<PAGE> 1
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 30, 1995)
$300,000,000
LINCOLN NATIONAL CORPORATION
$100,000,000 6 1/2% NOTES DUE MARCH 15, 2008
$200,000,000 7% NOTES DUE MARCH 15, 2018
------------------------
Interest on the 6 1/2% Notes due March 15, 2008 (the "2008 Notes") and the
7% Notes due March 15, 2018 (the "2018 Notes" and, together with the 2008 Notes,
the "Notes") is payable semiannually on March 15 and September 15 of each year,
commencing on September 15, 1998. The Notes are not redeemable prior to maturity
and are not entitled to any sinking fund.
The 2008 Notes and the 2018 Notes will be represented by Global Securities
registered in the name of the nominee of The Depository Trust Company, which
will act as the depository (the "Depository"). Ownership interests in the Notes
will be shown only on, and transfers thereof will be effected only through,
records maintained by the Depository and its participants. Owners of beneficial
interests in the Notes will be entitled to physical delivery of Notes in
certificated form equal in principal amount to their respective beneficial
interests only under the limited circumstances described under "Description of
Notes--Book-Entry Note." Settlement for the Notes will be made in immediately
available funds. The Notes will trade in the Depository's settlement system
until maturity or until the Notes are issued in certificated form, and secondary
market trading activity in the Notes will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2008 Note...................... 99.662% .65% 99.012%
- -----------------------------------------------------------------------------------------------------------
Total.............................. $99,662,000 $650,000 $99,012,000
- -----------------------------------------------------------------------------------------------------------
Per 2018 Note...................... 99.768% .875% 98.893%
- -----------------------------------------------------------------------------------------------------------
Total.............................. $199,536,000 $1,750,000 $197,786,000
===========================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from March 24, 1998.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Company estimated at $325,000.
------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to certain conditions.
The Underwriters reserve the right to withdraw, cancel or modify such offer and
to reject orders in whole or in part. It is expected that delivery of the Notes
will be made through the book-entry facilities of The Depository Trust Company
on or about March 24, 1998.
------------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
------------------------
The date of this Prospectus Supplement is March 19, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SUCH
TRANSACTIONS MAY INCLUDE OVER-ALLOTMENT, STABILIZING, THE PURCHASE OF NOTES TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS IN CONNECTION
WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1997, filed by Lincoln National Corporation (the "Company") with the Securities
and Exchange Commission, is incorporated into this Prospectus Supplement by
reference and made a part hereof. Each document or report filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date hereof and prior to the termination of any offering of
securities made by the Prospectus and this Prospectus Supplement shall be deemed
to be incorporated by reference herein and to be a part hereof from the date of
filing of such document. Any statement contained in the Prospectus or this
Prospectus Supplement, or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference therein or herein, shall
be deemed to be modified or superseded for purposes of the Prospectus and this
Prospectus Supplement 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 Prospectus or this Prospectus Supplement.
The Company will provide without charge to any person to whom this
Prospectus Supplement 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.
USE OF PROCEEDS
The net proceeds to the Company from the issue and sale of the Notes
offered hereby are estimated to be approximately $296.5 million, with accrued
interest and after deducting underwriting discounts and estimated expenses of
this offering payable by the Company. The Company intends to use $200 million of
the net proceeds received from the sale of the Notes offered hereby to reduce
the Company's commercial paper borrowings and the remaining portion will be used
for general corporate purposes. As of March 19, 1998, the Company's outstanding
commercial paper had maturities of 1 to 71 days, with a weighted average
interest rate equal to approximately 5.57%.
S-2
<PAGE> 3
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries at December 31, 1997, and as adjusted to give effect
to the sale by the Company of the Notes offered hereby and the application of
the net proceeds (without giving effect to the payment of expenses) therefrom as
if such sale and application of proceeds occurred on such date. See "Use of
Proceeds."
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term debt (including current maturities of long-term
debt)..................................................... $ 297.2 $ 97.2
======== ========
Long-term debt less current portion:
6 1/2% Notes due 2008....................................... $ -- $ 99.7
7% Notes due 2018........................................... -- 199.5
7 1/4% Debentures due 2005.................................. 191.4 191.4
7 1/8% Notes due 1999....................................... 99.7 99.7
7 5/8% Notes due 2002....................................... 99.4 99.4
9 1/8% Debentures due 2024.................................. 119.8 119.8
Mortgages and other notes................................... .7 .7
-------- --------
Total long-term debt (less current portion)................. 511.0 810.2
Minority interest -- preferred securities of subsidiary
companies................................................. 315.0 315.0
-------- --------
Total long-term debt and minority interest.................. 826.0 1,125.2
Shareholders' equity:
Series A preferred stock:
Authorized: 10,000,000 shares
Issued and outstanding: (35,091 shares)................ 1.1 1.1
Common stock, without par value:
Authorized: 800,000,000 shares
Issued and outstanding: (100,859,478 shares)........... 966.5 966.5
Retained earnings......................................... 3,533.1 3,533.1
Foreign currency translation adjustment................... 46.2 46.2
Net unrealized gain on securities available-for-sale...... 436.0 436.0
-------- --------
Total shareholders' equity............................. 4,982.9 4,982.9
-------- --------
Total capitalization................................. $5,808.9 $6,108.1
======== ========
</TABLE>
- ---------------
The Company's $3.00 Convertible Cumulative Preferred Stock, Series A
(without par value) is entitled to a liquidation preference in the amount of
$80.00 per share, or $2,807,280 plus accrued dividends at December 31, 1997.
S-3
<PAGE> 4
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below are the Company's historical ratios of earnings to fixed
charges for each of the years in the five-year period ended December 31, 1997.
In addition, set forth below are pro forma ratios giving effect to the sale of
the Notes and 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(5) 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.
(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 NOTES
GENERAL
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus, to which reference is hereby made. Capitalized terms not
otherwise defined herein shall have the meanings given to them in the Prospectus
and the Indenture (defined below).
S-4
<PAGE> 5
The 2008 Notes and the 2018 Notes will be issued as separate series under
an Indenture, dated as of September 15, 1994 (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee"). Each of the 2008
Notes and the 2018 Notes will be unsecured obligations of the Company.
The Notes are not redeemable prior to maturity and are not entitled to any
sinking fund. The Indenture does not limit the aggregate principal amount of
Debt Securities that may be issued and provides that Debt Securities may be
issued from time to time in one or more series. As of December 31, 1997, the
Company had $511.0 million of Debt Securities outstanding.
The 2008 Notes and the 2018 Notes will bear interest at the respective
rates per annum shown on the cover page of this Prospectus Supplement from March
24, 1998 or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually in arrears on March 15 and
September 15 of each year, commencing September 15, 1998 (each an "Interest
Payment Date"), to the persons in whose names such Notes were registered at the
close of business on the next preceding March 1 and September 1, whether or not
a Business Day (as defined below) (each a "Regular Record Date"), respectively.
Interest on the Notes will be computed on the basis of a 360-day year comprised
of twelve 30-day months.
Interest payable on a Note on any Interest Payment Date or at maturity
shall be the amount of interest accrued from and including the next preceding
Interest Payment Date in respect of which interest has been paid or provided for
(or from and including March 24, 1998, if no interest has been paid or provided
for with respect to such Note) to, but excluding, the Interest Payment Date or
the date of maturity, as the case may be. If any Interest Payment Date or the
maturity date of a Note falls on a day that is not a Business Day, the payment
shall be made on the next Business Day as if it were made on the date such
payment was due and no interest shall accrue on the amount so payable for the
period from and after such Interest Payment Date or the maturity date, as the
case may be. "Business Day" means any day, other than a Saturday, Sunday, legal
holiday or other day on which banks in The City of New York are required or
authorized by law, regulation or executive order to close.
The Notes will be issued only in fully-registered book-entry form, without
coupons, in denominations of $1,000 and integral multiples thereof, through the
facilities of The Depository Trust Company, New York, New York (the
"Depository"). Transfers or exchanges may be effected only through a
participating member of the Depository. See "Book-Entry Note" below. Payments on
the Notes will be made to the Depository or its nominee in accordance with the
arrangements then in effect between the Trustee and the Depository. See
"Book-Entry Note" below.
BOOK-ENTRY NOTE
The Notes will be represented by Global Securities (collectively, the
"Book-Entry Note") which will be deposited with, or on behalf of, the Depository
and registered in the name of the Depository's nominee. Except as set forth
below, the Book-Entry Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
nominee to a successor of the Depository or a nominee of such successor.
The Depository has advised the Company that it is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. The Depository
was created to hold securities for persons that have accounts with the
Depository ("participants") and to facilitate settlement of securities
transactions among its participants, such as transfers and pledges in such
deposited securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depository's "direct participants" include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations and certain other organizations, some of which
(and/or their representatives) own the Depository. Access to the Depository's
S-5
<PAGE> 6
book-entry system is also available to others, such as banks, securities
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
The Depository has also advised the Company and the Trustee that, upon the
issuance of the Book-Entry Note, the Depository will credit the respective
principal amounts of the Notes represented by the Book-Entry Note to the
accounts of participants. The accounts to be credited will be designated by the
applicable Underwriter. Purchases of Notes under the Depository's system must be
made by or through direct participants, which will receive a credit for the
Notes on the Depository's records. The ownership interest of each actual
purchaser of each Note ("beneficial owner") is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from the Depository of their purchase, but beneficial
owners are expected to receive written confirmation providing details of the
transaction, as well as periodic statements of their holdings, from the direct
and indirect participant through which the beneficial owner entered into the
transaction. The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
limits and such laws may impair the ability to transfer beneficial interests in
the Book-Entry Note.
So long as the Depository for the Book-Entry Note, or its nominee, is the
registered owner of the Book-Entry Note, the Depository or its nominee, as the
case may be, will be considered the sole owner or holder of the Notes
represented by the Book-Entry Note for all purposes under the Indenture. Except
as provided below, owners of beneficial interests in the Book-Entry Note will
not be entitled to have Notes represented by such Book-Entry Note registered in
their names, will not receive or be entitled to receive physical delivery of
such Notes in certificated form and will not be considered the owners or holders
thereof under the Indenture.
Principal and interest payments on the Notes represented by the Book-Entry
Note will be made by the Company to the Depository or its nominee, as the case
may be, as the registered owner of such Book-Entry Note. Neither the Company,
the Trustee, the Paying Agent (as defined in the Indenture) nor any Registrar
(as defined in the Indenture) for the Notes 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 Book-Entry Note, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. The Company expects that the Depository or its nominee, upon receipt
of any payment of principal or interest in respect of the Book-Entry Note, will
credit immediately the accounts of the relevant participants with payment in
amounts proportionate to their respective holdings in principal amount of
beneficial interest in such Book-Entry Note as shown on the records of the
Depository or its nominee. The Company also expects that payments by
participants to beneficial owners in the Book-Entry Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such participants.
Conveyance of notices and other communications by the Depository to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
If (i) the Depository is at any time unwilling, unable or ineligible to
continue as depository and a successor depository is not appointed by the
Company within ninety days, (ii) the Company executes and delivers to the
Trustee an order to the effect that a Book-Entry Note shall be so exchangeable,
or (iii) an Event of Default has occurred and is continuing with respect to the
Notes, the Company will issue the Notes in certificated form in exchange for
such Book-Entry Note. In any such instance, an owner of a beneficial interest in
the Book-Entry Note will be entitled to physical delivery in certificated form
of the Notes equal in principal amount to such beneficial interest and to have
such Notes registered in its name. Notes so issued in certificated form will be
issued in denominations of $1,000 or any larger amount that is an integral
multiple thereof and will be issued in registered form only, without coupons.
S-6
<PAGE> 7
PAYING AGENT AND REGISTRAR
Pursuant to the terms of the Indenture, the Company has appointed The Bank
of New York to act as paying agent and registrar with respect to the Notes under
the Indenture.
REGARDING THE TRUSTEE
The Trustee is a participant in the Company's revolving credit agreement,
and the Company has maintained other banking relationships with the Trustee in
the normal course of business. The Trustee is also the 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 and 9 1/8% Debentures due October 1,
2024.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated March 19, 1998 and the pricing agreement relating to the Notes
(collectively, the "Underwriting Agreement") among the Company and the
Underwriters named below (the "Underwriters"), for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated is acting as representative, the Company has agreed
to sell to the Underwriters, and the Underwriters have severally agreed to
purchase, the respective principal amounts of the Notes set forth opposite their
names below. In the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
the Notes offered hereby if any of such Notes are purchased. In the event of
default by any Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
UNDERWRITER 2008 NOTES 2018 NOTES
- ----------- ------------ ------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $ 34,000,000 $ 67,000,000
Goldman, Sachs & Co. ....................................... 33,000,000 66,500,000
Morgan Stanley & Co. Incorporated........................... 33,000,000 66,500,000
------------ ------------
Total.......................................... $100,000,000 $200,000,000
============ ============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less concessions not in excess of .4% of the principal amount of the 2008 Notes
and .5% of the principal amount of the 2018 Notes. The Underwriters may allow,
and such dealers may reallow, a discount not in excess of .25% of the principal
amount of the 2008 Notes and .25% of the principal amount of the 2018 Notes to
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed by the Underwriters.
The Notes are new issues of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but are not obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
Until the distribution of the Notes is completed, rules of the Securities
and Exchange Commission may limit the ability of the Underwriters to bid for and
purchase the Notes. As an exception to these rules, the Underwriters are
permitted to engage in certain transactions that stabilize the price of the
Notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.
If the Underwriters create a short position in the Notes in connection with
this offering, i.e., if they sell more of the Notes than are set forth on the
cover page of this Prospectus Supplement, the Underwriters may reduce that short
position by purchasing Notes in the open market.
S-7
<PAGE> 8
The Underwriters may also impose a penalty bid on certain Underwriters.
This means that if the Underwriters purchase Notes in the open market to reduce
the Underwriters' short position or to stabilize the price of the Notes, they
may reclaim the amount of the selling concession from the Underwriters who sold
those Notes as part of the offering. In general, purchases of a security for the
purpose of stabilization or to reduce a short position could cause the price of
the security to be higher than it might be in the absence of such purchases. The
imposition of a penalty bid might also have an effect on the price of a security
to the extent that it were to discourage resales of the security.
Neither the Company nor the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In addition, neither the
Company nor the Underwriters make any representation that the Underwriters will
engage in such transactions or that such transactions, once commenced, will be
discontinued without notice.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the Underwriters may be required to make in respect of
such liabilities.
In the ordinary course of their respective businesses, certain of the
Underwriters have in the past, and may in the future, engage in commercial and
investment banking transactions with the Company and its affiliates.
VALIDITY OF THE NOTES
The validity of the Notes offered hereby will be passed upon for the
Company by Sonnenschein Nath & Rosenthal, Chicago, Illinois and for the
Underwriters by Sullivan & Cromwell, New York, New York. Sonnenschein Nath &
Rosenthal and Sullivan & Cromwell will rely on the opinion of Jack D. Hunter,
Esq., Executive Vice President and General Counsel of the Company, as to matters
of Indiana law. 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. See "Legal Opinions" in the accompanying Prospectus.
EXPERTS
The consolidated financial statements and schedules of Lincoln National
Corporation and subsidiaries appearing in Lincoln National Corporation's Annual
Report (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.
S-8
<PAGE> 9
LINCOLN NATIONAL CORPORATION
DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
------------------------
Lincoln National Corporation (the "Company") from time to time may offer up
to $600,000,000 aggregate public offering price (or the equivalent in foreign
denominated currencies or composite currencies) of its (i) unsecured securities
consisting of notes, debentures and or other unsecured evidences of indebtedness
("Debt Securities"), (ii) Preferred Stock (without par value) ("Preferred
Stock"), or (iii) Common Stock (without par value) ("Common Stock"). The Debt
Securities, Preferred Stock and Common Stock (collectively, the "Securities")
may be offered either together or separately and will be offered in amounts, at
prices and on terms to be determined at the time of offering. The Company may
sell Securities directly, through agents designated from time to time, through
dealers or one or more underwriters, or through a syndicate of underwriters
managed by one or more underwriters. See "Plan of Distribution."
Certain specific terms of the particular Securities in respect of which
this Prospectus is being delivered ("Offered Securities") are set forth in the
accompanying Prospectus Supplement ("Prospectus Supplement"), including, where
applicable, the initial public offering price of the Securities, the listing on
any securities exchange, other special terms, and (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, the
denomination, maturity, premium, if any, the rate (which may be fixed or
variable), time and method of calculating payment of interest, if any, the place
or places where principal of, premium, if any, and interest, if any, on such
Debt Securities will be payable, the currency in which principal of, premium, if
any, and interest, if any, on such Debt Securities will be payable, any terms of
redemption at the option of the Company or the holder, any sinking fund
provisions and any terms for conversion or exchange into Common Stock and (ii)
in the case of Preferred Stock, the specific title and stated value, any
dividend, liquidation, redemption, voting and other rights and any terms for
exchange for Debt Securities or conversion or exchange into Common Stock. The
Prospectus Supplement sets forth the names of any underwriters, dealers or
agents involved in the distribution of the Offered Securities and any applicable
discounts, commissions or allowances. If so specified in the applicable
Prospectus Supplement, Offered Securities may be issued in whole or in part in
the form of one or more temporary or permanent global securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is June 30, 1995.
<PAGE> 10
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCE IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and are also
available for inspection and copying at the regional offices of the Commission
located at 75 Park Place, New York, New York 10007 and at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such information can also be obtained by mail from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. In addition, such information can be inspected at the offices
of the New York Stock Exchange, Inc. at 20 Broad Street, New York, New York
10005, at the offices of the Chicago Stock Exchange, Inc. at 440 South LaSalle
Street, Chicago, Illinois, 60603 and at the offices of the Pacific Stock
Exchange, Inc. at 301 Pine Street, San Francisco, California 94104.
This Prospectus constitutes a part of a registration statement filed on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus omits
certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement for further information
with respect to the Company. Any statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of each document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Company is not
required to, and does not, provide annual reports to holders of its debt
securities unless specifically requested by a holder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended December
31, 1994 (as amended by the Form 10-K/A filed on May 12, 1995), Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995, and Current Report on Form
8-K dated May 16, 1995 filed with the Commission pursuant to Section 13 of the
Exchange Act are incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offerings of the Debt Securities, Preferred Stock and
Common Stock made by the prospectuses included in the Registration Statement are
deemed incorporated herein by reference and such documents shall be deemed to be
a part hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that any statement contained herein or in any
subsequently filed document which also is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement
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<PAGE> 11
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge, upon written or oral request, to
each person to whom a copy of this Prospectus is delivered a copy of any of the
documents incorporated by reference herein (not including the exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents). Requests should be directed to C. Suzanne Womack, Secretary,
Lincoln National Corporation, 200 East Berry Street, Fort Wayne, Indiana,
46802-2706, telephone number (219) 455-3271.
FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
IN CONNECTION WITH ANY OFFERINGS OF COMMON STOCK, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK, CHICAGO OR
PACIFIC STOCK EXCHANGES OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is a holding company, which through its subsidiary companies,
operates multiple insurance and investment management businesses. After the sale
in 1994 of a majority interest in the Company's primary writer of employee
life-health benefit coverages, the Company's insurance operations currently are
divided into three major business segments, 1) Property-Casualty, 2) Life
Insurance and Annuities, and 3) Life-Health Reinsurance. A fourth business
segment was created by the Company upon the acquisition on April 3, 1995 of
Delaware Management Holdings, Inc. and its subsidiaries (collectively,
"Delaware"), which serves as investment adviser to approximately 290 pension
fund and other institutional accounts, acts as investment manager, national
distributor, and shareholder services agent for 33 registered, open-end funds
and serves as investment manager for 2 registered, closed-end funds. This fourth
business segment includes the operations of Delaware and several other
investment management operations of the Company owned by the Company prior to
the acquisition of Delaware.
The Property-Casualty segment's products are comprised substantially of
exposures that tend to produce claims that are reported and settled in the
short-term. Products are distributed nationally, with an emphasis on desirable
business environments, and target small and medium-sized commercial accounts and
preferred personal line customers.
The Life Insurance and Annuity segment provides a broad range of life
insurance and annuity contracts through a variety of distribution channels. This
segment attempts to differentiate its products through quality service and
flexibility. Universal life is the dominant life insurance product. Both fixed
and variable annuities have registered strong growth during the past several
years.
As of December 31, 1994, Lincoln National had consolidated assets of $48.9
billion and shareholders' equity of approximately $3.0 billion. As of March 31,
1995, Lincoln National had consolidated assets of $52.3 billion and
shareholders' equity of approximately $3.6 billion.
Lincoln National Corporation is an Indiana corporation with its principal
office at 200 East Berry Street, Fort Wayne, Indiana 46802-2706. Its telephone
number is (219) 455-2000.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds to the Company from the sale of Securities offered hereby will be
used for general corporate purposes and may be
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<PAGE> 12
used for the repayment of short-term debt, or to fund acquisitions, capital
expenditures or working capital needs. Specific allocations of the proceeds for
the various purposes have not been made at this time, and the amount and timing
of such offerings will depend upon the Company's requirements and the
availability of other funds. All or a portion of the proceeds may be invested on
a temporary basis in short-term, interest -- bearing securities. The specific
allocations of the proceeds of a particular series or issuance of Securities
will be described in the Prospectus Supplement relating thereto.
RISK FACTORS RELATING TO CURRENCIES
Debt Securities denominated or payable in foreign currencies may entail
significant risks. These risks include, without limitation, the possibility of
significant fluctuations in foreign currency exchange rates. These risks may
vary depending upon the currency or currencies involved. These risks will be
more fully described in the Prospectus Supplement relating thereto.
HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES
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, 1994
and the three month periods ended March 31, 1995 and March 31, 1994.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, YEAR ENDED MARCH 31,
------------- -------------------------------------
1995 1994 1994 1993 1992 1991 1990
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Annuities and Financial
Products(1)(4).............................. 10.44 12.67 6.43 10.35 6.69 3.04 3.04
Including Interest on Annuities and financial
Products(2)(4).............................. 1.49 1.57 1.27 1.43 1.32 1.16 1.18
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends(3)(4)......... 1.47 1.54 1.25 1.40 1.30 1.15 1.17
</TABLE>
- ---------------
(1) For purposes of determining this ratio, earnings consist of income before
federal income taxes and cumulative effect of accounting change adjusted for
the difference between income or losses from unconsolidated equity
investments and cash distributions from such investments, plus fixed
charges. Fixed charges consist of interest expense on debt and the portion
of operating leases that are representative of the interest factor.
(2) Same as the ratio of earnings to fixed charges excluding interest on
annuities and financial products, except fixed charges and earnings include
interest on annuities and financial products.
(3) Same as the ratio of earnings to fixed charges including interest on
annuities and financial products, except fixed charges include the pre-tax
earnings required to cover preferred stock dividend requirements.
(4) Subsequent to March 31, 1995 through May 23, 1995, additional indebtedness
of $464 million was incurred as a net result of the acquisition of Delaware
and Laurentian Financial Group plc, and the issuance of debentures. If the
impact of this increase in aggregate indebtedness for these transactions
were included in the calculation for the three months ended March 31, 1995,
the ratio of earnings to fixed charges as described in note (1) above would
decrease by 3.12 and such ratios as described in notes (2) and (3) would
decrease by 0.03. If the impact of this increase in indebtedness for these
transactions were included in the calculation for the year ended December
31, 1994, the ratio of earnings to fixed charges as described in note (1)
above would decrease by 2.07 and such ratios as described in notes (2) and
(3) would decrease by 0.03.
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<PAGE> 13
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued in one or more series under an Indenture
dated as of September 15, 1994 (the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Trustee"), a copy of which is included as an
exhibit to the Registration Statement filed with the Commission with respect to
the Debt Securities. The following summaries of certain provisions of the
Indenture are not complete and are subject to, and are qualified in their
entirety by reference to, all provisions of the Indenture. Certain terms defined
in the Indenture are capitalized in this Prospectus. Parenthetical references
are to the Indenture.
GENERAL
The Debt Securities will be unsecured and will rank on the parity with all
other unsecured and unsubordinated indebtedness of the Company.
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued up to the
aggregate principal amount which may be authorized from time to time by the
Company. Reference is made to the Prospectus Supplement for the following terms
of Debt Securities being offered thereby: (i) the title, aggregate principal
amount and authorized denominations of Debt Securities; (ii) the percentage of
their principal amount at which such Debt Securities will be issued; (iii) the
date or dates on which Debt Securities will mature; (iv) the rate or rates per
annum (which may be fixed or variable), if any, at which Debt Securities will
bear interest (or the method of determination or 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 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.
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<PAGE> 14
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 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)
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<PAGE> 15
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)
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)
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<PAGE> 16
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
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form and will not be
considered the holders thereof for any purposes under the Indenture. (Sections
2.06 and 11.03) Accordingly, each person owning a beneficial interest in such
Global Security must rely on the procedures of the Depository and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest to exercise any rights of a holder under the
Indenture. The Company understands that, under existing industry practices, if
the Company requests any action of holders or an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a holder
is entitled to give or take under the Indenture, the Depository would authorize
the participants to give such notice or take such action, and participants would
authorize beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal of and any premium, interest and Additional Amounts on a Global
Security will be payable in the manner described in the applicable Prospectus
Supplement.
LIMITATION ON LIENS ON STOCK OF RESTRICTED SUBSIDIARIES
The Company will not, nor will it permit any Restricted Subsidiary to,
issue, assume or guarantee any indebtedness for borrowed money (hereinafter
referred to as "Debt") secured by a mortgage, security interest, pledge, lien or
other encumbrance upon any shares of stock of any Restricted Subsidiary without
effectively providing that the Debt Securities (together with, if the Company
shall so determine, any other indebtedness of or guarantee by the Company
ranking equally with the Debt Securities and then existing or thereafter
created) shall be secured equally and ratably with such Debt. (Section 4.06).
For purposes of the Indenture, "Restricted Subsidiary" means each of
American States Insurance Company and The Lincoln National Life Insurance
Company so long as it remains a subsidiary, as well as any successor to all or a
principal part of the business of any such subsidiary and any other subsidiary
which the Board of Directors designates as a Restricted Subsidiary. (Section
1.01) The Restricted Subsidiaries
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<PAGE> 17
accounted for approximately 78% of the consolidated revenues of the Company
during the year ended December 31, 1994 and 94% of the consolidated assets of
the Company at December 31, 1994.
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)
DEFAULTS AND REMEDIES
An Event of Default with respect to Debt Securities of any series is
defined in the Indenture as being: (a) default for 30 days in payment of any
interest or Additional Amounts on the Debt Securities of such series; (b)
default in payment of principal or premium, if any, on the Debt Securities of
such series when due either at maturity, upon redemption, by declaration or
otherwise (except a failure to make payment resulting from mistake, oversight or
transfer difficulties not continuing for more than 3 Business Days beyond the
date on which such payment is due); (c) default in payment of any sinking fund
installment when due and payable (except a failure to make payment resulting
from mistake, oversight or transfer difficulties not continuing for more than 3
Business Days beyond the date on which such payment is due); (d) default by the
Company in the performance or breach of any other covenant or warranty of the
Company in respect of the Debt Securities of such series for a period of 60 days
after notice thereof to the Company or Trustee; (e) certain events involving the
bankruptcy or insolvency of the Company; or (f) other Events of Default as
specified in the Supplemental Indenture or Board Resolution under which such
series of Debt Securities was issued. (Section 6.01)
The Indenture provides that (1) if an Event of Default described in clauses
(a), (b), (c) or, in the event of a default with respect to less than all
Outstanding series under the Indenture, (d) above shall have occurred and be
continuing with respect to one or more series, either the Trustee or the holders
of 25 percent in principal amount of the Debt Securities of such series then
Outstanding (each such series voting as a separate class) may declare the
principal (or, in the case of original issue discount Debt Securities, the
portion thereof specified in the terms thereof) of all Outstanding Debt
Securities of such series and the interest accrued thereon and Additional
Amounts payable in respect thereof, if any, to be due and payable immediately
and (2) if an Event of Default described in clause (d) (in the event of a
default with respect to all Outstanding series) or (e) above shall have occurred
and be continuing, either the Trustee or the holders of 25 percent in principal
amount of all Debt Securities then Outstanding (voting as one class) may declare
the principal (or, in the case of original issue discount Debt Securities, the
portion of the principal amount thereof specified in the terms thereof) of all
Debt Securities then Outstanding and the interest accrued thereon and Additional
Amounts payable in respect thereof, if any, to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past defaults
(except for defaults in the payment of principal of, or premium, interest or
Additional Amounts, if any, on such Debt Securities) may be waived by the
holders of a majority in principal amount of the Debt Securities of such series
(or of all series, as the case may be) then Outstanding. (Sections 6.01 and
6.10)
Holders may not enforce the Indenture or the Debt Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Debt Securities unless it receives indemnity satisfactory to
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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 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)
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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)
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 and 9 1/8% Debentures due October 1,
2024.
DESCRIPTION OF PREFERRED STOCK AND COMMON STOCK
GENERAL
The Company may issue, separately or together with other Securities, shares
of Common Stock or Preferred Stock, all as set forth in the Prospectus
Supplement relating to the Common Stock or Preferred Stock for which this
Prospectus is being delivered. In addition, if the Prospectus Supplement so
provides, the Debt Securities or Preferred Stock may be convertible into or
exchangeable for Common Stock.
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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 three series of Preferred Stock, consisting of the Company's
$3.00 Cumulative Convertible Preferred Stock, Series A (without par value) (the
"Series A Preferred Stock") and its 5 1/2% Cumulative Convertible Exchangeable
Preferred Stock, Series E and F (without par value) ("Series E Preferred Stock"
and "Series F Preferred Stock" respectively). At March 31, 1995, the Company had
issued and outstanding 94,575,411 shares of Common Stock, 42,058 shares of
Series A Preferred and 2,201,443 and 2,216,454 shares of Series E and F
Preferred Stock, respectively.
The following descriptions of the classes of the Company's capital stock
are summaries, do not purport to be complete, and are subject, in all respects,
to the applicable provisions of the Indiana Business Corporation Law and the
Company's Articles of Incorporation (including the Certificate of Resolution by
the Board of Directors of the Company Designating the Rights and Preferences of
the Series A Preferred Stock), Articles of Amendment Designating the Rights and
Preferences of the Series E and F Preferred Stock, and the Rights Agreement,
referred to below, with The First National Bank of Boston, which, in each case,
are included as Exhibits to the Registration Statement of which this Prospectus
forms a part.
COMMON STOCK
Holders of the Company's Common Stock are entitled to receive dividends
when, as and if declared by the Board of Directors after all dividends accrued
on all preferred or special classes of shares entitled to preferential dividends
have been paid or declared and set apart for payment out of funds legally
available therefor. Upon liquidation, dissolution or winding up of the affairs
of the Company, whether voluntary or involuntary, holders of Common Stock are
entitled to receive pro rata any net assets of the Company remaining after the
claims of creditors and preferences of the Series A, E, and F Preferred Stock,
and any other series of Preferred Stock at the time outstanding, have been paid
in full. The Company's Articles of Incorporation provide that holders of Common
Stock and holders of any series of Preferred Stock from time to time outstanding
shall each have the right at every meeting of shareholders to one vote for each
share of Common Stock and/or Preferred Stock so held, and holders of Common
Stock and holders of Preferred Stock shall so vote as one class. Under certain
circumstances as provided by law, the Company's Articles of Incorporation or the
terms of the Preferred Stock, certain series of Preferred Stock may vote as a
separate class or classes. The Company's Bylaws presently provide for three
classes of directors, with directors in each class serving staggered three-year
terms. The holders of Common Stock do not have any preemptive rights to
subscribe for additional shares, and the Common Stock does not have cumulative
voting rights.
The Company's Common Stock is listed on the New York, Chicago, Pacific,
London and Tokyo Stock Exchanges. The outstanding shares of Common Stock are,
and the Common Stock offered hereby when issued will be, validly issued, fully
paid and non-assessable. The Company will take appropriate action to list the
Common Stock offered hereby as described in the Prospectus Supplement relating
to any issuance of Common Stock.
Common Stock Purchase Rights. Under a Rights Agreement between the Company
and The First National Bank of Boston ("Common Rights Agreement"), each
outstanding share of Common Stock is coupled with a right (the "Common Rights")
entitling the holder to purchase from the Company one share of Common Stock at a
price of $75.00 per share, subject to adjustment.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (other than the
Company or certain related persons or approved purchasers) (an "Acquiring
Person") acquired, or obtained the right to acquire, beneficial ownership of 20%
or more of the outstanding Common Stock or (ii) 10 days following the
commencement or announcement of an intention to make a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a
person or group of affiliated or associated persons of 30% or more of such
outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Common Rights will be transferred with and only with
the Common Stock. As soon as practicable following the Distribution Date,
separate certificates
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evidencing the Common Rights ("Common Rights Certificate") will be mailed to
holders of the Common Stock as of the close of business on the Distribution Date
and such separate Common Right Certificates alone will evidence the Common
Rights. The Common Rights are not exercisable until the Distribution Date. The
Common Rights will expire on November 21, 1996, unless earlier redeemed by the
Company as described below.
The Common Right purchase price payable, and the number of shares of Common
Stock or other Securities or property issuable, upon exercise of the Common
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Common Stock, (ii) upon the grant to holders of the
Common Stock of certain rights or warrants to subscribe for the Common Stock or
convertible Securities at less then the current market price of the Common
Stock, or (iii) upon the distribution to holders of the Common Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
out of earnings or retained earnings theretofore paid or dividends payable in
Common Stock) or of subscription rights or warrants (other than those referred
to above).
In the event that the Company were acquired in a merger or other business
combination transaction in which more than 50% of its assets or earning power
were sold, proper provision will be made so that each holder of a Common Right
shall thereafter have the right to receive upon the exercise thereof at the then
current exercise price of the Common Right, that number of shares of common
stock of the acquiring company which at the time of such transaction would have
a market value of two times the exercise price of the Common Right. In the event
an Acquiring Person merges into the Company, the Company is the surviving
corporation and the Company's Common Stock is not changed into or exchanged for
stock or other Securities of the Company or any other person or cash or any
other property and (i) an Acquiring Person engages in one of a number of
self-dealing transactions specified in the Common Rights Agreement or (ii)
during such time as there is an Acquiring Person, there is a reclassification of
Securities, reverse stock split, recapitalization of the Company, merger or
consolidation of the Company with any of its subsidiaries or any other
transaction involving the Company or its subsidiaries which has the effect of
increasing by more than 1% the proportionate equity Securities ownership of the
Company or any of its subsidiaries by an Acquiring Person, proper provision will
be made so that each holder of a Common Right, other than Common Rights that
were beneficially owned by the Acquiring Person on the earlier of the
Distribution Date or the date of the public announcement that an Acquiring
Person acquired 20% or more of the outstanding shares of Common Stock, will
thereafter have the right to receive upon exercise that number of shares of
Common Stock having a market value of two times the exercise price of the Common
Right.
With certain exceptions, no adjustment in the Common Right purchase price
will be required until cumulative adjustments require an adjustment of at least
1% in such Common Right purchase price. No fractional shares will be issued and
in lieu thereof an adjustment in cash will be made based on the market price of
the Common Stock on the last trading day prior to the date of exercise.
At any time prior to the time that any person becomes an Acquiring Person,
the Company may redeem the Common Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price") payable in cash. Immediately upon the
action of the Board of Directors electing to redeem the Common Rights, the
Company shall make an announcement thereof, and upon such election, the right to
exercise the Common Rights will terminate and the only right of the holders of
Common Rights will be to receive the Redemption Price. Until a Common Right is
exercised, the holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
Certain Provisions of the Company's Articles of Incorporation. The
Company's Articles of Incorporation provide that the affirmative vote of the
holders of three-fourths of the Company's voting stock is required to amend
Article VII, which deals with the number, classification, qualifications and
removal of directors. Article VII provides that the number of directors may be
fixed in the Bylaws, that qualifications for directors may be set in the Bylaws,
and that the Bylaws may provide for classification of the Board. The Bylaws can
be amended only by action of the Board. Article VII also provides that directors
can be removed, with or without
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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 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
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<PAGE> 23
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 and the Series E and F Preferred Stock constitute the only series of
Preferred Stock currently authorized for issuance by the Board of Directors.
The Company's Articles of Incorporation provide that each holder of
Preferred Stock of any series from time to time outstanding shall be entitled to
one vote per share upon all matters submitted to vote at every meeting of
shareholders of the Company. Further, in the event that six or more quarterly
dividends, whether or not consecutive, on any series of Preferred Stock shall be
in default, the holders of any outstanding series of Preferred Stock as to which
such default exists shall be entitled, at the next annual meeting of
shareholders, to vote as a class to elect two directors of the Company. Such
right shall continue with respect to shares of cumulative Preferred Stock,
including the Series A Preferred and Series E and F Preferred Stock, until all
accumulated and unpaid dividends on all such shares, the holders of which were
entitled to vote at the previous annual meeting of shareholders, have been paid
or declared and set aside for payment and, with respect to shares of
non-cumulative Preferred Stock, if any, until any non-cumulative dividends have
been paid or declared and set apart for payment for four consecutive quarterly
dividend periods on all such shares, the holders of which were entitled to vote
at the previous annual meeting of shareholders.
The approval of the holders of record of at least two-thirds of the
outstanding shares of all series of Preferred Stock of the Company, voting as a
class, will be required to (a) amend the Company's Articles of Incorporation to
create or authorize any stock ranking prior to or on a parity with such
Preferred Stock with respect to the payment of dividends or distributions upon
dissolution, liquidation or winding up, or to create or authorize any security
convertible into shares of any such stock; (b) amend, alter, change or repeal
any of the express terms of the Preferred Stock, or any series thereof, in any
prejudicial manner (provided only holders of two-thirds of the outstanding
shares of the series prejudiced by such change or repeal need consent to such
action); (c) merge or consolidate with another corporation whereby the Company
is not the surviving entity, if thereby the rights, preferences or powers of the
Preferred Stock would be adversely affected or Securities would thereupon be
authorized or outstanding which could not otherwise have been created without
the approval of such Preferred Stockholders; or (d) authorize, or revoke a
previously authorized, voluntary
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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 March 31, 1995, the Company had issued and outstanding 42,058 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 $3,364,640 in the aggregate at March 31,
1995, plus accrued dividends, before any assets may be distributed to holders of
Common Stock or any other stock ranking junior to the Series A Preferred Stock.
The Series A Preferred Stock may be redeemed at any time at the option of the
Company, in whole or in part, at a redemption price of $80.00 per share plus
accrued dividends, and the Series A Preferred Stock is convertible into Common
Stock at the option of the holder at a rate of eight shares of Common Stock
(subject to adjustment) for each share of Series A Preferred Stock. In the three
months ended March 31, 1995, 1,160 shares of Series A Preferred Stock were
converted into shares of the Company's Common Stock.
SERIES E AND F PREFERRED STOCK
The Company issued to The Dai-ichi Mutual Life Insurance Company
("Dai-ichi"), a mutual insurance company organized under the laws of Japan,
2,201,443 shares of Series E Preferred Stock on July 6, 1990 and 2,216,454
shares of Series F Preferred Stock on May 31, 1991. The holders of the Series E
and F Preferred Stock are entitled to receive, when and as declared by the
Company's Board of Directors, cumulative cash dividends at the annual rate of 5
1/2% of the Liquidation Preference (as defined below) payable quarterly on the
5th day of March, June, September and December.
Each share of Series E and F Preferred Stock may, at the option of the
holder, be converted into that number of fully paid and non-assessable shares of
Common Stock obtained by dividing the Liquidation Preference of each such share
of Preferred Stock being converted by the Conversion Price. The Liquidation
Preferences of the Series E and F Preferred Stock are $68.850 and $71.604,
respectively. The Conversion Prices of the Series E and F Preferred Stock are
$34.425 and $35.802, respectively, but are increased by 4 1/6% on July 6, 1995
and 4% on July 6, 1998.
The shares of Series E and F Preferred Stock are subject to both mandatory
and optional redemption provisions. The shares are subject to mandatory
redemption on July 6, 2002 by payment in cash of the respective Liquidation
Preference plus accrued dividends, if any. In lieu of mandatory redemption, the
Company may, at its option, issue in exchange for its then outstanding shares of
Series E and F Preferred Stock shares of non-convertible Preferred Stock or
Common Stock, which in either case are freely tradable and have a fair market
value equal to the respective Liquidation Preference of the shares of Series E
and F Preferred Stock plus any accrued dividends. The Company may, at its
option, redeem in cash, in whole or in part, any of the Series E and F Preferred
Stock which is not owned by Dai-ichi or its wholly-owned subsidiaries at a
redemption price per share equal to the respective Liquidation Preference plus
accrued dividends.
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In connection with its purchase of the shares of Series E and F Preferred
Stock, Dai-ichi has agreed to vote its shares of such stock, together with any
shares of Common Stock owned by Dai-ichi, in accordance with the recommendation
of the Company's Board of Directors, or under certain circumstances, in the same
proportion as all other voting securities voting on the particular matter.
Dai-ichi may dispose of such shares only upon certain conditions, including that
the shares first be offered for sale to the Company and that the shares be sold
in a manner that would ensure a wide distribution of the shares.
Registration Rights. Pursuant to an Investment Agreement between the
Company and Dai-ichi, dated as of June 25, 1990 (the "Investment Agreement"),
Dai-ichi and certain subsequent holders of Dai-ichi's shares are entitled to
certain registration rights covering such Preferred Stock, all shares of Common
Stock into which such Preferred Stock is convertible and all shares of Common
Stock or other Securities distributed with respect to such shares of Preferred
Stock or Common Stock (the "Registrable Securities").
Under the Investment Agreement, Dai-ichi (or certain subsequent holders of
Registrable Securities) has the right (the "Demand Right"), exercisable up to
three times, to require the Company to use its best efforts to effect the
registration of all or part of the Registrable Securities under the Securities
Act in connection with a public offering of such Registrable Securities. The
Demand Right may be exercisable at any time unless (i) the request for
registration is made within 120 days after the most recent registration pursuant
to exercise of a Demand Right, (ii) registration of the Registrable Securities
would adversely affect a public financing contemplated by the Company at the
time the request for registration is made, in which case a "black out" period of
up to 60 days would apply, (iii) audited financial statements necessary for
registration are unavailable or (iv) registration would require disclosure of
material information which the Company wishes to delay for a bona fide business
purpose.
In addition, Dai-ichi or any subsequent holder of Registrable Securities
has the right, exercisable one time only, to include their Registrable
Securities in a registration by the Company of any of its Securities having the
ordinary power to vote in the election of the directors of the Company
(including a proposed registration of Common Stock) under the Securities Act,
unless (i) in the reasonable judgment of the Company, inclusion of any
Registrable Securities in the Company's registration statement at that time
would adversely affect the Company's own financing, (ii) the Company's
registration statement is withdrawn or (iii) the Company's registration of
Securities is in connection with a merger, acquisition, exchange offer or
subscription offer, or a stock option, dividend reinvestment or other employee
benefit plan. The Company is required to bear all registration expenses in
connection with the registration of the Registrable Securities pursuant to the
Investment Agreement.
Common Share Equivalent Purchase Rights. The Company is party to a Rights
Agreement with The First National Bank of Boston, which relates to the Series E
and F Preferred Stock (the "Preferred Rights Agreement"). In general, the
Preferred Rights are intended to provide the holders of the Series E and F
Preferred Stock with the same rights as they would have had if they had owned
the shares of Common Stock into which the shares of Series E and F Preferred are
convertible. One common share equivalent purchase right (the "Preferred Rights")
was issued for each share of Series E and F Preferred Stock. In accordance with
the Preferred Rights Agreement, the Preferred Rights entitle the holders of such
Rights to purchase that number of shares of Common Stock into which the shares
of Series E and F Preferred Stock are convertible at a price of $75 per share,
subject to the same adjustments described with respect to the Common Rights.
Upon the occurrence of the same triggering events outlined with respect to the
Common Rights, each holder of a Preferred Right shall be entitled to receive
that number of common shares of an Acquiring Person obtained by multiplying the
current purchase price of the Preferred Rights by the total number of shares of
Common Stock for which the Preferred Rights may be exercised, and dividing the
product by 50% of the current per share market price of the common share of the
other person. Alternatively, if a person beneficially owning 20% of the Common
Stock acquires the Company by means of a reverse merger in which the Company
survives or such person engages in certain "self-dealing" transactions, each
Preferred Right not owned by the 20% holder becomes exercisable for the number
of shares of Common Stock which at the time would have a market value of two
times the exercise price of the Preferred Rights. The Preferred Rights expire on
November 21, 1996 and are subject to redemption and cancellation.
17
<PAGE> 26
REGULATION
The Company's insurance affiliates are subject to regulation and
supervision by the states, territories and foreign countries in which they are
admitted to do business. These jurisdictions generally maintain supervisory
agencies with broad discretionary powers relative to granting and revoking
licenses to transact business, regulating trade practices, licensing agents,
prescribing and approving policy forms, regulating premium rates for some lines
of business, establishing premium requirements, regulating competitive matters,
prescribing the form and content of financial statements and reports,
determining the reasonableness and adequacy of capital and surplus and
regulating the type and amount of investments permitted. The Company's insurance
subsidiaries conduct business in numerous jurisdictions and, accordingly, are
subject to the laws and regulations of each of those jurisdictions. Most of the
Company's principal insurance subsidiaries, including Lincoln National Life
Insurance Company and American States Insurance Company, are domiciled in
Indiana and are primarily regulated by the Indiana Commissioner.
As a holding company of insurance businesses, the Company is also subject
to regulatory requirements of the states where its insurance subsidiaries are
domiciled. For example, certain transactions involving an affiliated insurance
company, such as loans, extraordinary dividends or investments, in some cases
may require the prior approval of such company's primary regulators.
Additionally, these requirements restrict the ability of any person to acquire
control of the Company or any of its subsidiaries engaged in the insurance
business without prior regulatory approval. Control is generally deemed to exist
if an entity beneficially owns 10% or more of the voting securities of a
company. Such requirements may have the effect of preventing an acquisition of
the Company.
The Company's investment management subsidiaries are subject to a number of
federal and state laws and regulations, including without limitation, the
Investment Company Act of 1940, the Investment Advisers Act of 1940 and the
National Association of Securities Dealers Rules of Fair Practice. These laws
and regulations generally grant supervisory agencies and self-regulatory
organizations broad administrative powers, including the power to limit or
restrict the subsidiaries from carrying on their businesses in the event that
they fail to comply which such laws and regulations.
PLAN OF DISTRIBUTION
The Company may sell the Securities being offered hereby by any one or more
of the following methods: (i) through underwriters or dealers; (ii) directly to
one or more purchasers; (iii) through agents; or (iv) to both investors and/or
dealers through a specific bidding or auction process or otherwise. The
Prospectus Supplement with respect to the Securities sets forth the terms of the
offering of the Securities, including the name or names of any underwriters, the
purchase price of the Securities and the proceeds to the Company from such sale,
any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers, any bidding or auction process, any
Securities exchanges on which the Securities may be listed and any restrictions
on the sale and delivery of Securities in bearer form to U.S. persons.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or directly by underwriters. The specific
underwriter or underwriters or managing underwriter or underwriters, as the case
may be, will be set forth on the cover of the Prospectus Supplements relating to
such Securities and the members of the underwriting syndicate, if any, will be
named in such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all the Securities if any are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
18
<PAGE> 27
Securities may be sold directly by the Company or through agents designated
by the Company from time to time. Any agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the company to such agent will be set forth, in the
Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contract will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Dealers, agents and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Acts, or to contribution
with respect to payments which the dealers, agents or underwriters may be
required to make in respect thereof. Dealers, agents and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Sonnenschein Nath & Rosenthal, Chicago, Illinois. Sonnenschein Nath &
Rosenthal will rely on the opinion of Jack D. Hunter, Esq., Executive Vice
President and General Counsel of the Company, as to matters of Indiana law. As
of May 4, 1995, based on information filed with the Commission, Mr. Hunter
beneficially owned 53,323 shares of Common Stock of the Company, including
shares held in the Lincoln National Corporation Savings and Profit-Sharing Plan
and the Lincoln National Corporation Employees' and Agents' Stock Bonus Plan,
and holds options to acquire an additional 55,602 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedules of Lincoln National
Corporation and subsidiaries appearing in the Lincoln National Corporation's
Annual Report (Form 10-K) for the year ended December 31, 1994, 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.
19
<PAGE> 28
======================================================
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY NOTES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT.
---------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by
Reference.......................... S-2
Use of Proceeds...................... S-2
Capitalization....................... S-3
Ratio of Earnings to Fixed Charges... S-4
Description of Notes................. S-4
Underwriting......................... S-7
Validity of the Notes................ S-8
Experts.............................. S-8
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 3
Use of Proceeds...................... 3
Risk Factors Relating to
Currencies......................... 4
Historical Ratio of Earnings to Fixed
Charges............................ 4
Description of Debt Securities....... 5
Description of Preferred Stock and
Common Stock....................... 11
Regulation........................... 18
Plan of Distribution................. 18
Legal Opinions....................... 19
Experts.............................. 19
</TABLE>
======================================================
======================================================
$300,000,000
LINCOLN NATIONAL LOGO
$100,000,000
6 1/2% NOTES DUE MARCH 15, 2008
$200,000,000
7% NOTES DUE MARCH 15, 2018
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO. GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
MARCH 19, 1998
======================================================
