connection
with a conveyance hereunder to Lessee; (iii) all gross receipts or similar
taxes imposed or levied upon, assessed against or measured by the Basic Rent,
additional rent or any other sums payable by Lessee hereunder or levied upon
or assessed against the Leased Premises, to the extent that such tax,
assessment or other charge would be payable if the Leased Premises were the
only property of Lessor subject thereto, and (iv) any tax, assessment, charge
or levy of any nature whatsoever imposed or levied upon or assessed against
Lessor or the Leased Premises in substitution for or in place of an
Imposition. Lessee shall not be required to pay any franchise, corporate,
estate, inheritance, succession, transfer, income, excess profits, or revenue
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taxes of Lessor which are not described in the preceding sentence. Lessee
agrees to furnish to Lessor, within thirty days after written demand therefor,
evidence of all payments due under this paragraph 7(a). In the event that any
Imposition levied or assessed against the Leased Premises and payable by
Lessee becomes due and payable during the Term hereof and may legally be paid
in instalments, Lessee may pay such Imposition in instalments and shall be
liable only for those instalments which become due and payable during the Term
hereof.
(b) Lessee shall, at its expense, comply with and shall cause the
Leased Premises to comply with, in all material respects, all governmental
statutes, laws, rules, orders, regulations and ordinances the failure to
comply with which at any time would affect the Leased Premises or any part
thereof, or the use thereof, including those which require the making of any
structural, unforeseen or extraordinary changes, whether or not any of the
same involve a change of policy on the part of the body enacting the same
(collectively, the Legal Requirements). Lessee shall, at its expense, comply
with all Required Insurance (as defined in paragraph 13), and with the
provisions of all contracts, agreements, instruments and restrictions existing
at the commencement of the Term of this Lease or thereafter suffered or
permitted by Lessee affecting the Leased Premises or any part thereof or the
ownership, occupancy or use thereof.
8. Liens; Grants of Easements. (a) Lessee will not, directly or
indirectly, create or permit to be created or to remain, and will promptly
remove and discharge, at its expense, any mortgage, lien, encumbrance or
charge on, pledge of, or conditional sale or other title retention agreement
with respect to, the Leased Premises or any part thereof or Lessee's interest
therein or the Basic Rent, additional rent or other sums payable by Lessee
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under this Lease, other than (1) any encumbrances permitted by the Senior
Permitted Mortgage described in Paragraph 29(j), (2) any mortgage, lien,
encumbrance or other charge, pledge, conditional sale or other title retention
agreement created by or resulting from any act or failure to act of Lessor or
any agent or assignee of Lessor without the agreement of Lessee and (3) any
encumbrance or charge permitted in subparagraph (b) below. Nothing contained
in this Lease shall be construed as constituting the consent or request,
expressed or implied, by Lessor to the performance of any labor or services or
the furnishing of any materials for any construction, alteration, addition,
repair or demolition of all of the Leased Premises or any part thereof by any
contractor, subcontractor, laborer, materialman or vendor. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone holding the Leased
Premises or any part thereof, and that no mechanic's or other liens for any
such labor, services or materials shall attach to or affect the interest of
Lessor in and to the Leased Premises.
(b) Lessor hereby appoints Lessee its agent and attorney-in-fact and
authorizes Lessee (i) to grant easements, licenses, rights-of-way and other
rights and privileges in the nature of easements, (ii) to release existing
easements and appurtenances which are for the benefit of the Leased Premises,
(iii) to grant party wall rights for the benefit of any land adjoining the
Land Parcel and (iv) to execute and deliver any instrument necessary or
appropriate to confirm such grants, releases or consents to any person, with
or without consideration (in each case, however, only upon compliance with the
provisions of the Senior Permitted Mortgage), provided, that (x) such grant,
release or consent shall not materially impair the use of the Leased Premises
or materially reduce their value, and (y) the consideration, if any, received
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by Lessee for such grant, release or consent shall be paid to Lessor and
applied pursuant to paragraph 12(c), as if such consideration were a Net Award
from an event of Condemnation. Lessee agrees that Lessee will remain
obligated under the terms of this Lease to the same extent as if such action
had not been taken, and that Lessee will perform all obligations of the
grantor, releasor or transferor under any such instrument.
9. Indemnification. Lessee shall defend all actions or claims
against Lessor, or any partner of Lessor, or any assignee of Lessor, or any
partner, officer, director or shareholder of any assignee of Lessor
(collectively, the Indemnified Parties) with respect to, and shall pay,
protect, indemnify and save harmless the Indemnified Parties from and against
any and all liabilities, losses, damages, costs, expenses (including all
reasonable attorney's fees and expenses of the Indemnified Parties), causes of
action, suits, claims, demands or judgments of any nature whatsoever (i)
arising from any injury to, or the death of, any person or any damage to
property on the Leased Premises or upon adjoining sidewalks, streets or ways,
in any manner growing out of or connected with the use, non-use, condition or
occupation of the Leased Premises or any part thereof or resulting from the
condition thereof or of adjoining sidewalks, streets or ways, so long as not
occasioned by the affirmative act of Lessor, its agents, servants, employees
or assigns, and/or (ii) arising from violation by Lessee of any agreement or
condition of this Lease, or any contract or agreement to which Lessee is a
party or any restriction, law, ordinance or regulation, in each case affecting
the Leased Premises or any part thereof or the ownership, occupancy or use
thereof, so long as not occasioned by the intentional fault of Lessor, its
agents, servants, employees or assigns. If Lessor or any other Indemnified
Party shall be made a party to any such litigation commenced against Lessee,
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and if Lessee, at its expense, shall fail to provide Lessor or any other such
Indemnified Party with counsel (upon Lessor's or such Indemnified Party's
request) approved by Lessor or such Indemnified Party, as the case may be,
which approval shall not be unreasonably withheld, Lessee shall pay all costs
and reasonable attorneys' fees and expenses incurred or paid by Lessor or any
other such Indemnified Party in connection with such litigation. Lessor shall
give prompt written notice to Lessee of any claim asserted against Lessor, but
to Lessor's knowledge not also asserted against Lessee, which, if sustained,
may result in liability of Lessee hereunder, but failure on the part of Lessor
to give such notice shall not relieve Lessee from Lessee's obligation to
exonerate, protect, defend, indemnify and save harmless the Indemnified
Parties as aforesaid.
10. Maintenance and Repair. (a) Lessee acknowledges that it has
received the Leased Premises in good condition, repair and appearance. Lessee
agrees that, at its expense, it will keep and maintain the Leased Premises and
any Lessee's Improvements, including any altered, rebuilt, additional or
substituted buildings, structures and other improvements thereto, in good
condition, repair and appearance, except for ordinary wear and tear, and it
will promptly make all structural and nonstructural, foreseen and unforeseen,
and ordinary and extraordinary changes and repairs of every kind which may be
required to be made to keep and maintain the Leased Premises and any Lessee's
Improvements in such good condition, repair and appearance and it will keep
the Leased Premises and any Lessee's Improvements orderly and free and clear
of rubbish. Lessor shall not be required to maintain, repair or rebuild, or
to make any alterations, replacements or renewals of any nature to the Leased
Premises, or any part thereof, whether ordinary or extraordinary, structural
or nonstructural, foreseen or unforeseen, or to maintain the Leased Premises
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or any part thereof in any way. Lessee hereby expressly waives the right to
make repairs at the expense of Lessor which may be provided for in any law in
effect at the time of the commencement of the Term of this Lease or which may
thereafter be enacted. If Lessee shall abandon the Leased Premises, it shall
give Lessor and any Permitted Mortgagee immediate notice thereof.
(b) If any Improvements situated on the Leased Premises at any time
during the Term of this Lease shall encroach upon any property, street or
right-of-way adjoining or adjacent to the Leased Premises, or shall violate
the agreements or conditions contained in any restrictive covenant affecting
the Leased Premises or any part thereof, or shall impair the rights of others
under or hinder or obstruct any easement or right-of-way to which the Leased
Premises are subject, then, promptly after the written request of Lessor or
any person affected by any such encroachment, violation, impairment, hindrance
or obstruction, Lessee shall, at its expense, either (i) obtain effective
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation, impairment, hindrance or obstruction
whether the same shall affect Lessor, Lessee or both, or (ii) make such
changes in the Improvements on the Leased Premises and take such other action
as shall be necessary to remove such encroachments, hindrances or obstructions
and to end such violations or impairments, including, if necessary, the
alteration or removal of any Improvement on the Leased Premises. Any such
alteration or removal shall be made in conformity with the requirements of
paragraph ll(a) to the same extent as if such alteration or removal were an
alteration under the provisions of paragraph ll(a).
11. Alterations and Additions. (a) Lessee may, at its expense, (x)
after not less than forty-five days written notice to Lessor of its plans
(provided, however, that no such notice shall be required as to plans for work
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the estimated cost of which is less than $500,000), make non-structural
additions to and alterations of the Improvements to the Leased Premises, and
make non-structural substitutions and replacements therefor, provided, that
(i) the use, structural integrity and market value of the Leased Premises
shall not thereby be materially lessened as certified in writing by an
appropriate officer of Lessee, and (ii) such actions shall be performed in a
good and workmanlike manner; and (y) after not less than forty-five days
written notice to Lessor of its plans, make structural additions to and
alterations of the Improvements to the Leased Premises, and make structural
substitutions and replacements therefor, provided that (i) such actions shall
be performed in a good and workmanlike manner under the supervision of a
licensed architect or engineer in accordance with plans and specifications as
approved by Lessor and accepted by Lessee, (ii) no such structural change or
alteration shall be made unless Lessor's prior written consent shall have been
obtained, (iii) none of the buildings or structures constituting the Leased
Premises shall be demolished unless Lessee shall have first furnished Lessor
with such surety bonds or other assurances acceptable to Lessor as shall be
necessary to assure rebuilding of the Leased Premises and unless Lessor's
prior written consent shall have been obtained, and (iv) such additions,
alterations, substitutions and replacements shall be expeditiously completed
in compliance with all Legal Requirements (as defined in paragraph 7(b)) and
Required Insurance (as defined in paragraph 13(a)); provided that Lessor shall
not withhold its written consent to Lessee's plans, including plans and
specifications, under this clause (y) if and so long as the use, structural
integrity and market value of the Leased Premises shall not be materially
lessened by such plans as certified in writing by an appropriate officer of
Lessee. Lessee shall promptly pay all costs and expenses of each such
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addition, alteration, substitution or replacement, discharge all liens arising
therefrom and procure and pay for all permits and licenses required in
connection therewith. Failure by Lessor to give written approval or
disapproval within forty-five days of receipt of such notice from Lessee under
clause (y) shall be deemed Lessor's consent to such plans. All such
alterations and additions to the Improvements shall be and remain part of the
realty and the property of Lessor and subject to this Lease.
(b) Lessee may, at its expense, install, assemble or place any items
of trade fixtures, machinery, equipment or other personal property upon the
Leased Premises. Such trade fixtures, machinery, equipment or other personal
property shall be and remain the property of Lessee and Lessee may remove the
same from the Leased Premises at any time prior to the termination of this
Lease, provided that (i) Lessee shall repair any damage to the Leased Premises
resulting from such removal, and (ii) such removal shall not materially impair
the value and use of the Leased Premises.
(c) Lessee may, at its expense, upon 45 days prior notice to Lessor,
construct improvements on any portion of the Land Parcel on which there is not
already a permanent structure for which improvements it has not and will not
obtain reimbursement pursuant to paragraph 15 hereof (Lessee's Improvements),
provided that upon completion thereof, the use and market value of the
remaining Leased Premises shall not thereby be materially lessened. The
Lessee's Improvements shall be and remain the property of Lessee and Lessee
may make additions and alterations to Lessee's Improvements and substitutions
and replacements thereof which are otherwise in compliance with the provisions
of this subparagraph (c).
12. Condemnation. (a) Subject to the rights of Lessee set forth in
this paragraph 12, Lessee hereby irrevocably assigns to Lessor any award or
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compensation payment to which Lessee may become entitled by reason of Lessee's
interest in the Leased Premises if the use, occupancy or title of the Leased
Premises or any part thereof is taken, requisitioned or sold in, by or on
account of any actual or threatened eminent domain proceeding or other action
by any person having the power of eminent domain, provided, however, that
Lessee may retain any award or compensation payment relating to Lessee's
Improvements. Lessee shall appear in any such proceeding or action to
negotiate, prosecute and adjust any claim for any award or compensation on
account of any such taking, requisition or sale; and Lessor shall collect any
such award or compensation. The Net Award (as defined in paragraph 12(f))
shall be applied pursuant to this paragraph 12. Lessee shall pay all
reasonable costs and expenses (including any legal fees of any Permitted
Mortgagee required by any Permitted Mortgage to be paid by Lessor) in
connection with each such proceeding, action, negotiation and prosecution, for
which costs and expenses Lessee shall be reimbursed out of any award or
compensation received. Lessor shall be entitled to participate in any such
proceeding, action, negotiation or prosecution and the reasonable expenses
thereof (including counsel fees and expenses) shall be paid by Lessee.
(b) If an occurrence of the character referred to in paragraph 12(a)
shall affect all or a substantial portion of the Leased Premises and shall, in
the good faith judgment of Lessee, render the Leased Premises unsuitable for
restoration for continued use and occupancy in Lessee's business during the
Primary Term or any Extended Term, then Lessee shall, not later than 30 days
after such occurrence, deliver to Lessor (i) notice of its intention to
terminate this Lease on the next Basic Rent Payment Date (the Termination
Date) which occurs not less than 210 days nor more than 360 days after the
delivery of such notice and (ii) a certificate by the President or any Vice
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President of Lessee describing the event giving rise to such termination and
stating that its board of directors (or an executive committee thereof) has
determined that such event has rendered the Leased Premises unsuitable for
restoration for continued use and occupancy in Lessee's business. If the
Termination Date occurs during the Interim or Primary Term, such notice to
Lessor shall be accompanied by an irrevocable offer by Lessee to purchase the
Leased Premises on the Termination Date at a price determined in accordance
with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such
Purchase Offer by notice given to Lessee not later than the 30th day prior to
the Termination Date or (2) the Termination Date occurs during an Extended
Term, this Lease shall terminate on the Termination Date, except with respect
to obligations and liabilities of Lessee hereunder, actual or contingent,
which have arisen on or prior to the Termination Date, upon payment by Lessee
of all Basic Rent, additional rent and other sums then due and payable
hereunder to and including the Termination Date, and the Net Award shall
belong to Lessor; provided that the amount of such Net Award, if any, related
to any portion of the Improvements constructed by Lessee at its expense (and
for which it has not obtained reimbursement pursuant to paragraph 15 hereof)
shall be paid to Lessee, as determined by the Appraisal Procedure. Unless
Lessor shall have rejected such Purchase Offer in accordance with this
paragraph, Lessor shall be conclusively presumed to have accepted such offer,
and, on the Termination Date, shall convey the remaining portion of the Leased
Premises, if any, to Lessee or its designee and shall assign to Lessee or its
designee all of its interest in the Net Award, pursuant to and upon compliance
with paragraph 16.
(c) If during any Term (i) a portion of the Leased Premises shall be
taken by condemnation or other eminent domain proceedings, which taking is not
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sufficient to require that Lessee give a Purchase Offer or (ii) the use or
occupancy of the Leased Premises or any part thereof shall be temporarily
taken by any governmental authority, then this Lease shall continue in full
effect without abatement or reduction of Basic Rent, additional rent or other
sums payable by Lessee hereunder notwithstanding such partial or temporary
taking. Except as hereinafter set forth, Lessee shall (whether or not it has
received any portion of the Net Award), promptly after any such temporary
taking ceases, at its expense, repair any damage caused thereby in conformity
with the requirements of paragraph ll(a), so that, thereafter, the Leased
Premises shall be, as nearly as possible, in a condition and have a market
value as good as the condition and market value thereof immediately prior to
such taking. Lessee shall not be required to repair any damage to Lessee's
Improvements so long as such failure shall not materially lessen the use or
value of the remaining Leased Premises; provided, however, that if, in
Lessee's good faith judgment, such damage is substantial, then Lessee shall
demolish those affected portions of Lessee's Improvements if Lessee shall not
have repaired the same. After an occurrence of the character referred to in
paragraph 12(a), any Net Award payable in connection with such occurrence
shall be paid to the Proceeds Trustee (as defined in paragraph 12(e),
provided, that if no Proceeds Trustee has been named pursuant to paragraph
12(e) at the time of payment of the Net Award, such Net Award shall be paid to
the Senior Permitted Mortgagee (as defined in paragraph 29(m)), and if there
is no Senior Permitted Mortgagee then to Lessor, in all events for application
pursuant to this paragraph 12(c). Lessee shall be entitled to receive the Net
Award but only against certificates by the President or any Vice President of
Lessee delivered to Lessor and the Proceeds Trustee from time to time as such
work of rebuilding, replacement and repair progresses, each such certificate
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describing the work for which Lessee is requesting payment and the cost
incurred by Lessee in connection therewith and stating that Lessee has not
theretofore received payment for such work, provided that Lessee shall be
entitled to receive any Net Award in an aggregate amount of up to $100,000 in
connection with any one occurrence without providing Lessor with such
certificates. To the extent that any Net Award remaining after such repairs
have been made is less than $250,000, such remaining Net Award shall be paid
to Lessee. If such remaining Net Award equals or exceeds $250,000, all of the
remaining Net Award shall be retained by the Proceeds Trustee, the Senior
Permitted Mortgagee or by Lessor, as applicable, and shall be applied in
reduction of the principal amount of the indebtedness secured by any Senior
Permitted Mortgage then outstanding. To the extent that any Net Award is not
paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth
in Schedule C shall be reduced in accordance with Schedule C, and (ii) each
installment of Basic Rent payable on or after the first Payment Date occurring
two months or more after the final payment to Lessee for such restoration
(including Extended Terms thereafter) shall be reduced by an amount equal to
the amount of such installment multiplied by a fraction, the numerator of
which shall be an amount equal to the remaining Net Award not paid to Lessee,
and the denominator of which shall be the applicable amount set forth in
Schedule C prior to its reduction pursuant to clause (i) above, provided that
(i) the Basic Rent shall not be reduced to an amount less than $4.00 per
square foot of remaining rentable space, and (ii) during the Primary Term the
amount by which such installments of Basic Rent shall be so reduced shall not
exceed the amount by which the amount scheduled to be due on or about such
date on any indebtedness of Lessor secured by the Permitted Mortgage is
reduced to reflect the revised amortization thereof after giving effect to the
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corresponding prepayment of such indebtedness by Lessor (it being understood
that in case the Senior Permitted Mortgage is retired or otherwise refinanced
prior to such prepayment, such limitation shall be calculated as if such
mortgage indebtedness had remained outstanding, was so prepaid and the
amortization thereof revised as provided therein). In the event of any
temporary requisition, this Lease shall remain in full effect and Lessee shall
be entitled to receive the Net Award allocable to such temporary requisition;
except that such portion of the Net Award allocable to the period after the
expiration of the Term of this Lease shall be paid to Lessor. If the cost of
any repairs required to be made by Lessee pursuant to this paragraph 12(c)
shall exceed the amount of such Net Award, the deficlency shall be paid by
Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c)
for so long as any default shall have happened and shall be continuing under
this Lease.
(d) Notwithstanding the foregoing, Lessee, at its cost and expense,
shall be entitled to claim separately, in any condemnation proceeding, any
damages payable for moveable trade fixtures paid for and installed by Lessee
(or any persons claiming under Lessee) without any contribution or
reimbursement therefor by Lessor, and for Lessee's loss of business, and for
Lessee's relocation costs, provided Lessor's award is not reduced or otherwise
adversely affected thereby.
(e) The trustee (the Proceeds Trustee) of the Net Award and Net
Casualty Proceeds (as defined in paragraph 14(a)) shall be The Connecticut
Bank and Trust Company, National Association, or its successor under the
Collateral Trust Indenture, dated as of the date hereof (the Indenture) from
Clinton Holding Corporation to The Connecticut Bank and Trust Company,
National Association and F. W. Kawam, as trustees, or if such Indenture shall
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be terminated, the holder of the first mortgage lien on the Leased Premises,
who shall be an institutional lender, or if there shall not be such a lien, or
if such lien shall be held by a person other than an institutional lender,
then <> or a bank or trust company, designated by Lessee and acceptable to
Lessor, having an office in the State of Indiana. The Proceeds Trustee shall
have a combined capital and surplus of at least $100,000,000 and shall be duly
authorized to act as such trustee. All charges and fees of the Proceeds
Trustee shall be paid by Lessee. The Proceeds Trustee shall invest such Net
Award and Net Casualty Proceeds (as hereinafter defined) pursuant to such
Mutual agreement as may be made between Lessor and Lessee.
(f) For the purposes of this Lease the term "Net Award" shall mean:
(i) all amounts payable as a result of any condemnation or other eminent
domain proceeding, less all expenses of such proceeding and the collection of
such amounts not otherwise paid by Lessee and (ii) all amounts payable
pursuant to any agreement with any condemning authority (which agreement shall
be deemed to be a taking) which has been made in settlement of or under threat
of any condemnation or other eminent domain proceeding affecting the Leased
Premises (except Lessee's Improvements), less all expenses incurred (including
any reasonable costs incurred by Lessor in connection therewith) as a result
thereof or in connection with the collection of such amounts and not otherwise
paid by Lessee.
(g) Any minor condemnation or taking of the Leased Premises for the
construction or maintenance of streets or highways shall not be considered a
condemnation or taking for purposes of this paragraph 12 so long as the Leased
Prelllises shall not be materially adversely affected, ingress and egress for
the remainder of the Leased Premises shall be adequate for the business of
Lessee thereon and compliance is made with the provisions of any Permitted
Mortgage relating thereto.
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13. Insurance. (a) Lessee shall maintain, or cause to be maintained, at
its sole expense, the following insurance on the Leased Premises (herein called
the Required Insurance):
(i) Insurance against loss or damage by fire, lightning and other
risks from time to time included under "extended coverage"
policies, including, without limitation, vandalism and malicious
mischief coverage, in amounts sufficient to prevent Lessor or
Lessee from becoming a co-insurer of any loss under the applicable
policies but in any event in amounts not less than the full
insurable value of the Leased Premises. The term "full insurable
value", as used herein, means actual replacement value less
uninsurable items.
(ii) General public liability insurance against claims for bodily injury,
death or property damage occurring on, in or about the Leased
Premises and the adjoining streets, sidewalks and passageways, such
insurance to afford protection to Lessor of not less than
$1,000,000 with respect to bodily injury or death to any one
person, not less than $5,000,000 with respect to any one accident,
and not less than $1,000,000 with respect to property damage.
(iii) Worker's compensation insurance covering all persons employed in
connection with any work done on or about the Leased Premises
with respect to which claims for death or bodily injury could be
asserted against Lessor, Lessee or the Leased Premises, complying
with the laws of the State of Indiana.
(iv) Boiler and pressure vessel insurance on all equipment, parts
thereof and appurtenances attached or connected to the Leased
Premises, if any, which by reason of their use or existence are
capable of bursting, erupting, collapsing or exploding, in the
minimum amount of $1,000,000 for damage to property resulting from
such perils. Such insurance may, at the option of Lessee and as
permitted by applicable law, be included within the coverage of
insurance policies referred to in clause (i) above.
(v) Such other insurance on the Leased Premises in such amounts and
against such other hazards which at the time are commonly
obtained in the case of property similar to the Leased Premises in
the state in which the Leased Premises are located, including war
risk insurance (at and during such times as war risk insurance is
commonly obtained in the case of property similar to the Leased
Premises), when and to the
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extent obtainable from the United States Government or any agency
thereof.
(vi) Flood insurance in an amount equal to the full insurable
value (as defined in clause (i) above) of the Leased Premises
or the maximum amount available, whichever is less, if the area in
which the Leased Premises are located has been designated by the
Secretary of Housing and Urban Development as having special flood
hazards, and if flood insurance is available under the National
Flood Insurance Act.
(b) The Required Insurance shall be written by companies having an
A.M. Best rating of at least A:XV which are authorized to do an insurance
business in the State of Indiana and shall name as the insured parties
thereunder Lessor, Lessee and any Permitted Mortgagee, as their respective
interests may appear, provided, however, that so long as Lessee maintains a
net worth determined in accordance with generally accepted accounting
principles of not less than $85,381,600, Lessee may self-insure as to the
types of insurance referred to in clauses (i) through (v) of this paragraph.
Neither Lessor nor any Permitted Mortgagee shall be required to prosecute any
claim against, or to contest any settlement proposed by, an insurer. Lessee
may, at its expense, prosecute any such claim or contest any such settlement
in the name of Lessor, Lessee or both, and Lessor will join therein at
Lessee's written request upon the receipt by Lessor of an indemnity from
Lessee against all costs, liabilities and expenses in connection therewith.
(c) Insurance claims by reason of damage to or destruction of any
portion of the Leased Premises shall be adjusted by Lessee, but Lessor and any
Permitted Mortgagee shall have the right to join with Lessee in adjusting any
such loss.
(d) Every policy referred to in clauses (i), (iv) and (v) of
paragraph 13(a) shall bear a first mortgagee endorsement in favor of the then
Senior Permitted Mortgagee (if any); and any loss under any such policy shall
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be made payable to the Proceeds Trustee, provided that any recovery for damage
or destruction under any such policy shall be applied by the Proceeds Trustee
in the manner provided in paragraph 14. Every policy of Required Insurance
shall contain an agreement that the insurer will not cancel such policy except
after thirty days' written notice to Lessor and any Permitted Mortgagee and
that any loss otherwise payable thereunder shall be payable notwithstanding
any act or negligence of Lessor or Lessee which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) any foreclosure or other action taken by a Permitted
Mortgagee pursuant to any provision of any Permitted Mortgage upon the
happening of a default or an event of default thereunder, or (ii) any change
in ownership of the Leased Premises.
(e) Lessee shall deliver to Lessor promptly after the delivery of
this Lease the original or duplicate policies or certificates of insurers,
reasonably satisfactory to any Senior Permitted Mortgagee, evidencing all of
the Required Insurance. Lessee shall, within thirty days prior to the
expiration of any such policy, deliver to Lessor other original or duplicate
policies or such certificates evidencing the renewal of any such policy. If
Lessee fails to maintain or renew any Required Insurance, or to pay the
premium therefor, or to so deliver any such policy or certificate, then
Lessor, at its option, but without obligation to do so, may, upon five days'
notice to Lessee, procure such insurance. Any sums so expended by Lessor
shall be additional rent hereunder and shall be repaid by Lessee within five
days after notice to Lessee of such expenditure and the amount thereof.
(f) Neither Lessee nor Lessor shall obtain or carry separate
insurance covering the same risks as any Required Insurance unless Lessee,
Lessor and any Permitted Mortgagee are included therein as named insureds,
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with loss payable as provided in this Lease. Lessee and Lessor shall
immediately notify each other whenever any such separate insurance is obtained
and shall deliver to each other the policies or certificates evidencing the
same.
(g) Anything contained in this paragraph 13 to the contrary
notwithstanding, all Required Insurance may be carried under (1) a "blanket"
or "umbrella" policy or policies covering other properties or liabilities of
Lessee, its parent company, or any of its parent company's subsidiaries,
provided, that such policies otherwise comply with the provisions of this
Lease and specify the coverage and amounts thereof with respect to the Leased
premises, and (2) a policy or policies providing for self-insurance of
deductible amount of up to $1,000,000.
14. Casualty. (a) Lessee hereby irrevocably assigns to Lessor any
compensation or insurance proceeds to which Lessee may become entitled by
reason of Lessee's interest in the Leased Premises if the Leased Premises or
any part thereof are damaged or destroyed by fire or other casualty, provided,
however, that Lessee may retain any insurance proceeds or compensation
relating to Lessee's Improvements. If the Leased Premises or any part thereof
shall be damaged or destroyed by fire or other casualty, and if the estimated
cost of rebuilding, replacing or repairing the same shall exceed $100,000,
Lessee promptly shall notify Lessor thereof. Lessee shall negotiate,
prosecute and adjust any claim for any compensation or insurance payment on
account of any such damage or destruction; and Lessor shall collect any such
compensation or insurance payment. All amounts paid in connection with any
such damage or destruction shall be applied pursuant to this paragraph 14, and
all such amounts (except such amounts with respect to Lessee's Improvements)
paid or payable in connection therewith (minus the expenses of collecting such
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amounts) are herein called the Net Casualty Proceeds. Lessee shall pay all
reasonable costs and expenses (including any legal fees of any Permitted
Mortgagee required to be paid by Lessor pursuant to any Permitted Mortgage) in
connection with each such negotiation, prosecution and adjustment, for which
costs and expenses Lessee shall be reimbursed out of any compensation or
insurance payment received. Lessor shall be entitled to participate in any
such negotiation, prosecution and adjustment, and the reasonable expenses
thereof (including counsel fees and expenses) shall be paid by Lessee.
(b) After an occurrence of the character referred to in paragraph
14(a), except as hereinafter set forth, Lessee shall (whether or not it has
received any Net Casualty Proceeds), at its expense, rebuild, replace or
repair any damage to the Leased Premises caused by such event in conformity
with the requirements of paragraph 11(a) so as to restore the Leased Premises
(as nearly as practicable) to the condition and market value thereof
immediately prior to such occurrence. Lessee shall not be required to rebuild
or replace any damage to Lessee's Improvements so long as such failure shall
not materially lessen the value or use of the remaining Leased Premises;
provided, however, that if, in Lessee's good faith judgment, such damage is
substantial, then Lessee shall demolish those affected portions of Lessee's
Improvements if Lessee shall not have repaired the same. After an occurrence
of the character referred to in paragraph 14(a), all Net Casualty Proceeds
payable in connection with such occurrence shall be paid to Proceeds Trustee,
and this Lease shall continue in full effect, provided, that if no Proceeds
Trustee has been named pursuant to paragraph 12(e) at the time of payment of
Net Casualty Proceeds, such Net Casualty Proceeds shall be paid to the Senior
Permitted Mortgagee, and if there is no Senior Permitted Mortgagee then to
Lessor, in all events for application pursuant to this paragraph 14(b).
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Lessee shall be entitled to receive the Net Casualty Proceeds, but only
against certificates of the President or any Vice President of Lessee
delivered to Lessor and Proceeds Trustee from time to time as such work of
rebuilding, replacement and repair progresses, each such certificate
describing the work for which Lessee is requesting payment and the cost
incurred by Lessee in connection therewith and stating that Lessee has not
theretofore received payment for such work, provided that Lessee shall be
entitled to receive the Net Casualty Proceeds in an aggregate amount of up to
$100,000 in connection with any one occurrence without providing Lessor with
such certificates. To the extent that any Net Casualty Proceeds remaining
after such repairs have been made are less than $250,000 they shall be paid to
Lessee. If such remaining Net Casualty Proceeds equal or exceed $250,000,
such Net Casualty Proceeds shall be retained by the Proceeds Trustee, the
Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied
in reduction of the principal amount of the indebtedness secured by any Senior
Permitted Mortgage then outstanding. To the extent that any Net Casualty
Proceeds are not paid to Lessee pursuant to the preceding sentence, (i) the
amounts set forth in Schedule C shall be reduced in accordance with Schedule C,
and (ii) each installment of Basic Rent payable on or after the First
Payment Date occurring two months or more after the final payment to Lessee
for such restoration (including Extended Terms thereafter) shall be reduced by
an amount equal to the amount of such installment multiplied by a fraction,
the numerator of which shall be an amount equal to the remaining Net Casualty
Proceeds not paid to Lessee, and the denominator of which shall be the
applicable amount set forth in Schedule C prior to its reduction pursuant to
clause (i) above, provided that (i) the Basic Rent shall not be reduced to an
amount of less than $4.00 per square foot of remaining rentable space, and
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(ii) during the Primary Term the amount by which each such installment of
Basic Rent shall be so reduced shall not exceed the amount by which the amount
scheduled to be due on or about such date on any indebtedness of Lessor
secured by the Senior Permitted Mortgage is reduced to reflect the revised
amortization thereof after giving effect to the corresponding prepayment of
such indebtedness by Lessor (it being understood that in case the Senior
Permitted Mortgage is retired or otherwise refinanced prior to such
prepayment, such limitation shall be calculated as if such mortgage
indebtedness had remained outstanding, was so prepaid and the amortization
thereof revised as provided therein). If the cost of any repairs required to
be made by Lessee pursuant to this paragraph 14(b) shall exceed the amount of
such Net Casualty Proceeds, the deficiency shall be paid by Lessee.
(c) If the Leased Premises shall be substantially damaged or
destroyed in any single casualty so that, in Lessee's good faith judgment,
the Leased Premises shall be unsuitable for restoration for continued use and
occupancy in Lessee's business, then at Lessee's option in lieu of rebuilding,
replacing and repairing the Leased Premises, Lessee may give notice to Lessor,
within 30 days after the occurrence of such damage or destruction, of Lessee's
intention to terminate this Lease on the next Basic Rent Payment Date which
occurs not less than 210 days after the delivery of such notice (the
Termination Date), provided that, if the Termination Date occurs during the
Primary Term, such notice shall be accompanied by (i) an irrevocable offer of
Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the
Termination Date at a price determined in accordance with Schedule C hereof
(the Purchase Offer), and (ii) a certificate signed by the President or any
Vice President of Lessee stating that its board of directors (or an executive
committee thereof) has determined that such event has rendered the Leased
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Premises unsuitable for restoration, replacement and rebuilding for Lessee's
continued use and occupancy and that the Leased Premises will not be
restored. If Lessor shall reject such offer by notice to Lessee not later
than the 30th day prior to the Termination Date, the Net Casualty Proceeds and
the right thereto shall be assigned to and shall belong to Lessor and this
Lease shall terminate on the Termination Date, except with respect to
obligations and liabilities of Lessee under this Lease, actual or contingent,
which have arisen on or prior to the Termination Date, but only upon payment
by Lessee of all Basic Rent, additional rent, and other sums due and payable
by it under this Lease to and including the Termination Date; provided that
the amount of such Net Casualty Proceeds, if any, related to any portion of
the Improvements constructed by Lessee at its expense (and for which it has
not obtained reimbursement pursuant to paragraph 15 hereof), shall be paid to
Lessee as determined by the Appraisal Procedure. Unless Lessor shall have
rejected such offer in accordance with this paragraph, Lessor shall be
conclusively presumed to have accepted such offer, and on the Termination
Date, Lessor shall convey the remaining portion of the Leased Premises, if
any, and all its interest in the Net Casualty Proceeds in accordance with
paragraph 16. If the Termination Date shall occur during an Extended Term,
Lessee shall not be required to offer to purchase the Leased Premises; in such
case, the Net Casualty Proceeds shall belong to Lessor and this Lease shall
terminate; provided that the amount of such Net Casualty Proceeds, if any,
related to any portion of the Improvements constructed by Lessee at its
expense (and for which it has not obtained reimbursement pursuant to paragraph
15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure.
If the conditions set forth in the first sentence of this paragraph 14(c) are
fulfilled and Lessee fails to commence to rebuild, replace or repair the
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Leased Premises within 30 days after final adjustment of all insurance claims
made in connection therewith (but in no event later than one hundred eighty
days after the occurrence of such damage or destruction), Lessee conclusively
shall be deemed to have made such Purchase Offer and in the absence of a
written Purchase Offer by Lessee the Termination Date shall be deemed to be
the next Basic Rent Payment Date which occurs not less than 210 days after
such Purchase Offer is presumed to have been made; but nothing in this
sentence shall relieve Lessee of its obligation actually to deliver such
Purchase Offer.
15. Reimbursement for Alterations and Additions; Purchase of
Unimproved Land. (a) On any one or more dates during the Primary Term, Lessee
may request in writing (herein called a Lessee's Request) that Lessor pay to
Lessee the amount of Lessee's theretofore unreimbursed expenses (herein called
Reimbursable Expenses), which have been incurred by Lessee in connection with
the construction of additional structures on a portion or portions of the
Leased Premises upon which there are no major structures then existing and/or
additions, alterations to, or remodeling of, structures then existing on the
Leased Premises and the acquisition of land adjacent to the Leased Premises
(herein collectively called the Additions), which Additions are permitted by
paragraph ll(a) but are in addition to, and do not constitute, alterations,
additions or remodeling which Lessee is required to make upon the Leased
Premises pursuant to any provision of this Lease, and which Additions conform
to the character and quality of the then existing improvements on the Leased
Premises. Lessee shall have the right to make a Lessee's Request only if (i)
the construction of any Additions with respect to which such Reimbursable
Expenses have been incurred shall have been completed not more than two years
prior to the date of the Lessee's Request, (ii) the amount of such
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Reimbursable Expenses is not less than $500,000, (iii) the value or use of the
Leased Premises shall not be materially impaired by such Additions and (iv)
the sum of such requested Reimbursable Expenses and all Reimbursable Expenses
previously paid to Lessee pursuant to this paragraph 15(a) shall not exceed
$5,000,000. Each Lessee's Request shall be accompanied by architect's
drawings and specifications as previously approved by Lessor pursuant to
paragraph ll(a) hereof and accepted by Lessee, relating to the Additions with
respect to which such Request is made, and a Lessee's Certificate setting
forth in reasonable detail the amount and character of the Reimbursable
Expenses with respect to which such Request is made and a description of such
Additions, stating that the construction of such Additions has been completed
in compliance with the requirements of this paragraph 15, specifying the dates
on which the construction of such Additions were commenced and completed, and
stating that such Reimbursable Expenses are reimbursable in the amount
requested under the terms of this paragraph 15. Upon receipt of such Lessee's
Request, Lessor agrees to use its best efforts to arrange for the financing of
such Reimbursable Expenses on terms and conditions satisfactory to Lessor and
Lessee and consistent with the provisions of any Senior Permitted Mortgage.
Lessor and Lessee shall negotiate in good faith to enable Lessor to finance
such Reimbursable Expenses, having regard to then existing economic, financial
and money market conditions. Within ninety days after the receipt of such
Lessee's Request, drawings, specifications and Certificate, Lessor agrees to
pay to Lessee an amount equal to such Reimbursable Expenses so certified, but
only if the following further conditions shall have been fulfilled within such
90-day period:
(i) Lessor shall have issued and sold evidence of indebtedness (herein
called the Additional Indebtedness) pursuant to a Senior
Permitted Mortgage,
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for the purposes of obtaining funds to pay such Reimbursable
Expenses to Lessee;
(ii) The proceeds of the sale of the Additional Indebtedness actually
received by Lessor shall have been not less than the amount of
such Reimbursable Expenses;
(iii) Lessor and Lessee shall have authorized, executed and delivered
a supplement to this Lease, which supplement (herein called the
Lease Supplement) shall: (A) increase the Basic Rent payments
required to be made thereafter during the Primary Term by an
amount which shall be at least sufficient to make each payment,
when due, of principal of, and interest on, the Additional
Indebtedness, (B) increase each Basic Rent payment to be made
during the Extended Terms by an amount which shall be at least
sufficient to make each payment, when due, of principal of, and
interest on, the Additional Indebtedness during the portion of
such Extended Terms that such Additional Indebtedness is
outstanding, and Lessee shall not, and is obligated not to, cancel
its option to extend the term hereof to a date not earlier than
the maturity of the Additional Indebtedness, (C) increase the
purchase prices set forth in Schedule C hereto that would be
payable upon a purchase of the Leased Premises by Lessee pursuant
to paragraph 12(b) or 14(c), in each case by amounts which shall
at all times thereafter be at least sufficient to pay or prepay
the principal amount of the Additional Indebtedness to be then
outstanding (without adjustments for any prepayments made by
Lessor), and (D) make such other changes, if any, as shall be
necessary or appropriate, in the opinion of counsel for holders of
the Additional Indebtedness, by reason of the transactions
contemplated by this paragraph; and
(iv) Lessor shall have received from Lessee such other Lessee's
Certificates, opinions of counsel for Lessee, surveys of the
Leased Premises, title insurance policies, consents to the
assignment and reassignment of this Lease (as supplemented) and
other instruments as Lessor may reasonably request in order to
enable Lessor to finance the cost of such Reimbursable
Expenses by the issuance and sale of the Additional
(b) As long as Lessor has used its best efforts to arrange financing
as set forth in subparagraph (a) above, Lessor shall incur no liability to
Lessee by reason of the fact that Lessor does not pay Reimbursable Expenses,
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and if Lessor does not pay such Reimbursable Expenses, except as expressly
provided in subparagraph (c) below, this Lease shall continue in full effect,
without modification. All expenses incurred in connection with the issuance
by Lessor of Additional Indebtedness shall be borne by Lessee.
(c) If, after the conditions specified above have been satisfied
within 180 days of such Lessee's Request, Lessor shall not have paid to Lessee
an amount equal to such Reimbursable Expenses and if such Additions are either
contiguous to the Improvements or free standing (or subject to a party wall
pursuant to an agreement satisfactory in form and substance to Lessor and any
Senior Permitted Mortgagee) upon unimproved land constituting part of the
Leased Premises, then Lessee shall have the option, to be exercised by giving
90 days' notice to Lessor, to purchase such portion of the unimproved land
(together with any requisite easements) as is necessary for the construction
of such Additions, provided that such land (together with any land purchased
pursuant to paragraph 15(d) hereof, called the Unimproved Land) shall not be
improved by any permanent structure included in the Improvements and provided
further that the remainder of the Leased Premises, after excluding the
Unimproved Land, would (1) constitute an integrated economic unit including
sufficient parking and all necessary utility easements, (2) be a continuous
parcel of land, without gap or hiatus and be separately assessed for tax
purposes, (3) have adequate access to and from public highways, (4) not be in
violation of any Legal Requirement or Required Insurance, and (5) would have a
market value at least equal to the outstanding amount of the Senior Permitted
Mortgage as of such date. The purchase price for the Unimproved Land shall be
the greater of (x) fair market value attributable to such Unimproved Land, as
unencumbered by this Lease and without regard to any of Lessee's continuing
rights and obligations under this Lease, assuming Lessee shall have extended
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the Lease for all Extended Terms, as determined by Lessor and Lessee, and in
the event of their failure to agree, as determined by the Appraisal Procedure
or (y) Lessor's original cost attributable to such Unimproved Land as set
forth in Schedule A hereto. Lessee agrees that it shall bear the costs of the
Appraisal Procedure. On the date for purchase specified in Lessee's notice,
Lessor shall convey such Unimproved Land to Lessee or its designee pursuant to
and in compliance with paragraph 16. In the event of such purchase by Lessee,
Lessee agrees that (x) no improvements will be undertaken upon such Unimproved
Land which would materially reduce the value of the remainder of the Leased
Premises and (y) Lessee will grant such easements to Lessor or enter into such
cross-easement agreements with Lessor relating to the Unimproved Land as are
reasonably necessary to operate the remainder of the Leased Premises as an
integrated economic unit with no material reduction in the value thereof.
(d) In addition to the option contained in 15(c), Lessee shall have
the option to purchase all or any portion of the land described in Part 2 of
Schedule A and structure or Improvements thereon,* in the manner, at the price
and in accordance with the terms of subparagraph 15(c), provided that such
purchase shall not materially impair the value or use of the remainder of the
Leased Premises. Lessee shall have such option only if (i) Lessee shall have
undertaken in writing to construct improvements on such property for its own
use, and (ii) such improvements are not eligible for financing by Lessor
pursuant to the provisions of subparagraph 15(a).
(e) To the extent of the cash price paid to Lessor for Unimproved
Land purchased pursuant to paragraphs 15(c) or (d), (i) the amounts set forth
in Schedule C shall be reduced in accordance with Schedule C, and (ii) each
- ----------------
* See Schedule A, Part 2, for particulars.
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installment of Basic Rent payable on or after the first Payment Date occurring
two months or more after such purchase (including Extended Terms thereafter)
shall be reduced by an amount equal to the amount of such installment
multiplied by a fraction, the numerator of which shall be such purchase price
paid to Lessor, and the denominator of which shall be the applicable amount
set forth in Schedule C prior to its reduction pursuant to clause (i) above,
provided that (i) the Basic Rent shall not be reduced to an amount of less
than $4.00 per square foot of remaining rentable space, and (ii) during the
Primary Term the amount by which such installments of Basic Rent shall be so
reduced shall not exceed the amount by which the amount scheduled to be due on
or about such date on any indebtedness of Lessor secured by the Senior
Permitted Mortgage is reduced to reflect the revised amortization thereof
after giving effect to the corresponding prepayment of such indebtedness by
Lessor (it being understood that in the case the Senior Permitted Mortgage is
retired or otherwise refinanced prior to such prepayment, such limitations
shall be calculated as if such mortgage indebtedness had remained outstanding,
was so prepaid and the amortization thereof revised provided therein).
(f) In lieu of paying cash for the purchase of Unimproved Land
pursuant to paragraph 15(c) or (d), Lessee may convey to Lessor a substitute
parcel of land (Substitute Land) provided that the following conditions shall
be satisfied: the fair market value of the Substitute Land shall equal or
exceed the cash purchase price which would have been paid for the Unimproved
Land being purchased by Lessee (such fair market value of the Substitute Land
being determined by agreement of Lessor and Lessee, or failing such agreement,
by the Appraisal Procedure) (ii) all of the conditions set forth in paragraph
15(c) shall be satisfied as to the remaining portion of the Leased Premises
taken together with the Substitute Land, and (iii) Lessor and any Permitted
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Mortgagee shall have approved any exceptions to title to the Substitute Land.
All costs and expenses of Lessor and any Permitted Mortgagee incident to the
conveyance to Lessor of Substitute Land shall be borne by Lessee. In the event
that Unimproved Land is purchased pursuant to paragraph 15(c) or (d) in
exchange for Substitute Land rather than the payment of a cash purchase price,
the provisions of paragraph 15(e) shall not apply, and this Lease shall
continue in full effect without modification of Basic Rent or the amounts set
forth in Schedule C hereunder.
16. Procedure Upon Purchase. (a) If Lessee shall purchase the
Leased Premises pursuant to this Lease, Lessor need not convey any better title
thereto than existed on the date of the commencement of the Term hereof and
Lessee or its designee shall accept such title, subject, however, to the state
of title to the Leased Premises on the date of the commencement of the Term
hereof, the condition of the Leased Premises on the date of purchase and all
charges, liens, security interests and encumbrances on the Leased Premises and
all applicable Legal Requirements, but free of the lien of all Permitted
Mortgages and charges, liens, security interests and encumbrances resulting
from acts or failures to act of Lessor taken without the consent of Lessee.
(b) Upon the date fixed for any purchase of the Leased Premises
hereunder, Lessee shall pay to Lessor in immediately available funds the
purchase price therefor specified herein together with all Basic Rent,
additional rent and other sums then due and payable hereunder to and including
such date of purchase, and Lessor shall deliver to Lessee a special warranty
deed to the Leased Premises and any other instruments necessary to assign any
other property then required to be assigned by Lessor pursuant hereto. Lessee
shall pay all charges incident to such conveyance and assignment, including
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reasonable counsel fees, escrow fees, recording fees, title insurance premiums
and all applicable taxes (other than any income, capital gains or franchise
taxes of Lessor) which may be imposed by reason of such conveyance and
assignment and the delivery of said deeds and other instruments. Upon the
completion of such purchase, but not prior thereto (whether or not any delay or
failure in the completion of such purchase shall be the fault of Lessor), this
Lease and all obligations hereunder shall terminate, except with respect to
obligations and liabilities of Lessee hereunder, actual or contingent, which
have arisen on or prior to such date of purchase.
17. Assignment and Subletting. During the Primary Term only,
Lessee may sublet all or any part of the Leased Premises without the consent of
Lessor (provided, that each such sublease shall expressly be made subject to
the provisions of this Lease) and, may assign all its rights and interests
under this Lease. If Lessee assigns all its rights and interests under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Lessee hereunder in an instrument, approved by Lessor as to form
and substance (which approval will not be unreasonably withheld or delayed),
delivered to Lessor at the time of such assignment. No assignment or sublease
shall affect or reduce any of the obligations of Lessee hereunder, and all such
obligations shall continue in full effect as obligations of a principal and not
as obligations of a guarantor or surety, to the same extent as though no
assignment or subletting had been made, provided that performance by any such
assignee or sublessee of any of the obligations of Lessee under this Lease
shall be deemed to be performance by Lessee. No sublease or assignment shall
impose any obligations on Lessor or otherwise affect any of the rights of
Lessor under this Lease. Neither this Lease nor the Term hereby demised shall
be mortgaged by Lessee, nor shall Lessee mortgage or pledge the
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interest of Lessee in and to any sublease of the Leased Premises or the rentals
payable thereunder. Any mortgage, pledge, sublease or assignment made in
violation of this paragraph 17 shall be void. Lessee shall, within ten days
after the execution and delivery of any such assignment or the sublease of all
or substantially all of the Leased Premises, deliver a conformed copy thereof
to Lessor. Within ten days after the execution and delivery of any sublease of
all or any portion of the Leased Premises, Lessee shall give notice to Lessor
of the existence and term thereof, and of the name and address of the sublessee
thereunder.
18. Permitted Contests. Lessee shall not be required to (i) pay
any Imposition, (ii) comply with any statute, law, rule, order, regulation or
ordinance, (iii) discharge or remove any lien, encumbrance or charge or (iv)
obtain any waivers or settlements or make any changes or take any action with
respect to any encroachment, hindrance, obstruction, violation or impairment
referred to in paragraph 10(b), so long as Lessee shall contest, in good faith
and at its expense, the existence, the amount or the validity thereof, the
amount of the damages caused thereby, or the extent of its liability therefor,
by appropriate proceedings during the pendency of which there is prevented (A)
the collection of, or other realization upon, the tax, assessment, levy, fee,
rent or charge or lien, encumbrance or charge so contested, (B) the sale,
forfeiture or loss of the Leased Premises, or any part thereof, or the Basic
Rent or any additional rent, or any portion thereof, (C) any interference with
the use or occupancy of the Leased Premises or any part thereof, and (D) any
interference with the payment or collection of the Basic Rent or any additional
rent, or any portion thereof. While any such proceedings are pending, Lessor
shall not have the right to pay, remove or cause to be discharged the tax,
assessment, levy, fee, rent or charge or lien, encumbrance
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or charge thereby being contested. Lessee further agrees that each such contest
shall be promptly prosecuted to a final conclusion. Lessee shall pay, and save
Lessor harmless against, any and all losses, judgments, decrees and costs
(including all reasonable attorneys' fees and expenses) in connection with any
such contest and shall, promptly after the final settlement, compromise or
determination (including any appeals) of such contest, fully pay and discharge
the amounts which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith, together with all
penalties, fines, interests, costs and expenses thereof or in connection
therewith, and perform all acts, the performance of which shall be ordered or
decreed as a result thereof; provided, however, that nothing herein contained
shall be construed to require Lessee to pay or discharge any lien, encumbrance
or other charge created by any act or failure to act of Lessor or the payment
of which by Lessee is not otherwise required hereunder, or to perform any act
which Lessee is not otherwise required to perform hereunder. No such contest
shall subject Lessor or any Permitted Mortgagee to the risk of any criminal
liability. Lessee shall give such reasonable security to Lessor or the Senior
Permitted Mortgagee as may be demanded by Lessor or such Senior Permitted
Mortgagee to insure compliance with the foregoing provisions of this paragraph
18.
19. Conditional Limitations; Default Provision. (a) Any of the
following occurrences or acts shall constitute an event of default (herein
called an Event of Default) under this Lease:
(i) If Lessee, at any time during the continuance of this Lease
(and regardless of the pendency of any bankruptcy,
reorganization, receivership, insolvency or other proceedings,
at law, in equity, or before any administrative tribunal,
which have or might have the effect of preventing Lessee from
complying with the terms of this Lease), shall (1) fail to
make any payment when due of Basic Rent, additional rent or
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other sum herein required to be paid by Lessee
hereunder and such failure continues for 5 days, or (2) fail
to observe or perform any other provision hereof or any
provision of the Assignment of Lease and Guaranty, dated as of
the date hereof (the Assignment), from Lessor to Clinton
Holding Corporation (the Company), and consented to therein by
Lessee and by Lincoln National Corporation (Guarantor) or the
Reassignment of Lease and Guaranty, dated as of the date
hereof (the Reassignment), from the Company to The Connecticut
Bank and Trust Company, National Association and F. W. Kawam
(the Trustees), and consented to therein by Lessee and
Guarantor, for thirty days after notice to Lessee of such
failure has been given (provided, that in the case of any
default referred to in this clause (2) which cannot with
diligence be cured within such 30-day period, if Lessee shall
proceed promptly to cure the same and thereafter shall
prosecute the curing of such default with diligence, then upon
receipt by Lessor of a Lessee's Certificate stating the reason
such default cannot be cured within thirty days and stating
that Lessee is proceeding with diligence to cure such default,
the time within which such failure may be cured shall be
extended for such period as may be necessary to complete the
curing of the same with diligence but not to exceed 120 days
without Lessor's written consent which consent shall not be
unreasonably withheld); or
(ii) if any representation or warranty of Lessee or Guarantor
set forth in any notice, certificate, demand, request or
other instrument delivered pursuant to, or in connection
with, this Lease, the Assignment, or the Reassignment
shall either prove to be false or misleading in any
material respect as of the time when the same shall have
been made, or with respect to any such representation or
warranty Lessee or Guarantor shall fail to include in such
representation or warranty any fact or statement necessary in
light of the circumstances in which such representation or
warranty was made to make such representation or warranty not
misleading in any material respect as of the time when the
same shall have been made; or
(iii) if Lessee or Guarantor shall file a petition commencing a
voluntary case under the Federal Bankruptcy Code or any
other federal or state law (as now or hereafter in effect)
relating to bankruptcy, insolvency, reorganization,
winding-up or adjustment of debts (hereinafter collectively
called Bankruptcy Laws), or if Lessee or Guarantor shall (A)
apply for or consent to the appointment of, or the taking of
possession by, any receiver, custodian, trustee,
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United States Trustee or liquidator (or other similar
official) of the Leased Premises or any part thereof or of any
substantial portion of Lessee's property, or (B) generally not
pay their respective debts as they become due, or if either
Lessee or Guarantor admits in writing its inability to pay its
respective debts generally as they become due or (C) makes a
general assignment for the benefit of its respective
creditors, or (D) files a petition commencing a voluntary case
under or seeking to take advantage of any Bankruptcy Law, or
(E) fails to controvert in timely and appropriate manner, or
in writing acquiesces to, any petition commencing an
involuntary case against Lessee or Guarantor or otherwise
filed against Lessee or Guarantor pursuant to any Bankruptcy
Law, or (F) takes any corporate action in furtherance of any
of the foregoing, or
(iv) if an order for relief against Lessee or Guarantor shall be
entered in any involuntary case under the Federal
Bankruptcy Code or any similar order against Lessee or
Guarantor shall be entered pursuant to any other Bankruptcy
Law, or if a petition commencing an involuntary case against
Lessee or Guarantor or proposing the reorganization of Lessee
or Guarantor under any Bankruptcy Law shall be filed and not
be discharged or denied within 60 days after such filing, or
if a proceeding or case shall be commenced in any court of
competent jurisdiction seeking (A) the liquidation,
reorganization, dissolution, winding-up or adjustment of debts
of Lessee or Guarantor, or (B) the appointment of a receiver,
custodian, trustee, United States Trustee or liquidator (or
any similar official) of the Leased Premises or any part
thereof or of Lessee or Guarantor or of any substantial
portion of Lessee's or Guarantor's property, or (C) any
similar relief as to Lessee or Guarantor pursuant to any
Bankruptcy Law, and any such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue
unstayed and in effect for 60 days; or
(v) if (a) a final judgment for the payment of money in an amount
greater than $50,000 or (b) final judgments for the
payment of money aggregating in an amount greater than
$300,000 shall be rendered against Lessee or Guarantor and
Lessee or Guarantor shall not discharge the same or cause it
to be discharged within 60 days from the entry thereof, or
shall not appeal therefrom or from the order, decree or
process upon which or pursuant to which said judgment was
granted, based or entered, and secure a stay of execution or
an appeal
39
<PAGE>
bond in the amount of said judgment pending such appeal; or
(vi) if the Leased Premises shall be left both unattended and
without maintenance as provided herein, for a period of thirty
days; or
(vii) if Guarantor shall fail to observe or perform any provision
of the Guaranty or of the Other Guaranties, or pursuant
to the terms thereof shall be deemed to be in default
thereunder, and such failure or default shall continue for
thirty days after notice to Guarantor, provided, however, that
the foregoing shall not be construed as extending the period
of time during which the Guarantor is required to pay or
perform any obligation of Lessee hereunder or under the
Assignment or Reassignment.
(b) If an Event of Default shall have happened and be continuing,
Lessor shall have the right at its election to give Lessee written notice of
Lessor's intention to terminate the term of this Lease on a date specified in
such notice. Thereupon, the term of this Lease and the estate hereby granted
shall terminate on such date as completely and with the same effect as if such
date were the date fixed herein for the expiration of the term of this Lease,
and all rights of Lessee hereunder shall terminate, but Lessee shall remain
liable as hereinafter provided.
(c) If an Event of Default shall have happened and be continuing,
Lessor shall have the immediate right, whether or not the term of this Lease
shall have been terminated pursuant to paragraph 19(b), to (i) re-enter and
repossess the Leased Premises or any part thereof by force, summary
proceedings, ejectment or otherwise and (ii) remove all persons and property
therefrom. Lessor shall be under no liability by reason of any such re-entry,
repossession or removal. No such re-entry or taking of possession of the Leased
Premises by Lessor shall be construed as an election on Lessor's part to
terminate the Term of this Lease unless a written notice of such intention
40
<PAGE>
be given to Lessee pursuant to paragraph 19(b), or unless the termination of
this Lease be decreed by a court of competent jurisdiction.
(d) At any time or from time to time after the repossession of the
Leased Premises or any part thereof pursuant to paragraph 19(c), whether or not
the term of this Lease shall have been terminated pursuant to paragraph 19(b),
Lessor may (but shall be under no obligation to) relet the Leased Premises or
any part thereof for the account of Lessee, in the name of Lessee or Lessor or
otherwise, without notice to Lessee, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the term of this Lease) and on such conditions and for such uses as
Lessor, in its absolute discretion, may determine, and Lessor may collect and
receive any rents payable by reason of such reletting. Lessor shall not be
responsible or liable for any failure to relet the Leased Premises or any part
thereof or for any failure to collect any rent due upon any such reletting.
(e) No termination of the term of this Lease pursuant to paragraph
19(b), by operation of law or otherwise, and no repossession of the Leased
Premises or any part thereof pursuant to paragraph 19(c) or otherwise, and no
reletting of the Leased Premises or any part thereof pursuant to paragraph
19(d), shall relieve Lessee of its liabilities and obligations hereunder, all
of which shall survive such expiration, termination, repossession or reletting.
(f) In the event of any such termination or repossession, Lessee
will pay to Lessor the Basic Rent, additional rent and other sums required to
be paid by Lessee to and including the date of such termination or
repossession; and, thereafter, Lessee shall, until the end of what would have
been the term of this Lease in the absence of such termination or repossession,
and whether or not the Leased Premises or any part thereof shall
41
<PAGE>
have been relet, be liable to Lessor for, and shall pay to Lessor, as
liquidated and agreed current damages: (i) the Basic Rent, additional rent and
other sums which would be payable under this Lease by Lessee in the absence of
such termination or repossession, less (ii) the net proceeds, if any, of any
reletting effected for the account of Lessee pursuant to paragraph 19(d), after
deducting from such proceeds all Lessor's expenses incurred in connection with
such reletting (including, without limitation, all repossession costs,
brokerage commissions, legal expenses, reasonable attorneys' fees, employees'
expenses, alteration costs and expenses of preparation for such reletting).
Lessee will pay such current damages on the days on which the Basic Rent would
have been payable under this Lease in the absence of such termination or
repossession, and Lessor shall be entitled to recover the same from Lessee on
each such day.
(g) At any time after any such termination or repossession by
reason of the occurrence of an Event of Default, whether or not Lessor shall
have collected any current damages pursuant to paragraph 19(f), Lessor shall be
entitled to recover from Lessee, and Lessee will pay to Lessor on demand, as
and for liquidated and agreed final damages for Lessee's default and in lieu of
all current damages beyond the date of such demand (it being agreed that it
would be impracticable or extremely difficult to fix the actual damages), an
amount by which (a) the Basic Rent, additional rent and other sums which would
be payable under this Lease from the date of such demand (or, if it be earlier,
the date to which Lessee shall have satisfied in full its obligations under
paragraph 19(f) to pay current damages) for what would be the then unexpired
Term of this Lease in the absence of such termination or repossession,
discounted at the rate of 8% per annum over (b) the then fair net rental value
of the Leased Premises for the same period discounted at the
42
<PAGE>
rate of 8% per annum. If any statute or rule of law shall validly limit the
amount of such liquidated final damages to less than the amount above agreed
upon, Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law.
(h) Notwithstanding anything to the contrary stated herein, if an
Event of Default shall have happened and be continuing, whether or not Lessee
shall have abandoned the Leased Premises, Lessor may elect to continue this
Lease in effect for so long as Lessor does not terminate Lessee's rights to
possession of the Leased Premises and Lessor may enforce all of its rights and
remedies hereunder including without limitation the right to recover all Basic
Rent, additional rent and other sums payable hereunder as the same become due.
20. Additional Rights of Lessor. (a) No right or remedy herein
conferred upon or reserved to Lessor is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute. The failure of Lessor to insist at
any time upon the strict performance of any covenant or agreement or to
exercise any option, right, power or remedy contained in this Lease shall not
be construed as a waiver or a relinquishment thereof for the future. A receipt
by Lessor of any Basic Rent, any additional rent or any other sum payable
hereunder with knowledge of the breach of any covenant or agreement contained
in this Lease shall not be deemed a waiver of such breach, and no waiver by
Lessor of any provision of this Lease shall be deemed to have been made unless
expressed in writing and signed by Lessor. In addition to other remedies
provided in this Lease, Lessor shall be entitled, to the extent permitted by
applicable law, to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the covenants, agreements,
43
<PAGE>
conditions or provision of this Lease, or to decree compelling performance of
any of the covenants, agreement, conditions or provisions of this Lease, or to
any other remedy allowed to Lessor at law or in equity.
(b) To the extent it may lawfully do so, Lessee hereby waives and
surrenders for itself and all those claiming under it, including creditors of
all kinds, (i) any right and privilege which it or any of them may have under
any present or future constitution, statute or rule of law to redeem the Leased
Premises or to have a continuance of this Lease for the term hereby demised
after termination of Lessee's right of occupancy by order or judgment of any
court or by any legal process or writ, or under the terms of this Lease or
after the termination of the term of this Lease as herein provided, and (ii)
the benefits of any present or future constitution, statute or rule of law
which exempts property from liability for debt or for distress for rent.
(c) In the event an action shall be brought for the enforcement of
any right hereunder, the party cast in judgment shall pay to the prevailing
party all the expenses incurred in connection therewith including reasonable
attorneys' fees.
21. Notices, Demands and Other Instruments. All notices, demands,
requests, consents, approvals and other instruments required or permitted to be
given pursuant to the terms of this Lease shall be in writing and shall be
deemed to have been properly given if (a) with respect to Lessee, sent by
certified or registered mail, postage prepaid, or sent by telegram or delivered
by hand, in each case addressed to Lessee at its address first above set forth,
and (b) with respect to Lessor, sent by certified or registered mail, postage
prepaid, or sent by telegram or delivered by hand in each case, addressed to
Lessor at its address first above set forth. Lessor and Lessee shall each have
the right from time to time to specify as its address for
44
<PAGE>
purposes of this Lease any other address in the United States of America upon
giving 15 days' notice thereof, similarly given, to the other party.
22. Estoppel Certificates; Consents and Financial Statements. (a)
Lessee and Lessor will, at any time and from time to time, upon not less than
twenty days' prior request by the other party, execute, acknowledge and deliver
to the other party a Certificate, certifying that this Lease is unmodified and
in full effect (or setting forth any modifications and that this Lease is in
full effect as modified) and the dates to which the Basic Rent, additional rent
and other sums payable hereunder have been paid, and either stating that to the
knowledge of the signer of such certificate no default exists hereunder or
specifying each such default of which the signer may have knowledge; it being
intended, inter alia, that any such certificate may be relied upon by any
mortgagee or prospective purchaser or prospective mortgagee of the Leased
Premises.
(b) From time to time during the term of this Lease, Lessor
expects to secure financings of its interest in the Leased Premises by
assigning Lessor's interest in this Lease and the sums payable hereunder. In
the event of any such assignment to a Permitted Mortgagee, Lessee will, upon
not less than ten days' prior request by Lessor, execute, acknowledge and
deliver to Lessor a consent to such assignment addressed to such Permitted
Mortgagee in a form satisfactory to such Permitted Mortgagee; and Lessee will
produce, at Lessee's expense (but only with respect to the initial financing
involving the Permitted Mortgagee), such certificates, opinions of counsel and
other documents as may be reasonably requested by such Permitted Mortgagee.
(c) Lessee will furnish the following statements to Lessor:
(i) within 120 days after the end of each of Lessee's fiscal
years, the annual audited report of Lessee, including a
balance sheet and an income and surplus statement and
statement of changes in financial
45
<PAGE>
position for the fiscal year covered thereby, setting
forth in comparative form, the figures for the previous fiscal
year, all on a fully consolidated basis and in reasonable
detail and duly certified by the independent certified public
accountants regularly employed by Lessee,
(ii) within 120 days after the end of each of Lessee's fiscal
years, and together with the annual audited report
furnished in accordance with clause (i), an Officer's
Certificate stating that to the best of the signer's knowledge
and belief after making due inquiry, Lessee is not in default
in the performance or observance of any of the terms of this
Lease, or if Lessee shall be in Default to its knowledge,
specifying all such defaults, the nature thereof, and the
steps being taken to remedy the same,
(iii) with reasonable promptness, copies of all financial statements
and reports, if any, which Lessee shall send to its
respective stockholders, and copies of any Form 10-K, Form
10-Q, Form 8-K, proxy statement and registration statement
(other than Form S-8 registration statements), or copies of
any successor forms or statements substituted therefor, which
Lessee shall file with the Securities and Exchange Commission
or any governmental agency substituted therefor, and
(iv) with reasonable promptness, such other information, consistent
with the disclosure requirements of the federal
securities laws, respecting the financial condition and
affairs of Lessee, as Lessor may request from time to time.
23. No Merger. There shall be no merger of this Lease or the
leasehold estate hereby created with the fee estate in the Leased Premises or
any part thereof by reason of the same person acquiring or holding, directly
or indirectly, this Lease or the leasehold estate hereby created or any
interest in this Lease or in such leasehold estate as well as the fee estate in
the Leased Premises or any portion thereof.
24. Surrender. Upon the termination of this Lease, Lessee shall
peaceably surrender the Leased Premises to Lessor in the same condition in
which they were received from Lessor at the commencement of this Lease, except
as altered as permitted or required by this Lease and except for ordinary wear
46
<PAGE>
and tear. Provided that Lessee is not in default hereunder, Lessee shall remove
from the Leased Premises prior to or within a reasonable time after (not to
exceed thirty days) such termination all property not owned by Lessor, and, at
Lessee's expense, shall, at such time of removal, repair any damage caused by
such removal. Property not so removed shall become the property of Lessor.
Lessor may thereafter cause such property to be removed from the Leased
Premises and disposed of. The cost of any such removal and disposition and the
cost of repairing any damage caused by such removal shall be borne by Lessee.
25. Separability. Each and every covenant and agreement contained
in this Lease is separate and independent, and the breach of any thereof by
Lessor shall not discharge or relieve Lessee from any obligation hereunder. If
any term or provision of this Lease or the application thereof to any person or
circumstances or at any time shall to any extent be invalid and unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances or at any time other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
26. Binding Effect. All of the covenants, conditions and
obligations contained in this Lease shall be binding upon and inure to the
benefit of the respective successors and assigns of Lessor and Lessee to the
same extent as if each such successor and assign were in each case named as a
party to this Lease. This Lease may not be changed, modified or discharged
except by a writing signed by Lessor and Lessee.
27. Table of Contents, Headings. The table of contents and
headings used in this Lease are for convenient reference only and shall not to
any
47
<PAGE>
extent have the effect of modifying, amending or changing the provisions of
this Lease.
28. Governing Law. This Lease shall be governed by and interpreted
under the laws of the State of Indiana.
29. Certain Definitions.
(a) The term "Appraisal Procedure" means:
Lessee and Lessor shall each select an MAI appraiser. Such
value shall be determined by agreement of the full
appraisals of such two appraisers pursuant to the terms of
this Lease; and if no agreement can be reached by such two
appraisers, such value shall be determined by the full
appraisal of a third MAI appraiser, who shall be selected by
the original two appraisers. All reasonable and necessary
costs of the appraisals shall be paid by Lessee.
(b) The term "Guarantor" means:
Lincoln National Corporation, an Indiana corporation.
(c) The term "Guaranty" means:
The Guaranty, dated the date hereof, from Guarantor to Lessor,
guaranteeing performance of Lessee's obligations under this
Lease.
(d) The term "Impositions" means:
(i) all taxes, assessments (including assessments for benefits
from public works or improvements, whether or not begun
or completed prior to the commencement of the Term of this
Lease and whether or not to be completed within said Term),
levies, fees, water and sewer rents and charges, and all other
governmental charges of every kind, general and special,
ordinary and extraordinary, whether or not the same shall have
been within the express contemplation of the parties hereto,
together with any interest and penalties thereon, which are,
at any time, imposed or levied upon or assessed against (A)
the Leased Premises or any part thereof, (B) any Basic Rent,
any additional rent reserved or payable hereunder or any other
sums payable by Lessee hereunder, (C) this Lease or the
leasehold estate hereby created or which arise in respect of
the operation, possession, occupancy or use of the Leased
Premises;
48
<PAGE>
(ii) any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the Basic Rent,
additional rent or any other sums payable by Lessee hereunder
or levied upon or assessed against the Leased Premises;
including without limitation [reference to Indiana gross
receipts tax];
(iii) all sales and use taxes which may be levied or assessed
against or payable by Lessor or Lessee on account of
the acquisition, leasing or use of the Leased Premises or any
portion thereof; and
(iv) all charges for water, gas, light, heat, telephone,
electricity, power and other utilities and
communications services rendered or used on or about the
Leased Premises.
(e) The term "Junior Permitted Mortgagees" means American States
Insurance Company, as mortgagee under a mortgage, dated as of the date hereof,
from Lessor, as mortgagor, and its assigns; and Dean Witter Realty Inc., as
mortgagee under a mortgage dated as of the date hereof, from Lessor, as
mortgagor, and its assigns.
(f) The term "this Lease" means:
this Lease and Agreement as amended and modified from time to
time, together with any memorandum or short form of
lease entered into for the purpose of recording.
(g) The term "Lessee's Certificate" means:
a written certificate signed by the Chairman of the Board, the
President or any Vice President of Lessee.
(h) The term "Lessor's Cost" means Lessor's Cost from time to time
as set forth in Schedule C.
(i) The term "Other Guaranties" means:
the Guaranties, dated as of the date hereof, from Guarantor to
Lessor guaranteeing performance of the obligations of
Lincoln National Pension Insurance Company, as lessee, under a
Lease and Agreement, dated as of the date hereof, and the
Guaranty, dated as of the date hereof, from Guarantor to
Lessor guaranteeing performance of the obligations of American
States Insurance Company, as lessee, under a Lease and
Agreement, dated as of the date hereof.
49
<PAGE>
(j) The term "Permitted Mortgage" means:
any mortgage, deed of trust, security agreement, assignment of
lease or other security instrument relating to the
Leased Premises and this Lease, subject to the rights of
lessee under this Lease, and securing the borrowing by Lessor
from Clinton Holding Corporation, a Delaware corporation (the
Senior Permitted Mortgage), made at the time of execution of
this Lease, or any refinancing thereof, or the mortgages to
the Junior Permitted Mortgagees (the Subordinated Permitted
Mortgage).
(k) The term "Permitted Mortgagee" means the Senior Permitted
Mortgagee and the Junior Permitted Mortgagees.
(l) The term "Purchase Offer" means:
an offer delivered by Lessee to Lessor, executed by the
president or any vice president of Lessee, irrevocably
offering to purchase the Leased Premises pursuant to the
provisions of paragraphs 12 or 14 on any Termination Date
specified in such Offer at a price determined in accordance
with Schedule C.
(m) The term "Senior Permitted Mortgagee" means The Connecticut
Bank and Trust Company, National Association and F. W. Kawam, as trustees, as
assignees of Clinton Holding Corporation, and their successors and assigns.
(n) The term "Termination Date" means:
any Basic Rent Payment Date.
30. Lessee's Options; Right of First Refusal. (a) If no event of
default hereunder has occurred and is continuing, Lessee shall have the option
to purchase the Leased Premises either (x) on the last day of the Primary Term
or (y) on the last day of the first, second, third, fourth, fifth and sixth
Extended Terms if the Lease has been extended to any such date (any of such
dates for purchase being referred to as the Purchase Date), upon not less than
360 days prior written notice to Lessor of its intention to exercise such
option. The purchase price payable upon the exercise of such option shall be
the fair market value of the Leased Premises as of the Purchase Date, taking
50
<PAGE>
into consideration Lessee's continuing rights and obligations under this Lease
assuming Lessee shall have extended the Lease for all Extended Terms, minus the
enhancement of the fair market value of the Leased Premises due to the
existence of Lessee's Improvements and that portion of the Improvements, if
any, constructed by Lessee at its own expense and for which Lessee has not been
reimbursed pursuant to paragraph 15. If Lessee and Lessor cannot agree as to
such fair market value, such fair market value shall be determined in
accordance with the Appraisal Procedure. Such Appraisal Procedure shall be
completed within 150 days after Lessee's notice as set forth above. Lessee's
option shall be exercisable by giving notice of such exercise to Lessor not
less than 360 days prior to the Purchase Date. On the Purchase Date, Lessor
shall convey the Leased Premises to Lessee pursuant to and upon compliance with
paragraph 16. The foregoing option is personal to Lessee, and such option is
not assignable (except by Lessee to any of its affiliates) notwithstanding any
assignment of the Lease to any other person.
(b) If, at any time during the Primary Term or any Extended Term
of this Lease, Lessor shall receive and be willing to accept a bona fide offer
from a third party to purchase Lessor's interest in the Leased Premises, other
than an offer to purchase such interest at any sale incidental to foreclosure
or other similar proceedings, or if Lessor shall offer to sell its interest in
the Leased Premises to any third party, Lessor shall promptly transmit to
Lessee its written offer to sell such interest to Lessee upon the same terms
and conditions as are set forth in the third party offer or its offer to a
third party, as the case may be, together with a true copy of such offer
(containing the name and address of such third party); provided, however, that
Lessor's offer to Lessee shall be reduced by the enhancement of the fair market
value of the Leased Premises due to the existence of Lessee's
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<PAGE>
Improvements and that portion of the Improvements, if any, constructed by
Lessee at its own expense and for which Lessee has not been reimbursed pursuant
to paragraph 15, as determined by the Appraisal Procedure. Lessee shall have 30
business days within which to accept such offer. If Lessee shall accept such
offer by written notice to Lessor within such time, such offer and acceptance
shall constitute a contract between them for the sale by Lessor and the
purchase by Lessee of the Leased Premises, and shall not thereafter be subject
to rejection by either party. On the date of such purchase, Lessor shall convey
and assign the Leased Premises to Lessee, provided that such conveyance and
assignment shall be made subject to the Permitted Exceptions listed in Schedule
A hereto, to this Lease, and to such liens, encumbrances, charges, exceptions
and restrictions affecting the Leased Premises as such third party is willing
to accept in such offer, and provided further that this Lease and any Permitted
Mortgage shall continue in full force and effect. If the offer to sell is not
so accepted by Lessee, then Lessor may sell the Leased Premises to such third
party purchaser upon the terms contained in such original offer by or to such
third party and such sale and transfer must be consummated within 180 days
following the expiration of the time hereinabove provided for the acceptance by
Lessee. If the Leased Premises is sold to a third party, the sale shall be
subject to this Lease and all of the provisions hereof, including, without
limitation, all options granted to Lessee.
31. Schedules. The following are Schedules A, B and C referred to
in this Lease, which are hereby made a part hereof.
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<PAGE>
SCHEDULE A
TO LEASE
Part 1: Property Description
Part 2: Property subject to the option set forth in paragraph 15(d).
The Lease will include a legal description of certain specific
portions of the Leased Premises which are to be subject to the paragraph 15(d)
option. The amount of indebtedness to be prepaid pursuant to the Senior
Permitted Mortgage in connection with the exercise of such option will be the
greater of (a) the amount herein set forth as the cost attributable to such
portion of the Leased Premises or (b) the fair market value of such portion as
determined pursuant to paragraph 15(c). Such property and amounts will be as
follows:
West Fort Worth: unimproved land - $100,000
<PAGE>
SCHEDULE B
TO LEASE
Basic Rent Payments
1. The instalments of Basic Rent payable for the Leased Premises
during the Interim Term shall be: $6,668 per diem (based on a 360-day year of
12 30-day months), payable on August 31, 1984.
2. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term ending on and including August 31, 1989
shall be $691,409 and shall be payable semi-annually in arrears commencing on
February 28, 1985 and thereafter on the last day of each August and February
thereafter to and including August 31, 1989.
3. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1989 and
ending on and including August 31, 1994 shall be $1,571,803 and shall be
payable semi-annually in arrears commencing on February 28, 1990 and thereafter
on the last day of each August and February thereafter to and including August
31, 1994.
4. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1994 and
ending on and including August 31, 1999 shall be $1,599,188 and shall be
payable semi-annually in arrears commencing on February 28, 1995 and thereafter
on the last day of each August and February thereafter, to and including August
31, 1999.
5. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1999 and
ending on and including August 31, 2004 shall be $2,440,619 and shall be
<PAGE>
payable semi-annually in arrears commencing on February 29, 2000 and thereafter
on the last day of each August and February thereafter, to and including August
31, 2004.
6. Each instalment of Basic Rent payable for the Lease to
Premises during that portion of the Primary Term commencing on September 1,
2004 and ending on and including August 31, 2009 shall be $2,585,825 and should
be payable semi-annually in arrears commencing on February 28, 2005 and
thereafter on the last day of each August and February thereafter to and
including August 31, 2009.
7. Each instalment of Basic Rent for the Leased Premises during
the Extended Terms shall be $1,175,000, and shall be payable semi-annually in
arrears commencing on February 28, 2010 and thereafter on the last day of each
August and February thereafter occurring during the Extended Terms.
If any instalment of Basic Rent shall be payable on a date which
shall not be a business day, then such instalment shall be payable on the
first business day thereafter.
<PAGE>
SCHEDULE C
TO LEASE
COMPUTATION OF PURCHASE PRICES
Upon the purchase of the Leased Premises during the Interim or Primary
Terms pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall
be an amount equal to the amount set forth in column 2 below opposite the
period in which such purchase occurs (the first such amount being called
"Lessor's Cost") (period 1 being the period beginning on the first day of the
Interim Term and ending on and including February 28, 1985, period 2 being the
period beginning on March 1, 1985 and ending on and including August 31, 1985,
and each succeeding period being the following semiannual period to and
including period 50).
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
Purchase Period Applicable Amount
--------------- -----------------
<S> <C>
1 $26,405,296
2 27,661,280
3 28,664,433
4 29,746,062
5 30,751,407
6 31,809,467
7 32,818,136
8 33,850,098
9 34,863,375
10 35,891,867
11 36,576,595
12 36,744,483
13 36,878,346
14 38,979,820
15 37,085,896
16 37,206,250
17 37,341,716
18 37,493,127
19 37,661,416
20 37,847,563
21 38,025,262
22 38,218,155
23 38,426,981
</TABLE>
<PAGE>
<TABLE>
<S> <C>
24 38,652,186
25 38,894,730
26 39,155,290
27 39,434,663
28 39,733,686
29 40,053,240
30 40,394,253
31 39,692,606
32 38,953,827
33 38,175,132
34 37,353,526
35 36,485,793
36 35,568,471
37 34,597,843
38 33,569,910
39 32,480,373
40 31,324,614
41 29,822,990
42 28,234,468
43 26,552,917
44 24,771,760
45 22,883,943
46 20,881,899
47 18,757,508
48 16,502,058
49 14,106,204
50 11,559,914
</TABLE>
<PAGE>
Upon a partial prepayment of the indebtedness secured by the Senior
Permitted Mortgage referred to in paragraph 12(c), 14(b) or 15(e) of this
Lease, the amounts set forth above shall be reduced by an amount equal to
the amount of the reduction of the principal amount of such indebtedness
scheduled to be outstanding during each purchase period, after giving effect to
the revised amortization thereof resulting from such partial prepayment in
accordance with the terms thereof. (In case such indebtedness is prepaid or
other wise refinanced, the amounts so determined shall be reduced as if such
indebtedness had remained outstanding.)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
signed as of the date first above written.
CLINTON STREET LIMITED PARTNERSHIP,
as Lessor
By: Liberty Street Limited Partnership - 84,
A General Partner
By: /s/ E. DAVISSON HARDMAN, JR.,
-----------------------------
E. Davisson Hardman, Jr.,
A General Partner
LINCOLN NATIONAL PENSION INSURANCE COMPANY,
as Lessee
By: /s/ MAX A. ROESLER
-----------------------------
Name: Max A. Roesler
Title: Vice President
This document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
Exhibit A
Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
Parcel 1
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, together with a part of the Northeast
Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana,
both said parts being more particularly described as follows, to-wit:
Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'-
27" E, on and along the North line of said Section 7, by deed, a distance of
422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet
to the true point of beginning, located on the South right-of-way line of State
Road #14 (Illinois Road); thence S 00 degrees-03'-33" E a distance of 355.0
feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25
degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W,
a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15
feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67
degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40"E, a
distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18
feet to the Northwest corner of a 0.228 acre tract of land conveyed to
Professional Building Corporation of Fort Wayne in a deed appearing at Document
#74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02
degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a
distance of 75.15 feet to the Southwest corner thereof; thence N 89
degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a
distance of 133.98 feet to the Southeast corner thereof, said Southeast corner
being a point situated on the West line of a 60 foot-wide roadway and utility
easement granted in Deed Record 716, pages 150-152 in the Office of the
Recorder of Allen County, Indiana, said easement being known as Magnavox Way as
said name was established in an instrument appearing at Document #70-9781 in
the Office of the Recorder of Allen County, Indiana; thence S 00
degrees-03'-32" E, on and along the West line of said easement, a distance of
275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence
S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00"
W, a distance of 484.96 feet to an existing line fence; thence S 88
degrees-03'-10" W a distance of 345.52 feet to the Easterly right-of-way line
of Interstate Highway #69; thence Northeasterly, on and along said Easterly
right-of-way line on the following courses and distances:
<PAGE>
PARCEL 2 (Magnavox Way)
An easement for the purpose of ingress and egress and utilities for the benefit
of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716,
pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781
and 80-16836 over the following real estate.
A strip of land 60 feet in width lying 30 feet on either side of the line
described as follows:
Beginning at the North Quarter Corner of said Section 7, running thence South
89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence
South 00 degrees 08' 33" East 167.5 feet more or less to the South
Right-of-Way line of Frontage Road No. 1, the true point of beginning of this
description; thence continuing South 00 degrees 08' 33" East 185.48 feet;
thence on a tangent curve to the right having a central angle of 23 degrees
and a length of 250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet;
thence on a tangent curve to the left having a central angle of 24 degrees 41'
59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00
feet more or less to the North line of the South Half of the South Half of the
Southeast Quarter of the Northwest Quarter of Section 7, Township 30 degrees
North, Range 12 East, the South line of Inverness Investors, Inc. Property.
PARCEL 3
An easement for the purpose of ingress and egress for the benefit of Parcel 1
created in an Easement recorded November 7, 1963 in Deed Record 716, pages
153-157 and modified by Agreement recorded as Document Numbers 70-9781 and
80-16836 over the following described real estate.
Part of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in
Allen County, Indiana, more particularly described as follows, to wit:
Beginning at the Northeast corner of said South Half of the South Half of the
Southeast Quarter of the fractional Northwest Quarter of Section 7, on the
center line of Getz Road; thence West along the North line of the South Half of
the South Half of the Southeast Quarter of the fractional Northwest Quarter of
said Section 7, a distance of 1323.13 feet to a stone marking the Northwest
corner of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of said Section 7; thence South along the West
line of the East Half of the said fractional Northwest Quarter of Section 7, a
distance of 50.00 feet; thence East and parallel to the North line of said
South Half of the South Half of the Southeast Quarter of the fractional
Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the
center line of Getz Road, 50 feet South of the place of beginning, thence
North on the center line of the Getz Road a distance of 50.0 feet to the place
of beginning; and for the installation and perpetual maintenance of sewer and
water line within the Northern Half of the above described real estate.
<PAGE>
Re: Lease I Agreement
Guaranty
Memorandum of Lease and Agreement
Assignment of Lease and Guaranty
Reassignment of Lease and Guaranty
Second Assignment of Lease and
Guaranty
Second Reassignment of Lease and
Guaranty
("Lincoln West" site)
CORRECTION AGREEMENT
THIS AGREEMENT, made this 7th day of November, 1985, by and
between: CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership,
having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York,
New York, 10006; LINCOLN NATIONAL PENSION INSURANCE COMPANY, an Indiana
corporation, having an address at 1300 South Clinton Street, Fort Wayne,
Indiana 46801; CLINTON HOLDING CORPORATION, a Delaware corporation, having an
address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York
10006; THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W.
KAWAM, both having an address at One Constitution Plaza, Hartford Connecticut
06115; LINCOLN NATIONAL CORPORATION, having an address at 1300 South Clinton
Street, Fort Wayne, Indiana 46801 and AMERICAN STATES INSURANCE COMPANY,
having an address at 500 North Meridian Street, Indianapolis, Indiana 46207.
WITNESSETH:
WHEREAS, the parties to this agreement are parties to one or more
instruments, all dated as of August 1, 1984, in connection with the leasing by
Lincoln National Pension Insurance Company of a certain parcel of land located
in Allen County, Indiana, commonly known as the "Lincoln West" site, the legal
description of which is set forth on Schedule A hereto, which aforementioned
instruments were recorded on August 29, 1984, (unless otherwise noted below) in
85-034289
THREE RIVERS TITLE COMPANY, INC.
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
the Office of the Recorder of Allen County, Indiana, and which instruments
are as follows:
1. Lease and Agreement
(Not recorded)
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
2. Guaranty
(Not recorded)
From: Lincoln National Corporation, as "Guarantor"
To: Clinton Street Limited Partnership, as "Owner"
3. Memorandum of Lease and Agreement
Recorded as Instrument No. 84-021076
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
4. Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021078
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
5. Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021080
From: Clinton Holding Corporation, as "Company"
To: The Connecticut Bank and Trust Company, National
Association and F. W. Kawan, as "Trustees"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
6. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021084
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
7. Second Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021082
From: Clinton Holding Corporation, as "Company"
To: American States Insurance Company, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
<PAGE>
-3-
WHEREAS, the legal description of the "Lincoln West" site which is set
forth in Schedule A to each of the foregoing instruments has been determined to
be incomplete and, therefore, incorrect, and
WHEREAS, it is the mutual desire of the parties hereto that the
foregoing instruments be corrected by having appended to each instrument a
complete and correct Schedule A legal description, and, in the event any such
instrument has been recorded, that such instrument be corrected of record,
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00)
paid by each of the parties hereto to each of the other parties hereto, and
other valuable considerations each to the other in hand paid, the receipt and
sufficiency of which are hereby acknowledged, the parties do mutually covenant
and agree:
1. That Schedule A to this agreement be and it hereby is substituted
for Schedule A to all of the foregoing instruments.
2. That all other terms, conditions, and covenants of the aforesaid
instruments are and shall remain in full force and effect except as hereby
corrected.
3. That by inadvertence the aforesaid Second Reassignment of Lease and
Guaranty (recorded as Instrument No. 84-021082) was recorded prior in time to
the aforesaid Second Assignment of Lease and Guaranty (recorded as Instrument
No. 84-021084) and such order of recording to the contrary notwithstanding, all
parties hereto agree that such Second Reassignment of Lease and Guaranty shall
be subject and subordinate to the aforesaid Second Assignment of Lease and
Guaranty and said Second Assignment of Lease and Guaranty shall be considered
for all purposes as if and treated as though it had been signed, sealed,
delivered and recorded prior in time to the aforesaid Second Reassignment of
Lease and Guaranty.
<PAGE>
-4-
4. That subparagraph (iv) appearing at lines twenty-three through
twenty-six of the first page of ASSIGNMENT OF LEASE AND GUARANTY From CLINTON
STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION with respect to
Property Location: West Fort Wayne, Indiana, is corrected to read as follows:
"(iv) Series D 14.70% Secured Note Due September 1, 1999 in
the original principal amount of $2,805,280 (herein, together with any
notes issued in exchange or replacement therefor, called the Series D
Owner's Note)."
5. That this agreement may be executed in any number of counterparts
and each counterpart shall for all purposes be deemed to be an original; and
all such counterparts shall together constitute but one and the same agreement.
6. That the parties hereto are authorized and directed to attach this
Correction Agreement to each of the aforesaid instruments, as a part and
portion thereof, and to record same among the public records in the Office of
the Recorder of Allen County, Indiana, and elsewhere as they shall deem
appropriate.
This Agreement shall bind and shall inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed as of the day and year first above written.
<PAGE>
-5-
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
---------------------------------
E. Davisson Hardman, Jr.
A General Partner
LINCOLN NATIONAL PENSION INSURANCE
COMPANY,
BY: MAX ROESLER
--------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
---------------------------
Name: Dolores Prange
Title: Assistant Secretary
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
--------------------------------
Name: E. Davisson Hardman, Jr.
Title: President
(SEAL)
Attest:
BY: ALEXANDER J. JORDAN JR.
-------------------------------
Name: Alexander J. Jordan Jr.
Title: Assistant Secretary
<PAGE>
-6-
THE CONNECTICUT BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
BY: MASON M. LEMONT
----------------------------
Name: MASON M. LEMONT
Title: Asst. Vice President
(SEAL)
Attest:
BY: V. KREUSCHER
------------------------
Name: V. Kreuscher
Title: Assistant Vice President
F.W. KAWAM
-----------------------
F. W. Kawan
LINCOLN NATIONAL CORPORATION
BY: MAX ROESLER
-----------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-----------------------
Name: Dolores Prange
Title: Assistant Secretary
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
-----------------------------
Name: F. Ernest Barthel
Title: Vice President
(SEAL)
Attest:
By: THOMAS M. OBER
------------------------
Name: Thomas M. Ober
Title: Secretary
<PAGE>
-7-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY
STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the
general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership and acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of LIBERTY STREET
LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON
STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
----------------------
Printed Dolores M. Antonino
----------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ---------------------
<PAGE>
-8-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN: )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared Max Roesler and Dolores Prange, as Vice President and
Assistant. Secretary, respectively, of LINCOLN NATIONAL PENSION INSURANCE
COMPANY, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned.
DONALD F. BUTLER
------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ---------------------
Resident of DeKalb County, Indiana
<PAGE>
-9-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the
President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledge the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November, 1985
Signature DOLORES M. ANTONINO
------------------------
Printed Dolores M. Antonino
------------------------
NOTARY PUBLIC
(SEAL)
My commission expires:
July 25, 1991
- --------------------
<PAGE>
-10-
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared Mason M. Lemont and V. Kreuscher, the ASSISTANT VICE
PRESIDENT and ASSISTANT VICE PRESIDENT, respectively of THE CONNECTICUT BANK
AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
RUTH A. SMITH
-----------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires:
3/3/89
- ---------------------
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of
November, 1985, personally appeared F. W. Kawam who acknowledged execution of
the foregoing instrument as his free and voluntary act and deed, and as the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
RUTH A. SMITH
-----------------------
NOTARY PUBLIC
My Commission Expires:
3/3/89
- ---------------------
<PAGE>
-11-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared Max Roesler and Dolores Prange, as Vice President and
Assistant Secretary respectively, of LINCOLN NATIONAL CORPORATION, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
(SEAL) ---------------------------------
Donald F. Butler NOTARY PUBLIC
My Commission Expires:
May 25, 1987
- ----------------------
Resident of DeKalb County, Indiana
<PAGE>
-12-
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice
President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
(SEAL) ---------------------------------
Donald F. Butler NOTARY PUBLIC
My Commission Expires:
May 25, 1987
- ----------------------
Resident of DeKalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801.
<PAGE>
SCHEDULE A
PARCEL 1 Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, together with a part of the Northeast
Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana,
both said parts being more particularly described as follows, to wit:
Commencing at the Northwest corner of said Section 7; thence N 89
degrees-56'-27" E, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of
145.0 feet to the true point of beginning, located on the South right-of-way
line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a
distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41
feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13
degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a
distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43
feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24
degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228
acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N
89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a
distance of 133.98 feet to the Southeast corner thereof, said Southeast corner
being a point situated on the West line of a 60 foot-wide roadway and utility
easement granted in Deed Record 716, pages 150-152 in the Office of the
Recorder of Allen County, Indiana, said easement being known as Magnavox Way as
said name was established in an instrument appearing at Document #70-9781 in
the Office of the Recorder of Allen County, Indiana; thence S 00
degrees-03'-32" E, on and along the West line of said easement, a distance of
275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S
89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W,
a distance of 484.96 feet to an existing line fence; thence S 88
degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line
of Interstate Highway #69; thence Northeasterly, on and along said Easterly
right-of-way line on the following courses and distances:
Northeasterly, on and along the arc of a regular curve to the left having a
radius of 4046.53 feet, and being situated 140.0 feet (measured radially)
Southeasterly of and concentric to the centerline of I-69, an arc distance
of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a
length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04
feet to a point situated 100.0 feet (measured radially), Southeasterly of
said I-69 centerline; thence Northeasterly, on and along the arc of a
regular curve to the left having a radius of 4006.53 feet, and being
situated 100.0 feet (measured radially) Southeasterly of and concentric to
said I-69 centerline, an arc distance of 410.24 feet (the chord of which
bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23
degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 18
degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 14
degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 884.93 feet and being situated 70.0 feet (measured radially)
Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined
by the Southeasterly edge of pavement of an existing 18 foot-wide concrete
ramp, an arc distance of 327.39 feet (the chord of which bears N 26
degrees-38'-02" E, (for a length of 325.53 feet); thence N 35
degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet
(measured at right angles) Southeasterly of said line "S-E-C"; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 666.20 feet and being situated 50.0 feet (measured radially)
Southeasterly of and concentric to said line "S-E-C", an arc distance of
355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length
of 351.75 feet) to the true point of beginning.
<PAGE>
SCHEDULE A Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
PARCEL 2
An easement for the purpose of ingress and egress and utilities for the benefit
of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716,
pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781
and 80-16836 over the following real estate.
A strip of land 60 feet in width lying 30 feet on either side of the line
described as follows:
Beginning at the North Quarter Corner of said Section 7, running thence South
89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence
South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way
line of Frontage Road No. 1, the true point of beginning of this description;
thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a
tangent curve to the right having a central angle of 25 degrees and a length of
250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a
tangent curve to the left having a central angle of 24 degrees 41' 59" and a
length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more
or less to the North line of the South Half of the South Half of the Southeast
Quarter of the Northwest Quarter of Section 7, Township 30' North, Range 12
East, the South line of Inverness Investors, Inc. Property.
PARCEL 3
An easement for the purpose of ingress and egress for the benefit of Parcel 1
created in an Easement recorded November 7, 1968 in Deed Record 716, pages
153-157 and modified by Agreement recorded as Document Numbers 70-9781 and
80-16836 over the following described real estate.
Part of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in
Allen County, Indiana, more particularly described as follows, to wit:
Beginning at the Northeast corner of said South Half of the South Half of the
Southeast Quarter of the fractional Northwest Quarter of Section 7, on the
center line of Getz Road; thence West along the North line of the South Half of
the South Half of the Southeast Quarter of the fractional Northwest Quarter of
said Section 7, a distance of 1323.13 feet to a stone marking the Northwest
corner of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of said Section 7; thence South along the West
line of the East Half of the said fractional Northwest Quarter of Section 7, a
distance of 50.00 feet; thence East and parallel to the North line of said
South Half of the South Half of the Southeast Quarter of the fractional
Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the
center line of Getz Road, 50 feet South of the place of beginning, thence North
on the center line of the Getz Road a distance of 50.0 feet to the place of
beginning; and for the installation and perpetual maintenance of sewer and
water line within the Northern Half of the above described real estate.
<PAGE>
Re: Lease and Agreement
Guaranty
Memorandum of Lease and
Agreement
Assignment of Lease and
Guaranty
Reassignment of Lease and
Guaranty
Second Assignment of Lease
and Guaranty
Second Reassignment of Lease
and Guaranty
("Lincoln West" site)
PARTIAL RELEASE
In consideration of the sum of Ten Dollars ($10.00) and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, as parties to one or more of the
following-described instruments, to-wit:
1. Lease and Agreement -
(Not recorded)
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
2. Guaranty
(Not recorded)
From: Lincoln National Corporation, as "Guarantor"
To: Clinton Street Limited Partnership, as "Owner"
3. Memorandum of Lease and Agreement
Recorded as Instrument No. 84-021076
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
4. Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021078
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
5. Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021080
From: Clinton Holding Corporation, as "Company"
To: The Connecticut Bank and Trust Company, National
Association and F. W. Kawam, as "Trustees"
THREE RIVERS TITLE COMPANY, INC.
1985 NOV 19 AM 3:55
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
-2-
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
6. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021084
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
7. Second Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021082
From: Clinton Holding Corporation, as "Company"
To: American States Insurance Company, as "Assignee"
Consent to be: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
hereby release and discharge the real estate more particularly bounded and
described in Exhibit A hereto from the incumbrance and effect the
above-described instruments, which instruments were corrected by that certain
Correction Agreement by and among the parties hereto dated November 7, 1985,
and recorded November 19, 1985, in the Office of the Recorder of Allen County,
Indiana, as Instrument No. 85-34289.
The parties hereto agree that this Partial Release may be executed in
any number of counterparts and each counterpart shall for all purposes be
deemed to be an original; and such counterparts shall together constitute but
one and the same instrument.
Dated this 7th day of November, 1985.
<PAGE>
-3-
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
---------------------------------
E. Davisson Hardman, Jr.
A General Partner
LINCOLN NATIONAL PENSION INSURANCE
COMPANY
BY: MAX ROESLER
---------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-------------------------
Name: Dolores Prange
Title: Assistant Secretary
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
----------------------------------
Name: E. Davisson Hardman, Jr.
Title: President
(SEAL)
Attest:
BY: ALEXANDER J. JORDAN, JR.
--------------------------
Name: Alexander J. Jordan, Jr.
Title: Assistant Secretary
<PAGE>
-4-
THE CONNECTICUT BANK AND TRUST
COMPANY NATIONAL ASSOCIATION
BY: MASON M. LEMONT
---------------------------------
Name: MASON M. LEMONT
Title: Asst. Vice President
(SEAL)
Attest:
BY: V. KREUSCHER
-------------------------
Name: V. Kreuscher
Title: ASSISTANT VICE PRESIDENT
F. W. KAWAM
---------------------------------
F. W. Kawam
LINCOLN NATIONAL CORPORATION
BY: MAX ROESLER
----------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-------------------------
Name: Dolores Prange
Title: Assistant Secretary
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
----------------------------------
Name: F. Ernest Barthel
Title: Vice President
(SEAL)
Attest:
BY: THOMAS M. OBER
--------------------------
Name: Thomas M. Ober
Title: Secretary
<PAGE>
-5-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State, personally
appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED
PARTNERSHIP-84 a Massachusetts limited partnership, which is the general
partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
and acknowledged the execution of the foregoing instrument as such partner to
be his free and voluntary act as such partner of LIBERTY STREET LIMITED
PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET
LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7 day of November, 1985.
Signature DOLORES M. ANTONINO
-------------------
Printed Dolores M. Antonino
--------------------
NOTARY PUBLIC
My commission expires: (SEAL)
July 25, 1991
- ------------------------
<PAGE>
-6-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION
INSURANCE COMPANY, a corporation, and acknowledged the execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
/s/ DONALD F. BUTLER
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ------------------------
Resident of DeKalb County, Indiana
<PAGE>
-7-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State, personally
appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President
and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation
organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November, 1985
(SEAL)
Signature DOLORES M. ANTONINO
-------------------
Printed Dolores M. Antonino
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ------------------------
<PAGE>
-8-
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared Mason M. Lemont and V. Kreuscher, the ASSISTANT VICE
PRESIDENT and ASSISTANT VICE PRESIDENT, respectively of THE CONNECTICUT BANK
AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
(SEAL)
RUTH A. SMITH
------------------------
NOTARY PUBLIC
My Commission Expires:
March 3, 1989
- ------------------------
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared F. W. Kawam who acknowledged execution of the
foregoing instrument as his free and voluntary act and deed, and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
(SEAL)
RUTH A. SMITH
--------------------------
NOTARY PUBLIC
My Commission Expires:
March 3, 1989
- ------------------------
<PAGE>
-9-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL
CORPORATION, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned.
DONALD F. BUTLER
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ----------------------
Resident of DeKalb County, Indiana
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice
President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- -------------------------
Resident of DeKalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801.
<PAGE>
Exhibit A
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, being more particularly described as
follows:
Commencing at the Northwest corner of said Section 7: thence North 89 deg. 56
min. 27 sec. East, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a
distance of 145.0 feet to the South right of way line of Road #14 (Illinois
Road); thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0 feet;
thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet; thence
South 25 deg. 06 min. 36 sec. West, a distance of 147.78 feet; thence South 13
deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28 deg. 49
min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07 min. 55
sec. East, a distance of 116.43 feet; thence South 67 degrees 37 min. 33 sec.
East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec. East, a
distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a distance
of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed
to Professional Building Corporation of Fort Wayne in a deed appearing at a
Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of
said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner
thereof; thence North 89 deg. 56 min. 19 sec. East, on and along the South
line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast
corner thereof, said Southeast corner being a point situated on the West line
of a 60 foot wide roadway and utility easement granted in Deed Record 716,
pages 150-152 in the Office of the Recorder of Allen County, Indiana, said
easement being known as Magnavox Way as said name was established in an
instrument appearing at Document #70-9781 in the Office of the Recorder of
Allen County, Indiana; thence South 00 deg. 03 min. 32 sec. East, on and along
the West line of said easement, a distance of 200.0 feet to the point of
beginning; thence continuing South 00 deg. 03 min. 32 sec. East 75.00 feet;
thence South 66 deg. 10 min. 20 sec. West, a distance of 1122.16 feet; thence
South 89 deg. 56 min. 27 sec. West, a distance of 18.20 feet; thence North 15
deg. 16 min. 15 sec. East, a distance of 549.10 feet; thence South 89 deg. 54
min. 52 sec. East, a distance of 900.00 feet to the point of beginning,
containing 6.471 acres and subject to Easements and Rights of Way of Record.
<PAGE>
Property Location: West Fort Wayne, Indiana
84-021078
ASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON STREET LIMITED PARTNERSHIP
To
CLINTON HOLDING CORPORATION
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
THREE RIVERS TITLE COMPANY, INC.
1984 AUG 29 PM 4:57
ALLEN COUNTY RECORDER
Virginia L. Young
<PAGE>
ASSIGNMENT OF LEASES AND GUARANTY, dated as of August 1, 1984,
(herein, together with all supplements and amendments hereto, called this
Agreement), from CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership (herein called Owner), having an address c/o Dean Witter Realty
Inc., 130 Liberty Street, New York, New York 10006, to CLINTON HOLDING
CORPORATION, a Delaware corporation, herein, together with its respective
successors and assigns, called Assignee) having an address c/o Dean Witter
Realty Inc., 130 Liberty Street, New York, New York 10006.
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule A hereto (the Land Parcel) and in
the improvements located (the Land Parcel, together with the improvements
located thereon being collectively called the Schedule A Property), Assignor,
simultaneously with the execution and delivery hereof, is borrowing from
Assignee the amount of $16,551,155, such borrowing being evidenced by its (i)
Series A 13.90% Secured Note Due September 1, 1989, in the original principal
amount of $660,066 (herein, together with any notes issued in exchange or
replacement thereof, called the Series A Owner's Note), (ii) Series B 14.30%
Secured Note Due September 1, 1994, in the original principal amount of
$6,188,119 (herein, together with any notes issued in exchange or replacement
therefor, called the Series B Owner's Note), (iii) Series C 14.60% Secured Note
Due September 1, 1999, in the original principal amount of $5,742,574 (herein,
together with any notes issued in exchange or replacement thereof, called the
Series C Note), (iv) Series D 14.70% Secured Note Due September 1, 1999 in the
original principal amount of $8,584,159 (herein, together with any notes issued
in exchange or replacement therefor, called the Series D Owner's Note), and (v)
Series E 15.00% Secured Note Due September 1, 1999 in the original principal
amount of $1,155,116 (herein, together with any notes
<PAGE>
issued in exchange or replacement therefor, called the Series E Owner's Note;
the Series E Owner's Note, together with the Series A Owner's Note, the Series
B Owner's Note, the Series C Owner's Note and the Series D Owner's Note, are
herein collectively called the Owner's Notes).
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule B hereto and in the improvements
located thereon (the Schedule B Property), Assignor, simultaneously with the
execution and delivery hereof, is borrowing from Assignee the amount of
$50,646,535, such borrowing being evidenced by its (i) Series A 13.90% Secured
Note Due September 1, 1989, in the original principal amount of $2,019,802,
(ii) Series B 14.30% Secured Note Due September 1, 1994, in the original
principal amount of $18,935,644, (iii) Series C 14.60% Secured Note Due
September 1, 1999, in the original principal amount of $17,572,277, (iv) Series
D 14.70% Secured Note Due September 1, 1999 in the original principal amount of
$8,584,159 and (v) Series E 15.00% Secured Note Due September 1, 1999 in the
original principal amount of $3,534,653.
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule C hereto and in the improvements
located (the Schedule C Property), Assignor, simultaneously with the execution
and delivery hereof, is borrowing from Assignee the amount of $33,102,310, such
borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September
1, 1989, in the original principal amount of $1,320,132, (ii) Series B 14.30%
Secured Note Due September 1, 1994, in the original principal amount of
$12,376,237, (iii) Series C 14.60% Secured Note Due September 1, 1999, in the
original principal amount of $11,485,149, (iv) Series D 14.70% Secured Note Due
September 1, 1999 in the original principal amount of $5,610,561 and
2
<PAGE>
(v) Series E 15.00% Secured Note Due September 1, 1999 in the original
principal amount of $2,310,231.
The Secured Notes of the Owner relating to the Schedule B Property and
Schedule C Property are collectively called the Other Owner's Notes, and the
Schedule A Property together with the Schedule B Property and the Schedule C
Property are collectively called the Properties and individually called a
Property.
The Owner's Notes and the Other Owner's Notes are secured by three
separate Mortgages, each dated as of the date hereof (the Mortgage relating to
the Schedule A Property called the Mortgage and all three Mortgages
collectively called the Mortgages), from Owner, as mortgagor, to Assignee, as
mortgagee, which each creates a lien on a Property. As additional security for
the Owner's Notes and the Other Owner's Notes, Owner is entering into the
undertakings herein set forth. The Schedule A Property has been leased by Owner
to Lincoln National Pension Insurance Company (the Lessee) under a Lease and
Agreement, dated as of the date hereof (herein, together with all supplements
and amendments thereto, and any memorandum or short form thereof entered into
for the purpose of recording, called the Lease), between Owner, as lessor, and
the Lessee, as lessee. The obligations of the Lessee under the Lease and
hereunder has been guaranteed by Lincoln National Corporation (the Guarantor)
pursuant to a Guaranty dated as of the date hereof (the Guaranty). In order to
induce Assignee to purchase the Owner's Notes and the Other Owner's Notes and
accept the Mortgages, Owner is entering into the undertakings herein set forth
with Assignee and is assigning the Lease and the Guaranty to Assignee.
3
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, Owner
agrees as follows:
1. Owner, in furtherance of the covenants of the Mortgages and as
security for the payment of the principal of, premium, if any, and interest and
all other sums payable on the Owner's Notes and the Other Owner's Notes, and of
all other sums payable under the Mortgages, and the performance and observance
of the provisions thereof, has assigned, transferred, conveyed and set over,
and by these presents does assign, transfer, convey and set over to Assignee,
all of Owner's estate, right, title and interest in, to and under the Lease,
and the Guaranty together with all rights, powers, privileges, options and
other benefits of Owner as lessor under the Lease and as beneficiary under the
Guaranty including, but not by way of limitation, (i) the immediate and
continuing right to receive and collect all rents, income, revenues, issues,
profits, insurance proceeds, condemnation awards, moneys and security payable
or receivable under the Lease or the Guaranty pursuant to any of the provisions
of either thereof, whether as rents or as the purchase price of the Schedule A
Property or otherwise (except sums payable directly to any person other than
the lessor under the Lease), (ii) the right to accept any offer by Lessee to
purchase the Schedule A Property, or part thereof, or any award payable in
connection with a taking thereof (provided that such acceptance shall be
permitted by the terms of Section 3.1(a) of the Mortgages), (iii) the right and
power (which right and power are coupled with an interest) to execute and
deliver, as agent and attorney-in-fact of Owner, an appropriate deed or other
instrument necessary to convey the Schedule A Property, any part thereof or any
award payable in connection with a taking thereof to Lessee if Lessee becomes
obligated to purchase the Schedule A
4
<PAGE>
Property, any part thereof or any award payable in connection with a taking
thereof, (iv) the right to perform all other necessary or appropriate acts as
said agent and attorney-in-fact with respect to any purchase and conveyance
referred to in clause (iii) above, (v) the right to make all waivers and
agreements, (vi) the right to give all notices, consents and releases, (vii)
the right to take any legal action upon the happening of a default under the
Lease or the Guaranty including the commencement, conduct and consummation of
proceedings at law or in equity as shall be permitted under any provision of
the Lease or the Guaranty or by law or in equity and (viii) the right to do any
and all other things whatsoever which Owner or any lessor is or may be entitled
to do under the Lease or the Guaranty.
2. The assignment made hereby is executed as collateral security, and
the execution and delivery hereof shall not in any way impair or diminish the
obligations of Owner under the provisions of the Lease nor shall any of the
obligations contained in the Lease be imposed upon Assignee. Upon a release of
the Schedule A Property or part thereof from the lien of the Mortgage, pursuant
to the provisions of the Mortgage, said assignment, and all rights herein
assigned to Assignee shall cease and terminate and all the estate, right, title
and interest of owner in and to the above-described assigned property shall
revert to owner, and Assignee shall, at the request of Owner, deliver to Owner
an instrument in recordable form cancelling this Agreement and reassigning to
Owner the above-described assigned property. Upon the payment of the principal
of and premium, if any, and all accrued interest on the Owner's Notes and the
Other owner's Notes and of all other sums payable under the Mortgages, or upon
a release of all of the Property from the lien of the Mortgage pursuant to the
provisions of the Mortgage, said assignment and all rights herein assigned to
Assignee shall cease and
5
<PAGE>
terminate and all the estate, right, title and interest of Owner in and to the
above-described assigned property shall revert to Owner, and Assignee shall, at
the request of Owner, deliver to Owner an instrument in recordable form
cancelling this Agreement and reassigning to Owner the above-described assigned
property.
3. Owner hereby designates Assignee to receive all payments of Basic
Rent, purchase prices and other sums payable to the lessor under the Lease and
all payments receivable by Owner under the Guaranty and to receive duplicate
original copies of all notices, undertakings, demands, statements, documents
and other communications which the Guarantor is required or permitted to give,
make, deliver to or serve upon assignor under the Guaranty and which the Lessee
is required or permitted to give, make, deliver to or serve upon the lessor
under the Lease. Owner hereby directs the Lessee to deliver to Assignee, at its
address set forth above or at such other address as Assignee shall designate,
duplicate original copies of all such notices, undertakings, demands,
statements, documents and other communications and no delivery thereof by the
Lessee shall be of any force or effect unless made to Owner and also made to
Assignee as herein provided.
4. Owner represents to Assignee that Owner has not executed any other
assignment of the subject matter of this Assignment other than the Mortgage and
that the Lease is in full effect and are not in default.
5. Owner agrees that said assignment and the designation and direction
to the Lessee hereinabove set forth are irrevocable, and that it will not take
any action as lessor under the Lease or as the beneficiary under the Guaranty
which is inconsistent with said assignment, or make any other assignment,
designation or direction inconsistent therewith, and that any assignment,
designation or direction inconsistent therewith shall be void.
6
<PAGE>
Owner will, from time to time upon the request of Assignee execute all
instruments of further assurance and all such supplemental instruments with
respect to this Agreement as the Assignee may specify.
6. Owner hereby agrees, and hereby undertakes to obtain the agreements
of the Lessee to the following matters:
(a) The Lessee consents to the provisions of this Agreement, and
agrees to pay and deliver to Assignee all rentals and other sums assigned to
Assignee pursuant to this Agreement, without offset, deduction, defense,
deferment, abatement or diminution, subject to the provisions of the Lease and
will not, for any reason whatsoever, seek to recover from Assignee any moneys
duly owed and paid to the Assignee by virtue of this Agreement. The Lessee
agrees (i) that all sums payable to Assignee pursuant to the preceding sentence
shall be paid in such manner that Assignee shall have "collected funds" on each
date on which such sums are due and payable, and addressed to Assignee at its
address set forth above or to such other address or manner as may be specified
by Assignee by written notice to the Lessee and (ii) to deliver to Assignee
duplicate original copies of all notices and other instruments which each may
deliver pursuant to the Lease. No such payment or delivery made by a Lessee
shall be of any force or effect (i) unless paid to Assignee or delivered to
Assignee and Owner as provided above and (ii) until actually received by the
Assignee.
(b) Owner and the Lessee will not enter into any agreement
subordinating, amending, modifying or terminating (except as provided in the
Lease) the Lease without the consent thereto in writing of Assignee and any
such attempted subordination, amendment, modification or termination without
such consent shall be void. In the event that the Lease shall be amended as
herein permitted, the Lease as so amended shall continue to be subject to the
7
<PAGE>
provisions of this Agreement without the necessity of any further act by any of
the parties hereto. The Lessee will remain obligated under the Lease in
accordance with its terms, and will not take any action to terminate (except as
expressly permitted by the Lease), rescind or avoid the Lease, notwithstanding
any action with respect to the Lease which may be taken by an assignee or
receiver of Owner or of any such assignee or by any court in any such
proceeding.
(c) If, pursuant to the Lease, Lessee shall offer to purchase the
Schedule A Property (or any part thereof or any award payable in connection
with a taking thereof), notice of acceptance of any such offer shall be deemed
validly given for all purposes if given by Assignee as permitted by paragraph
1(ii) hereof and notice by Owner of rejection of any such offer shall be void
unless accompanied by the written consent of Assignee and no such offer shall
be deemed rejected by Owner without the written consent of Assignee. If Lessee
shall become obligated to purchase the Schedule A Property (or any part thereof
or any award payable in connection with a taking thereof) pursuant to any
provision of the Lease, Lessee will accept a deed and other instruments
conveying and transferring the Schedule A Property (or any part thereof) which
are executed and delivered by Assignee as being in compliance with the
provisions of the Lease, provided that said deed and other instruments shall
otherwise be in compliance with the provisions of the Lease. If it should
become necessary for Assignee or any other party to institute any foreclosure
or other judicial proceeding in order that title to the Schedule A Property (or
any part thereof or any award payable in connection with a taking thereof) may
be conveyed to Lessee, the time within which delivery of the deed or other
instruments relating to such conveyance may be made shall be extended to the
extent necessary to permit Assignee or such other party to institute and
8
<PAGE>
conclude such foreclosure or other judicial proceeding, and the Lease shall not
terminate, but shall continue in full effect until the expiration of such
period of extension.
7. This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This Agreement
may be executed in two or more counterparts and shall be deemed to have become
effective when and only when one or more of such counterparts shall have been
signed by or on behalf of each of the parties hereto, although it shall not be
necessary that any single counterpart be signed by or on behalf of each of the
parties hereto, and all such counterparts shall be deemed to constitute but one
and the same instrument. This Agreement shall be governed by the laws of the
State of Indiana.
8. The following are Schedules A, Schedule B and Schedule C referred
to in this Agreement.
9
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY
STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the
general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership and acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of LIBERTY STREET
LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON
STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 28th day of August, 1984.
Signature JOAN E. HOGAN
-----------------------------
Printed Joan E. Hogan
-----------------------------
NOTARY PUBLIC
My commission expires:
10-31-86
- -------------------------
10
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this ___ day of August,
A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION
INSURANCE COMPANY, a corporation, and acknowledged the execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
CAROL ANN JOHNSTON
-----------------------------
Carol Ann Johnston, Notary Public
(SEAL)
Carol A. Johnston
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, 1988
- ----------------------------------
<PAGE>
LINCOLN NATIONAL PENSION INSURANCE COMPANY hereby consents to the
foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to
each of the provisions set forth in paragraph 6 thereof.
LINCOLN NATIONAL PENSION INSURANCE
COMPANY
(SEAL)
Attest: By:MAX A. ROESLER
--------------------------------
Name: Max A. Roesler
Title: Vice President
By: PATRICIA A. ADAMS
--------------------------------
NAME: PATRICIA A. ADAMS
Title: Assistant Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Assignment of Lease and Guaranty and hereby accepts and agrees to each of the
provisions set forth in paragraph 6 thereof.
LINCOLN NATIONAL CORPORATION
(SEAL)
Attest: By: MAX A. ROESLER
--------------------------------
Name: Max A. Roesler
Title: Vice President
By: PATRICIA A. ADAMS
--------------------------------
Name: Patricia A. Adams
Title: Assistant Secretary
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
IN WITNESS WHEREOF, Owner has caused this Agreement to be executed
and delivered as of the date first above written.
CLINTON STREET LIMITED PARTNERSHIP
By: Liberty Street Limited
Partnership-84,
General Partner,
Witness: By: E. DAVISSON HARDMAN
------------------------------
E. Davisson Hardman,
a General Partner
<PAGE>
Property Location: West Fort Wayne, Indiana
84-021080
REASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON HOLDING CORPORATION
To
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
and
F. W. KAWAM,
as Trustees
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
THREE RIVERS TITLE COMPANY, INC.
1984 AUG 29 PM 5:00
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
Property Location: West Fort Wayne, Indiana
84-021080
REASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON HOLDING CORPORATION
To
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
and
F. W. KAWAM,
as Trustees
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
THREE RIVERS TITLE COMPANY, INC.
1984 AUG 29 PM 5:00
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
Property Location: West Fort Wayne, Indiana
REASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON HOLDING CORPORATION
To
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
and
F. W. KAWAM,
as Trustees
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
REASSIGNMENT OF LEASE AND GUARANTY, dated as of August l, 1984, from
CLINTON HOLDING CORPORATION, a Delaware corporation (herein, together with its
successors and assigns, called the Company) having an address c/o Dean Witter
Realty Inc., 130 Liberty Street, New York, New York 10006, to THE CONNECTICUT
BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an
address at One Constitution Plaza, Hartford, Connecticut 06115, as trustees
(the Trustees) under the Collateral Trust Indenture (the Indenture), dated as
of August 1, 1984, from the Company, as grantor, to the Trustees, as trustees
(the Trustees, together with their successors and assigns, are herein called
the Assignee).
PRELIMINARY STATEMENT
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
(Owner), has entered into a Lease and Agreement, dated as of August l, 1984
(herein, together with all amendments and supplements thereto and any short
form thereof entered into for purposes of recording, called the Lease), with
Lincoln National Pension Insurance Company, an Indiana corporation, as lessee
(Lessee). The obligations of Lessee under the Lease has been guaranteed by
Lincoln National Corporation (Guarantor) pursuant to a guaranty, dated as of
August l, 1984, from Guarantor to Owner (the Guaranty). The premises leased
pursuant to the Lease consist of the land parcel described in Schedule A hereto
(the Land Parcel), all buildings and other improvements located thereon, and
all easements, rights and appurtenances relating respectively thereto
(collectively, the Property). All right, title and interest of Owner in and to
the Lease and the Guaranty have been assigned to the Company pursuant to (i)
the mortgage, dated as of the date hereof, relating to the Property (the
Mortgage), from Owner, as mortgagor, to the Company, as
<PAGE>
mortgagee, and (ii) an Assignment of Lease and Guaranty, dated as of the date
hereof, relating to the Lease and the Guaranty (herein, together with all
supplements and amendments thereto, collectively called the Assignment), from
Owner, as assignor, to the Company, as assignee, as security for the (i) Series
A 13.90% Secured Notes Due September 1, 1989, in the original principal amount
of $4,000,000, (ii) Series B 14.30% Secured Notes Due September 1, 1994, in the
original principal amount of $37,500,000, (iii) Series C 14.60% Secured Notes
Due September 1, 1999, in the original principal amount of $34,800,000, (iv)
Series D 14.70% Secured Notes Due September 1, 1999, in the original principal
amount of $17,000,000, and (v) Series E 15.00% Secured Notes Due September 1,
1999, in the original principal amount of $7,000,000 of Owner.
NOW, THEREFORE, in consideration of the premises and the sum of One
Dollar ($1) and other valuable consideration, receipt whereof is hereby
acknowledged, and in order to secure (i) the due and punctual payment of the
Series A 13.90% Collateral Trust Notes Due September 1, 1999, the Series B
14.30% Collateral Trust Notes Due September 1, 1994, the Series C 14.60%
Collateral Trust Notes Due September 1, 1999, the Series D 14.70% Collateral
Trust Notes Due September 1, 1999 and the Series E 15.00% Collateral Trust
Notes Due September 1, 1999 of the Company, issued by the Company under and
secured by the Indenture and (ii) the performance of the Company's obligations
under the Indenture, the Company has assigned, transferred, conveyed and set
over, and by these presents does hereby assign, transfer, convey and set over,
to the Assignee, all of its rights, title and interest in and to the Lease, the
Guaranty and the Assignment; all without recourse to the Company.
The following is the Schedule A referred to in this Reassignment of
Lease and Guaranty, which Schedule is hereby incorporated by reference herein.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Reassignment of Lease
and Guaranty to be executed and its corporate seal to be hereunto affixed and
attested by its officers thereunto duly authorized, as of the date first above
written.
CLINTON HOLDING CORPORATION
By: E. DAVISSON HARDMAN, JR.
------------------------
Name:
Title:
(SEAL)
Attest:
By: ALEXANDER J. JORDAN JR.
------------------------
Name:
Title:
LINCOLN NATIONAL PENSION INSURANCE COMPANY hereby consents to the
foregoing Reassignment of Lease and Guaranty.
LINCOLN NATIONAL PENSION INSURANCE
COMPANY
By: MAX A. ROESLER
------------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest:
By: PATRICIA A. ADAMS
-------------------------------
Name: Patricia A. Adams
Title: Assistant Secretary
<PAGE>
LINCOLN NATIONAL CORPORATION, hereby consents to the foregoing
Reassignment of Lease and Guaranty.
LINCOLN NATIONAL CORPORATION
By: MAX A. ROESLER
------------------------
Name: Max A. Roesler
Title: Vice President
(Seal)
Attest:
By: PATRICIA A. ADAMS
--------------------------
Name: Patricia A. Adams
Title: Assistant Secretary
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY
STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the
general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership and acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of LIBERTY STREET
LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON
STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 28th day of August, 1984.
Signature JOAN E. HOGAN
---------------------------
Printed Joan E. Hogan
-------------------------
NOTARY PUBLIC
My commission expires:
10-31-86
- -----------------------
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan Jr., the
President and Secretary, respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 28th day of August, 1984.
Signature JOAN E. HOGAN
----------------------------
Printed Joan E. Hogan
----------------------------
NOTARY PUBLIC
My commission expires:
10-31-86
- --------------------------
<PAGE>
STATE OF INDIANA )
) SS.
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this _______ day of
August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams,
as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL
CORPORATION, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purpose therein
mentioned.
CAROL ANN JOHNSTON
---------------------------------
Carol Ann Johnston, Notary Public
(SEAL)
My Commission Expires:
CAROL A. JOHNSTON
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, 1988
- ------------------------------------
<PAGE>
PARCEL 2 (Magnavox Way)
An easement for the purpose of ingress and egress and utilities for the benefit
of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716,
pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781
and 80-16836 over the following real estate.
A strip of land 60 feet in width lying 30 feet on either side of the line
described as follows:
Beginning at the North Quarter Corner of said Section 7, running thence South
89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence
South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way
line of Frontage Road No. 1, the true point of beginning of this description;
thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a
tangent curve to the right having a central angle of 25 degrees and a length of
250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a
tangent curve to the left having a central angle of 24 degrees 41' 59" and a
length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more
or less to the North line of the South Half of the South Half of the Southeast
Quarter of the Northeast Quarter of Section 7, Township 30' North, Range 12
East, the South line of Inverness Investors, Inc. Property.
PARCEL 3
An easement for the purpose of ingress and egress for the benefit of Parcel 1
created in a Easement recorded November 7, 1963 in Deed Record 716, pages
153-157 and modified by Agreement recorded as Document Numbers 70-9781 and
80-16836 over the following described real estate.
Part of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in
Allen County, Indiana, more particularly described as follows, to wit:
Beginning at the Northeast corner of said South Half of the South Half of the
Southeast Quarter of the fractional Northwest Quarter of Section 7, on the
center line of Getz Road; thence West along the North line of the South Half of
the South Half of the Southeast Quarter of the fractional Northwest Quarter of
said Section 7, a distance of 1323.13 feet to a stone marking the Northwest
corner of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of said Section 7; thence South along the West
line of the East Half of the said fractional Northwest Quarter of Section 7, a
distance of 50.00 feet; thence East and parallel to the North line of said
South Half of the South Half of the Southeast Quarter of the fractional
Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the
center line of Getz Road, 50 feet South of the place of beginning, thence
North on the center line of the Getz Road a distance of 50.0 feet to the place
of beginning; and for the installation and perpetual maintenance of sewer and
water line within the Northern Half of the above described real estate.
<PAGE>
SCHEDULE A
Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
Parcel 1
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, together with a part of the Northeast
Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana,
both said parts being more particularly described as follows, to wit:
Commencing at the Northwest corner of said Section 7; thence N 89
degrees-56'-27" E, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of
145.0 feet to the true point of beginning, located on the South right-of-way
line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E a
distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41
feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13
degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a
distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43
feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24
degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228
acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N
89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a
distance of 133.98 feet to the Southeast corner thereof, said Southeast corner
being a point situated on the West line of a 60 foot-wide roadway and utility
easement granted in Deed Record 716, pages 150-152 in the Office of the
Recorder of Allen County, Indiana, said easement being known as Magnavox Way as
said name was established in an instrument appearing at Document #70-9781 in
the Office of the Recorder of Allen County, Indiana; thence S 00
degrees-03'-32" E, on and along the West line of said easement, a distance of
275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S
89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W,
a distance of 484.96 feet to an existing line fence; thence S 88
degrees-03'-10" W a distance of 345.52 feet to the Easterly right-of-way line
of Interstate Highway #69; thence Northeasterly, on and along said Easterly
right-of-way line on the following courses and distances:
<PAGE>
Re: Lease and Agreement
Guaranty
Memorandum of Lease and Agreement
Assignment of Lease and Guaranty
Reassignment of Lease and Guaranty
Second Assignment of Lease and
Guaranty
Second Reassignment of Lease and
Guaranty
("Lincoln West" site)
CORRECTION AGREEMENT 85-034289
THIS AGREEMENT, made this 7th day of November, 1985, by and between:
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having
an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York,
10006; LINCOLN NATIONAL PENSION INSURANCE COMPANY, an Indiana corporation,
having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46801;
CLINTON HOLDING CORPORATION, a Delaware corporation, having an address c/o
Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006; THE
CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both
having an address at One Constitution Plaza, Hartford Connecticut 06115;
LINCOLN NATIONAL CORPORATION, having an address at 1300 South Clinton Street,
Fort Wayne, Indiana 46 and AMERICAN STATES INSURANCE COMPANY, having an
address at 500 North Meridian Street, Indianapolis, Indiana 46207.
WITNESSETH:
WHEREAS, the parties to this agreement are parties to one or more
instruments, all dated as of August 1, 1984, in connection with the leasing by
Lincoln National Pension Insurance Company of a certain parcel of land located
in Allen County, Indiana, commonly known as the "Lincoln West" site, the legal
description of which is set forth on Schedule A hereto, which aforementioned
instruments were recorded on August 29, 1984, (unless otherwise noted below) in
THREE RIVERS COMPANY, INC.
1985 NOV 18 PM 1:33
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
-2-
the Office of the Recorder of Allen County, Indiana, and which instruments are
as follows:
1. Lease and Agreement
(Not recorded)
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
2. Guaranty
(Not recorded)
From: Lincoln National Corporation, as "Guarantor"
To: Clinton Street Limited Partnership, as "Owner"
3. Memorandum of Lease and Agreement
Recorded as Instrument No. 84-021076
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
4. Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021078
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
5. Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021080
From: Clinton Holding Corporation, as "Company"
To: The Connecticut Bank and Trust Company, National
Association and F. W. Kawan, as "Trustees"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
6. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021084
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
7. Second Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021082
From: Clinton Holding Corporation, as "Company"
To: American States Insurance Company, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
<PAGE>
-3-
WHEREAS, the legal description of the "Lincoln West" site which is set
forth in Schedule A to each of the foregoing instruments has been determined to
be incomplete and, therefore, incorrect, and
WHEREAS, it is the mutual desire of the parties hereto that the
foregoing instruments be corrected by having appended to each instrument a
complete and correct Schedule A legal description, and, in the event any such
instrument has been recorded, that such instrument be corrected of record,
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00)
paid by each of the parties hereto to each of the other parties hereto, and
other valuable considerations each to the other in hand paid, the receipt and
sufficiency of which are hereby acknowledged, the parties do mutually covenant
and agree:
1. That Schedule A to this agreement be and it hereby is substituted
for Schedule A to all of the foregoing instruments.
2. That all other terms, conditions, and covenants of the aforesaid
instruments are and shall remain in full force and effect except as hereby
corrected.
3. That by inadvertence the aforesaid Second Reassignment of Lease and
Guaranty (recorded as Instrument No. 84-021082) was recorded prior in time to
the aforesaid Second Assignment of Lease and Guaranty (recorded as Instrument
No . 84-021084) and such order of recording to the contrary notwithstanding,
all parties hereto agree that such Second Reassignment of Lease and Guaranty
shall be subject and subordinate to the aforesaid Second Assignment of Lease
and Guaranty and said Second Assignment of Lease and Guaranty shall be
considered for all purposes as if and treated as though it had been signed,
sealed, delivered and recorded prior in time to the aforesaid Second
Reassignment of Lease and Guaranty.
<PAGE>
-4-
4. That subparagraph (iv) appearing at lines twenty-three through
twenty-six of the first page of ASSIGNMENT OF LEASE AND GUARANTY From CLINTON
STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION with respect to
Property Location: West Fort Wayne, Indiana, is corrected to read as follows:
"(iv) Series D 14.70 Secured Note Due September 1, 1999 in the
original principal amount of $2,805,280 (herein, together with any notes issued
in exchange or replacement therefor, called the Series D Owner's Note)."
5. That this agreement may be executed in any number of counterparts
and each counterpart shall for all purposes be deemed to be an original; and
all such counterparts shall together constitute but one and the same
agreement.
6. That the parties hereto are authorized and directed to attach this
Correction Agreement to each of the aforesaid instruments, as a part and
portion thereof, and to record same among the public records in the Office of
the Recorder of Allen County, Indiana, and elsewhere as they shall deem
appropriate.
This Agreement shall bind and shall inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed as of the day and year first above written.
<PAGE>
-5-
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
---------------------------------
E. Davisson Hardman, Jr.
A General Partner
LINCOLN NATIONAL PENSION INSURANCE
COMPANY
BY: MAX ROESLER
---------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-------------------------
Name: Dolores Prange
Title: Assistant Secretary
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
----------------------------------
Name: E. Davisson Hardman, Jr.
Title: President
(SEAL)
Attest:
BY: ALEXANDER J. JORDAN, JR.
--------------------------
Name: Alexander J. Jordan, Jr.
Title: Assistant Secretary
<PAGE>
-6-
THE CONNECTICUT BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
BY: MASON M. LEMONT
---------------------------------
Name: Mason M. LeMont
Title: Asst. Vice President
(SEAL)
Attest:
BY: V. KREUSCHER
-------------------------
Name: V. Kreuscher
Title: ASSISTANT VICE PRESIDENT
F. W. KAWAM
---------------------------------
F. W. Kawam
LINCOLN NATIONAL CORPORATION
BY: MAX ROESLER
----------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-------------------------
Name: Dolores Prange
Title: Assistant Secretary
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
----------------------------------
Name: F. Ernest Barthel
Title: Vice President
(SEAL)
Attest:
BY: THOMAS M. OBER
--------------------------
Name: Thomas M. Ober
Title: Secretary
<PAGE>
-7-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY
STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the
general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership and acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of LIBERTY STREET
LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON
STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
-------------------
Printed Dolores M. Antonino
-------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ---------------------
<PAGE>
-8-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION
INSURANCE COMPANY, a corporation, and acknowledged the execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
DONALD F. BUTLER
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ----------------------
Resident of DeKalb County, Indiana
<PAGE>
-9-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the
President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November 198_
Signature DOLORES M. ANTONINO
----------------------
Printed Dolores M. Antonino
----------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ----------------------
<PAGE>
-10-
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared Mason M. Lemont and V. Kreuscher, the Assistant Vice
President and Assistant Vice President respectively of THE CONNECTICUT BANK
AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
RUTH A. SMITH
----------------------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires:
3/31/84
- ----------------------
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared F. W. Kawam who acknowledged execution of the
foregoing instrument as his free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
RUTH A. SMITH
----------------------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires:
3/31/84
- ----------------------
<PAGE>
-11-
STATE OF INDIANA )
)SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared Max Roesler and Dolores Prange, as Vice President and
Assistant Secretary respectively, of LINCOLN NATIONAL CORPORATION, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
-------------------------------
(SEAL) Donald F. Butler NOTARY PUBLIC
My Commission Expires:
May 25, 1987
- ----------------------
Resident of DeKalb County, Indiana
<PAGE>
-12-
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, Donald F. Butler, a Notary Public, this 7th day of November,
1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice
President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a
corporation, and acknowledged the execution of the foregoing instrument as
their free and voluntary act and deed and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein mentioned.
DONALD F. BUTLER
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- -----------------------
Resident of DeKalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney,
for Lincoln National Corporation, 1300 S. Clinton St.,
Fort Wayne, IN 46801.
<PAGE>
SCHEDULE A
PARCEL 1 Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, together with a part of the Northeast
Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana,
both said parts being more particularly described as follows, to wit:
Commencing at the Northwest corner of said Section 7; thence N 89
degrees-56'-27" E, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of
145.0 feet to the true point of beginning, located on the South right-of-way
line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a
distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41
feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13
degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a
distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43
feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24
degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228
acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N
89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a
distance of 133.98 feet to the Southeast corner thereof, said Southeast corner
being a point situated on the West line of a 60 foot-wide roadway and utility
easement granted in Deed Record 716, pages 150-152 in the Office of the
Recorder of Allen County, Indiana, said easement being known as Magnavox Way as
said name was established in an instrument appearing at Document #70-9781 in
the Office of the Recorder of Allen County, Indiana; thence S 00
degrees-03'-32" E, on and along the West line of said easement, a distance of
275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S
89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W,
a distance of 484.96 feet to an existing line fence; thence S 88
degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line
of Interstate Highway #69; thence Northeasterly on and along said Easterly
right-of-way line on the following courses and distances:
Northeasterly, on and along the arc of a regular curve to the left having a
radius of 4046.53 feet, and being situated 140.0 feet (measured radially)
Southeasterly of and concentric to the centerline of I-69, an arc distance
of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a
length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04
feet to a point situated 100.0 feet (measured radially), Southeasterly of
said I-69 centerline; thence Northeasterly, on and along the arc of a
regular curve to the left having a radius of 4006.53 feet, and being
situated 100.0 feet (measured radially) Southeasterly of and concentric to
said I-69 centerline, an arc distance of 410.24 feet (the chord of which
bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23
degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 18
degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 14
degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 884.93 feet and being situated 70.0 feet (measured radially)
Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined
by the Southeasterly edge of pavement of an existing 18 foot-wide concrete
ramp, an arc distance of 327.39 feet (the chord of which bears N 26
degrees-38'-02" E, for a length of 325.53 feet); thence N 35
degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet
(measured at right angles) Southeasterly of said line "S-E-C"; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 666.20 feet and being situated 50.0 feet (measured radially)
Southeasterly of and concentric to said line "S-E-C", an arc distance of
355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length
of 351.75 feet) to the true point of beginning.
<PAGE>
PARCEL 2
An easement for the purpose of ingross and egress and utilities for the benefit
of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716,
pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781
and 80-16836 over the following real estate.
A strip of land 60 feet in width lying 30 feet on either side of the line
described as follows:
Beginning at the North Quarter Corner of said Section 7, running thence South
89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence
South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way
line of Frontage Road No. 1, the true point of beginning of this description;
thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a
tangent curve to the right having a central angle of 25 degrees and a length of
250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a
tangent curve to the left having a central angle of 24 degrees 41' 59" and a
length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more
or less to the North line of the South Half of the South Half of the Southeast
Quarter of Section 7, Township 30' North, Range 12 East, the South line of
Inverness Investors, Inc. Property.
PARCEL 3
An easement for the purpose of ingress and egress for the benefit of Parcel 1
created in an Easement recorded November 7, 1968 in Deed Record 716, pages
153-157 and modified by Agreement recorded as Document Numbers 70-9781 and
80-16836 over the following described real estate.
Part of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in
Allen County, Indiana, more particularly described as follows, to wit:
Beginning at the Northeast corner of said South Half of the South Half of the
Southeast Quarter of the fractional Northwest Quarter of Section 7, on the
center line of Cetz Road; thence West along the North line of the South Half of
the South Half of the Southeast Quarter of the fractional Northwest Quarter of
said Section 7, a distance of 1323.13 feet to a stone marking the Northwest
corner of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of said Section 7; thence South along the West
line of the East Half of the said fractional Northwest Quarter of Section 7, a
distance of 50.00 feet; thence East and parallel to the North line of said
South Half of the South Half of the Southeast Quarter of the fractional
Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the
center line of Getz Road, 50 feet South of the place of beginning, thence North
on the center line of the Getz Road a distance of 50.0 feet to the place of
beginning; and for the installation and perpetual maintenance of sewer and
water line within the Northern Half of the above described real estate.
<PAGE>
Re: Lease and Agreement
Guaranty
Memorandum of Lease and
Agreement
Assignment of Lease and
Guaranty
Reassignment of Lease and
Guaranty
Second Assignment of Lease
and Guaranty
Second Reassignment of Lease
and Guaranty
("Lincoln West" site)
PARTIAL RELEASE
In consideration of the sum of Ten Dollars ($10.00) and other
good and valuable considerations, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, as parties to
one or more of the following-described instruments, to-wit:
1. Lease and Agreement
(Not recorded)
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
2. Guaranty
(Not recorded)
From: Lincoln National Corporation, as "Guarantor"
To: Clinton Street Limited Partnership, as "Owner"
3 Memorandum of Lease and Agreement
Recorded as Instrument No. 84-021076
The parties to which are:
Clinton Street Limited Partnership, as "Lessor"
and
Lincoln National Pension Insurance Company, as "Lessee"
4. Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021078
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
5. Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021080
From: Clinton Holding Corporation, as "Company"
To: The Connecticut Bank and Trust Company, National
Association and F. W. Kawam, as "Trustees"
THREE RIVERS TITLE COMPANY, INC.
1985 NOV 19 PM 3:55
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
-2-
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
6. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021084
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
7. Second Reassignment of Lease and Guaranty
Recorded as Instrument No. 84-021082
From: Clinton Holding Corporation, as "Company"
To: American States Insurance Company, as "Assignee"
Consent to be: Lincoln National Pension Insurance Company
and
Lincoln National Corporation
hereby release and discharge the real estate more particularly
bounded and described in Exhibit A hereto from the incumbrance and
effect the above-described instruments, which instruments were
corrected by that certain Correction Agreement by and among the
parties hereto dated November 7, 1985, and recorded November 19,
1985, in the Office of the Recorder of Allen County, Indiana,
as Instrument No. 85-34289.
The parties hereto agree that this Partial Release may be executed in any
number of counterparts and each counterpart shall for all purposes be deemed to
be an original; and such counterparts shall together constitute but one and the
same instrument.
Dated this 7th day of November, 1985.
<PAGE>
-3-
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
---------------------------------
E. Davisson Hardman, Jr.
A General Partner
LINCOLN NATIONAL PENSION INSURANCE
COMPANY
BY: MAX ROESLER
---------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-------------------------
Name: Dolores Prange
Title: Assistant Secretary
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
----------------------------------
Name: E. Davisson Hardman, Jr.
Title: President
(SEAL)
Attest:
BY: ALEXANDER J. JORDAN, JR.
--------------------------
Name: Alexander J. Jordan, Jr.
Title: Assistant Secretary
<PAGE>
-4-
THE CONNECTICUT BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
BY: MASON M. LEMONT
---------------------------------
Name: MASON M. LEMONT
Title: Asst. Vice President
(SEAL)
Attest:
BY: V. KREUSCHER
-------------------------
Name: V. Kreuscher
Title: Assistant Vice President
F. W. KAWAM
---------------------------------
F. W. Kawam
LINCOLN NATIONAL CORPORATION
BY: MAX ROESLER
----------------------------------
Name: Max Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
-------------------------
Name: Dolores Prange
Title: Assistant Secretary
AMERICAN STATES INSURANCE COMPANY
BY: F. ERNEST BARTHEL
----------------------------------
Name: F. Ernest Barthel
Title: Vice President
(SEAL)
Attest:
BY: THOMAS M. OBER
--------------------------
Name: Thomas M. Ober
Title: Secretary
<PAGE>
-5-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State, personally
appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED
PARTNERSHIP-84 a Massachusetts limited partnership, which is the general
partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
and acknowledged the execution of the foregoing instrument as such partner to
be his free and voluntary act as such partner of LIBERTY STREET LIMITED
PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET
LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
-------------------
Printed Dolores M. Antonino
-------------------
NOTARY PUBLIC
(SEAL)
My commission expires:
July 25, 1991
- -----------------------
<PAGE>
-6-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION
INSURANCE COMPANY, a corporation, and acknowledged the execution of the
foregoing instrument as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation for the uses and purposes
therein mentioned.
DONALD F. BUTLER
--------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- --------------------------
Resident of DeKalb County, Indiana
<PAGE>
-7-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the
President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
------------------------
Printed Dolores M. Antonino
------------------------
NOTARY PUBLIC
(SEAL)
My commission expires:
July 25, 1991
- ----------------------
<PAGE>
-8-
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared Mason M. Lemont and V. Kreuscher, the ASSISTANT VICE
PRESIDENT and ASSISTANT VICE PRESIDENT respectively, of THE CONNECTICUT BANK
AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the
foregoing instrument as their free and voluntary act and deed and as the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
RUTH A. SMITH
---------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires:
3/3/89
- ----------------------
STATE OF CONNECTICUT )
) SS:
COUNTY OF HARTFORD )
Before me, Ruth A. Smith, a Notary Public, this 7th day of November,
1985, personally appeared F. W. Kawam who acknowledged execution of
the foregoing instrument as his free and voluntary act and deed, and as the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
RUTH A. SMITH
---------------------
NOTARY PUBLIC
My Commission Expires:
July 25, 1987
- -----------------------
<PAGE>
-9-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL
CORPORATION INSURANCE COMPANY, a corporation, and acknowledged the execution of
the foregoing instrument as their free and voluntary act and deed and as the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
Donald F. Butler
--------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ------------------------
Resident of DeKalb County, Indiana
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as
Vice President and Secretary respectively, of AMERICAN STATES INSURANCE
COMPANY, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned.
DONALD F. BUTLER
---------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- --------------------------
Resident of DeKalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801
<PAGE>
EXHIBIT A
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, being more particularly described as
follows:
Commencing at the Northwest corner of said Section 7; thence North 89 deg. 56
min. 27 sec. East, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a
distance of 145.0 feet to the South right of way line of State Road #14
(Illinois Road): thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0
feet; thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet;
thence South 25 deg. 06 min. 36 sec. West, a distance of 147.78 feet; thence
South 13 deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28
deg. 49 min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07
min. 55 sec. East, a distance of 116.43 feet; thence South 67 deg. 37 min. 33
sec. East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec.
East, a distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at a Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of
said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof;
thence North 89 deg. 56 min. 19 sec. East, on and along the South line of said
0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof,
said Southeast corner being a point situated on the West line of a 60 foot wide
roadway and utility easement granted in Deed Record 716, pages 150-152 in the
Office of the Recorder of Allen County, Indiana, said easement being known as
Magnavox Way as said name was established in an instrument appearing at
Document #70-9781 in the Office of the Recorder of Allen County, Indiana;
thence South 00 deg. 03 min. 32 sec. East, on and along the West line of said
easement, a distance of 200.0 feet to the point of beginning; thence continuing
South 00 deg. 03 min. 32 sec. East 75.00 feet; thence South 66 deg. 10 min. 20
sec. West, a distance of 1122.16 feet; thence South 89 deg. 56 min. 27 sec.
West, a distance of 18.20 feet; thence North 15 deg. 16 min. 19 sec. East, a
distance of 549.10 feet; thence South 89 deg. 54 min. 52 sec. East, a distance
of 900.00 feet to the point of beginning, containing 6.471 acres and subject to
Easements and Rights of Way of Record.
Exhibit (n)
LEASE AND AGREEMENT
Between
CLINTON STREET LIMITED PARTNERSHIP,
as Lessor
And
THE LINCOLN NATIONAL LIFE
as Lessee
Dated as of August 1, 1984
Location of Leased Premises: 1300 S. Clinton St.
Fort Wayne, IN 46802
(Downtown locations except Renaissance Square)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Title and Condition. . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Use of Leased Premises; Quiet Enjoyment. . . . . . . . . . . . . . . 2
4. Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
6. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . 4
7. Taxes and Assessments; Compliance with Law . . . . . . . . . . . . . 6
8. Liens; Grants of Easements . . . . . . . . . . . . . . . . . . . . . 7
9. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . 10
11. Alterations and Additions . . . . . . . . . . . . . . . . . . . . . 12
12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
14. Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15. Reimbursement for Alterations and Additions;
Purchase of Unimproved Land . . . . . . . . . . . . . . . . . . . 28
16. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . 34
17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . 35
18. Permitted Contests. . . . . . . . . . . . . . . . . . . . . . . . . 36
19. Conditional Limitations; Default Provision. . . . . . . . . . . . . 37
20. Additional Rights of Lessor . . . . . . . . . . . . . . . . . . . . 43
21. Notices, Demands and Other Instruments. . . . . . . . . . . . . . . 44
22. Estoppel Certificates; Consents and Financial Statements. . . . . . 45
23. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
24. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
25. Separability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
26. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
27. Table of Contents, Headings . . . . . . . . . . . . . . . . . . . . 47
28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
29. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 48
30. Lessee's Options; Right of First Refusal. . . . . . . . . . . . . . 49
31. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
SCHEDULE A - Property Description and Permitted Exceptions
SCHEDULE B - Basic Rent Payments
SCHEDULE C - Computation of Purchase Prices
<PAGE>
LEASE AND AGREEMENT, dated as of August 1, 1984 (this Lease)
between CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
(herein, together with its successor and assigns, called Lessor), having an
address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York
10006 and THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation
(herein, together with any corporation succeeding thereto by consolidation,
merger or acquisition of all or substantially all its assets, called Lessee),
having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46801.
Certain words or phrases having initial capitals have the meanings set forth in
paragraph 29.
1. Demise of Premises. In consideration of the rents and covenants
herein stipulated to be paid and performed, Lessor hereby demises and lets to
Lessee, and Lessee hereby lets from Lessor, for the terms herein described, the
premises (herein called the Leased Premises) consisting of (i) the land
described in Schedule A hereto (herein called the Land Parcel), (ii) all
buildings, structures and other improvements thereon, including all building
equipment and fixtures, if any, owned by Lessor (herein collectively called the
Improvements), but excluding trade equipment, fixtures and other personal
property owned by Lessee and Lessee's Improvements (as hereinafter defined in
paragraph 11(c)), and (iii) all easements, rights and appurtenances relating
thereto, all upon the terms and conditions herein specified.
2. Title and Condition. The Leased Premises are demised and let
subject to (a) the rights of any parties in possession and the existing state
of the title as of the commencement of the term of this Lease, (b) any state of
facts which an accurate survey or physical inspection thereof might show, (c)
all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
<PAGE>
by any governmental authority having jurisdiction, and (d) the condition of any
buildings, structures and other improvements located thereon, as of the
commencement of the term of this Lease, without representation or warranty by
Lessor. Lessee represents that it has examined the title to and the condition
of the Leased Premises and has found the same to be satisfactory.
3. Use of Leased Premises; Quiet Enjoyment. (a) Lessee may occupy and
use the Leased Premises for any lawful purpose.
(b) If and so long as Lessee shall observe and perform all covenants,
agreements and obligations required to be observed and performed by it
hereunder, Lessor covenants that it will not and will not permit any party
claiming by, through or under Lessor, to interfere with the peaceful and quiet
possession and enjoyment of the Leased Premises by Lessee; provided, that
Lessor and its agents may, upon prior notice to Lessee (unless Lessor has
reason to believe a default or Event of Default hereunder has occurred, in
which case no such notice shall be necessary), enter upon and examine the
Leased Premises at reasonable times. Lessee shall have the right to accompany
Lessor and its agents during any such examination of the Leased Premises. Any
failure by Lessor to comply with the foregoing warranties shall not give Lessee
any right to cancel or terminate this Lease, or to abate, reduce or make
deduction from or offset against any Basic Rent, as hereinafter defined, or
additional rent or other sum payable under this Lease, or to fail to perform or
observe any other covenant, agreement or obligation hereunder.
4. Terms. Subject to the terms and conditions hereof, Lessee shall
have and hold the Leased Premises for (a) an interim term (herein called the
Interim Term) commencing on August 30, 1984 and ending at midnight on August
31, 1984; and (b) a primary term (herein called the Primary Term) commencing on
September 1, 1984, and ending at midnight on August 31, 2009. Thereafter,
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Lessee shall have the rights and options to extend this Lease for 6
consecutive extended terms of 5 years each (herein called Extended Terms, and
together with the Interim Term and the Primary Term, called the Term) unless
this Lease shall be sooner terminated pursuant to the provisions hereof. Each
such Extended Term shall commence on the day immediately succeeding the
expiration date of the preceding Primary Term or Extended Term, as the case may
be, and shall end at midnight on the day immediately preceding the fifth
anniversary of the first day of such Extended Term. Each such option to extend
this Lease shall conclusively be deemed to have been exercised by Lessee unless
Lessee shall give written notice to the contrary to Lessor at least three
hundred sixty-five days prior to the end of the then Term of this Lease. No
instrument of renewal need be executed, provided that no Extended Term shall
take effect unless this Lease is in full force and effect and no default or
Event of Default exists and is continuing immediately prior to the commencement
thereof. If Lessee gives notice of its intention not to extend this Lease, the
term of this Lease shall terminate at the end of the then Term of this Lease
and Lessee shall have no further option to extend this Lease. If Lessee gives
such notice not to extend this Lease, then Lessor shall have the right during
the remainder of the Term of this Lease to advertise the availability of the
Leased Premises for sale or reletting and to erect upon the Leased Premises
signs appropriate for the purpose of indicating such availability, provided
that such signs do not unreasonably interfere with the use of the Leased
Premises by Lessee. The phrase "Term of this Lease" or "Term hereof" means the
Interim Term and the Primary Term, plus any Extended Term with respect to which
the right to extend has been exercised.
5. Rent. (a) Lessee covenants to pay to Lessor, as instalments of rent
for the Leased Premises during the Term of this Lease, the amounts set
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forth in Schedule B hereto (herein called the Basic Rent) on the dates set
forth in said Schedule (herein called the Basic Rent Payment Dates), and to pay
in immediately available funds the same at Lessor's address set forth above or
at such other place within the continental United States and/or to such other
person as Lessor from time to time may designate to Lessee in writing, in
lawful money of the United States of America.
(b) Lessee covenants that all other amounts, liabilities and
obligations which Lessee assumes or agrees to pay or discharge pursuant to this
Lease (except amounts payable as the purchase price for the Leased Premises or
any part thereof pursuant to any provision of this Lease and amounts payable as
liquidated damages pursuant to paragraph 19(j) or paragraph 19(g)), together
with every fine, penalty, interest and cost which may be added for nonpayment
or late payment thereof, shall constitute additional rent hereunder. In the
event of any failure by Lessee to pay or discharge any of the foregoing, Lessor
shall have all rights, powers and remedies provided herein or by law in the
case of nonpayment of Basic Rent. Lessee also covenants to pay to Lessor on
demand as such additional rent (A) interest at the rate of 18.00 per annum (or
the maximum not prohibited by law, whichever is less), calculated on the basis
of a 360-day year of twelve equal months, on all overdue instalments of Basic
Rent from the due date thereof (without regard to any grace period) until paid
in full and (B) interest at the rate of 16.00 per annum (calculated as set
forth in clause (A) above) on all overdue amounts relating to any other aspects
of additional rent arising out of obligations which Lessor shall have paid on
behalf of Lessee from the date of such payment by Lessor until paid in full.
6. Net Lease; Non-Terminability. (a) This is an absolutely net lease
and the Basic Rent, additional rent and all other sums payable hereunder
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by Lessee, whether as the purchase price for the Leased Premises or otherwise,
shall be paid without notice (except as expressly provided herein), demand,
set-off, counterclaim, abatement, suspension, deduction or defense.
(b) Any present or future law to the contrary notwithstanding, this
Lease shall not terminate, nor shall Lessee have any right to terminate this
Lease (except as otherwise expressly provided herein), nor shall Lessee be
entitled to any abatement or reduction of rent hereunder (except as otherwise
expressly provided herein), nor shall the obligations of Lessee under this
Lease be affected, by reason of (i) any damage to or destruction of all or any
part of the Leased Premises from whatever cause, (ii) the taking of the Leased
Premises or any portion thereof by condemnation, requisition or otherwise,
(iii) the prohibition, limitation or restriction of Lessee's use of all or any
part of the Leased Premises, or any interference with such use, (iv) any
eviction by paramount title or otherwise, (v) Lessee's acquisition or ownership
of all or any part of the Leased Premises otherwise than as expressly provided
in paragraphs 12(b), 14(c) or 15 herein, (vi) any default on the part of Lessor
under this Lease, or under any other agreement to which Lessor and Lessee may
be parties, (vii) the failure of Lessor to deliver possession of the Leased
Premises on the commencement of the Term hereof or (viii) any other cause
whether similar or dissimilar to the foregoing. It is the intention of the
parties hereto that the obligations of Lessee hereunder shall be separate and
independent covenants and agreements, that the Basic Rent, additional rent and
all other sums payable by Lessee hereunder shall continue to be payable in all
events and that the obligations of Lessee hereunder shall continue unaffected,
unless the requirement to pay or perform the same shall have been terminated
pursuant to an express provision of this Lessee
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(c) Lessee agrees that it will remain obligated under this Lease in
accordance with its terms, and that it will not take any action to terminate,
rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, or
winding-up or other proceeding affecting Lessor or its successor in interest,
(ii) any action with respect to this Lease which may be taken by any trustee or
receiver of Lessor or its successor in interest or by any court in any such
proceeding.
(d) Lessee waives all rights which may now or hereafter be conferred
by law (i) to quit, terminate or surrender this Lease or the Leased Premises or
any part thereof, or (ii) to abate, suspend, defer or reduce the Basic Rent,
additional rent or any other sums payable under this Lease, except as otherwise
expressly provided herein.
7. Taxes and Assessments; Compliance with Law. (a) Lessee shall pay or
discharge each of the following items on or prior to the last day on which such
items may be paid without interest or penalty: (i) all Impositions; (ii) all
transfer taxes, recording fees and similar charges payable in connection with a
conveyance hereunder to Lessee; (iii) all gross receipts or similar taxes
imposed or levied upon, assessed against or measured by the Basic Rent,
additional rent or any other sums payable by Lessee hereunder or levied upon or
assessed against the Leased Premises, to the extent that such tax, assessment
or other charge would be payable if the Leased Premises were the only property
of Lessor subject thereto, and (iv) any tax, assessment, charge or levy of any
nature whatsoever imposed or levied upon or assessed against Lessor or the
Leased Premises in substitution for or in place of an Imposition. Lessee shall
not be required to pay any franchise, corporate, estate, inheritance,
succession, transfer, income, excess profits, or revenue
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taxes of Lessor which are not described in the preceding sentence. Lessee
agrees to furnish to Lessor, within thirty days after written demand therefor,
evidence of all payments due under this paragraph 7(a). In the event that any
Imposition levied or assessed against the Leased Premises and payable by Lessee
becomes due and payable during the Term hereof and may legally be paid in
instalments, Lessee may pay such Imposition in instalments and shall be liable
only for those instalments which become due and payable during the Term hereof.
(b) Lessee shall, at its expense, comply with and shall cause the
Leased Premises to comply with, in all material respects, all governmental
statutes, laws, rules, orders, regulations and ordinances the failure to comply
with which at any time would affect the Leased Premises or any part thereof, or
the use thereof, including those which require the making of any structural,
unforeseen or extraordinary changes, whether or not any of the same involve a
change of policy on the part of the body enacting the same (collectively, the
Legal Requirements). Lessee shall, at its expense, comply with all Required
Insurance (as defined in paragraph 13), and with the provisions of all
contracts, agreements, instruments and restrictions existing at the
commencement of the Term of this Lease or thereafter suffered or permitted by
Lessee affecting the Leased Premises or any part thereof or the ownership,
occupancy or use thereof.
8. Liens; Grants of Easements. (a) Lessee will not, directly or
indirectly, create or permit to be created or to remain, and will promptly
remove and discharge, at its expense, any mortgage, lien, encumbrance or charge
on, pledge of, or conditional sale or other title retention agreement with
respect to, the Leased Premises or any part thereof or Lessee's interest
therein or the Basic Rent, additional rent or other sums payable by Lessee
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under this Lease, other than (1) any encumbrances permitted by the Senior
Permitted Mortgage described in Paragraph 29(j), (2) any mortgage, lien,
encumbrance or other charge, pledge, conditional sale or other title retention
agreement created by or resulting from any act or failure to act of Lessor or
any agent or assignee of Lessor without the agreement of Lessee and (3) any
encumbrance or charge permitted in subparagraph (b) below. Nothing contained in
this Lease shall be construed as constituting the consent or request, expressed
or implied, by Lessor to the performance of any labor or services or the
furnishing of any materials for any construction, alteration, addition, repair
or demolition of all of the Leased Premises or any part thereof by any
contractor, subcontractor, laborer, materialman or vendor. Notice is hereby
given that Lessor will not be liable for any labor, services or materials
furnished or to be furnished to Lessee, or to anyone holding the Leased
Premises or any part thereof, and that no mechanic's or other liens for any
such labor, services or materials shall attach to or affect the interest of
Lessor in and to the Leased Premises.
(b) Lessor hereby appoints Lessee its agent and attorney-in-fact and
authorizes Lessee (i) to grant easements, licenses, rights-of-way and other
rights and privileges in the nature of easements, (ii) to release existing
easements and appurtenances which are for the benefit of the Leased Premises,
(iii) to grant party wall rights for the benefit of any land adjoining the Land
Parcel and (iv) to execute and deliver any instrument necessary or appropriate
to confirm such grants, releases or consents to any person, with or without
consideration (in each case, however, only upon compliance with the provisions
of the Senior Permitted Mortgage), provided, that (x) such grant, release or
consent shall not materially impair the use of the Leased Premises or
materially reduce their value, and (y) the consideration, if any, received
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by Lessee for such grant, release or consent shall be paid to Lessor and
applied pursuant to paragraph 12(c), as if such consideration were a Net Award
from an event of Condemnation. Lessee agrees that Lessee will remain obligated
under the terms of this Lease to the same extent as if such action had not been
taken, and that Lessee will perform all obligations of the grantor, releasor or
transferor under any such instrument.
9. Indemnification. Lessee shall defend all actions or claims against
Lessor, or any partner of Lessor, or any assignee of Lessor, or any partner,
officer, director or shareholder of any assignee of Lessor (collectively, the
Indemnified Parties) with respect to, and shall pay, protect, indemnify and
save harmless the Indemnified Parties from and against any and all liabilities,
losses, damages, costs, expenses (including all reasonable attorney's fees and
expenses of the Indemnified Parties), causes of action, suits, claims, demands
or judgments of any nature whatsoever (i) arising from any injury to, or the
death of, any person or any damage to property on the Leased Premises or upon
adjoining sidewalks, streets or ways, in any manner growing out of or connected
with the use, non-use, condition or occupation of the Leased Premises or any
part thereof or resulting from the condition thereof or of adjoining sidewalks,
streets or ways, so long as not occasioned by the affirmative act of Lessor,
its agents, servants, employees or assigns, and/or (ii) arising from violation
by Lessee of any agreement or condition of this Lease, or any contract or
agreement to which Lessee is a party or any restriction, law, ordinance or
regulation, in each case affecting the Leased Premises or any part thereof or
the ownership, occupancy or use thereof, so long as not occasioned by the
intentional fault of Lessor, its agents, servants, employees or assigns. If
Lessor or any other Indemnified Party shall be made a party to any such
litigation commence against Lessee,
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and if Lessee, at its expense, shall fail to provide Lessor or any other such
Indemnified Party with counsel (upon Lessor's or such Indemnified Party's
request) approved by Lessor or such Indemnified Party, as the case may be,
which approval shall not be unreasonably withheld, Lessee shall pay all costs
and reasonable attorneys' fees and expenses incurred or paid by Lessor or any
other such Indemnified Party in connection with such litigation. Lessor shall
give prompt written notice to Lessee of any claim asserted against Lessor, but
to Lessor's knowledge not also asserted against Lessee, which, if sustained,
may result in liability of Lessee hereunder, but failure on the part of Lessor
to give such notice shall not relieve Lessee from Lessee's obligation to
exonerate, protect, defend, indemnify and save harmless the Indemnified Parties
as aforesaid.
10. Maintenance and Repair. (a) Lessee acknowledges that it has
received the Leased Premises in good condition, repair and appearance. Lessee
agrees that, at its expense, it will keep and maintain the Leased Premises and
any Lessee's Improvements, including any altered, rebuilt, additional or
substituted buildings, structures and other improvements thereto, in good
condition, repair and appearance, except for ordinary wear and tear, and it
will promptly make all structural and nonstructural, foreseen and unforeseen,
and ordinary and extraordinary changes and repairs of every kind which may be
required to be made to keep and maintain the Leased Premises and any Lessee's
Improvements in such good condition, repair and appearance and it will keep the
Leased Premises and any Lessee's Improvements orderly and free and clear of
rubbish. Lessor shall not be required to maintain, repair or rebuild, or to
make any alterations, replacements or renewals of any nature to the Leased
Premises, or any part thereof, whether ordinary or extraordinary, structural or
nonstructural, foreseen or unforeseen, or to maintain the Leased Premises
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or any part thereof in any way. Lessee hereby expressly waives the right to
make repairs at the expense of Lessor which may be provided for in any law in
effect at the time of the commencement of the Term of this Lease or which may
thereafter be enacted. If Lessee shall abandon the Leased Premises, it shall
give Lessor and any Permitted Mortgagee immediate notice thereof.
(b) If any Improvements situated on the Leased Premises at any time
during the Term of this Lease shall encroach upon any property, street or
right-of-way adjoining or adjacent to the Leased Premises, or shall violate the
agreements or conditions contained in any restrictive covenant affecting the
Leased Premises or any part thereof, or shall impair the rights of others under
or hinder or obstruct any easement or right-of-way to which the Leased Premises
are subject, then, promptly after the written request of Lessor or any person
affected by any such encroachment, violation, impairment, hindrance or
obstruction, Lessee shall, at its expense, either (i) obtain effective waivers
or settlements of all claims, liabilities and damages resulting from each such
encroachment, violation, impairment, hindrance or obstruction whether the same
shall affect Lessor, Lessee or both, or (ii) make such changes in the
Improvements on the Leased Premises and take such other action as shall be
necessary to remove such encroachments, hindrances or obstructions and to end
such violations or impairments, including, if necessary, the alteration or
removal of any Improvement on the Leased Premises. Any such alteration or
removal shall be made in conformity with the requirements of paragraph 11(a) to
the same extent as if such alteration or removal were an alteration under the
provisions of paragraph 11(a).
11. Alterations and Additions. (a) Lessee may, at its expense, (x)
after not less than forty-five days written notice to Lessor of its plans
(provided, however, that no such notice shall be required as to plans for work
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the estimated cost of which is less than $500,000), make non-structural
additions to and alterations of the Improvements to the Leased Premises, and
make non-structural substitutions and replacements therefor, provided, that (i)
the use, structural integrity and market value of the Leased Premises shall not
thereby be materially lessened as certified in writing by an appropriate
officer of Lessee, and (ii) such actions shall be performed in a good and
workmanlike manner; and (y) after not less than forty-five days written notice
to Lessor of its plans, make structural additions to and alterations of the
Improvements to the Leased Premises, and make structural substitutions and
replacements therefor, provided that (i) such actions shall be performed in a
good and workmanlike manner under the supervision of a licensed architect or
engineer in accordance with plans and specifications as approved by Lessor and
accepted by Lessee, (ii) no such structural change or alteration shall be made
unless Lessor's prior written consent shall have been obtained, (iii) none of
the buildings or structures constituting the Leased Premises shall be
demolished unless Lessee shall have first furnished Lessor with such surety
bonds or other assurances acceptable to Lessor as shall be necessary to assure
rebuilding of the Leased Premises and unless Lessor's prior written consent
shall have been obtained, and (iv) such additions, alterations, substitutions
and replacements shall be expeditiously completed in compliance with all Legal
Requirements (as defined in paragraph 7(b)) and Required Insurance (as defined
in paragraph 13(a)); provided that Lessor shall not withhold its written
consent to Lessee's plans, including plans and specifications, under this
clause (y) if and so long as the use, structural integrity and market value of
the Leased Premises shall not be materially lessened by such plans as certified
in writing by an appropriate officer of Lessee. Lessee shall promptly pay all
costs and expenses of each such addition, alteration, substitution or
replacement, discharge all liens arising
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therefrom and procure and pay for all permits and licenses required in
connection therewith. Failure by Lessor to give written approval or disapproval
within forty-five days of receipt of such notice from Lessee under clause (y)
shall be deemed Lessor's consent to such plans. All such alterations and
additions to the Improvements shall be and remain part of the realty and the
property of Lessor and subject to this Lease.
(b) Lessee may, at its expense, install, assemble or place any items
of trade fixtures, machinery, equipment or other personal property upon the
Leased Premises. Such trade fixtures, machinery, equipment or other personal
property shall be and remain the property of Lessee and Lessee may remove the
same from the Leased Premises at any time prior to the termination of this
Lease, provided that (i) Lessee shall repair any damage to the Leased Premises
resulting from such removal, and (ii) such removal shall not materially impair
the value and use of the Leased Premises.
(c) Lessee may, at its expense, upon 45 days prior notice to Lessor,
construct improvements on any portion of the Land Parcel on which there is not
already a permanent structure for which improvements it has not and will not
obtain reimbursement pursuant to paragraph 15 hereof (Lessee's Improvements),
provided that upon completion thereof, the use and market value of the
remaining Leased Premises shall not thereby be materially lessened. The
Lessee's Improvements shall be and remain the property of Lessee and Lessee may
make additions and alterations to Lessee's Improvements and substitutions and
replacements thereof which are otherwise in compliance with the provisions of
this subparagraph (c).
12. Condemnation. (a) Subject to the rights of Lessee set forth in
this paragraph 12, Lessee hereby irrevocably assigns to Lessor any award or
compensation payment to which Lessee may become entitled by reason of Lessee's
interest in the Leased Premises if the use, occupancy or title of the Leased
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Premises or any part thereof is taken, requisitioned or sold in, by or on
account of any actual or threatened eminent domain proceeding or other action
by any person having the power of eminent domain, provided, however, that
Lessee may retain any award or compensation payment relating to Lessee's
Improvements. Lessee shall appear in any such proceeding or action to
negotiate, prosecute and adjust any claim for any award or compensation on
account of any such taking, requisition or sale; and Lessor shall collect any
such award or compensation. The Net Award (as defined in paragraph 12(f)) shall
be applied pursuant to this paragraph 12. Lessee shall pay all reasonable costs
and expenses (including any legal fees of any Permitted Mortgagee required by
any Permitted Mortgage to be paid by Lessor) in connection with each such
proceeding, action, negotiation and prosecution, for which costs and expenses
Lessee shall be reimbursed out of any award or compensation received. Lessor
shall be entitled to participate in any such proceeding, action, negotiation or
prosecution and the reasonable expenses thereof (including counsel fees and
expenses) shall be paid by Lessee.
(b) If an occurrence of the character referred to in paragraph 12(a)
shall affect all or a substantial portion of the Leased Premises and shall, in
the good faith judgment of Lessee, render the Leased Premises unsuitable for
restoration for continued use and occupancy in Lessee's business during the
Primary Term or any Extended Term, then Lessee shall, not later than 30 days
after such occurrence, deliver to Lessor (i) notice of its intention to
terminate this Lease on the next Basic Rent Payment Date (the Termination Date)
which occurs not less than 210 days nor more than 360 days after the delivery
of such notice and (ii) a certificate by the President or any Vice President of
Lessee describing the event giving rise to such termination and stating that
its board of directors (or an executive committee thereof) has
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determined that such event has rendered the Leased Premises unsuitable for
restoration for continued use and occupancy in Lessee's business. If the
Termination Date occurs during the Interim or Primary Term, such notice to
Lessor shall be accompanied by an irrevocable offer by Lessee to purchase the
Leased Premises on the Termination Date at a price determined in accordance
with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such
Purchase Offer by notice given to Lessee not later than the 30th day prior to
the Termination Date or (2) the Termination Date occurs during an Extended
Term, this Lease shall terminate on the Termination Date, except with respect
to obligations and liabilities of Lessee hereunder, actual or contingent, which
have arisen on or prior to the Termination Date, upon payment by Lessee of all
Basic Rent, additional rent and other sums then due and payable hereunder to
and including the Termination Date, and the Net Award shall belong to Lessor;
provided that the amount of such Net Award, if any, related to any portion of
the Improvements constructed by Lessee at its expense (and for which it has not
obtained reimbursement pursuant to paragraph 15 hereof) shall be paid to
Lessee, as determined by the Appraisal Procedure. Unless Lessor shall have
rejected such Purchase Offer in accordance with this paragraph, Lessor shall be
conclusively presumed to have accepted such offer, and, on the Termination Date,
shall convey the remaining portion of the Leased Premises, if any, to Lessee or
its designee and shall assign to Lessee or its designee all of its interest in
the Net Award, pursuant to and upon compliance with paragraph 16.
(c) If during any Term (i) a portion of the Leased Premises shall be
taken by condemnation or other eminent domain proceedings, which taking is not
sufficient to require that Lessee give a Purchase Offer or (ii) the use or
occupancy of the Leased Premises or any part thereof shall be temporarily
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taken by any governmental authority, then this Lease shall continue in full
effect without abatement or reduction of Basic Rent, additional rent or other
sums payable by Lessee hereunder notwithstanding such partial or temporary
taking. Except as hereinafter set forth, Lessee shall (whether or not it has
received any portion of the Net Award), promptly after any such temporary
taking ceases, at its expense, repair any damage caused thereby in conformity
with the requirements of paragraph 11(a), so that, thereafter, the Leased
Premises shall be, as nearly as possible, in a condition and have a market
value as good as the condition and market value thereof immediately prior to
such taking. Lessee shall not be required to repair any damage to Lessee's
Improvements so long as such failure shall not materially lessen the use or
value of the remaining Leased Premises; provided, however, that if, in Lessee's
good faith judgment, such damage is substantial, then Lessee shall demolish
those affected portions of Lessee's Improvements if Lessee shall not have
repaired the same. After an occurrence of the character referred to in
paragraph 12(a), any Net Award payable in connection with such occurrence shall
be paid to the Proceeds Trustee (as defined in paragraph 12(e), provided, that
if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time
of payment of the Net Award, such Net Award shall be paid to the Senior
Permitted Mortgagee (as defined in paragraph 29(m)), and if there is no Senior
Permitted Mortgagee then to Lessor, in all events for application pursuant to
this paragraph 12(c). Lessee shall be entitled to receive the Net Award but
only against certificates by the President or any Vice President of Lessee
delivered to Lessor and the Proceeds Trustee from time to time as such work for
rebuilding, replacement and repair progresses, each such certificate describing
the work for which Lessee is requesting payment and the cost incurred by Lessee
in connection therewith and stating that Lessee has not
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theretofore received payment for such work, provided that Lessee shall be
entitled to receive any Net Award in an aggregate amount of up to $100,000 in
connection with any one occurrence without providing Lessor with such
certificates. To the extent that any Net Award remaining after such repairs
have been made is less than $250,000, such remaining Net Award shall be paid to
Lessee. If such remaining Net Award equals or exceeds $250,000, all of the
remaining Net Award shall be retained by the Proceeds Trustee, the Senior
Permitted Mortgagee or by Lessor, as applicable, and shall be applied in
reduction of the principal amount of the indebtedness secured by any Senior
Permitted Mortgage then outstanding. To the extent that any Net Award is not
paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in
Schedule C shall be reduced in accordance with Schedule C, and (ii) each
installment of Basic Rent payable on or after the first Payment Date occurring
two months or more after the final payment to Lessee for such restoration
(including Extended Terms thereafter) shall be reduced by an amount equal to
the amount of such installment multiplied by a fraction, the numerator of which
shall be an amount equal to the remaining Net Award not paid to Lessee, and the
denominator of which shall be the applicable amount set forth in Schedule C
prior to its reduction pursuant to clause (i) above, provided that (i) the
Basic Rent shall not be reduced to an amount less than $4.00 per square foot of
remaining rentable space, and (ii) during the Primary Term the amount by which
such installments of Basic Rent shall be so reduced shall not exceed the amount
by which the amount scheduled to be due on or about such date on any
indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect
the revised amortization thereof after giving effect to the corresponding
prepayment of such indebtedness by Lessor (it being understood that in case the
Senior Permitted Mortgage is retired or otherwise refinanced
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prior to such prepayment, such limitation shall be calculated as if such
mortgage indebtedness had remained outstanding, was so prepaid and the
amortization thereof revised as provided therein). In the event of any
temporary requisition, this Lease shall remain in full effect and Lessee shall
be entitled to receive the Net Award allocable to such temporary requisition;
except that such portion of the Net Award allocable to the period after the
expiration of the Term of this Lease shall be paid to Lessor. If the cost of
any repairs required to be made by Lessee pursuant to this paragraph 12(c)
shall exceed the amount of such Net Award, the deficiency shall be paid by
Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c)
for so long as any default shall have happened and shall be continuing under
this Lease.
(d) Notwithstanding the foregoing, Lessee, at its cost and expense,
shall be entitled to claim separately, in any condemnation proceeding, any
damages payable for moveable trade fixtures paid for and installed by Lessee
(or any persons claiming under Lessee) without any contribution or
reimbursement therefor by Lessor, and for Lessee's loss of business, and for
Lessee's relocation costs, provided Lessor's award is not reduced or otherwise
adversely affected thereby.
(e) The trustee (the Proceeds Trustee) of the Net Award and Net
Casualty Proceeds (as defined in paragraph 14(a)) shall be The Connecticut Bank
and Trust Company, National Association, or its successor under the Collateral
Trust Indenture, dated as of the date hereof (the Indenture) from Clinton
Holding Corporation to The Connecticut Bank and Trust Company, National
Association and F. W. Kawam, as trustees, or if such Indenture shall be
terminated, the holder of the first mortgage lien on the Leased Premises, who
shall be an institutional lender, or if there shall not be such a lien, or
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if such lien shall be held by a person other than an institutional lender, then
<> or a bank or trust company, designated by Lessee and acceptable to Lessor,
having an office in the State of Indiana. The Proceeds Trustee shall have a
combined capital and surplus of at least $100,000,000 and shall be duly
authorized to act as such trustee. All charges and fees of the Proceeds Trustee
shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and
Net Casualty Proceeds (as hereinafter defined) pursuant to such mutual
agreement as may be made between Lessor and Lessee.
(f) For the purposes of this Lease the term "Net Award" shall mean:
(i) all amounts payable as a result of any condemnation or other eminent domain
proceeding, less all expenses of such proceeding and the collection of such
amounts not otherwise paid by Lessee and (ii) all amounts payable pursuant to
any agreement with any condemning authority (which agreement shall be deemed to
be a taking) which has been made in settlement of or under threat of any
condemnation or other eminent domain proceeding affecting the Leased Premises
(except Lessee's Improvements), less all expenses incurred (including any
reasonable costs incurred by Lessor in connection therewith) as a result
thereof or in connection with the collection of such amounts and not otherwise
paid by Lessee.
(g) Any minor condemnation or taking of the Leased Premises for the
construction or maintenance of streets or highways shall not be considered a
condemnation or taking for purposes of this paragraph 12 so long as the Leased
Premises shall not be materially adversely affected, ingress and egress for the
remainder of the Leased Premises shall be adequate for the business of Lessee
thereon and compliance is made with the provisions of any Permitted Mortgage
relating thereto.
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13. Insurance. (a) Lessee shall maintain, or cause to be maintained,
at its sole expense, the following insurance on the Leased Premises (herein
called the Required Insurance):
(i) Insurance against loss or damage by fire, lightning and other
risks from time to time included under "extended coverage"
policies, including, without limitation, vandalism and
malicious mischief coverage, in amounts sufficient to prevent
Lessor or Lessee from becoming a co-insurer of any loss under
the applicable policies but in any event in amounts not less
than the full insurable value of the Leased Premises. The term
"full insurable value", as used herein, means actual
replacement value less uninsurable items.
(ii) General public liability insurance against claims for bodily
injury, death or property damage occurring on, in or about the
Leased Premises and the adjoining streets, sidewalks and
passageways, such insurance to afford protection to Lessor of
not less than $1,000,000 with respect to bodily injury or
death to any one person, not less than $5,000,000 with respect
to any one accident, and not less than $1,000,000 with respect
to property damage.
(iii) Worker's compensation insurance covering all persons employed
in connection with any work done on or about the Leased
Premises with respect to which claims for death or bodily
injury could be asserted against Lessor, Lessee or the Leased
Premises, complying with the laws of the State of Indiana.
(iv) Boiler and pressure vessel insurance on all equipment, parts
thereof and appurtenances attached or connected to the Leased
Premises, if any, which by reason of their use or existence
are capable of bursting, erupting, collapsing or exploding, in
the minimum amount of $1,000,000 for damage to property
resulting from such perils. Such insurance may, at the option
of Lessee and as permitted by applicable law, be included
within the coverage of insurance policies referred to in
clause (i) above.
(v) Such other insurance on the Leased Premises in such amounts
and against such other hazards which at the time are commonly
obtained in the case of property similar to the Leased
Premises in the state in which the Leased Premises are
located, including war risk insurance (at and during such
times as war risk insurance is commonly obtained in the case
of property similar to the Leased Premises), when and to the
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extent obtainable from the United States Government or any
agency thereof.
(vi) Flood insurance in an amount equal to the full insurable value
(as defined in clause (i) above) of the Leased Premises or the
maximum amount available, whichever is less, if the area in
which the Leased Premises are located has been designated by
the Secretary of Housing and Urban Development as having
special flood hazards, and if flood insurance is available
under the National Flood Insurance Act.
(b) The Required Insurance shall be written by companies having an
A.M. Best rating of at least A:XV which are authorized to do an insurance
business in the State of Indiana and shall name as the insured parties
thereunder Lessor, Lessee and any Permitted Mortgagee, as their respective
interests may appear, provided, however, that so long as Lessee maintains a net
worth determined in accordance with generally accepted accounting principles of
not less than $598,820,000, Lessee may self-insure as to the types of insurance
referred to in clauses (i) through (v) of this paragraph.* Neither Lessor nor
any Permitted Mortgagee shall be required to prosecute any claim against, or to
contest any settlement proposed by, an insurer. Lessee may, at its expense,
prosecute any such claim or contest any such settlement in the name of Lessor,
Lessee or both, and Lessor will join therein at Lessee's written request upon
the receipt by Lessor of an indemnity from Lessee against all costs,
liabilities and expenses in connection therewith.
(c) Insurance claims by reason of damage to or destruction of any
portion of the Leased Premises shall be adjusted by Lessee, but Lessor and any
Permitted Mortgagee shall have the right to join with Lessee in adjusting any
such loss.
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* $85,381,600 for Lincoln National Pension Insurance Company;
$267,542,400 for American States Insurance Company. These amounts are
80% of said companies' Capital and Surplus as of December 31, 1983.
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(d) Every policy referred to in clauses (i), (iv) and (v) of paragraph
13(a) shall bear a first mortgagee endorsement in favor of the then Senior
Permitted Mortgagee (if any); and any loss under any such policy shall be made
payable to the Proceeds Trustee, provided that any recovery for damage or
destruction under any such policy shall be applied by the Proceeds Trustee in
the manner provided in paragraph 14. Every policy of Required Insurance shall
contain an agreement that the insurer will not cancel such policy except after
thirty days' written notice to Lessor and any Permitted Mortgagee and that any
loss otherwise payable thereunder shall be payable notwithstanding any act or
negligence of Lessor or Lessee which might, absent such agreement, result in a
forfeiture of all or a part of such insurance payment and notwithstanding (i)
any foreclosure or other action taken by a Permitted Mortgagee pursuant to any
provision of any Permitted Mortgage upon the happening of a default or an event
of default thereunder, or (ii) any change in ownership of the Leased Premises.
(e) Lessee shall deliver to Lessor promptly after the delivery of this
Lease the original or duplicate policies or certificates of insurers,
reasonably satisfactory to any Senior Permitted Mortgagee, evidencing all of
the Required Insurance. Lessee shall, within thirty days prior to the
expiration of any such policy, deliver to Lessor other original or duplicate
policies or such certificates evidencing the renewal of any such policy. If
Lessee fails to maintain or renew any Required Insurance, or to pay the premium
therefor, or to so deliver any such policy or certificate, then Lessor, at its
option, but without obligation to do so, may, upon five days' notice to Lessee,
procure such insurance. Any sums so expended by Lessor shall be additional rent
hereunder and shall be repaid by Lessee within five days after notice to Lessee
of such expenditure and the amount thereof.
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(f) Neither Lessee nor Lessor shall obtain or carry separate insurance
covering the same risks as any Required Insurance unless Lessee, Lessor and any
Permitted Mortgagee are included therein as named insureds, with loss payable
as provided in this Lease. Lessee and Lessor shall immediately notify each
other whenever any such separate insurance is obtained and shall deliver to
each other the policies or certificates evidencing the same.
(g) Anything contained in this paragraph 13 to the contrary
notwithstanding, all Required Insurance may be carried under (1) a "blanket" or
"umbrella" policy or policies covering other properties or liabilities of
Lessee, its parent company, or any of its parent company's subsidiaries,
provided, that such policies otherwise comply with the provisions of this Lease
and specify the coverage and amounts thereof with respect to the Leased
Premises, and (2) a policy or policies providing for self-insurance of
deductible amount of up to $1,000,000.
14. Casualty. (a) Lessee hereby irrevocably assigns to Lessor any
compensation or insurance proceeds to which Lessee may become entitled by
reason of Lessee's interest in the Leased Premises if the Leased Premises or
any part thereof are damaged or destroyed by fire or other casualty, provided,
however, that Lessee may retain any insurance proceeds or compensation relating
to Lessee's Improvements. If the Leased Premises or any part thereof shall be
damaged or destroyed by fire or other casualty, and if the estimated cost of
rebuilding, replacing or repairing the same shall exceed $100,000, Lessee
promptly shall notify Lessor thereof. Lessee shall negotiate, prosecute and
adjust any claim for any compensation or insurance payment on account of any
such damage or destruction; and Lessor shall collect any such compensation or
insurance payment. All amounts paid in connection with any
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such damage or destruction shall be applied pursuant to this paragraph 14, and
all such amounts (except such amounts with respect to Lessee's Improvements)
paid or payable in connection therewith (minus the expenses of collecting such
amounts) are herein called the Net Casualty Proceeds. Lessee shall pay all
reasonable costs and expenses (including any legal fees of any Permitted
Mortgagee required to be paid by Lessor pursuant to any Permitted Mortgage) in
connection with each such negotiation, prosecution and adjustment, for which
costs and expenses Lessee shall be reimbursed out of any compensation or
insurance payment received. Lessor shall be entitled to participate in any such
negotiation, prosecution and adjustment, and the reasonable expenses thereof
(including counsel fees and expenses) shall be paid by Lessee.
(b) After an occurrence of the character referred to in paragraph
14(a), except as hereinafter set forth, Lessee shall (whether or not it has
received any Net Casualty Proceeds), at its expense, rebuild, replace or repair
any damage to the Leased Premises caused by such event in conformity with the
requirements of paragraph 11(a) so as to restore the Leased Premises (as
nearly as practicable) to the condition and market value thereof immediately
prior to such occurrence. Lessee shall not be required to rebuild or replace
any damage to Lessee's Improvements so long as such failure shall not
materially lessen the value or use of the remaining Leased Premises; provided,
however, that if, in Lessee's good faith judgment, such damage is substantial,
then Lessee shall demolish those affected portions of Lessee's Improvements if
Lessee shall not have repaired the same. After an occurrence of the character
referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection
with such occurrence shall be paid to Proceeds Trustee, and this Lease shall
continue in full effect, provided, that if no Proceeds Trustee has been named
pursuant to paragraph 12(e) at the time of payment of
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Net Casualty Proceeds, such Net Casualty Proceeds shall be paid to the Senior
Permitted Mortgagee, and if there is no Senior Permitted Mortgagee then to
Lessor, in all events for application pursuant to this paragraph 14(b). Lessee
shall be entitled to receive the Net Casualty Proceeds, but only against
certificates of the President or any Vice President of Lessee delivered to
Lessor and Proceeds Trustee from time to time as such work of rebuilding,
replacement and repair progresses, each such certificate describing the work
for which Lessee is requesting payment and the cost incurred by Lessee in
connection therewith and stating that Lessee has not theretofore received
payment for such work, provided that Lessee shall be entitled to receive the
Net Casualty Proceeds in an aggregate amount of up to $100,000 in connection
with any one occurrence without providing Lessor with such certificates. To the
extent that any Net Casualty Proceeds remaining after such repairs have been
made are less than $250,000 they shall be paid to Lessee. If such remaining Net
Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be
retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor,
as applicable, and shall be applied in reduction of the principal amount of the
indebtedness secured by any Senior Permitted Mortgage then outstanding. To the
extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the
preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in
accordance with Schedule C, and (ii) each installment of Basic Rent payable on
or after the First Payment Date occurring two months or more after the final
payment to Lessee for such restoration (including Extended Terms thereafter)
shall be reduced by an amount equal to the amount of such installment
multiplied by a fraction, the numerator of which shall be an amount equal to
the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of
which shall be the
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applicable amount set forth in Schedule C prior to its reduction pursuant to
clause (i) above, provided that (i) the Basic Rent shall not be reduced to an
amount of less than $4.00 per square foot of remaining rentable space, and (ii)
during the Primary Term the amount by which each such installment of Basic Rent
shall be so reduced shall not exceed the amount by which the amount scheduled
to be due on or about such date on any indebtedness of Lessor secured by the
Senior Permitted Mortgage is reduced to reflect the revised amortization
thereof after giving effect to the corresponding prepayment of such
indebtedness by Lessor (it being understood that in case the Senior Permitted
Mortgage is retired or otherwise refinanced prior to such prepayment, such
limitation shall be calculated as if such mortgage indebtedness had remained
outstanding, was so prepaid and the amortization thereof revised as provided
therein). If the cost of any repairs required to be made by Lessee pursuant to
this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the
deficiency shall be paid by Lessee.
(c) If the Leased Premises shall be substantially damaged or destroyed
in any single casualty so that, in Lessee's good faith judgment, the Leased
Premises shall be unsuitable for restoration for continued use and occupancy in
Lessee's business, then at Lessee's option in lieu of rebuilding, replacing and
repairing the Leased Premises, Lessee may give notice to Lessor, within 30 days
after the occurrence of such damage or destruction, of Lessee's intention to
terminate this Lease on the next Basic Rent Payment Date which occurs not less
than 210 days after the delivery of such notice (the Termination Date),
provided that, if the Termination Date occurs during the Primary Term, such
notice shall be accompanied by (i) an irrevocable offer of Lessee to purchase
the Leased Premises and the Net Casualty Proceeds on the Termination Date at a
price determined in accordance with Schedule C hereof
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<PAGE>
(the Purchase Offer), and (ii) a certificate signed by the President or any
Vice President of Lessee stating that its board of directors (or an executive
committee thereof) has determined that such event has rendered the Leased
Premises unsuitable for restoration, replacement and rebuilding for Lessee's
continued use and occupancy and that the Leased Premises will not be restored.
If Lessor shall reject such offer by notice to Lessee not later than the 30th
day prior to the Termination Date, the Net Casualty Proceeds and the right
thereto shall be assigned to and shall belong to Lessor and this Lease shall
terminate on the Termination Date, except with respect to obligations and
liabilities of Lessee under this Lease, actual or contingent, which have arisen
on or prior to the Termination Date, but only upon payment by Lessee of all
Basic Rent, additional rent, and other sums due and payable by it under this
Lease to and including the Termination Date; provided that the amount of such
Net Casualty Proceeds, if any, related to any portion of the Improvements
constructed by Lessee at its expense (and for which it has not obtained
reimbursement pursuant to paragraph 15 hereof), shall be paid to Lessee as
determined by the Appraisal Procedure. Unless Lessor shall have rejected such
offer in accordance with this paragraph, Lessor shall be conclusively presumed
to have accepted such offer, and on the Termination Date, Lessor shall convey
the remaining portion of the Leased Premises, if any, and all its interest in
the Net Casualty Proceeds in accordance with paragraph 16. If the Termination
Date shall occur during an Extended Term, Lessee shall not be required to offer
to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall
belong to Lessor and this Lease shall terminate; provided that the amount of
such Net Casualty Proceeds, if any, related to any portion of the Improvements
constructed by Lessee at its expense (and for which it has not obtained
reimbursement pursuant to paragraph
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15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure.
If the conditions set forth in the first sentence of this paragraph 14(c) are
fulfilled and Lessee fails to commence to rebuild, replace or repair the Leased
Premises within 30 days after final adjustment of all insurance claims made in
connection therewith (but in no event later than one hundred eighty days after
the occurrence of such damage or destruction), Lessee conclusively shall be
deemed to have made such Purchase Offer and in the absence of a written
Purchase Offer by Lessee the Termination Date shall be deemed to be the next
Basic Rent Payment Date which occurs not less than 210 days after such Purchase
Offer is presumed to have been made; but nothing in this sentence shall relieve
Lessee of its obligation actually to deliver such Purchase Offer.
15. Reimbursement for Alterations and Additions; Purchase of
Unimproved Land. (a) On any one or more dates during the Primary Term, Lessee
may request in writing (herein called a Lessee's Request) that Lessor pay to
Lessee the amount of Lessee's theretofore unreimbursed expenses (herein called
Reimbursable Expenses), which have been incurred by Lessee in connection with
the construction of additional structures on a portion or portions of the
Leased Premises upon which there are no major structures then existing and/or
additions, alterations to, or remodeling of, structures then existing on the
Leased Premises and the acquisition of land adjacent to the Leased Premises
(herein collectively called the Additions), which Additions are permitted by
paragraph 11(a) but are in addition to, and do not constitute, alterations,
additions or remodeling which Lessee is required to make upon the Leased
Premises pursuant to any provision of this Lease, and which Additions conform
to the character and quality of the then existing improvements on the Leased
Premises. Lessee shall have the right to make a Lessee's Request only if (i)
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the construction of any Additions with respect to which such Reimbursable
Expenses have been incurred shall have been completed not more than two years
prior to the date of the Lessee's Request, (ii) the amount of such Reimbursable
Expenses is not less than $500,000, (iii) the value or use of the Leased
Premises shall not be materially impaired by such Additions and (iv) the sum of
such requested Reimbursable Expenses and all Reimbursable Expenses previously
paid to Lessee pursuant to this paragraph 15(a) shall not exceed $5,000,000.
Each Lessee's Request shall be accompanied by architect's drawings and
specifications as previously approved by Lessor pursuant to paragraph 11(a)
hereof and accepted by Lessee, relating to the Additions with respect to which
such Request is made, and a Lessee's Certificate setting forth in reasonable
detail the amount and character of the Reimbursable Expenses with respect to
which such Request is made and a description of such Additions, stating that
the construction of such Additions has been completed in compliance with the
requirements of this paragraph 15, specifying the dates on which the
construction of such Additions were commenced and completed, and stating that
such Reimbursable Expenses are reimbursable in the amount requested under the
terms of this paragraph 15. Upon receipt of such Lessee's Request, Lessor
agrees to use its best efforts to arrange for the financing of such
Reimbursable Expenses on terms and conditions satisfactory to Lessor and Lessee
and consistent with the provisions of any Senior Permitted Mortgage. Lessor and
Lessee shall negotiate in good faith to enable Lessor to finance such
Reimbursable Expenses, having regard to then existing economic, financial and
money market conditions. Within ninety days after the receipt of such Lessee's
Request, drawings, specifications and Certificate, Lessor agrees to pay to
Lessee an amount equal to such Reimbursable Expenses so certified, but
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only if the following further conditions shall have been fulfilled within such
90-day period:
(i) Lessor shall have issued and sold evidence of indebtedness
(herein called the Additional Indebtedness) pursuant to a
Senior Permitted Mortgage, for the purposes of obtaining funds
to pay such Reimbursable Expenses to Lessee;
(ii) The proceeds of the sale of the Additional Indebtedness
actually received by Lessor shall have been not less than the
amount of such Reimbursable Expenses;
(iii) Lessor and Lessee shall have authorized, executed and
delivered a supplement to this Lease, which supplement (herein
called the Lease Supplement) shall: (A) increase the Basic
Rent payments required to be made thereafter during the
Primary Term by an amount which shall be at least sufficient
to make each payment, when due, of principal of, and interest
on, the Additional Indebtedness, (B) increase each Basic Rent
payment to be made during the Extended Terms by an amount
which shall be at least sufficient to make each payment, when
due, of principal of, and interest on, the Additional
Indebtedness during the portion of such Extended Terms that
such Additional Indebtedness is outstanding, and Lessee shall
not, and is obligated not to, cancel its option to extend the
term hereof to a date not earlier than the maturity of the
Additional Indebtedness, (C) increase the purchase prices set
forth in Schedule C hereto that would be payable upon a
purchase of the Leased Premises by Lessee pursuant to
paragraph 12(b) or 14(c), in each case by amounts which shall
at all times thereafter be at least sufficient to pay or
prepay the principal amount of the Additional Indebtedness to
be then outstanding (without adjustments for any prepayments
made by Lessor), and (D) make such other changes, if any, as
shall be necessary or appropriate, in the opinion of counsel
for holders of the Additional Indebtedness, by reason of the
transactions contemplated by this paragraph; and
(iv) Lessor shall have received from Lessee such other Lessee's
Certificates, opinions of counsel for Lessee, surveys of the
Leased Premises, title insurance policies, consents to the
assignment and reassignment of this Lease (as supplemented)
and other instruments as Lessor may reasonably request in
order to enable Lessor to finance the cost of such
Reimbursable Expenses by the issuance and sale of the
Additional Indebtedness.
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(b) As long as Lessor has used its best efforts to arrange
financing as set forth in subparagraph (a) above, Lessor shall incur no
liability to Lessee by reason of the fact that Lessor does not pay Reimbursable
Expenses, and if Lessor does not pay such Reimbursable Expenses, except as
expressly provided in subparagraph (c) below, this Lease shall continue in full
effect, without modification. All expenses incurred in connection with the
issuance by Lessor of Additional Indebtedness shall be borne by Lessee.
(c) If, after the conditions specified above have been satisfied
within 180 days of such Lessee's Request, Lessor shall not have paid to Lessee
an amount equal to such Reimbursable Expenses and if such Additions are either
contiguous to the Improvements or free standing (or subject to a party wall
pursuant to an agreement satisfactory in form and substance to Lessor and any
Senior Permitted Mortgagee) upon unimproved land constituting part of the
Leased Premises, then Lessee shall have the option, to be exercised by giving
90 days' notice to Lessor, to purchase such portion of the unimproved land
(together with any requisite easements) as is necessary for the construction of
such Additions, provided that such land (together with any land purchased
pursuant to paragraph 15(d) hereof, called the Unimproved Land) shall not be
improved by any permanent structure included in the Improvements and provided
further that the remainder of the Leased Premises, after excluding the
Unimproved Land, would (1) constitute an integrated economic unit including
sufficient parking and all necessary utility easements, (2) be a continuous
parcel of land, without gap or hiatus and be separately assessed for tax
purposes, (3) have adequate access to and from public highways, (4) not be in
violation of any Legal Requirement or Required Insurance, and (5) would have a
market value at least equal to the outstanding amount of the Senior Permitted
Mortgage as of such date. The purchase price for the Unimproved Land shall be
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the greater of (x) fair market value attributable to such Unimproved Land, as
unencumbered by this Lease and without regard to any of Lessee's continuing
rights and obligations under this Lease, as determined by Lessor and Lessee,
and in the event of their failure to agree, as determined by the Appraisal
Procedure or (y) Lessor's original cost attributable to such Unimproved Land as
set forth in Schedule A hereto. Lessee agrees that it shall bear the costs of
the Appraisal Procedure. On the date for purchase specified in Lessee's notice,
Lessor shall convey such Unimproved Land to Lessee or its designee pursuant to
and in compliance with paragraph 16. In the event of such purchase by Lessee,
Lessee agrees that (x) no improvements will be undertaken upon such Unimproved
Land which would materially reduce the value of the remainder of the Leased
Premises and (y) Lessee will grant such easements to Lessor or enter into such
cross-easement agreements with Lessor relating to the Unimproved Land as are
reasonably necessary to operate the remainder of the Leased Premises as an
integrated economic unit with no material reduction in the value thereof.
(d) In addition to the option contained in 15(c), Lessee shall
have the option to purchase all or any portion of the land described in Part 2
of Schedule A, and structure or Improvements thereon,* in the manner, at the
price and in accordance with the terms of subparagraph 15(c), provided that
such purchase shall not materially impair the value or use of the remainder of
the Leased Premises. Lessee shall have such option only if (i) Lessee shall
have undertaken in writing to construct improvements on such property for its
own use, and (ii) such improvements are not eligible for financing by Lessor
pursuant to the provisions of subparagraph 15(a).
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* See Schedule A, Part 2, for particulars.
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(e) To the extent of the cash price paid to Lessor for Unimproved
Land purchased pursuant to paragraphs 15(c) or (d), (i) the amounts set forth
in Schedule C shall be reduced in accordance with Schedule C, and (ii) each
installment of Basic Rent payable on or after the first Payment Date occurring
two months or more after such purchase (including Extended Terms thereafter)
shall be reduced by an amount equal to the amount of such installment
multiplied by a fraction, the numerator of which shall be such purchase price
paid to Lessor, and the denominator of which shall be the applicable amount set
forth in Schedule C prior to its reduction pursuant to clause (i) above,
provided that (i) the Basic Rent shall not be reduced to an amount of less than
$4.00 per square foot of remaining rentable space, and (ii) during the Primary
Term the amount by which such installments of Basic Rent shall be so reduced
shall not exceed the amount by which the amount scheduled to be due on or about
such date on any indebtedness of Lessor secured by the Senior Permitted
Mortgage is reduced to reflect the revised amortization thereof after giving
effect to the corresponding prepayment of such indebtedness by Lessor (it being
understood that in the case the Senior Permitted Mortgage is retired or
otherwise refinanced prior to such prepayment, such limitations shall be
calculated as if such mortgage indebtedness had remained outstanding, was so
prepaid and the amortization thereof revised provided therein).
(f) In lieu of paying cash for the purchase of Unimproved Land
pursuant to paragraph 15(c) or (d), Lessee may convey to Lessor a substitute
parcel of land (Substitute Land) provided that the following conditions shall
be satisfied: the fair market value of the Substitute Land shall equal or
exceed the cash purchase price which would have been paid for the Unimproved
Land being purchased by Lessee (such fair market value of the Substitute Land
being determined by agreement of Lessor and Lessee, or failing such agreement,
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by the Appraisal Procedure), (ii) all of the conditions set forth in paragraph
15(c) shall be satisfied as to the remaining portion of the Leased Premises
taken together with the Substitute Land, and (iii) Lessor and any Permitted
Mortgagee shall have approved any exceptions to title to the Substitute Land.
All costs and expenses of Lessor and any Permitted Mortgagee incident to the
conveyance to Lessor of Substitute Land shall be borne by Lessee. In the event
that Unimproved Land is purchased pursuant to paragraph 15(c) or (d) in
exchange for Substitute Land rather than the payment of a cash purchase price,
the provisions of paragraph 15(e) shall not apply, and this Lease shall
continue in full effect without modification of Basic Rent or the amounts set
forth in Schedule C hereunder.
16. Procedure Upon Purchase. (a) If Lessee shall purchase the
Leased Premises pursuant to this Lease, Lessor need not convey any better title
thereto than existed on the date of the commencement of the Term hereof and
Lessee or its designee shall accept such title, subject, however, to the state
of title to the Leased Premises on the date of the commencement of the Term
hereof, the condition of the Leased Premises on the date of purchase and all
charges, liens, security interests and encumbrances on the Leased Premises and
all applicable Legal Requirements, but free of the lien of all Permitted
Mortgages and charges, liens, security interests and encumbrances resulting
from acts or failures to act of Lessor taken without the consent of Lessee.
(b) Upon the date fixed for any purchase of the Leased Premises
hereunder, Lessee shall pay to Lessor in immediately available funds the
purchase price therefor specified herein together with all Basic Rent,
additional rent and other sums then due and payable hereunder to and including
such date of purchase, and Lessor shall deliver to Lessee a special warranty
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deed to the Leased Premises and any other instruments necessary to assign any
other property then required to be assigned by Lessor pursuant hereto. Lessee
shall pay all charges incident to such conveyance and assignment, including
reasonable counsel fees, escrow fees, recording fees, title insurance premiums
and all applicable taxes (other than any income, capital gains or franchise
taxes of Lessor) which may be imposed by reason of such conveyance and
assignment and the delivery of said deeds and other instruments. Upon the
completion of such purchase, but not prior thereto (whether or not any delay or
failure in the completion of such purchase shall be the fault of Lessor), this
Lease and all obligations hereunder shall terminate, except with respect to
obligations and liabilities of Lessee hereunder, actual or contingent, which
have arisen on or prior to such date of purchase.
17. Assignment and Subletting. During the Primary Term only,
Lessee may sublet all or any part of the Leased Premises without the consent of
Lessor (provided, that each such sublease shall expressly be made subject to
the provisions of this Lease) and, may assign all its rights and interests
under this Lease. If Lessee assigns all its rights and interests under this
Lease, the assignee under such assignment shall expressly assume all the
obligations of Lessee hereunder in an instrument, approved by Lessor as to form
and substance (which approval will not be unreasonably withheld or delayed),
delivered to Lessor at the time of such assignment. No assignment or sublease
shall affect or reduce any of the obligations of Lessee hereunder, and all such
obligations shall continue in full effect as obligations of a principal and not
as obligations of a guarantor or surety, to the same extent as though no
assignment or subletting had been made, provided that performance by any such
assignee or sublessee of any of the obligations of Lessee under this Lease
shall be deemed to be performance by Lessee. No sublease or
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assignment shall impose any obligations on Lessor or otherwise affect any of
the rights of Lessor under this Lease. Neither this Lease nor the Term hereby
demised shall be mortgaged by Lessee, nor shall Lessee mortgage or pledge the
interest of Lessee in and to any sublease of the Leased Premises or the rentals
payable thereunder. Any mortgage, pledge, sublease or assignment made in
violation of this paragraph 17 shall be void. Lessee shall, within ten days
after the execution and delivery of any such assignment or the sublease of all
or substantially all of the Leased Premises, deliver a conformed copy thereof
to Lessor. Within ten days after the execution and delivery of any sublease of
all or any portion of the Leased Premises, Lessee shall give notice to Lessor
of the existence and term thereof, and of the name and address of the sublessee
thereunder.
18. Permitted Contests. Lessee shall not be required to (i) pay
any Imposition, (ii) comply with any statute, law, rule, order, regulation or
ordinance, (iii) discharge or remove any lien, encumbrance or charge or (iv)
obtain any waivers or settlements or make any changes or take any action with
respect to any encroachment, hindrance, obstruction, violation or impairment
referred to in paragraph 10(b), so long as Lessee shall contest, in good faith
and at its expense, the existence, the amount or the validity thereof, the
amount of the damages caused thereby, or the extent of its liability therefor,
by appropriate proceedings during the pendency of which there is prevented (A)
the collection of, or other realization upon, the tax, assessment, levy, fee,
rent or charge or lien, encumbrance or charge so contested, (B) the sale,
forfeiture or loss of the Leased Premises, or any part thereof, or the Basic
Rent or any additional rent, or any portion thereof, (C) any interference with
the use or occupancy of the Leased Premises or any part thereof, and (D) any
interference with the payment or collection of the Basic Rent or any
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additional rent, or any portion thereof. While any such proceedings are
pending, Lessor shall not have the right to pay, remove or cause to be
discharged the tax, assessment, levy, fee, rent or charge or lien, encumbrance
or charge thereby being contested. Lessee further agrees that each such contest
shall be promptly prosecuted to a final conclusion. Lessee shall pay, and save
Lessor harmless against, any and all losses, judgments, decrees and costs
(including all reasonable attorneys' fees and expenses) in connection with any
such contest and shall, promptly after the final settlement, compromise or
determination (including any appeals) of such contest, fully pay and discharge
the amounts which shall be levied, assessed, charged or imposed or be
determined to be payable therein or in connection therewith, together with all
penalties, fines, interests, costs and expenses thereof or in connection
therewith, and perform all acts, the performance of which shall be ordered or
decreed as a result thereof; provided, however, that nothing herein contained
shall be construed to require Lessee to pay or discharge any lien, encumbrance
or other charge created by any act or failure to act of Lessor or the payment
of which by Lessee is not otherwise required hereunder, or to perform any act
which Lessee is not otherwise required to perform hereunder. No such contest
shall subject Lessor or any Permitted Mortgagee to the risk of any criminal
liability. Lessee shall give such reasonable security to Lessor or the Senior
Permitted Mortgagee as may be demanded by Lessor or such Senior Permitted
Mortgagee to insure compliance with the foregoing provisions of this paragraph
18.
19. Conditional Limitations; Default Provision. (a) Any of the
following occurrences or acts shall constitute an event of default (herein
called an Event of Default) under this Lease:
(i) If Lessee, at any time during the continuance of this Lease
(and regardless of the pendency of any
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bankruptcy, reorganization, receivership, insolvency or other
proceedings, at law, in equity, or before any administrative
tribunal, which have or might have the effect of preventing
Lessee from complying with the terms of this Lease), shall (l)
fail to make any payment when due of Basic Rent, additional
rent or other sum herein required to be paid by Lessee
hereunder and such failure continues for 5 days, or (2) fail
to observe or perform any other provision hereof or any
provision of the Assignment of Lease and Guaranty, dated as of
the date hereof (the Assignment), from Lessor to Clinton
Holding Corporation (the Company), and consented to therein by
Lessee and by Lincoln National Corporation (Guarantor) or the
Reassignment of Lease and Guaranty, dated as of the date
hereof (the Reassignment), from the Company to The Connecticut
Bank and Trust Company, National Association and F. W. Kawam
(the Trustees), and consented to therein by Lessee and
Guarantor, for thirty days after notice to Lessee of such
failure has been given (provided, that in the case of any
default referred to in this clause (2) which cannot with
diligence be cured within such 30-day period, if Lessee shall
proceed promptly to cure the same and thereafter shall
prosecute the curing of such default with diligence, then upon
receipt by Lessor of a Lessee's Certificate stating the reason
such default cannot be cured within thirty days and stating
that Lessee is proceeding with diligence to cure such default,
the time within which such failure may be cured shall be
extended for such period as may be necessary to complete the
curing of the same with diligence but not to exceed 120 days
without Lessor's written consent which consent shall not be
unreasonably withheld); or
(ii) if any representation or warranty of Lessee or Guarantor set
forth in any notice, certificate, demand, request or other
instrument delivered pursuant to, or in connection with, this
Lease, the Assignment, or the Reassignment shall either prove
to be false or misleading in any material respect as of the
time when the same shall have been made, or with respect to
any such representation or warranty Lessee or Guarantor shall
fail to include in such representation or warranty any fact or
statement necessary in light of the circumstances in which
such representation or warranty was made to make such
representation or warranty not misleading in any material
respect as of the time when the same shall have been made; or
(iii) if Lessee or Guarantor shall file a petition commencing a
voluntary case under the Federal Bankruptcy Code or any other
federal or state law (as
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now or hereafter in effect) relating to bankruptcy,
insolvency, reorganization, winding-up or adjustment of debts
(hereinafter collectively called Bankruptcy Laws), or if
Lessee or Guarantor shall (A) apply for or consent to the
appointment of, or the taking of possession by, any receiver,
custodian, trustee, United States Trustee or liquidator (or
other similar official) of the Leased Premises or any part
thereof or of any substantial portion of Lessee's property, or
(B) generally not pay their respective debts as they become
due, or if either Lessee or Guarantor admits in writing its
inability to pay its respective debts generally as they become
due or (C) makes a general assignment for the benefit of its
respective creditors, or (D) files a petition commencing a
voluntary case under or seeking to take advantage of any
Bankruptcy Law, or (E) fails to controvert in timely and
appropriate manner, or in writing acquiesces to, any petition
commencing an involuntary case against Lessee or Guarantor or
otherwise filed against Lessee or Guarantor pursuant to any
Bankruptcy Law, or (F) takes any corporate action in
furtherance of any of the foregoing, or
(iv) if an order for relief against Lessee or Guarantor shall be
entered in any involuntary case under the Federal Bankruptcy
Code or any similar order against Lessee or Guarantor shall be
entered pursuant to any other Bankruptcy Law, or if a petition
commencing an involuntary case against Lessee or Guarantor or
proposing the reorganization of Lessee or Guarantor under any
Bankruptcy Law shall be filed and not be discharged or denied
within 60 days after such filing, or if a proceeding or case
shall be commenced in any court of competent jurisdiction
seeking (A) the liquidation, reorganization, dissolution,
winding-up or adjustment of debts of Lessee or Guarantor, or
(B) the appointment of a receiver, custodian, trustee, United
States Trustee or liquidator (or any similar official) of the
Leased Premises or any part thereof or of Lessee or Guarantor
or of any substantial portion of Lessee's or Guarantor's
property, or (C) any similar relief as to Lessee or Guarantor
pursuant to any Bankruptcy Law, and any such proceeding or
case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect for 60 days; or
(v) if (a) a final judgment for the payment of money in an amount
greater than $50,000 or (b) final judgments for the payment of
money aggregating in an amount greater than $300,000 shall be
rendered against Lessee or Guarantor and Lessee or Guarantor
shall not discharge
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the same or cause it to be discharged within 60 days from the
entry thereof, or shall not appeal therefrom or from the
order, decree or process upon which or pursuant to which said
judgment was granted, based or entered, and secure a stay of
execution or an appeal bond in the amount of said judgment
pending such appeal; or
(vi) If the Leased Premises shall be left both unattended and
without maintenance as provided herein, for a period of thirty
days; or
(vii) if Guarantor shall fail to observe or perform any provision of
the Guaranty or of the Other Guaranties, or pursuant to the
terms thereof shall be deemed to be in default thereunder, and
such failure or default shall continue for thirty days after
notice to Guarantor, provided, however, that the foregoing
shall not be construed as extending the period of time during
which the Guarantor is required to pay or perform any
obligation of Lessee hereunder or under the Assignment or
Reassignment.
(b) If an Event of Default shall have happened and be continuing,
Lessor shall have the right at its election to give Lessee written notice of
Lessor's intention to terminate the term of this Lease on a date specified in
such notice. Thereupon, the term of this Lease and the estate hereby granted
shall terminate on such date as completely and with the same effect as if such
date were the date fixed herein for the expiration of the term of this Lease,
and all rights of Lessee hereunder shall terminate, but Lessee shall remain
liable as hereinafter provided.
(c) If an Event of Default shall have happened and be continuing,
Lessor shall have the immediate right, whether or not the term of this Lease
shall have been terminated pursuant to paragraph 19(b), to (i) re-enter and
repossess the Leased Premises or any part thereof by force, summary
proceedings, ejectment or otherwise and (ii) remove all persons and property
therefrom. Lessor shall be under no liability by reason of any such re-entry,
repossession or removal. No such re-entry or taking of possession of the Leased
Premises by Lessor shall be construed as an election on Lessor's part
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to terminate the Term of this Lease unless a written notice of such intention
be given to Lessee pursuant to paragraph 19(b), or unless the termination of
this Lease be decreed by a court of competent jurisdiction.
(d) At any time or from time to time after the repossession of the
Leased Premises or any part thereof pursuant to paragraph 19(c), whether or not
the term of this Lease shall have been terminated pursuant to paragraph 19(b),
Lessor may (but shall be under no obligation to) relet the Leased Premises or
any part thereof for the account of Lessee, in the name of Lessee or Lessor or
otherwise, without notice to Lessee, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the term of this Lease) and on such conditions and for such uses as
Lessor, in its absolute discretion, may determine, and Lessor may collect and
receive any rents payable by reason of such reletting. Lessor shall not be
responsible or liable for any failure to relet the Leased Premises or any part
thereof or for any failure to collect any rent due upon any such reletting.
(e) No termination of the term of this Lease pursuant to paragraph
19(b), by operation of law or otherwise, and no repossession of the Leased
Premises or any part thereof pursuant to paragraph 19(c) or otherwise, and no
reletting of the Leased Premises or any part thereof pursuant to paragraph
19(d), shall relieve Lessee of its liabilities and obligations hereunder, all
of which shall survive such expiration, termination, repossession or reletting.
(f) In the event of any such termination or repossession, Lessee
will pay to Lessor the Basic Rent, additional rent and other sums required to
be paid by Lessee to and including the date of such termination or
repossession; and, thereafter, Lessee shall, until the end of what would have
been the term of this Lease in the absence of such termination or
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repossession, and whether or not the Leased Premises or any part thereof shall
have been relet, be liable to Lessor for, and shall pay to Lessor, as
liquidated and agreed current damages: (i) the Basic Rent, additional rent
and other sums which would be payable under this Lease by Lessee in the absence
of such termination or repossession, less (ii) the net proceeds, if any, of any
reletting effected for the account of Lessee pursuant to paragraph 19(d), after
deducting from such proceeds all Lessor's expenses incurred in connection with
such reletting (including, without limitation, all repossession costs,
brokerage commissions, legal expenses, reasonable attorneys' fees, employees'
expenses, alteration costs and expenses of preparation for such reletting).
Lessee will pay such current damages on the days on which the Basic Rent would
have been payable under this Lease in the absence of such termination or
repossession, and Lessor shall be entitled to recover the same from Lessee on
each such day.
(g) At any time after any such termination or repossession by
reason of the occurrence of an Event of Default, whether or not Lessor shall
have collected any current damages pursuant to paragraph 19(f), Lessor shall be
entitled to recover from Lessee, and Lessee will pay to Lessor on demand, as
and for liquidated and agreed final damages for Lessee's default and in lieu of
all current damages beyond the date of such demand (it being agreed that it
would be impracticable or extremely difficult to fix the actual damages), an
amount by which (a) the Basic Rent, additional rent and other sums which would
be payable under this Lease from the date of such demand (or, if it be earlier,
the date to which Lessee shall have satisfied in full its obligations under
paragraph 19(f) to pay current damages) for what would be the then unexpired
Term of this Lease in the absence of such termination or repossession,
discounted at the rate of 8% per annum over (b) the then fair
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net rental value of the Leased Premises for the same period discounted at the
rate of 8% per annum. If any statute or rule of law shall validly limit the
amount of such liquidated final damages to less than the amount above agreed
upon, Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law.
(h) Notwithstanding anything to the contrary stated herein, if an
Event of Default shall have happened and be continuing, whether or not Lessee
shall have abandoned the Leased Premises, Lessor may elect to continue this
Lease in effect for so long as Lessor does not terminate Lessee's rights to
possession of the Leased Premises and Lessor may enforce all of its rights and
remedies hereunder including without limitation the right to recover all Basic
Rent, additional rent and other sums payable hereunder as the same become due.
20. Additional Rights of Lessor. (a) No right or remedy herein
conferred upon or reserved to Lessor is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity or by statute. The failure of Lessor to
insist at any time upon the strict performance of any covenant or agreement or
to exercise any option, right, power or remedy contained in this Lease shall
not be construed as a waiver or a relinquishment thereof for the future. A
receipt by Lessor of any Basic Rent, any additional rent or any other sum
payable hereunder with knowledge of the breach of any covenant or agreement
contained in this Lease shall not be deemed a waiver of such breach, and no
waiver by Lessor of any provision of this Lease shall be deemed to have been
made unless expressed in writing and signed by Lessor. In addition to other
remedies provided in this Lease, Lessor shall be entitled, to the extent
permitted by applicable law, to injunctive relief in case of the violation, or
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attempted or threatened violation, of any of the covenants, agreements,
conditions or provision of this Lease, or to decree compelling performance of
any of the covenants, agreement, conditions or provisions of this Lease, or to
any other remedy allowed to Lessor at law or in equity.
(b) To the extent it may lawfully do so, Lessee hereby waives and
surrenders for itself and all those claiming under it, including creditors of
all kinds, (i) any right and privilege which it or any of them may have under
any present or future constitution, statute or rule of law to redeem the Leased
Premises or to have a continuance of this Lease for the term hereby demised
after termination of Lessee's right of occupancy by order or judgment of any
court or by any legal process or writ, or under the terms of this Lease or
after the termination of the term of this Lease as herein provided, and (ii)
the benefits of any present or future constitution, statute or rule of law
which exempts property from liability for debt or for distress for rent.
(c) In the event an action shall be brought for the enforcement of
any right hereunder, the party cast in judgment shall pay to the prevailing
party all the expenses incurred in connection therewith including reasonable
attorneys' fees.
21. Notices, Demands and Other Instruments. All notices, demands,
requests, consents, approvals and other instruments required or permitted to be
given pursuant to the terms of this Lease shall be in writing and shall be
deemed to have been properly given if (a) with respect to Lessee, sent by
certified or registered mail, postage prepaid, or sent by telegram or delivered
by hand, in each case addressed to Lessee at its address first above set forth,
and (b) with respect to Lessor, sent by certified or registered mail, postage
prepaid, or sent by telegram or delivered by hand in each case, addressed to
Lessor at its address first above set forth. Lessor and Lessee
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shall each have the right from time to time to specify as its address for
purposes of this Lease any other address in the United States of America upon
giving 15 days' notice thereof, similarly given, to the other party.
22. Estoppel Certificates; Consents and Financial Statements. (a)
Lessee and Lessor will, at any time and from time to time, upon not less than
twenty days' prior request by the other party, execute, acknowledge and deliver
to the other party a Certificate, certifying that this Lease is unmodified and
in full effect (or setting forth any modifications and that this Lease is in
full effect as modified) and the dates to which the Basic Rent, additional rent
and other sums payable hereunder have been paid, and either stating that to the
knowledge of the signer of such certificate no default exists hereunder or
specifying each such default of which the signer may have knowledge; it being
intended, inter alia, that any such certificate may be relied upon by any
mortgagee or prospective purchaser or prospective mortgagee of the Leased
Premises.
(b) From time to time during the term of this Lease, Lessor
expects to secure financings of its interest in the Leased Premises by
assigning Lessor's interest in this Lease and the sums payable hereunder. In
the event of any such assignment to a Permitted Mortgagee, Lessee will, upon
not less than ten days' prior request by Lessor, execute, acknowledge and
deliver to Lessor a consent to such assignment addressed to such Permitted
Mortgagee in form satisfactory to such Permitted Mortgagee; and Lessee will
produce, at Lessee's expense (but only with respect to the initial financing
involving the Permitted Mortgagee), such certificates, opinions of counsel and
other documents as may be reasonably requested by such Permitted Mortgagee.
(c) Lessee will furnish the following statements to Lessor:
(i) within 120 days after the end of each of Lessee's fiscal
years, the annual audited report of Lessee,
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including a balance sheet and an income and surplus statement
and statement of changes in financial position for the fiscal
year covered thereby, setting forth in comparative form, the
figures for the previous fiscal year, all on a fully
consolidated basis and in reasonable detail and duly certified
by the independent certified public accountants regularly
employed by Lessee,
(ii) within 120 days after the end of each of Lessee's fiscal
years, and together with the annual audited report furnished
in accordance with clause (i), an Officer's Certificate
stating that to the best of the signer's knowledge and belief
after making due inquiry, Lessee is not in default in the
performance or observance of any of the terms of this Lease,
or if Lessee shall be in Default to its knowledge, specifying
all such defaults, the nature thereof, and the steps being
taken to remedy the same,
(iii) with reasonable promptness, copies of all financial statements
and reports, if any, which Lessee shall send to its respective
stockholders, and copies of any Form 10-K, Form 10-Q, Form
8-K, proxy statement and registration statement (other than
Form S-8 registration statements), or copies of any successor
forms or statements substituted therefor, which Lessee shall
file with the Securities and Exchange Commission or any
governmental agency substituted therefor, and
(iv) with reasonable promptness, such other information, consistent
with the disclosure requirements of the federal securities
laws, respecting the financial condition and affairs of
Lessee, as Lessor may request from time to time.
23. No Merger. There shall be no merger of this Lease or the
leasehold estate hereby created with the fee estate in the Leased Premises or
any part thereof by reason of the same person acquiring or holding, directly or
indirectly, this Lease or the leasehold estate hereby created or any interest
in this Lease or in such leasehold estate as well as the fee estate in the
Leased Premises or any portion thereof.
24. Surrender. Upon the termination of this Lease, Lessee shall
peaceably surrender the Leased Premises to Lessor in the same condition in
which they were received from Lessor at the commencement of this Lease, except
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as altered as permitted or required by this Lease and except for ordinary wear
and tear. Provided that Lessee is not in default hereunder, Lessee shall remove
from the Leased Premises prior to or within a reasonable time after (not to
exceed thirty days) such termination all property not owned by Lessor, and, at
Lessee's expense, shall, at such time of removal, repair any damage caused by
such removal. Property not so removed shall become the property of Lessor.
Lessor may thereafter cause such property to be removed from the Leased
Premises and disposed of. The cost of any such removal and disposition and the
cost of repairing any damage caused by such removal shall be borne by Lessee.
25. Separability. Each and every covenant and agreement contained
in this Lease is separate and independent, and the breach of any thereof by
Lessor shall not discharge or relieve Lessee from any obligation hereunder. If
any term or provision of this Lease or the application thereof to any person or
circumstances or at any time shall to any extent be invalid and unenforceable,
the remainder of this Lease, or the application of such term or provision to
persons or circumstances or at any time other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and shall be enforced to the extent
permitted by law.
26. Binding Effect. All of the covenants, conditions and
obligations contained in this Lease shall be binding upon and inure to the
benefit of the respective successors and assigns of Lessor and Lessee to the
same extent as if each such successor and assign were in each case named as a
party to this Lease. This Lease may not be changed, modified or discharged
except by a writing signed by Lessor and Lessee.
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27. Table of Contents, Headings. The table of contents and
headings used in this Lease are for convenient reference only and shall not to
any extent have the effect of modifying, amending or changing the provisions of
this Lease.
28. Governing Law. This Lease shall be governed by and interpreted
under the laws of the State of Indiana.
29. Certain Definitions.
(a) The term "Appraisal Procedure" means:
Lessee and Lessor shall each select an MAI appraiser. Such
value shall be determined by agreement of the full appraisals
of such two appraisers pursuant to the terms of this Lease;
and if no agreement can be reached by such two appraisers,
such value shall be determined by the full appraisal of a
third MAI appraiser, who shall be selected by the original two
appraisers. All reasonable and necessary costs of the
appraisals shall be paid by Lessee.
(b) The term "Guarantor" means:
Lincoln National Corporation, an Indiana corporation.
(c) The term "Guaranty" means:
The Guaranty, dated the date hereof, from Guarantor to Lessor,
guaranteeing performance of Lessee's obligations under this
Lease.
(d) The term "Impositions" means:
(i) all taxes, assessments (including assessments for benefits
from public works or improvements, whether or not begun or
completed prior to the commencement of the Term of this Lease
and whether or not to be completed within said Term), levies,
fees, water and sewer rents and charges, and all other
governmental charges of every kind, general and special,
ordinary and extraordinary, whether or not the same shall have
been within the express contemplation of the parties hereto,
together with any interest and penalties thereon, which are,
at any time, imposed or levied upon or assessed against (A)
the Leased Premises or any part thereof, (B) any Basic Rent,
any additional rent reserved or payable hereunder or any other
sums payable by Lessee hereunder, (C) this Lease or the
leasehold estate hereby created or which arise in
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respect of the operation, possession, occupancy or use of the
Leased Premises:
(ii) any gross receipts or similar taxes imposed or levied upon,
assessed against or measured by the Basic Rent, additional
rent or any other sums payable by Lessee hereunder or levied
upon or assessed against the Leased Premises; including
without limitation [reference to Indiana gross receipts tax];
(iii) all sales and use taxes which may be levied or assessed
against or payable by Lessor or Lessee on account of the
acquisition, leasing or use of the Leased Premises or any
portion thereof; and
(iv) all charges for water, gas, light, heat, telephone,
electricity, power and other utilities and communications
services rendered or used on or about the Leased Premises.
(e) The term "Junior Permitted Mortgagees" means American States
Insurance Company, as mortgagee under a mortgage, dated as of the date hereof,
from Lessor, as mortgagor, and its assigns; and Dean Witter Realty Inc., as
mortgagee under a mortgage dated as of the date hereof, from Lessor, as
mortgagor, and its assigns.
(f) The term "this Lease" means:
this Lease and Agreement as amended and modified from time to
time, together with any memorandum or short form of lease
entered into for the purpose of recording.
(g) The term "Lessee's Certificate" means:
a written certificate signed by the Chairman of the Board, the
President or any Vice President of Lessee.
(h) The term "Lessor's Cost" means Lessor's Cost from time to time
as set forth in Schedule C.
(i) The term "Other Guaranties" means:
the Guaranties, dated as of the date hereof, from Guarantor to
Lessor guaranteeing performance of the obligations of Lincoln
National Pension Insurance Company, as lessee, under a Lease
and Agreement, dated as of the date hereof, and the Guaranty,
dated as of the date hereof, from Guarantor to Lessor
guaranteeing
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performance of the obligations of American States Insurance
Company, as lessee, under a Lease and Agreement, dated as of
the date hereof.
(j) The term "Permitted Mortgage" means:
any mortgage, deed of trust, security agreement, assignment of
lease or other security instrument relating to the Leased
Premises and this Lease, subject to the rights of lessee under
this Lease, and securing the borrowing by Lessor from Clinton
Holding Corporation, a Delaware corporation (the Senior
Permitted Mortgage), made at the time of execution of this
Lease, or any refinancing thereof, or the mortgages to the
Junior Permitted Mortgagees (the Subordinated Permitted
Mortgage).
(k) The term "Permitted Mortgagee" means the Senior Permitted
Mortgagee and the Junior Permitted Mortgagees.
(l) The term "Purchase Offer" means:
an offer delivered by Lessee to Lessor, executed by the
president or any vice president of Lessee, irrevocably
offering to purchase the Leased Premises pursuant to the
provisions of paragraphs 12 or 14 on any Termination Date
specified in such Offer at a price determined in accordance
with Schedule C.
(m) The term "Senior Permitted Mortgagee" means The Connecticut
Bank and Trust Company, National Association and F. W. Kawam, as trustees, as
assignees of Clinton Holding Corporation, and their successors and assigns.
(n) The term "Termination Date" means:
any Basic Rent Payment Date.
30. Lessee's Options; Right of First Refusal. (a) If no event of
default hereunder has occurred and is continuing, Lessee shall have the option
to purchase the Leased Premises either (x) on the last day of the Primary Term
or (y) on the last day of the first, second, third, fourth, fifth and sixth
Extended Terms if the Lease has been extended to any such date (any of such
dates for purchase being referred to as the Purchase Date), upon not less than
360 days prior written notice to Lessor of its intention to exercise such
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option. The purchase price payable upon the exercise of such option shall be
the fair market value of the Leased Premises as of the Purchase Date, taking
into consideration Lessee's continuing rights and obligations under this Lease
assuming Lessee shall have extended the Lease for all Extended Terms, minus the
enhancement of the fair market value of the Leased Premises due to the
existence of Lessee's Improvements and that portion of the Improvements, if
any, constructed by Lessee at its own expense and for which Lessee has not been
reimbursed pursuant to paragraph 15. If Lessee and Lessor cannot agree as to
such fair market value, such fair market value shall be determined in
accordance with the Appraisal Procedure. Such Appraisal Procedure shall be
completed within 150 days after Lessee's notice as set forth above. Lessee's
option shall be exercisable by giving notice of such exercise to Lessor not
less than 360 days prior to the Purchase Date. On the Purchase Date, Lessor
shall convey the Leased Premises to Lessee pursuant to and upon compliance with
paragraph 16. The foregoing option is personal to Lessee, and such option is
not assignable (except by Lessee to any of its affiliates) notwithstanding any
assignment of the Lease to any other person.
(b) If, at any time during the Primary Term or any Extended Term
of this Lease, Lessor shall receive and be willing to accept a bona fide offer
from a third party to purchase Lessor's interest in the Leased Premises, other
than an offer to purchase such interest at any sale incidental to foreclosure
or other similar proceedings, or if Lessor shall offer to sell its interest in
the Leased Premises to any third party, Lessor shall promptly transmit to
Lessee its written offer to sell such interest to Lessee upon the same terms
and conditions as are set forth in the third party offer or its offer to a
third party, as the case may be, together with a true copy of such offer
(containing the name and address of such third party); provided, however, that
51
<PAGE>
Lessor's offer to Lessee shall be reduced by the enhancement of the fair market
value of the Leased Premises due to the existence of Lessee's Improvements and
that portion of the Improvements, if any, constructed by Lessee at its own
expense and for which Lessee has not been reimbursed pursuant to paragraph 15,
as determined by the Appraisal Procedure. Lessee shall have 30 business days
within which to accept such offer. If Lessee shall accept such offer by written
notice to Lessor within such time, such offer and acceptance shall constitute a
contract between them for the sale by Lessor and the purchase by Lessee of the
Leased Premises, and shall not thereafter be subject to rejection by either
party. On the date of such purchase, Lessor shall convey and assign the Leased
Premises to Lessee, provided that such conveyance and assignment shall be made
subject to the Permitted Exceptions listed in Schedule A hereto, to this Lease,
and to such liens, encumbrances, charges, exceptions and restrictions affecting
the Leased Premises as such third party is willing to accept in such offer, and
provided further that this Lease and any Permitted Mortgage shall continue in
full force and effect. If the offer to sell is not so accepted by Lessee, then
Lessor may sell the Leased Premises to such third party purchaser upon the
terms contained in such original offer by or to such third party and such sale
and transfer must be consummated within 180 days following the expiration of
the time hereinabove provided for the acceptance by Lessee. If the Leased
Premises is sold to a third party, the sale shall be subject to this Lease and
all of the provisions hereof, including, without limitation, all options
granted to Lessee.
31. Schedules. The following are Schedules A, B and C referred to
in this Lease, which are hereby made a part hereof.
52
<PAGE>
SCHEDULE A
TO LEASE
Part 1: Property Description
Part 2: Property subject to the option set forth in paragraph 15(d).
[Each Lease will include a legal description of certain specific
portions of the Leased Premises which are to be subject to the paragraph 15(d)
option. The amount of indebtedness to be prepaid pursuant to the Senior
Permitted Mortgage in connection with the exercise of such option will be the
greater of (a) the amount herein set forth as the cost attributable to such
portion of the Leased Premises, or (b) the fair market value of such portion as
determined pursuant to paragraph 15(c). Such property and amounts will be as
follows:
Downtown, Fort Wayne: 1 parcel presently improved
by a low-rise structure --
$1,500,000
<PAGE>
SCHEDULE B
TO LEASE
Basic Rent Payments
1. The instalments of Basic Rent payable for the Leased Premises
during the Interim Term shall be: $20,407 per diem (based on a 360-day year of
12 30-day months), payable on August 31, 1984.
2. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term ending on and including August 31, 1989
shall be $2,115,713 and shall be payable semi-annually in arrears commencing on
February 28, 1985 and thereafter on the last day of each August and February
thereafter to and including August 31, 1989.
3. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1989 and
ending on and including August 31, 1994 shall be $4,809,718 and shall be
payable semi-annually in arrears commencing on February 28, 1990 and thereafter
on the last day of each August and February thereafter to and including August
31, 1994.
4. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1994 and
ending on and including August 31, 1999 shall be $4,893,516 and shall be
semi-annually in arrears commencing on February 28, 1995 and thereafter
on the last day of each August and February thereafter, to and including August
31, 1999.
5. Each instalment of Basic Rent payable for the Leased Premises
during that portion of the Primary Term commencing on September 1, 1999 and
ending on and including August 31, 2004 shall be $7,468,295 and shall be
<PAGE>
payable semi-annually in arrears commencing on February 29, 2000 and thereafter
on the last day of each August and February thereafter, to and including August
31, 2004.
6. Each instalment of Basic Rent payable for the Lease to Premises
during that portion of the Primary Term commencing on September 1, 2004 and
ending on and including August 31, 2009 shall be $7,912,625 and should be
payable semi-annually in arrears commencing on February 28, 2005 and thereafter
on the last day of each August and February thereafter to and including August
31, 2009.
7. Each instalment of Basic Rent for the Leased Premises during the
Extended Terms shall be $3,595,500, and shall be payable semi-annually in
arrears commencing on February 28, 2010 and thereafter on the last day of each
August and February thereafter occurring during the Extended Terms.
If any instalment of Basic Rent shall be payable on a date which shall
not be a business day, then such instalment shall be payable on the first
business day thereafter.
45
<PAGE>
SCHEDULE C
TO LEASE
COMPUTATION OF PURCHASE PRICES
Upon the purchase of the Leased Premises during the Interim or Primary
Terms pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall
be an amount equal to the amount set forth in column 2 below opposite the
period in which such purchase occurs (the first such amount being called
"Lessor's Cost") (period 1 being the period beginning on the first day of the
Interim Term and ending on and including February 28, 1985, period 2 being the
period beginning on March 1, 1985 and ending on and including August 31, 1985,
and each succeeding period being the following semiannual period to and
including period 50).
<TABLE>
<CAPTION>
Column 1 Column 2
-------- --------
Purchase Price Applicable Amount
-------------- -----------------
<S> <C>
1 $69,016,257
2 72,414,723
3 75,022,734
4 77,853,455
5 88,432,664
6 83,154,489
7 85,705,546
8 88,307,746
9 90,831,799
10 93,380,640
11 94,854,980
12 94,724,364
13 94,465,273
14 94,281,844
15 93,686,304
16 93,307,297
17 92,946,262
18 92,604,773
19 92,284,548
20 91,987,462
21 91,631,767
22 91,288,630
23 90,958,768
</TABLE>
<PAGE>
<TABLE>
<S> <C>
24 90,642,950
25 90,341,999
26 90,856,799
27 69,768,300
28 89,537,523
29 83,305,563
30 83,093,599
31 86,946,558
32 84,685,834
33 82,303,087
34 79,788,975
35 77,133,710
36 74,326,706
37 71,356,584
38 68,211,108
39 64,877,127
40 61,340,504
41 57,395,047
42 53,187,823
43 48,730,963
44 43,395,350
45 33,960,317
46 33,603,745
47 27,901,849
48 21,829,066
49 15,357,935
50 8,459,945
</TABLE>
<PAGE>
Upon a partial prepayment of the indebtedness secured by the Senior
Permitted Mortgage referred to in paragraph 12(c), 14(b) or 15(e) of this
Lease, the amounts set forth above shall be reduced by an amount equal to the
amount of the reduction of the principal amount of such indebtedness scheduled
to be outstanding during each purchase period, after giving effect to the
revised amortization thereof resulting from such partial prepayment in
accordance with the terms thereof. (In case such indebtedness is prepaid or
other wise refinanced, the amounts so determined shall be reduced as if such
indebtedness had remained outstanding.)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be
signed as of the date first above written.
CLINTON STREET LIMITED PARTNERSHIP,
as Lessor
By: Liberty Street Limited Partnership - 84,
A General Partner
By: E. DAVISSON HARDMAN, JR.
-------------------------------
E. Davisson Hardman, Jr.,
A General Partner
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY,
as Lessee
By: MAX A. ROESLER
-------------------------------
Max A. Roesler
Vice President
This document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 021l0
<PAGE>
Schedule A
Fort Wayne, Indiana
Lincoln National Life
Insurance comapny
("Harrison" site)
PARCEL 1 (1-A-A)
Lots Numbered 52, 53, and 54, together with the vacated alley lying west of and
adjacent thereto, all being in Breckenridge's Addition to the City of Fort
Wayne, Indiana, according to the plat thereof, recorded in Deed Record 38, page
170 in the Office of the Recorder of Allen County, Indiana. Together with an
overhand walkway as described in Declaratory Resolution No. 1402-75 adopted
August 14, 1975 and confirmed October 9, 1975 by the Board of Public Works of
the City of Fort Wayne, Indiana.
PARCEL 2 (1-A-A)
Lots Numbered 84, 85, 86, 87, 88, and 89 together with the vacated alley lying
West of and adjacent thereto, also together with the vacated alley lying North
of and adjacent to said Lot Number 89, all being in Brackenridge's Addition to
the City of Fort Wayne, Indiana, according to the plot thereof, recorded in
Deed Record 75, page 465 in the Office of Recorder of Allen County, Indiana.
PARCEL 3 (1-A-A)
A parcel of land situated in the City of Fort Wayne, Allen County, Indiana
bounded by a line commencing at the point where the North boundary line of
Brackenridge Street in said City intersects the East boundary line of Harrison
Street in said City and running thence East on the North boundary line of said
Brackenridge Street, a distance of 231.5 feet, more or less, to the West
boundary line of the alley running North from said Breckenridge Street to
Douglas Avenue, between Harrison and Calhoun Streets; thence North, along the
West boundary line of said alley, a distance of 131 feet, more or less, to the
South boundary line of an alley running West to Harrison Street between
Breckenbridge Street and Douglas Avenue; thence West on the South boundary line
of the alley last above described, a distance of 231.5 feet, more or less to
the East boundary line of said Harrison Street; thence South, on the East
boundary line of said Harrison Street, a distance of 131 feet, more or less, to
the point of beginning.
PARCEL 4 (1-A-A)
That part of the Northwest Quarter of the Northeast Quarter of Section 11,
Township 0 North, Range 12 East, in the City of Fort Wayne, Allen County,
Indiana, beginning at a point where the East line of Harrison Street intersects
with and crosses the South Line of Douglas Avenue; thence running South along
the East line of Harrison Street, a distance of 134 feet to an alley; thence
East, along the alley a distance of 231.5 feet to an alley: thence North and
parallel with said Harrison Street to the South line of Douglas Avenue; thence
West along the South line of Douglas Avenue to the point of beginning.
PARCEL 5 (1-A-A)
The vacated alley lying between PARCEL 3 and PARCEL 4
<PAGE>
1PARCEL 6 (1-A-B)
The East 46 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to the City
of Fort Wayne, Allen County, Indiana.
PARCEL 7 (1-A-B)
Part of the West 84 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to
the City of Fort Wayne, Allen County, Indiana, being more particularly
described as follows to wit:
Beginning at the Northwest corner of said Lot 93; thence East, on and along the
North line of said Lot 93, a distance of 84 feet; thence South, a
distance of 60 feet to the South line of said Lot 91; thence Northwesterly, on
the arc of a regular curve to the right having a radius of 172 feet, a distance
of 105.34 feet to the point of beginning;
PARCEL 8 (1-A-B)
Lots 94, 95, 96, 97, 98, 99, 100 and 101, and all that part of Lot 103 South of
the centerline of the brick wall along the South line of said Lot; Lots 104,
105, 106, 107 and the North 19.5 feet of Lot 103 all in Hamilton's Third
Addition to the City of Fort Wayne, Allen County, Indiana;
Together with an overhead walkway as described in Declaratory Resolution No.
1402-75 adopted August 14, 1975 and confirmed October 9, 1975 by the Board of
Public Works of the City of Fort Wayne, Indiana.
PARCEL 9 (1-A-B)
Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township
30 North, Range 13 East, more particularly described as follows to-wit:
Commencing at the intersection of the South line of Montgomery Street, now
Douglas Avenue, in the City of Fort Wayne, with the East line of an alley next
East of and parallel with Calhoun Street in said City; thence South on the East
line of said Alley, 160.71 feet, more or less to the center of a vacated alley
lying South of Montgomery Street, now Douglas Avenue, and extending from
clinton Street west to the first alley east of Calhoun Street, said alley
having been vacated by the Board of Public Works of the City of Fort Wayne, by
Declaratory Resoulution No. 401, adopted April 22, 1920, and confirmed May 13,
1920, running thence East along the centerline of said vacated alley 70 feet to
a point; thence North and parallel to the East line of the first alley east of
Calhoun street 160.71 feet, more or less, to the South line of Montgomery
Street, now Douglas Avenue in said City of Fort Wayne; thence West 70 feet to
the place of beginning;
(CONTINUED)
<PAGE>
-5-
PARCEL 11 (1-A-B) (Continued)
The tract of land in the Northeast Quarter of the Northeast Quarter of Section
11, Township 30 North, Range 12 East, in the City of Fort Wayne, described as
follows to-wit:
Commencing at the intersection of the south property line of Montgomery Street
Now Douglas Street) and the West property line of Clinton Street, as said lines
existed in 1925; thence West on said south property line of Montgomery Street
(Now Douglas Street) one hundred and fifty nine (159) feet, more or less, to
the east line of the tract conveyed to Chester J. Nathan and S. Louis Wolf by
deed recorded in Deed Record 290, at page 210 of the Deed Records of Allen
County, State of Indiana; thence South along said east property line one
hundred sixty and 71/100 (160.71) feet to the centerline of the vacated
fourteen (14) Foot alley between Montgomery (now Douglas) and Holman (now
Brackenridge) Streets; thence east along said centerline of said vacated alley,
one hundred and fifty nine (159) feet, more or less, to the west property line
of Clinton Street as it existed in 1925; thence north along the said west
property line of Clinton Street to the place of beginning.
PARCEL 12 (1-A-B)
The vacated alley lying East of and adjacent to Lots Numbered 91 to 101,
inclusive, and Lots Numbered 103 to 107 inclusive, in Hamilton's Third Addition
to the city of Fort Wayne, Allen County, Indiana, said alley having been
vacated under Declaratory Resolution No. 1401-1975.
PARCEL 13 (1-B-5)
Lots Numbered 62, 63 and 64, all being in Brackenridge's Addition to the City
of Fort Wayne, Indiana, according to the plat thereof, recorded in Plat Book 0,
page 82, in the Office of the Recorder of Allen County, Indiana
Together with an overhead walkway as described on Declaratory Resolution No.
1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public
Works of the City of Fort Wayne, Indiana.
PARCEL 14 (1-Z)
Lot 7 and the East one-half of Lot B in Baker's Addition to the City of Fort
Wayne, Indiana, according to the plat thereof, recorded in Deed record 31, page
20, in the Office of the Recorder of Allen County, Indiana.
PARCEL 15 (3-J)
Lots Numbered 4, 5 and 6, together with the South Half of the vacated alley
lying North of and adjacent to said Lot 6, all being in Baker's Addition to the
City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed
Record 31, page 20, in the Office of the Recorder of Allen County, Indiana.
<PAGE>
PARCEL 16 (3-J)
Lots Numbered 55, 56, 57, 58, 59, 60 and 61, together with the North Half of
the vacated alley lying South of and adjacent to said Lot 61, all being in
Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the
plat thereof, recorded in Plat Book O, page 82, in the Office of the Recorder
of Allen County, Indiana.
Together with an overhead walkway as described in Declaratory Resolution No.
1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public
Works of the City of Fort Wayne, Indiana.
PARCEL 17 (3-L)
The East Half of Lot Numbered 57 and all of Lots Numbered 58, 59, 60, and 61,
and the vacated alley between said Lots Numbered 57 and 58, all in Hamilton's
Second Addition to the City of Fort Wayne, in Allen County, Indiana, according
to the plat thereof, recorded in Deed Record 31, page 176 in the Office of the
Recorder of Allen County, Indiana, and the vacated Railroad Street under
Declaratory Resolution No. 1251-1969 adjacent to said Lots.
PARCEL 18 (3-L)
Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township
30 North, Range 12 East, Fort Wayne, Allen County, Indiana, described as
follows:
Beginning at a point on the North line of vacated Railroad Street, 131.44 feet
East of the East line of Calhoun Street; thence East along the North line of
vacated Railroad Street, a distance of 237.56 feet to the West line of Clinton
Street; thence South along the West line of Clinton Street, 144.65 feet; thence
Westerly, at right angles to the last described course, 20.0 feet; thence
Southerly, at right angles to the last described course, 10.5 feet (recorded as
12 feet) to the Northerly face of a concrete retaining wall; thence Westward
along the North face of said retaining wall, following a curved course to the
right to a point 133.03 feet East of the East line of Calhoun Street, measured
along the North face of said retaining wall; thence North 128.4 feet to the
point of beginning.
PARCEL 19 (3-Q)
The West 1/2 of Lot Numbered 8 in Baker's Addition to the City of Fort Wayne,
Allen County, Indiana, according to the plat thereof, recorded in Deed Record
31, page 20 in the Office of the Recorder of Allen County, Indiana.
<PAGE>
PARCEL 20 (4-C)
Lots Numbered 65 and 66 in Brackenridge's Addition to the City of Fort Wayne,
Indiana, according to the plat thereof, recorded in Deed Record 28, page 93 in
the Office of the Recorder of Allen County, Indiana.
PARCEL 21 (4-D)
That part of Lot 11 in Baker's Addition to the City of Fort Wayne, Allen
County, Indiana, described as follows: Beginning at the Northwest corner of
said Lot 11, thence East along the North end of said lot to the East side
thereof; thence South along the East side of said lot to the South end thereof;
thence in a straight line in a Northwesterly direction to the point of
beginning.
PARCEL 22 (4-D)
Lots 9 and 10 Baker's Addition to the City of Fort Wayne.
PARCEL 23 (3-S)
Lots 62 and 63 in the continuation of Hamilton's Second Addition to the City of
Fort Wayne, according to the plat thereof, recorded in Deed Record 31, page 176
in the records in the Office of the Recorder of Allan County, Indiana.
PARCEL 24
The portion of that certain 10-foot North-South alley which is bounded on the
West by Lot 62 of Brackenridge Addition to the City of Fort Wayne, by Lot 7 of
Baker's Addition to the City of Fort Wayne, and which said alley is bounded on
the East by Lots 55 through 61, inclusive, of Brackenridge Addition to the City
of Fort Wayne, by Lots 4 through 6, inclusive, in Baker's Addition to the City
of Fort Wayne (hereinafter referred to as North-South Alley): and
The portion of that certain 10-foot East-West alley which is bounded on the
North by Lots 62 through 66, inclusive, of Brackenridge Addition to the City of
Fort Wayne, and which is bounded on the South by Lots 7 through 11, inclusive,
of Baker's Addition to the City of Fort Wayne thereinafter referred to as
East-West Alley).
<PAGE>
Property Location: Downtown Fort Wayne, Indiana
ASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON STREET LIMITED PARTNERSHIP
To
CLINTON HOLDING CORPORATION
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
ASSIGNMENT OF LEASES AND GUARANTY, dated as of August 1, 1984,
(herein, together with all supplements and amendments hereto, called this
Agreement), from CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership (herein called Owner), having an address c/o Dean Witter Realty
Inc., 130 Liberty Street, New York, New York 10006, to CLINTON HOLDING
CORPORATION, a Delaware corporation, herein, together with its respective
successors and assigns, called Assignee) having an address c/o Dean Witter
Realty Inc., 130 Liberty Street, New York, New York 10006.
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule A hereto (the Land Parcel) and in
the improvements located (the Land Parcel, together with the improvements
located thereon being collectively called the Schedule A Property), Assignor,
simultaneously with the execution and delivery hereof, is borrowing from
Assignee the amount of $50,646,535, such borrowing being evidenced by its (i)
Series A 13.90% Secured Note Due September 1, 1989, in the original principal
amount of $2,019,802 (herein, together with any notes issued in exchange or
replacement thereof, called the Series A Owner's Note), (ii) Series B 14.30%
Secured Note Due September 1, 1994, in the original principal amount of
$18,935,644 (herein, together with any notes issued in exchange or replacement
therefor, called the Series B Owner's Note), (iii) Series C 14.60% Secured Note
Due September 1, 1999, in the original principal amount of $17,572,277 (herein,
together with any notes issued in exchange or replacement thereof, called the
Series C Note), (iv) Series D 14.70% Secured Note Due September 1, 1999 in the
original principal amount of $8,584,159 (herein, together with any notes issued
in exchange or replacement therefor, called the Series D Owner's Note), and (v)
Series E 15.00% Secured Note Due September 1, 1999 in the original principal
amount of $3,534,653 (herein, together with any notes
<PAGE>
issued in exchange or replacement therefor, called the Series E Owner's Note;
the Series E Owner's Note, together with the Series A Owner's Note, the Series
B Owner's Note, the Series C Owner's Note and the Series D Owner's Note, are
herein collectively called the Owner's Notes).
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule B hereto and in the improvements
located thereon (the Schedule B Property), Assignor, simultaneously with the
execution and delivery hereof, is borrowing from Assignee the amount of
$16,551,155, such borrowing being evidenced by its (i) Series A 13.90% Secured
Note Due September 1, 1989, in the original principal amount of $660,066, (ii)
Series B 14.30% Secured Note Due September 1, 1994, in the original principal
amount of $6,188,119, (iii) Series C 14.60% Secured Note Due September 1, 1999,
in the original principal amount of $5,742,574, (iv) Series D 14.70% Secured
Note Due September 1, 1999 in the original principal amount of $2,805,280 and
(v) Series E 15.00% Secured Note Due September 1, 1999 in the original
principal amount of $1,155,116.
To finance a portion of the cost to Owner of acquiring a fee interest
in the parcel of land described in Schedule C hereto and in the improvements
located (the Schedule C Property), Assignor, simultaneously with the execution
and delivery hereof, is borrowing from Assignee the amount of $33,102,310 such
borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September
l, 1989, in the original principal amount of $1,320,132, (ii) Series B 14.30%
Secured Note Due September 1, 1994, in the original principal amount of
$12,376,237, (iii) Series C 14.60% Secured Note Due September l, 1999, in the
original principal amount of $11,485,149 (iv) Series D 14.70% Secured Note Due
September 1, 1999 in the original principal amount of $5,610,561 and
2
<PAGE>
(v) Series E 15.00% Secured Note Due September l, 1999 in the original
principal amount of $2,310,231.
The Secured Notes of the Owner relating to the Schedule B Property and
Schedule C Property are collectively called the Other Owner's Notes, and the
Schedule A Property together with the Schedule B Property and the Schedule C
Property are collectively called the Properties and individually called a
Property.
The Owner's Notes and the Other Owner's Notes are secured by three
separate Mortgages, each dated as of the date hereof (the Mortgage relating to
the Schedule A Property called the Mortgage and all three Mortgages
collectively called the Mortgages), from Owner, as mortgagor, to Assignee, as
mortgagee, which each creates a lien on a Property. As additional security for
the Owner's Notes and the Other Owner's Notes, Owner is entering into the
undertakings herein set forth. The Schedule A Property has been leased by Owner
to The Lincoln National Life Insurance Company (the Lessee) under a Lease and
Agreement, dated as of the date hereof (herein, together with all supplements
and amendments thereto, and any memorandum or short form thereof entered into
for the purpose of recording, called the Lease), between Owner, as lessor, and
the Lessee, as lessee. The obligations of the Lessee under the Lease and
hereunder has been guaranteed by Lincoln National Corporation (the Guarantor)
pursuant to a Guaranty dated as of the date hereof (the Guaranty). In order to
induce Assignee to purchase the Owner's Notes and the Other Owner's Notes and
accept the Mortgages, Owner is entering into the undertakings herein set forth
with Assignee and is assigning the Lease and the Guaranty to Assignee.
3
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, Owner
agrees as follows:
1. Owner, in furtherance of the covenants of the Mortgages and as
security for the payment of the principal of, premium, if any, and interest and
all other sums payable on the Owner's Notes and the Other Owner's Notes, and of
all other sums payable under the Mortgages, and the performance and observance
of the provisions thereof, has assigned, transferred, conveyed and set over,
and by these presents does assign, transfer, convey and set over to Assignee,
all of Owner's estate, right, title and interest in, to and under the Lease,
and the Guaranty together with all rights, powers, privileges, options and
other benefits of Owner as lessor under the Lease and as beneficiary under the
Guaranty including, but not by way of limitation, (i) the immediate and
continuing right to receive and collect all rents, income, revenues, issues,
profits, insurance proceeds, condemnation awards, moneys and security payable
or receivable under the Lease or the Guaranty pursuant to any of the provisions
of either thereof, whether as rents or as the purchase price of the Schedule A
Property or otherwise (except sums payable directly to any person other than
the lessor under the Lease), (ii) the right to accept any offer by Lessee to
purchase the Schedule A Property, or part thereof, or any award payable in
connection with a taking thereof (provided that such acceptance shall be
permitted by the terms of Section 3.1(a) of the Mortgages), (iii) the right and
power (which right and power are coupled with an interest) to execute and
deliver, as agent and attorney-in-fact of Owner, an appropriate deed or other
instrument necessary to convey the Schedule A Property, any part thereof or any
award payable in connection with a taking thereof to Lessee if Lessee becomes
obligated to purchase the Schedule A
4
<PAGE>
Property, any part thereof or any award payable in connecticn with a taking
thereof, (iv) the right to perform all other necessary or appropriate acts as
said agent and attorney-in-fact with respect to any purchase and conveyance
referred to in clause (iii) above, (v) the right to make all waivers and
agreements, (vi) the right to give all notices, consents and releases, (vii)
the right to take any legal action upon the happening of a default under the
Lease or the Guaranty including the commencement, conduct and consummation of
proceedings at law or in equity as shall be permitted under any provision of
the Lease or the Guaranty or by law or in equity and (viii) the right to do any
and all other things whatsoever which Owner or any lessor is or may be entitled
to do under the Lease or the Guaranty.
2. The assignment made hereby is executed as collateral security, and
the execution and delivery hereof shall not in any way impair or diminish the
obligations of Owner under the provisions of the Lease nor shall any of the
obligations contained in the Lease be imposed upon Assignee. Upon a release of
the Schedule A Property or part thereof from the lien of the Mortgage, pursuant
to the provisions of the Mortgage, said assignment, and all rights herein
assigned to Assignee shall cease and terminate and all the estate, right, title
and interest of Owner in and to the above-described assigned property shall
revert to Owner, and Assignee shall, at the request of Owner, deliver to Owner
an instrument in recordable form cancelling this Agreement and reassigning to
Owner the above-described assigned property. Upon the payment of the principal
of and premium, if any, and all accrued interest on the Owner's Notes and the
Other Owner's Notes and of all other sums payable under the Mortgages, or upon
a release of all of the Property from the lien of the Mortgage pursuant to the
provisions of the Mortgage, said assignment and all rights herein assigned to
Assignee shall cease and
5
<PAGE>
terminate and all the estate, right, title and interest of Owner in and to the
above-described assigned property shall revert to Owner, and Assignee shall, at
the request of Owner, deliver to Owner an instrument in recordable form
cancelling this Agreement and reassigning to Owner the above-described assigned
property.
3. Owner hereby designates Assignee to receive all payments of Basic
Rent, purchase prices and other sums payable to the lessor under the Lease and
all payments receivable by Owner under the Guaranty and to receive duplicate
original copies of all notices, undertakings, demands, statements, documents
and other communications which the Guarantor is required or permitted to give,
make, deliver to or serve upon assignor under the Guaranty and which the Lessee
is required or permitted to give, make, deliver to or serve upon the lessor
under the Lease. Owner hereby directs the Lessee to deliver to Assignee, at its
address set forth above or at such other address as Assignee shall designate,
duplicate original copies of all such notices, undertakings, demands,
statements, documents and other communications and no delivery thereof by the
Lessee shall be of any force or effect unless made to Owner and also made to
Assignee as herein provided.
4. Owner represents to Assignee that Owner has not executed any other
assignment of the subject matter of this Assignment other than the Mortgage and
that the Lease is in full effect and are not in default.
5. Owner agrees that said assignment and the designation and direction
to the Lessee hereinabove set forth are irrevocable, and that it will not take
any action as lessor under the Lease or as the beneficiary under the Guaranty
which is inconsistent with said assignment, or make any other assignment,
designation or direction inconsistent therewith, and that any assignment,
designation or direction inconsistent therewith shall be void.
6
<PAGE>
Owner will, from time to time upon the request of Assignee execute all
instruments of further assurance and all such supplemental instruments with
respect to this Agreement as the Assignee may specify.
6. Owner hereby agrees, and hereby undertakes to obtain the agreements
of the Lessee to the following matters:
(a) The Lessee consents to the provisions of this Agreement, and
agrees to pay and deliver to Assignee all rentals and other sums assigned to
Assignee pursuant to this Agreement, without offset, deduction, defense,
deferment, abatement or diminution, subject to the provisions of the Lease and
will not, for any reason whatsoever, seek to recover from Assignee any moneys
duly owed and paid to the Assignee by virtue of this Agreement. The Lessee
agrees (i) that all sums payable to Assignee pursuant to the preceding sentence
shall be paid in such manner that Assignee shall have "collected funds" on each
date on which such sums are due and payable, and addressed to Assignee at its
address set forth above or to such other address or manner as may be specified
by Assignee by written notice to the Lessee and (ii) to deliver to Assignee
duplicate original copies of all notices and other instruments which each may
deliver pursuant to the Lease. No such payment or delivery made by a Lessee
shall be of any force or effect (i) unless paid to Assignee or delivered to
Assignee and Owner as provided above and (ii) until actually received by the
Assignee.
(b) Owner and the Lessee will not enter into any agreement
subordinating, amending, modifying or terminating (except as provided in the
Lease) the Lease without the consent thereto in writing of Assignee and any
such attempted subordination, amendment, modification or termination without
such consent shall be void. In the event that the Lease shall be amended as
herein permitted, the Lease as so amended shall continue to be subject to the
7
<PAGE>
provisions of this Agreement without the necessity of any further act by any of
the parties hereto. The Lessee will remain obligated under the Lease in
accordance with its terms, and will not take any action to terminate (except as
expressly permitted by the Lease), rescind or avoid the Lease, notwithstanding
any action with respect to the Lease which may be taken by an assignee or
receiver of Owner or of any such assignee or by any court in any such
proceeding.
(c) If, pursuant to the Lease, Lessee shall offer to purchase the
Schedule A Property (or any part thereof or any award payable in connection with
a taking thereof), notice of acceptance of any such offer shall be deemed
validly given for all purposes if given by Assignee as permitted by paragraph
l(ii) hereof and notice by Owner of rejection of any such offer shall be void
unless accompanied by the written consent of Assignee and no such offer shall
be deemed rejected by Owner without the written consent of Assignee. If Lessee
shall become obligated to purchase the Schedule A Property (or any part thereof
or any award payable in connection with a taking thereof) pursuant to any
provision of the Lease, Lessee will accept a deed and other instruments
conveying and transferring the Schedule A Property (or any part thereof) which
are executed and delivered by Assignee as being in compliance with the
provisions of the Lease, provided that said deed and other instruments shall
otherwise be in compliance with the provisions of the Lease. If it should
become necessary for Assignee or any other party to institute any foreclosure
or other judicial proceeding in order that title to the Schedule A Property (or
any part thereof or any award payable in connection with a taking thereof) may
be conveyed to Lessee, the time within which delivery of the deed or other
instruments relating to such conveyance may be made shall be extended to the
extent necessary to permit Assignee or such other party to institute and
8
<PAGE>
conclude such foreclosure or other judicial proceeding, and the Lease shall not
terminate, but shall continue in full effect until the expiration of such
period of extension.
7. This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This Agreement
may be executed in two or more counterparts and shall be deemed to have become
effective when and only when one or more of such counterparts shall have been
signed by or on behalf of each of the parties hereto, although it shall not be
necessary that any single counterpart be signed by or on behalf of each of the
parties hereto, and all such counterparts shall be deemed to constitute but one
and the same instrument. This Agreement shall be governed by the laws of the
State of Indiana.
8. The following are Schedules A, Schedule B and Schedule C referred
to in this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, Owner has caused this Agreement to be executed and
delivered as of the date first above written.
CLINTON STREET LIMITED PARTNERSHIP
By: Liberty Street Limited
Partnership-84,
General Partner,
Witness: By: E. DAVISSON HARDMAN,
--------------------------
E. Davisson Hardman,
a General Partner
10
<PAGE>
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the
foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to
each of the provisions set forth in paragraph 6 thereof.
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
(SEAL)
Attest: By: MAX A. ROESLER
-----------------------
NAME: Max A. Roesler
TITLE: Vice President
By: PATRICIA A. ADAMS
--------------------------
NAME: Patricia A. Adams
TITLE: Assistant Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Assignment of Lease and Guaranty and hereby accepts and agrees to each of the
provisions set forth in paragraph 6 thereof.
LINCOLN NATIONAL CORPORATION
(SEAL)
Attest: By: MAX A. ROESLER
-----------------------
NAME: Max A. Roesler
TITLE: Vice President
By: PATRICIA A. ADAMS
--------------------------
NAME: Patricia A. Adams
TITLE: Assistant Secretary
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this ___
day of August, A.D., 1984, personally appeared Max A. Roesler and
Patricia A. Adams, as Vice President and Assistant Secretary,
respectively, of THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, a
corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the
free and voluntary act and deed of said corporation, for the uses
and purposes therein mentioned.
CAROL ANN JOHNSTON
---------------------------------
Carol Ann Johnston, Notary Public
(SEAL)
My Commission Expires:
CAROL A. JOHNSTON
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, 1988
- ------------------------------------
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and
State, personally appeared E. Davisson Hardman, Jr., a general
partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts
limited partnership, which is the general partner of CLINTON
STREET LIMITED PARTNERSHIP, an Indiana limited partnership and
acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of
LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner
acting on behalf of CLINTON STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 28th day of
August, 1984.
Signature JOAN E. HOGAN
-----------------
Printed JOAN E. HOGAN
-----------------
NOTARY PUBLIC
My commission expires:
10-31-86
- ---------------------
<PAGE>
84-021067
Property Location: Downtown Fort Wayne, Indiana
ASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON STREET LIMITED PARTNERSHIP
To
CLINTON HOLDING CORPORATION
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
Thomas H. Trimarco
THREE RIVERS TITLE COMPANY, INC.
1984 AUG 29 PM 4:39
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
84-021069
Property Location: Downtown Fort Wayne, Indiana
REASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON HOLDING CORPORATION
To
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
and
F. W. KAWAM,
as Trustees
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
Thomas H. Trimarco, Esq.
THREE RIVERS TITLE COMPANY, INC.
1984 AUG 29 PM 4:43
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
Property Location: Downtown Fort Wayne, Indiana
REASSIGNMENT OF LEASE AND GUARANTY
From
CLINTON HOLDING CORPORATION
To
THE CONNECTICUT BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
and
F. W. KAWAM,
as Trustees
Dated as of August 1, 1984
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
REASSIGNMENT OF LEASE AND GUARANTY, dated as of August l, 1984, from
CLINTON HOLDING CORPORATION, a Delaware corporation (herein, together with its
successors and assigns, called the Company) having an address c/o Dean Witter
Realty Inc., 130 Liberty Street, New York, New York 10006, to THE CONNECTICUT
BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an
address at One Constitution Plaza, Hartford, Connecticut 06115, as trustees
(the Trustees) under the Collateral Trust Indenture (the Indenture), dated as
of August 1, 1984, from the Company, as grantor, to the Trustees, as trustees
(the Trustees, together with their successors and assigns, are herein called
the Assignee).
PRELIMINARY STATEMENT
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership
(Owner), has entered into a Lease and Agreement, dated as of August l, 1984
(herein, together with all amendments and supplements thereto and any short
form thereof entered into for purposes of recording, called the Lease), with
The Lincoln National Life Insurance Company, an Indiana corporation, as lessee
(Lessee). The obligations of Lessee under the Lease has been guaranteed by
Lincoln National Corporation (Guarantor) pursuant to a guaranty, dated as of
August l, 1984, from Guarantor to Owner (the Guaranty). The premises leased
pursuant to the Lease consist of the land parcel described in Schedule A
hereto (the Land Parcel), all buildings and other improvements located
thereon, and all easements, rights and appurtenances relating respectively
thereto (collectively, the Property). All right, title and interest of Owner
in and to the Lease and the Guaranty have been assigned to the Company
pursuant to (i) the mortgage, dated as of the date hereof, relating to the
Property (the Mortgage), from Owner, as mortgagor, to the Company, as
<PAGE>
mortgagee, and (ii) an Assignment of Lease and Guaranty, dated as of the date
hereof, relating to the Lease and the Guaranty (herein, together with all
supplements and amendments thereto, collectively called the Assignment), from
Owner, as assignor, to the Company, as assignee, as security for the (i)
Series A 13.90% Secured Notes Due September 1, 1989, in the original principal
amount of $4,000,000, (ii) Series B 14.30% Secured Notes Due September 1,
1994, in the original principal amount of $37,500,000, (iii) Series C 14.60%
Secured Notes Due September 1, 1999, in the original principal amount of
$34,800,000, (iv) Series D 14.70% Secured Notes Due September 1, 1999, in the
original principal amount of $17,000,000, and (v) Series E 15.00% Secured
Notes Due September 1, 1999, in the original principal amount of $7,000,000 of
Owner.
NOW, THEREFORE, in consideration of the premises and the sum of One
Dollar ($1) and other valuable consideration, receipt whereof is hereby
acknowledged, and in order to secure (i) the due and punctual payment of the
Series A 13.90% Collateral Trust Notes Due September 1, 1999, the Series B
14.30% Collateral Trust Notes Due September 1, 1994, the Series C 14.60%
Collateral Trust Notes Due September 1, 1999, the Series D 14.70% Collateral
Trust Notes Due September 1, 1999 and the Series E 15.00% Collateral Trust
Notes Due September 1, 1999 of the Company, issued by the Company under and
secured by the Indenture and (ii) the performance of the Company's obligations
under the Indenture, the Company has assigned, transferred, conveyed and set
over, and by these presents does hereby assign, transfer, convey and set over,
to the Assignee, all of its rights, title and interest in and to the Lease,
the Guaranty and the Assignment; all without recourse to the Company.
The following is the Schedule A referred to in this Reassignment of
Lease and Guaranty, which Schedule is hereby incorporated by reference herein.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Reassignment of Lease
and Guaranty to be executed and its corporate seal to be hereunto affixed and
attested by its officers thereunto duly authorized, as of the date first above
written.
CLINTON HOLDING CORPORATION
By: E. DAVISSON HARDMAN JR.
------------------------
Name:
Title:
(Seal)
Attest:
By: ALEXANDER J. JORDAN JR.
--------------------------
Name:
Title:
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the
foregoing Reassignment of Lease and Guaranty.
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
By: MAX A. ROESLER
------------------------
Name: Max A. Roesler
Title: Vice President
(Seal)
Attest:
By: PATRICIA A. ADAMS
--------------------------
Name: Patricia A. Adams
Title: Assistant Secretary
<PAGE>
LINCOLN NATIONAL CORPORATION, hereby consents to the foregoing
Reassignment of Lease and Guaranty.
LINCOLN NATIONAL CORPORATION
By: MAX A. ROESLER
-------------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest:
By: PATRICIA A. ADAMS
------------------------
Name: Patricia A. Adams
Title: Assistant Secretary
This Document prepared by:
Csaplar & Bok
One Winthrop Square
Boston, Massachusetts 02110
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this _______ day of
August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams,
as Vice President and Assistant Secretary, respectively, of THE LINCOLN
NATIONAL LIFE INSURANCE COMPANY a corporation, and acknowledged the execution
of the foregoing instrument as their free and voluntary act and deed and as the
free and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
CAROL ANN JOHNSTON
---------------------------------
Carol Ann Johnston, Notary Public
(SEAL)
My Commission Expires:
CAROL A. JOHNSTON
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, 1988
- -----------------------------------
<PAGE>
STATE OF INDIANA )
) ss:
COUNTY OF ALLEN )
Before me, Carol Ann Johnston, a Notary Public, this _______
day of August, A.D., 1984, personally appeared Max A. Roesler and
Patricia A. Adams, as Vice President and Assistant Secretary,
respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and
acknowledged the execution of the foregoing instrument as their
free and voluntary act and deed and as the free and voluntary act
and deed of said corporation, for the uses and purposes therein
mentioned.
CAROL ANN JOHNSTON
---------------------------------
Carol Ann Johnston, Notary Public
(SEAL)
My Commission Expires:
CAROL A. JOHNSTON,
Notary Public
Resident of Allen County, Indiana
My Commission Expires May 15, l988
- -----------------------------------
<PAGE>
COMMONWEALTH OF MASSACHUSETTS)
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State, personally
appeared E. Davisson Hardman, Jr. and Alexander J. Jordan Jr., the President
and Secretary, respectively, of CLINTON HOLDING CORPORATION, a corporation
organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 28th day of
August, 1984.
Signature JOAN E. HOGAN
---------------------
Printed Joan E. Hogan
---------------------
NOTARY PUBLIC
My commission expires:
10-31-86
- ---------------------
<PAGE>
Schedule A
Fort Wayne, Indiana
Lincoln National Life
Insurance Company
("Harrison" site)
PARCEL 1 (1-A-A)
Lots Numbered 52, 53, and 54, together with the vacated alley lying west of and
adjacent hereto, all being in Brackenridge's Addition to the City of Fort
Wayne, Indiana, according to the plat thereof, recorded in Deed Record 18, page
170 in the Office of the Recorder of Allen County, Indiana. Together with an
overhead walkway as described in Declaratory Resolution No. 1402-75 adopted
August 14, 1975 and confirmed October 9, 1975 by the Board of Public Works of
the City of Fort Wayne, Indiana.
PARCEL 2 (1-A-A)
Lots Numbered 84, 85, 86, 87, 88, and 89 together with the vacated alley lying
West of and adjacent thereto, also together with the vacated alley lying North
of and adjacent to said Lot Number 89, all being in Brackenridge's Addition to
the City of Fort Wayne, Indiana, according to the plat thereof, recorded in
Deed Record 75, page 465 in the Office of the Recorder of Allen County, Indiana.
PARCEL 3 (1-A-A)
A parcel of land situated in the City of Fort Wayne, Allen County, Indiana
bounded by a line commencing at the point where the North boundary line of
Brackenridge Street in said City interests the East boundary line of Harrison
Street in said City and running thence East on the North boundary line of said
Brackenridge Street, a distance of 231.5 feet, more or less, to the West
boundary line of the alley running North from said Brackenridge Street to
Douglas Avenue, between Harrison and Calhoun Streets; thence North, along the
West boundary line of said alley, a distance of 131 feet, more or less, to the
South boundary line of an alley running West to Harrison Street between
Brackenridge Street and Douglas Avenue; thence West on the South boundary line
of the alley last above described, a distance of 231.5 feet, more or less to
the East boundary line of said Harrison Street; thence South, on the East
boundary line of said Harrison Street, a distance of 131 feet, more or less, to
the point of beginning.
PARCEL 4 (1-A-A)
That part of the Northwest Quarter of the Northeast Quarter of Section 11,
Township 30 North, Range 12 East, in the City of Fort Wayne, Allen County,
Indiana, beginning at a point where the East line of Harrison Street intersects
with and crosses the South line of Douglas Avenue; thence running South along
the East line of Harrison Street, a distance of 134 feet to an alley; thence
East, along the alley a distance of 231.5 feet to an alley; thence North and
parallel with said Harrison Street to the South line of Douglas Avenue; thence
West along the South line of Douglas Avenue to the point of beginning.
PARCEL 5 (1-A-A)
The vacated alley lying between PARCEL 3 and PARCEL 4
<PAGE>
PARCEL 6 (1-A-B)
The East 46 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to the City
of Fort Wayne, Allen County, Indiana.
PARCEL 7 (1-A-B)
Part of the West 84 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to
the City of Fort Wayne, Allen County, Indiana, being more particularly
described as follows to-wit:
Beginning at the Northwest corner of said Lot 93; thence East, on and
along the North line of said Lot 93, a distance of 84 feet; thence South, a
distance of 60 feet to the South line of said Lot 91; thence Northwesterly, on
the arc of a regular curve to the right having a radius of 172 feet, a distance
of 105.34 feet to the point of beginning;
PARCEL 8 (1-A-B)
Lots 94, 95, 96, 97, 98, 99, 100 and 101, and all that part of Lot 103 South of
the centerline of the brick wall along the South line of said Lot; Lots 104,
105, 106, 107 and the North 19.5 feet of Lot 103 all in Hamilton's Third
Addition to the City of Fort Wayne, Allen County, Indiana;
Together with an overhead walkway as described in Declaratory Resolution No.
1402-75 adopted August 14, 1975 and confirmed October 9, 1975 by the Board of
Public Works of the City of Fort Wayne, Indiana.
PARCEL 9 (1-A-B)
Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township
30 North, Range 13 East, more particularly described as follows to-wit:
Commencing at the intersection of the South line of Montgomery Street, now
Douglas Avenue, in the City of Fort Wayne, with the East line of an alley next
East of and parallel with Calhoun Street in said City; thence South on the East
line of said Alley, 160.71 feet, more or less to the center of a vacated alley
lying South of Montgomery Street, now Douglas Avenue, and extending from
Clinton Street West to the first alley east of Calhoun Street, said alley
having been vacated by the Board of Public Works of the City of Fort Wayne, by
Declaratory Resolution No. 401, adopted April 22, 1920, and confirmed May 13,
1930 running thence East along the centerline of said vacated alley 70 feet to
a point; thence North and parallel to the East line of the first alley
east of Calhoun Street 160.71 feet, more or less, to the South line of
Montgomery Street, now Douglas Avenue in said City of Fort Wayne; thence West
70 feet to the place of beginning;
(CONTINUED)
<PAGE>
PARCEL 11 (1-A-B) (Continued)
The tract of land in the Northeast Quarter of the Northeast Quarter of Section
11, Township 30 North, Range 12 East, in the City of Fort Wayne, described as
follows to-wit:
Commencing at the intersection of the south property line of Montgomery Street
(Now Douglas Street) and the West property line of Clinton Street, as said
lines existed in 1925; thence West on said south property line of Montgomery
Street (Now Douglas Street) one hundred and fifty nine (159) feet, more or less
to the east line of the tract conveyed to Chester J. Nathan and S. Louis Wolf
by deed recorded in Deed Record 290, at page 210 of the Deed Records of Allen
County, State of Indiana; thence South along said east property line one
hundred sixty and 71/100 (160.71) feet to the centerline of the vacated
fourteen (14) Foot alley between Montgomery (now Douglas) and Holman (now
Brackenridge Streets; thence east along said centerline of said vacated alley,
one hundred and fifty nine (159) feet, more or less, to the west property line
of Clinton Street as it existed in 1925; thence north along the said west
property line of Clinton Street to the place of beginning.
PARCEL 12 (1-A-B)
The vacated alley lying East of and adjacent to Lots Numbered 91 to 101,
inclusive, and Lots Numbered 103 to 107 inclusive, in Hamilton's Third Addition
to the City of Fort Wayne, Allen County, Indiana, said alley having been
vacated under Declaratory Resolution No. 1401-1975.
PARCEL 13 (1-B-5)
Lots Numbered 62, 63 and 64, all being in Brackenridge's Addition to the City
of Fort Wayne, Indiana, according to the plat thereof, recorded in Plat Book 0,
page 82, in the Office of the Recorder of Allen County, Indiana.
Together with an overhead walkway as described on Declaratory Resolution No.
1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public
Works of the City of Fort Wayne, Indiana.
PARCEL 14 (1-Z)
Lot 7 and the East one-half of Lot a in Baker's Addition to the City of Fort
Wayne, Indiana, according to the plat thereof, recorded in Deed Record 31, page
20, in the Office of the Recorder of Allen County, Indiana.
PARCEL 15 (3-J)
Lots Numbered 4, 5 and 6, together with the South Half of the vacated alley
lying North of and adjacent to said Lot 6, all being in Baker's Addition to the
City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed
Record 31, page 20, in the Office of the Recorder of Allen County, Indiana.
<PAGE>
PARCEL 16 (3-J)
Lots Numbered 55, 56, 57, 58, 59, 60 and 61, together with the North Half of
the vacated alley lying South of and adjacent to said Lot 61, all being in
Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the
plat thereof, recorded in Plat Book O, page 82, in the Office of the Recorder
of Allen County, Indiana.
Together with an overhead walkway as described in Declaratory Resolution No.
1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public
Works of the City of Fort Wayne, Indiana.
PARCEL 17 (3-L)
The East Half of Lot Numbered 57 and all of Lots Numbered 58, 59, 60, and 61,
and the vacated alley between said Lots Numbered 57 and 58, all in Hamilton's
Second Addition to the City of Fort Wayne, in Allen County, Indiana, according
to the plat thereof, recorded in Deed Record 31, page 176 in the Office of the
Recorder of Allen County, Indiana, and the vacated Railroad Street under
Declaratory Resolution No. 1251-1969 adjacent to said Lots.
PARCEL 18 (3-L)
Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township
30 North, Range 12 East, Fort Wayne, Allen County, Indiana, described as
follows:
Beginning at a point on the North line of vacated Railroad Street, 131.44 feet
East of the East line of Calhoun Street; thence East along the North line of
vacated Railroad Street, a distance of 237.56 feet to the West line of Clinton
Street; thence South along the West line of Clinton Street, 144.65 feet; thence
Westerly, at right angles to the last described course, 20.0 feet; thence
Southerly, at right angles to the last described course, 10.5 feet (recorded as
12 feet) to the Northerly face of a concrete retaining wall; thence Westward
along the North face of said retaining wall, following a curved course to the
right to a point 133.03 feet East of the East line of Calhoun Street, measured
along the North face of said retaining wall; thence North 128.4 feet to the
point of beginning.
PARCEL 19 (3-Q)
The West 1/2 of Lot Numbered 8 in Baker's Addition to the City of Fort Wayne,
Allen County, Indiana, according to the plat thereof, recorded in Deed Record
31, page 20 in the Office of the Recorder of Allen County, Indiana.
<PAGE>
PARCEL 20 (4-C)
Lots Numbered 65 and 66 in Brackenridge's Addition to the City of Fort Wayne,
Indiana, according to the plat thereof, recorded in Deed Record 28, page 93 in
the Office of the Recorder of Allen County, Indiana.
PARCEL 21 (4-D)
That part of Lot 11 in Baker's Addition to the City of Fort Wayne, Allen
County, Indiana, described as follows: Beginning at the Northwest corner of
said Lot 11; thence East along the North end of said lot to the East side
thereof; thence South along the East side of said lot to the South end thereof;
thence in a straight line in a Northwesterly direction to the point of
beginning.
PARCEL 22 (4-D)
Lots 9 and 10 Baker's Addition to the City of Fort Wayne.
PARCEL 23 (3-S)
Lots 62 and 63 in the continuation of Hamilton's Second Addition to the City of
Fort Wayne, according to the plat thereof, recorded in Deed Record 31, page 176
in the records in the Office of the Recorder of Allen County, Indiana.
PARCEL 24
The portion of that certain 10-foot North-South alley which is bounded on the
West by Lot 62 of Brackenridge Addition to the City of Fort Wayne, by Lot 7 of
Baker's Addition to the City of Fort Wayne, and which said alley is bounded on
the East by Lots 55 through 61, inclusive, of Brackenridge Addition to the City
of Fort Wayne, by Lots 4 through 6, inclusive, in Baker's Addition to the City
of Fort Wayne (hereinafter referred to as North-South Alley); and
The portion of that certain 10-foot East-West alley which is bounded on the
North by Lots 62 through 66, inclusive, of Brackenridge Addition to the City of
Fort Wayne, and which is bounded on the South by Lots 7 through 11, inclusive,
of Baker's Addition to the City of Fort Wayne (hereinafter referred to as
East-West Alley).
<PAGE>
Re: Assignment of Lease and Guaranty
Second Assignment of Lease and
Guaranty
("Harrison" site)
85-034293
CORRECTION AGREEMENT
THIS AGREEMENT, made this 7th day of November, 1985, by and between:
CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having an
address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York
10006; and CLINTON HOLDING CORPORATION, a Delaware corporation, having an
address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York
10006;
WITNESSETH:
WHEREAS, the parties to this agreement are parties to one or more
instruments, all dated as of August 1, 1984, relating to the leasing by
The Lincoln National Life Insurance Company of a certain parcel of land
located in Allen County, Indiana, commonly known as the Harrison" site, which
aforementioned instruments were recorded on August 29, 1984, (unless otherwise
noted below) in the Office of the Recorder of Allen County, Indiana, and which
instruments are as follows:
1. Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021067
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: The Lincoln National Life Insurance Company
and
Lincoln National Corporation
2. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021071
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: The Lincoln National Life Insurance Company
and
Lincoln National Corporation
THREE RIVERS TITLE COMPANY, INC.
1985 NOV 19 PM 1:43
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
-2-
WHEREAS, the aforesaid instruments, in addition to the legal
description of the Harrison site make reference by Schedule B and C,
respectively, in connection with certain financings, to land located in Fort
Wayne, Indiana, commonly known as the "Lincoln West" site, and to land located
in Indianapolis, Indiana, and
WHEREAS, the legal description of the "Lincoln West" site which is set
forth in Schedule B to each of the foregoing instruments has been determined to
be incomplete and, therefore, incorrect, and
WHEREAS, it is the mutual desire of the parties hereto that the
foregoing instruments be corrected by having appended to each instrument a
complete and correct Schedule B legal description, and that such instruments be
corrected of record.
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid
by each of the parties hereto to each of the other parties hereto, and other
valuable considerations each to the other in hand paid, the receipt and
sufficiency of which are hereby acknowledged, the parties do mutually covenant
and agree:
1. That Schedule B to this agreement be and it hereby is substituted
for Schedule B to all of the foregoing instruments.
2. That all other terms, conditions, and covenants of the aforesaid
instruments are and shall remain in full force and effect except as hereby
corrected.
3. That this agreement may be executed in any number of counterparts
and each counterpart shall for all purposes be deemed to be an original; and
all such counterparts shall together
<PAGE>
-3-
constitute but one and the same agreement.
4. That the parties hereto are authorized and directed to attach this
Correction Agreement to each of the aforesaid instruments, as a part and portion
thereof, and to record same among the public records in the Office of the
Recorder of Allen County, Indiana, and elsewhere as they shall deem
appropriate.
This Agreement shall bind and shall inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed as of the day and year first above written.
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
------------------------------
Name: E. Davisson Hardman, Jr.
Title: President
(SEAL)
Attest:
BY: ALEXANDER J. JORDAN, JR.
-------------------------------
Name: Alexander J. Jordan, Jr.
Title: Assistant Secretary
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
----------------------------------
E. Davisson Hardman, Jr.
A General Partner
<PAGE>
-4-
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the
foregoing Correction Agreement.
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
BY: MAX A. ROESLER
-----------------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
--------------------------------
Name: Dolores Prange
Title: Assistant Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Correction Agreement.
LINCOLN NATIONAL CORPORATION
BY: MAX A. ROESLER
-----------------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
--------------------------------
Name: Dolores Prange
Title: Assistant Secretary
<PAGE>
-5-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the
President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
---------------------------
Printed DOLORES M. ANTONINO
---------------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- -------------------------
<PAGE>
-6-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY
STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is
the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership and acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of LIBERTY STREET
LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON
STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
---------------------------
Printed DOLORES M. ANTONINO
---------------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ------------------------
<PAGE>
-7-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max A. Roesler and Dolores Prange, the Vice
President and Assistant Secretary, respectively of THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY, who acknowledged execution of the foregoing instrument
as their free and voluntary act and deed and as the free
and voluntary act and deed of said corporation, for the uses and purposes
therein mentioned.
DONALD F. BUTLER
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ---------------------------
Resident of DeKalb County, Indiana
<PAGE>
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max A. Roesler and Dolores Prange, as Vice
President and Assistant Secretary, respectively, of LINCOLN NATIONAL
CORPORATION, a corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and as the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned.
Donald F. Butler
-------------------------------
Donald F. Butler NOTARY PUBLIC
(SEAL)
My Commission Expires:
May 25, 1987
- ---------------------------
Resident of DeKalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801.
<PAGE>
SCHEDULE A
PARCEL 1 Fort Wayne, Indiana
Lincoln National Pension
Insurance Company
("Lincoln West" site)
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, together with a part of the Northeast
Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana,
both said parts being more particularly described as follows, to wit:
Commencing at the Northwest corner of said Section 7; thence N 89
degrees-56'-27" E, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of
145.0 feet to the true point of beginning, located on the South right-of-way
line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a
distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41
feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13
degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a
distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43
feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24
degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228
acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N
89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a
distance of 133.98 feet to the Southeast corner thereof, said Southeast corner
being a point situated on the West line of a 60 foot-wide roadway and utility
easement granted in Deed Record 716, pages 150-152 in the Office of the
Recorder of Allen County, Indiana, said easement being known as Magnavox Way as
said name was established in an instrument appearing at Document #70-9781 in
the Office of the Recorder of Allen County, Indiana; thence S 00
degrees-03'-32" E, on and along the West line of said easement, a distance of
275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S
89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W,
a distance of 484.96 feet to an existing line fence; thence S 88
degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line
of Interstate Highway #69; thence Northeasterly, on and along said Easterly
right-of-way line on the following courses and distances:
Northeasterly, on and along the arc of a regular curve to the left having a
radius of 4046.53 feet, and being situated 140.0 feet (measured radially)
Southeasterly of and concentric to the centerline of I-69, an arc distance
of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a
length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04
feet to a point situated 100.0 feet (measured radially), Southeasterly of
said I-69 centerline; thence Northeasterly, on and along the arc of a
regular curve to the left having a radius of 4006.53 feet, and being
situated 100.0 feet (measured radially) Southeasterly of and concentric to
said I-69 centerline, an arc distance of 410.24 feet (the chord of which
bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23
degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 18
degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence N 14
degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet
(measured radially) Southeasterly of said I-69 centerline; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 884.93 feet and being situated 70.0 feet (measured radially)
Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined
by the Southeasterly edge of pavement of an existing 18 foot-wide concrete
ramp, an arc distance of 327.39 feet (the chord of which bears N 26
degrees-38'-02" E, (for a length of 325.53 feet); thence N 35
degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet
(measured at right angles) Southeasterly of said line "S-E-C"; thence
Northeasterly, on and along the arc of a regular curve to the right having
a radius of 666.20 feet and being situated 50.0 feet (measured radially)
Southeasterly of and concentric to said line "S-E-C", an arc distance of
355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length
of 351.75 feet) to the true point of beginning.
<PAGE>
PARCEL 2
An easement for the purpose of ingress and egress and utilities for the benefit
of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716,
pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781
and 80-16836 over the following real estate.
A strip of land 60 feet in width lying 30 feet on either side of the line
described as follows:
Beginning at the North Quarter Corner of said Section 7, running thence South
89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence
South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way
line of Frontage Road No. 1, the true point of beginning of this description;
thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a
tangent curve to the right having a central angle of 25 degrees and a length of
250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a
tangent curve to the left having a central angle of 24 degrees 41' 59" and a
length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more
or less to the North line of the South Half of the South Half of the Southeast
Quarter of the Northwest Quarter of Section 7, Township 30' North, Range 12
East, the South line of Inverness Investors, Inc. Property.
PARCEL 3
An easement for the purpose of ingress and egress for the benefit of Parcel 1
created in an Easement recorded November 7, 1968 in Deed Record 716, pages
153-157 and modified by Agreement recorded as Document Numbers 70-9781 and
80-16836 over the following described real estate.
Part of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in
Allen County, Indiana, more particularly described as follows, to wit:
Beginning at the Northeast corner of said South Half of the South Half of the
Southeast Quarter of the fractional Northwest Quarter of Section 7, on the
center line of Getz Road; thence West along the North line of the South Half of
the South Half of the Southeast Quarter of the fractional Northwest Quarter of
said Section 7, a distance of 1323.13 feet to a stone marking the Northwest
corner of the South Half of the South Half of the Southeast Quarter of the
fractional Northwest Quarter of said Section 7; thence South along the West
line of the East Half of the said fractional Northwest Quarter of Section 7, a
distance of 50.00 feet; thence East and parallel to the North line of said
South Half of the South Half of the Southeast Quarter of the fractional
Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the
center line of Getz Road, 50 feet South of the place of beginning, thence North
on the center line of the Getz Road a distance of 50.0 feet to the place of
beginning; and for the installation and perpetual maintenance of sewer and
water line within the Northern Half of the above described real estate.
<PAGE>
Re: Assignment of Lease and Guaranty
Second Assignment of Lease and Guaranty
("Harrison") sit
85-034353
PARTIAL RELEASE
In consideration of the sum of Ten Dollars ($10.00) and other
good and valuable considerations, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, as parties to one
or more of the following-described instruments, to-wit:
1. Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021067
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: The Lincoln National Life Insurance Company
and
Lincoln National Corporation
2. Second Assignment of Lease and Guaranty
Recorded as Instrument No. 84-021071
From: Clinton Street Limited Partnership, as "Owner"
To: Clinton Holding Corporation, as "Assignee"
Consented to by: The Lincoln National Life Insurance Company
and
Lincoln National Corporation
hereby release and discharge the real estate more particularly
bounded and described in Exhibit A hereto from the incumbrance
and effect of the above-described instruments, which instruments
were corrected by that certain Correction Agreement by and among the
parties hereto dated November 7, 1985, and recorded November 19, 1985,
in the Office of the Recorder of Allen County, Indiana, as Instrument No.
85-34293.
The parties hereto agree that this Partial Release may be
executed in any number of counterparts and each counterpart shall
for all purposes be deemed to be an original; and all such counter-
parts shall together constitute but one and the same instrument.
Dated this 7th day of November, 1985.
THREE RIVERS TITLE COMPANY, INC
1985 NOV 19 PM 3:57
ALLEN COUNTY RECORDER
VIRGINIA L. YOUNG
<PAGE>
-2-
CLINTON HOLDING CORPORATION
BY: E. DAVISSON HARDMAN, JR.
----------------------------
Name:E. Davisson Hardman, Jr.
Title: President
(SEAL)
Attest:
BY: ALEXANDER J. JORDAN, JR.
-------------------------------
Name: Alexander J. Jordan, Jr.
Title: Assistant Secretary
CLINTON STREET LIMITED PARTNERSHIP
BY: Liberty Street Limited Partnership
-84, A General Partner
BY: E. DAVISSON HARDMAN, JR.
------------------------------
E. Davisson Hardman, Jr.
A Genera1 Partner
<PAGE>
-3-
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents
to the foregoing Partial Release.
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY
BY: MAX A. ROESLER
-----------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
--------------------------
Name: Dolores Prange
Title: Assistant Secretary
LINCOLN NATIONAL CORPORATION hereby consents to the foregoing
Partial Release.
LINCOLN NATIONAL CORPORATION
BY: MAX A. ROESLER
------------------------
Name: Max A. Roesler
Title: Vice President
(SEAL)
Attest:
BY: DOLORES PRANGE
----------------------------
Name: Dolores Prange
Title: Assistant Secretary
<PAGE>
-4-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State, personally
appeared E. Davisson Hardman, Jr., and Alexander J. Jordan, Jr., the
President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a
corporation organized and existing under the laws of the State of Delaware, and
acknowledged the execution of the foregoing instrument as such officers acting
for and on behalf of said corporation.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
-------------------
Printed Dolores M. Antonino
-------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ---------------------
<PAGE>
-5-
COMMONWEALTH OF MASSACHUSETTS )
) SS:
COUNTY OF SUFFOLK )
Before me, a Notary Public in and for said County and State,
personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY
STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the
general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited
partnership and acknowledged the execution of the foregoing instrument as such
partner to be his free and voluntary act as such partner of LIBERTY STREET
LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON
STREET LIMITED PARTNERSHIP.
Witness my hand and Notarial Seal this 7th day of November, 1985.
Signature DOLORES M. ANTONINO
---------------------
Printed Dolores M. Antonino
---------------------
NOTARY PUBLIC
My commission expires:
July 25, 1991
- ---------------------
<PAGE>
-6-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th day of
November, 1985, personally appeared Max A. Roesler and Dolores Prange, the
Vice President and Assistant Secretary, respectively of THE LINCOLN NATIONAL
LIFE INSURANCE COMPANY, who acknowledged execution of the foregoing instrument
as their free and voluntary act and deed and as the free and voluntary act
and deed of said corporation for the uses and purposes therein mentioned.
DONALD F. BUTLER
-------------------------------
(SEAL) Donald F. Butler NOTARY PUBLIC
My Commission Expires:
May 25, 1987
- ---------------------
Resident of DeKalb County, Indiana
<PAGE>
-7-
STATE OF INDIANA )
) SS:
COUNTY OF ALLEN )
Before me, Donald F. Butler, a Notary Public, this 7th
day of November, 1985, personally appeared Max A. Roesler
and Dolores Prange, as Vice President and Assistant Secretary,
respectively, of LINCOLN NATIONAL CORPORATION, a
corporation, and acknowledged the execution of the foregoing
instrument as their free and voluntary act and deed and
as the free and voluntary act and deed of said corporation, for
the uses and purposes therein mentioned.
DONALD F. BUTLER
-------------------------------
(SEAL) Donald F. Butler NOTARY PUBLIC
My Commission Expires:
May 25, 1987
- ---------------------
Resident of DeKalb County, Indiana
This instrument prepared by Donald F. Butler, Attorney, for Lincoln National
Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801.
<PAGE>
Exhibit A
A part of the Fractional Northwest Quarter of Section 7, Township 30 North,
Range 12 East, Allen County, Indiana, being more particularly described as
follows:
Commencing at the Northwest corner of said Section 7; thence North 89 deg. 56
min. 27 sec. East, on and along the North line of said Section 7, by deed, a
distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a
distance of 145.0 feet to the South right of way line of State Road #14
(Illinois Road); thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0
feet; thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet;
thence South 25 deg. 06 min. 36 sec. West, a distance of 147.78 feet; thence
South 13 deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28
deg. 49 min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07
min. 55 sec. East, a distance of 116.43 feet; thence South 67 deg. 37 min. 33
sec. East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec.
East, a distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a
distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land
conveyed to Professional Building Corporation of Fort Wayne in a deed appearing
at a Document #74-22292 in the Office of the Recorder of Allen County, Indiana;
thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of
said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof;
thence North 89 deg. 56 min. 19 sec. East, on and along the South line of said
0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof,
said Southeast corner being a point situated on the West line of a 60 foot wide
roadway and utility easement granted in Deed Record 716, pages 150-152 in the
Office of the Recorder of Allen County, Indiana, said easement being known as
Magnavox Way as said name was established in an instrument appearing at
Document #70-9781 in the Office of the Recorder of Allen County, Indiana;
thence South 00 deg. 03 min. 32 sec. East, on and along the West line of said
easement, a distance of 200.0 feet to the point of beginning; thence continuing
South 00 deg. 03 min. 32 sec. East 75.00 feet; thence South 66 deg. 10 min. 20
sec. West, a distance of 1122.16 feet; thence South 89 deg. 56 min. 27 sec.
West, a distance of 18.20 feet; thence North 15 deg. 16 min. 19 sec. East, a
distance of 549.10 feet; thence South 89 deg. 54 min. 52 sec. East, a distance
of 900.00 feet to the point of beginning, containing 6.471 acres and subject to
Easements and Rights of Way of Record.
<TABLE>
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
<CAPTION>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
Year Ended December 31 1995 1994 1993
PRIMARY
<S> <C> <C> <C>
Average shares outstanding (assuming
conversion of series A, E and F
preferred stock) -------------------- 104,115,650 103,863,196 102,307,356
Net effect of dilutive stock
options (based on the treasury stock
method using average market price) -- 701,494 506,601 777,468
Total shares outstanding ---------- 104,817,144 104,369,797 103,084,824
</TABLE>
<TABLE>
<CAPTION>
FULLY DILUTED
<S> <C> <C> <C>
Average shares outstanding (assuming
conversion of Series A, E and F
preferred stock) ----------------------104,115,650 103,863,196 102,307,356
Net effect of dilutive stock options
(based on the treasury stock method
using the year-end market price,
if higher than average market price) -- 1,115,139 506,764 876,936
Total shares outstanding ------------105,230,789 104,369,960 103,184,292
</TABLE>
<TABLE>
<CAPTION>
DOLLAR INFORMATION (000's Omitted)
<S> <C> <C> <C>
Income before cumulative effect
of accounting change ------------------ 482,186 349,898 415,283
Cumulative effect of accounting change - -- -- (96,431)
Net Income -------------------------- 482,186 349,898 318,852
</TABLE>
<TABLE>
<CAPTION>
PER SHARE INFORMATION
<S> <C> <C> <C>
Primary:
Income before cumulative
effect of accounting change --------- $4.60 $3.35 $4.03
Cumulative effect of
accounting change ------------------- -- -- (.94)
Net Income ------------------------ $4.60 $3.35 $3.09
Fully Diluted:
Income before cumulative
effect of accounting change --------- $4.58 $3.35 $4.03
Cumulative effect of
accounting change ------------------- -- -- (.94)
Net Income ------------------------ $4.58 $3.35 $3.09
<FN>
<F1>
Notes: 1. Earnings per share are computed based on the average number
of common shares outstanding during each year after assuming
conversion of the series A, E and F preferred stock.
<F2>
2. LNC did not include the dilutive impact of the stock option
program in the computation of the earnings per share information
appearing in the consolidated financial statements since it
was immaterial.
</FN>
</TABLE>
Exhibit 21
EXHIBIT A
ORGANIZATIONAL CHART OF THE
LINCOLN NATIONAL INSURANCE HOLDING COMPANY SYSTEM
All the members of the holding company system are corporations, with the
exception of American States Lloyds Insurance Company, Delaware Distributors,
L.P., Founders CBO, L.P., and Lincoln National Mezzanine Fund, L.P.
Lincoln National Corporation
Indiana - Holding Company
|
|--American States Insurance Company
| 100% - Indiana - Property/Casualty
|
|
| |--American Economy Insurance Company
| | 100% - Indiana - Property/Casualty
| |
|
| | |--American States Insurance Company of Texas
| | 100% - Texas - Property/Casualty
| |
|
|--American States Life Insurance Company
| | 100% - Indiana - Life/Health
| |
| |--American States Lloyds Insurance Company
| | Lloyds Plan - * - Texas - Property/Casualty
| |
| |--American States Preferred Insurance Company
| | 100% - Indiana - Property/Casualty
| |
| |--City Insurance Agency, Inc.
| | 100% - Indiana
|
|
|
|--Insurance Company of Illinois
| 100% - Illinois - Fire & Casualty Insurance
|
|--Aseguradora InverLincoln, S.A. Compania de Seguros y
| Reaseguros, Grupo Financiero InverMexico
| 49% - Mexico - Life, Property and Casualty Insurance
|
|
|--The Insurers Fund, Inc. #
| 100% - Maryland - Inactive
|
|--LNC Administrative Services Corporation
| 100% - Indiana - Third Party Administrator
|
|--The Richard Leahy Corporation
| 100% - Indiana - Insurance Agency
| |
| |--The Financial Alternative, Inc.
| | 100% - Utah - Insurance Agency
| |
| |--Financial Alternative Resources, Inc.
| | 100% - Kansas - Insurance Agency
| |
| |--Financial Choices, Inc.
| | 100% - Pennsylvania - Insurance Agency
| |
| |--Financial Investment Services, Inc.
| | (formerly Financial Services Department, Inc.)
| | 100% - Indiana - Insurance Agency
| |
| |--Financial Investments, Inc.
| | (formerly Insurance Alternatives, Inc.)
| | 100% - Indiana - Insurance Agency
| |
| |--The Financial Resources Department, Inc.
| | 100% - Michigan - Insurance Agency
| |
| |--Investment Alternatives, Inc.
| | 100% - Pennsylvania - Insurance Agency
| |
| |--The Investment Center, Inc.
| | 100% - Tennessee - Insurance Agency
| |
| |--The Investment Group, Inc.
| | 100% - New Jersey - Insurance Agency
| |
| |--Personal Financial Resources, Inc.
| | 100% - Arizona - Insurance Agency
| |
| |--Personal Investment Services, Inc.
| | 100% - Pennsylvania - Insurance Agency
|
|--LincAm Properties, Inc.
| 50% - Delaware - Real Estate Investment
|
|
|
|
|--Lincoln Financial Group, Inc.
| (formerly Lincoln National Sales Corporation)
| 100% - Indiana - Insurance Agency
| |
| |--LNC Equity Sales Corporation
| | 100% - Indiana - Broker-Dealer
| |
| |--Corporate agencies: Lincoln Financial Group, Inc. (LFG)
| | has been subsidiaries of which LFG owns from 80%-100% of the
| | common stock (see Attachment #1). These subsidiaries serve as
| | the corporate agency offices for the marketing and servicing of
| | products of The Lincoln National Life Insurance Company. Each
| | subsidiary s assets are less than 1% of the total assets of the
| | ultimate controlling person.
| |
| |--Professional Financial Planning, Inc.
| | 100% - Indiana - Financial Planning Services
|
|--Lincoln Life Improved Housing, Inc.
| 100% - Indiana
|
|--Lincoln National (China) Inc.
| 100% - Indiana - China Representative Office
|
|--Lincoln National Intermediaries, Inc.
| 100% - Indiana - Reinsurance Intermediary
|
|--Lincoln National Investment Companies, Inc.
| 100% - Indiana - Holding Company
| |
| |--Delaware Management Holdings, Inc.
| | 100% - Delaware - Holding Company
| | |
| | |--DMH Corp.
| | 100% - Delaware - Holding Company
| | |
| | |--Delaware Distributors, Inc.
| | | 100% - Delaware - General Partner
| | | |
| | | |--Delaware Distributors, L.P.
| | | 100% - Delaware - Mutual Fund
| | | Distributor & Broker/Dealer
| | |
| | |--Delaware International Advisers Ltd.
| | | 81.1% - England - Investment Advisor
| | |
| | |--Delaware International Holdings Ltd.
| | | 100% - Bermuda - Marketing Services
| | | |
| | | |--Delaware International Advisers Ltd.
| | | 18.9% - England - Investment Advisor
| | |
| | |--Delaware Investment Counselors, Inc.
| | | 100% - Delaware - Investment Advisor
| | |
| | |--Delaware Investment & Retirement Services, Inc.
| | | 100% - Delaware - Registered Transfer Agent
| | |
| | |--Delaware Management Company, Inc.
| | | 100% - Delaware - Investment Advisor
| | | |
| | | |--Founders Holdings, Inc.
| | | 100% - Delaware - General Partner
| | | |
| | | |--Founders CBO, L.P.
| | | 100% - Delaware - Investment Partnership
| | | |
| | | |--Founders CBO Corporation
| | | 100% - Delaware - Co-Issuer with Founders CBO
| | |
| | |--Delaware Management Trust Company
| | | 100% - Pennsylvania - Trust Service
| | |
| | |--Delaware Service Company, Inc.
| | 100% - Delaware - Shareholder Services & Transfer Agent
| |
| |--Lincoln Investment Management, Inc.
| | (formerly Lincoln National Investment Management Company)
| | 100% - Illinois - Mutual Fund Manager and
| | Registered Investment Adviser
| | |
| | |--Lincoln National Mezzanine Corporation
| | 100% - Indiana - General Partner for Mezzanine Financing
| | Limited Partnership
| | |
| | |--Lincoln National Mezzanine Fund, L.P.
| | 50% - Delaware - Mezzanine Financing Limited Partnership
|
|--Lincoln National Investment Companies, Inc.
| 100% - Indiana - Holding Company
| |
| |--Lynch & Mayer, Inc.
| | 100% - Indiana - Investment Adviser
| | |
| | |--Lynch & Mayer Asia, Inc.
| | | 100% - Delaware - Investment Management
| | |
| | |--Lynch & Mayer Securities Corp.
| | 100% - Delaware - Securities Broker
| |
| |--Vantage Global Advisors, Inc.
| (formerly Modern Portfolio Theory Associates, Inc.)
| 100% - Delaware - Investment Adviser
|
|--The Lincoln National Life Insurance Company
| 100% - Indiana
| |
| |--First Penn-Pacific Life Insurance Company
| | 100% - Indiana
| |
| |--Lincoln National Aggressive Growth Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Bond Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Capital Appreciation Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Equity-Income Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Global Asset Allocation Fund, Inc.
| | (formerly Lincoln NationalPutnam Master Fund, Inc.)
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Growth and Income Fund, Inc.
| | (formerly Lincoln National Growth Fund, Inc.)
| | 100% - Maryland - Mutual Fund
|
|
|
|--The Lincoln National Life Insurance Company
| 100% - Indiana
| |
| |--Lincoln National Health & Casualty Insurance Company
| | 100% - Indiana
| |
| |--Lincoln National International Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Managed Fund, Inc.
| | 100% - Maryland - Mutual Fund.
| |
| |--Lincoln National Money Market Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Social Awareness Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Special Opportunities Fund, Inc.
| | 100% - Maryland - Mutual Fund
| |
| |--Lincoln National Reassurance Company
| 100% - Indiana - Life Insurance
| |
| |--Special Pooled Risk Administrators, Inc.
| 100% - New Jersey - Catastrophe Reinsurance
| Pool Administrator
|
|--Lincoln National Management Services, Inc.
| 100% - Indiana - Underwriting and Management Services
|
|--Lincoln National Realty Corporation
| 100% - Indiana - Real Estate
|
|--Lincoln National Reinsurance Company (Barbados) Limited
| 100% - Barbados
|
|--Lincoln National Reinsurance Company Limited
| (formerly Heritage Reinsurance, Ltd.)
| 100% ** - Bermuda
| |
| |--Lincoln European Reinsurance Company
| | 100% - Belgium
| |
| |--Lincoln National Underwriting Services, Ltd.
| | 90% - England/Wales - Life/Accident/Health Underwriter
| | (Remaining 10% owned by Old Fort Ins. Co. Ltd.)
| |
| |--Servicios de Evaluacion de Riesgos, S.deR.L. de C.V.
| | 51% - Mexico - Reinsurance Underwriter
| (Remaining 49% owned by Lincoln National Corp.)
|
|--Lincoln National Risk Management, Inc.
| 100% - Indiana - Risk Management Services
|
|--Lincoln National Structured Settlement, Inc.
| 100% - New Jersey
|
|--Lincoln National (UK) PLC
| (formerly Cannon Lincoln PLC)
| 100% - England/Wales - Holding Company
| |
| |--Allied Westminster & Company Limited
| | (formerly One Olympic Way Financial Services Limited)
| | 100% - England/Wales - Sales Services
| |
| |--Cannon Fund Managers Limited
| | 100% - England/Wales - Inactive
| |
| |--Culverin Property Services Limited
| | 100% - England/Wales - Property Development Services
| |
| |--HUTM Limited (formerly Hansard Unit Trust Managers Limited)
| | 100% - England/Wales - Unit Trust Management
| |
| |--ILI Supplies Limited
| | 100% - England/Wales - Computer Leasing
| |
| |--Laurentian Financial Group PLC
| | 100% - England/Wales - Holding Company
| | |
| | |--Laurentian Financial Advisers Limited
| | | 100% - England/Wales - Sales Company
| | |
| | |--Laurentian Fund Management Limited
| | | 100% - England/Wales - Investment Management
| | |
| | |--Laurentian Independent Financial Planning Limited
| | | 100% - England/Wales - Independent Financial Adviser
| | | (formerly Cannon Lincoln PLC)
| | 100% - England/Wales - Holding Company
| |
| |--Laurentian Financial Group PLC
| | 100% - England/Wales - Holding Company
| | |
| | |--Laurentian Life PLC
| | | 100% - England/Wales - Life Insurance
| | | |
| | | |--Barnwood Property Group Limited
| | | | 100% - England/Wales - Holding Company
| | | | |
| | | | |--Barnwood Developments Limited
| | | | | 100% - England/Wales - Property Development
| | | | |
| | | | |--Barnwood Properties Limited
| | | | 100% - England/Wales - Property Investment
| | | |
| | | |--IMPCO Properties Limited
| | | 100% - England/Wales - Property Investment (Inactive)
| | |
| | |--Laurentian Management Services Limited
| | | 100% - England/Wales - Management Services
| | | |
| | | |--Jobprofit Limited
| | | | 100% - England/Wales - Dormant
| | | |
| | | |--Laurit Limited
| | | 100% - England/Wales - Data Processing Systems
| | |
| | |--Laurentian Milldon Limited
| | | 100% - England/Wales - Sales Company
| | |
| | |--Laurentian Unit Trust Management Limited
| | | 100% - England/Wales - Unit Trust Management
| | | |
| | | |--LUTM Nominees Limited
| | | 100% - England/Wales - Nominee Service
| | |
| | |--Laurtrust Limited
| | 100% - England/Wales - Pension Scheme Trustee (Inactive)
| | |
| | |--The Money Club Direct Company Limited
| | 100% - Dormant
| |
| |--Liberty Life Assurance Company Limited
| | 100% - England/Wales - Life Assurance
| |
| |--Liberty Life Pension Trustee Company Limited
| | 100% - England/Wales - Corporate Pension Fund
| |
| |--Liberty Press Limited
| | 100% - England/Wales - Printing Services
|
|--Lincoln National (UK) PLC
| (formerly Cannon Lincoln PLC)
| 100% - England/Wales - Holding Company
| |
| |--Lincoln Assurance Limited
| | (formerly Cannon Assurance Limited)
| | 100% ** - England/Wales - Life Assurance
| |
| |--Lincoln Fund Managers Limited
| | (formerly Cannon Lincoln Fund Managers Limited)
| | 100% - England/Wales - Unit Trust Management
| |
| |--Lincoln Insurance Services Ltd.
| | (formerly: Cannon Lincoln Insurance Services Ltd.)
| | 100% - Holding Company
| | |
| | |--British National Life Sales Ltd.
| | | 100% - Inactive
| | |
| | |--BNL Trustees Limited
| | | 100% - England/Wales - Corporate Pension Fund
| | |
| | |--Chapel Ash Financial Services Ltd.
| | | 100% - Direct Insurance Sales
| | |
| | |--Lincoln General Insurance Co. Ltd.
| | | (formerly: Cannon General Insurance Co. Ltd.)
| | | 100% - Accident & Health Insurance
| | |
| | |--P.N. Kemp-Gee & Co. Ltd.
| | 100% - Inactive
| |
| |--Lincoln Investment Management Limited
| | (formerly Cannon Lincoln Investment Management Ltd.)
| | 100% - England/Wales - Investment Management Services
| | |
| | |--CL CR Management Ltd.
| | 50% - England/Wales - Administrative Services
| |
| |--Lincoln National Training Services Limited
| | (formerly Cannon Lincoln Training Services Ltd.)
| | 100% - England/Wales - Training Company
| |
| |--Lincoln Pension Trustees Limited
| | (formerly Cannon Pension Trustees Limited)
| | 100% - England/Wales - Corporate Pension Fund
| |
| |--LN Management Limited
| | (formerly: Cannon Lincoln Management Limited)
| | 100% - England/Wales - Administrative Services
| | |
| | |--UK Mortgage Securities Limited
| | 100% - England/Wales - Inactive
|
|--Lincoln National (UK) PLC
| (formerly Cannon Lincoln PLC)
| 100% - England/Wales - Holding Company
| |
| |--LN Securities Limited
| | (formerly Cannon Securities Limited)
| | 100% - England/Wales - Nominee Company
| |
| |--Niloda Limited
| | 100% - England/Wales - Investment Company
|
|--Linsco Reinsurance Company
| (formerly Lincoln National Reinsurance Company)
| 100% - Indiana - Property/Casualty
|
|--Old Fort Insurance Company,Ltd.
| 100% ** - Bermuda
| |
| |--Lincoln National Underwriting Services, Ltd.
| 10% - England/Wales - Life/Accident/Health Underwriter
| (Remaining 90% owned by Lincoln Natl. Reinsurance Co.)
|
|--Servicios de Evaluacion de Riesgos, S.de R.L. de C.V.
| 49% - Mexico - Reinsurance Underwriter
| (Remaining 51% owned by Lincoln Natl. Reinsurance Co.)
|
|--Underwriters & Management Services, Inc.
100% - Indiana - Underwriting Services
Footnotes:
* The funds contributed by the Underwriters were, and continue to be subject
to trust agreements between American States Insurance Company,
the grantor,and each Underwriter, as trustee.
** Except for director-qualifying shares
# Lincoln National Corporation has subscribed for and paid for
100 shares of Common Stock (with a par value of $1.00 per share)
at a price of $10 per share, as part of the organizing of the fund.
As such stock is further sold, the ownership of voting securities
by Lincoln National Corporation will decline and fluctuate.
ATTACHMENT #1
LINCOLN FINANCIAL GROUP, INC.
CORPORATE AGENCY SUBSIDIARIES
1) Lincoln Financial Group, Inc. (AL)
2) Lincoln Southwest Financial Group, Inc. (Phoenix, AZ)
3) Lincoln Financial and Insurance Services Corporation
(Walnut Creek, CA)
3a California Fringe Benefit and Insurance Marketing Corporation
DBA/California Fringe Benefit Company (Walnut Creek, CA)
4) Colorado-Lincoln Financial Group, Inc.
(Denver, CO)
5) Lincoln National Sales Corporation of Connecticut (formerly: The Lincoln
Financial Group, Inc.) (Norwalk, CT)
6) Lincoln National Financial Services, Inc. (Lake Worth, FL)
7) CMP Financial Services, Inc. (Chicago, IL)
8) Lincoln National Sales Corporation of Indiana, Inc.
(Indianapolis, IN)
9) Lincoln Financial Group of Northern Indiana, Inc.
(Fort Wayne, IN)
10) The Financial Group, Inc. (Mission, KS)
10a Financial Planning Partners, Ltd.(Mission, KS)
11) The Lincoln National Financial Group of Louisiana, Inc.
(Shreveport, LA)
12) Benefits Marketing Group, Inc.
(D.C. & Chevy Chase, MD)
13) Morgan Financial Group, Inc. (Baltimore, MD)
14) Lincoln Financial Services and Insurance Brokerage of
New England, Inc.(formerly: Lincoln National of New England
Insurance Agency, Inc.)(Worcester, MA)
15) Lincoln Financial Group of Michigan, Inc. (Troy, MI)
15a Financial Consultants of Michigan, Inc. (Troy, MI)
16) Lincoln Financial Group of Missouri, Inc. (formerly:
John J. Moore & Associates,Inc.) (St. Louis, MO)
17) Financial Associates, Inc. (Omaha, NE)
18) Beardslee & Associates, Inc. (Clifton, NJ)
19) Lincoln Financial Group, Inc. (formerly: Resources/
Financial, Inc.)(Albuquerque, NM)
20) Lincoln Financial Group/Carolinas, Inc. (Charlotte, NC)
21) Lincoln Cascades, Inc. (Portland, OR)
22) Lincoln Financial Services, Inc. (Pittsburgh, PA)
23) Lincoln National Financial Group of Philadelphia, Inc.
(Philadelphia, PA)
23a Cavalier Financial Planners, Inc. (Philadelphia, PA)
24) Lincoln Financial Group, Inc. (Salt Lake City, UT)
25) Lincoln Financial Services of Virginia, Inc. (Norfolk, VA)
(DBA/Group Concepts Unlimited)
LNCHOLD.ASC
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
EXHIBIT 23 - CONSENT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements on Forms S-3 and S-8 (Securities and Exchange
Commission Registration Numbers 33-51415, 33-51721, 33-58113, 33-52667,
33-55379, 33-59785, 33-4711, 33-13445, 33-62315, 2-77594, and 2-77599)
of Lincoln National Corporation and in the related Prospectuses of our
report dated February 7, 1996, with respect to the consolidated financial
statements and schedules of Lincoln National Corporation included in this
Annual Report (Form 10-K) for the year ended December 31, 1995.
ERNST & YOUNG LLP
Fort Wayne, Indiana
March 22, 1996
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000059558
<NAME> LINCOLN NATIONAL CORPORATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 25,834,476,000
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,164,844,000
<MORTGAGE> 3,186,872,000
<REAL-ESTATE> 775,912,000
<TOTAL-INVEST> 31,936,442,000
<CASH> 1,572,855,000
<RECOVER-REINSURE> 2,495,189,000
<DEFERRED-ACQUISITION> 1,436,685,000
<TOTAL-ASSETS> 63,257,733,000
<POLICY-LOSSES> 12,922,547,000
<UNEARNED-PREMIUMS> 813,380,000
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 18,784,508,000
<NOTES-PAYABLE> 1,086,151,000
0
1,335,000
<COMMON> 889,476,000
<OTHER-SE> 3,487,311,000
<TOTAL-LIABILITY-AND-EQUITY> 63,257,733,000
3,777,070,000
<INVESTMENT-INCOME> 2,285,681,000
<INVESTMENT-GAINS> 269,818,000
<OTHER-INCOME> 162,103,000
<BENEFITS> 4,113,143,000
<UNDERWRITING-AMORTIZATION> 687,299,000
<UNDERWRITING-OTHER> 1,133,723,000
<INCOME-PRETAX> 626,575,000
<INCOME-TAX> 144,389,000
<INCOME-CONTINUING> 482,186,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 482,186,000
<EPS-PRIMARY> 4.63
<EPS-DILUTED> 4.63
<RESERVE-OPEN> 2,499,400,000
<PROVISION-CURRENT> 1,234,000,000
<PROVISION-PRIOR> (24,500,000)
<PAYMENTS-CURRENT> 613,200,000
<PAYMENTS-PRIOR> 689,400,000
<RESERVE-CLOSE> 2,406,300,000
<CUMULATIVE-DEFICIENCY> 25,000,000
</TABLE>
<PAGE>
Form 2:
[From Annual Statement for the Year 1995 of the Combined Company]
SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES
NOTES TO SCHEDULE P
1. The Parts of Schedule P:
Part 1 - detailed information on losses and loss expenses.
Part 2 - history of incurred losses and allocated expenses.
Part 3 - history of loss and allocated expense payments.
Part 4 - history of bulk and incurred but not reported reserves.
Part 5 - history of claims.
Part 6 - history of premiums earned.
Part 7 - history of loss sensitive contracts.
Schedule P Interrogatories.
2. Line of business A thorugh M, R and S are groupings of the lines of
business used on the state page.
3. Reinsurance A, B, C, and D (Lines N to Q) are:
Reinsurance A = nonproportional property (1988 and subsequent).
Reinsurance B = nonporportional liability (1988 and subsequent).
Reinsurance C = financial lines (1988 and subsequent).
Reinsurance D = old Schedule O Line 30 (1987 and prior).
SCHEDULE P - PART 1 SUMMARY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 26896 8314 5540 483 372 1522 25161 0
1986 1437420 138904 1298516 807724 65887 55478 839 25067 54003 850479 0
1987 1837984 350718 1487266 946053 146721 64230 9565 26768 56596 910593 0
1988 2064554 247166 1817388 1129095 36840 80109 3763 33565 72982 1241583 0
1989 1991101 54624 1936477 1315830 46734 88973 2876 35339 78433 1433626 0
1990 2181300 67507 2113793 1465392 107029 93747 7857 35568 80529 1524782 0
1991 2228837 79752 2149085 1353130 55582 76123 1585 34060 90613 1462699 0
1992 2154109 102238 2051871 1218485 72338 56272 1123 28948 89110 1290406 0
1993 1978243 80319 1897924 972481 15192 36304 196 24006 90048 1083445 0
1994 1872396 92874 1779522 833818 24339 19666 59 21941 90531 919617 0
1995 1826446 68449 1757997 558058 10576 6359 0 12478 78373 632214 0
TOTAL 0 0 0 10626962 589552 582801 28346 278112 782740 11374605 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 218254 58496 148843 10540 26194 4056 5176 0 0 11125 336500 0
1986 17832 5708 7781 4 3224 178 1338 0 0 1049 25334 0
1987 19046 1734 9731 52 4860 155 1616 0 0 1359 34671 0
1988 35165 10066 15844 1699 8156 1051 2306 0 0 2156 50811 0
1989 49635 6114 33332 1065 14550 257 6249 0 0 4186 100516 0
1990 72734 9339 43790 1963 18680 689 8234 78 0 5940 137309 0
1991 100030 8220 57444 3263 29072 1265 13742 21 0 8498 196017 0
1992 118092 6090 72430 2240 27849 370 13740 7 0 9802 233206 0
1993 175010 4797 72882 2898 31895 873 12830 1 0 13405 297453 0
1994 223254 8589 124709 5242 32365 804 18435 11 0 18640 402757 0
1995 346633 7408 250610 7628 30569 216 29429 4 0 33644 675629 0
TOTAL 1375685 126561 837396 36594 227414 9914 113095 122 0 109804 2490203 0
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 298061 38439
1986 948430 72616 875814 66.0 52.3 67.4 0 0 0.0 19901 5433
1987 1103489 158228 945261 60.0 45.1 63.6 0 0 0.0 26991 7680
1988 1345813 53417 1292396 65.2 21.6 71.1 0 0 0.0 39244 11567
1989 1591186 57047 1534139 79.9 104.4 79.2 0 0 0.0 75788 24728
1990 1789045 126955 1662090 82.0 188.1 78.6 0 0 0.0 105222 32087
1991 1728651 69935 1658716 77.6 87.7 77.2 0 0 0.0 145991 50026
1992 1605778 82166 1523612 74.5 80.4 74.3 0 0 0.0 182192 51014
1993 1404854 23957 1380897 71.0 29.8 72.8 0 0 0.0 240197 57256
1994 1361418 39046 1322372 72.7 42.0 74.3 0 0 0.0 334132 68625
1995 1333675 25836 1307839 73.0 37.7 74.4 0 0 0.0 582207 93422
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 2049926 440277
</TABLE>
SCHEDULE P - PART 2 SUMMARY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 553586 619588 646231 654839 678855 716069 754781 841178 848206 939068 90862 97890
1986 900747 793011 800430 811200 811366 808529 813487 813730 814995 820762 5767 7032
1987 0 1012021 931308 884029 882419 880283 884101 885633 887552 887306 -246 1673
1988 0 0 1255850 1215709 1223884 1223729 1214740 1212888 1215158 1217258 2100 4370
1989 0 0 0 1462442 1444448 1444062 1450409 1429271 1438241 1451523 13282 22252
1990 0 0 0 0 1609320 1591118 1587918 1578082 1573455 1575623 2168 -2459
1991 0 0 0 0 0 1664771 1639354 1593562 1571542 1559605 -11937 -33957
1992 0 0 0 0 0 0 1556085 1486128 1452016 1424699 -27317 -61429
1993 0 0 0 0 0 0 0 1390700 1318274 1277445 -40829 -113255
1994 0 0 0 0 0 0 0 0 1305237 1213201 -92036 0
1995 0 0 0 0 0 0 0 0 0 1195822 0 0
TOTAL -58186 -77883
</TABLE>
SCHEDULE P - PART 3 SUMMARY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 215235 343554 408915 480887 531073 543767 571200 590052 613692 0 0
1986 362770 569214 646813 709918 742164 764366 777823 785282 792190 796477 0 0
1987 0 391524 577311 694014 760818 804449 823652 837382 846803 853995 0 0
1988 0 0 531430 828523 973881 1061892 1103499 1132467 1153186 1168602 0 0
1989 0 0 0 616604 976080 1135986 1230150 1285179 1325139 1355194 0 0
1990 0 0 0 0 660190 1060666 1232367 1334786 1400709 1444253 0 0
1991 0 0 0 0 0 671258 1035286 1198342 1303295 1372086 0 0
1992 0 0 0 0 0 0 611508 949286 1113032 1201296 0 0
1993 0 0 0 0 0 0 0 577527 861057 993397 0 0
1994 0 0 0 0 0 0 0 0 567547 829086 0 0
1995 0 0 0 0 0 0 0 0 0 553842 0 0
TOTAL
</TABLE>
<PAGE>
SCHEDULE P - PART 4 SUMMARY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 81049 52660 40837 21392 16270 27968 43438 85116 74912 143480
1986 314338 48448 15182 11210 12363 5200 8088 6319 7281 9116
1987 0 350270 102590 40115 26827 16839 15213 11005 11788 11293
1988 0 0 381478 118488 63064 36970 27002 22881 17939 16452
1989 0 0 0 438884 168430 90298 67289 38887 32614 38516
1990 0 0 0 0 489662 194704 105544 76526 55447 49982
1991 0 0 0 0 0 541097 228581 124203 90371 67902
1992 0 0 0 0 0 0 515529 180942 121442 83923
1993 0 0 0 0 0 0 0 414845 171309 82813
1994 0 0 0 0 0 0 0 0 351764 137891
1995 0 0 0 0 0 0 0 0 0 272404
TOTAL
</TABLE>
SCHEDULE P - PART 1A HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 666 22 97 0 5 33 774 0
1986 148207 10296 137911 85735 2690 2968 26 889 6193 92180 50707
1987 179365 31872 147493 97437 10514 3371 810 983 6371 95855 60597
1988 202488 24754 177734 120422 1202 4099 28 1241 8770 132061 66329
1989 186277 2778 183499 142556 883 3677 -86 1439 9463 154899 76379
1990 199302 4117 195185 159993 5243 4482 172 1416 10952 170012 89496
1991 211353 3969 207384 167928 1106 5548 39 1147 12816 185147 84416
1992 212355 3183 209172 159883 976 4350 6 905 13332 176583 66370
1993 209900 6878 203022 157074 25 3264 1 894 14722 175034 67261
1994 206789 8475 198314 156359 0 2214 0 715 15410 173983 60124
1995 206451 8541 197910 107681 0 789 0 182 12897 121367 62905
TOTAL 0 0 0 1355734 22661 34859 996 9816 110959 1477895 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 241 0 21 0 16 0 1 0 0 21 300 11
1986 403 200 10 0 32 13 0 0 0 21 253 6
1987 95 0 5 0 6 0 0 0 0 7 113 9
1988 916 18 12 0 72 1 1 0 0 72 1054 16
1989 784 200 18 0 54 13 1 0 0 53 697 14
1990 1553 200 60 0 104 13 4 0 0 117 1625 22
1991 2427 0 164 0 449 0 30 0 0 206 3276 67
1992 4119 208 280 0 1122 51 78 0 0 334 5674 121
1993 6025 0 543 0 1462 0 133 0 0 517 8680 200
1994 8903 1289 3694 0 1122 0 503 0 0 998 13931 414
1995 28675 0 10960 0 2034 0 527 0 0 2834 45030 5747
TOTAL 54141 2115 15767 0 6473 91 1278 0 0 5180 80633 6627
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 262 38
1986 95362 2929 92433 64.3 28.4 67.0 0 0 0.0 213 40
1987 107292 11324 95968 59.8 35.5 65.1 0 0 0.0 100 13
1988 134365 1251 133114 66.4 5.1 74.9 0 0 0.0 910 144
1989 156605 1010 155595 84.1 36.4 84.8 0 0 0.0 602 95
1990 177264 5627 171637 88.9 136.7 87.9 0 0 0.0 1413 212
1991 189568 1147 188421 89.7 28.9 90.9 0 0 0.0 2591 685
1992 183499 1241 182258 86.4 39.0 87.1 0 0 0.0 4191 1483
1993 183740 27 183713 87.5 0.4 90.5 0 0 0.0 6568 2112
1994 189202 1289 187913 91.5 15.2 94.8 0 0 0.0 11308 2623
1995 166397 0 166397 80.6 0.0 84.1 0 0 0.0 39635 5395
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 67793 12840
</TABLE>
SCHEDULE P - PART 1B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 796 967 31 5 133 -11 -156 0
1986 181252 7162 174090 146590 2018 6129 92 3155 10003 160612 55393
1987 252408 56837 195571 201900 43535 9142 3790 4073 10359 174076 77966
1988 261214 18944 242270 218589 2439 9156 96 4619 15014 240224 84159
1989 251280 3395 247885 227962 1941 9579 78 4955 15153 250675 85166
1990 272473 4731 267742 258255 9407 11066 641 5417 14785 274058 82094
1991 296004 7593 288411 232392 2296 8905 19 5055 15313 254295 68048
1992 293313 7733 285580 200572 1061 7477 0 4373 15455 222443 60926
1993 295028 6302 288726 179891 702 5872 0 3554 18119 203180 59500
1994 284933 6008 278925 140409 1144 3360 0 2827 18747 161372 57178
1995 285987 4257 281730 74772 257 940 0 1315 14881 90336 56191
TOTAL 0 0 0 1882128 65767 71657 4721 39476 147818 2031115 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 19373 7115 16 0 500 324 1 0 0 241 12692 36
1986 281 0 3 0 18 0 0 0 0 16 318 12
1987 515 205 15 0 31 13 1 0 0 21 365 13
1988 1884 312 29 0 119 19 2 0 0 94 1797 29
1989 4381 1170 22 0 276 74 1 0 0 197 3633 41
1990 4525 910 35 0 285 57 2 0 0 215 4095 73
1991 7651 313 88 0 1369 130 17 0 0 410 9092 157
1992 12636 49 406 0 1834 9 60 0 0 709 15587 384
1993 29276 86 1909 0 3419 24 224 0 0 1701 36419 1015
1994 54623 1078 9885 0 4961 132 901 0 0 3485 72645 2827
1995 99001 566 30619 0 6236 34 1928 0 0 7056 144240 12669
TOTAL 234146 11804 43027 0 19048 816 3137 0 0 14145 300883 17256
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12274 418
1986 163042 2109 160933 90.0 29.4 92.4 0 0 0.0 284 34
1987 221984 47545 174439 87.9 83.7 89.2 0 0 0.0 325 40
1988 244886 2867 242019 93.7 15.1 99.9 0 0 0.0 1601 196
1989 257572 3262 254310 102.5 96.1 102.6 0 0 0.0 3233 400
1990 289170 11015 278155 106.1 232.8 103.9 0 0 0.0 3650 445
1991 266145 2759 263386 89.9 36.3 91.3 0 0 0.0 7426 1666
1992 239150 1119 238031 81.5 14.5 83.4 0 0 0.0 12993 2594
1993 240411 812 239599 81.5 12.9 83.0 0 0 0.0 31099 5320
1994 236374 2356 234018 83.0 39.2 83.9 0 0 0.0 63430 9215
1995 235433 858 234575 82.3 20.2 83.3 0 0 0.0 129054 15186
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 265369 35514
</TABLE>
<PAGE>
SCHEDULE P - PART 1C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 1960 219 151 0 1 82 1974 0
1986 152762 5699 147063 97901 4931 8149 90 1076 5902 106931 27725
1987 211249 31536 179713 117560 7708 8179 464 1167 6618 124185 32581
1988 243931 35502 208429 138580 2221 9733 115 1090 6329 152306 39110
1989 231779 2843 228936 168919 6627 11648 417 1301 7704 181227 42303
1990 268927 9688 259239 190397 18815 13632 1432 1352 7444 191226 40875
1991 278804 21243 257561 169783 14364 11051 765 1690 8304 174009 37485
1992 259991 13759 246232 134564 8542 7216 493 1258 7783 140528 28726
1993 221041 6964 214077 102490 2102 5167 134 888 7912 113333 26412
1994 196567 3874 192693 70858 900 2455 8 890 9045 81450 25308
1995 185841 3307 182534 32526 483 649 0 432 6846 39538 23720
TOTAL 0 0 0 1225538 66912 78030 3918 11145 73969 1306707 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 882 106 131 0 57 9 8 0 0 53 1016 79
1986 851 261 49 0 53 15 3 0 0 40 720 19
1987 400 0 115 11 25 0 6 0 0 25 560 20
1988 719 188 711 382 49 16 13 0 0 41 947 28
1989 3992 610 1015 239 254 41 44 0 0 228 4643 125
1990 6031 265 1454 442 341 5 80 26 0 334 7502 980
1991 12690 1263 3725 588 1596 5 686 19 0 855 17677 377
1992 16098 1725 10979 404 1807 25 1446 7 0 1302 29471 299
1993 35438 522 10427 522 3596 39 780 1 0 2310 51467 540
1994 45931 1139 20207 945 3578 73 1380 10 0 3331 72260 1334
1995 60895 394 39660 1317 3836 25 2466 4 0 5380 110497 4564
TOTAL 183927 6473 88473 4850 15192 253 6912 67 0 13899 296760 8365
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 907 109
1986 112946 5298 107648 73.9 93.0 73.2 0 0 0.0 639 81
1987 132930 8184 124746 62.9 26.0 69.4 0 0 0.0 504 56
1988 156175 2923 153252 64.0 8.2 73.5 0 0 0.0 860 87
1989 193805 7936 185869 83.6 279.1 81.2 0 0 0.0 4158 485
1990 219714 20986 198728 81.7 216.6 76.7 0 0 0.0 6778 724
1991 208687 17004 191683 74.9 80.0 74.4 0 0 0.0 14564 3113
1992 181193 11194 169999 69.7 81.4 69.0 0 0 0.0 24948 4523
1993 168120 3320 164800 76.1 47.7 77.0 0 0 0.0 44821 6646
1994 156784 3075 153709 79.8 79.4 79.8 0 0 0.0 64054 8206
1995 152258 2222 150036 81.9 67.2 82.2 0 0 0.0 98844 11653
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 261077 35683
</TABLE>
SCHEDULE P - PART 1D WORKERS' COMPENSATION
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 4873 1993 269 53 16 109 3205 0
1986 148620 16543 132077 119815 19423 4074 -807 2468 7699 112972 40636
1987 188202 24841 163361 127927 9206 5876 549 1978 7912 131960 52085
1988 232751 26962 205789 159157 1435 6969 79 2249 9097 173709 63697
1989 248591 1424 247167 174525 2413 7460 110 2329 9146 188608 66672
1990 273705 1939 271766 191728 5304 8136 489 2650 9501 203572 59034
1991 277049 2356 274693 168117 519 6572 7 1930 9995 184158 49607
1992 241105 2438 238667 112375 285 4239 6 910 8183 124506 36115
1993 225021 1856 223165 92677 278 2913 5 719 7199 102506 27600
1994 205194 1321 203873 60921 600 1698 1 216 7321 69339 25082
1995 204085 -3269 207354 24925 0 434 0 31 4934 30293 22719
TOTAL 0 0 0 1237040 41456 48640 492 15496 81096 1324828 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 52064 28628 5775 0 2753 1673 63 0 0 1509 31863 416
1986 10730 4460 1962 0 336 73 9 0 0 270 8774 91
1987 10066 731 3089 0 434 44 16 0 0 382 13212 89
1988 12038 260 4276 0 506 17 18 0 0 467 17028 138
1989 18238 1554 6413 0 803 101 25 0 0 691 24515 182
1990 26469 3600 7780 0 1322 233 43 0 0 1096 32877 316
1991 27543 1191 8157 0 1927 225 106 0 0 1234 37551 482
1992 23741 75 8645 0 1476 15 166 0 0 1084 35022 556
1993 30079 425 10627 0 1930 80 244 0 0 1424 43799 764
1994 38744 1214 17994 0 2415 215 651 0 0 2074 60449 1553
1995 51123 1982 40864 0 3001 128 1287 0 0 3825 97990 5380
TOTAL 300835 44120 115582 0 16903 2804 2628 0 0 14056 403080 9967
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 29211 2652
1986 144895 23148 121747 97.5 139.9 92.2 0 0 0.0 8232 542
1987 155700 10532 145168 82.7 42.4 88.9 0 0 0.0 12424 788
1988 192527 1791 190736 82.7 6.6 92.7 0 0 0.0 16054 974
1989 217299 4179 213120 87.4 293.5 86.2 0 0 0.0 23097 1418
1990 246072 9627 236445 89.9 496.5 87.0 0 0 0.0 30649 2228
1991 223651 1941 221710 80.7 82.4 80.7 0 0 0.0 34509 3042
1992 159908 379 159529 66.3 15.5 66.8 0 0 0.0 32311 2711
1993 147094 787 146307 65.4 42.4 65.6 0 0 0.0 40281 3518
1994 131816 2028 129788 64.2 153.5 63.7 0 0 0.0 55524 4925
1995 130396 2111 128285 63.9 -64.6 61.9 0 0 0.0 90005 7985
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 372297 30783
</TABLE>
SCHEDULE P - PART 1E COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 1316 40 1378 1 25 67 2720 0
1986 261480 11158 250322 102976 6658 16386 344 3082 7470 119830 34591
1987 335256 39993 295263 119362 9968 20028 1703 3226 8010 135729 40850
1988 386997 38626 348371 155370 8256 28761 2337 3994 10748 184286 49845
1989 380232 4816 375416 211859 6262 35830 1245 3952 13609 253791 61102
1990 425673 4827 420846 218010 5888 33294 1224 3774 13719 257911 62691
1991 449288 6717 442571 214296 3662 28518 90 3462 16257 255319 59602
1992 430889 10051 420838 233646 13922 20914 105 2679 17435 257968 50386
1993 406047 13207 392840 164710 44 12044 1 2175 15179 191888 46944
1994 383725 15810 367915 146357 1831 5613 44 1628 18171 168266 45008
1995 370775 12359 358416 103108 0 1641 0 972 15395 120144 46979
TOTAL 0 0 0 1671010 56531 204407 7094 28969 136060 1947852 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 6695 641 6936 0 4525 175 1894 0 0 934 20168 190
1986 1954 0 3618 0 1528 0 988 0 0 394 8482 97
1987 4946 534 4534 0 3121 97 1236 0 0 627 13833 125
1988 7427 2847 6580 0 4641 290 1797 0 0 891 18199 197
1989 11993 0 19514 0 10203 0 5327 0 0 2231 49268 330
1990 17831 0 25026 0 12380 0 6831 0 0 3034 65102 401
1991 25226 311 28377 98 16081 302 9959 0 0 3740 82672 494
1992 30841 66 27182 67 14375 0 8800 0 0 4024 85089 672
1993 40931 77 23667 87 14523 0 7109 0 0 4389 90455 1146
1994 44682 106 30486 158 14156 0 9170 0 0 5255 103485 2012
1995 53303 307 54553 9 11119 24 14567 0 0 7798 141000 7926
TOTAL 245829 4889 230473 419 106652 888 67678 0 0 33317 677753 13590
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12990 7178
1986 135313 7002 128311 51.7 62.8 51.3 0 0 0.0 5572 2910
1987 161867 12301 149566 48.3 30.8 50.7 0 0 0.0 8946 4887
1988 216215 13730 202485 55.9 35.5 58.1 0 0 0.0 11160 7039
1989 310567 7506 303061 81.7 155.9 80.7 0 0 0.0 31507 17761
1990 330130 7112 323018 77.6 147.3 76.8 0 0 0.0 42857 22245
1991 342455 4462 337993 76.2 66.4 76.4 0 0 0.0 53194 29478
1992 357216 14160 343056 82.9 140.9 81.5 0 0 0.0 57890 27199
1993 282555 209 282346 69.6 1.6 71.9 0 0 0.0 64434 26021
1994 273890 2142 271748 71.4 13.5 73.9 0 0 0.0 74904 28581
1995 261484 340 261144 70.5 2.8 72.9 0 0 0.0 107540 33460
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 470994 206759
</TABLE>
SCHEDULE P - PART 1F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1986 111 5 106 199 3 24 1 0 8 227 10
1987 161 64 97 -6 0 -1 0 0 8 1 1
1988 103 37 66 2 3 9 1 0 -4 3 3
1989 59 0 59 167 11 91 3 0 -2 242 6
1990 75 0 75 0 0 0 0 0 0 0 5
1991 86 0 86 0 0 0 0 0 4 4 3
1992 79 0 79 104 0 35 0 0 6 145 12
1993 79 0 79 9 0 12 0 0 10 31 7
1994 75 0 75 0 0 0 0 0 8 8 0
1995 59 0 59 0 0 0 0 0 5 5 0
TOTAL 0 0 0 475 17 170 5 0 43 666 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 25 0 26 0 8 0 8 0 0 4 71 3
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 25 0 26 0 8 0 8 0 0 4 71 3
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1986 232 4 228 209.0 80.0 215.1 0 0 0.0 0 0
1987 1 0 1 0.6 0.0 1.0 0 0 0.0 0 0
1988 81 4 77 78.6 10.8 116.7 0 0 0.0 51 20
1989 256 15 241 433.9 0.0 408.5 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 4 0 4 4.7 0.0 4.7 0 0 0.0 0 0
1992 147 0 147 186.1 0.0 186.1 0 0 0.0 0 0
1993 32 0 32 40.5 0.0 40.5 0 0 0.0 0 0
1994 8 0 8 10.7 0.0 10.7 0 0 0.0 0 0
1995 5 0 5 8.5 0.0 8.5 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 51 20
</TABLE>
SCHEDULE P - PART 1G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 59 0 0 0 0 0 59 0
1986 4267 1131 3136 862 278 88 83 0 98 687 0
1987 4991 1230 3761 536 113 71 73 3 122 543 0
1988 4585 511 4074 801 151 95 96 3 177 826 0
1989 4417 23 4394 894 283 63 54 0 190 810 0
1990 4729 38 4691 733 64 58 51 0 207 883 0
1991 4596 39 4557 824 238 22 20 0 201 789 0
1992 4585 41 4544 636 0 4 0 0 203 843 0
1993 5157 79 5078 809 0 0 0 0 244 1053 0
1994 5509 92 5417 1470 0 11 0 18 417 1898 0
1995 6064 111 5953 478 0 0 0 0 244 722 0
TOTAL 0 0 0 8102 1127 412 377 24 2103 9113 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 29 0 0 0 9 0 0 0 0 3 41 4
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 15 0 0 0 5 0 0 0 0 1 21 4
1995 94 0 133 0 30 0 43 0 0 19 319 28
TOTAL 138 0 133 0 44 0 43 0 0 23 381 36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1986 1049 361 688 24.6 31.9 21.9 0 0 0.0 0 0
1987 728 185 543 14.6 15.0 14.4 0 0 0.0 0 0
1988 1073 247 826 23.4 48.3 20.3 0 0 0.0 0 0
1989 1146 336 810 25.9 1460.9 18.4 0 0 0.0 0 0
1990 998 116 882 21.1 305.3 18.8 0 0 0.0 0 0
1991 1050 258 792 22.8 661.5 17.4 0 0 0.0 0 0
1992 885 0 885 19.3 0.0 19.5 0 0 0.0 29 12
1993 1054 0 1054 20.4 0.0 20.8 0 0 0.0 0 0
1994 1919 0 1919 34.8 0.0 35.4 0 0 0.0 15 6
1995 1041 0 1041 17.2 0.0 17.5 0 0 0.0 227 92
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 271 110
</TABLE>
SCHEDULE P - PART 1H SECTION 1 OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 13959 457 3093 384 53 756 16967 0
1986 130554 21616 108938 52447 9294 12533 -91 354 3366 59143 11852
1987 172142 35043 137099 56380 12252 13246 459 341 3405 60320 13601
1988 198081 40870 157211 66733 12281 16408 695 404 3431 73596 14410
1989 159938 11275 148663 69097 13955 15571 976 260 2771 72508 13637
1990 156925 11824 145101 87553 28841 17649 3626 529 1951 74686 17524
1991 153783 14294 139489 63391 13673 10762 478 581 2671 62673 17376
1992 151722 28323 123399 53074 15297 7019 454 61 2678 47020 8441
1993 140350 15173 125177 37459 2774 3714 38 80 2868 41229 7454
1994 128473 21747 106726 16685 1624 1425 4 60 3718 20200 6632
1995 104994 11733 93261 5109 12 278 0 14 3165 8540 5477
TOTAL 0 0 0 521887 110460 101698 7023 2737 30780 536882 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 16503 3727 14095 0 10173 1483 3101 0 0 2267 40929 697
1986 2367 351 1402 0 1089 78 308 0 0 285 5022 76
1987 2032 0 1531 20 1108 0 331 0 0 276 5258 91
1988 7032 3109 2981 662 2260 684 462 0 0 533 8813 128
1989 5840 224 3962 416 2128 26 749 0 0 709 12722 166
1990 9056 903 5941 765 3280 379 1108 26 0 991 18303 289
1991 14783 1693 11874 392 5779 601 2773 0 0 1860 34383 594
1992 18696 1263 14349 269 6091 270 2980 0 0 2176 42490 489
1993 24518 3061 20460 348 6206 728 4173 0 0 2754 53974 435
1994 18672 1925 26868 629 5167 384 5528 0 0 3081 56378 570
1995 10525 2 34360 178 3238 0 7520 0 0 3613 59076 1152
TOTAL 130024 16258 137823 3679 46519 4633 29033 26 0 18545 337348 4687
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 26871 14058
1986 73796 9630 64166 56.5 44.6 58.9 0 0 0.0 3418 1604
1987 78310 12731 65579 45.5 36.3 47.8 0 0 0.0 3543 1715
1988 99839 17431 82408 50.4 42.6 52.4 0 0 0.0 6242 2571
1989 100831 15596 85235 63.0 138.3 57.3 0 0 0.0 9162 3560
1990 127527 34538 92989 81.3 292.1 64.1 0 0 0.0 13329 4974
1991 113892 16838 97054 74.1 117.8 69.6 0 0 0.0 24572 9811
1992 107065 17552 89513 70.6 62.0 72.5 0 0 0.0 31513 10977
1993 102149 6948 95201 72.8 45.8 76.1 0 0 0.0 41569 12405
1994 81144 4567 76577 63.2 21.0 71.8 0 0 0.0 42986 13392
1995 67811 192 67619 64.6 1.6 72.5 0 0 0.0 44705 14371
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 247910 89438
</TABLE>
SCHEDULE P - PART 1H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 6 0 0 0 0 0 6 0
1986 2215 2215 0 1709 1714 4 3 0 0 -4 151
1987 2018 1965 53 3093 3092 5 5 0 0 1 178
1988 3328 3274 54 3552 3371 -1 14 0 17 183 175
1989 4362 4303 59 3190 3205 -11 0 0 0 -26 149
1990 4400 4316 84 7158 7149 -8 0 0 2 3 190
1991 7991 7985 6 12056 553 -132 0 0 285 11656 173
1992 17116 6466 10650 5132 0 -131 0 0 56 5057 190
1993 6124 -976 7100 2139 0 0 0 0 34 2173 174
1994 2778 -747 3525 1431 0 5 0 0 89 1525 154
1995 12970 -546 13516 92 0 0 0 0 1 93 147
TOTAL 0 0 0 39558 19084 -269 22 0 484 20667 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 631 579 212 0 206 139 46 0 0 35 412 8
1986 0 0 74 0 19 0 16 0 0 6 115 4
1987 75 75 0 0 0 0 0 0 0 0 0 4
1988 3 3 0 0 0 0 0 0 0 0 0 0
1989 209 209 0 0 0 0 0 0 0 0 0 5
1990 436 436 0 0 0 0 0 0 0 0 0 4
1991 2234 0 0 0 0 0 0 0 0 0 2234 8
1992 1747 0 16 0 21 0 5 0 0 6 1795 14
1993 2354 0 0 0 0 0 0 0 0 0 2354 29
1994 2221 0 0 0 0 0 0 0 0 0 2221 42
1995 5573 0 17 0 7 0 3 0 0 4 5604 113
TOTAL 15483 1302 319 0 253 139 70 0 0 51 14735 231
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 264 148
1986 1829 1717 112 82.6 77.5 0.0 0 0 0.0 74 41
1987 3173 3172 1 157.2 161.4 1.9 0 0 0.0 0 0
1988 3570 3388 182 107.3 103.5 337.0 0 0 0.0 0 0
1989 3390 3416 -26 77.7 79.4 -44.1 0 0 0.0 0 0
1990 7588 7585 3 172.5 175.7 3.6 0 0 0.0 0 0
1991 14446 553 13893 180.8 6.9 231550.0 0 0 0.0 2234 0
1992 6852 0 6852 40.0 0.0 64.3 0 0 0.0 1763 32
1993 4527 0 4527 73.9 0.0 63.8 0 0 0.0 2354 0
1994 3747 0 3747 134.9 0.0 106.3 0 0 0.0 2221 0
1995 5698 0 5698 43.9 0.0 42.2 0 0 0.0 5590 14
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 14500 235
</TABLE>
<PAGE>
SCHEDULE P - PART 1I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY & THEFT)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 2896 53 617 1 160 144 3603 0
1994 85868 5693 80175 39860 504 659 0 513 3478 43493 0
1995 82527 5481 77046 35680 484 366 0 264 3792 39354 0
TOTAL 0 0 0 78436 1041 1642 1 937 7414 86450 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 1482 2 2 0 41 0 20 1 0 107 1649 39
1994 1781 0 9 0 241 0 4 0 0 133 2168 39
1995 7647 43 1300 0 202 1 45 0 0 664 9814 1260
TOTAL 10910 45 1311 0 484 1 69 1 0 904 13631 1338
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1482 167
1994 46164 503 45661 53.8 8.8 57.0 0 0 0.0 1790 378
1995 49694 528 49166 60.2 9.6 63.8 0 0 0.0 8904 910
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 12176 1455
</TABLE>
SCHEDULE P - PART 1J AUTO PHYSICAL DAMAGE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 -846 6 82 3 1717 -51 -824 0
1994 244146 1127 243019 138432 685 1160 0 14879 13084 151991 142267
1995 242900 826 242074 143314 378 827 0 9240 15257 159020 145232
TOTAL 0 0 0 280900 1069 2069 3 25836 28290 310187 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 138 0 1147 245 4 0 31 1 0 18 1092 42
1994 502 0 456 0 13 0 8 1 0 64 1042 106
1995 14187 41 2718 0 369 1 74 0 0 2136 19442 6452
TOTAL 14827 41 4321 245 386 1 113 2 0 2218 21576 6600
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1040 52
1994 153718 686 153032 63.0 60.9 63.0 0 0 0.0 958 84
1995 178884 420 178464 73.6 50.8 73.7 0 0 0.0 16864 2578
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 18862 2714
</TABLE>
SCHEDULE P - PART 1K FIDELITY / SURETY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 -88 -13 175 6 654 -92 2 0
1994 11597 630 10967 1097 0 153 1 144 164 1413 0
1995 10954 869 10085 254 0 51 0 25 81 386 0
TOTAL 0 0 0 1263 -13 379 7 823 153 1801 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 1195 156 0 0 384 49 0 0 0 88 1462 82
1994 570 0 0 0 183 0 0 0 0 46 799 59
1995 931 0 797 0 299 0 256 0 0 120 2403 91
TOTAL 2696 156 797 0 866 49 256 0 0 254 4664 232
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1039 423
1994 2212 1 2211 19.1 0.2 20.2 0 0 0.0 570 229
1995 2790 0 2790 25.5 0.0 27.7 0 0 0.0 1728 675
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 3337 1327
</TABLE>
SCHEDULE P - PART 1L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 7713 4075 139 10 81 61 3828 0
1994 111231 28348 82883 60664 17050 857 0 51 741 45212 0
1995 108042 24737 83305 30017 8962 379 0 3 650 22084 0
TOTAL 0 0 0 98394 30087 1375 10 135 1452 71124 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 33673 29755 16102 7833 4 0 43 26 0 117 12325 293
1994 5665 1841 12615 3510 0 0 62 0 0 44 13035 1000
1995 14386 4076 33381 6124 0 0 436 0 0 70 38073 719
TOTAL 53724 35672 62098 17467 4 0 541 26 0 231 63433 2012
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12187 138
1994 80649 22401 58248 72.5 79.0 70.3 0 0 0.0 12929 106
1995 79318 19163 60155 73.4 77.5 72.2 0 0 0.0 37567 506
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 62683 750
</TABLE>
SCHEDULE P - PART 1M INTERNATIONAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0
1992 146 0 146 -6 0 0 0 0 0 -6 0
1993 113 0 113 0 0 0 0 0 -2 -2 0
1994 2 0 2 0 0 0 0 0 -2 -2 0
1995 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 -6 0 0 0 0 -4 -10 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1986 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1987 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1992 -5 0 -5 -3.4 0.0 -3.4 0 0 0.0 0 0
1993 -2 0 -2 -1.8 0.0 -1.8 0 0 0.0 0 0
1994 -2 0 -2 -100.0 0.0 -100.0 0 0 0.0 0 0
1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
SCHEDULE P - PART 1N REINSURANCE A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1745 118 1627 635 -427 0 0 0 -5 1057 0
1990 779 127 652 -547 -36 -20 1 0 -9 -541 0
1991 550 151 399 -724 393 -8 34 0 -31 -1190 0
1992 24677 9643 15034 42715 22025 66 4 0 108 20860 0
1993 6386 2109 4277 3619 407 30 2 0 3 3243 0
1994 -258 426 -684 -168 0 0 0 0 0 -168 0
1995 -579 9 -588 0 0 0 0 0 0 0 0
TOTAL 0 0 0 45441 22371 57 41 0 64 23150 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 384 156 34 0 31 0 0 0 0 0 293 0
1990 209 6 56 0 10 0 0 0 0 0 269 0
1991 682 141 85 0 57 0 0 0 0 0 683 0
1992 1806 295 64 0 113 1 0 0 0 0 1687 0
1993 578 72 0 0 28 0 0 0 0 0 534 0
1994 30 0 0 0 0 0 0 0 0 0 30 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 3751 674 269 0 248 1 0 0 0 0 3593 0
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 1081 -270 1351 61.9 -228.8 83.0 0 0 0.0 262 31
1990 -301 -28 -273 -38.6 -22.0 -41.9 0 0 0.0 259 10
1991 59 570 -511 10.7 377.5 -128.1 0 0 0.0 626 57
1992 44871 22325 22546 181.8 231.5 150.0 0 0 0.0 1575 112
1993 4259 481 3778 66.7 22.8 88.3 0 0 0.0 506 28
1994 -136 0 -136 52.7 0.0 19.9 0 0 0.0 30 0
1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 3346 247
</TABLE>
SCHEDULE P - PART 1O REINSURANCE B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 127 0 127 -1840 -187 -174 0 0 -25 -1852 0
1990 4366 0 4366 -2089 -244 -287 0 0 -39 -2171 0
1991 39 0 39 -4299 -729 -789 -2 0 -99 -4456 0
1992 4000 44 3956 -890 -38 134 2 0 20 -700 0
1993 5914 -27 5941 1 54 68 7 0 3 11 0
1994 1109 46 1063 -741 0 0 0 0 -21 -762 0
1995 562 6 556 0 0 0 0 0 0 0 0
TOTAL 0 0 0 -11597 -1301 -1178 7 0 -180 -11661 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 943 22 1351 0 194 0 0 0 0 0 2466 0
1990 1968 5 1803 0 234 0 0 0 0 0 4000 0
1991 1562 11 1306 0 230 0 0 0 0 0 3087 0
1992 4065 20 2570 0 335 0 0 0 0 0 6950 0
1993 1756 13 805 0 111 0 0 0 0 0 2659 0
1994 261 0 1576 0 78 0 0 0 0 0 1915 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 10956 71 9706 0 1263 0 0 0 0 0 21854 0
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 447 -165 612 352.0 0.0 481.9 0 0 0.0 2272 194
1990 1589 -239 1828 36.4 0.0 41.9 0 0 0.0 3766 234
1991 -2086 -719 -1367 -5348.7 0.0 -3505.1 0 0 0.0 2857 230
1992 6234 -16 6250 155.9 -36.4 158.0 0 0 0.0 6615 335
1993 2743 75 2668 46.4 -277.8 44.9 0 0 0.0 2548 111
1994 1153 0 1153 104.0 0.0 108.5 0 0 0.0 1837 78
1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 20591 1263
</TABLE>
SCHEDULE P - PART 1P REINSURANCE C
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1992 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1993 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
</TABLE>
SCHEDULE P - PART 1Q REINSURANCE D
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 2590 4427 386 27 0 455 -1023 0
1986 35133 10388 24745 -540 106 -94 0 0 0 -740 0
1987 11444 126 11318 -656 -63 -91 0 0 2 -682 0
1988 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0 0 1394 4470 201 27 0 457 -2445 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 119805 16396 121636 10540 7459 192 57 0 0 6000 227829 0
1986 525 5 604 4 41 0 0 0 0 0 1161 0
1987 614 6 304 2 49 0 0 0 0 0 959 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 120944 16407 122544 10546 7549 192 57 0 0 6000 229949 0
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 214505 13324
1986 536 114 422 1.5 1.1 1.7 0 0 0.0 1120 41
1987 222 -55 277 1.9 -43.7 2.4 0 0 0.0 910 49
1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 216535 13414
</TABLE>
SCHEDULE P - PART 1R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 25 0 54 0 0 3 82 0
1986 8392 520 7872 1444 -929 1310 27 20 945 4601 92
1987 11517 3003 8514 846 -1185 746 82 15 1190 3885 136
1988 12241 2498 9743 2555 -529 1383 145 17 1704 6026 329
1989 18433 7590 10843 1973 113 1167 0 3 1129 4156 826
1990 15587 5646 9941 1706 166 752 0 12 1098 3390 563
1991 9588 60 9528 1519 0 1179 0 12 1395 4093 438
1992 4969 21 4948 1320 0 631 0 -1 830 2781 192
1993 4587 19 4568 267 0 215 0 4 536 1018 194
1994 4660 24 4636 179 0 57 0 0 160 396 171
1995 4819 25 4794 102 0 3 0 0 225 330 164
TOTAL 0 0 0 11936 -2364 7497 254 82 9215 30758 0
</TABLE>
<TABLE>
<CAPTION>
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 685 70 21 0 456 34 4 0 0 54 1116 8
1986 282 0 59 0 106 0 13 0 0 18 478 6
1987 42 0 111 0 82 0 24 0 0 12 271 7
1988 580 0 31 0 374 0 6 0 0 49 1040 5
1989 218 0 457 0 562 0 100 0 0 54 1391 20
1990 644 0 628 0 646 0 138 0 0 103 2159 14
1991 1344 0 567 0 1560 0 147 0 0 154 3772 28
1992 772 0 662 0 641 0 169 0 0 116 2360 22
1993 1343 0 636 0 441 0 162 0 0 160 2742 25
1994 654 0 922 0 447 0 228 0 0 127 2378 29
1995 292 0 1249 0 196 0 275 0 0 125 2137 42
TOTAL 6856 70 5343 0 5511 34 1266 0 0 972 19844 206
</TABLE>
<TABLE>
<CAPTION>
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 636 480
1986 4176 -902 5078 49.8 -173.5 64.5 0 0 0.0 341 137
1987 3055 -1103 4158 26.5 -36.7 48.8 0 0 0.0 153 118
1988 6685 -384 7069 54.6 -15.4 72.6 0 0 0.0 611 429
1989 5660 113 5547 30.7 1.5 51.2 0 0 0.0 675 716
1990 5715 166 5549 36.7 2.9 55.8 0 0 0.0 1272 887
1991 7867 0 7867 82.1 0.0 82.6 0 0 0.0 1911 1861
1992 5140 0 5140 103.4 0.0 103.9 0 0 0.0 1434 926
1993 3760 0 3760 82.0 0.0 82.3 0 0 0.0 1979 763
1994 2776 0 2776 59.6 0.0 59.9 0 0 0.0 1576 802
1995 2466 0 2466 51.2 0.0 51.4 0 0 0.0 1541 596
TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 12129 7715
</TABLE>
SCHEDULE P - PART 2A HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 20297 15697 15327 15297 15205 15406 15335 18234 16474 16436 -38 -1798
1986 92150 87204 86457 86354 86012 85981 86110 86138 86200 86220 20 82
1987 0 105090 92399 90727 90034 89598 89323 89625 89635 89592 -43 -33
1988 0 0 134914 123490 122927 124523 123419 123530 123830 124272 442 742
1989 0 0 0 166199 150780 148215 146940 146684 146220 146080 -140 -604
1990 0 0 0 0 180535 164754 161466 161527 160894 160567 -327 -960
1991 0 0 0 0 0 187912 178533 175867 175457 175400 -57 -467
1992 0 0 0 0 0 0 175222 169922 169461 168592 -869 -1330
1993 0 0 0 0 0 0 0 168925 169154 168473 -681 -452
1994 0 0 0 0 0 0 0 0 174703 171504 -3199 0
1995 0 0 0 0 0 0 0 0 0 150667 0 0
TOTAL -4892 -4820
</TABLE>
<PAGE>
SCHEDULE P - PART 2B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 76962 84820 84404 82631 82795 82234 82306 85179 94287 94190 -97 9011
1986 168621 150306 148696 151102 151806 151453 151275 151010 150995 150912 -83 -98
1987 0 189794 164839 164199 164949 164858 164458 164754 164094 164059 -35 -695
1988 0 0 237184 228667 229838 226859 226698 226073 226785 226911 126 838
1989 0 0 0 243886 243308 241785 239085 238170 239364 238959 -405 789
1990 0 0 0 0 273715 275730 269069 266510 264748 263157 -1591 -3353
1991 0 0 0 0 0 269236 262149 251857 248041 247663 -378 -4194
1992 0 0 0 0 0 0 241094 233331 226213 221867 -4346 -11464
1993 0 0 0 0 0 0 0 233747 221430 219779 -1651 -13968
1994 0 0 0 0 0 0 0 0 220299 211785 -8514 0
1995 0 0 0 0 0 0 0 0 0 212640 0 0
TOTAL -16974 -23134
</TABLE>
SCHEDULE P - PART 2C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 66272 72564 71989 71562 70194 69652 69605 72098 70949 71076 127 -1022
1986 99692 96705 100830 102174 101018 101429 101707 102254 101852 101707 -145 -547
1987 0 119611 122148 120680 121965 120818 119552 119238 118243 118101 -142 -1137
1988 0 0 147179 148230 152239 151934 149297 150088 147547 146882 -665 -3206
1989 0 0 0 174084 179222 181272 180186 176273 178995 177935 -1060 1662
1990 0 0 0 0 199225 197296 198887 196453 192356 190949 -1407 -5504
1991 0 0 0 0 0 206143 205380 197417 186022 182525 -3497 -14892
1992 0 0 0 0 0 0 192760 181893 164955 160913 -4042 -20980
1993 0 0 0 0 0 0 0 173217 166487 154577 -11910 -18640
1994 0 0 0 0 0 0 0 0 155433 141334 -14099 0
1995 0 0 0 0 0 0 0 0 0 137810 0 0
TOTAL -36840 -64266
</TABLE>
SCHEDULE P - PART 2D WORKERS' COMPENSATION
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 114650 122431 129267 130597 132060 134226 136299 139530 137668 137889 221 -1641
1986 113214 100646 105526 109078 109723 113016 113323 113286 113071 113778 707 492
1987 0 133171 128384 125935 130810 133061 136571 137988 138022 136875 -1147 -1113
1988 0 0 155717 171291 173074 179700 180178 181077 182131 181174 -957 97
1989 0 0 0 182943 194205 200163 203591 201780 204361 203285 -1076 1505
1990 0 0 0 0 211282 222814 225752 226718 227583 225850 -1733 -868
1991 0 0 0 0 0 214236 221652 219670 214943 210480 -4463 -9190
1992 0 0 0 0 0 0 178837 168465 159744 150263 -9481 -18202
1993 0 0 0 0 0 0 0 161936 146338 137683 -8655 -24253
1994 0 0 0 0 0 0 0 0 131446 120393 -11053 0
1995 0 0 0 0 0 0 0 0 0 119523 0 0
TOTAL -37637 -53173
</TABLE>
SCHEDULE P - PART 2E COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 70278 81045 92462 92289 92010 96470 105402 111487 103446 108972 5526 -2515
1986 135473 113681 108698 115672 117065 114053 117309 117132 118458 120447 1989 3315
1987 0 174843 144688 136248 133604 131961 137012 137994 141017 140927 -90 2933
1988 0 0 210338 187694 190070 185748 184810 185290 188346 190847 2501 5557
1989 0 0 0 272659 265599 262111 274361 265797 271680 287221 15541 21424
1990 0 0 0 0 300511 293531 296552 293564 292532 306262 13730 12698
1991 0 0 0 0 0 344073 345090 333933 327880 317993 -9887 -15940
1992 0 0 0 0 0 0 345631 332688 333081 321598 -11483 -11090
1993 0 0 0 0 0 0 0 300195 279806 262777 -17029 -37418
1994 0 0 0 0 0 0 0 0 275443 248323 -27120 0
1995 0 0 0 0 0 0 0 0 0 237949 0 0
TOTAL -26322 -21036
</TABLE>
SCHEDULE P - PART 2F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 2284 1430 1160 815 693 767 646 643 544 544 0 -99
1986 216 4 4 100 86 219 219 219 219 219 0 0
1987 0 -1 -1 -1 -1 -1 2 -7 -7 -7 0 0
1988 0 0 0 0 67 67 69 72 74 76 2 4
1989 0 0 0 66 253 502 265 244 244 244 0 0
1990 0 0 0 0 0 64 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 191 -7 373 139 -234 146
1993 0 0 0 0 0 0 0 0 20 22 2 22
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL -230 73
</TABLE>
SCHEDULE P - PART 2F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
<PAGE>
SCHEDULE P - PART 2G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 77 104 29 27 27 27 36 56 4 4 0 -52
1986 578 551 554 554 554 554 592 590 590 590 0 0
1987 0 561 436 425 425 426 421 422 421 421 0 -1
1988 0 0 851 826 760 759 673 636 649 649 0 13
1989 0 0 0 730 630 621 632 634 620 620 0 -14
1990 0 0 0 0 883 706 683 677 675 675 0 -2
1991 0 0 0 0 0 742 589 594 589 589 0 -5
1992 0 0 0 0 0 0 942 699 677 678 1 -21
1993 0 0 0 0 0 0 0 870 825 809 -16 -61
1994 0 0 0 0 0 0 0 0 1346 1501 155 0
1995 0 0 0 0 0 0 0 0 0 778 0 0
TOTAL 140 -143
</TABLE>
SCHEDULE P - PART 2H SECTION 1 OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 121041 137461 141138 137637 139259 149577 161970 163204 175102 187821 12719 24617
1986 80230 55575 61838 62522 59688 57649 58758 58057 58551 60513 1962 2456
1987 0 70080 78626 67513 61784 63160 61470 60576 61070 61896 826 1320
1988 0 0 86073 86471 79797 83850 82165 77542 77753 78445 692 903
1989 0 0 0 89389 79267 90559 89821 86159 82785 81754 -1031 -4405
1990 0 0 0 0 90887 92487 94717 95369 97895 90048 -7847 -5321
1991 0 0 0 0 0 103393 92007 90177 90235 92524 2289 2347
1992 0 0 0 0 0 0 73933 85472 84980 84660 -320 -812
1993 0 0 0 0 0 0 0 88813 87198 89579 2381 766
1994 0 0 0 0 0 0 0 0 84012 69778 -14234 0
1995 0 0 0 0 0 0 0 0 0 60840 0 0
TOTAL -2563 21871
</TABLE>
SCHEDULE P - PART 2H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 190 0 0 0 0 1504 1738 1380 795 -585 -943
1986 954 305 0 0 97 -10 8 -4 -4 105 109 109
1987 0 1785 12 12 12 12 1 1 1 1 0 0
1988 0 0 0 11 34 -4 167 167 167 165 -2 -2
1989 0 0 0 0 14 -1 147 -27 -27 -27 0 0
1990 0 0 0 0 126 -4 330 176 151 0 -151 -176
1991 0 0 0 0 0 0 12883 7327 7693 13606 5913 6279
1992 0 0 0 0 0 0 10763 6499 5701 6790 1089 291
1993 0 0 0 0 0 0 0 5377 4078 4493 415 -884
1994 0 0 0 0 0 0 0 0 4099 3659 -440 0
1995 0 0 0 0 0 0 0 0 0 5694 0 0
TOTAL 6348 4674
</TABLE>
SCHEDULE P - PART 2I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY & THEFT)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 22232 17078 17276 198 -4956
1994 0 0 0 0 0 0 0 0 41405 42050 645 0
1995 0 0 0 0 0 0 0 0 0 44710 0 0
TOTAL 843 -4956
</TABLE>
SCHEDULE P - PART 2J AUTO PHYSICAL DAMAGE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 20819 9986 7938 -2048 -12881
1994 0 0 0 0 0 0 0 0 148499 139885 -8614 0
1995 0 0 0 0 0 0 0 0 0 161071 0 0
TOTAL -10662 -12881
</TABLE>
SCHEDULE P - PART 2K FIDELITY / SURETY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 6057 3293 2251 -1042 -3806
1994 0 0 0 0 0 0 0 0 2834 2001 -833 0
1995 0 0 0 0 0 0 0 0 0 2588 0 0
TOTAL -1875 -3806
</TABLE>
SCHEDULE P - PART 2L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 66937 51561 46145 -5416 -20792
1994 0 0 0 0 0 0 0 0 63879 57465 -6414 0
1995 0 0 0 0 0 0 0 0 0 59434 0 0
TOTAL -11830 -20792
</TABLE>
SCHEDULE P - PART 2M INTERNATIONAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 116 -6 -6 -6 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
<PAGE>
SCHEDULE P - PART 2N REINSURANCE A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 929 1093 1036 1140 1153 1384 1356 -28 203
1990 0 0 0 0 0 0 -133 -489 -307 -264 43 225
1991 0 0 0 0 0 0 -602 -1074 -789 -478 311 596
1992 0 0 0 0 0 0 27601 20506 22820 22439 -381 1933
1993 0 0 0 0 0 0 0 2749 4051 3776 -275 1027
1994 0 0 0 0 0 0 0 0 0 -136 -136 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL -518 3992
</TABLE>
SCHEDULE P - PART 2O REINSURANCE B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 873 -1478 224 637 413 2115
1990 0 0 0 0 6172 0 1403 -2185 940 1868 928 4053
1991 0 0 0 0 0 0 -537 -4529 -1872 -1268 604 3261
1992 0 0 0 0 0 0 9867 1585 4413 6229 1816 4644
1993 0 0 0 0 0 0 0 262 1551 2667 1116 2405
1994 0 0 0 0 0 0 0 0 0 1174 1174 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 4967 16804
</TABLE>
SCHEDULE P - PART 2P REINSURANCE C
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
SCHEDULE P - PART 2Q REINSURANCE D
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 68206 89582 97875 112132 130041 154503 169796 232878 237235 310159 72924 77281
1986 5214 4203 4010 0 0 0 -287 -101 -107 421 528 522
1987 0 0 0 0 0 0 -186 -321 -20 276 296 597
1988 0 0 0 0 0 0 0 0 0 0 73748 78400
TOTAL 73748 78400
</TABLE>
SCHEDULE P - PART 2R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 3582 3154 4351 5001 9397 4800 3416 3359 3399 3631 232 272
1986 1491 1665 2601 2646 4324 3064 2795 3393 3430 4113 683 720
1987 0 2230 2746 3684 6367 3775 2753 2654 2863 2956 93 302
1988 0 0 2567 4426 9739 6438 4353 4500 4629 5315 686 815
1989 0 0 0 3192 6654 5408 3337 3740 3414 4364 950 624
1990 0 0 0 0 3642 4190 3544 4293 3250 4348 1098 55
1991 0 0 0 0 0 4507 3338 5109 5263 6318 1055 1209
1992 0 0 0 0 0 0 1928 3170 3759 4194 435 1024
1993 0 0 0 0 0 0 0 2778 2841 3065 224 287
1994 0 0 0 0 0 0 0 0 1840 2488 648 0
1995 0 0 0 0 0 0 0 0 0 2116 0 0
TOTAL 6104 5308
</TABLE>
SCHEDULE P - PART 2R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
SCHEDULE P - PART 2S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
TOTAL 0 0
</TABLE>
SCHEDULE P - PART 3A HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 5768 9440 12172 12687 13903 14226 15128 15416 16157 10927 257
1986 61725 79506 81732 83858 84807 85180 85522 85629 85841 85988 48482 2341
1987 0 66392 82966 85855 87230 88116 88559 89001 89323 89486 57938 3064
1988 0 0 89234 113947 116302 118940 120430 122194 122852 123291 62766 3632
1989 0 0 0 106859 137398 141267 143360 144236 144969 145436 73171 5252
1990 0 0 0 0 113400 148002 153492 156059 157586 159059 81957 7623
1991 0 0 0 0 0 125957 159931 167329 170483 172330 77239 7050
1992 0 0 0 0 0 0 118115 151094 159731 163250 60768 5661
1993 0 0 0 0 0 0 0 124303 154978 160309 62290 4777
1994 0 0 0 0 0 0 0 0 125964 158573 53696 6015
1995 0 0 0 0 0 0 0 0 0 108470 43119 14038
</TABLE>
<PAGE>
SCHEDULE P - PART 3B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 46105 61335 72546 75910 78626 80371 84641 81884 81741 5847 690
1986 58028 110077 127078 140861 145397 148560 149719 149949 150410 150609 47371 8525
1987 0 65172 103615 135821 150938 158408 161160 163038 163556 163715 64746 12714
1988 0 0 85573 159413 195726 213152 219524 222724 223986 225211 68192 14829
1989 0 0 0 90971 167497 204054 220367 228126 232691 235523 71442 15209
1990 0 0 0 0 97913 186523 227719 247450 255891 259274 69127 14786
1991 0 0 0 0 0 90118 172244 211454 230632 238983 60072 12900
1992 0 0 0 0 0 0 82707 157035 191321 206988 53512 11765
1993 0 0 0 0 0 0 0 81601 149324 185060 53378 11585
1994 0 0 0 0 0 0 0 0 77916 142625 43017 11334
1995 0 0 0 0 0 0 0 0 0 75454 31638 11884
</TABLE>
SCHEDULE P - PART 3C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 33710 49889 57610 63291 65953 67113 67700 68220 70111 6771 688
1986 24372 51899 70242 84871 91278 96190 98563 99799 100938 101029 23817 4068
1987 0 29315 60999 88069 104592 112367 115160 116360 117233 117567 27797 5102
1988 0 0 37192 75777 109876 128506 138192 142993 145439 145976 33018 6243
1989 0 0 0 42107 92119 126602 150989 162769 169911 173522 35864 6859
1990 0 0 0 0 48312 107231 141941 164882 177433 183782 33322 6609
1991 0 0 0 0 0 41264 97238 135960 157116 165704 30780 6395
1992 0 0 0 0 0 0 39023 83864 116895 132745 23575 5025
1993 0 0 0 0 0 0 0 35849 74689 105420 21408 4443
1994 0 0 0 0 0 0 0 0 36092 72404 19425 4547
1995 0 0 0 0 0 0 0 0 0 32694 14296 4863
</TABLE>
SCHEDULE P - PART 3D WORKERS' COMPENSATION
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 38645 60410 75396 84145 92067 96972 99849 104441 107537 5588 776
1986 26377 63984 81819 91113 95278 99309 101411 102646 104130 105273 38106 3162
1987 0 29150 74319 96066 106184 113960 119096 120988 123008 124048 48591 4439
1988 0 0 36058 97062 126153 143666 153460 158294 162278 164612 58209 6037
1989 0 0 0 44020 103658 140081 160439 169739 176157 179463 61511 6281
1990 0 0 0 0 52140 119287 157200 174542 186435 194071 53447 5352
1991 0 0 0 0 0 50477 115234 144926 163582 174162 44418 4873
1992 0 0 0 0 0 0 40039 80234 104254 116321 32444 3449
1993 0 0 0 0 0 0 0 33989 76013 95307 24444 2394
1994 0 0 0 0 0 0 0 0 26401 62018 21068 2462
1995 0 0 0 0 0 0 0 0 0 25360 13734 3604
</TABLE>
SCHEDULE P - PART 3E COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 24471 44943 62858 70047 76364 81026 84333 87087 89737 4261 477
1986 49028 72414 77792 90045 97340 102487 107451 109710 111142 112360 29235 5415
1987 0 53980 73770 87146 99355 110626 116857 121128 125033 127719 34163 6961
1988 0 0 73177 107791 125827 143425 150500 158453 165627 173538 40377 9321
1989 0 0 0 96368 147864 174270 194985 213394 226023 240183 49191 12478
1990 0 0 0 0 94314 151256 180507 208200 228889 244192 49343 13023
1991 0 0 0 0 0 118238 172345 195557 219705 239062 46247 12997
1992 0 0 0 0 0 0 119425 176833 214538 240534 38939 11080
1993 0 0 0 0 0 0 0 104766 151005 176708 36138 9660
1994 0 0 0 0 0 0 0 0 103435 150093 32466 10533
1995 0 0 0 0 0 0 0 0 0 104748 25435 13619
</TABLE>
SCHEDULE P - PART 3F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 335 303 468 567 576 539 542 544 544 22 34
1986 4 4 4 7 21 219 219 219 219 219 3 7
1987 0 -1 -1 -1 -1 -1 -7 -7 -7 -7 1 0
1988 0 0 0 0 3 3 5 4 7 8 0 0
1989 0 0 0 0 15 57 243 244 244 244 7 0
1990 0 0 0 0 0 0 0 0 0 0 0 4
1991 0 0 0 0 0 0 0 0 0 0 0 3
1992 0 0 0 0 0 0 0 -7 7 139 12 5
1993 0 0 0 0 0 0 0 0 20 22 3 3
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 26 26 27 27 27 -53 -57 -55 4 0 0
1986 327 551 554 554 554 554 554 553 553 590 0 0
1987 0 329 422 425 425 426 415 418 418 421 0 0
1988 0 0 517 599 694 693 621 624 625 649 0 0
1989 0 0 0 446 618 618 579 598 600 620 0 0
1990 0 0 0 0 485 687 674 674 675 675 0 0
1991 0 0 0 0 0 405 545 588 589 589 0 0
1992 0 0 0 0 0 0 402 629 639 641 0 0
1993 0 0 0 0 0 0 0 670 800 809 0 0
1994 0 0 0 0 0 0 0 0 867 1481 0 0
1995 0 0 0 0 0 0 0 0 0 478 0 0
</TABLE>
<PAGE>
SCHEDULE P - PART 3H SECTION 1 OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 38667 65397 90930 106950 117599 121529 125021 132949 149160 4707 2763
1986 7099 17357 26816 37030 45279 49110 51886 53563 54561 55775 9261 2622
1987 0 7718 16801 28897 39222 46195 48719 52542 54000 56914 10716 2959
1988 0 0 8737 19915 34927 47287 56781 62335 67247 70165 11368 3211
1989 0 0 0 10232 22548 37279 50685 56903 64753 69741 10945 3289
1990 0 0 0 0 12627 22732 43882 54211 64196 72734 14271 2757
1991 0 0 0 0 0 7914 20586 34568 49013 60002 13987 2419
1992 0 0 0 0 0 0 8191 19277 33746 44344 5631 2371
1993 0 0 0 0 0 0 0 9970 26695 38363 5163 1860
1994 0 0 0 0 0 0 0 0 7062 16482 4359 1703
1995 0 0 0 0 0 0 0 0 0 5375 2856 1472
</TABLE>
SCHEDULE P - PART 3H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 34 396 410 417 0 0
1986 0 4 0 0 -10 -10 -10 -4 -4 -4 59 112
1987 0 1 12 12 12 12 1 1 1 1 89 95
1988 0 0 0 0 -4 -4 167 167 167 165 58 60
1989 0 0 0 0 -1 -1 -18 -27 -27 -27 58 65
1990 0 0 0 0 -4 -4 21 0 0 0 80 112
1991 0 0 0 0 0 0 2527 2873 3264 11372 59 113
1992 0 0 0 0 0 0 23 855 1605 5002 45 139
1993 0 0 0 0 0 0 0 1564 1720 2139 30 121
1994 0 0 0 0 0 0 0 0 173 1438 22 93
1995 0 0 0 0 0 0 0 0 0 92 6 32
</TABLE>
SCHEDULE P - PART 3I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLARY & THEFT)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 12276 15735 0 0
1994 0 0 0 0 0 0 0 0 31613 40015 0 0
1995 0 0 0 0 0 0 0 0 0 35560 0 0
</TABLE>
SCHEDULE P - PART 3J AUTO PHYSICAL DAMAGE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 7636 6863 313 275
1994 0 0 0 0 0 0 0 0 131058 138907 131902 10260
1995 0 0 0 0 0 0 0 0 0 143766 117192 21586
</TABLE>
SCHEDULE P - PART 3K FIDELITY / SURETY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 784 878 0 0
1994 0 0 0 0 0 0 0 0 554 1248 0 0
1995 0 0 0 0 0 0 0 0 0 304 0 0
</TABLE>
SCHEDULE P - PART 3L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 30169 33937 0 0
1994 0 0 0 0 0 0 0 0 26325 44471 0 0
1995 0 0 0 0 0 0 0 0 0 21434 0 0
</TABLE>
SCHEDULE P - PART 3M INTERNATIONAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 -6 -6 -6 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3N REINSURANCE A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 140 964 946 754 950 1160 1061 0 0
1990 0 0 0 0 0 0 -598 -637 -489 -533 0 0
1991 0 0 0 0 0 0 -2068 -1389 -1343 -1161 0 0
1992 0 0 0 0 0 0 10521 18761 20489 20751 0 0
1993 0 0 0 0 0 0 0 2321 2977 3240 0 0
1994 0 0 0 0 0 0 0 0 0 -168 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3O REINSURANCE B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 -2378 -2031 -1885 -1827 0 0
1990 0 0 0 0 0 0 -3179 -2682 -2138 -2133 0 0
1991 0 0 0 0 0 0 -4916 -4945 -4278 -4356 0 0
1992 0 0 0 0 0 0 599 1117 1770 -720 0 0
1993 0 0 0 0 0 0 0 143 340 7 0 0
1994 0 0 0 0 0 0 0 0 0 -741 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
<PAGE>
SCHEDULE P - PART 3P REINSURANCE C
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3Q REINSURANCE D
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 22438 46067 32126 60320 77381 73163 84573 89809 88330 0 0
1986 974 -37 0 0 0 0 -950 -647 -632 -739 0 0
1987 0 0 0 0 0 0 -657 -562 -469 -684 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 862 1290 138 1028 1832 2304 2467 2489 2569 5 7
1986 299 622 926 1407 1877 2279 2677 2892 3316 3655 36 55
1987 0 227 283 663 1197 2364 2414 2470 2592 2696 65 64
1988 0 0 298 769 1464 3317 3693 3779 3873 4322 79 83
1989 0 0 0 392 691 1318 1666 1878 2284 3026 202 130
1990 0 0 0 0 179 825 1071 1195 1564 2292 706 249
1991 0 0 0 0 0 553 786 1400 2187 2700 878 216
1992 0 0 0 0 0 0 101 172 781 1951 100 76
1993 0 0 0 0 0 0 0 69 231 481 110 63
1994 0 0 0 0 0 0 0 0 91 236 85 55
1995 0 0 0 0 0 0 0 0 0 106 53 69
</TABLE>
SCHEDULE P - PART 3R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 3S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4A HOMEOWNERS/FARMOWNERS
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 5099 395 227 132 141 141 38 1857 69 22
1986 12268 1630 324 209 91 97 42 14 12 11
1987 0 19637 2774 263 230 203 46 18 9 5
1988 0 0 21531 2405 654 780 223 60 18 13
1989 0 0 0 33127 3648 1104 179 77 47 19
1990 0 0 0 0 34711 4923 792 391 115 64
1991 0 0 0 0 0 29706 4701 731 306 194
1992 0 0 0 0 0 0 26630 2440 718 357
1993 0 0 0 0 0 0 0 16846 3987 677
1994 0 0 0 0 0 0 0 0 22197 4196
1995 0 0 0 0 0 0 0 0 0 11488
</TABLE>
SCHEDULE P - PART 4B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 3046 509 28 12 7 10 2 21 25 16
1986 41102 2094 520 43 49 36 7 13 11 3
1987 0 48612 7552 1643 1054 101 21 13 28 16
1988 0 0 51737 10571 3602 763 58 33 49 31
1989 0 0 0 46258 15874 5005 1326 80 36 24
1990 0 0 0 0 53278 19611 3289 740 144 38
1991 0 0 0 0 0 56431 12233 1467 699 104
1992 0 0 0 0 0 0 48577 6491 5011 466
1993 0 0 0 0 0 0 0 40230 9101 2133
1994 0 0 0 0 0 0 0 0 32944 10786
1995 0 0 0 0 0 0 0 0 0 32549
</TABLE>
SCHEDULE P - PART 4C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 2477 1554 117 28 29 8 6 2591 781 140
1986 32983 5633 2416 436 294 104 31 12 6 53
1987 0 37112 10400 4713 2378 389 163 77 105 110
1988 0 0 38916 12526 6938 1910 363 994 211 342
1989 0 0 0 45824 22413 8578 1134 682 323 819
1990 0 0 0 0 63143 24978 9737 1648 669 1065
1991 0 0 0 0 0 73923 25023 9256 4542 3803
1992 0 0 0 0 0 0 73000 19723 13494 12015
1993 0 0 0 0 0 0 0 51302 24500 10684
1994 0 0 0 0 0 0 0 0 42725 20632
1995 0 0 0 0 0 0 0 0 0 40805
</TABLE>
<PAGE>
SCHEDULE P - PART 4D WORKERS' COMPENSATION
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 6052 2831 2796 1902 2420 4322 6074 7153 5530 5838
1986 55103 5814 2416 1569 1330 2135 2693 2356 1964 1972
1987 0 65296 13956 3764 3878 3585 4450 3705 3484 3103
1988 0 0 67397 20984 11331 8829 6122 5044 4873 4294
1989 0 0 0 75712 29108 19441 14789 7225 6334 6437
1990 0 0 0 0 86055 38400 23450 18240 8159 7822
1991 0 0 0 0 0 92736 42931 28746 13554 8264
1992 0 0 0 0 0 0 86312 39160 21067 8809
1993 0 0 0 0 0 0 0 80969 25054 10871
1994 0 0 0 0 0 0 0 0 57210 18643
1995 0 0 0 0 0 0 0 0 0 42151
</TABLE>
SCHEDULE P - PART 4E COMMERCIAL MULTIPLE PERIL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 11491 6923 9514 4920 3011 2716 6996 8760 6754 8830
1986 59618 15173 2967 4882 5960 1668 3410 2693 3778 4605
1987 0 83866 34298 13725 10503 6088 6095 5073 6303 5772
1988 0 0 89237 37024 24133 13472 10918 11067 8972 8376
1989 0 0 0 111411 56704 33285 30992 18144 18916 24841
1990 0 0 0 0 130753 71188 45917 33478 27711 31859
1991 0 0 0 0 0 153703 90415 56161 44166 38236
1992 0 0 0 0 0 0 144405 70176 49533 35915
1993 0 0 0 0 0 0 0 122241 63409 30690
1994 0 0 0 0 0 0 0 0 99655 39497
1995 0 0 0 0 0 0 0 0 0 69110
</TABLE>
SCHEDULE P - PART 4F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 534 232 229 38 39 90 37 47 0 0
1986 87 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 9 0 0 0
1988 0 0 0 0 34 42 42 45 44 34
1989 0 0 0 56 6 20 21 0 0 0
1990 0 0 0 0 0 47 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 189 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 1 7 0 0 0 0 0 38 0 0
1986 140 0 0 0 0 0 0 0 0 0
1987 0 107 0 0 0 0 0 0 0 0
1988 0 0 147 6 6 6 0 0 0 0
1989 0 0 0 151 0 0 0 0 0 0
1990 0 0 0 0 250 0 8 0 0 0
1991 0 0 0 0 0 186 14 0 0 0
1992 0 0 0 0 0 0 349 0 0 0
1993 0 0 0 0 0 0 0 105 0 0
1994 0 0 0 0 0 0 0 0 66 0
1995 0 0 0 0 0 0 0 0 0 178
</TABLE>
SCHEDULE P - PART 4H SECTION 1 OTHER LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 11395 6738 5413 3145 3755 3731 13559 10459 17285 17196
1986 52673 11611 5731 3883 3955 1084 1885 1178 1460 1709
1987 0 37878 27740 13547 7095 6042 4270 2056 1757 1842
1988 0 0 51881 30674 12983 9530 8699 4558 2652 2780
1989 0 0 0 57150 24726 18932 16076 11582 5545 4295
1990 0 0 0 0 47092 25306 17219 18868 16593 6258
1991 0 0 0 0 0 65291 39103 22580 20130 14255
1992 0 0 0 0 0 0 46394 31486 23725 17061
1993 0 0 0 0 0 0 0 58266 36011 24283
1994 0 0 0 0 0 0 0 0 54928 31766
1995 0 0 0 0 0 0 0 0 0 41703
</TABLE>
SCHEDULE P - PART 4H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 190 0 0 0 0 374 983 700 259
1986 926 271 0 0 61 0 3 0 0 91
1987 0 1716 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 88 0 0 0
1990 0 0 0 0 82 0 14 0 0 0
1991 0 0 0 0 0 0 30 0 0 0
1992 0 0 0 0 0 0 0 31 25 21
1993 0 0 0 0 0 0 0 54 62 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 21
</TABLE>
<PAGE>
SCHEDULE P - PART 4I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE,
EARTHQUAKE, GLASS, BURGLA
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 7816 72 21
1994 0 0 0 0 0 0 0 0 3855 13
1995 0 0 0 0 0 0 0 0 0 1343
</TABLE>
SCHEDULE P - PART 4J AUTO PHYSICAL DAMAGE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 10698 1131 933
1994 0 0 0 0 0 0 0 0 8000 463
1995 0 0 0 0 0 0 0 0 0 2791
</TABLE>
SCHEDULE P - PART 4K FIDELITY / SURETY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 1176 0 0
1994 0 0 0 0 0 0 0 0 1075 0
1995 0 0 0 0 0 0 0 0 0 1053
</TABLE>
SCHEDULE P - PART 4L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 45106 15460 8286
1994 0 0 0 0 0 0 0 0 27887 9168
1995 0 0 0 0 0 0 0 0 0 27692
</TABLE>
SCHEDULE P - PART 4M INTERNATIONAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 116 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4N REINSURANCE A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 26 0 0 0 0 0 34
1990 0 0 0 0 0 0 0 0 0 56
1991 0 0 0 0 0 0 0 0 0 85
1992 0 0 0 0 0 0 8524 0 500 64
1993 0 0 0 0 0 0 0 0 500 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4O REINSURANCE B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 1604 0 900 1351
1990 0 0 0 0 6172 0 2419 0 1400 1803
1991 0 0 0 0 0 0 3085 0 1400 1306
1992 0 0 0 0 0 0 8521 0 1400 2570
1993 0 0 0 0 0 0 0 0 500 805
1994 0 0 0 0 0 0 0 0 0 1576
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4P REINSURANCE C
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4Q REINSURANCE D
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 32655 32548 22405 10996 6304 16405 16228 48529 43584 111153
1986 2 2 4 0 0 0 0 0 0 600
1987 0 0 0 0 0 0 0 0 0 302
1988 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 1399 67 42 182 318 113 70 197 140 17
1986 817 317 148 160 513 25 3 53 49 72
1987 0 1418 1522 912 1542 272 136 57 82 136
1988 0 0 1442 1410 2361 1407 303 219 89 39
1989 0 0 0 1912 3370 1910 955 763 404 558
1990 0 0 0 0 2401 1830 1022 1497 441 767
1991 0 0 0 0 0 2255 936 1679 1406 714
1992 0 0 0 0 0 0 963 1162 1060 830
1993 0 0 0 0 0 0 0 1238 1109 799
1994 0 0 0 0 0 0 0 0 1225 1151
1995 0 0 0 0 0 0 0 0 0 1524
</TABLE>
<PAGE>
SCHEDULE P - PART 4R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 4S FINANCIAL GUARANTY / MORTGAGE GUARANTY
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 8036 586 245 91 55 53 15 15 13 6
1986 41347 47836 48242 48349 48416 48455 48464 48469 48478 48482
1987 0 46424 57311 57647 57788 57894 57914 57923 57931 57938
1988 0 0 53400 61138 61558 62647 62704 62739 62759 62766
1989 0 0 0 54081 65023 72965 73069 73134 73157 73171
1990 0 0 0 0 63447 81278 81731 81861 81919 81957
1991 0 0 0 0 0 67986 76574 77053 77180 77239
1992 0 0 0 0 0 0 52540 60318 60666 60768
1993 0 0 0 0 0 0 0 55678 61978 62290
1994 0 0 0 0 0 0 0 0 47715 53696
1995 0 0 0 0 0 0 0 0 0 43119
</TABLE>
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 735 313 154 123 73 34 43 37 17 11
1986 2014 398 149 88 38 17 18 16 8 6
1987 0 2586 413 182 85 34 21 16 11 9
1988 0 0 2722 419 210 130 70 37 18 16
1989 0 0 0 4063 485 153 104 64 31 14
1990 0 0 0 0 4406 441 229 120 57 22
1991 0 0 0 0 0 3785 577 233 121 67
1992 0 0 0 0 0 0 3369 506 226 121
1993 0 0 0 0 0 0 0 2427 469 200
1994 0 0 0 0 0 0 0 0 2322 414
1995 0 0 0 0 0 0 0 0 0 5747
</TABLE>
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS
SECTION 3
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 44647 50260 50534 50605 50637 50668 50681 50694 50702 50707
1987 0 50815 60131 60362 60453 60552 60565 60580 60589 60597
1988 0 0 58418 64671 64993 66241 66275 66304 66318 66329
1989 0 0 0 59454 68232 76197 76282 76349 76366 76379
1990 0 0 0 0 72941 88957 89298 89428 89470 89496
1991 0 0 0 0 0 77053 83878 84282 84375 84415
1992 0 0 0 0 0 0 59799 66009 66287 66370
1993 0 0 0 0 0 0 0 61538 67009 67261
1994 0 0 0 0 0 0 0 0 53641 60124
1995 0 0 0 0 0 0 0 0 0 62905
</TABLE>
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 10413 2475 928 320 131 113 32 16 23 9
1986 35024 45026 46527 46988 47155 47314 47339 47349 47360 47371
1987 0 49461 62117 63662 64144 64625 64688 64721 64739 64746
1988 0 0 51786 63957 65547 67925 68072 68147 68179 68192
1989 0 0 0 49098 61845 70656 71116 71288 71392 71442
1990 0 0 0 0 48728 66717 68286 68786 69030 69127
1991 0 0 0 0 0 47261 57771 59261 59854 60072
1992 0 0 0 0 0 0 41280 51271 52959 53512
1993 0 0 0 0 0 0 0 41908 51806 53378
1994 0 0 0 0 0 0 0 0 33693 43017
1995 0 0 0 0 0 0 0 0 0 31638
</TABLE>
<PAGE>
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 4136 1490 837 351 181 103 67 55 40 36
1986 9722 2445 1049 370 161 69 35 26 18 12
1987 0 14100 3312 1082 435 182 82 35 20 13
1988 0 0 14618 3257 1100 383 192 94 43 29
1989 0 0 0 13575 3274 1090 436 206 92 41
1990 0 0 0 0 13483 3192 1177 466 180 73
1991 0 0 0 0 0 11686 3053 1099 417 157
1992 0 0 0 0 0 0 11045 2811 1007 384
1993 0 0 0 0 0 0 0 10767 2714 1015
1994 0 0 0 0 0 0 0 0 10536 2827
1995 0 0 0 0 0 0 0 0 0 12669
</TABLE>
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
SECTION 3
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 46500 54589 55027 55142 55196 55362 55372 55380 55383 55393
1987 0 72168 76796 77193 77344 77915 77935 77956 77961 77966
1988 0 0 73608 80348 80921 84063 84114 84144 84154 84159
1989 0 0 0 69291 77248 84909 85065 85127 85156 85166
1990 0 0 0 0 67288 81286 81834 82026 82073 82094
1991 0 0 0 0 0 61649 67312 67889 68016 68048
1992 0 0 0 0 0 0 55002 60404 60825 60926
1993 0 0 0 0 0 0 0 54359 59161 59500
1994 0 0 0 0 0 0 0 0 52172 57178
1995 0 0 0 0 0 0 0 0 0 56191
</TABLE>
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 6561 1354 536 183 89 67 19 9 3 8
1986 16755 22471 23282 23576 23684 23781 23800 23809 23813 23817
1987 0 20556 26349 27171 27461 27712 27757 27779 27789 27797
1988 0 0 24628 30875 31698 32826 32933 32986 33011 33018
1989 0 0 0 24374 30701 35258 35631 35794 35839 35864
1990 0 0 0 0 22275 31553 32684 33145 33262 33322
1991 0 0 0 0 0 22749 27941 30341 30640 30780
1992 0 0 0 0 0 0 17650 22661 23316 23575
1993 0 0 0 0 0 0 0 16966 20703 21408
1994 0 0 0 0 0 0 0 0 15750 19425
1995 0 0 0 0 0 0 0 0 0 14291
</TABLE>
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 2404 981 429 203 114 63 60 42 36 79
1986 4274 1386 593 222 108 45 26 18 14 19
1987 0 4990 1501 526 233 98 49 32 22 20
1988 0 0 5402 1412 573 263 110 64 37 28
1989 0 0 0 5501 1519 682 338 137 158 125
1990 0 0 0 0 5459 2898 2705 1161 1036 980
1991 0 0 0 0 0 8998 4471 888 519 376
1992 0 0 0 0 0 0 4689 1409 626 299
1993 0 0 0 0 0 0 0 3840 1328 540
1994 0 0 0 0 0 0 0 0 3885 1333
1995 0 0 0 0 0 0 0 0 0 4563
</TABLE>
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 3
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 22912 27241 27559 27637 27666 27688 27694 27701 27710 27726
1987 0 28226 32066 32265 32370 32526 32539 32551 32560 32581
1988 0 0 33702 37655 37993 39012 39041 39070 39090 39110
1989 0 0 0 33532 37805 41998 42130 42160 42284 42303
1990 0 0 0 0 30884 39927 41021 40245 40826 40875
1991 0 0 0 0 0 36213 38168 36732 37422 37474
1992 0 0 0 0 0 0 25527 27729 28629 28687
1993 0 0 0 0 0 0 0 23788 26194 26391
1994 0 0 0 0 0 0 0 0 22588 25305
1995 0 0 0 0 0 0 0 0 0 23714
</TABLE>
SCHEDULE P - PART 5D WORKERS' COMPENSATION
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 10978 3731 1554 684 456 335 167 107 92 67
1986 24365 34688 36737 37394 37694 37921 38009 38047 38085 38106
1987 0 32608 45345 47104 47734 48276 48434 48508 48559 48591
1988 0 0 40963 53390 55153 57577 57906 58060 58145 58209
1989 0 0 0 39869 51942 60133 60920 61254 61425 61511
1990 0 0 0 0 34507 50355 52201 52930 53263 53447
1991 0 0 0 0 0 31676 41592 43431 44078 44418
1992 0 0 0 0 0 0 23357 30751 32004 32444
1993 0 0 0 0 0 0 0 17824 23575 24444
1994 0 0 0 0 0 0 0 0 16020 21068
1995 0 0 0 0 0 0 0 0 0 13734
</TABLE>
<PAGE>
SCHEDULE P - PART 5D WORKERS' COMPENSATION
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 5238 2625 1928 1233 981 746 591 526 475 416
1986 6752 2791 1251 597 379 264 172 140 102 91
1987 0 9259 2998 1126 666 399 241 178 130 89
1988 0 0 10017 2941 1436 758 407 278 202 138
1989 0 0 0 9491 3226 1507 743 424 257 182
1990 0 0 0 0 9579 3335 1526 859 482 316
1991 0 0 0 0 0 8831 3179 1514 844 482
1992 0 0 0 0 0 0 6320 2206 1008 556
1993 0 0 0 0 0 0 0 4872 1583 764
1994 0 0 0 0 0 0 0 0 4236 1553
1995 0 0 0 0 0 0 0 0 0 5380
</TABLE>
SCHEDULE P - PART 5D WORKERS' COMPENSATION
SECTION 3
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 32393 40057 40575 40698 40770 40590 40607 40615 40622 40636
1987 0 44070 51674 51838 52014 52029 52054 52070 52081 52085
1988 0 0 54566 61586 62042 63599 63640 63666 63689 63697
1989 0 0 0 52629 60175 66396 66565 66604 66644 66672
1990 0 0 0 0 47009 58548 58881 58974 59005 59034
1991 0 0 0 0 0 43389 49171 49476 49578 49607
1992 0 0 0 0 0 0 31819 35813 36058 36115
1993 0 0 0 0 0 0 0 24213 27422 27600
1994 0 0 0 0 0 0 0 0 21673 25082
1995 0 0 0 0 0 0 0 0 0 22719
</TABLE>
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 7507 1144 699 314 196 148 58 47 38 35
1986 21370 27630 28354 28697 28901 29071 29131 29177 29206 29235
1987 0 24201 32352 33189 33538 33863 33996 34068 34118 34163
1988 0 0 29036 37394 38375 39853 40045 40189 40282 40377
1989 0 0 0 31892 41972 48077 48530 48837 49031 49191
1990 0 0 0 0 33070 47106 48266 48828 49126 49343
1991 0 0 0 0 0 35181 44211 45401 45950 46247
1992 0 0 0 0 0 0 29800 37501 38487 38939
1993 0 0 0 0 0 0 0 28830 35354 36138
1994 0 0 0 0 0 0 0 0 26072 32466
1995 0 0 0 0 0 0 0 0 0 25435
</TABLE>
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 2816 2010 917 539 335 293 380 231 222 190
1986 3658 1339 767 494 294 175 156 106 110 97
1987 0 4861 1637 782 483 311 208 181 175 125
1988 0 0 5842 1728 925 547 377 303 258 197
1989 0 0 0 6603 2086 1137 761 516 425 330
1990 0 0 0 0 6787 2281 1294 828 554 401
1991 0 0 0 0 0 6799 2524 1436 831 493
1992 0 0 0 0 0 0 5722 2253 1178 671
1993 0 0 0 0 0 0 0 5375 1981 1145
1994 0 0 0 0 0 0 0 0 5468 2011
1995 0 0 0 0 0 0 0 0 0 7925
</TABLE>
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL
SECTION 3
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 27271 32910 33614 33914 34084 34274 34380 34447 34532 34591
1987 0 32272 39063 39677 39981 40379 40506 40635 40769 40850
1988 0 0 39436 46362 47194 49153 49352 49548 49729 49846
1989 0 0 0 44592 53426 59747 60248 60577 60890 61101
1990 0 0 0 0 46392 60469 61586 62103 62451 62691
1991 0 0 0 0 0 49586 57785 58857 59371 59601
1992 0 0 0 0 0 0 42003 49109 49970 50385
1993 0 0 0 0 0 0 0 40100 46146 46943
1994 0 0 0 0 0 0 0 0 37660 45007
1995 0 0 0 0 0 0 0 0 0 46978
</TABLE>
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
SECTION 1A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 4 14 8 3 2 0 0 0 0 0
1986 0 0 0 0 0 3 3 3 3 3
1987 0 1 1 1 1 1 1 1 1 1
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 3 3 7 7 7 7
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 4 5 8 12
1993 0 0 0 0 0 0 0 0 3 3
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
<PAGE>
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
SECTION 2A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 38 16 9 5 3 3 0 0 0 0
1986 4 0 0 4 3 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 1 3 3 4 4 3 3
1989 0 0 0 3 3 4 0 0 0 0
1990 0 0 0 0 0 3 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 5 0 4 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
SECTION 3A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 9 9 9 12 12 10 10 10 10 10
1987 0 1 1 1 1 1 1 1 1 1
1988 0 0 0 0 3 3 3 3 3 3
1989 0 0 0 3 5 6 6 6 6 6
1990 0 0 0 0 0 3 5 5 5 5
1991 0 0 0 0 0 3 3 3 3 3
1992 0 0 0 0 0 0 7 7 12 12
1993 0 0 0 0 0 0 0 4 7 7
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 1A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 3715 1440 716 466 248 137 68 234 229 47
1986 5593 8130 8605 8872 9034 9140 9185 9221 9241 9261
1987 0 7085 9632 10159 10358 10518 10592 10642 10677 10717
1988 0 0 7504 10091 10515 11070 11261 11355 11415 11460
1989 0 0 0 6833 8792 10237 10600 10788 10875 10945
1990 0 0 0 0 5550 13035 13775 14064 14177 14271
1991 0 0 0 0 0 11440 12861 13635 13860 13987
1992 0 0 0 0 0 0 3562 5171 5458 5631
1993 0 0 0 0 0 0 0 3583 4888 5170
1994 0 0 0 0 0 0 0 0 3261 4359
1995 0 0 0 0 0 0 0 0 0 2856
</TABLE>
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 2A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 3779 2163 1477 939 662 539 901 1048 1192 697
1986 1543 983 733 473 240 133 104 99 99 76
1987 0 1658 979 564 336 207 178 147 140 91
1988 0 0 1789 858 585 477 353 181 148 128
1989 0 0 0 1476 757 788 753 385 216 165
1990 0 0 0 0 1307 1717 1968 660 348 288
1991 0 0 0 0 0 2257 1498 624 709 594
1992 0 0 0 0 0 0 941 649 610 489
1993 0 0 0 0 0 0 0 1110 592 435
1994 0 0 0 0 0 0 0 0 983 570
1995 0 0 0 0 0 0 0 0 0 1151
</TABLE>
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 3A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 7769 10591 11212 11482 11594 11591 11640 11722 11802 11852
1987 0 9716 12464 12980 13186 13262 13345 13433 13538 13601
1988 0 0 10461 13042 13561 14009 14099 14188 14301 14410
1989 0 0 0 9587 11749 13051 13340 13380 13520 13637
1990 0 0 0 0 7889 17047 17838 17366 17352 17524
1991 0 0 0 0 0 15285 16369 16474 17173 17375
1992 0 0 0 0 0 0 5612 7245 8147 8446
1993 0 0 0 0 0 0 0 5479 6984 7463
1994 0 0 0 0 0 0 0 0 5052 6631
1995 0 0 0 0 0 0 0 0 0 5476
</TABLE>
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 1B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 32 19 2 3 1 0 0 0 3 0
1986 15 43 51 58 59 59 59 59 59 59
1987 0 30 65 75 80 83 85 86 89 89
1988 0 0 20 44 49 52 54 54 58 58
1989 0 0 0 12 40 46 50 51 55 58
1990 0 0 0 0 21 56 64 67 73 80
1991 0 0 0 0 0 15 41 50 55 59
1992 0 0 0 0 0 0 12 21 37 45
1993 0 0 0 0 0 0 0 8 22 30
1994 0 0 0 0 0 0 0 0 11 22
1995 0 0 0 0 0 0 0 0 0 6
</TABLE>
<PAGE>
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 2B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 29 6 3 3 0 0 0 0 37 8
1986 76 25 9 0 0 0 0 0 0 4
1987 0 107 47 23 10 7 5 5 4 4
1988 0 0 84 19 10 7 7 7 0 0
1989 0 0 0 83 24 13 11 10 5 5
1990 0 0 0 0 97 29 20 18 11 4
1991 0 0 0 0 0 100 39 29 14 8
1992 0 0 0 0 0 0 106 62 29 14
1993 0 0 0 0 0 0 0 111 60 29
1994 0 0 0 0 0 0 0 0 104 42
1995 0 0 0 0 0 0 0 0 0 113
</TABLE>
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 3B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 129 138 139 146 146 146 146 146 146 150
1987 0 162 172 176 176 177 177 177 177 177
1988 0 0 149 166 168 170 170 172 172 175
1989 0 0 0 131 142 145 145 145 145 149
1990 0 0 0 0 173 183 183 185 190 190
1991 0 0 0 0 0 167 170 170 173 173
1992 0 0 0 0 0 0 174 179 185 190
1993 0 0 0 0 0 0 0 147 170 174
1994 0 0 0 0 0 0 0 0 143 154
1995 0 0 0 0 0 0 0 0 0 147
</TABLE>
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 1A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 72 0 3 3 5
1986 0 0 0 0 0 28 28 31 34 38
1987 0 0 0 0 0 53 53 55 60 65
1988 0 0 0 0 0 63 63 68 74 79
1989 0 0 0 0 0 171 171 179 188 202
1990 0 0 0 0 0 670 672 686 696 706
1991 0 0 0 0 0 835 839 855 868 878
1992 0 0 0 0 0 0 40 68 84 100
1993 0 0 0 0 0 0 0 70 99 110
1994 0 0 0 0 0 0 0 0 59 85
1995 0 0 0 0 0 0 0 0 0 53
</TABLE>
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 2A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 46 23 18 17 8
1986 0 0 0 0 0 19 5 11 7 6
1987 0 0 0 0 0 16 8 8 10 7
1988 0 0 0 0 0 36 11 13 10 5
1989 0 0 0 0 0 54 23 23 21 20
1990 0 0 0 0 0 53 23 28 15 14
1991 0 0 0 0 0 64 31 45 37 28
1992 0 0 0 0 0 0 26 34 32 22
1993 0 0 0 0 0 0 0 29 25 25
1994 0 0 0 0 0 0 0 0 26 29
1995 0 0 0 0 0 0 0 0 0 42
</TABLE>
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 3A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 70 66 78 85 92
1987 0 0 0 0 0 111 111 117 130 136
1988 0 0 0 0 0 306 303 312 323 329
1989 0 0 0 0 0 782 779 793 807 826
1990 0 0 0 0 0 501 509 541 552 563
1991 0 0 0 0 0 352 356 402 424 438
1992 0 0 0 0 0 0 68 121 163 192
1993 0 0 0 0 0 0 0 121 166 194
1994 0 0 0 0 0 0 0 0 111 171
1995 0 0 0 0 0 0 0 0 0 164
</TABLE>
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 1B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
<PAGE>
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 2B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 3B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 222043 220748 220604
1994 0 0 0 0 0 0 0 0 197471 193368
1995 0 0 0 0 0 0 0 0 0 190078
</TABLE>
SCHEDULE P - PART 6C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 6550 6701 6726
1994 0 0 0 0 0 0 0 0 3404 3501
1995 0 0 0 0 0 0 0 0 0 3181
</TABLE>
SCHEDULE P - PART 6D WORKERS' COMPENSATION
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 238981 225370 224973
1994 0 0 0 0 0 0 0 0 219279 202989
1995 0 0 0 0 0 0 0 0 0 220290
</TABLE>
SCHEDULE P - PART 6D WORKERS' COMPENSATION
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 1721 1769 1757
1994 0 0 0 0 0 0 0 0 1274 1556
1995 0 0 0 0 0 0 0 0 0 1093
</TABLE>
<PAGE>
SCHEDULE P - PART 6E COMMERCIAL MULTIPLE PERIL
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 396815 418417 418399
1994 0 0 0 0 0 0 0 0 360600 367827
1995 0 0 0 0 0 0 0 0 0 363569
</TABLE>
SCHEDULE P - PART 6E COMMERCIAL MULTIPLE PERIL
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 12741 15876 15892
1994 0 0 0 0 0 0 0 0 12381 12448
1995 0 0 0 0 0 0 0 0 0 12277
</TABLE>
SCHEDULE P - PART 6H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 1A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 136736 155099 154874
1994 0 0 0 0 0 0 0 0 108478 110086
1995 0 0 0 0 0 0 0 0 0 103819
</TABLE>
SCHEDULE P - PART 6H SECTION 1 OTHER LIABILITY - OCCURRENCE
SECTION 2A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 14885 23751 23689
1994 0 0 0 0 0 0 0 0 12006 12152
1995 0 0 0 0 0 0 0 0 0 11669
</TABLE>
SCHEDULE P - PART 6H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 1B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 10504 9691 10692
1994 0 0 0 0 0 0 0 0 4788 4745
1995 0 0 0 0 0 0 0 0 0 5462
</TABLE>
SCHEDULE P - PART 6H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
SECTION 2B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 54 54 54
1994 0 0 0 0 0 0 0 0 71 71
1995 0 0 0 0 0 0 0 0 0 2
</TABLE>
<PAGE>
SCHEDULE P - PART 6M INTERNATIONAL
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 113 116 116
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6M INTERNATIONAL
ERR
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6N REINSURANCE A
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 4260 3791 2954
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6N REINSURANCE A
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 306 438 433
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6O REINSURANCE B
SECTION 1
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 4270 3800 3487
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6O REINSURANCE B
SECTION 2
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 16 31 31
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 1A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 4551 4705 4700
1994 0 0 0 0 0 0 0 0 4506 4723
1995 0 0 0 0 0 0 0 0 0 4606
</TABLE>
<PAGE>
SCHEDULE P - PART 6R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
SECTION 2A
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 19 19 19
1994 0 0 0 0 0 0 0 0 24 25
1995 0 0 0 0 0 0 0 0 0 25
</TABLE>
SCHEDULE P - PART 6R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 1B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
SCHEDULE P - PART 6R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
SECTION 2B
<TABLE>
<CAPTION>
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 0 0 0 0 0 0 0 0 0 0
1986 0 0 0 0 0 0 0 0 0 0
1987 0 0 0 0 0 0 0 0 0 0
1988 0 0 0 0 0 0 0 0 0 0
1989 0 0 0 0 0 0 0 0 0 0
1990 0 0 0 0 0 0 0 0 0 0
1991 0 0 0 0 0 0 0 0 0 0
1992 0 0 0 0 0 0 0 0 0 0
1993 0 0 0 0 0 0 0 0 0 0
1994 0 0 0 0 0 0 0 0 0 0
1995 0 0 0 0 0 0 0 0 0 0
</TABLE>
