<PAGE> 1
Post-Effective Amendment No. 1 (No. 33-59785)
Registration No. 333-______
As filed with the Securities and Exchange Commission on April 2, 1998
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
Lincoln National Corporation Lincoln National Capital III
(Exact name of registrant as Lincoln National Capital IV
specified in its charter) Lincoln National Capital V
Lincoln National Capital VI
(Exact name of each registrant as
Indiana specified in its Trust Agreement)
(State or other jurisdiction of Delaware
incorporation or organization) (State or other jurisdiction of
35-1140070 Incorporation or organization
(I.R.S. Employer of each registrant)
Identification Number) Each to be Applied for
200 East Berry Street (I.R.S. Employer
Fort Wayne, Indiana 46802-2706 Identification No.)
(219) 455-2000 c/o Lincoln National Corporation
(Address, including zip code, 200 East Berry Street
and telephone number, including Fort Wayne, Indiana 46802-2706
area code, of registrant's (219) 455-2000
principal executive offices) (Address, including zip code, and
telephone number, including area
code, of each registrant's
principal executive offices)
____________________________
Jack D. Hunter, Esq.
Executive Vice President and General Counsel
Lincoln National Corporation
200 East Berry Street
Fort Wayne, Indiana 46802-2706
(219) 455-2000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With copies to:
John L. Steinkamp
Vice President and Associate Arthur J. Simon
General Counsel Sonnenschein Nath & Rosenthal
Lincoln National Corporation 8000 Sears Tower
200 Berry Street Chicago, Illinois 60606
Fort Wayne, Indiana 46802 (312) 876-7567
(219) 455-2000
___________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
____________________________
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Proposed maximum Proposed maximum Amount of
Amount to be offering price per aggregate offering registration
Title of each class of Securities to be registered registered(1)(2) unit(3) price fee (4)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities of Lincoln National Corporation:
Debt Securities . . . . . . . . . . . . . . . . .
Preferred Stock, no par value(5) . . . . . . . . .
Depositary Shares . . . . . . . . . . . . . . . .
Common Stock, no par value(6) . . . . . . . . . .
Warrants . . . . . . . . . . . . . . . . . . . . .
Stock Purchase Contracts . . . . . . . . . . . . .
Stock Purchase Units . . . . . . . . . . . . . . .
Preferred Securities of Lincoln National
Capital III . . . . . . . . . . . . . . . . . . . . .
Preferred Securities of Lincoln National Capital IV .
Preferred Securities of Lincoln National Capital V .
Preferred Securities of Lincoln National Capital VI .
Guarantees of Preferred Securities of Lincoln National
Capital III, Lincoln National Capital IV, Lincoln
National Capital V and Lincoln National Capital VI by
Lincoln National Corporation (7) . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . $1,000,000,000 100% $1,000,000,000 $295,000
==================================================================================================================================
</TABLE>
(1) Such indeterminate number or amount of Debt Securities, Preferred Stock,
Depositary Shares, Common Stock, Warrants, Stock Purchase Contracts and
Stock Purchase Units of Lincoln National Corporation and Preferred
Securities of Lincoln National Capital Trust III, Lincoln National
Capital Trust IV, Lincoln National Capital Trust V and Lincoln National
Capital Trust VI as may from time to time be issued at indeterminate
prices. Junior Subordinated Debt Securities may be issued and sold to
Lincoln National Capital Trust III, Lincoln National Capital Trust IV,
Lincoln National Capital Trust V and Lincoln National Capital Trust VI,
in which event such Junior Subordinated Debt Securities may later be
distributed to the holders of Preferred Securities upon a dissolution of
Lincoln National Capital Trust III, Lincoln National Capital Trust IV,
Lincoln National Capital Trust V and Lincoln National Capital Trust VI
and the distribution of the assets thereof.
(2) Such amount in U.S. dollars or the equivalent thereof in foreign
currencies as shall result in an aggregate initial offering price for all
securities of $1,300,000,000. In addition, this Registration Statement
includes such presently indeterminate number of Offered Securities (as
defined herein) as may be issuable from time to time upon conversion or
exchange of the Offered Securities being registered hereunder.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended
("Securities Act"), and exclusive of accrued interest and dividends, if
any.
(4) Does not include certain securities of Lincoln National Corporation
covered by Registration Statement No. 33-59785 being carried over to this
Registration Statement or the registration fee previously paid with
respect to such securities.
(5) The Preferred Stock may include Common Stock Purchase Rights which, prior
to the occurrence of certain events, would not be exercisable or
evidenced separately from the Preferred Stock.
(6) The Common Stock includes associated Purchase Rights which are not
exercisable prior to the occurrence of certain events. Such Rights
initially are attached to and trade with the Common Stock. No separate
consideration will be received for such Rights.
(7) Lincoln National is also registering under this registration statement
all other obligations that it may have with respect to Preferred
Securities issued by Lincoln National Capital Trust III, Lincoln National
Capital Trust IV, Lincoln National Capital Trust V and Lincoln National
Capital Trust VI. No separate consideration will be received for any
Guarantee or any other such obligations.
Pursuant to Rule 429, the Prospectus included in this Registration
Statement also relates to $300,000,000 of securities registered and remaining
unissued under Registration Statement No. 33-59785 previously filed by Lincoln
National Corporation, with respect to which the filing fee has previously been
paid to the Commission. Such Registration Statement is accordingly amended to
reflect the information contained herein, including the addition of Lincoln
National Capital Trust III, Lincoln National Capital Trust IV, Lincoln National
Capital Trust V and Lincoln National Capital Trust VI as registrants. In the
event that any of such previously registered securities are offered prior to
the effective date of this Registration Statement, the amount of such
securities will not be included in any Prospectus hereunder. The amount of
securities being registered, together with the remaining securities registered
under Registration Statement No. 33-59785, represents the maximum amount of
securities which are expected to be offered for sale.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
<PAGE> 4
SUBJECT TO COMPLETION, DATED APRIL 2, 1998
PROSPECTUS
$1,300,000,000
Lincoln National Corporation
Debt Securities
Preferred Stock
Common Stock
Warrants
Stock Purchase Contracts
Stock Purchase Units
---------------
Lincoln National Capital III
Lincoln National Capital IV
Lincoln National Capital V
Lincoln National Capital VI
Preferred Securities fully and unconditionally
guaranteed, as described herein, by
Lincoln National Corporation
Lincoln National Corporation (the "Company") may offer and sell from
time to time (i) its unsecured senior debt securities ("Senior Debt Securities")
and its unsecured junior subordinated debt securities (the "Junior Subordinated
Debt Securities"), consisting of debentures, notes and/or other evidences of
indebtedness (the "Debt Securities"), (ii) shares of its preferred stock, no
par value per share (the "Preferred Stock"), which may be represented by
depositary shares as described herein, (iii) shares of its common stock, no par
value per share (the "Common Stock"), (iv) warrants to purchase any of the
foregoing Debt Securities, Preferred Stock and Common Stock (the "Warrants"),
(v) stock purchase contracts ("Stock Purchase Contracts") to purchase shares of
Common Stock or (vi) stock purchase units ("Stock Purchase Units"), each
representing ownership of a Stock Purchase Contract and any of (x) Debt
Securities, (y) debt obligations of third parties, including U.S. Treasury
Securities, or (z) Preferred Securities (as defined below) of a Lincoln Trust
(as defined below), securing the holder's obligation to purchase Common Stock
under the Stock Purchase Contract. Such securities may be offered in one or
more separate classes or series, in amounts, at prices and on terms to be
determined by market conditions at the time of sale and to be set forth in a
supplement or supplements to this Prospectus (a "Prospectus Supplement"). Such
securities may be sold for U.S. dollars, foreign denominated currency or
currency units; amounts payable with respect to any such securities may
likewise be payable in U.S. dollars, foreign denominated currency or currency
units, in each case as the Company specifically designates.
Lincoln National Capital III, Lincoln National Capital IV, Lincoln
National Capital V and Lincoln National Capital VI, each a statutory business
trust formed under the laws of the State of Delaware (each, a "Lincoln Trust,"
and collectively, the "Lincoln Trusts"), may severally offer, from time to
time, preferred securities (the "Preferred Securities") representing preferred
undivided beneficial interests in such Lincoln Trust. The Company will be the
owner of the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") of each Lincoln Trust. The
payment of periodic cash distributions
<PAGE> 5
("Distributions") with respect to Preferred Securities of each of the Lincoln
Trusts out of monies held by the Property Trustee (as defined herein) of each
of the Lincoln Trusts and payments on liquidation of each Lincoln Trust and on
redemption of Preferred Securities of such Lincoln Trust, will be guaranteed by
the Company as and to the extent described herein (each, a "Guarantee"). See
"Description of Guarantees." The Company's obligation under each Guarantee is
an unsecured obligation of the Company and will rank subordinate and junior in
right of payment to all Senior Debt (as defined herein) of the Company. Except
as otherwise provided in the applicable Prospectus Supplement, (i) concurrently
with the issuance by a Lincoln Trust of its Preferred Securities, such Lincoln
Trust will invest the proceeds thereof and any contributions made in respect of
the Common Securities in a corresponding series of the Company's Junior
Subordinated Debt Securities (the "Corresponding Junior Subordinated Debt
Securities") with terms directly corresponding to the terms of that Lincoln
Trust's Preferred Securities (the "Related Preferred Securities"), (ii) the
Corresponding Junior Subordinated Debt Securities will be the sole assets of
each Lincoln Trust, and (iii) payments under the Corresponding Junior
Subordinated Debt Securities and the related Expense Agreement (as defined
herein) will be the only revenue of each Lincoln Trust. The Company may redeem
the Corresponding Junior Subordinated Debt Securities (and cause the redemption
of the Trust Securities) or may terminate each Lincoln Trust and cause the
Corresponding Junior Subordinated Debt Securities to be distributed to the
holders of Preferred Securities in liquidation of their interests in such
Issuer in certain circumstances. See "Description of Preferred Securities --
Liquidation Distribution Upon Termination."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------
This Prospectus may not be used to consummate sales of Offered
Securities (as defined herein) unless accompanied by a Prospectus Supplement.
The date of this Prospectus is ______________, 1998.
<PAGE> 6
(Continued from previous page)
Specific terms of the particular Debt Securities, Preferred Stock,
Common Stock, Warrants, Stock Purchase Contracts, Stock Purchase Units,
Preferred Securities and the related Guarantee, in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
an accompanying Prospectus Supplement or Supplements, together with the terms
of the offering of the Offered Securities, the initial price thereof and the
net proceeds from the sale thereof. The Prospectus Supplement will set forth
with regard to the particular Offered Securities, certain terms thereof,
including, where applicable, (i) in the case of Debt Securities, the ranking as
senior or junior subordinated Debt Securities, the specific designation,
aggregate principal amount, purchase price, maturity, interest rate (which may
be fixed or variable), if any, the time and method of calculating interest
payments, if any, the right of the Company, if any, to defer payments of
interest on the Junior Subordinated Debt Securities and the maximum length of
such deferred period, time of payment of interest, if any, listing, if any, on
a securities exchange, authorized denomination, any exchangeability,
conversion, redemption, prepayment or sinking fund provisions, the currency or
currencies or currency unit or units in which principal, premium, if any, or
interest, if any, is payable, public offering price and any other specific
terms of the Debt Securities; (ii) in the case of Preferred Stock, the specific
designation, number of shares, purchase price and the rights, preferences and
privileges thereof and any qualifications or restrictions thereon (including
dividends, liquidation value, voting rights, terms for the redemption,
conversion or exchange thereof and any other specific terms of the Preferred
Stock), listing, if any, on a securities exchange and whether the Company has
elected to offer the Preferred Stock in the form of depositary shares; (iii) in
the case of Common Stock, the number of shares offered, the initial offering
price, market price and dividend information; (iv) in the case of Warrants, the
specific designation, the number, purchase price and terms thereof, any listing
of the Warrants or the underlying securities on a securities exchange or any
other terms in connection with the offering, sale and exercise of the Warrants,
as well as the terms on which and the securities for which such Warrants may be
exercised; (v) in the case of Stock Purchase Contracts, the designation and
number of shares of Common Stock issuable thereunder, the purchase price of the
Common Stock, the date or dates on which the Common Stock is required to be
purchased by the holders of the Stock Purchase Contracts, any periodic payments
required to be made by the Company to the holders of the Stock Purchase
Contracts or vice versa, and the terms of the offering and sale thereof; (vi)
in the case of Stock Purchase Units, the specific terms of the Stock Purchase
Contracts and any Debt Securities or debt obligations of third parties or
Preferred Securities of a Lincoln Trust securing the holders' obligation to
purchase the Common Stock under the Stock Purchase Contracts, the ability of a
holder of such Stock Purchase Units to settle early the underlying Stock
Purchase Contract by delivering cash in exchange for the underlying collateral
and, if applicable, whether the Company will issue to such holder a Prepaid
Stock Purchase Contract as a result of such early settlement and the specific
terms of the Prepaid Stock Purchase Contract and the terms of the offering and
sale of such Stock Purchase Units; and (vii) in the case of Preferred
Securities of a Lincoln Trust, the specific designation, number of securities,
liquidation amount per security, initial public offering price, and any listing
on a securities exchange, distribution rate (or method of calculation thereof),
dates on which distributions shall be payable and dates from which
distributions shall accrue, voting rights, if any, terms for any conversion or
exchange into other securities, any redemption or sinking fund provisions, any
other rights, preferences, privileges, limitations or restrictions relating to
the Preferred Securities and the terms upon which the proceeds of the sale of
the Preferred Securities shall be used to purchase a specific series of Junior
Subordinated Debt Securities of the Company.
The Offered Securities may be offered in amounts, at prices and on
terms to be determined at the time of offering; provided, however, that the
aggregate offering price to the public of the Offered Securities will be
limited to $1,300,000,000. Any Prospectus Supplement relating to any Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable, to the Offered Securities.
The Company and/or each Lincoln Trust may sell the Offered Securities
directly, through agents designated from time to time or through underwriters
or dealers. See "Plan of Distribution." If any agents of the Company and/or
any Lincoln Trust or any underwriters or dealers are involved in the sale of
the Offered Securities, the names of such agents, underwriters or dealers and
any applicable commissions and discounts will be set forth in the related
Prospectus Supplement. The managing underwriter or underwriters with respect
to each series sold to or through underwriters will be named in the
accompanying Prospectus Supplement. See "Plan of Distribution" for possible
indemnification arrangements for dealers, underwriters and agents.
<PAGE> 7
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND, WITH RESPECT TO PARTICULAR OFFERED SECURITIES, THE PROSPECTUS
SUPPLEMENT RELATING THERETO, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER
THIS PROSPECTUS NOR SUCH PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER FOR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR SUCH PROSPECTUS
SUPPLEMENT NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR ANY
LINCOLN TRUST SINCE THE DATE HEREOF OR THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
FOR NORTH CAROLINA RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA,
NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY
OF THIS DOCUMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities of the Commission at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
In addition, such reports, proxy statements and other information concerning
the Company can be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, at the offices of the Chicago
Stock Exchange, Inc. at 440 South LaSalle Street, Chicago, Illinois 60603 and
at the offices of the Pacific Stock Exchange, Inc. at 301 Pine Street, San
Francisco, California 94104. The Commission maintains a Web site (located at
http://www.sec.gov) which includes reports, proxy statements and other
information, including the Registration Statement of which this Prospectus is a
part, filed electronically by registrants with the Commission.
The Company and the Lincoln Trusts have filed with the Commission a
Registration Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
No separate financial statements of the Lincoln Trusts have been
included herein. The Company and the Lincoln Trusts do not consider that such
financial statements would be material to holders of the Preferred Securities
because (i) all of the voting securities of the Lincoln Trusts will be owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) each Lincoln Trust is a newly formed
-3-
<PAGE> 8
special purpose entity, has no operating history or independent operations and
is not engaged in and does not propose to engage in any activity other than
holding as trust assets the Corresponding Junior Subordinated Debt Securities
of the Company and issuing the Trust Securities, and (iii) the Company's
obligations described herein and in any accompanying Prospectus Supplement,
through the applicable Guarantee, the applicable Trust Agreement, the Junior
Subordinated Debt Securities, the Junior Subordinated Indenture and any
supplemental indentures thereto, and the Expense Agreement, taken together,
constitute a full, irrevocable and unconditional guarantee by the Company of
payments due on the Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Lincoln Trust's obligations under the Preferred Securities. See "The Lincoln
Trusts," "Description of Preferred Securities," "Description of Junior
Subordinated Debt Securities" and "Description of Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated into this Prospectus by reference and made a part hereof: (a) the
Company's Annual Report on Form 10-K for the year ended December 31, 1997; and
(b) the Company's Current Report on Form 8-K filed on March 24, 1998. Each
document or report filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
any offering of securities made by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document. Any statement contained
herein, or in a document all or a portion of which is incorporated or deemed to
be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein
(other than exhibits not specifically incorporated by reference into the texts
of such documents). Requests for such documents should be directed to: C.
Suzanne Womack, Secretary, Lincoln National Corporation, 200 East Berry Street,
Fort Wayne, Indiana, 46802-2706, telephone number (219) 455-3271.
----------------
Unless otherwise indicated, currency amounts in this Prospectus and
any Prospectus Supplement are stated in United States dollars ("$," "dollars"
or "U.S.$").
-4-
<PAGE> 9
LINCOLN NATIONAL CORPORATION
The Company is a holding company with consolidated assets at December
31, 1997 of approximately $77.2 billion and shareholders' equity of
approximately $5.0 billion. The Company, through its subsidiaries, provides
life insurance and annuities, life-health reinsurance, property-casualty
insurance, and investment management services to its customers.
Lincoln National Corporation is an Indiana corporation with its
principal office at 200 East Berry Street, Fort Wayne, Indiana 46802-2706.
Its telephone number is (219) 455-2000.
THE LINCOLN TRUSTS
Each Lincoln Trust is a statutory business trust formed under Delaware
law pursuant to (i) a trust agreement executed by the Company, as sponsor of
the Lincoln Trust, and the Delaware Trustee (as defined herein) of such Lincoln
Trust and (ii) the filing of a certificate of trust with the Delaware Secretary
of State. Each trust agreement will be amended and restated in its entirety
(each, as so amended and restated, a "Trust Agreement") substantially in the
form filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. Each Trust Agreement will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each
Lincoln Trust exists for the exclusive purposes of (i) issuing and selling its
Trust Securities, (ii) using the proceeds from the sale of such Trust
Securities to acquire a series of Corresponding Junior Subordinated Debt
Securities issued by the Company, and (iii) engaging in only those other
activities necessary, convenient or incidental thereto.
All of the Common Securities of each Lincoln Trust will be owned by
the Company. The Common Securities of a Lincoln Trust will rank pari passu,
and payments will be made thereon pro rata, with the Preferred Securities of
such Lincoln Trust, except that upon the occurrence and continuance of an event
of default under a Trust Agreement resulting from a Junior Subordinated Debt
Security Event of Default (as defined herein), the rights of the Company as
holder of the Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Preferred Securities of such Lincoln Trust. See
"Description of Preferred Securities -- Subordination of Common Securities."
The Company will acquire Common Securities in an aggregate liquidation amount
equal to not less than 3% of the total capital of each Lincoln Trust.
Unless otherwise specified in the applicable Prospectus Supplement,
each Lincoln Trust has a term of approximately 55 years, but may terminate
earlier as provided in the applicable Trust Agreement. Each Lincoln Trust's
business and affairs are conducted by its trustees, each appointed by the
Company as holder of the Common Securities. Unless otherwise specified in the
applicable Prospectus Supplement, the trustees for each Lincoln Trust will be
The First National Bank of Chicago, as the Property Trustee (the "Property
Trustee"), First Chicago Delaware, Inc., as the Delaware Trustee (the "Delaware
Trustee"), and two individual trustees (the "Administrative Trustees") who are
employees or officers of or affiliated with the Company (collectively, the
"Issuer Trustees"). The First National Bank of Chicago, as Property Trustee,
will act as sole indenture trustee under each Trust Agreement for purposes of
compliance with the Trust Indenture Act. The First National Bank of Chicago
will also act as trustee under the Guarantees and the Junior Subordinated
Indenture (as defined herein). See "Description of Guarantees" and
"Description of Junior Subordinated Debt Securities." The holder of the Common
Securities of a Lincoln Trust, or the holders of a majority in liquidation
preference of the related Preferred Securities if a Junior Subordinated Debt
Security Event of Default under the Trust Agreement for such Lincoln Trust has
occurred and is continuing, will be entitled to appoint, remove or replace the
Property Trustee and/or the Delaware Trustee for such Lincoln Trust. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the applicable Trust
Agreement. The Company will pay all fees and expenses related to each Lincoln
Trust and the offering of the Preferred Securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of each Lincoln Trust.
-5-
<PAGE> 10
The principal executive office of each Lincoln Trust is 200 East Berry
Street, Fort Wayne, Indiana 46802-2706 and its telephone number is (219)
455-2000.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement
with respect to the proceeds from the sale of the particular Offered Securities
to which such Prospectus Supplement relates, the net proceeds from the sale of
the Offered Securities are expected to be used by the Company for general
corporate purposes, including repayment or redemption of outstanding debt or
preferred stock, the possible acquisition of financial services businesses or
assets thereof, investments in portfolio assets and working capital needs. The
Company routinely reviews opportunities to acquire financial services
businesses or assets thereof. Each Lincoln Trust will use all proceeds
received from the sale of its Trust Securities to purchase Junior Subordinated
Debt Securities of the Company.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Set forth below are the Company's historical ratios of earnings to
fixed charges for each of the years in the five-year period ended December 31,
1997. In addition, set forth below are pro forma ratios giving effect to the
sale of $100,000,000 aggregate principal amount of 6 1/2% Notes due March 15,
2008 (the "2008 Notes") and $200,000,000 aggregate principal amount of 7% Notes
due March 15, 2018 (together with the 2008 Notes, the "Notes") in March 1998 and
the application of the proceeds thereof (without giving effect to the reduction
of offering proceeds due to discounted price to public, underwriting discount
and expenses).
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Annuities
and Financial Products (1)
Historical . . . . . . . . . . . . . . . . . . . . . . 13.58 7.37 7.51 6.43 10.35
Pro Forma (2) . . . . . . . . . . . . . . . . . . . . 13.23
Including Interest on Annuities
and Financial Products (3)
Historical . . . . . . . . . . . . . . . . . . . . . . 1.90 1.45 1.41 1.25 1.43
Pro Forma (2) . . . . . . . . . . . . . . . . . . . . 1.89
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (4)
Historical . . . . . . . . . . . . . . . . . . . . . . 1.90 1.45 1.40 1.23 1.40
Pro Forma (2) . . . . . . . . . . . . . . . . . . . . 1.89
- ------------------
</TABLE>
(1) For purposes of determining this ratio, earnings consist of income
before federal income taxes, cumulative effect of accounting change
and minority interests adjusted for the difference between income or
losses from unconsolidated equity investments and cash distributions
from such investments, plus fixed charges. Fixed charges consist of:
(i) interest and debt expense on short and long-term debt and
distributions to minority interest-preferred securities of subsidiary
companies and (ii) the portion of operating leases that are
representative of the interest factor.
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<PAGE> 11
(2) Pro forma ratios after giving effect to the net increase in interest
expense due to the issuance of the Notes at a blended rate of 6.833%
per annum less the repayment of $200 million of short-term debt and
earnings on $100 million of short-term investments at a weighted
average interest rate of 5.83% per annum.
(3) Same as the ratio of earnings to fixed charges, excluding interest on
annuities and financial products, except fixed charges and earnings
include interest on annuities and financial products.
(4) Same as the ratio of earnings to fixed charges, including interest on
annuities and financial products, except that fixed charges include
the pre-tax earnings required to cover preferred stock dividend
requirements.
(5) Coverage ratios in 1997 are higher than other historical periods due
to the inclusion of a gain on sale of discontinued operations of $777
million.
DESCRIPTION OF THE SENIOR DEBT SECURITIES
The Senior Debt Securities (for purposes of this Section only, the
"Debt Securities") may be issued in one or more series under an Indenture dated
as of September 15, 1994, as supplemented from time to time (as so
supplemented, the "Indenture"), between the Company and The Bank of New York,
as trustee (the "Trustee"). This summary of certain terms and provisions of
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, the form of which is
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and to the Trust Indenture Act. The Indenture is qualified under
the Trust Indenture Act. Parenthetical references in this Section are to
provisions of the Indenture. Certain terms defined in the Indenture are
capitalized in this Prospectus. Whenever particular defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such defined
terms are incorporated herein or therein by reference.
GENERAL
The Debt Securities will be unsecured and will rank on the parity with
all other unsecured and unsubordinated indebtedness of the Company.
The Indenture does not limit the amount of Debt Securities which may
be issued thereunder and provides that Debt Securities may be issued up to the
aggregate principal amount which may be authorized from time to time by the
Company. Reference is made to the Prospectus Supplement for the following
terms of Debt Securities being offered thereby: (i) the title, aggregate
principal amount and authorized denominations of Debt Securities; (ii) the
percentage of their principal amount at which such Debt Securities will be
issued; (iii) the date or dates on which Debt Securities will mature; (iv) the
rate or rates per annum (which may be fixed or variable), if any, at which Debt
Securities will bear interest (or the method of determination or calculation
thereof); (v) the times at which any such interest will be payable; (vi) the
currency or units based on or relating to currencies in which the Debt
Securities are denominated and in which principal, premium, if any, any
interest and Additional Amounts (as defined below) will or may be payable;
(vii) the dates, if any, on which and the price or prices at which the Debt
Securities will, pursuant to any mandatory sinking fund provisions, or may,
pursuant to any optional sinking fund provisions, be redeemed by the Company,
and other terms and provisions of such sinking fund; (viii) any redemption
terms or any terms for repayment of principal amount at the option of the
holder; (ix) whether and under what circumstances the Company will pay
additional amounts ("Additional Amounts") in respect of certain taxes imposed
on certain holders or as otherwise provided; (x) the terms and conditions upon
which such Debt Securities may be convertible into shares of Common Stock or
other securities of the Company, including the conversion price, conversion
period and other conversion provisions; (xi) the defeasance provisions, if any,
that are applicable to such Debt Securities (other than those described
herein); (xii) whether the Debt Securities are to be issuable in global form
and, if so, the terms and conditions, if any, upon which interests in such Debt
Securities in global form
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<PAGE> 12
may be exchanged, in whole or in part, for the individual Debt Securities
represented thereby and the initial Depository with respect to such global Debt
Security; (xiii) the person to whom any interest on a Registered Security is
payable, if other than the registered holder thereof, or the manner in which
any interest is payable on a Bearer Security if other than upon presentation of
the coupons pertaining thereto, as the case may be; or (xiv) any other specific
terms of such Debt Securities.
Principal, interest and premium and Additional Amounts, if any, will
be payable in the manner, at the places and subject to the restrictions set
forth in the Indenture, the Debt Securities and the Prospectus Supplement
relating thereto.
Unless otherwise indicated in the Prospectus Supplement relating
thereto, the Debt Securities will be issued in fully registered form without
coupons. Where Debt Securities of any series are issued in bearer form, the
special restrictions and considerations, including special offering
restrictions and special Federal income tax considerations, applicable to any
such Debt Securities and to payment on and transfer and exchange of such Debt
Securities will be described in the applicable Prospectus Supplement.
Some of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or at a rate which at the time of issuance is
below market rates) to be sold at the substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.
If the purchase price of any Debt Securities is payable in one or more
foreign currencies or currency units or if any Debt Securities are denominated
in one or more foreign currencies or currency units or if the principal of,
premium, if any, or interest, if any, on any Debt Securities is payable in one
or more foreign currencies or currency units, the restrictions, elections,
certain Federal income tax considerations, specific terms and other information
with respect to such issue of Debt Securities and such foreign currency or
currency units will be set forth in the applicable Prospectus Supplement.
Debt Securities may be presented for exchange, and registered Debt
Securities may be presented for transfer, in the manner, at the places and
subject to the restrictions set forth in the Indenture, the Debt Securities and
the Prospectus Supplement relating thereto. Debt Securities in bearer form and
the coupons, if any, appertaining thereto will be transferable by delivery. No
service charge will be made for any transfer or exchange of Debt Securities,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. (Section 2.06)
Unless otherwise indicated in the applicable Prospectus Supplement,
the covenants contained in the Indenture and the Debt Securities would not
necessarily afford Holders of the Debt Securities protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect Holders.
If the Debt Securities are convertible into shares of Common Stock,
the conversion price payable and the number of shares purchasable upon
conversion may be subject to adjustment in certain events as set forth in the
applicable Prospectus Supplement.
FORM, REGISTRATION, TRANSFER AND EXCHANGE
The Debt Securities of a series may be issued solely as Registered
Securities, solely as Bearer Securities (with or without coupons attached) or
as both Registered Securities and Bearer Securities. Debt Securities of a
series may be issuable in whole or part in the form of one or more global Debt
Securities ("Global Securities"), as described below under "Book-Entry Debt
Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if
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<PAGE> 13
Debt Securities of any series are issuable as both Registered Securities and as
Bearer Securities, at the option of the holder, subject to the terms of the
Indenture, Bearer Securities (accompanied by all unmatured coupons, except as
provided below, and all matured coupons in default) of such series will be
exchangeable for Registered Securities of the same series of any authorized
denominations and of a like aggregate principal amount and tenor. Unless
otherwise indicated in the applicable Prospectus Supplement, any Bearer
Security surrendered in exchange for a Registered Security between a record
date or a special record date for defaulted interest and the relevant date for
payment of interest will be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the holder of such coupon when due in accordance with the terms
of the Indenture. Bearer Securities will not be issued in exchange for
Registered Securities. (Sections 2.06, 2.12 and 4.01)
Debt Securities may be presented for exchange as provided above, and
unless otherwise indicated in the applicable Prospectus Supplement, Registered
Securities may be presented for registration of transfer (duly endorsed, or
accompanied by a duly executed written instrument of transfer), at the office
of any transfer agent designated by the Company for such purpose with respect
to any series of Debt Securities and referred to in the applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such transfer or exchange
will be effected upon such transfer agent being satisfied with the documents of
title and identity of the person making the request. The Company may at any
time rescind the designation of any transfer agent, provided, however, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for Debt
Securities of such series. The Company may at any time designate additional
transfer agents with respect to any series of Debt Securities. (Sections 2.06
and 4.02)
In the event of any redemption of Debt Securities of any series, the
Company will not be required to (i) register the transfer of or exchange Debt
Securities of that series during a period of 15 days next preceding the
selection of securities of such series to be redeemed; (ii) register the
transfer of or exchange any Registered Security, or portion thereof, called for
redemption, except the unredeemed portion of any Registered Security being
redeemed in part; or (iii) exchange any Bearer Security called for redemption
except, to the extent provided with respect to any series of Debt Securities
and referred to in the applicable Prospectus Supplement, to exchange such
Bearer Security for a Registered Security of that series and of like tenor and
principal amount that is immediately surrendered for redemption. (Section 2.06)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal, premium, if any, interest and Additional Amounts, if any,
on Registered Securities will be made at the office of such paying agent or
paying agents as the Company may designate from time to time, except that at
the option of the Company payment of any interest and any Additional Amounts
may be made by check or draft mailed to the address of the Person entitled
thereto as such address shall appear in the Debt Security Register. Unless
indicated in an applicable Prospectus Supplement, payment of any installment of
interest on Registered Securities will be made to the Person in whose name such
Registered Security is registered at the close of business on the record date
for such interest. (Section 4.01)
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal, premium, if any, interest and Additional Amounts, if any,
on Bearer Securities will be payable, subject to any applicable laws and
regulations, at the offices of such paying agents outside the United States as
the Company may designate from time to time, or by check or by transfer to an
account maintained by the payee outside the United States. Unless otherwise
indicated in the applicable Prospectus Supplement, any payment of interest on
any Bearer Securities will be made only against surrender of the coupon
relating to such interest installment. (Sections 2.06 and 4.02)
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<PAGE> 14
Any paying agents in or outside the United States initially designated
by the Company for the Debt Securities will be named in the applicable
Prospectus Supplement. If the Debt Securities of a series are listed on a
stock exchange located outside the United States, and such stock exchange shall
so require, the Company will maintain a paying agent with respect to such
series in London, Luxembourg or any other city so required located outside the
United States so long as the Debt Securities of such series are listed on such
exchange. The Company may at any time designate additional paying agents or
rescind the designation of any paying agent, provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment. (Section
4.02)
All monies paid by the Company to a paying agent for the payment of
principal of or interest or Additional Amounts, if any, on any Debt Security
which remain unclaimed at the end of one year after such principal, interest or
Additional Amounts shall have become due and payable will be repaid to the
Company and the holder of such Debt Security or any coupon will thereafter look
only to the Company for payment thereof. (Section 4.03)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or
more Global Securities that will be deposited with a Depository or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or
more Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding Debt Securities of the series to be represented by such Global
Security or Global Securities. Unless and until it is exchanged in whole or in
part for Debt Securities in registered form, a Global Security may not, subject
to certain exceptions, be registered for transfer or exchange except to the
Depository for such Global Security or a nominee of such Depository. (Section
2.06)
The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the provisions described below will be applicable to depository
arrangements.
Unless otherwise specified in the applicable Prospectus Supplement,
Debt Securities which are to be represented by a Global Security to be
deposited with or on behalf of a Depository will be represented by a Global
Security registered in the name of such Depository or its nominee. Upon the
issuance of such Global Security and the deposit of such Global Security with
or on behalf of the Depository for such Global Security, the Depository will
credit on its book-entry registration and transfer system the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of institutions that have accounts with such Depository or its
nominee ("participants"). The accounts to be credited will be designated by
the underwriters or agents of such Debt Securities or by the Company if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interest by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depository for such Global Security. Ownership of beneficial
interests in such Global Security by persons that hold through participants
will be shown on, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. The
foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
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<PAGE> 15
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the holders thereof for any purposes under the Indenture. (Sections
2.06 and 11.03) Accordingly, each person owning a beneficial interest in such
Global Security must rely on the procedures of the Depository and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest to exercise any rights of a holder under the
Indenture. The Company understands that, under existing industry practices, if
the Company requests any action of holders or an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a holder
is entitled to give or take under the Indenture, the Depository would authorize
the participants to give such notice or take such action, and participants
would authorize beneficial owners owning through such participants to give such
notice or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Principal of and any premium, interest and Additional Amounts on a
Global Security will be payable in the manner described in the applicable
Prospectus Supplement.
LIMITATION ON LIENS ON STOCK OF RESTRICTED SUBSIDIARIES
The Company will not, nor will it permit any Restricted Subsidiary to,
issue, assume or guarantee any indebtedness for borrowed money (hereinafter
referred to as "Debt") secured by a mortgage, security interest, pledge, lien
or other encumbrance upon any shares of stock of any Restricted Subsidiary
without effectively providing that the Debt Securities (together with, if the
Company shall so determine, any other indebtedness of or guarantee by the
Company ranking equally with the Debt Securities and then existing or
thereafter created) shall be secured equally and ratably with such Debt.
(Section 4.06).
For purposes of the Indenture, "Restricted Subsidiary" means The
Lincoln National Life Insurance Company so long as it remains a subsidiary, as
well as any successor to all or a principal part of the business of any such
subsidiary and any other subsidiary which the Board of Directors designates as
a Restricted Subsidiary. (Section 1.01) The Restricted Subsidiary accounted
for approximately 78% of the consolidated revenues of the Company during the
year ended December 31, 1997 and 86% of the consolidated assets of the Company
at December 31, 1997. Prior to June 1997, the Company's ownership in American
States Insurance Company also was considered a Restricted Subsidiary. Upon the
announcement of the sale of the Company's interest in American States Insurance
Company in June 1997, American States Insurance Company became a discontinued
operation of the Company and therefor ceased to be considered a Restricted
Subsidiary for purposes of the Indenture.
LIMITATION ON ISSUANCE OR DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES
The Company will not, nor will it permit any Restricted Subsidiary to,
issue, sell, assign, transfer or otherwise dispose of, directly or indirectly,
any Capital Stock (other than nonvoting preferred stock) of any Restricted
Subsidiary, except for (i) the purpose of qualifying directors; (ii) sales or
other dispositions to the Company or one or more Restricted Subsidiaries; (iii)
the disposition of all or any part of the Capital Stock of any Restricted
Subsidiary for consideration which is at least equal to the fair value of such
Capital Stock as determined by the Company's Board of Directors (acting in good
faith); or (iv) an issuance, sale, assignment, transfer or other disposition
required to comply with an order of a court or regulatory authority of
competent jurisdiction, other than an order issued at the request of the
Company or any Restricted Subsidiary. (Section 4.07)
For the purposes of the Indenture, "Capital Stock" means any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) corporate stock.
(Section 1.01)
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<PAGE> 16
DEFAULTS AND REMEDIES
An Event of Default with respect to Debt Securities of any series is
defined in the Indenture as being: (a) default for 30 days in payment of any
interest or Additional Amounts on the Debt Securities of such series; (b)
default in payment of principal or premium, if any, on the Debt Securities of
such series when due either at maturity, upon redemption, by declaration or
otherwise (except a failure to make payment resulting from mistake, oversight
or transfer difficulties not continuing for more than 3 Business Days beyond
the date on which such payment is due); (c) default in payment of any sinking
fund installment when due and payable (except a failure to make payment
resulting from mistake, oversight or transfer difficulties not continuing for
more than three Business Days beyond the date on which such payment is due);
(d) default by the Company in the performance or breach of any other covenant
or warranty of the Company in respect of the Debt Securities of such series for
a period of 60 days after notice thereof to the Company or Trustee; (e) certain
events involving the bankruptcy or insolvency of the Company; or (f) other
Events of Default as specified in the Supplemental Indenture or Board
Resolution under which such series of Debt Securities was issued. (Section
6.01)
The Indenture provides that (1) if an Event of Default described in
clauses (a), (b), (c) or, in the event of a default with respect to less than
all Outstanding series under the Indenture, (d) above shall have occurred and
be continuing with respect to one or more series, either the Trustee or the
holders of 25 percent in principal amount of the Debt Securities of such series
then Outstanding (each such series voting as a separate class) may declare the
principal (or, in the case of original issue discount Debt Securities, the
portion thereof specified in the terms thereof) of all Outstanding Debt
Securities of such series and the interest accrued thereon and Additional
Amounts payable in respect thereof, if any, to be due and payable immediately
and (2) if an Event of Default described in clause (d) (in the event of a
default with respect to all Outstanding series) or (e) above shall have
occurred and be continuing, either the Trustee or the holders of 25 percent in
principal amount of all Debt Securities then Outstanding (voting as one class)
may declare the principal (or, in the case of original issue discount Debt
Securities, the portion of the principal amount thereof specified in the terms
thereof) of all Debt Securities then Outstanding and the interest accrued
thereon and Additional Amounts payable in respect thereof, if any, to be due
and payable immediately, but upon certain conditions such declarations may be
annulled and past defaults (except for defaults in the payment of principal of,
or premium, interest or Additional Amounts, if any, on such Debt Securities)
may be waived by the holders of a majority in principal amount of the Debt
Securities of such series (or of all series, as the case may be) then
Outstanding. (Sections 6.01 and 6.10)
Holders may not enforce the Indenture or the Debt Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Debt Securities unless it receives indemnity satisfactory to it. Subject
to certain limitations, holders of a majority in principal amount of the Debt
Securities of any series may direct the Trustee in its exercise of any trust or
power. The Company is required to deliver annually to the Trustee an officer's
statement indicating whether the signer knows of any default by the Company in
performing any of its obligations under the Indenture. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal, premium, if any, interest or Additional Amounts, if any,
or any sinking or purchase fund installment) if it determines that withholding
notice is in their interest. (Sections 4.05, 6.06, 6.09, 6.11, 7.01 and 7.05).
DEFEASANCE
Unless otherwise described in a Prospectus Supplement with respect to
any series of Debt Securities, the Company, at its option, (a) will be
discharged from any and all obligations in respect of such Debt Securities
(except in each case for certain obligations to register the transfer or
exchange of such Debt Securities, replace stolen, lost or mutilated Debt
Securities, maintain paying agencies and hold moneys for payment in trust) on
the ninety-first day after satisfaction of all conditions thereto or (b)
effective upon the satisfaction of all conditions thereto, need not comply with
certain restrictive covenants (including any covenants or agreements applicable
with respect to a particular series of Debt Securities) under the Indenture
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<PAGE> 17
and will not be limited by any restrictions with respect to merger,
consolidation or sales of assets, in each case if the Company deposits with the
Trustee, in trust, (x) money or (y) Government Obligations or a combination of
(x) and (y) which, through the payment of interest thereon and principal
thereof in accordance with their terms, will in the written opinion of
independent public accountants selected by the Company, provide money in an
amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and interest and Additional Amounts, if any, and premium, if
any, on, such Debt Securities on the dates such payments are due in accordance
with the terms of such series. (Section 8.02) In order to avail itself of
either of the foregoing options, no Event of Default shall have occurred and
be continuing under the Indenture and the Company must provide to the Trustee
(i) an opinion of counsel to the effect that holders of the Debt Securities of
such series will not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of its option and will be
subject to Federal income tax on the same amount and in the same manner, and at
the same time as would have been the case if such option had not been exercised
and, in the case of Debt Securities being discharged, such opinion shall be
accompanied by a private letter ruling to that effect received from the United
States Internal Revenue Service (the "Service") or a revenue ruling pertaining
to a comparable form of transaction to that effect published by the Service,
(ii) an officers' certificate to the effect that no Event of Default or event
which with the giving of notice or lapse of time, or both, would become an
Event of Default, with respect to such Debt Securities shall have occurred and
be continuing on the date of the deposit, and (iii) if the Debt Securities are
listed on the New York Stock Exchange, an opinion of counsel to the effect that
the exercise of such option will not cause the Debt Securities to be delisted.
(Section 8.02) "Government Obligations" means generally direct noncallable
obligations of the government which issued the currency in which the Debt
Securities of the applicable series are denominated, noncallable obligations
the payment of the principal of and interest on which is fully guaranteed by
such government, and noncallable obligations on which the full faith and credit
of such government is pledged to the payment of the principal thereof and
interest thereon. (Section 1.01). In addition, the Company may obtain a
discharge under the Indenture with respect to all the Debt Securities of a
series by depositing with the Trustee, in trust, moneys or Government
Obligations sufficient to pay at maturity or upon redemption principal of,
premium, if any, and any interest and Additional Amounts on, all of the Debt
Securities of such series, provided that all of the Debt Securities of such
series are by their terms to become due and payable within one year or are to
be called for redemption within one year. No opinion of counsel or ruling
relating to the tax consequences to holders is required with respect to a
discharge pursuant to the provisions described in the immediately preceding
sentence. (Section 8.01) In the event of any discharge of Debt Securities
pursuant to the terms of the Indenture described above, the holders of such
Debt Securities will thereafter be able to look solely to such trust fund, and
not to the Company, for payments of principal, premium, if any, and interest
and Additional Amounts, if any. (Sections 8.01 and 8.02)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into, or sell, lease or
convey all or substantially all of its assets to, another corporation unless
(i) the successor or transferee corporation, which shall be a corporation
organized and existing under the laws of the United States or a State thereof,
assumes by supplemental indenture all the obligations of the Company under the
Debt Securities and the Indenture and (ii) the Company or successor
corporation, as the case may be, will not, immediately after such consolidation
or merger or sale, lease or conveyance, be in default in the performance of any
covenant or condition with respect to the Debt Securities or the Indenture.
The Company will deliver to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture comply with the terms of the Indenture. Upon any
consolidation or merger, or any sale, lease or conveyance of all or
substantially all of the assets of the Company, the successor corporation
formed by such consolidation or into which the Company is merged or to which
such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture. (Sections
5.01 and 5.02). Thereafter all obligations of the predecessor corporation
shall terminate. (Section 5.01)
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<PAGE> 18
MODIFICATION OF THE INDENTURE
The Indenture permits the Company and the Trustee to amend or
supplement the Indenture or the Debt Securities without notice to or consent of
any holder of a Debt Security for certain purposes, including without
limitation, to cure any ambiguity, defect or inconsistency, to comply with
Section 5.01 (relating to when the Company may consolidate, merge or sell all
or substantially all of its assets), to provide for uncertificated Debt
Securities, to establish the form or terms of Debt Securities of any series or
to make any change that does not adversely affect the rights of any holder of a
Debt Security. (Section 9.01) Certain modifications and amendments of the
Indenture may be made by the Company and the Trustee only with the consent of
the holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of each series issued under the Indenture which is
affected by the modification or amendment (voting as one class). However, no
such modification or amendment may, without the consent of the holder of each
Debt Security affected thereby, (i) reduce the aforesaid percentage of Debt
Securities whose holders must consent to an amendment, supplement or waiver;
(ii) reduce the rate or rates or extend the time for payment of interest or
Additional Amounts, if any, on any Debt Security; (iii) reduce the principal of
or premium, if any, on or extend the fixed maturity of any Debt Security; (iv)
modify or effect in any manner adverse to the holders of Debt Securities the
terms and conditions of the obligations of the Company in respect of its
obligations under the Indenture; (v) waive a default in the payment of
principal of or premium or interest or Additional Amounts, if any, on any Debt
Security; (vi) impair the right to institute a suit for the enforcement of any
payment on or with respect to any series of Debt Securities; (vii) change a
Place of Payment; or (viii) make any Debt Security payable in currency other
than that stated in the Debt Security. (Section 9.02)
REGARDING THE TRUSTEE
The Trustee is a participant in the Company's revolving credit
agreement, and the Company has maintained other banking relationships with the
Trustee in the normal course of business. The Trustee also acts as trustee and
paying agent for the Company's 7-1/8% Notes due July 15, 1999, 7-5/8% Notes due
July 15, 2002, 7-1/4% Debentures due May 15, 2005, 6 1/2% Notes due March 15,
2008, 7% Notes due March 15, 2018 and 9-1/8% Debentures due October 1, 2024.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
The Junior Subordinated Debt Securities may be issued in one or more
series under a Junior Subordinated Indenture, as supplemented from time to time
(as so supplemented, the "Junior Subordinated Indenture"), between the Company
and The First National Bank of Chicago, as trustee (the "Junior Subordinated
Indenture Trustee"). This summary of certain terms and provisions of the
Junior Subordinated Indenture does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Junior Subordinated
Indenture, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and to the Trust Indenture
Act. The Junior Subordinated Indenture is qualified under the Trust Indenture
Act. Parenthetical references in this Section are to provisions of the Junior
Subordinated Indenture. Certain terms defined in the Junior Subordinated
Indenture are capitalized in this Prospectus. Whenever particular defined
terms of the Junior Subordinated Indenture are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference.
GENERAL
Each series of Junior Subordinated Debt Securities will rank pari
passu with all other series of Junior Subordinated Debt Securities and will be
unsecured and subordinate and junior in right of payment to the extent and in
the manner set forth in the Junior Subordinated Indenture to all Senior Debt
(as defined below) of the Company. See "--Subordination." The Company is a
non-operating holding company and almost all of the operating assets of the
Company and its consolidated subsidiaries are owned by such subsidiaries. The
Company relies primarily on dividends from such subsidiaries to meet its
obligations. The payment of dividends by the Company's insurance company
subsidiaries is limited under the insurance company holding
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company laws of the states in which such subsidiaries are domiciled.
Accordingly, the Junior Subordinated Debt Securities will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Junior Subordinated Debt Securities should look
only to the assets of the Company for payments on the Junior Subordinated Debt
Securities. The payment of dividends by the Company's insurance company
subsidiaries is limited under the insurance holding company laws of the states
in which such subsidiaries are domiciled. Except as otherwise provided in the
applicable Prospectus Supplement, the Junior Subordinated Indenture does not
limit the incurrence or issuance of other secured or unsecured debt of the
Company, whether under the Junior Subordinated Indenture, any other indenture
that the Company may enter into in the future or otherwise. See
"--Subordination" and the Prospectus Supplement relating to any offering of
Offered Securities.
The Junior Subordinated Debt Securities will be issuable in one or
more series pursuant to an indenture supplemental to the Junior Subordinated
Indenture or a resolution of the Company's Board of Directors or a committee
thereof.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Junior Subordinated Debt Securities: (1)
the title of the Junior Subordinated Debt Securities; (2) any limit upon the
aggregate principal amount of the Junior Subordinated Debt Securities; (3) the
date or dates on which the principal of the Junior Subordinated Debt Securities
is payable (the "Stated Maturity") or the method of determination thereof; (4)
the rate or rates, if any, at which the Junior Subordinated Debt Securities
shall bear interest, the Interest Payment Dates on which any such interest
shall be payable, the right, if any, of the Company to defer or extend an
Interest Payment Date, and the Regular Record Date for any interest payable on
any Interest Payment Date or the method by which any of the foregoing shall be
determined; (5) the place or places where, subject to the terms of the Junior
Subordinated Indenture as described below under "Payment and Paying Agents",
the principal of and premium, if any, and interest on the Junior Subordinated
Debt Securities will be payable and where, subject to the terms of the Junior
Subordinated Indenture as described below under "--Denominations, Registration
and Transfer," the Junior Subordinated Debt Securities may be presented for
registration of transfer or exchange and the place or places where notices and
demands to or upon the Company in respect of the Junior Subordinated Debt
Securities and the Junior Subordinated Indentures may be made ("Place of
Payment"); (6) any period or periods within or date or dates on which, the
price or prices at which and the terms and conditions upon which Junior
Subordinated Debt Securities may be redeemed, in whole or in part, at the
option of the Company or a holder thereof; (7) the obligation or the right, if
any, of the Company or a holder thereof to redeem, purchase or repay the Junior
Subordinated Debt Securities and the period or periods within which, the price
or prices at which, the currency or currencies (including currency unit or
units) in which and the other terms and conditions upon which the Junior
Subordinated Debt Securities shall be redeemed, repaid or purchased, in whole
or in part, pursuant to such obligation; (8) the denominations in which any
Junior Subordinated Debt Securities shall be issuable if other than
denominations of $25 and any integral multiple thereof; (9) if other than in
U.S. Dollars, the currency or currencies (including currency unit or units) in
which the principal of (and premium, if any) and interest, if any, on the
Junior Subordinated Debt Securities shall be payable, or in which the Junior
Subordinated Debt Securities shall be denominated; (10) any additions,
modifications or deletions in the Events of Default or covenants of the Company
specified in the Junior Subordinated Indenture with respect to the Junior
Subordinated Debt Securities; (11) if other than the principal amount thereof,
the portion of the principal amount of Junior Subordinated Debt Securities that
shall be payable upon declaration of acceleration of the maturity thereof; (12)
any additions or changes to the Junior Subordinated Indenture with respect to a
series of Junior Subordinated Debt Securities as shall be necessary to permit
or facilitate the issuance of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; (13) any
index or indices used to determine the amount of payments of principal of and
premium, if any, on the Junior Subordinated Debt Securities and the manner in
which such amounts will be determined; (14) the terms and conditions relating
to the issuance of a temporary Global Security representing all of the Junior
Subordinated Debt Securities of such series and the exchange of such temporary
Global Security for definitive Junior Subordinated Debt Securities of such
series; (15) subject to the terms described under "--Global Junior Subordinated
Debt Securities", whether the Junior Subordinated Debt Securities of the series
shall be issued
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<PAGE> 20
in whole or in part in the form of one or more Global Securities and, in such
case, the Depositary for such Global Securities, which Depositary shall be a
clearing agency registered under the Exchange Act; (16) the appointment of any
Paying Agent or Agents; (17) the terms and conditions of any obligation or
right of the Company or a holder to convert or exchange the Junior Subordinated
Debt Securities into Preferred Securities; (18) the form of Trust Agreement and
Guarantee Agreement, if applicable; (19) the relative degree, if any, to which
such Junior Subordinated Debt Securities of the series shall be senior to or be
subordinated to other series of such Junior Subordinated Debt Securities or
other indebtedness of the Company in right of payment, whether such other
series of Junior Subordinated Debt Securities or other indebtedness are
outstanding or not; and (20) any other terms of the Junior Subordinated Debt
Securities not inconsistent with the provisions of the Junior Subordinated
Indenture.
Junior Subordinated Debt Securities may be sold at a substantial
discount below their stated principal amount, bearing no interest or interest
at a rate which at the time of issuance is below market rates. Certain United
States Federal income tax consequences and special considerations applicable to
any such Junior Subordinated Debt Securities will be described in the
applicable Prospectus Supplement.
If the purchase price of any of the Junior Subordinated Debt
Securities is payable in one or more foreign currencies or currency units or if
any Junior Subordinated Debt Securities are denominated in one or more foreign
currencies or currency units or if the principal of, premium, if any, or
interest, if any, on any Junior Subordinated Debt Securities is payable in one
or more foreign currencies or currency units, the restrictions, elections,
certain United States Federal income tax consequences, specific terms and other
information with respect to such issue of Junior Subordinated Debt Securities
and such foreign currency or currency units will be set forth in the applicable
Prospectus Supplement.
If any index is used to determine the amount of payments of principal
of, premium, if any, or interest on any series of Junior Subordinated Debt
Securities, special United States Federal income tax, accounting and other
considerations applicable thereto will be described in the applicable
Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement,
the Junior Subordinated Debt Securities will be issuable only in registered
form without coupons in denominations of $25 and any integral multiple thereof.
Junior Subordinated Debt Securities of any series will be exchangeable for
other Junior Subordinated Debt Securities of the same issue and series, of any
authorized denominations, of a like aggregate principal amount, of the same
Original Issue Date and Stated Maturity and bearing the same interest rate.
Junior Subordinated Debt Securities may be presented for exchange as
provided above, and may be presented for registration of transfer (with the
form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed), at the office of the appropriate Securities Registrar
or at the office of any transfer agent designated by the Company for such
purpose with respect to any series of Junior Subordinated Debt Securities and
referred to in the applicable Prospectus Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
Junior Subordinated Indenture. The Company will appoint the Trustee as
Securities Registrar under the Junior Subordinated Indenture. If the
applicable Prospectus Supplement refers to any transfer agents (in addition to
the Securities Registrar) initially designated by the Company with respect to
any series of Junior Subordinated Debt Securities, the Company may at any time
rescind the designation of any such transfer agent or approve a change in the
location through which any such transfer agent acts, provided that the Company
maintains a transfer agent in each Place of Payment for such series. The
Company may at any time designate additional transfer agents with respect to
any series of Junior Subordinated Debt Securities.
In the event of any redemption, neither the Company nor the Junior
Subordinated Indenture Trustee shall be required to (i) issue, register the
transfer of or exchange Junior Subordinated Debt Securities of any
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<PAGE> 21
series during a period beginning at the opening of business 15 days before the
day of selection for redemption of Junior Subordinated Debt Securities of that
series and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Junior
Subordinated Debt Securities so selected for redemption, except, in the case of
any Junior Subordinated Debt Securities being redeemed in part, any portion
thereof not to be redeemed.
GLOBAL JUNIOR SUBORDINATED DEBT SECURITIES
The Junior Subordinated Debt Securities of a series may be issued in
whole or in part in the form of one or more Global Junior Subordinated Debt
Securities that will be deposited with, or on behalf of, a depositary (the
"Depositary") identified in the Prospectus Supplement relating to such series.
Global Junior Subordinated Debt Securities may be issued only in fully
registered form and in either temporary or permanent form. Unless and until it
is exchanged in whole or in part for the individual Junior Subordinated Debt
Securities represented thereby, a Global Junior Subordinated Debt Security may
not be transferred except as a whole by the Depositary for such Global Junior
Subordinated Debt Security to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any nominee to a successor Depositary or any nominee of such
successor.
The specific terms of the depositary arrangement with respect to a
series of Junior Subordinated Debt Securities will be described in the
Prospectus Supplement relating to such series. The Company anticipates that
the following provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debt Security, and
the deposit of such Global Junior Subordinated Debt Security with or on behalf
of the Depositary, the Depositary for such Global Junior Subordinated Debt
Security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual Junior
Subordinated Debt Securities represented by such Global Junior Subordinated
Debt Security to the accounts of persons that have accounts with such
Depositary ("Participants"). Such accounts shall be designated by the dealers,
underwriters or agents with respect to such Junior Subordinated Debt Securities
or by the Company if such Junior Subordinated Debt Securities are offered and
sold directly by the Company. Ownership of beneficial interests in a Global
Junior Subordinated Debt Security will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial
interests in such Global Junior Subordinated Debt Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the applicable Depositary or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Junior Subordinated Debt
Security.
So long as the Depositary for a Global Junior Subordinated Debt
Security, or its nominee, is the registered owner of such Global Junior
Subordinated Debt Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Junior Subordinated Debt
Securities represented by such Global Junior Subordinated Debt Security for all
purposes under the Junior Subordinated Indenture governing such Junior
Subordinated Debt Securities. Except as provided below, owners of beneficial
interests in a Global Junior Subordinated Debt Security will not be entitled to
have any of the individual Junior Subordinated Debt Securities of the series
represented by such Global Junior Subordinated Debt Security registered in
their names, will not receive or be entitled to receive physical delivery of
any such Junior Subordinated Debt Securities of such series in definitive form
and will not be considered the owners or holders thereof under the Junior
Subordinated Indenture.
Payments of principal of (and premium, if any) and interest on
individual Junior Subordinated Debt Securities represented by a Global Junior
Subordinated Debt Security registered in the name of a Depositary or its
nominee will be made to the Depositary or its nominee, as the case may be, as
the registered owner of the Global Junior Subordinated Debt Security
representing such Junior Subordinated Debt Securities. None
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<PAGE> 22
of the Company, the Junior Subordinated Indenture Trustee, any Paying Agent, or
the Securities Registrar for such Junior Subordinated Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global Junior
Subordinated Debt Security representing such Junior Subordinated Debt
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the Depositary for a series of Junior
Subordinated Debt Securities or its nominee, upon receipt of any payment of
principal, premium or interest in respect of a permanent Global Junior
Subordinated Debt Security representing any of such Junior Subordinated Debt
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of such Global Junior Subordinated Debt Security for such Junior
Subordinated Debt Securities as shown on the records of such Depositary or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Junior Subordinated Debt Security held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Such payments will
be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if
a Depositary for a series of Junior Subordinated Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Junior Subordinated Debt Securities of such series in exchange
for the Global Junior Subordinated Debt Security representing such series of
Junior Subordinated Debt Securities. In addition, the Company may at any time
and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Junior Subordinated Debt Securities,
determine not to have any Junior Subordinated Debt Securities of such series
represented by one or more Global Junior Subordinated Debt Securities and, in
such event, will issue individual Junior Subordinated Debt Securities of such
series in exchange for the Global Junior Subordinated Debt Security or
Securities representing such series of Junior Subordinated Debt Securities.
Further, if the Company so specifies with respect to the Junior Subordinated
Debt Securities of a series, an owner of a beneficial interest in a Global
Junior Subordinated Debt Security representing Junior Subordinated Debt
Securities of such series may, on terms acceptable to the Company, the Junior
Subordinated Indenture Trustee and the Depositary for such Global Junior
Subordinated Debt Security, receive individual Junior Subordinated Debt
Securities of such series in exchange for such beneficial interests, subject to
any limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debt Securities. In any such instance, an owner of a beneficial
interest in a Global Junior Subordinated Debt Security will be entitled to
physical delivery of individual Junior Subordinated Debt Securities of the
series represented by such Global Junior Subordinated Debt Security equal in
principal amount to such beneficial interest and to have such Junior
Subordinated Debt Securities registered in its name. Individual Junior
Subordinated Debt Securities of such series so issued will be issued in
denominations, unless otherwise specified by the Company, of $25 and integral
multiples thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of principal of (and premium, if any) and any interest on Junior
Subordinated Debt Securities will be made at the office of the Junior
Subordinated Indenture Trustee in the City of New York or at the office of such
Paying Agent or Paying Agents as the Company may designate from time to time in
the applicable Prospectus Supplement, except that at the option of the Company
payment of any interest may be made (i), except in the case of Global Junior
Subordinated Debt Securities, by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register, provided that proper transfer
instructions have been received by the Regular Record Date. Unless otherwise
indicated in the applicable Prospectus Supplement, payment of any interest on
Junior Subordinated Debt Securities will be made to the Person in whose name
such Junior Subordinated Debt Security is registered at the close of business
on the Regular Record Date for
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<PAGE> 23
such interest, except in the case of Defaulted Interest. The Company may at
any time designate additional Paying Agents or rescind the designation of any
Paying Agent; however the Company will at all times be required to maintain a
Paying Agent in each Place of Payment for each series of Junior Subordinated
Debt Securities.
Any moneys deposited with the Junior Subordinated Indenture Trustee or
any Paying Agent, or then held by the Company in trust, for the payment of the
principal of (and premium, if any) or interest on any Junior Subordinated Debt
Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall, at the request
of the Company, be repaid to the Company and the holder of such Junior
Subordinated Debt Security shall thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE
If provided in the applicable Prospectus Supplement, the Company shall
have the right at any time and from time to time during the term of any series
of Junior Subordinated Debt Securities to defer payment of interest for such
number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the
Stated Maturity of such series of Junior Subordinated Debt Securities. Certain
United States Federal income tax consequences and special considerations
applicable to any such Junior Subordinated Debt Securities will be described in
the applicable Prospectus Supplement.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement,
Junior Subordinated Debt Securities will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement,
the Company may, at its option, redeem the Junior Subordinated Debt Securities
of any series in whole at any time or in part from time to time. Junior
Subordinated Debt Securities in denominations larger than $25 may be redeemed
in part but only in integral multiples of $25. Except as otherwise specified
in the applicable Prospectus Supplement, the redemption price for any Junior
Subordinated Debt Security so redeemed shall equal any accrued and unpaid
interest thereon to the redemption date, plus the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement,
if a Junior Subordinated Debt Security Tax Event (as defined below) in respect
of a series of Junior Subordinated Debt Securities shall occur and be
continuing, the Company may, at its option, redeem such series of Junior
Subordinated Debt Securities in whole (but not in part) at any time within 90
days of the occurrence of such Junior Subordinated Debt Security Tax Event, at
a redemption price equal to 100% of the principal amount of such Junior
Subordinated Debt Securities then outstanding plus accrued and unpaid interest
to the date fixed for redemption.
"Junior Subordinated Debt Security Tax Event" means the receipt by the
Company of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the applicable series of Junior Subordinated Debt Securities
under the Junior Subordinated Indenture, there is more than an insubstantial
risk that interest payable by the Company on such series of Junior Subordinated
Debt Securities is not, or within 90 days of the date of such opinion will not
be, deductible by the Company, in whole or in part, for United States Federal
income tax purposes.
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<PAGE> 24
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Junior Subordinated
Debt Securities to be redeemed at its registered address. Unless the Company
defaults in payment of the redemption price, on and after the redemption date
interest ceases to accrue on such Junior Subordinated Debt Securities or
portions thereof called for redemption.
RESTRICTIONS ON CERTAIN PAYMENTS
The Company will also covenant, as to each series of Junior
Subordinated Debt Securities, that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any of the Company's capital stock or (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Company (including other Junior Subordinated Debt Securities)
that rank pari passu with or junior in interest to the Junior Subordinated Debt
Securities or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu or junior in interest to the Junior Subordinated
Debt Securities (other than (a) dividends or distributions in common stock of
the Company, (b) redemptions or purchases of any rights pursuant to the
Company's Rights Plan, or any successor to such Rights Plan, and the
declaration of a dividend of such rights or the issuance of stock under such
plans in the future, (c) payments under any Guarantee and (d) purchases of
common stock related to the issuance of common stock under any of the Company's
benefit plans for its directors, officers or employees) if at such time (i)
there shall have occurred any event of which the Company has actual knowledge
that (a) with the giving of notice or the lapse of time, or both, would
constitute an "Event of Default" under the Junior Subordinated Indenture with
respect to the Junior Subordinated Debt Securities of such series and (b) in
respect of which the Company shall not have taken reasonable steps to cure,
(ii) if such Junior Subordinated Debt Securities are held by a Lincoln Trust of
a series of Related Preferred Securities, the Company shall be in default with
respect to its payment of any obligations under the Guarantee relating to such
Related Preferred Securities or (iii) the Company shall have given notice of
its selection of an Extension Period as provided in the Junior Subordinated
Indenture with respect to the Junior Subordinated Debt Securities of such
series and shall not have rescinded such notice, or such Extension Period, or
any extension thereof, shall be continuing.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time the Company and the Junior Subordinated Indenture
Trustee may, without the consent of the holders of any series of Junior
Subordinated Debt Securities, amend, waive or supplement the Junior
Subordinated Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of any series
of Junior Subordinated Debt Securities or, in the case of Corresponding Junior
Subordinated Debt Securities, the holders of the Related Preferred Securities
so long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Junior Subordinated Indenture under the Trust Indenture
Act. The Junior Subordinated Indenture contains provisions permitting the
Company and the Junior Subordinated Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of each outstanding
series of Junior Subordinated Debt Securities affected, to modify the Junior
Subordinated Indenture in a manner affecting the rights of the holders of such
series of the Junior Subordinated Debt Securities; provided, that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debt Security so affected, (i) change the Stated Maturity of any
series of Junior Subordinated Debt Securities, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon
(except such extension as is contemplated hereby) or (ii) reduce the percentage
of principal amount of Junior Subordinated Debt Securities of any series, the
holders of which are required to consent to any such modification of the Junior
Subordinated Indenture, provided that, in the case of Corresponding Junior
Subordinated Debt Securities, so long as any of the Related Preferred
Securities remain outstanding, no such modification may be made that adversely
affects the holders of such Preferred Securities in any material respect, and
no termination of the Junior Subordinated Indenture may occur, and no waiver of
any Junior Subordinated Debt Security Event of Default or compliance with any
covenant under
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<PAGE> 25
the Junior Subordinated Indenture may be effective, without the prior consent
of the holders of at least a majority of the aggregate liquidation preference
of such Related Preferred Securities unless and until the principal of the
Corresponding Junior Subordinated Debt Securities and all accrued and unpaid
interest thereon have been paid in full and certain other conditions are
satisfied.
In addition, the Company and the Junior Subordinated Indenture Trustee
may execute, without the consent of any holder of Junior Subordinated Debt
Securities, any supplemental Junior Subordinated Indenture for the purpose of
creating any new series of Junior Subordinated Debt Securities.
JUNIOR SUBORDINATED DEBT SECURITY EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to a series of Junior Subordinated Debt
Securities that has occurred and is continuing constitutes a "Junior
Subordinated Debt Security Event of Default" with respect to such series of
Junior Subordinated Debt Securities:
(i) failure for 30 days to pay any interest on such series of the
Junior Subordinated Debt Securities, when due (subject to the deferral of any
due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debt Securities when due whether at maturity, upon
redemption by declaration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Junior Subordinated Indenture for 90 days
after written notice to the Company from the Junior Subordinated Indenture
Trustee or the holders of at least 25% in aggregate outstanding principal
amount of such series of outstanding Junior Subordinated Debt Securities; or
(iv) certain events in bankruptcy, insolvency or reorganization of
the Company.
The holders of a majority in aggregate outstanding principal amount of
such series of Junior Subordinated Debt Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Junior Subordinated Indenture Trustee. The Junior Subordinated Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of such series of Junior Subordinated Debt Securities may declare the
principal due and payable immediately upon a Junior Subordinated Debt Security
Event of Default, and, in the case of Corresponding Junior Subordinated Debt
Securities, should the Junior Subordinated Indenture Trustee or such holders of
such Corresponding Junior Subordinated Debt Securities fail to make such
declaration, the holders of at least 25% in aggregate liquidation preference of
the Related Preferred Securities shall have such right. The holders of a
majority in aggregate outstanding principal amount of such series of Junior
Subordinated Debt Securities may annul such declaration and waive the default
if the default (other than the non-payment of the principal of such series of
Junior Subordinated Debt Securities which has become due solely by such
acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Junior Subordinated Indenture Trustee. In the case of
Corresponding Junior Subordinated Debt Securities, should the holders of such
Corresponding Junior Subordinated Debt Securities fail to annul such
declaration and waive such default, the holders of a majority in aggregate
liquidation preference of the Related Preferred Securities shall have such
right.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debt Securities affected thereby may, on behalf of the
holders of all the Junior Subordinated Debt Securities, waive any past default,
except a default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Junior Subordinated Indenture Trustee) or a default in respect of a covenant or
provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent
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of the holder of each outstanding Junior Subordinated Debt Security. In the
case of Corresponding Junior Subordinated Debt Securities, should the holders
of such Corresponding Junior Subordinated Debt Securities fail to annul such
declaration and waive such default, the holders of a majority in aggregate
liquidation preference of the Related Preferred Securities shall have such
right. The Company is required to file annually with the Junior Subordinated
Indenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
In case a Junior Subordinated Debt Security Event of Default shall
occur and be continuing as to a series of Corresponding Junior Subordinated
Debt Securities, the Property Trustee will have the right to declare the
principal of and the interest on such Corresponding Junior Subordinated Debt
Securities, and any other amounts payable under the Junior Subordinated
Indenture, to be forthwith due and payable and to enforce its other rights as a
creditor with respect to such Corresponding Junior Subordinated Debt
Securities.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Junior Subordinated Debt Security Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest or principal on the related Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable, a holder of
Preferred Securities may institute a legal proceeding directly against the
Company for enforcement of payment to such holder of the principal of or
interest on such related Junior Subordinated Debt Securities having a principal
amount equal to the aggregate Liquidation Amount of the related Preferred
Securities of such holder (a "Direct Action"). The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all of the Preferred
Securities. If the right to bring a Direct Action is removed, the applicable
Issue may become subject to the reporting obligations under the Securities
Exchange Act of 1934, as amended. The Company shall have the right under the
Junior Subordinated Indenture to set-off any payment made to such holder of
Preferred Securities by the Company in connection with a Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the related Junior Subordinated Debt
Securities.
The holders of the Preferred Securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debt Securities unless
there shall have been an Event of Default under the Trust Agreement. See
"Description of Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Company shall not
consolidate with or merge into any other Person or convey, transfer or lease
its properties and assets substantially as an entirety to any Person, and no
Person shall consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company,
unless (i) in case the Company consolidates with or merges into another Person
or conveys or transfers its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes the Company's obligations on the Junior Subordinated Debt
Securities issued under the Junior Subordinated Indenture; (ii) immediately
after giving effect thereto, no Junior Subordinated Debt Security Event of
Default, and no event which, after notice or lapse of time or both, would
become a Junior Subordinated Debt Security Event of Default, shall have
happened and be continuing; (iii) in the case of Corresponding Junior
Subordinated Debt Securities, such transaction is permitted under the related
Trust Agreement or Guarantee and does not give rise to any breach or violation
of the related Trust Agreement and Guarantee, and (iv) certain other conditions
as prescribed in the Junior Subordinated Indenture are met.
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The general provisions of the Junior Subordinated Indenture do not
afford holders of the Junior Subordinated Debt Securities protection in the
event of a highly leveraged or other transaction involving the Company that may
adversely affect holders of the Junior Subordinated Debt Securities.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other
things, all Junior Subordinated Debt Securities not previously delivered to the
Junior Subordinated Indenture Trustee for cancellation (i) have become due and
payable or (ii) will become due and payable at their Stated Maturity within one
year, and the Company deposits or causes to be deposited with the Junior
Subordinated Indenture Trustee trust funds, in trust, for the purpose and in an
amount in the currency or currencies in which the Junior Subordinated Debt
Securities are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debt Securities not previously delivered to the
Junior Subordinated Indenture Trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to the Stated
Maturity, as the case may be, then the Junior Subordinated Indenture will cease
to be of further effect (except as to the Company's obligations to pay all
other sums due pursuant to the Junior Subordinated Indenture and to provide the
officers' certificates and opinions of counsel described therein), and the
Company will be deemed to have satisfied and discharged the Junior Subordinated
Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus
Supplement, the Junior Subordinated Debt Securities of any series may be
convertible or exchangeable into Preferred Securities or other securities. The
specific terms on which Junior Subordinated Debt Securities of any series may
be so converted or exchanged will be set forth in the applicable Prospectus
Supplement. Such terms may include provisions for conversion or exchange,
either mandatory, at the option of the holder, or at the option of the Company,
in which case the number of shares of Preferred Securities or other securities
to be received by the Holders of Junior Subordinated Debt Securities would be
calculated as of a time and in the manner stated in the applicable Prospectus
Supplement.
SUBORDINATION
In the Junior Subordinated Indenture, the Company has covenanted and
agreed that any Junior Subordinated Debt Securities issued thereunder will be
subordinate and junior in right of payment to all Senior Debt to the extent
provided in the Junior Subordinated Indenture. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshaling of
assets or any bankruptcy, insolvency, debt restructuring or similar proceedings
in connection with any insolvency or bankruptcy proceeding of the Company, the
holders of Senior Debt will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on such Senior Debt
before the holders of Junior Subordinated Debt Securities or, in the case of
Corresponding Junior Subordinated Debt Securities, the Property Trustee on
behalf of the holders, will be entitled to receive or retain any payment in
respect of the principal of (and premium, if any) or interest, if any, on the
Junior Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Junior
Subordinated Debt Securities, the holders of all Senior Debt outstanding at the
time of such acceleration will first be entitled to receive payment in full of
all amounts due thereon (including any amounts due upon acceleration) before
the holders of Junior Subordinated Debt Securities will be entitled to receive
or retain any payment in respect of the principal of (or premium, if any) or
interest, if any, on the Junior Subordinated Debt Securities.
No payments on account of principal (or premium, if any) or interest,
if any, in respect of the Junior Subordinated Debt Securities may be made if
there shall have occurred and be continuing a default in any payment with
respect to Senior Debt, or an event of default with respect to any Senior Debt
resulting in the
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acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of the Junior Subordinated
Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are not superior in right of payment to the
Junior Subordinated Debt Securities or to other Debt which is pari passu with,
or subordinated to, the Junior Subordinated Debt Securities; provided, however,
that Senior Debt shall not be deemed to include (i) any Debt of the Company
which when incurred and without respect to any election under Section 1111(b)
of the Bankruptcy Code, was without recourse to the Company, (ii) any Debt of
the Company to any of its subsidiaries, (iii) Debt to any employee of the
Company, (iv) any liability for taxes, (v) indebtedness or monetary obligations
to trade creditors or assumed by the Company or any of its subsidiaries in the
ordinary course of business in connection with the obtaining of materials or
services, and (vi) any other debt securities issued pursuant to the Junior
Subordinated Indenture.
The Company is a non-operating holding company and almost all of the
operating assets of the Company are owned by such subsidiaries. The Company
relies primarily on dividends from such subsidiaries to meet its obligations
for payment of principal and interest on its outstanding debt obligations and
corporate expenses. Accordingly, the Junior Subordinated Debt Securities will
be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, including liabilities under contracts of insurance and
annuities written by the Company's insurance subsidiaries. Holders of Junior
Subordinated Debt Securities should look only to the assets of the Company for
payments of interest and principal and premium, if any.
The Junior Subordinated Indenture places no limitation on the amount
of additional Senior Debt that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Debt.
The Junior Subordinated Indenture provides that the foregoing
subordination provisions, insofar as they relate to any particular issue of
Junior Subordinated Debt Securities, may be changed prior to such issuance.
Any such change would be described in the applicable Prospectus Supplement.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debt
Securities will be governed by and construed in accordance with the laws of the
State of New York.
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INFORMATION CONCERNING THE JUNIOR SUBORDINATED INDENTURE TRUSTEE
The Junior Subordinated Indenture Trustee shall have and be subject to
all the duties and responsibilities specified with respect to an indenture
trustee under the Trust Indenture Act. Subject to such provisions, the Junior
Subordinated Indenture Trustee is under no obligation to exercise any of the
powers vested in it by the Junior Subordinated Indenture at the request of any
holder of Junior Subordinated Debt Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Junior Subordinated Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Junior Subordinated Indenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES
The Corresponding Junior Subordinated Debt Securities may be issued in
one or more series of Junior Subordinated Debt Securities under the Junior
Subordinated Indenture with terms corresponding to the terms of a series of
Related Preferred Securities. In that event, concurrently with the issuance of
each Lincoln Trust's Preferred Securities, such Lincoln Trust will invest the
proceeds thereof and the consideration paid by the Company for the Common
Securities in a series of Corresponding Junior Subordinated Debt Securities
issued by the Company to such Lincoln Trust. Each series of Corresponding
Junior Subordinated Debt Securities will be in the principal amount equal to
the aggregate stated Liquidation Amount of the Related Preferred Securities and
the Common Securities of such Lincoln Trust and will rank pari passu with all
other series of Junior Subordinated Debt Securities. Holders of the Related
Preferred Securities for a series of Corresponding Junior Subordinated Debt
Securities will have the rights in connection with modifications to the Junior
Subordinated Indenture or upon occurrence of Junior Subordinated Debt Security
Events of Default described under "--Modification of Junior Subordinated
Indenture" and "--Junior Subordinated Debt Security Events of Default", unless
provided otherwise in the Prospectus Supplement for such Related Preferred
Securities.
If a Special Event in respect of a Lincoln Trust of Related Preferred
Securities shall occur and be continuing, the Company may, at its option,
redeem the Corresponding Junior Subordinated Debt Securities at any time within
90 days of the occurrence of such Special Event, in whole but not in part,
subject to the provisions of the Junior Subordinated Indenture. The redemption
price for any Corresponding Junior Subordinated Debt Securities shall be equal
to 100% of the principal amount of such Corresponding Junior Subordinated Debt
Securities then outstanding plus accrued and unpaid interest to the date fixed
for redemption. For so long as the applicable Lincoln Trust is the holder of
all the outstanding series of Corresponding Junior Subordinated Debt
Securities, the proceeds of any such redemption will be used by the Lincoln
Trust to redeem the corresponding Trust Securities in accordance with their
terms. The Company may not redeem a series of Corresponding Junior
Subordinated Debt Securities in part unless all accrued and unpaid interest has
been paid in full on all outstanding Corresponding Junior Subordinated Debt
Securities of such series for all interest periods terminating on or prior to
the Redemption Date.
The Company will covenant in the Junior Subordinated Indenture as to
each series of Corresponding Junior Subordinated Debt Securities, that if and
so long as (i) the Lincoln Trust of the related series of Trust Securities is
the holder of all such Corresponding Junior Subordinated Debt Securities, (ii)
a Tax Event in respect of such Lincoln Trust has occurred and is continuing and
(iii) the Company has elected, and has not revoked such election, to pay
Additional Sums (as defined under "Description of Preferred Securities --
Redemption or Exchange") in respect of such Trust Securities, the Company will
pay to such Lincoln Trust such Additional Sums. The Company will also
covenant, as to each series of Corresponding Junior Subordinated Debt
Securities, (i) to maintain directly or indirectly 100% ownership of the Common
Securities of the Lincoln Trust to which Corresponding Junior Subordinated Debt
Securities have been issued, provided that certain successors which are
permitted pursuant to the Junior Subordinated Indenture may succeed to the
Company's ownership of the Common Securities, (ii) not to voluntarily
terminate, wind-up or liquidate any
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<PAGE> 30
Lincoln Trust, except (a) in connection with a distribution of Corresponding
Junior Subordinated Debt Securities to the holders of the Preferred Securities
in liquidation of such Lincoln Trust, or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the related Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms
and provisions of the related Trust Agreement, to cause such Lincoln Trust to
remain classified as a grantor trust and not as an association taxable as a
corporation for United States Federal income tax purposes.
DESCRIPTION OF PREFERRED STOCK AND COMMON STOCK
GENERAL
The Company may issue, separately or together with other Offered
Securities, shares of Common Stock or Preferred Stock, all as set forth in the
Prospectus Supplement relating to the Common Stock or Preferred Stock for which
this Prospectus is being delivered. In addition, if the Prospectus Supplement
so provides, the Debt Securities or Preferred Stock may be convertible into or
exchangeable for Common Stock.
The Company's Articles of Incorporation currently authorize the
issuance of 800,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock ("Preferred Stock"). The Company's Preferred Stock may be
issued from time to time in one or more series by resolution of the Board of
Directors. The Company has outstanding one series of Preferred Stock,
consisting of the Company's $3.00 Cumulative Convertible Preferred Stock,
Series A (without par value) (the "Series A Preferred Stock"). At December 31,
1997, the Company had issued and outstanding 100,859,478 shares of Common Stock
and 35,091 shares of Series A Preferred Stock.
As described under "Description of Depositary Shares", the Company
may, at its option, elect to offer depositary shares ("Depositary Shares")
evidenced by depositary receipts ("Depositary Receipts"), each representing an
interest (to be specified in the Prospectus Supplement relating to the
particular series of the Preferred Stock) in a share of the particular series
of the Preferred Stock issued and deposited with a Preferred Stock Depositary
(as defined herein).
The following descriptions of the classes of the Company's capital
stock are summaries, do not purport to be complete, and are subject, in all
respects, to the applicable provisions of the Indiana Business Corporation Law
and the Company's Articles of Incorporation (including the Certificate of
Resolution by the Board of Directors of the Company Designating the Rights and
Preferences of the Series A Preferred Stock), and the Rights Agreement,
referred to below, with The First National Bank of Boston, which, in each case,
are included as exhibits to the Registration Statement of which this Prospectus
forms a part.
COMMON STOCK
Holders of the Company's Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors after all
dividends accrued on all preferred or special classes of shares entitled to
preferential dividends have been paid or declared and set apart for payment out
of funds legally available therefor. Upon liquidation, dissolution or winding
up of the affairs of the Company, whether voluntary or involuntary, holders of
Common Stock are entitled to receive pro rata any net assets of the Company
remaining after the claims of creditors and preferences of the Series A
Preferred Stock, and any other series of Preferred Stock at the time
outstanding, have been paid in full. The Company's Articles of Incorporation
provide that holders of Common Stock and holders of any series of Preferred
Stock from time to time outstanding shall each have the right at every meeting
of shareholders to one vote for each share of Common Stock and/or Preferred
Stock so held, and holders of Common Stock and holders of Preferred Stock shall
so vote as one class. Under certain circumstances as provided by law, the
Company's Articles of Incorporation or the terms of the Preferred Stock,
certain series of Preferred Stock may vote as a separate class or classes. The
Company's Bylaws presently provide for three classes of directors, with
directors in each class serving
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staggered three-year terms. The holders of Common Stock do not have any
preemptive rights to subscribe for additional shares, and the Common Stock does
not have cumulative voting rights.
The Company's Common Stock is listed on the New York, Chicago, Pacific
and London Stock Exchanges. The outstanding shares of Common Stock are, and
the Common Stock offered hereby when issued will be, validly issued, fully paid
and non-assessable. The Company will take appropriate action to list the
Common Stock offered hereby as described in the Prospectus Supplement relating
to any issuance of Common Stock.
Common Stock Purchase Rights. On November 14, 1996, the Board of
Directors of the Company authorized the amendment and restatement of the Rights
Agreement dated November 7, 1986 between the Company and The First National
Bank of Boston as rights agent (the "Rights Agent"), relating to certain Common
Share purchase rights (the "Common Rights") issued on each outstanding share of
Common Stock of the Company ("Common Share"). After separation from the Common
Stock, each Common Right will entitle the holder thereof until the earlier of
November 14, 2006 or the redemption of the Common Rights to buy one Common
Share at an exercise price of $200.00, subject to adjustment. The Common
Rights will continue to be represented by the certificates for Common Shares
and will not be exercisable, or transferable apart from the Common Shares,
until the earlier of the tenth calendar day after the announcement that a
person or group has acquired beneficial ownership of 15% or more of the Common
Shares (an "Acquiring Person") or the tenth business day after a person
commences, or announces an intention to commence, an offer the consummation of
which would result in a person beneficially owning 15% or more of the Common
Shares. Separate certificates for the Common Rights will be mailed to holders
of the Common Shares as of such date. The Common Rights will then begin
trading separately from the Common Shares. As long as the Common Rights are
attached to the Common Shares, the Company will issue one Common Right with
each Common Share that shall become outstanding so that all Common Shares will
have attached Common Rights.
In the event that (1) the Company is acquired in a merger or other
business combination transaction, or (2) any person consolidates or merges with
the Company and all or part of the Common Shares are exchanged for securities,
cash or property of any other person, or (3) 50% or more of the Company's
consolidated assets or earning power are sold, each Common Right will entitle
its holder to purchase, at the exercise price of the Common Right, that number
of shares of common stock of the surviving company which at the time of such
transaction would have a market value of two times the exercise price of the
Common Right. Alternatively, if a person acquires 15% or more of the
outstanding Common Shares, each Common Right not owned by the Acquiring Person
would become exercisable for the number of Common Shares which would then have
a market value of two times the exercise price of the Common Right. In
addition, at any time after a person becomes an Acquiring Person, and before
its acquisition of 50% or more of the Common Shares, the Board of Directors of
the Company may exchange Common Rights, other than Common Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one Common Share
per Common Right (subject to adjustment).
The Common Rights are redeemable in whole, but not in part, at $.01
per Common Right at any time prior to the expiration of 10 calendar days from
the date of the public announcement that a person or group has become an
Acquiring Person. The Common Rights will expire on November 14, 2006 (unless
sooner redeemed). Until a Common Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
The purchase price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Common Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) as a result of the grant to holders of the Common Shares of
certain rights or warrants to subscribe for Common Shares or convertible
securities at less than the current market price of the Common Shares or (iii)
as a result of the distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends or dividends
payable in the Common Shares) or of subscription
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<PAGE> 32
rights or warrants (other than those referred to above). With certain
exceptions, no adjustment in the purchase price will be required until
cumulative adjustments require an adjustment of at least 1% in such purchase
price.
The Common Rights have certain anti-takeover effects. The Common
Rights may cause substantial dilution to a person or group that attempts to
acquire the Company on terms not approved by the Board of Directors of the
Company, except pursuant to an offer conditioned on a substantial number of
Common Rights being acquired. The Common Rights should not interfere with any
merger or other business combination approved by the Board of Directors since
the Common Rights may be redeemed in whole, but not in part, by the company at
$.01 per Common Right prior to the expiration of ten calendar days from the
date of the public announcement that a person or group has become an Acquiring
Person.
Certain Provisions of the Company's Articles of Incorporation. The
Company's Articles of Incorporation provide that the affirmative vote of the
holders of three-fourths of the Company's voting stock is required to amend
Article VII, which deals with the number, classification, qualifications and
removal of directors. Article VII provides that the number of directors may be
fixed in the Bylaws, that qualifications for directors may be set in the
Bylaws, and that the Bylaws may provide for classification of the Board. The
Bylaws can be amended only by action of the Board. Article VII also provides
that directors can be removed, with or without cause, at a meeting of
shareholders called expressly for that purpose upon the affirmative vote of the
holders of at least three-fourths of the Company's voting stock.
The provisions of Article VII requiring the affirmative vote of
three-fourths of the Company's voting stock to amend Article VII could make it
difficult for the shareholders to change the existing provision of that
Article, which, in turn, could discourage proxy contests and tender offers and
make it more likely that incumbent directors will maintain their positions.
The Articles of Incorporation also contain a "fair price" provision
which requires, subject to certain exceptions, certain kinds of business
combinations involving the Company and any shareholder holding 10% or more of
the Company's voting stock (or certain affiliates of such shareholder) to be
approved by the holders of at least three-fourths of the Company's voting
stock, unless (i) the transaction is approved by a majority of the members of
the Board of Directors of the Company who are not affiliated with the 10%
shareholder making the proposal, or (ii) the transaction meets certain minimum
price and procedural requirements (in either of which cases, only the normal
shareholder and director approval requirements of the Indiana Business
Corporation Law would govern the transaction). The "fair price" provision may
be amended or repealed only upon the affirmative vote of the holders of at
least three-fourths of the Company's voting stock. The "fair price" provision
is intended to increase the likelihood that all shareholders of the Company
will be treated similarly if certain kinds of business combinations are
effected. The "fair price" provision may have the effect of making a takeover
of the Company more expensive and may therefore discourage tender offers for
less than three-fourths of the Company's stock and acquisitions of substantial
blocks of the Company's stock with a view to acquiring control of the Company.
Certain State Law Provisions. Chapter 43 of the Indiana Business
Corporation Law also restricts business combinations with interested
shareholders. It prohibits certain business combinations, including mergers,
sales of assets, recapitalizations, and reverse stock splits, between certain
corporations having 100 or more shareholders that also have a class of voting
shares registered with the Securities and Exchange Commission under Section 12
of the Exchange Act (which includes the Company) and an interested shareholder,
defined as the beneficial owner of 10% or more of the voting power of the
outstanding voting shares of that corporation, for five years following the
date the shareholder acquired such 10% beneficial ownership, unless the
acquisition or the business combination was approved by the board of directors
in advance of such date. Moreover, the acquisition or business combination
must meet all requirements of the corporation's articles of incorporation, as
well as the requirements specifically set out in the Indiana Business
Corporation Law. After the five-year period expires, a business combination
with an interested shareholder that did not receive board approval prior to the
interested shareholder's acquisition date may take place only if such
combination is approved by a majority vote of shares not held by the interested
shareholder or its
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affiliates or if the proposed combination meets certain minimum price
requirements based upon the highest price paid by the interested shareholder.
The aggregate amount of cash and the market value of non-cash consideration to
be received by holders of all outstanding stock other than common stock is to
be determined under criteria similar to those for common stock, except that the
minimum price to be received by such shareholders cannot be less than the
highest preferential amount per share to which holders of such class of stock
are entitled in the event of voluntary dissolution, plus dividends declared or
due. The consideration to be received by holders of a particular class must be
distributed promptly and paid in cash or in the same form as the interested
shareholder used to acquire the largest number of shares it owns in that class.
Finally, the interested shareholder must not have become the beneficial owner
of any more voting shares of stock since it became an interested shareholder,
with certain exceptions.
Chapter 42 of the Indiana Business Corporation Law includes provisions
designed to protect minority shareholders in the event that a person acquires,
pursuant to a tender offer or otherwise, shares giving it more than 20%, more
than 33-1/3%, or more than 50% of the outstanding voting power ("Control
Shares") of corporations having 100 or more shareholders. Unless the
corporation's articles of incorporation or bylaws provide that Chapter 42 does
not apply to control share acquisitions of shares of the corporation before the
control share acquisition, an acquirer who purchases Control Shares without
seeking and obtaining the prior approval of the board of directors cannot vote
the Control Shares until each class or series of shares entitled to vote
separately on the proposal, by a majority of all votes entitled to be cast by
that group (excluding the Control Shares and any shares held by officers of the
corporation and employees of the corporation who are directors thereof),
approve in a special or annual meeting the rights of the acquirer to vote the
Control Shares. An Indiana corporation otherwise subject to Chapter 42 may
elect not to be covered by the statute by so providing in its articles of
incorporation or bylaws. The Company is currently subject to the statute.
Indiana insurance laws and regulations provide that no person may
acquire voting securities of the Company if after such acquisition such person
would directly or indirectly be in control of the Company, unless such person
has provided certain required information to the Company and to the Indiana
Insurance Commissioner (the "Indiana Commissioner") and the Indiana
Commissioner has approved the acquisition. Control of the Company is presumed
to exist if any person beneficially owns 10% or more of the voting securities
of the Company. Furthermore, the Indiana Commissioner may determine, after
notice and hearing, that control exists notwithstanding the absence of a
presumption to that effect. Consequently, no person may acquire, directly or
indirectly, 10% or more of the voting securities of the Company to be
outstanding after the Offerings, or otherwise acquire control of the Company,
unless such person has provided such required information to the Indiana
Commissioner and the Indiana Commissioner has approved such acquisition.
Transfer Agent and Registrar. The First National Bank of Boston
serves as Transfer Agent and Registrar for shares of the Company's Common
Stock.
PREFERRED STOCK
The Company's Preferred Stock has, upon issuance, preference over the
Common Stock with respect to the payment of dividends and the distribution of
assets in the event of liquidation, dissolution or winding up of the Company.
Other relative rights, preferences and limitations of each series of Preferred
Stock, including dividend, redemption, liquidation, sinking fund, conversion
and other provisions, are determined by the Board of Directors in the
resolutions establishing and designating such series and as described in the
Prospectus Supplement relating to the series of Preferred Stock. The Series A
Preferred Stock constitutes the only series of Preferred Stock currently
authorized for issuance by the Board of Directors.
The Company's Articles of Incorporation provide that each holder of
Preferred Stock of any series from time to time outstanding shall be entitled
to one vote per share upon all matters submitted to vote at every meeting of
shareholders of the Company. Further, in the event that six or more quarterly
dividends, whether or not consecutive, on any series of Preferred Stock shall
be in default, the holders of any outstanding series of Preferred Stock as to
which such default exists shall be entitled, at the next annual meeting of
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shareholders, to vote as a class to elect two directors of the Company. Such
right shall continue with respect to shares of cumulative Preferred Stock,
including the Series A Preferred Stock, until all accumulated and unpaid
dividends on all such shares, the holders of which were entitled to vote at the
previous annual meeting of shareholders, have been paid or declared and set
aside for payment and, with respect to shares of non-cumulative Preferred
Stock, if any, until any non-cumulative dividends have been paid or declared
and set apart for payment for four consecutive quarterly dividend periods on
all such shares, the holders of which were entitled to vote at the previous
annual meeting of shareholders.
The approval of the holders of record of at least two-thirds of the
outstanding shares of all series of Preferred Stock of the Company, voting as a
class, will be required to (a) amend the Company's Articles of Incorporation to
create or authorize any stock ranking prior to or on a parity with such
Preferred Stock with respect to the payment of dividends or distributions upon
dissolution, liquidation or winding up, or to create or authorize any security
convertible into shares of any such stock; (b) amend, alter, change or repeal
any of the express terms of the Preferred Stock, or any series thereof, in any
prejudicial manner (provided only holders of two-thirds of the outstanding
shares of the series prejudiced by such change or repeal need consent to such
action); (c) merge or consolidate with another corporation whereby the Company
is not the surviving entity, if thereby the rights, preferences or powers of
the Preferred Stock would be adversely affected or Offered Securities would
thereupon be authorized or outstanding which could not otherwise have been
created without the approval of such Preferred Stockholders; or (d) authorize,
or revoke a previously authorized, voluntary dissolution of the Company,
approve any limitation of the term of the existence of the Company or authorize
the sale, lease, exchange or other disposition of all or substantially all of
the property of the Company.
In the event of voluntary or involuntary dissolution, liquidation or
winding-up of the Company, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to its shareholders, before distribution of assets is made to
holders of Common Stock or any other class of stock ranking junior to such
series of Preferred Stock upon liquidation, a liquidating distribution in an
amount per share as set forth in the Prospectus Supplement relating to such
series of Preferred Stock, plus accrued and unpaid dividends.
The Preferred Stock, when issued, will be fully paid and
non-assessable. Unless otherwise specified in the Prospectus Supplement
relating to the particular series of a Preferred Stock, each series of
Preferred Stock will be on a parity in all respects with other series of
Preferred Stock.
SERIES A PREFERRED STOCK
At December 31, 1997, the Company had issued and outstanding 35,091
shares of Series A Preferred Stock. Cumulative dividends are payable
quarterly, as declared by the Board of Directors, on shares of Series A
Preferred Stock at the per annum rate of $3.00 per share. Upon the
liquidation, dissolution or winding up of the Company, the Series A Preferred
Stock is entitled to a liquidation preference of $80.00 per share, or
$2,807,280 in the aggregate at December 31, 1997, plus accrued dividends,
before any assets may be distributed to holders of Common Stock or any other
stock ranking junior to the Series A Preferred Stock. The Series A Preferred
Stock may be redeemed at any time at the option of the Company, in whole or in
part, at a redemption price of $80.00 per share plus accrued dividends, and the
Series A Preferred Stock is convertible into Common Stock at the option of the
holder at a rate of eight shares of Common Stock (subject to adjustment) for
each share of Series A Preferred Stock.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of
certain provisions of the Deposit Agreement (as defined below) and of the
Depositary Shares and Depositary Receipts summarizes the material terms of the
Deposit Agreement and of the Depositary Shares and Depositary Receipts, and is
qualified in its
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entirety by reference to, the form of Deposit Agreement and form of Depositary
Receipts relating to each series of the Preferred Stock.
GENERAL
The Company may, at its option, elect to have shares of Preferred
Stock be represented by Depositary Shares. The shares of any series of the
Preferred Stock underlying the Depositary Shares will be deposited under a
separate deposit agreement (the "Deposit Agreement") between the Company and a
bank or trust company selected by the Company (the "Preferred Stock
Depositary"). The Prospectus Supplement relating to a series of Depositary
Shares will set forth the name and address of the Preferred Stock Depositary.
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
will be entitled, proportionately, to all the rights, preferences and
privileges of the Preferred Stock represented thereby (including dividend,
voting, redemption, conversion, exchange and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
A holder of Depositary Shares will be entitled to receive the shares
of Preferred Stock (but only in whole shares of Preferred Stock) underlying
such Depositary Shares. If the Depositary Receipts delivered by the holder
evidence a number of Depositary Shares in excess of the whole number of shares
of Preferred Stock to be withdrawn, the Depositary will deliver to such holder
at the same time a new Depositary Receipt evidencing such excess number of
Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or
other cash distributions in respect to the Preferred Stock to the record
holders of Depositary Receipts in proportion, insofar as possible, to the
number of Depositary Shares owned by such holders.
In the event of a distribution other than in cash in respect to the
Preferred Stock, the Preferred Stock Depositary will distribute property
received by it to the record holders of Depositary Receipts in proportion,
insofar as possible, to the number of Depositary Shares owned by such holders,
unless the Preferred Stock Depositary determines that it is not feasible to
make such distribution, in which case the Preferred Stock Depositary may, with
the approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including sale (at
public or private sale) of such property and distribution of the net proceeds
from such sale to such holders.
The amount so distributed in any of the foregoing cases will be
reduced by any amount required to be withheld by the Company or the Preferred
Stock Depositary on account of taxes.
CONVERSION AND EXCHANGE
If any Preferred Stock underlying the Depositary Shares is subject to
provisions relating to its conversion or exchange as set forth in the
Prospectus Supplement relating thereto, each record holder of Depositary Shares
will have the right or obligation to convert or exchange such Depositary Shares
pursuant to the terms thereof.
REDEMPTION OF DEPOSITARY SHARES
If Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds received
by the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of the Preferred Stock held by the Preferred Stock Depositary. The
redemption price per
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Depositary Share will be equal to the aggregate redemption price payable with
respect to the number of shares of Preferred Stock underlying the Depositary
Shares. Whenever the Company redeems Preferred Stock from the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date a proportionate number of Depositary Shares representing the
shares of Preferred Stock that were redeemed. If less than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be
selected by lot or pro rata as may be determined by the Company.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by the Company with
the Preferred Stock Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of two
years from the date such funds are so deposited.
VOTING
Upon receipt of notice of any meeting at which the holders of any
shares of Preferred Stock underlying the Depositary Shares are entitled to
vote, the Preferred Stock Depositary will mail the information contained in
such notice to the record holders of the Depositary Receipts. Each record
holder of such Depositary Receipts on the record date (which will be the same
date as the record date for the Preferred Stock) will be entitled to instruct
the Preferred Stock Depositary as to the exercise of the voting rights
pertaining to the number of shares of Preferred Stock underlying such holder's
Depositary Shares. The Preferred Stock Depositary will endeavor, insofar as
practicable, to vote the number of shares of Preferred Stock underlying such
Depositary Shares in accordance with such instructions, and the Company will
agree to take all reasonable action which may be deemed necessary by the
Preferred Stock Depositary in order to enable the Preferred Stock Depositary to
do so. The Preferred Stock Depositary will abstain from voting the Preferred
Stock to the extent it does not receive specific written instructions from
holders of Depositary Receipts representing such Preferred Stock.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of or
any election on the part of the Company to call for the redemption of any
Preferred Stock, the Preferred Stock Depositary shall in each such instance fix
a record date (which shall be the same as the record date for the Preferred
Stock) for the determination of the holders of Depositary Receipts (x) who
shall be entitled to receive such dividend, distribution, rights, preferences
or privileges or the net proceeds of the sale thereof or (y) who shall be
entitled to give instructions for the exercise of voting rights at any such
meeting or to receive notice of such meeting or of such redemption or
conversion, subject to the provisions of the Deposit Agreement.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt and any provision of the Deposit
Agreement may at any time be amended by agreement between the Company and the
Preferred Stock Depositary. However, any amendment which imposes or increases
any fees, taxes or other charges payable by the holders of Depositary Receipts
(other than taxes and other governmental charges, fees and other expenses
payable by such holders as stated under "Charges of Preferred Stock
Depositary"), or which otherwise prejudices any substantial existing right of
holders of Depositary Receipts, will not take effect as to outstanding
Depositary Receipts until the expiration of 90 days after notice of such
amendment has been mailed to the record holders of outstanding Depositary
Receipts.
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Whenever so directed by the Company, the Preferred Stock Depositary
will terminate the Deposit Agreement by mailing notice of such termination to
the record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred
Stock Depositary may likewise terminate the Deposit Agreement if at any time 45
days shall have expired after the Preferred Stock Depositary shall have
delivered to the Company a written notice of its election to resign and a
successor depositary shall not have been appointed and accepted its
appointment. If any Depositary Receipts remain outstanding after the date of
termination, the Preferred Stock Depositary thereafter will discontinue the
transfer of Depositary Receipts, will suspend the distribution of dividends to
the holders thereof, and will not give any further notices (other than notice
of such termination) or perform any further acts under the Deposit Agreement
except as provided below and except that the Preferred Stock Depositary will
continue (i) to collect dividends on the Preferred Stock and any other
distributions with respect thereto and (ii) to deliver the Preferred Stock
together with such dividends and distributions and the net proceeds of any
sales of rights, preferences, privileges or other property, without liability
for interest thereon, in exchange for Depositary Receipts surrendered. At any
time after the expiration of two years from the date of termination, the
Preferred Stock Depositary may sell the Preferred Stock then held by it at
public or private sales, at such place or places and upon such terms as it
deems proper and may thereafter hold the net proceeds of any such sale,
together with any money and other property then held by it, without liability
for interest thereon, for the pro rata benefit of the holders of Depositary
Receipts which have not been surrendered.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all charges of the Preferred Stock Depositary
including charges in connection with the initial deposit of the Preferred
Stock, the initial issuance of the Depositary Receipts, the distribution of
information to the holders of Depositary Receipts with respect to matters on
which Preferred Stock is entitled to vote, withdrawals of the Preferred Stock
by the holders of Depositary Receipts or redemption or conversion of the
Preferred Stock, except for taxes (including transfer taxes, if any) and other
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be at the expense of holders of Depositary Receipts or
persons depositing Preferred Stock.
MISCELLANEOUS
The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts at its corporate office and its New York office,
all reports and communications from the Company which are delivered to the
Preferred Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable
if it is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Preferred Stock Depositary under the Deposit Agreement are limited to
performing its duties thereunder without negligence or bad faith. The
obligations of the Company under the Deposit Agreement are limited to
performing its duties thereunder in good faith. Neither the Company nor the
Preferred Stock Depositary is obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Preferred Stock
Depositary are entitled to rely upon advice of or information from counsel,
accountants or other persons believed to be competent and on documents believed
to be genuine.
The Preferred Stock Depositary may resign at any time or be removed by
the Company, effective upon the acceptance by its successor of its appointment;
provided, that if a successor Preferred Stock Depositary has not been appointed
or accepted such appointment within 45 days after the Preferred Stock
Depositary has delivered a notice of election to resign to the Company, the
Preferred Stock Depositary may terminate the Deposit Agreement. See "Amendment
and Termination of Deposit Agreement" above.
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DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants to purchase Debt Securities, Preferred
Stock (or Depositary Shares representing Preferred Stock) or Common Stock
(collectively, the "Underlying Warrant Securities"), and such Warrants may be
issued independently or together with any such Underlying Warrant Securities
and may be attached to or separate from such Underlying Warrant Securities.
Each series of Warrants will be issued under a separate warrant agreement (each
a "Warrant Agreement") to be entered into between the Company and a warrant
agent ("Warrant Agent"). The Warrant Agent will act solely as an agent of the
Company in connection with the Warrants of such series and will not assume any
obligation or relationship of agency for or with holders or beneficial owners
of Warrants. The following sets forth certain general terms and provisions of
the Warrants offered hereby. Further terms of the Warrants and the applicable
Warrant Agreement are set forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of any
Warrants in respect of which this Prospectus is being delivered, including the
following: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currency or currencies, including composite currencies, in which the price
of such Warrants may be payable; (v) the designation and terms of the
Underlying Warrant Securities purchasable upon exercise of such Warrants; (vi)
the price at which and the currency or currencies, including composite
currencies, in which the Underlying Warrant Securities purchasable upon
exercise of such Warrants may be purchased; (vii) the date on which the right
to exercise such Warrants shall commence and the date on which such right shall
expire; (viii) whether such Warrants will be issued in registered form or
bearer form; (ix) if applicable, the minimum or maximum amount of such Warrants
which may be exercised at any one time; (x) if applicable, the designation and
terms of the Underlying Warrant Securities with which such Warrants are issued
and the number of such Warrants issued with each such Underlying Warrant
Security; (xi) if applicable, the date on and after which such Warrants and the
related Underlying Warrant Securities will be separately transferable; (xii)
information with respect to book-entry procedures, if any; (xiii) if
applicable, a discussion of certain United States federal income tax
considerations; and (xiv) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each Lincoln Trust,
the Issuer Trustees on behalf of such Lincoln Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities of a particular
issue will represent preferred beneficial interests in the Lincoln Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities of such Lincoln Trust, as well as other benefits as
described in the corresponding Trust Agreement. This summary of certain
provisions of the Preferred Securities and each Trust Agreement does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Trust Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act. Wherever
particular defined terms of a Trust Agreement (as amended or supplemented from
time to time) are referred to herein or in a Prospectus Supplement, such
defined terms are incorporated herein or therein by reference. The form of the
Trust Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Each of the Lincoln Trusts is a legally
separate entity and the assets of one are not available to satisfy the
obligations of any of the others.
GENERAL
The Preferred Securities of a Lincoln Trust will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities of that
Lincoln Trust except as described under "--Subordination of Common Securities."
Legal title to the Corresponding Junior Subordinated Debt Securities will be
held by
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the Property Trustee in trust for the benefit of the holders of the related
Preferred Securities and Common Securities. Each Guarantee Agreement executed
by the Company for the benefit of the holders of a Lincoln Trust's Preferred
Securities (the "Guarantee" for such Preferred Securities) will be a guarantee
on a subordinated basis with respect to the related Preferred Securities but
will not guarantee payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when the related Lincoln Trust does
not have funds on hand available to make such payments. See "Description of
Guarantees."
DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. In the event that any
date on which Distributions are payable on the Preferred Securities is not a
Business Day (as defined below), payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect to any such delay) except
that, if such Business Day is in the next succeeding calendar year, payment of
such Distribution shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date (each date on
which Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to remain closed or a
day on which the corporate trust office of the Property Trustee or the Junior
Subordinated Indenture Trustee (as defined herein) is closed for business.
Each Lincoln Trust's Preferred Securities represent preferred
beneficial interests in the applicable Lincoln Trust, and the Distributions on
each Preferred Security will be payable at a rate specified in the Prospectus
Supplement for such Preferred Securities. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months unless otherwise specified in the applicable Prospectus Supplement.
Distributions to which holders of Preferred Securities are entitled will
accumulate additional Distributions at the rate per annum if and as specified
in the applicable Prospectus Supplement. The term "Distributions" as used
herein includes any such additional Distributions unless otherwise stated.
If provided in the applicable Prospectus Supplement, the Company has
the right under the Junior Subordinated Indenture, pursuant to which it will
issue the Corresponding Junior Subordinated Debt Securities, to defer the
payment of interest at any time or from time to time on any series of the
Corresponding Junior Subordinated Debt Securities for a period which will be
specified in such Prospectus Supplement relating to such series (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Corresponding Junior Subordinated Debt Securities. As a
consequence of any such extension, Distributions on the corresponding Preferred
Securities would be deferred (but would continue to accumulate additional
Distributions thereon at the rate per annum set forth in the Prospectus
Supplement for such Preferred Securities) by the Lincoln Trust which issued
such Preferred Securities during any such Extension Period. During such
Extension Period the Company may not, and may not permit any subsidiary of the
Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to the Corresponding
Junior Subordinated Debt Securities or make any guarantee payments with respect
to any guarantee by the Company of debt securities of any subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the
Corresponding Junior Subordinated Debt Securities (other than (a) dividends or
distributions in common stock of the Company, (b) redemptions or purchases of
any rights pursuant to the Company's Rights Plan, or any successor to such
Rights Plan, and the declaration of a dividend of such rights or the issuance
of stock under stock plans in the future, (c) payments under any Guarantee and
(d) purchasers of common stock related to the issuance of common stock under
any of the Company's benefit plans for its directors, officers or employees).
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The revenue of each Lincoln Trust available for distribution to
holders of its Preferred Securities will be limited to payments under the
Corresponding Junior Subordinated Debt Securities in which the Lincoln Trust
will invest the proceeds from the issuance and sale of its Trust Securities.
See "Description of Junior Subordinated Debt Securities--Corresponding Junior
Subordinated Debt Securities." If the Company does not make interest payments
on such Corresponding Junior Subordinated Debt Securities, the Property Trustee
will not have funds available to pay Distributions on the Related Preferred
Securities. The payment of Distributions (if and to the extent the Lincoln
Trust has funds legally available for the payment of such Distributions and
cash sufficient to make such payments) is guaranteed by the Company on a
limited basis as set forth herein under "Description of Guarantees."
Distributions on the Preferred Securities will be payable to the
holders thereof as they appear on the register of such Lincoln Trust on the
relevant record dates, which, as long as the Preferred Securities remain in
book-entry form, will be one Business Day prior to the relevant Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
applicable Trust Agreement, each such payment will be made as described under
"Book-Entry Issuance." In the event any Preferred Securities are not in
book-entry form, the relevant record date for such Preferred Securities shall
be the date at least 15 days prior to the relevant Distribution Date, as
specified in the applicable Prospectus Supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption. Upon the repayment or redemption, in whole or
in part, of any Corresponding Junior Subordinated Debt Securities, whether at
maturity or upon earlier redemption as provided in the Junior Subordinated
Indenture, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem a Like Amount (as defined below) of the Trust
Securities, upon not less than 30 nor more than 60 days notice, at a redemption
price (the "Redemption Price") equal to the aggregate Liquidation Amount of
such Trust Securities plus accumulated but unpaid Distributions thereon to the
date of redemption (the "Redemption Date") and the related amount of the
premium, if any, paid by the Company upon the concurrent redemption of such
Corresponding Junior Subordinated Debt Securities. See "Description of Junior
Subordinated Debt Securities--Redemption." If less than all of any series of
Corresponding Junior Subordinated Debt Securities are to be repaid or redeemed
on a Redemption Date, then the proceeds from such repayment or redemption shall
be allocated to the redemption pro rata of the related Preferred Securities and
the Common Securities. The amount of premium, if any, paid by the Company upon
the redemption of all or any part of any series of any Corresponding Junior
Subordinated Debt Securities to be repaid or redeemed on a Redemption Date
shall be allocated to the redemption pro rata of the related Preferred
Securities and the Common Securities.
The Company will have the right to redeem any series of Corresponding
Junior Subordinated Debt Securities (i) in whole at any time or in part from
time to time, subject to the conditions described under "Description of Junior
Subordinated Debt Securities--Redemption", (ii) at any time, in whole (but not
in part), upon the occurrence of a Tax Event or an Investment Company Event
(each as defined below, a "Special Event") and subject to the further
conditions described under "Description of Junior Subordinated Debt
Securities--Redemption", or (iii) as may be otherwise specified in the
applicable Prospectus Supplement.
Special Event Redemption or Distribution of Corresponding Junior
Subordinated Debt Securities. If a Special Event in respect of a series of
Preferred Securities and Common Securities shall occur and be continuing, the
Company has the right to redeem the Corresponding Junior Subordinated Debt
Securities in whole (but not in part) and thereby cause a mandatory redemption
of such Preferred Securities and Common Securities in whole (but not in part)
at the Redemption Price within 90 days following the occurrence of such Special
Event. At any time, the Company has the right to terminate the related Lincoln
Trust and, after satisfaction of the liabilities of creditors of such Lincoln
Trust as provided by applicable law, cause such Corresponding Junior
Subordinated Debt Securities to be distributed to the holders of such Preferred
Securities and Common Securities in liquidation of the Lincoln Trust. If the
Company does not elect either option described above, the applicable series of
Preferred Securities will remain outstanding and, in the event a Tax
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Event has occurred and is continuing, Additional Sums (as defined below) may be
payable on the Corresponding Junior Subordinated Debt Securities.
Extension of Maturity of Corresponding Junior Subordinated Debt
Securities. If provided in the applicable Prospectus Supplement, the Company
shall have the right to extend or shorten the maturity of any series of
Corresponding Junior Subordinated Debt Securities at the time that the Company
exercises its right to elect to terminate the related Lincoln Trust and cause
such Corresponding Junior Subordinated Debt Securities to be distributed to the
holders of such Preferred Securities and Common Securities in liquidation of
the Lincoln Trust, provided that it can extend the maturity only if certain
conditions specified in the applicable Prospectus Supplement are met at the
time such election is made and at the time of such extension.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by a Lincoln Trust
on the outstanding Preferred Securities and Common Securities of the Lincoln
Trust shall not be reduced as a result of any additional taxes, duties and
other governmental charges to which such Lincoln Trust has become subject as a
result of a Tax Event.
"Investment Company Event" means the receipt by the applicable Lincoln
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), the applicable Lincoln Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the series of
Preferred Securities issued by the Lincoln Trust.
"Like Amount" means (i) with respect to a redemption of any series of
Trust Securities, Trust Securities of such series having a Liquidation Amount
(as defined below) equal to that portion of the principal amount of
Corresponding Junior Subordinated Debt Securities to be contemporaneously
redeemed in accordance with the Junior Subordinated Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Corresponding Junior Subordinated Debt Securities to holders of
any series of Trust Securities in connection with a dissolution or liquidation
of the related Lincoln Trust, Corresponding Junior Subordinated Debt Securities
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Corresponding Junior Subordinated Debt
Securities are distributed. "Liquidation Amount" means the stated amount of
$25 per Trust Security.
"Tax Event" means the receipt by the applicable Lincoln Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance
of the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Lincoln Trust is, or will be within 90 days of
the date of such opinion, subject to United States Federal income tax with
respect to income received or accrued on the corresponding series of
Corresponding Junior Subordinated Debt Securities, (ii) interest payable by the
Company on such series of Corresponding Junior Subordinated Debt Securities is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Company, in whole or in part, for United States Federal income tax
purposes, or (iii) the applicable Lincoln Trust is, or will be within 90 days
of the date of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debt Securities for any series of Preferred Securities (i)
such series of Preferred Securities will no longer be deemed
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to be outstanding, (ii) The Depository Trust Company ("DTC") or its nominee, as
the record holder of such series of Preferred Securities, will receive a
registered global certificate or certificates representing the Corresponding
Junior Subordinated Debt Securities to be delivered upon such distribution and
(iii) any certificates representing such series of Preferred Securities not
held by DTC or its nominee will be deemed to represent the Corresponding Junior
Subordinated Debt Securities having a principal amount equal to the stated
liquidation preference of such series of Preferred Securities, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such series of Preferred Securities until such certificates
are presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debt Securities that may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of a Lincoln Trust were to occur. Accordingly, the Preferred
Securities that an investor may purchase, or the Corresponding Junior
Subordinated Debt Securities that the investor may receive on dissolution and
liquidation of a Lincoln Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of the Corresponding Junior Subordinated Debt
Securities. Redemptions of the Preferred Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the related Lincoln Trust has funds on hand available for the payment of
such Redemption Price. See also "--Subordination of Common Securities."
If a Lincoln Trust gives a notice of redemption in respect of its
Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, to the extent funds are available, the Property Trustee will
deposit irrevocably with DTC funds sufficient to pay the applicable Redemption
Price and will give DTC irrevocable instructions and authority to pay the
Redemption Price to the holders of such Preferred Securities. See "Book-Entry
Issuance." If such Preferred Securities are no longer in book-entry form, the
Property Trustee, to the extent funds are available, will irrevocably deposit
with the paying agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred Securities on the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of the holders of such Preferred Securities so called for redemption
will cease, except the right of the holders of such Preferred Securities to
receive the Redemption Price, but without interest on such Redemption Price,
and such Preferred Securities will cease to be outstanding. In the event that
any date fixed for redemption of Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities called for redemption is improperly withheld or
refused and not paid either by the Lincoln Trust or by the Company pursuant to
the Guarantee as described under "Description of Guarantees", Distributions on
such Preferred Securities will continue to accrue at the then applicable rate,
from the Redemption Date originally established by the Lincoln Trust for such
Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United
States Federal securities law), the Company or its subsidiaries may at any time
and from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
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Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debt Securities to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant
record date, which shall be one Business Day prior to the relevant Redemption
Date or liquidation date, as applicable; provided, however, that in the event
that any Preferred Securities are not in book-entry form, the relevant record
date for such Preferred Securities shall be a date at least 15 days prior to
the Redemption Date or liquidation date, as applicable, as specified in the
applicable Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities
issued by an issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple of $25 in excess thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than $25.
The Property Trustee shall promptly notify the trust registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of each Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Trust Securities to
be redeemed at its registered address. Unless the Company defaults in payment
of the Redemption Price on the Corresponding Junior Subordinated Debt
Securities, on and after the Redemption Date interest ceases to accrue on such
Junior Subordinated Debt Securities or portions thereof (and distributions
cease to accrue on the Related Preferred Securities or portions thereof) called
for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Lincoln
Trust's Preferred Securities and Common Securities, as applicable, shall be
made pro rata based on the Liquidation Amount of such Preferred Securities and
Common Securities; provided, however, that if on any Distribution Date or
Redemption Date a Junior Subordinated Debt Security Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or Redemption
Price of, any of the Lincoln Trust's Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the Lincoln Trust's outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all of the Lincoln Trust's outstanding Preferred Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Lincoln Trust's
Preferred Securities then due and payable.
In the case of any Event of Default resulting from a Junior
Subordinated Debt Security Event of Default, the Company as holder of such
Lincoln Trust's Common Securities will be deemed to have waived any right to
act with respect to any such Event of Default under the applicable Trust
Agreement until the effect of all such Events of Default with respect to such
Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the applicable Trust Agreement with respect to
the Preferred Securities have been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the holders of such
Preferred Securities and not on behalf of the Company as holder of the
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Lincoln Trust's Common Securities, and only the holders of such Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Lincoln Trust shall
automatically terminate upon expiration of its term and shall terminate on the
first to occur of: (i) certain events of bankruptcy, dissolution or liquidation
of the Company; (ii) the distribution of a Like Amount of the Corresponding
Junior Subordinated Debt Securities to the holders of its Trust Securities, if
the Company, as Depositor, has given written direction to the Property Trustee
to terminate such Lincoln Trust (which direction is optional and wholly within
the discretion of the Company, as Depositor); (iii) the redemption of all of
the Lincoln Trust's Trust Securities following a Special Event; (iv) redemption
of all of the Lincoln Trust's Preferred Securities as described under
"Description of Preferred Securities -- Redemption or Exchange -- Mandatory
Redemption"; and (v) the entry of an order for the dissolution of the Lincoln
Trust by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (v)
above, the Lincoln Trust shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by distributing,
after satisfaction of liabilities to creditors of such Lincoln Trust as
provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Corresponding Junior Subordinated Debt Securities, unless such
distribution is determined by the Property Trustee not to be practical, in
which event such holders will be entitled to receive out of the assets of the
Lincoln Trust available for distribution to holders, after satisfaction of
liabilities to creditors of such Lincoln Trust as provided by applicable law,
an amount equal to, in the case of holders of Preferred Securities, the
aggregate of the Liquidation Amount plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because such Lincoln Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by such
Lincoln Trust on its Preferred Securities shall be paid on a pro rata basis.
The holder(s) of such Lincoln Trust's Common Securities will be entitled to
receive distributions upon any such liquidation pro rata with the holders of
its Preferred Securities, except that if a Junior Subordinated Debt Security
Event of Default has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities. A supplemental Indenture may
provide that if an early termination occurs as described in clause (v) above,
the Corresponding Junior Subordinated Debt Securities may be subject to
optional redemption in whole (but not in part).
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default"
under each Trust Agreement (an "Event of Default") with respect to the
Preferred Securities issued thereunder (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of a Junior Subordinated Debt Security Event of
Default under the Junior Subordinated Indenture (see "Description of Junior
Subordinated Debt Securities -- Junior Subordinated Debt Security Events of
Default"); or
(ii) default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such default
for a period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
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(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or the
breach of which is dealt with in clause (ii) or (iii) above), and continuation
of such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting Issuer Trustee or Trustees
by the holders of at least 25% in aggregate liquidation preference of the
outstanding Preferred Securities of the applicable Lincoln Trust, a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under such Trust Agreement;
or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Lincoln Trust's
Preferred Securities, the Administrative Trustees and the Company, as
Depositor, unless such Event of Default shall have been cured or waived. The
Company, as Depositor, and the Administrative Trustees are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under
each Trust Agreement.
If a Junior Subordinated Debt Security Event of Default has occurred
and is continuing, the Preferred Securities shall have a preference over the
Common Securities upon termination of each Lincoln Trust as described above.
See "--Liquidation Distribution Upon Termination." The existence of an Event
of Default does not entitle the holders of Preferred Securities to accelerate
the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Junior Subordinated Debt Security Event of Default shall have
occurred and be continuing, any Issuer Trustee may be removed at any time by
the holder of the Common Securities. If a Junior Subordinated Debt Security
Event of Default has occurred and is continuing, the Property Trustee and the
Delaware Trustee may be removed at such time by the holders of a majority in
Liquidation Amount of the outstanding Preferred Securities. In no event will
the holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees, which voting rights are vested
exclusively in the Company as the holder of the Common Securities. No
resignation or removal of an Issuer Trustee and no appointment of a successor
trustee shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Company, as the holder of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co- trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a Junior
Subordinated Debt Security Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee
or any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any
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corporation resulting from any merger, conversion or consolidation to which
such Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of such Trustee, shall be the
successor of such Trustee under each Trust Agreement, provided such corporation
shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE LINCOLN TRUSTS
A Lincoln Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. A Lincoln Trust may, at the request of the Company, with the
consent of the Administrative Trustees and without the consent of the holders
of the Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that (i) such successor entity either (a) expressly assumes
all of the obligations of such Lincoln Trust with respect to the Preferred
Securities or (b) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Preferred
Securities rank in priority with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly appoints a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Corresponding Junior Subordinated Debt
Securities, (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities are
then listed, if any, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose identical to that of the
Lincoln Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Company has received an opinion
from independent counsel to the Lincoln Trust experienced in such matters to
the effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Lincoln Trust nor such successor entity will be required to
register as an investment company under the Investment Company Act and (viii)
the Company or any permitted successor or assignee owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, a Lincoln Trust shall not,
except with the consent of holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Lincoln Trust or the successor entity to be classified as other
than a grantor trust for United States Federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of
Guarantees--Amendments and Assignment" and as otherwise required by law and the
applicable Trust Agreement, the holders of the Preferred Securities will have
no voting rights.
Each Trust Agreement may be amended from time to time by the Company,
the Property Trustee and the Administrative Trustees, without the consent of
the holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust
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Agreement, which shall not be inconsistent with the other provisions of such
Trust Agreement, or (ii) to modify, eliminate or add to any provisions of such
Trust Agreement to such extent as shall be necessary to ensure that the Lincoln
Trust will be classified for United States Federal income tax purposes as a
grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Lincoln Trust will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any holder of Trust Securities, and any
amendments of such Trust Agreement shall become effective when notice thereof
is given to the holders of Trust Securities. Each Trust Agreement may be
amended by the Issuer Trustees and the Company with (i) the consent of holders
representing not less than a majority (based upon Liquidation Amounts) of the
outstanding Trust Securities, and (ii) receipt by the Issuer Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Lincoln Trust's status as a grantor trust for United States Federal
income tax purposes or the Lincoln Trust's exemption from status as an
"investment company" under the Investment Company Act, provided that without
the consent of each holder of Trust Securities, such Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date
or (ii) restrict the right of a holder of Trust Securities to institute suit
for the enforcement of any such payment on or after such date.
So long as any Corresponding Junior Subordinated Debt Securities are
held by the Property Trustee, the Issuer Trustees shall not (i) direct the
time, method and place of conducting any proceeding for any remedy available to
the Junior Subordinated Indenture Trustee, or executing any trust or power
conferred on the Property Trustee with respect to such Corresponding Junior
Subordinated Debt Securities, (ii) waive any past default that is waivable
under Section 513 of the Junior Subordinated Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Junior
Subordinated Debt Securities shall be due and payable or (iv) consent to any
amendment, modification or termination of the Junior Subordinated Indenture or
such Corresponding Junior Subordinated Debt Securities, where such consent
shall be required, without, in each case, obtaining the prior approval of the
holders of a majority in aggregate Liquidation Amount of all outstanding
Preferred Securities; provided, however, that where a consent under the Junior
Subordinated Indenture would require the consent of each holder of
Corresponding Junior Subordinated Debt Securities affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of
each holder of the corresponding Preferred Securities. The Issuer Trustees
shall not revoke any action previously authorized or approved by a vote of the
holders of the Preferred Securities except by subsequent vote of the holders of
the Preferred Securities. The Property Trustee shall notify each holder of
Preferred Securities of any notice of default with respect to the Corresponding
Junior Subordinated Debt Securities. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of
the foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Lincoln Trust will not be
classified as a corporation for United States Federal income tax purposes on
account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each holder of record of Preferred Securities in the manner set
forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required for a Lincoln Trust to redeem and cancel its Preferred Securities in
accordance with the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Issuer Trustees or any
affiliate of the Company or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
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GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part
in the form of one or more Global Preferred Securities that will be deposited
with, or on behalf of, the Depositary identified in the Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement for such series, the Depositary will be DTC. Global
Preferred Securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Preferred Securities represented thereby, a Global
Preferred Security may not be transferred except as a whole by the Depositary
for such Global Preferred Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Preferred Securities will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of
such Global Preferred Security with or on behalf of the Depositary, the
Depositary for such Global Preferred Security or its nominee will credit, on
its book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Preferred Securities represented by such
Global Preferred Securities to the accounts of Participants. Such accounts
shall be designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by the Company if such Preferred Securities are offered
and sold directly by the Company. Ownership of beneficial interests in a
Global Preferred Security will be limited to Participants or persons that may
hold interests through Participants. Ownership of beneficial interests in such
Global Preferred Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the applicable Depositary
or its nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Preferred Security.
So long as the Depositary for a Global Preferred Security, or its
nominee, is the registered owner of such Global Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such Global
Preferred Security for all purposes under the Indenture governing such
Preferred Securities. Except as provided below, owners of beneficial interests
in a Global Preferred Security will not be entitled to have any of the
individual Preferred Securities of the series represented by such Global
Preferred Security registered in their names, will not receive or be entitled
to receive physical delivery of any such Preferred Securities of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of (and premium, if any) and interest on
individual Preferred Securities represented by a Global Preferred Security
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Preferred Security representing such Preferred Securities. None of the
Company, the Property Trustee, any Paying Agent, or the Securities Registrar
for such Preferred Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Preferred Security representing such
Preferred Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of Preferred
Securities or its nominee, upon receipt of any payment of Liquidation Amount,
premium or Distributions in respect of a permanent Global Preferred Security
representing any of such Preferred Securities, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security for such Preferred Securities as shown on the records
of such
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Depositary or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Preferred
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if
a Depositary for a series of Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is
not appointed by the Company within 90 days, the Company will issue individual
Preferred Securities of such series in exchange for the Global Preferred
Security representing such series of Preferred Securities. In addition, the
Company may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities,
determine not to have any Preferred Securities of such series represented by
one or more Global Preferred Securities and, in such event, will issue
individual Preferred Securities of such series in exchange for the Global
Preferred Security or Securities representing such series of Preferred
Securities. Further, if the Company so specifies with respect to the Preferred
Securities of a series, an owner of a beneficial interest in a Global Preferred
Security representing Preferred Securities of such series may, on terms
acceptable to the Company, the Property Trustee and the Depositary for such
Global Preferred Security, receive individual Preferred Securities of such
series in exchange for such beneficial interests, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities.
In any such instance, an owner of a beneficial interest in a Global Preferred
Security will be entitled to physical delivery of individual Preferred
Securities of the series represented by such Global Preferred Security equal in
principal amount to such beneficial interest and to have such Preferred
Securities registered in its name. Individual Preferred Securities of such
series so issued will be issued in denominations, unless otherwise specified by
the Company, of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Lincoln Trust's Preferred Securities
are not held by the Depositary, such payments shall be made by check mailed to
the address of the holder entitled thereto as such address shall appear on the
Register. Unless otherwise specified in the applicable Prospectus Supplement,
the paying agent (the "Paying Agent") shall initially be the Property Trustee
and any co- paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Company. The Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Property Trustee
and the Company. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees shall appoint a successor (which
shall be a bank or trust company acceptable to the Administrative Trustees and
the Company) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement,
the Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of each Lincoln Trust, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Lincoln Trusts will not be required to register or
cause to be registered the transfer of their Preferred Securities after such
Preferred Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in each Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the Property Trustee is under no obligation
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to exercise any of the powers vested in it by the applicable Trust Agreement at
the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Event of Default has occurred and is continuing and
the Property Trustee is required to decide between alternative causes of
action, construe ambiguous provisions in the applicable Trust Agreement or is
unsure of the application of any provision of the applicable Trust Agreement,
and the matter is not one on which holders of Preferred Securities are entitled
under such Trust Agreement to vote, then the Property Trustee shall take such
action as is directed by the Company and if not so directed, shall take such
action as it deems advisable and in the best interests of the holders of the
Trust Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Lincoln Trusts in such a way that no Lincoln
Trust will be deemed to be an "investment company" required to be registered
under the Investment Company Act or classified as an association taxable as a
corporation for United States Federal income tax purposes and so that the
Corresponding Junior Subordinated Debt Securities will be treated as
indebtedness of the Company for United States Federal income tax purposes. In
this connection, the Company and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of each Lincoln Trust or each Trust Agreement, that the Company and the
Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the related Preferred
Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
No Lincoln Trust may borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by the Company concurrently
with the issuance by each Lincoln Trust of its Preferred Securities for the
benefit of the holders from time to time of such Preferred Securities. The
First National Bank of Chicago will act as indenture trustee ("Guarantee
Trustee") under each Guarantee for the purposes of compliance with the Trust
Indenture Act and each Guarantee will be qualified as an indenture under the
Trust Indenture Act. This summary of certain provisions of the Guarantees does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of each Guarantee Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act. The form of
the Guarantee has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. Reference in this summary to Preferred
Securities means that Lincoln Trust's Preferred Securities to which a Guarantee
relates. The Guarantee Trustee will hold each Guarantee for the benefit of the
holders of the related Lincoln Trust's Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined
below) to the holders of the Preferred Securities, as and when due, regardless
of any defense, right of set-off or counterclaim that such Lincoln Trust may
have or assert other than the defense of payment. The following payments with
respect to the Preferred Securities, to the extent not paid by or on behalf of
the related Lincoln Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accumulated and unpaid Distributions required to be paid on
such Preferred Securities, to the extent that such Lincoln Trust has funds on
hand available therefor at such time, (ii) the Redemption Price with respect to
any Preferred Securities called for redemption to the extent that such Lincoln
Trust has funds on hand available therefor at such time, or (iii) upon a
voluntary or involuntary dissolution, winding up or liquidation of such Lincoln
Trust (unless the Corresponding Junior Subordinated Debt Securities are
distributed
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to holders of such Preferred Securities), the lesser of (a) the Liquidation
Distribution and (b) the amount of assets of such Lincoln Trust remaining
available for distribution to holders of Preferred Securities. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Company to the holders of the applicable Preferred
Securities or by causing the Lincoln Trust to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated
basis of the related Lincoln Trust's obligations under the Preferred
Securities, but will apply only to the extent that such related Lincoln Trust
has funds sufficient to make such payments, and is not a guarantee of
collection.
If the Company does not make interest payments on the Corresponding
Junior Subordinated Debt Securities held by the Lincoln Trust, the Lincoln
Trust will not be able to pay Distributions on the Preferred Securities and
will not have funds legally available therefor. Each Guarantee will rank
subordinate and junior in right of payment to all Senior Debt of the Company.
See "--Status of the Guarantees." The Company is a non-operating holding
company and almost all of the operating assets of the Company and its
consolidated subsidiaries are owned by such subsidiaries. The Company relies
primarily on dividends from such subsidiaries to meet its obligations for
payment of principal and interest on its outstanding debt obligations and
corporate expenses. Accordingly, the Company's obligations under the
Guarantees will be effectively subordinated to all existing and future
liabilities of the Company's subsidiaries, and claimants should look only to
the assets of the Company for payments thereunder. The payment of dividends by
the Company's insurance company subsidiaries is limited under the insurance
holding company laws in which such subsidiaries are domiciled. See "Lincoln
National Corporation." Except as otherwise provided in the applicable
Prospectus Supplement, the Guarantees do not limit the incurrence or issuance
of other secured or unsecured debt of the Company, whether under the Indenture,
any other indenture that the Company may enter into in the future or otherwise.
See the Prospectus Supplement relating to any offering of Preferred Securities.
The Company's obligations described herein and in any accompanying
Prospectus Supplement, through the applicable Guarantee, the applicable Trust
Agreement, the Junior Subordinated Debt Securities, the Junior Subordinated
Indenture and any supplemental indentures thereto, and the Expense Agreement,
taken together, constitute a full, irrevocable and unconditional guarantee by
the Company of payments due on the Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Lincoln Trust's obligations under the Preferred
Securities. See "The Lincoln Trusts," "Description of Preferred Securities,"
and "Description of Junior Subordinated Debt Securities."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all Senior Debt.
Each Guarantee will rank pari passu with all other Guarantees issued
by the Company. Each Guarantee will constitute a guarantee of payment and not
of collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). Each Guarantee will be held for the benefit of the holders of the
related Preferred Securities. Each Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Lincoln
Trust or upon distribution to the holders of the Preferred Securities of the
Corresponding Junior Subordinated Debt Securities. None of the Guarantees
places a limitation on the amount of additional Senior Debt that may be
incurred by the Company. The Company expects from time to time to incur
additional indebtedness constituting Senior Debt.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely
affect the rights of holders of the related Preferred Securities (in which case
no vote will be required), no Guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate
Liquidation Amount of such outstanding Preferred Securities. The manner of
obtaining any such approval will be as set forth under "Description of the
Preferred Securities--Voting Rights; Amendment of Each Trust Agreement." All
guarantees and agreements contained in each Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the related Preferred Securities
then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure
of the Company to perform any of its payment or other obligations thereunder.
The holders of not less than a majority in aggregate Liquidation Amount of the
related Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of such Guarantee or to direct the exercise of any trust or
power conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under such
Guarantee without first instituting a legal proceeding against the Lincoln
Trust, the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and
continuance of a default by the Company in performance of any Guarantee,
undertakes to perform only such duties as are specifically set forth in each
Guarantee and, after default with respect to any Guarantee, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by
any Guarantee at the request of any holder of any Preferred Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the related Preferred Securities,
upon full payment of the amounts payable upon liquidation of the related
Lincoln Trust or upon distribution of Corresponding Junior Subordinated Debt
Securities to the holders of the related Preferred Securities. Each Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of the related Preferred Securities must restore payment of
any sums paid under such Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with
the laws of the State of New York.
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THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Company under
each Trust Agreement (the "Expense Agreement"), the Company will irrevocably
and unconditionally guarantee to each person or entity to whom the Lincoln
Trust becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Lincoln Trust, other than obligations of the Lincoln Trust
to pay to the holders of any Preferred Securities or other similar interests in
the Lincoln Trust of the amounts due such holders pursuant to the terms of the
Preferred Securities or such other similar interests, as the case may be.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, representing contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock at a future date or
dates. The price per share of Common Stock may be fixed at the time the Stock
Purchase Contracts are issued or may be determined by reference to a specific
formula set forth in the Stock Purchase Contracts. The Stock Purchase
Contracts may be issued separately or as a part of units ("Stock Purchase
Units") consisting of a Stock Purchase Contract and either (x) Senior Debt
Securities, Subordinated Debt Securities or Junior Subordinated Debt
Securities, (y) debt obligations of third parties, including U.S. Treasury
securities, or (z) Preferred Securities of a Lincoln Trust, securing the
holder's obligations to purchase the Common Stock under the Stock Purchase
Contracts. The Stock Purchase Contracts may require the Company to make
periodic payments to the holders of the Stock Purchase Units or vice versa, and
such payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner and in certain circumstances the Company may deliver newly
issued prepaid stock purchase contracts ("Prepaid Securities") upon release to
a holder of any collateral securing such holder's obligations under the
original Stock Purchase Contract.
The applicable Prospectus Supplement will describe the terms of any
Stock Purchase Contracts or Stock Purchase Units and, if applicable, Prepaid
Securities. The description in the Prospectus Supplement will not purport to
be complete and will be qualified in its entirety by reference to the Stock
Purchase Contracts, the collateral arrangements and depositary arrangements, if
applicable, relating to such Stock Purchase Contracts or Stock Purchase Units
and, if applicable, the Prepaid Securities and the document pursuant to which
such Prepaid Securities will be issued.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the Preferred
Securities and the Junior Subordinated Debt Securities, unless otherwise
referred to in the Prospectus Supplement relating to an offering of Preferred
Securities or Junior Subordinated Debt Securities. The Preferred Securities
and the Junior Subordinated Debt Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global certificates will be issued for
the Preferred Securities of each Lincoln Trust and the Junior Subordinated Debt
Securities, representing in the aggregate the total number of such Lincoln
Trust's Preferred Securities or aggregate principal balance of Junior
Subordinated Debt Securities, respectively, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that its Participants deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and
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certain other organizations ("Direct Participants"). DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with Direct Participants, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Preferred Securities or Junior Subordinated Debt
Securities within the DTC system must be made by or through Direct
Participants, which will receive a credit for the Preferred Securities or
Junior Subordinated Debt Securities on DTC's records. The ownership interest
of each actual purchaser of each Preferred Security and each Junior
Subordinated Debt Security ("Beneficial Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities or Junior Subordinated Debt Securities. Transfers of
ownership interests in the Preferred Securities or Junior Subordinated Debt
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities or
Junior Subordinated Debt Securities, except in the event that use of the
book-entry system for the Preferred Securities of such Lincoln Trust or Junior
Subordinated Debt Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities or Junior Subordinated Debt Securities; DTC's records reflect only
the identity of the Direct Participants to whose accounts such Preferred
Securities or Junior Subordinated Debt Securities are credited, which may or
may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications buy DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered
holder of the Preferred Securities or Junior Subordinated Debt Securities. If
less than all of a Lincoln Trust's Preferred Securities or the Junior
Subordinated Debt Securities are being redeemed, DTC's current practice is to
determine by lot the amount of the interest of each Direct Participant to be
redeemed.
Although voting with respect to the Preferred Securities or the Junior
Subordinated Debt Securities is limited to the holders of record of the
Preferred Securities or Junior Subordinated Debt Securities, in those instances
in which a vote is required, neither DTC nor Cede & Co. will itself consent or
vote with respect to Preferred Securities or Junior Subordinated Debt
Securities. Under its usual procedures, DTC would mail an omnibus proxy (the
"Omnibus Proxy") to the relevant Trustee as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts such Preferred Securities or Junior
Subordinated Debt Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities or the Junior
Subordinated Debt Securities will be made by the relevant Trustee to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the relevant Trustee, the
Lincoln Trust thereof or the Company, subject to
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any statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to DTC is the responsibility of the relevant Trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary
with respect to any of the Preferred Securities or the Junior Subordinated Debt
Securities at any time by giving reasonable notice to the relevant Trustee and
the Company. In the event that a successor securities depositary is not
obtained, definitive Preferred Security or Junior Subordinated Debt Security
certificates representing such Preferred Securities or Junior Subordinated Debt
Securities are required to be printed and delivered. The Company, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Junior Subordinated Debt
Security Event of Default, the holders of a majority in liquidation preference
of Preferred Securities or aggregate principal amount of Junior Subordinated
Debt Securities may determine to discontinue the system of book-entry transfers
through DTC. In any such event, definitive certificates for such Preferred
Securities or Junior Subordinated Debt Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Lincoln Trusts and the Company
believe to be accurate, but the Lincoln Trusts and the Company assume no
responsibility for the accuracy thereof. Neither the Lincoln Trusts nor the
Company has any responsibility for the performance by DTC or its Participants
of their respective obligations as described herein or under the rules and
procedures governing their respective operations.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Lincoln Trust has funds available for the payment
of such Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of Guarantees." Taken together, the
Company's obligations under each series of Junior Subordinated Debt Securities,
the Junior Subordinated Indenture, the related Trust Agreement, the related
Expense Agreement, and the related Guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of distributions and other
amounts due on the related series of Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Lincoln Trust's obligations under the Preferred
Securities. If and to the extent that the Company does not make payments on
any series of Corresponding Junior Subordinated Debt Securities, such Lincoln
Trust will not pay Distributions or other amounts due on its Preferred
Securities. The Guarantees do not cover payment of Distributions when the
related Lincoln Trust does not have sufficient funds to pay such Distributions.
In such event, the remedy of a holder of a series of Preferred Securities is to
institute a legal proceeding directly against the Company for enforcement of
payment of such Distributions to such holder. The obligations of the Company
under each Guarantee are subordinate and junior in right of payment to all
Senior Debt of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due
on each series of Corresponding Junior Subordinated Debt Securities, such
payments will be sufficient to cover Distributions and other payments due on
the related Preferred Securities, primarily because (i) the aggregate principal
amount of each series of Corresponding Junior Subordinated Debt Securities will
be equal to the sum of the aggregate stated Liquidation Amount of the Related
Preferred Securities and related Common Securities; (ii)
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the interest rate and interest and other payment dates on each series of
Corresponding Junior Subordinated Debt Securities will match the Distribution
rate and Distribution and other payment dates for the related Preferred
Securities; (iii) the Company shall pay for all and any costs, expenses and
liabilities of such Lincoln Trust except the Lincoln Trust's obligations to
holders of its Preferred Securities under such Preferred Securities; and (iv)
each Trust Agreement further provides that the Lincoln Trust will not engage in
any activity that is not consistent with the limited purposes of such Lincoln
Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder with and to the extent the Company has theretofore
made, or is concurrently on the date of such payment making, a payment under
the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any related Preferred Security may institute a legal
proceeding directly against the Company to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Lincoln Trust or any other person or entity.
A default or event of default under any Senior Debt of the Company
would not constitute a default or Event of Default. However, in the event of
payment defaults under, or acceleration of, Senior Debt of the Company, the
subordination provisions of the Junior Subordinated Indenture provide that no
payments may be made in respect of the Corresponding Junior Subordinated Debt
Securities until such Senior Debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on any
series of Corresponding Junior Subordinated Debt Securities would constitute an
Event of Default.
LIMITED PURPOSE OF LINCOLN TRUSTS
Each Lincoln Trust's Preferred Securities evidence a beneficial
interest in such Lincoln Trust, and each Lincoln Trust exists for the sole
purpose of issuing its Preferred Securities and Common Securities and investing
the proceeds thereof in Corresponding Junior Subordinated Debt Securities. A
principal difference between the rights of a holder of a Preferred Security and
a holder of a Corresponding Junior Subordinated Debt Security is that a holder
of a Corresponding Junior Subordinated Debt Security is entitled to receive
from the Company the principal amount of and interest accrued on Corresponding
Junior Subordinated Debt Securities held, while a holder of Preferred
Securities is entitled to receive Distributions from such Lincoln Trust (or
from the Company under the applicable Guarantee) if and to the extent such
Lincoln Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of any Lincoln Trust involving the liquidation of the Corresponding
Junior Subordinated Debt Securities, the holders of the related Preferred
Securities will be entitled to receive, out of assets held by such Lincoln
Trust, the Liquidation Distribution in cash. See "Description of Preferred
Securities -- Liquidation Distribution Upon Termination." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Corresponding Junior Subordinated Debt Securities, would be a
subordinated creditor of the Company, subordinated in right of payment to all
Senior Debt, but entitled to receive payment in full of principal and interest,
before any stockholders of the Company receive payments or distributions.
Since the Company is the guarantor under each Guarantee and has agreed to pay
for all costs, expenses and liabilities of each Lincoln Trust (other than the
Lincoln Trust's obligations to the holders of its Preferred Securities), the
positions of a holder of such Preferred Securities and a holder of such
Corresponding Junior Subordinated Debt Securities relative to other creditors
and to stockholders of the Company in the event of liquidation or bankruptcy of
the Company are expected to be substantially the same.
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PLAN OF DISTRIBUTION
The Company and/or any Lincoln Trust may sell any of the Offered
Securities in any one or more of the following ways from time to time: (i)
through agents; (ii) to or through underwriters; (iii) through dealers; or (iv)
directly to purchasers.
The Prospectus Supplement with respect to the Offered Securities will
set forth the terms of the offering of the Offered Securities, including the
name or names of any underwriters, dealers or agents; the purchase price of the
Offered Securities and the proceeds to the Company and/or a Lincoln Trust from
such sale; any underwriting discounts and commissions or agency fees and other
items constituting underwriters' or agents' compensation; any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers and any securities exchange on which such Offered Securities may be
listed. Any initial public offering price, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
The distribution of the Offered Securities may be effected from time
to time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
Offers to purchase Offered Securities may be solicited by agents
designated by the Company from time to time. Any such agent involved in the
offer or sale of the Offered Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company and/or the
applicable Lincoln Trust to such agent will be set forth, in the applicable
Prospectus Supplement. Unless otherwise indicated in such Prospectus
Supplement, any such agent will be acting on a reasonable best efforts basis
for the period of its appointment. Any such agent may be deemed to be an
underwriter, as that term is defined in the Securities Act, of the Offered
Securities so offered and sold.
If Offered Securities are sold by means of an underwritten offering,
the Company and/or the applicable Lincoln Trust will execute an underwriting
agreement with an underwriter or underwriters at the time an agreement for such
sale is reached, and the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transaction, including commissions, discounts and any other compensation of the
underwriters and dealers, if any, will be set forth in the Prospectus
Supplement which will be used by the underwriters to make resales of the
Offered Securities in respect of which this Prospectus is delivered to the
public. If underwriters are utilized in the sale of the Offered Securities in
respect of which this Prospectus is delivered, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices determined by the underwriter
at the time of sale. Offered Securities may be offered to the public either
through underwriting syndicates represented by managing underwriters or
directly by the managing underwriters. If any underwriter or underwriters are
utilized in the sale of the Offered Securities, unless otherwise indicated in
the Prospectus Supplement, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions precedent and
that the underwriters with respect to a sale of Offered Securities will be
obligated to purchase all such Offered Securities of a series if any are
purchased.
If a dealer is utilized in the sales of the Offered Securities in
respect of which this Prospectus is delivered, the Company and/or the
applicable Lincoln Trust will sell such Offered Securities to the dealer as
principal. The dealer may then resell such Offered Securities to the public at
varying prices to be determined by such dealer at the time of resale. Any such
dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the Offered Securities so offered and sold. The name of the
dealer and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
Offers to purchase Offered Securities may be solicited directly by the
Company and/or the applicable Lincoln Trust and the sale thereof may be made by
the Company and/or the applicable Lincoln Trust directly
-53-
<PAGE> 58
to institutional investors or others, who may be deemed to be underwriters
within the meaning of the Securities Act with respect to any resale thereof.
The terms of any such sales will be described in the Prospectus Supplement
relating thereto.
Agents, underwriters and dealers may be entitled under relevant
agreements to indemnification or contribution by the Company and/or the
applicable Lincoln Trust against certain liabilities, including liabilities
under the Securities Act.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, the Company and its subsidiaries in
the ordinary course of business.
Offered Securities may also be offered and sold, if so indicated in
the applicable Prospectus Supplement, in connection with a remarketing upon
their purchase, in accordance with a redemption or repayment pursuant to their
terms, or otherwise, by one or more firms ("remarketing firms"), acting as
principals for their own accounts or as agents for the Company and/or the
applicable Lincoln Trust. Any remarketing firm will be identified and the terms
of its agreement, if any, with its compensation will be described in the
applicable Prospectus Supplement. Remarketing firms may be deemed to be
underwriters, as such term is defined in the Securities Act, in connection with
the Offered Securities remarketed thereby. Remarketing firms may be entitled
under agreements which may be entered into with the Company and/or the
applicable Lincoln Trust to indemnification or contribution by the Company
and/or the applicable Lincoln Trust against certain civil liabilities,
including liabilities under the Securities Act, and may be customers of, engage
in transactions with or perform services for the Company and its subsidiaries
in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company
and/or the applicable Lincoln Trust may authorize agents, underwriters or
dealers to solicit offers by certain types of institutions to purchase Offered
Securities from the Company and/or the applicable Lincoln Trust at the public
offering prices set forth in the applicable Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date or dates in the future. A commission indicated in the applicable
Prospectus Supplement will be paid to underwriters, dealers and agents
soliciting purchases of Offered Securities pursuant to any such delayed
delivery contracts accepted by the Company and/or the applicable Lincoln Trust.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement,
certain legal matters will be passed upon for the Company and the Lincoln
Trusts by Sonnenschein Nath & Rosenthal, Chicago, Illinois, counsel to the
Company, and for the Lincoln Trusts by Richards, Layton & Finger, special
Delaware counsel to the Lincoln Trusts. Sonnenschein Nath & Rosenthal will
rely on (i) the opinion of Richards, Layton & Finger as to matters of Delaware
law and (ii) the opinion of Jack D. Hunter, Esq., Executive Vice President and
General Counsel of the Company, as to matters of Indiana law. As of February
27, 1998, Mr. Hunter beneficially owned 103,476 shares of Common Stock of the
Company, including 49,125 shares of Common Stock which Mr. Hunter has the right
to acquire pursuant to options exercisable within 60 days of such date.
EXPERTS
The consolidated financial statements and schedules of Lincoln
National Corporation and subsidiaries appearing in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements and schedules are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
-54-
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with the
Offering described in this Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee . . . . . . . . . . . $295,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . *
Printing and Engraving Expenses . . . . . . . . . . . . . . . . . . . . . *
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . *
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . *
Indenture trustee's fees and expenses . . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ *
========
</TABLE>
-------------------------------
* To be completed by amendment.
The foregoing items, except for the Securities and Exchange Commission fee, are
estimated. All expenses will be borne by the Company except as otherwise
indicated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following discussion of the indemnification provisions of the
Indiana Business Corporation Law (Indiana Code Section 23-1-37) (the "Law"),
which applies to the Registrant, is a summary, is not meant to be complete, and
is qualified in its entirety by reference to the Law. The Law provides
indemnity for present and past directors, officers, employees and agents of the
Company and of other entities, including partnerships, trusts and employee
benefit plans, who serve in such capacities at the request of the Company,
against obligations to pay as the result of threatened, pending or completed
actions, suits or proceedings, whether criminal, civil, administrative or
investigations to which they are parties, if it is determined by a majority of
disinterested directors, a committee of the board of directors or special
counsel selected by the board of directors that they acted in good faith and
they reasonably believed their conduct in their official capacity was in the
Company's best interests or if such conduct was not in their official capacity,
that the same was at least not opposed to the Company's best interests, and
that in criminal proceedings they had reasonable cause to believe their conduct
was lawful or no reasonable cause to believe that it was unlawful. The Law
provides for mandatory indemnification for directors and officers against
reasonable expenses incurred if they were wholly successful in the defense of
such proceeding. Also termination of a proceeding by judgment, settlement or
like disposition is not determinative that the director, officer, employee or
agent did not meet the standard of conduct set forth in the Law. The indemnity
provided by the Law may be enforced in court and provision is made for
advancement of expenses. The Law also permits the Company to insure its
liability on behalf of the directors, officers, employees and agents so
indemnified and the Law does not exclude any other rights in indemnification
and advancement of expenses provided in the Company's Articles of
Incorporation, Bylaws, or resolutions of its board of directors or its
shareholders.
II-1
<PAGE> 60
The Bylaws of the Company provide for the indemnification of its
officers, directors and employees against reasonable expenses, including
settlements, that may be incurred by them in connection with the defense of any
action, suit or proceeding to which they are made or threatened to be made
parties so long as (i) the individual's conduct was in good faith, (ii) he
reasonably believed that the conduct was in the Company's best interests (or
for non-corporate acts, not against the best interest of the Company), and
(iii) in the case of criminal proceedings, the individual either had reason to
believe the conduct was lawful, or no reasonable cause to believe it was
unlawful. In the case of directors, a determination as to whether
indemnification or reimbursement is proper shall be made by a majority of
disinterested directors, a committee of the board of directors or special
counsel selected by the board of directors. In the case of individuals who are
not directors, such determination shall be made by the chief executive officer
of the Company or, if the chief executive officer so directs, in the manner it
would be made if the individual were a director of the Company.
Such indemnification may apply to claims arising under the Securities
Act of 1933, as amended. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted for directors, officers or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in that
Act and therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
The Company maintains directors' and officers' liability insurance
with an annual aggregate limit of $50,000,000 for the current policy period,
subject to a $1,000,000 deductible at the corporate level, for each wrongful
act where corporate reimbursement is available to any director or officer.
Reference is made to the applicable Underwriting Agreement filed as
Exhibit 1 to this Registration Statement.
Under each Trust Agreement, the Company will agree to indemnify each
of the Trustees of the Lincoln Trust or any predecessor Trustee for the Lincoln
Trust, and to hold the Trustee harmless against, any loss, damage, claims,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
Trust Agreements, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties under the Trust Agreements.
ITEM 16. EXHIBITS
EXHIBIT NO.
1(a) Form of Underwriting Agreement for Debt Securities,
Preferred Stock and Common Stock is incorporated by
reference to the Company's Form 8-K filed with the Commission
on September 29, 1994.
1(b)+ Form of Underwriting Agreement (Warrants)
1(c)+ Form of Underwriting Agreement (Preferred Securities)
1(d)+ Form of Underwriting Agreement (Stock Purchase Contracts)
1(e)+ Form of Underwriting Agreement (Stock Purchase Units)
II-2
<PAGE> 61
4(a) Articles of Incorporation of the Company, as amended, are
incorporated by reference to Exhibit 4(a) to the Company's
Form S-3/A (File No. 33-55379) filed with the Commission on
September 15, 1994.
4(b) By-laws of the Company, as amended, are incorporated by
reference to Exhibit 3(b) to the Company's Form 10-K (File
No. 1-6028) for fiscal year ended December 31, 1997. Rights
4(c) Rights Agreement, as last amended November 14, 1996, is
incorporated by reference to the Company's Form 8-K filed
with the Commission on November 22, 1996.
4(d) Indenture of the Company dated as of January 15, 1987
(Commission File No. 33-22658) is incorporated by reference
to Exhibit 4(a) of the Company's Form 10-K for the year
ended December 31, 1994 filed with the Commission on March
27, 1995.
4(e) First Supplemental Indenture dated as of July 1, 1992, to
Indenture of the Company dated as of January 15, 1987, is
incorporated by reference to Exhibit 4(b) to the Company's
Form 10-K for the year ended December 31, 1996 filed with the
Commission on March 13, 1997.
4(f) Specimen Notes for 7 1/8% Notes due July 15, 1999
(Commission File No. 33-22658) and for 7 5/8% Notes due July
15, 2002 (Commission File No. 33-22658) are incorporated by
reference to Exhibit 4(c) of the Company's Form 10-K for
the year ended December 31, 1996, filed with the Commission
on March 13, 1997.
4(g) Indenture of the Company dated as of September 15, 1994,
between the Company and The Bank of New York, as Trustee, is
incorporated by reference to Exhibit No. 4(c) of the
Company's Form S-3/A (Commission File No. 33-55379), filed
with the Commission on September 15, 1994.
4(h) Form of Note is incorporated by reference to Exhibit No.4(d)
to the Company's Registration Statement on Form S-3/A
(Commission File No. 33-55379), filed with the Commission
on September 15, 1994.
4(i) Form of Zero Coupon Security is incorporated by reference
to Exhibit No. 4(f) of the Company's Registration
Statement on Form S-3/A (Commission File No. 33-55379),
filed with the Commission on September 15, 1994.
4(j) Specimen of the Company's 9 1/8% Debentures due October
1, 2024 (Commission File No. 33-55379) is incorporated by
reference to Schedule I of the Company's Form 8-K filed with
the Commission on September 29, 1994.
4(k) Specimen of the Company'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 the
Company's Form 8-K filed with the Commission on May 17,
1995.
4(l) Junior Subordinated Indenture dated as of May 1, 1996
between the Company and The First National Bank of Chicago
is incorporated by reference to Exhibit 4(j) of the
Company's Form 10-K for the year ended December 31, 1996,
filed with the Commission on March 13, 1997.
4(m) Guarantee Agreement for Lincoln National Capital I is
incorporated by reference to Exhibit 4(k) of the Company's
Form 10-K for the year ended December 31, 1996, filed
with the Commission on March 13, 1997.
II-3
<PAGE> 62
4(n) Guarantee Agreement for Lincoln National Capital II is
incorporated by reference to Exhibit 4(l) of the Company's
form 10-K for the year ended December 31, 1996, filed with
the Commission on March 13, 1997.
4(o) Form of Lincoln National Capital I 8.75% Cumulative
Quarterly Income Preferred Securities, Series A (Commission
File No. 333-04133) is incorporated by reference to Exhibit
4(m) to the Company's Form 10-K for the year ended December
31, 1996, filed with the Commission on March 13, 1997.
4(p) Form of Lincoln National Capital II 8.35% Trust Originated
Preferred Securities, Series B (Commission File No.
333-04133) is incorporated by reference to Exhibit 4(n)
to the Company's Form 10-K for the year ended December
31, 1996, filed with the Commission on March 13, 1997.
4(q) Form of 6 1/2% Note due March 15, 2008 is incorporated by
reference to Exhibit 4.1 to the Company's Form 8-K filed
with the Commission on March 24, 1998.
4(r) Form of 7% Note due March 15, 2018 is incorporated by
reference to Exhibit 4.2 to the Company's Form 8-K filed
with the Commission on March 24, 1998.
4(s) Certificate of Trust of Lincoln National Capital III is
incorporated by reference to Exhibit 4(m) to the Company's
Form S-3 (File No. 333-04133) filed with the Commission on
May 21, 1996.
4(t) Trust Agreement of Lincoln National Capital III is
incorporated by reference to Exhibit 4(n) to the Company's
Form S-3 (File No. 333-04133) filed with the Commission on
May 21, 1996.
4(u) * Certificate of Trust of Lincoln National Capital IV
4(v) * Trust Agreement of Lincoln National Capital IV
4(w) * Certificate of Trust of Lincoln National Capital V
4(x) * Trust Agreement of Lincoln National Capital V
4(y) * Certificate of Trust of Lincoln National Capital VI
4(z) * Trust Agreement of Lincoln National Capital VI
4(aa) Form of Amended and Restated Trust Agreement for
Lincoln National Capital III is incorporated by reference
to Exhibit 4(q) to the Company's Form S-3/A (File No.
333-04133) filed with the Commission on June 19, 1996.
4(bb) * Form of Amended and Restated Trust Agreement for Lincoln
National Capital IV*
4(cc) * Form of Amended and Restated Trust Agreement for Lincoln
National Capital V*
4(dd) * Form of Amended and Restated Trust Agreement for Lincoln
National Capital VI*
4(ee) * Form of Preferred Security Certificate for Lincoln National
Capital III, Lincoln National Capital IV, Lincoln National
Capital V and Lincoln National Capital VI (included as
Exhibit D of Exhibits 4(aa), 4(bb), 4(cc) and 4(dd),
respectively)
4(ff) Form of Guarantee Agreement for Lincoln National Capital
III is incorporated by reference to Exhibit 4(q) to the
Company's Form S-3/A (File No. 333-04133) filed with the
Commission on June 19, 1996.
4(gg) * Form of Guarantee Agreement for Lincoln National Capital IV
II-4
<PAGE> 63
4(hh) * Form of Guarantee Agreement for Lincoln National Capital V
4(ii) * Form of Guarantee Agreement for Lincoln National Capital VI
5(a) * Opinion of Sonnenschein Nath & Rosenthal
5(b) * Opinion of Richards, Layton & Finger as to legality of
the Preferred Securities to be issued by Lincoln National
Capital III, Lincoln National Capital IV, Lincoln
National Capital V and Lincoln National Capital VI
8 * Opinion of counsel as to certain federal income tax matters
12 Statement re: Computation of Ratio of Earnings to Fixed
Charges is incorporated by reference to Exhibit 12 to the
Company's Form 10-K for the year ended December 31, 1997,
filed with the Commission on March 18, 1998.
23(a) Consent of Ernst & Young LLP
23(b) * Consent of Sonnenschein Nath & Rosenthal (to be included in
Exhibit 5(a))
23(c) * Consent of Richards, Layton & Finger (to be included in
Exhibit 5(b))
23(d) * Consent of tax counsel (to be included in Exhibit 8)
24 Powers of Attorney (included on signature page)
25(a) Form T-1 Statement of Eligibility of The First Chicago
National Bank to act as trustee under the Junior
Subordinated Indenture is incorporated by reference to
Exhibit 25(a) to the Company's Form S-3 (File No. 333-04133)
filed with the Commission on May 21, 1996.
25(b) Form T-1 Statement of Eligibility of The First Chicago
National Bank to act as trustee under the Amended and
Restated Trust Agreement of Lincoln National Capital
III is incorporated by reference to Exhibit 25(d) to the
Company's Form S-3 (File No. 333-04133) filed with the
Commission on May 21, 1996.
25(c) * Form T-1 Statement of Eligibility of The First Chicago
National Bank to act as trustee under the Amended and
Restated Trust Agreement of Lincoln National Capital IV
25(d) * Form T-1 Statement of Eligibility of The First Chicago
National Bank to act as trustee under the Amended and
Restated Trust Agreement of Lincoln National Capital V
25(e) * Form T-1 Statement of Eligibility of The First Chicago
National Bank to act as trustee under the Amended and
Restated Trust Agreement of Lincoln National Capital VI
25(f) Form T-1 Statement of Eligibility of The First Chicago
National Bank under the Guarantee for the benefit of the
holders of Preferred Securities of Lincoln National Capital
III is incorporated by reference to Exhibit 25(g) to the
Company's Form S-3 (File No. 333-04133) filed with the
Commission on May 21, 1996.
25(g) * Form T-1 Statement of Eligibility of The First Chicago
National Bank under the Guarantee for the benefit of the
holders of Preferred Securities of Lincoln National
Capital IV
II-5
<PAGE> 64
25(h) * Form T-1 Statement of Eligibility of The First Chicago
National Bank under the Guarantee for the benefit of the
holders of Preferred Securities of Lincoln National Capital V
25(i) * Form T-1 Statement of Eligibility of The First Chicago
National Bank under the Guarantee for the benefit of the
holders of Preferred Securities of Lincoln National Capital VI
- ---------------------
+ To be filed under subsequent Form 8-K
* To be filed by amendment
ITEM 17. UNDERTAKINGS
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers and sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement; notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
II-6
<PAGE> 65
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) If the securities to be registered are to be offered at competitive
bidding, the undersigned registrants hereby undertake: (1) to use its best
efforts to distribute prior to the opening of bids, to prospective bidders,
underwriters, and dealers, a reasonable number of copies of a prospectus which
at that time meets the requirements of Section 10(a) of the Act, and relating
to the securities offered at competitive bidding, as contained in the
Registration Statement, together with any supplements thereto, and (2) to file
an amendment to the Registration Statement reflecting the results of bidding,
the terms of the reoffering and related matters to the extent required by the
applicable form, not later than the first use, authorized by the issuer after
the opening of bids, of a prospectus relating to the securities offered at
competitive bidding, unless no further public offering of such securities by
the issuer and no reoffering of such securities by the purchasers is proposed
to be made.
(d) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(e) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(f) The undersigned registrants hereby undertake to file, if necessary,
an application for the purpose of determining the eligibility of the Trustee to
act under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as
amended, in accordance with the rules and regulations prescribed by the
Securities and Exchange Commission under Section 305(b)(2) of such Act.
(g) The undersigned registrants hereby undertake to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-7
<PAGE> 66
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Fort Wayne, Indiana on March 31, 1998.
LINCOLN NATIONAL CORPORATION
By: /s/ Ian M. Rolland
-------------------------------------
Ian M. Rolland, Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Lincoln National
Corporation, hereby severally constitute and appoint Jack D. Hunter and John L.
Steinkamp, and each of them singly, our true and lawful attorneys, with full
power to them and each of them singly, to sign for us in our names in the
capacities indicated below, all pre-effective and post-effective amendments to
this Registration Statement, including any filings pursuant to Rule 462(b)
under the Securities Act of 1933, and generally to do all things in our names
and on our behalf in such capacities to enable Lincoln National Corporation to
comply with the provisions of the Securities Act of 1933, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 31, 1998.
/s/ Ian M. Rolland Chairman of the Board of Directors and Chief
- --------------------------------- Executive Officer (Principal Executive
Ian M. Rolland Officer)
/s/ Richard C. Vaughan Executive Vice President and Chief Financial
- --------------------------------- Officer (Principal Financial Officer)
Richard C. Vaughan
/s/ Donald L. Van Wyngarden Second Vice President and Controller
- --------------------------------- (Principal Accounting Officer)
Donald L. Van Wyngarden
/s/ J. Patrick Barrett Director
- ---------------------------------
J. Patrick Barrett
/s/ Thomas D. Bell, Jr. Director
- ---------------------------------
Thomas D. Bell, Jr.
/s/ Jon A. Boscia President and Director
- ---------------------------------
Jon A. Boscia
/s/ Daniel R. Efroymonson Director
- ---------------------------------
Daniel R. Efroymonson
/s/ Harry L. Kavetas Director
- ---------------------------------
Harry L. Kavetas
II-8
<PAGE> 67
/s/ M. Leanne Lachman Director
- ---------------------------------
M. Leanne Lachman
/s/ Earl L. Neal Director
- ---------------------------------
Earl L. Neal
/s/ Roel Pieper Director
- ---------------------------------
Roel Pieper
/s/ John M. Pietruski Director
- ---------------------------------
John M. Pietruski
/s/ Jill S. Ruckelshaus Director
- ---------------------------------
Jill S. Ruckelshaus
/s/ Gordon A. Walker Director
- ---------------------------------
Gordon A. Walker
/s/ Gilbert R. Whitaker, Jr. Director
- ---------------------------------
Gilbert R. Whitaker, Jr.
II-9
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Lincoln
National Capital Trust III, Lincoln National Capital Trust IV, Lincoln National
Capital Trust V and Lincoln National Capital Trust VI, each certifies that it
has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
Fort Wayne, state of Indiana, on March 31, 1998.
LINCOLN NATIONAL CAPITAL TRUST III
By: Lincoln National Corporation, as Depositor
By: /s/ Janet C. Whitney
-------------------------------------
Name: Janet C. Whitney
Title: Vice President and Treasurer
LINCOLN NATIONAL CAPITAL TRUST IV
By: Lincoln National Corporation, as Depositor
By: /s/ Janet C. Whitney
-------------------------------------
Name: Janet C. Whitney
Title: Vice President and Treasurer
LINCOLN NATIONAL CAPITAL TRUST V
By: Lincoln National Corporation, as Depositor
By: /s/ Janet C. Whitney
-------------------------------------
Name: Janet C. Whitney
Title: Vice President and Treasurer
LINCOLN NATIONAL CAPITAL TRUST VI
By: Lincoln National Corporation, as Depositor
By: /s/ Janet C. Whitney
-------------------------------------
Name: Janet C. Whitney
Title: Vice President and Treasurer
II-10
<PAGE> 1
EXHIBIT 23(a)
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Lincoln National
Corporation for the registration of up to $1,300,000,000 aggregate public
offering price of unsecured senior debt securities, unsecured junior
subordinated debt securities, preferred stock, common stock, warrants, stock
purchase contracts, stock purchase units or a combination thereof and to the
incorporation by reference therein of our report dated February 5, 1998, with
respect to the consolidated financial statements and schedules of Lincoln
National Corporation included in its Annual Report (Form 10-K) for the year
ended December 31, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Fort Wayne, Indiana
March 31, 1998
