EXECUTIVES' SEVERANCE BENEFIT PLAN

 

 

 

 

EX-10.1 3 ex10-1.htm EXHIBIT 10-1

Exhibit 10.1

RETIREMENT AND RELEASE AGREEMENT

 

This Retirement and Release Agreement (this “Agreement”) is entered into by and between Lincoln National Corporation (the "Company") and Jon A. Boscia (the “Executive”) to set forth the terms and conditions of the Executive's employment separation from the Company, and his retirement and resignation from his employment and position as an officer and director of the Company and its subsidiaries.

 

 RECITALS

 

A.  The Executive has been employed by the Company as its Chief Executive Officer.

 

B.  The Executive is resigning his position as Chairman of the Board and Chief Executive Officer, and, consistent with the Company’s Corporate Governance Guidelines, as a director, of the Company, as well as an officer or director of any of the Company’s subsidiaries, effective July 6, 2007.

 

C.       The Executive will remain as an employee of the Company and agrees to make himself reasonably available to the Company through August 31, 2007.  Effective August 31, 2007, the Executive hereby retires and resigns his employment with the Company.

 

D.       The Executive wishes to accept the payments described herein, to make the covenants described herein, and to release the Company from any and all claims concerning his prior employment.

 

AGREEMENT

 

In consideration of the mutual promises and covenants contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged, the Executive and the Company agree as follows:

 

1.  Resignation.  The Executive resigns as Chief Executive Officer and Chairman of the Board, and, consistent with the Company’s Corporate Governance Guidelines, as a director, of the Company, and from all positions as a director, officer or employee of each subsidiary of the Company, effective July 6, 2007.  The Executive will remain as an employee of the Company through August 31, 2007 and will make himself reasonably available to assist the Company’s new Chief Executive Officer and its Board of Directors with transition matters.  Effective as of August 31, 2007 (the “Retirement Date”), the Executive hereby retires and resigns his employment with the Company, and the Executive will be paid Executive's regular salary amounts, less applicable deductions, and receive benefits at Executive's current level through the Retirement Date.  The Company accepts the Executive’s resignation and approves his retirement for all purposes, including with respect to the Company Amended and Restated Incentive Compensation Plan (“Incentive Compensation Plan”) and all outstanding awards under the Nonqualified Stock Option Agreements (“Option Agreements”) and the Long-Term Incentive Plan Award Agreements for the 2005-2007 Performance Cycle (the “2005-2007 LTIP

 


Award”), 2006-2008 Performance Cycle (the “2006-2008 LTIP Award”), and the 2007-2009 Long-term Incentive Program Performance Award Agreement (the “2007-2009 LTIP Award” ) (collectively, the “LTIP Award Agreements”). Set forth on Schedule A are a list of all outstanding option awards with dates of grant, expiration date, vesting schedules, and exercise prices under the Option Agreements and the awards, target values and forms of payments under the LTIP Award Agreements.  The Executive’s resignation shall be treated as an approved retirement for purposes of any and all of the Company’s bonus, incentive compensation, stock option and all other benefit plans.

 

2.  Compensation and Benefits.  The Company acknowledges that, as of the Retirement Date, the Executive will be deemed retired under the Incentive Compensation Plan, and as such, the Executive is entitled to the following benefits:

 

(a)  

Annual Incentive Compensation. The Executive will be entitled to receive a pro-rated amount of his annual bonus under the Annual Incentive Plan at his current target level of $2,312,500 per annum based on the ratio of: (i) days of employment (243) during the performance cycle to (ii) number of total days in the performance cycle (365).  Therefore the Executive will be entitled to $1,541,667 payable in a lump sum on the first day that is six months after his Retirement Date, in satisfaction of all benefits pursuant to such plan.

 

(b)  

Long-term Incentive Awards.

 

1.  

2005–2007 LTIP Award.  Executive will receive a pro-rated award of options to purchase shares of Company common stock and any cash pursuant to the terms of the 2005-2007 LTIP Award, based on the ratio of: (i) days of employment (973) during the performance cycle (1/1/05 – 12/31/07) to (ii) number of total days in the performance cycle (1,095).  His pro-rated award will be paid at the same time long-term incentive awards are normally paid to employees at the end of the performance cycle, in accordance with the 2005–2007 LTIP Award, or, if later, the first day that is six months after the Retirement Date.  These options will remain exercisable until the first to occur of: (i) the tenth (10th) anniversary of grant or (ii) the fifth (5th) anniversary of the Retirement Date.

 

2.  

2006–2008 LTIP Award.  Executive will receive a pro-rated award of Company common stock and any cash pursuant to the terms of the 2006-2008 LTIP Award based on the ratio of: (i) days of employment (597) during the performance cycle (1/12/06 – 12/31/08) to (ii) number of total days in the performance cycle (1,083).  His pro-rated award will be paid at the same time long-term incentive awards are normally paid to employees at the end of the performance cycle, in accordance with the 2006–2008 LTIP Award.

 

3.  

2007–2009 LTIP Award.  Executive will receive a pro-rated award of Company common stock and any cash pursuant to the terms of the 2007-2009 LTIP Award based on the ratio of: (i) days of employment (243) during the performance cycle (1/1/07 – 12/31/09)

 

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to (ii) number of total days in the performance cycle (1,096).  His pro-rated award will be paid at the same time long-term incentive awards are normally paid to employees at the end of the performance cycle, in accordance with the 2007–2009 LTIP Award.

 

(c)  

Stock Options.

 

1.  

Vesting of Stock Options.  All of the Executive’s outstanding unvested options will vest at the Retirement Date.

 

2.  

Exercise Period for all Outstanding Vested Stock Options.  The Executive may exercise all or part of any outstanding options, including options vested prior to the Retirement Date and those vested upon retirement, until the first to occur of: (i) the tenth (10th) anniversary of the grant or (ii) the fifth (5th) anniversary of the Retirement Date.

 

(d)  

Retirement Benefits.  Executive will receive payments pursuant to the Company Employees’ Retirement Plan, Employees’ Supplemental Pension Benefit Plan, Company Executives’ Excess Compensation Pension Benefit Plan, Salary Continuation Plan and Company 401(k) Plan as determined as of the Retirement Date.

 

(e)  

Deferred Compensation Plan.  The Executive will receive his account balance paid in lump-sum or installment payments, at the time and in the form provided pursuant to the plan and any elections thereunder.

 

(f)  

Health and Welfare Benefits.  From the Retirement Date until such time that the Executive is Medicare eligible, the Company shall continue Executive’s participation in the Company medical and dental plan in which Executive and his dependents participated as of the Retirement Date at the same coverage level as in effect as of the Retirement Date, subject to Executive's payment of all applicable contributions or premiums (employer and employee) at the rate applicable to employees of the Company in effect from time to time. The Company shall invoice Executive for all such contributions and premiums. The Company shall provide the Executive with taxable cash payments equal to the pre-determined monthly premiums due for participation in the Company medical and dental plan on the first day of each month, provided that the first six months of payments will be made six months after the Retirement Date.  If Executive should at any time prior to becoming Medicare eligible gain new employment and become eligible for coverage under the new employer’s health insurance plan, it is Executive's personal obligation to immediately notify the Company and in such case Executive shall not thereafter be eligible to participate in the Company’s group health insurance plan.

 

(g)  

Beneficiaries.  Any payment provided to be made to the Executive shall, in the event of Executive’s death, instead be made (i) in the case of any payment pursuant to a plan or other arrangement under which the Executive has designated a beneficiary, to the Executive's beneficiary and (ii) in any other case, to the legal

 

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representative of the Executive's estate or such other beneficiary as he may hereafter designate in writing by notice to the Company, or (iii) as otherwise required by law.

 

3.  Additional Pay and Annuity.  In consideration of the releases and covenants contained herein, and for other good and valuable consideration,

 

(a)  

the Company will pay the Executive additional payments equal to one times his target annual cash compensation (including salary and target annual bonus) in the amount of $3,237,500, payable over one year in three installments on the first day of March, June, and September 2008, the first installment being $1,618,750 and the remaining installments being $809,375 each, and

 

(b)  

the Executive will be entitled to receive a special supplemental monthly retirement benefit in the form of a 100% joint & survivorship annuity with a 10 year term certain in the amount of $28,583.33 ($343,000 annually) and upon his death, Executive’s surviving spouse shall receive a monthly retirement benefit for her life of $28,583.33 ($343,000 annually). This benefit is a monthly benefit commencing on the Retirement Date to be paid in the form of a ten year certain and 100% joint and survivorship annuity (in no event would the Company make less than one hundred and twenty (120) such payments, whether to the Executive, the Executive’s spouse or their respective beneficiaries). Notwithstanding the foregoing, the first payment shall not be made to the Executive before the date that is six months from the date after the Retirement Date.  The first payment shall include a payment in arrears for payments accrued during the six month period beginning on the Retirement Date in the amount of $171,500, as well as the normal monthly benefit amount of $28,583.33.  This special supplemental monthly retirement benefit shall not be reduced for early commencement of benefits.

 

The Executive agrees and stipulates that the payments described herein are being paid to him as a special allowance, and that he is not entitled to receive said payments under any contract between the Company and himself, or pursuant to any Company policy or practice.

 

4.  No Additional Compensation.  The Executive and the Company agree that, except as expressly set forth in this Agreement, the Executive shall not be entitled to receive any additional compensation, bonuses, incentive compensation, Executive benefits or other consideration from the Company in connection with or in any way related to his retirement from, or prior employment by, the Company.  The Executive acknowledges that he does not have and will not be deemed to have a deemed participation under the Company Executives’ Severance Benefit Plan.

 

5.  Return of Company Property.  The Executive represents and warrants that he will return to the Company by no later than the Retirement Date all Company property including, without limitation, any keys, access cards, credit cards, books, manuals, files, computer software, disks and the like, as well as all paper and electronic copies of materials and documents in his possession or under his direct or indirect control relating to the Company, its business, executives, clients and customers, and that he will not retain copies, in whatever form, of any

 

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such materials or documents.  Notwithstanding anything to the contrary set forth herein, the Company hereby acknowledges and agrees that the Executive may retain, as his own property, his copies of his individual personnel documents, such as his payroll and tax records, and similar personal records.

 

6.  Complete Release of Claims by The Executive Against the Company.  In consideration of the payments described in Sections 2 and 3 of this Agreement, and other good and valuable consideration, which are given to the Executive specifically in exchange for this release as a result of negotiations between the Company and the Executive, the Executive, on behalf of himself, his heirs, successors and assigns, hereby releases and discharges the Company, its subsidiaries, its and their employee benefit plans, its and their current or former directors, officers, executives, agents, insurers, attorneys, consultants, and auditors, and any and each of their successors and assigns and predecessors (“Released Parties”), from any and all claims, charges, causes of action and damages (including attorneys’ fees and costs actually incurred), known and unknown (“Claims”), including those Claims related in any way to the Executive’s employment with the Company, or the termination of his employment relationship or positions as an officer of the Company, arising on or prior to the Retirement Date.  The waivers in this Agreement shall not waive the Executive’s rights respecting the Company’s obligations under this Agreement, Executive’s rights as a shareholder of the Company, or Executive’s rights as a policyholder of any policies issued by the Company or any of its subsidiaries.

 

For the purposes of implementing a full and complete release and discharge of the Company and the other Released Parties, the Executive expressly acknowledges that this Agreement is intended to include in its affect, without limitation, all Claims which he does not know or suspect to exist in his favor at the time he signs this Agreement, and that this Agreement is intended to fully and finally resolve any such Claim or Claims.

 

The release contained in this Section 6 specifically includes, but is not limited to, rights and claims under the local, state or federal laws prohibiting discrimination in employment, including the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Pennsylvania Human Relations Act, the Employee Retirement Income Security Act (except as otherwise stated herein), the Executive protection provisions of the Federal Deposit Insurance Act (12 U.S.C. § 1831j), Title VII of the Civil Rights Act of 1964, the Sarbanes-Oxley Act of 2002, as well as any other state or federal laws or common law theories relating to discrimination in employment, the termination of employment, or personal injury, including without limitation all claims for wrongful discharge, breach of contract, fraud, breach of an implied covenant of good faith and fair dealing, intentional infliction of emotional distress, tortious interference with contract or prospective economic advantage, defamation, loss of consortium, infliction of emotional distress; or any claim for any compensation, including, but not limited to additional compensation, back pay, front pay, or benefits (other than as provided for in this Agreement), severance, reinstatement, or any other form of economic loss; and all claims for personal injury, including, but not limited to: mental anguish, emotional distress, pain and suffering, humiliation, and damage to name or reputation; and all claims for liquidated damages and punitive damages and all claims for counsel fees and costs.

 

7.  Covenant Not to Sue.  The Executive represents that he has not filed any Claim that was released in this Agreement against the Company or its Released Parties with any court

 

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or government agency, and that he will not, to the extent allowed by applicable law, do so at any time in the future; provided, however, that the covenants contained in this Section 7 will not prevent the Executive from filing a claim to enforce the terms of this Agreement.  If any government agency brings any claim or conducts any investigation against the Company, nothing in this Agreement forbids the Executive from cooperating in such proceedings, but by this Agreement, the Executive waives and agrees to relinquish any damages or other individual relief that may be awarded as a result of any such proceedings.

 

8.  Future Cooperation.  The Executive agrees to make himself reasonably available to the Company in connection with any claims, disputes, investigations, regulatory examinations or actions, lawsuits or administrative proceedings relating to matters in which he was involved during the period in which he was Chief Executive Officer of the Company, and to provide information to the Company, and otherwise cooperate with the Company in the investigation, defense or prosecution of such actions.  The Company will reimburse the Executive for any reasonable, documented out-of-pocket expenses incurred by the Executive in connection with his compliance with this Section 8.

 

9.  Voluntary Agreement; Full Understanding; Advice of Counsel.  The Executive understands and acknowledges the significance of this Agreement and acknowledges that this Agreement is voluntary and has not been given as a result of any coercion.  The Executive also acknowledges that he has been given full opportunity to review and negotiate this Agreement, that he has been specifically advised to consult with legal counsel prior to signing it, that he has in fact carefully reviewed it with his attorney before signing it, and that he executes this Agreement only after full reflection and analysis.

 

10.  Company Representations.  The Company represents and warrants to the Executive that (i) the execution, delivery and performance of this Agreement have been duly and validly authorized on behalf of the Company, (ii) the execution, delivery and performance of this Agreement by the Company does not and will not violate any law, regulation, order, judgment or decree or any agreement, plan or corporate governance document of the Company and (iii) upon the execution and delivery of this Agreement by the Executive, this Agreement shall be the valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). The Executive acknowledges that, except as expressly set forth herein, no representations of any kind or character have been made to him by the Company or by any of the Company’s directors, employees, agents, representatives or attorneys to induce the execution of this Agreement.

 

11.  Review and Revocation Periods.  The Executive has twenty-one (21) days to consider this Agreement before signing it.  The Executive may use as much or as little of this 21-day period as he wishes before signing.  To accept this Agreement, the Executive must return the signed Agreement to William H. Cunningham, on or before that day and time.  The Executive understands and acknowledges that he has seven (7) days after signing this Agreement to revoke it.  To revoke this Agreement, the Executive must deliver a written notice of revocation to William H. Cunningham no later than 5:00 pm, Eastern Standard Time, on the seventh day after this Agreement is executed.  If the Executive does not sign this Agreement or signs and revokes this Agreement, he will not receive any of the payments described in Sections 2 and 3 of this

 

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Agreement.  Although the Executive's resignations as Chief Executive Officer, Chairman of the Board and a director of the Company, and from all positions as a director, officer or employee of each subsidiary of the Company, are effective on July 6, 2007 as set forth in Section 1 of this Agreement, the remainder of this Agreement shall not become effective until the eighth (8th) day following the Executive's signing of this Agreement.

 

12.  Nonadmission.  This Agreement shall not be construed as an admission of wrongdoing or evidence of any noncompliance with, or violation of, any statute or law by the Company or by the Executive.

 

13.  Non-Competition.   In consideration of the payments described in Sections 2 and 3 of this Agreement, Executive agrees that from the date hereof and for one (1) year following the Retirement Date, he will not act as a director, officer, employee, partner, principal, agent, consultant or advisor to, nor directly or indirectly become associated with, any business or entity which engages in any activity that is competitive with any of the businesses of the Company or any of its subsidiaries, existing at the time of this Agreement, in the United States of America ("Competitive Business"); provided  that Executive shall not be prohibited from engaging in  activities that are not a  Competitive Business for any business or entity that engages in both a Competitive Business and activities that are not a Competitive Business so long as Executive does not also engage in any activities that are  a Competitive Business for such business or entity.   The Company acknowledges that this Section 13 does not preclude the Executive from purchasing or owning publicly-traded securities of any such business if the Executive's holdings do not exceed five percent of the issued and outstanding securities of any class of securities of such business.

 

14.  Non-solicitation.   In consideration of the payments described in Section 2 and 3 of this Agreement, from the date hereof and for one (1) year following the Retirement Date, Executive agrees that he will not directly or indirectly hire, manage, solicit or recruit senior management, financial planners, agents, salespeople, financial advisors, or other employees of the Company or any of its subsidiaries (or an employee of the Company or any of its subsidiaries within the two-month period prior to the Retirement Date), or encourage or induce such person to resign from the Company. The Executive acknowledges that his association with any business, in a senior management or similar position, which hires a member of senior management of the Company or any of its subsidiaries  in the Executive’s direct or indirect reporting chain at such business would be considered an indirect hire or solicitation in violation of this Section 14.   From the date hereof and for a period of one (1) year following the Retirement Date, the Executive will not attempt to (i) solicit any client or customer to transact business with another business that is competitive with any business of the Company or any of its subsidiaries or to reduce or refrain from doing any business with the Company or any of its subsidiaries, or (ii) disrupt or otherwise interfere with any relationship between the Company or any of its subsidiaries and a client or customer.

 

15.  Waiver of Obligation Not to Compete under the LTIP Award Agreements and the Option Agreements.  The Company hereby waives compliance beginning on and after September 1, 2008 with the non-competition provision contained in Section 7 of the Option Agreements, Section 3 of the 2005-2007 LTIP Award, Section 7 of the 2006-2008 LTIP Award, and Section 3 of the 2007-2009 LTIP Award, and the Company agrees that compliance with the non-competition standard set forth in Section 13 of this Agreement will be deemed compliance

 

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with any non-competition standard contained in such agreements or awards; provided that the remedial provisions of such Option Agreements and LTIP Awards shall only apply with respect to actions taken by Executive before September 1, 2008.

 

16.  Confidentiality of Terms of this Agreement Prior to Execution.  Executive affirms that he has kept confidential his proposed retirement, including all surrounding circumstances, and all terms of this Agreement before execution of this Agreement, except for his counsel and spouse.

 

17.  Confidential Information.

 

Acknowledgement of Receipt of Confidential Information. The Executive acknowledges that he has occupied a position of the highest trust and confidence with the Company, and during the Executive’s employment with the Company, he has become familiar with the Company’s and its subsidiaries’ business plans and strategies, and with other proprietary and confidential information concerning the Company and its subsidiaries, their businesses, executives and customers or clients.  As used in this Agreement, “Confidential Information” shall mean any information relating to the business or affairs of the Company, its subsidiaries or its customers, including but not limited to information relating to financial statements, executives, software tools, business methods, equipment, programs, methodologies, strategies and information, analyses, reports, notes, memoranda, data, ideas, processes, devices, programs, writings, research, personnel information, customer information, financial information, or other proprietary information used by the Company or any of its subsidiaries in connection with its business, provided, however, that Confidential Information shall not include any information which is in the public domain or becomes known in the industry through no wrongful act on the part of the Executive.  The Executive acknowledges that the Confidential Information is confidential and proprietary to the Company.

 

Agreement to Maintain Confidentiality of Company Information. The Executive shall keep secret and retain in strictest confidence, and shall not, without the prior written consent of the Company, furnish, make available or disclose to any third party (except in furtherance of the Company’s business activities and for the sole benefit of the Company) or use for the benefit of himself or any third party, any Confidential Information.

 

18.  Non-Disparagement.  Except as required by law or subpoena, (a) the Executive shall not make any public statements regarding his employment (other than factual statements concerning the dates of his employment and positions held) or his retirement and resignation, or the Agreement that are not agreed to by the Company, such approval not to be unreasonably withheld or delayed, (b) the Executive shall not disparage the Company, or any of its subsidiaries, its and their respective Boards of Directors, members thereof and senior management, and (c) the Company will ensure that no executive officers or directors of the Company disparage the Executive.

 

19.  Indemnification.  For six (6) years following the date hereof, the Company shall not amend, repeal or otherwise modify in a manner adverse to the Executive the provisions of the Company's articles of incorporation and/or bylaws with respect to exculpation, advancement of expenses and indemnification of the Executive.  The Company represents and warrants that it maintains a directors and officers liability insurance policy that provides coverage with respect to

 

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actions taken or omissions on or prior to the date hereof and  covenants and agrees, for the six (6) years following the date hereof, to maintain such  a policy in effect that does not  treat the Executive in a disproportionate manner as compared with the other directors and officers of the Company .

 

20.  Remedies.   Executive expressly recognizes and agrees that the restraints imposed by Section 13 and 14 are reasonable as to time and geographic scope and are not oppressive. The Executive acknowledges and agrees that the covenants set forth in Sections 13, 14, 16, 17, and 18, are reasonable and necessary for the protection of the Company’s business interests, that irreparable injury will result to the Company if the Executive breaches any of his obligations under this Agreement, and that in the event of the Executive’s actual or threatened breach of such obligations, the Company will have no adequate remedy at law.  The Executive accordingly agrees that in the event of any actual or threatened breach by him of any of his obligations under Sections 13, 14, 16, 17, and 18 of this Agreement, the Company shall be entitled to immediate temporary injunctive and other equitable relief, without bond and without the necessity of showing actual monetary damages, subject to hearing as soon thereafter as possible.  In that regard, the Executive agrees to submit voluntarily to the jurisdiction over his person by a court of competent jurisdiction located within the Commonwealth of Pennsylvania.  Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove.  In the event that the Company seeks an injunction or similar equitable relief for the breach or threatened breach of the provisions herein, the Executive agrees that he shall not use the availability of arbitration in Section 20 hereof as grounds for the dismissal of any such injunctive action.

 

In the event that any covenant contained in this Agreement shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it shall be interpreted to extend only over the maximum period of time for which it may be enforceable and/or over the maximum geographical area as to which it may be enforceable and/or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

 

If Executive fails to comply with Sections 5, 6, 7, 8, 13, 14, 16, 17, or 18 of the Agreement and does not cure such failure within 15 days after written notice by the Company to Executive of such failure, then the Company  can thereafter immediately cease any continuing benefits under Sections 2 and 3 of this Agreement, in addition to any other remedies the Company may have pursuant to this Agreement or under law.

 

21.  Arbitration.  The Company and the Executive will first attempt to amicably resolve disagreements and disputes hereunder by negotiation.  If the matter is not amicably resolved through negotiation, within thirty (30) days after written notice from either party, any controversy, dispute or disagreement arising out of or relating to this Agreement, or the breach thereof, will be subject to exclusive, final and binding arbitration, which will be conducted in Philadelphia, Pennsylvania in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  Either party may bring a court action to compel arbitration under this Agreement or to enforce an arbitration award.  Nothing in this Section 21 shall be deemed to limit, compromise, or affect the Company’s right to seek and/or obtain injunctive relief or other equitable relief from a court of competent jurisdiction pursuant to Section 20

 

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above. Each party hereto hereby expressly waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Agreement, or under any amendment to this Agreement.

 

22.  Applicable Law; Venue; Interpretation.  This Agreement shall be interpreted in accordance with the laws of the Commonwealth of Pennsylvania without regard to its conflict of laws or canons of construction interpreting written agreements against the drafter.  The Company and the Executive agree that any claims or causes of action that arise out of this Agreement shall be instituted and litigated only in, and they voluntarily submit to the jurisdiction over his person by, a court of competent jurisdiction located within the Commonwealth of Pennsylvania. The language of this Agreement shall be construed as a whole according to its fair meaning.

 

23.  Fees and Expenses.  The Company will pay the legal fees incurred by the Executive in connection with the negotiation and execution of this Agreement, up to $100,000, payable upon submission of the billing statement or paid receipt for such services rendered by the Executive's counsel or counsels.

 

24.  Tax Withholdings and Deductions.  All payments described herein shall be subject to applicable federal, state, and local tax withholdings and deductions.

 

25.  Complete Agreement.  This Agreement represents and contains the entire understanding between the parties in connection with the subject matter of this Agreement.  This Agreement shall not be modified or varied except by a written instrument signed by the Executive and the Chairman of the Board of the Company.  It is expressly acknowledged and recognized by all parties that all prior written or oral agreements, understandings or representations between the parties are merged into this Agreement.

 

26.  Notices.  All notices, requests, demands, waivers and other communications under this Agreement must be in writing and will be deemed given (1) on the business day sent, when delivered by hand or facsimile transmission (with confirmation) during normal business hours, (2) on the business day after the business day sent, if delivered by a nationally recognized overnight courier or (3) on the third business day after the business day sent if delivered by registered or certified mail, return receipt requested, in each case to the following address or number (or to such other addresses or numbers as may be specified by notice that conforms to this Section 26).

 

If to the Executive, to you:

 

Jon A. Boscia

951 Idlewild Drive

Gladwyne, PA  19035

 

with a copy to:

 

Mark Foley, Esquire

Cozen O’Connor

The Atrium

1900 Market Street

 

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Philadelphia, PA  19103

 

If to the Company, to:

 

General Counsel

Lincoln National Corporation

1500 Market Street, Suite 3900

Centre Square West Tower

Philadelphia, Pa 19102-2112

 

with a copy to:

 

Chairman of the Compensation Committee

Lincoln National Corporation

1500 Market Street, Suite 3900

Centre Square West Tower

Philadelphia, Pa 19102-2112

 

27.  Section 409A.All payments and benefits under this Agreement shall be made and provided in a manner that is intended to comply with Section 409A of the Code, to the extent applicable.  The Executive and the Company agree that if the Executive concludes in good faith on the advice of counsel that the rights granted hereby should be altered to comply with Section 409A of the Code, the Executive and the Company will use reasonable best efforts to agree to amendments to this Agreement to comply with Section 409A of the Code while preserving substantially the same economic value and cost to each of the parties hereto; provided that this sentence shall not be construed as an indemnification with respect to any liability under Section 409A of the Code.

 

28.  Invalidity.  It is understood and agreed that if any provisions of this Agreement are held to be invalid or unenforceable, the remaining provisions of the Agreement shall nevertheless continue to be fully valid and enforceable.

 

29.  Execution.  This Agreement may be executed with duplicate original counterparts with faxed signatures, each of which shall constitute an original and which together shall constitute one and the same document.

 

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PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

 

LINCOLN NATIONAL CORPORATION

 

 

By  /s/ William H. Cunningham

      _______________________________

      Chairman of the Compensation

      Committee of the Board of Directors

 

Date July 6, 2007

        _____________________________

 

JON BOSCIA

 

 

By   /s/ Jon A. Boscia

        ___________________________

Jon A. Boscia

 

 

Date July 6, 2007

         ______________________________

 

 

 

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SCHEDULE A

NQSO – ICP Awards

 

Grant Date

Expiration Date

 

Strike Price

Vested & Exercisable

 

Unvested

 

 

 

 

 

05/13/1998

05/13/2008

$44.925

220,000

0

 

 

 

 

 

05/12/1999

05/12/2009

$50.830

200,000

0

 

 

 

 

 

03/09/2000

03/09/2010

$24.720

100,000

0

 

 

 

 

 

03/08/2001

03/08/2011

$43.480

184,000

0

 

 

 

 

 

03/14/2002

03/14/2012

$52.100

200,000

0

 

 

 

 

 

03/11/2004

03/11/2014

$47.580

272,827

0

 

 

 

 

 

03/10/2005*

03/10/2015

$46.770

0

301,385

 

 

 

 

 

04/13/2006**

04/13/2016

$56.020

92,792

185,583

 

 

 

 

 

02/22/2007**

02/22/2017

$70.660

0

226,303

 

 

 

 

 

04/26/2007

05/14/2007

$69.900

21,924

0

 

 

 

 

 

Totals

 

 

1,291,543

713,271

 

*   Performance option granted pursuant to LTIP Award terms, will cliff-vest at the end of three-year performance period (upon payout), on the date of Board certification.

 

**Vests ratably, 1/3 on each anniversary of grant date (not performance options).

 

Long-Term Incentive Plan (LTIP) Performance Awards

 

LTIP Cycle

Grant Date

Elected Form

Target Amount

 

 

 

 

2005-2007 Cycle

03/10/2005

67% options

33% cash

$5,200,000

 

 

 

 

2006-2008 Cycle

04/13/2006

100% shares

$4,865,500

 

 

 

 

2007-2009 Cycle

02/22/2007

75% shares

25% cash

$4,865,500

 

 

 

EXHIBIT 10.12

LINCOLN NATIONAL CORPORATION

Executives’ Severance Benefit Plan

(As effective November 9, 2006)

Section 1. History, Plan Name and Effective Date. Effective August 12, 1982, the Board of Directors (the “Board”) of Lincoln National Corporation (the “Corporation”) established the Lincoln National Corporation Executives’ Severance Benefit Plan (the “Plan”). The following provisions constitute an amendment, restatement and continuation of the Plan, effective as of November 9, 2008.

Section 2. Purpose. The Corporation recognizes that the possibility of an unforeseen change of control is unsettling to its executives and the executives of its Affiliates. Therefore, this Plan is established to provide financial reassurance to the executives determined to be eligible to participate in the Plan under Section 3 below, the “Executives.” Such financial reassurance is necessary for the Corporation to continue to: (i) attract, recruit, and retain such Executives and assure their continuing dedication to their duties notwithstanding the threat or occurrence of a Change of Control (as defined in Section 6 below); and (ii) enable the Executives, should the Corporation receive unsolicited proposals from third parties with respect to its future, to assess and advise the Board what action on those proposals would be in the best interests of the Corporation, its shareholders and the policyholders and other customers of its Affiliates, and to take such action regarding those proposals as the Board might determine appropriate, without being influenced by the uncertainties of their own financial situation; and (iii) demonstrate to the Executives of the Corporation and its Affiliates that the Corporation is concerned with the welfare of the Executives and intends to assure that loyal Executives are treated fairly; and (iv) ensure that the Executives are provided with compensation and benefits upon a Change of Control which meet the expectations of the Executives.

To the extent the Plan is subject to section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the Plan shall be interpreted, operated, and administered in accordance with Code section 409A.

Section 3. Executives Eligible to Participate. Eligibility to participate in the Plan shall be limited to the categories of employees described in Sections 3(a) and 3(b) below. Participating employees of the Corporation and its Affiliates are referred to as “Executives”:

(a) Senior Management Committee Members. Current members of the Corporation’s Senior Management Committee (or any successor committee having substantially similar responsibilities) (the “SMC”); and

(b) Other Designated Employees. Any additional employees designated by name to participate in the Plan by the Compensation Committee of the Board (the “Committee”), or recommended by the Chief Executive Officer of the Corporation (the “CEO”) and approved by the Committee. A current list of the members of the SMC, and a list of the individuals described in Section 3(b), shall be maintained by the Plan Administrator, and kept on file with the Corporate Secretary.

Section 4. Termination of Participation. Except as provided in Section 4(b) below, upon termination of participation in the Plan, the Executive shall thereafter lose entitlement to any benefits under the Plan and all rights hereunder shall be forfeited.

(a) Termination of Participation. Subject to Section 4(b) below, the following events, if occurring before a Change of Control (as defined in Section 6), will result in the termination of an Executive’s participation in the Plan: (i) the date the Executive separates from service with the Corporation and its Affiliates, (ii) the date the Executive ceases to be an SMC member, or (iii) the date that an Executive,


whose participation in the Plan was by approved by the Committee, has his or her participation terminated by the Committee.

(b) Deemed Participation. Notwithstanding the foregoing, an Executive whose participation in the Plan was terminated shall nevertheless be deemed to have been a participant in the Plan on the date of a Change of Control and shall be eligible to receive benefits as provided under this Plan if both of the following requirements are met:

(i) The Executive’s termination of participation results from: (A) involuntarily termination from service with the Corporation and its Affiliates, other than for Cause (as defined in Section 7(b) below); (B) removal from the SMC (or any successor committee having substantially similar responsibilities); or (C) removal by the Committee; and

(ii) The Executive’s termination of participation occurs within the 6 month period before the occurrence of a Change of Control.

Section 5. Plan Benefits.

(a) Level of Benefits. For all Executives, other than than those Executives described in Section 5(c) below (“Section 5(c) Executives”), benefits under this Plan shall be determined based on the designated “Tier” applicable to such Executive:

Tier One: Executives shall be paid a cash lump sum payment, as described in Section 5(b) below, shall receive certain enhancements to benefits under other plans sponsored by the Corporation, as well as other miscellaneous benefits described in Section 8 below, and shall receive the benefits described in Section 9 of the Plan, including eligibility to receive “Gross-Up” payments.

Tier Two: Executives shall be paid a cash lump sum payment, as described in Section 5(b) below, and shall receive certain enhancements to benefits under other plans sponsored by the Corporation, as well as other miscellaneous benefits described in Section 8 below. Executives in Tier Two shall not be eligible to receive any of the benefits described in Section 9 of the Plan.

Tier Three Executives shall be paid a cash lump sum payment, as described in Section 5(b) below. Tier Three Executives shall not be eligible to receive the enhancements described in Section 8 of the Plan, or any of the benefits described in Section 9 of the Plan.

Unless designated otherwise by the Committee, an Executive is assumed to be a “Tier One” Executive. Designations of Executives as Tier Two and Tier Three Executives shall be set forth on Appendix A attached to this Plan, as amended from time to time by the Committee.

(b) Cash Severance Payment. Subject to Section 5(c) below, the amount of the cash severance benefit paid under this Plan shall be (A) in the case of the CEO and President of the Corporation, an amount equal to three (3) times the CEO’s highest annual rate of base salary during the 12 month period immediately preceding the date that the CEO Separates from Service, plus three (3) times the CEO’s or President’s (as applicable) Target Bonus, and (B), in the case of all other Executives, an amount equal to two (2) times the Executive’s highest annual rate of base salary during the 12 month period immediately preceding the date that the Executive Separates from Service, plus two (2) times the Target Bonus for such Executive. For purposes of this Plan, “Target Bonus” equals the higher of: (a) the target annual incentive bonus approved for the CEO, President, or Executive for the calendar year in which the CEO, President, or Executive Separated from Service, or (b) the target annual incentive bonus approved for the CEO, President, or Executive for the year in which the Change of Control occurred.

(c) Former Jefferson Pilot Executives. For any Executive who was a participant in the Jefferson Pilot Executive Change in Control Severance Plan (“JP COC Plan”) on the effective date of


the merger between the Corporation’s wholly owned subsidiary and Jefferson Pilot Corporation (“Merger”), effective April 3, 2006 (the “Effective Date”), benefits under this Plan shall be provided as follows:

(i) Prior to April 4, 2008, if any Executive described in this Section 5(c) is eligible for payments and benefits pursuant to the terms and conditions of the JP COC Plan, and is also eligible for payments and benefits pursuant to the terms and provisions of this Plan (described in Section 5(a) above, subject to meeting the criteria described in Section 7 below), then that Executive shall receive the better of the cash payment provided under Section 1(b) of the JP COC Plan, or the cash payment provided under Section 5(b) of this Plan, but not both. Any cash payments paid under this Plan shall be reduced on a dollar-per-dollar basis by any severance payments received by the Executive under the various other severance plans, severance programs, severance arrangements or employment agreements sponsored by the Corporation (including any employment agreements assumed by the Corporation as a result of the merger), except to the extent the plan, program, agreement or arrangement specifically provides otherwise.

(ii) On or after April 4, 2008, any Executive described in this Section 5(c) shall be eligible to receive the payments and benefits as provided under this Plan (described in Section 5(a) above, subject to meeting the criteria described in Section 7 below). Such Executive shall enjoy the same benefits on the same terms and conditions as all other Executives, and shall no longer be considered a Section 5(c) Executive.

Section 6. Change of Control. As used in this Plan, “Change of Control” means:

(a) The acquisition by any individual, entity or group (as defined in Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of (A) the then outstanding shares of common stock of the Corporation (the “Outstanding Corporation Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Corporation other than an acquisition by virtue of the exercise of a conversion privilege, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or any entity controlled by the Corporation, or (D) any acquisition by any entity or corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (A), (B) and (C) of subsection (c) of this Section 7 are satisfied; or

(b) Individuals who, as of the beginning of any period of two consecutive years, constitute the Board of Directors of the Corporation (the “Board”), cease for any reason to constitute at least a majority of the directors of the Corporation; provided, however, that any individual becoming a director subsequent to the beginning of such period whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least two-thirds of the Board at the beginning of such period, shall be considered as though such individual were a member of the Board as of the beginning of such period, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Consummation of a reorganization, merger or consolidation of the Corporation, unless, following such reorganization, merger or consolidation, (A) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is immediately thereafter then represented by the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities that were


outstanding immediately prior to such reorganization, merger or consolidation in substantially the same proportions as the voting power of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, among the holders thereof immediately prior to such reorganization, merger or consolidation, (B) no Person (excluding the Corporation, any employee benefit plan or related trust of the Corporation, or such corporation resulting from such reorganization, merger or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation and, directly or indirectly, twenty percent (20%) or more of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or

(d) Approval by the shareholders of the Corporation of (A) a complete liquidation or dissolution of the Corporation or (B) the sale or other disposition of all or substantially all of the assets of the Corporation, other than to a corporation, with respect to which following such sale or other disposition (1) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is immediately thereafter then represented by the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities that were outstanding immediately prior to such sale or other disposition in substantially the same proportion as the voting power of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, among the holders thereof immediately prior to such sale or other disposition, (2) no Person (excluding the Corporation and any employee benefit plan or related trust of the Corporation, or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, twenty percent (20%) or more of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Corporation. The closing of a transaction, as defined in the documents relating to, or as evidenced by a certificate of any state or federal governmental authority in connection therewith, approval of which by the shareholders of the Corporation would constitute a Change of Control under this Section 6(d).

Section 7. Payment of Benefits.

(a) General. If within a three-year period commencing on the date of a Change of Control (the “Benefit Period”), (i) the Corporation or any Affiliate terminates the employment of the Executive for any reason other than Cause (as defined in Section 7(b) below), death, or Total and Permanent Disability (as defined in Section 18(c) below), or (ii) the Executive terminates his employment for Good Reason (as defined in Section 7(c) below), the amount of the Executive’s cash severance payment described in Section 5(b) shall be paid in a lump sum within 30 calendar days of the date that the Executive “Separates from Service” within the meaning of Code Section 409A. An Executive who, pursuant to Section 4(b) above, is no longer an employee but is deemed to be a participant in the Plan on the date of the Change of Control and eligible for Plan benefits, shall be paid such lump sum within 30 calendar days of the later of: (i) the date of the Change of Control, or (ii) the date the Executive “Separates from Service” within the meaning of Code Section 409A.


Notwithstanding the foregoing, distributions may not be made to a Key Employee before the date that is six months after the date of the Key Employee’s Separation from Service (or, if earlier, the date of death of the Key Employee). For this purpose, “Key Employee” means an Executive treated as a “specified employee” under Code section 409A(a)(2)(B)(i), i.e., a key employee (as defined in Code section 416(i) without regard to paragraph (5) thereof) of a corporation any stock of which is publicly traded on an established securities market or otherwise.

(b) Defintion of “Cause” The Corporation may terminate an Executive for Cause during the Benefit Period. For purposes of this Plan, “Cause” means:

(i) conviction of a felony, or other fraudulent or willful misconduct materially and demonstrably injurious to the business or reputation of the Corporation by the Executive; or

(ii) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Corporation or one of its Affiliates (other than such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Corporation which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed his duties.

For purposes of this Section 7(b), no act or omission to act, on the part of the Executive, shall be considered “willful” unless such act or omission is the result of the Executive’s bad faith or acting without reasonable belief that the Executive’s action or omission was in the best interests of the Corporation. Any act based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Corporation or based upon the advice of counsel for the Corporation shall be conclusively presumed to have been taken by the Executive in good faith and in the best interests of the Corporation. An Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to him and an opportunity for him, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth above in (i) or (ii) above and specifying the particulars thereof in detail.

(c) Termination for “Good Reason.” The Executive may initiate the termination of his or her employment for Good Reason during the Benefit Period. As used in this Plan, “Good Reason” means, without the Executive’s written consent:

(i) an adverse and material change in the Executive’s status, positions or responsibilities as compared to the Executive’s status, position or responsibilities as in effect prior to such change. Notwithstanding the foregoing, neither an increase in the scope or number of an Executive’s responsibilities, nor a change in the Executive’s reporting relationships (e.g. a change with respect to the person or position to whom the Executive reports or the individual(s) or position(s) who report to the Executive) shall be considered an adverse and material change in the Executive’s status or position;

(ii) a reduction in the amount of either the Executive’s annual base salary or target annual incentive program (“annual bonus”) opportunity as in effect on the date she or he became a participant in the Plan, or as the same may be increased from time to time during the term of the Executive’s participation in this Plan;

(iii) the failure to provide or continue in effect materially similar compensation and benefits, in accordance with the plans, practices, policies and programs of the Corporation and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding


the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Corporation and its Affiliates; provided, however, that broad-based changes to the benefit plans of the Corportion and its Affiliates, affecting a significant portion of the employees of the Corporation and its Affiliates, shall not be deemed “Good Reason” under this Section 7.

(iv) the failure of any successor or assign of the Corporation to assume and expressly agree to perform the obligations under this Plan;

(v) any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination (as defined in Section 7(d) below) and a resolution satisfying the requirements of Section 7(b) above; and for purposes of this Plan, no such purported termination shall be effective; or

(vi) any request by the Corporation or any Affiliate that the Executive participate in an unlawful act.

Anything in this Plan to the contrary notwithstanding, a termination of employment initiated by the CEO for any reason during the Benefit Period shall be deemed to be a termination for “Good Reason” for all purposes of this Plan.

(d) Notice of Termination. Any termination by the Corporation for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party given by hand delivery, registered or certified mail, return receipt requested, postage prepaid, to the last known home address of the Executive or to the address of the principal office of the Corporation, copy to the General Counsel. For purposes of this Plan, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Executive or the Corporation to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Corporation, respectively, hereunder, or preclude the Executive or the Corporation, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Corporation’s rights hereunder.

(e) Future Covenants. As a condition to the receipt of any payments or benefits under this Plan, the Executive agrees to use his or her best efforts and utmost diligence to guard and protect such confidential information and trade secrets acquired during his or her tenure with the Corporation and its Affiliates. Furthermore, the Executive agrees that, for a period of (2) two years following his or her termination date, that the Executive will not directly or indirectly hire, manage, solicit or recruit any financial planners, agents, salespeople, financial advisors or employees of the Corporation or its Affiliates. Finally, the Executive agrees not to disparage the Corporation or its Affiliates, or any of its financial planners, agents, sales people, financial advisors or employees.

Section 8. Benefit Enhancements & Coordination with Other Plans.

(a) In the event that benefits are payable under this Plan to a Tier One or Tier Two Executive in accordance with Section 7(a) or 7(c) above, the Executive shall be paid:

(i) for each completed performance period, all amounts due to the Executive under any annual or long-term performance cycle incentive plans of the Corporation or any Affiliate (or successor


plans) in which the Executive participated immediately before his or her Separation from Service, as provided in any such plan; and

(ii) for each performance period in progress, any award amount shall be pro-rated to the date of the Executive’s Separation of Service based on the greater of actual results through the most recently completed fiscal quarter or the targeted amount through such quarter;

(b) In the event benefits are payable under this Plan to a Tier One or Tier Two Executive in accordance with Section 7(a) or 7(c) above, the Executive’s benefits, if any, under the terms of the Lincoln National Corporation Employees’ Supplemental Pension Benefit Plan and the Lincoln National Corporation Executives’ Excess Compensation Pension Benefit Plan, or any amendment and restatement of those Plans (the “SERP”), shall:

(i) immediately vest and be payable upon the Executive’s Separation from Service (as defined in Section 409A of the Code); and

(ii) be calculated as follows:

(A) For Executives who have their benefits calculated under the final average pay formula of the Lincoln National Corporation Employees’ Retirement Plan, calculated as provided under the terms and provisions of the SERP, except that an additional three (3) years of benefit service shall be credited to the CEO, or an additional two (2) years of benefit service in the case of all other Executives; or

(B) For Executives who have their benefits calculated under the cash balance formula of the Lincoln National Corporation Employees’ Retirement Plan, calculated as provided under the terms and provisions of the SERP, except that an additional three (3) years of pay credits shall be credited to the CEO, or an additional two (2) years of pay credits in the case of all other Executives;

(c) In the event benefits are payable under this Plan to a Tier One or Tier Two Executive in accordance with Section 7(a) or 7(c) above, any Executive eligible to receive a benefit under the terms of the Salary Continuation Plan for Executives of Lincoln National Corporation and Affiliates (the “SCP”) shall immediately vest in and have their benefits determined using the Maximum Monthly Benefit described in Section 5(c) of the SCP: 17% for the CEO of the Corporation, and 10% for all other Executives;

(d) In the event benefits are payable under this Plan to a Tier One or Tier Two Executive in accordance with Section 7(a) or 7(c) above, the the Executive shall be reimbursed for any COBRA premiums the Executive has paid after his employment is terminated for continuation of coverage under benefit plans maintained by the Corporation or any Affiliate; and for purposes of determining eligibility service for retiree medical and dental coverage, an Executive who is eligible for retiree medical and dental benefits shall include as service the period during which severance is paid under the Corporation’s broad-based severance plan;

(e) In the event benefits are payable under this Plan to a Tier One or Tier Two Executive in accordance with Section 7(a) or 7(c) above, such Executive shall be entitled to outplacement services, the scope and provider of which shall be selected by the Executive in his sole discretion, at the sole expense of the Corporation as incurred to a maximum of 15% of the Executive’s highest annual rate of base salary during the 12 month period immediately preceding the Executive’s termination of employment; and

(f) no Executive (Tier One, Tier Two and Tier Three Executives) receiving any benefit under this Plan or the JP COC Plan shall be entitled to receive any severance payment any the various other severance plans, severance programs, severance arrangements or employment agreements sponsored by the Corporation (including any employment agreements assumed by the Corporation as a result of the merger), except to the extent the plan, program, agreement or arrangement specifically provides otherwise. Notwithstanding the foregoing, Executives participating in this Plan may be eligible to receive payments


under the Lincoln National Corporation Severance Pay Plan or the Jefferson-Pilot Financial Separation Pay Plan. Any payments made to an Executive under the Lincoln National Corporation Severance Pay Plan or the Jefferson-Pilot Financial Separation Pay Plan shall reduce, on a dollar-per-dollar basis, the amount of cash payment due to such Executive under this Plan or the JP COC Plan.

(g) the Executive’s rights under any other benefit plan maintained by the Corporation or any Affiliate (or successor) shall be governed by the terms of that plan as in effect on the day immediately preceding the Change of Control.

Section 9. Certain Additional Payments by the Corporation.

(a) Anything in this Plan to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Corporation to or for the benefit of an Executive designated as a Tier One Executive in accordance with Section 5(a) above (whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, but determined without regard to any additional payments required under this Section 9) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that an Executive would otherwise be entitled to a Gross-Up Payment, but that the Payments otherwise payable would not be subject to the Excise Tax if such Payments were reduced by an amount that is less than 10% of the portion of such Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Executive under this Plan shall be reduced (but not below zero) to the maximum amount that could be paid to the Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Gross-Up Payment shall be made to the Executive. Initially, the reduction shall result in a decrease in the payments under Section 5, unless an alternative method of reduction is elected by the Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Plan shall be reduced pursuant to this provision.

(b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, the reduction of Payments to reach the Safe Harbor Cap, and the assumptions to be utilized in arriving at such determination, shall be made by Ernst & Young or such other nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Corporation and the Executive within a reasonable period of time beginning with the Accounting Firm’s the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Corporation or the Executive. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control or the Corporation, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Corporation to the Executive as soon as administratively practicable after receipt of thee Accounting Firm’s determination, but in no event sooner than benefits are paid to the Executive generally under Section 7(a). If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that the Executive will not incur a negligence or similar penalty for failure to report any Excise Tax on the Executive’s applicable federal income tax return. Any


determination by the Accounting Firm shall be binding upon the Corporation and the Executive. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) below and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive.

(c) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gave such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

(i) give the Corporation any information reasonably requested by the Corporation relating to such claim,

(ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including; without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation,

(iii) cooperate with the Corporation in good faith to contest such claim, and

(iv) permit the Corporation to participate in any proceedings relating to such claim,

provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest, deemed interest with respect to interest-free advances, and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation’s complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation


pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

Section 10. Reimbursement of Legal Fees. The Corporation shall pay directly or reimburse an Executive (at the Executive’s option) for any and all legal fees and expenses incurred by such Executive relating to the enforcement or enforceability of any obligations of the Corporation and its Affiliates under the Plan or relating to enjoining the Board from amending the Plan in a manner which is inconsistent with Section 14; provided, however, that an Executive shall be required to repay any such amounts to the Corporation to the extent that a court issues a final and non-appealable order setting forth the determination that the position taken by the Executive was frivolous or advanced by the Executive in bad faith.

Section 11. Confidential Information. Each Executive who receives a severance benefit under this Plan agrees to retain in confidence any secret or confidential information known to him relating to the Corporation, its Affiliates and their respective businesses, which shall have been obtained by the Executive during his employment by the Corporation or any of its Affiliates and shall not be or become public knowledge (other than by acts of the Executive or a representative of the Executive in violation of this Plan). After termination of the Executive’s employment with the Corporation or any of its Affiliates, the Executive shall not, without prior written consent of the Corporation or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall a violation or an asserted violation of the provisions of this Section 11 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Plan.

Section 12. Right or Title to Funds. In the event of a Change of Control, the Corporation shall immediately set aside, earmark, and contribute to a trust sufficient funds in cash to pay for any obligations it may have under this Plan as determined by the Accounting Firm, including no less than $5,000,000.00 to satisfy any obligation of the Corporation under Section 10, to a Grantor Trust within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Code. An Executive, and any successor in interest to such Executive, shall be and remain a general creditor of the Corporation with respect to any promises to pay under this Plan in the same manner as any other creditor who has a general claim for an unpaid liability, provided, however, that the Executive shall have such rights against assets held in the Grantor Trust that are provided in such Grantor Trust agreement. The Corporation shall not make any loans or extend credit to an Executive that will be offset by benefits payable under this Plan.

Section 13. Binding Plan. The obligations under this Plan shall be binding upon and inure to the benefit of an Executive, his or her beneficiary or estate, the Corporation and any successor to the Corporation.

Section 14. Amendment, Suspension or Termination of Plan. This Plan may be amended at any time and from time to time by and on behalf of the Corporation by the Board, but no amendment shall operate to give the Executive, either directly or indirectly, any interest whatsoever in any funds or assets of the Corporation, except the right upon fulfillment of all terms and conditions hereof, as such terms and conditions may be amended, to receive the payments herein provided. No amendment, suspension or termination of this Plan shall operate in any way to reduce, diminish, or adversely affect any of the benefits provided to any Executive if such amendment, suspension or termination (i) arose by action of the Corporation in connection with or anticipation of a Change of Control, (ii) occurs coincident with a Change of Control, or (iii) occurs after a Change of Control has occurred. Any such amendment, suspension, or termination that occurs within the six (6) month period before a Change of Control is presumed to have been in anticipation of such Change of Control.


Section 15. Plan Administrator. The Plan shall be administered by the Benefits Administrator. The Benefits Administrator shall be the Corporation’s Head of Human Resources, unless and until the Board appoints a successor. The Benefits Administrator shall have full authority to interpret the Plan, resolve issues pertaining to Plan eligibility, determine benefits payable under the Plan, and take whatever actions are, in the sole discretion of the Benefits Administrator, necessary to or desirable for such administration, including, but not limited to: (a) establishing administrative rules consistent with the provisions of the Plan, (b) delegating the responsibilities of the Benefits Administrator to other persons, and (c) retaining the services of lawyers, accountants, or other third parties to assist with the administration of the Plan.

Section 16. No Effect on Employment. This Plan shall supplement and shall neither supersede any other contract of employment, whether oral or in writing, between the Executive and the Corporation or any Affiliate, nor affect or impair the rights and obligations of the Executive and the Corporation or any Affiliate, respectively, thereunder; and nothing contained herein shall impose any obligation on the Corporation or Affiliate to continue the employment of the Executive.

Section 17. No Waiver. Neither the failure nor the delay on the part of the Executive in exercising any right, power or privilege hereunder shall operate as a waiver of such right, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege hereunder. No remedy conferred hereunder is intended to be exclusive of any other remedy and each shall be cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity.

Section 18. Definitions and Rules of Construction. Except where the context clearly indicates to the contrary, the following terms have the meanings specified:

(a) “Affiliate” means any corporation that directly or indirectly controls or is controlled by or is under common control with the Corporation. For purposes of this definition control means the power to direct or cause the direction of the management and policies of a corporation through the ownership of voting securities.

(b) “Separation from Service” means a separation from service with the Corporation and its Affiliates as that term shall be defined in Code Section 409A and the rules and regulations promulgated thereunder.

(c) “Total and Permanent Disability” means the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which can be expected to last for a continuous period of not less than 12 months. The determination as to whether an Executive is totally and permanently disabled shall be made by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive’s legal representative.

(d) This Plan may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

(e) The headings in this Plan are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof.