-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, nV8XyqgTrzYvJjs/grc05MQNrWOykpzkIvMOseHsw/s/8amwAAN1QTk4wtuqA5E6 M0V0MI+74AO0ZjWnsAyZaA== 0000059558-95-000039.txt : 19950427 0000059558-95-000039.hdr.sgml : 19950427 ACCESSION NUMBER: 0000059558-95-000039 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19950426 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN NATIONAL CORP CENTRAL INDEX KEY: 0000059558 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 351140070 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 033-04711 FILM NUMBER: 95531623 BUSINESS ADDRESS: STREET 1: 1300 S CLINTON ST STREET 2: PO BOX 1110 CITY: FORT WAYNE STATE: IN ZIP: 46802 BUSINESS PHONE: 2194552000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN NATIONAL LIFE INSURANCE CO AGENTS SAVINGS & PROFIT S CENTRAL INDEX KEY: 0000748330 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: IN FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 033-04711-01 FILM NUMBER: 95531624 BUSINESS ADDRESS: STREET 1: 1300 S CLINTON ST STREET 2: P O BOX 1110 CITY: FORT WAYNE STATE: IN ZIP: 46801 POS AM 1 As filed with the Securities and Exchange Commission on April 26, 1995 Registration No. 33-4711 SECURITIES AND EXCHANGE COMMISSION POST-EFFECTIVE AMENDMENT NO. 9 TO THE REGISTRATION STATEMENT ON FORM S-1 UNDER THE SECURITIES ACT OF 1933 (WITH S-3 INFORMATION ABOUT LINCOLN NATIONAL CORPORATION) Lincoln National Corporation The Lincoln National Life Insurance (Exact name of registrant as Company Agents' Savings and specified in its charter) Profit-Sharing Plan (Exact name of registrant as specified in its charter) Indiana Indiana (State of Incorporation) (State of Incorporation) 35-1140070 35-0472300 (I.R.S. Employer (I.R.S. Employer Identification No.) Identification No.) 200 E.Berry Street 1300 South Clinton Street Fort Wayne, Indiana 46802 Fort Wayne, Indiana 46802 (219)455-2000 (219)455-2000 (Address, including zip code and (Address, including zip code and telephone number, including area telephone number, including area code of registrant's principal code of registrant's principal executive offices) executive offices) Jack D. Hunter 200 E. Berry Street Fort Wayne, Indiana 46802 (219)455-2000 (Name, address, including zip code, and telephone number, including area code, of agent for service) If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ X ] Pursuant to Rule 429 of the General Rules and Regulations under the Securities Act of 1933, as amended, the Prospectus contained in this Registration Statement will also be used in connection with the securities registered pursuant to Registration Statements Nos. 2-91708 and 2-83029. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AGENTS' SAVINGS AND PROFIT-SHARING PLAN POST-EFFECTIVE AMENDMENT No. 9 Cross Reference Sheet Showing Location in Prospectus of Information Required by Items of Form S-1 Pursuant to Item 501(b) of Regulation S-K. Item of Form S-1 Location in Prospectus Item 1. Forepart of the Registration Forepart of the Registration Statement and Outside Front Statement and Front Cover Page of Cover Page of Prospectus Prospectus Item 2. Inside Front and Outside Back Inside Front Cover Page of Cover Pages of Prospectus Prospectus Item 3. Summary Information, Risk GENERAL INFORMATION Factors and Ratio of Earnings to Fixed Charges Item 4. Use of Proceeds SUMMARY OF THE PLAN -- Investment of Contributions Item 5. Determination of Offering Price Not Applicable Item 6. Dilution Not Applicable Item 7. Selling Security Holders Not Applicable Item 8. Plan of Distribution SUMMARY OF THE PLAN -- Sale of Stock to the Trustee Item 9. Description of Securities to SUMMARY OF THE PLAN be Registered Item 10. Interests of Named Experts Not Applicable and Counsel Item 11. Information with Respect to SUMMARY OF THE PLAN the Registrant Item 12. Disclosure of Commission INDEMNIFICATION OF OFFICERS, Position on Indemnification DIRECTORS, EMPLOYEES AND AGENTS for Securities Act Liabilities
LINCOLN NATIONAL CORPORATION Cross Reference Sheet Showing Location in Prospectus of Information Required by Items of Form S-3 Pursuant to Item 501(b) of Regulation S-K. Item of Form S-3 Location in Prospectus Item 1. Forepart of the Registration Forepart of the Registration Statement and Front Cover Page Statement and Front Cover of Prospectus Page of Prospectus Item 2. Inside Front and Outside Back Inside Front and Outside Back Cover Pages of Prospectus Cover Pages of Prospectus Item 3. Summary Information, Risk GENERAL INFORMATION Factors and Ratio of Earnings to Fixed Charges Item 4. Use of Proceeds Not Applicable Item 5. Determination of Offering Not Applicable Price Item 6. Dilution Not Applicable Item 7. Selling Security Holders Not Applicable Item 8. Plan of Distribution SUMMARY OF THE PLAN -- Sale of Stock to the Trustee Item 9. Description of Securities to LINCOLN NATIONAL CORPORATION be Registered COMMON STOCK Item 10. Interests of Named Experts Not Applicable and Counsel Item 11. Material Changes Not Applicable Item 12. Incorporation of Certain INCORPORATION OF ADDITIONAL Information by Reference DOCUMENTS BY REFERENCE Item 13. Disclosure of Commission INDEMNIFICATION OF OFFICERS, Position on Indemnification DIRECTORS, EMPLOYEES AND for Securities Act Liabilities AGENTS
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY 1300 South Clinton Street Fort Wayne, Indiana 46802 (219)455-2000 AGENTS' SAVINGS AND PROFIT-SHARING PLAN Offering LINCOLN NATIONAL CORPORATION Common Stock This amended Prospectus relates to 20,000,000 "Plan Interests" in The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan (the Plan) registered by the initial Registration Statement on April 30, 1986. It also relates to 1,600,000 shares of Common Stock of Lincoln National Corporation, being offered and sold to eligible agents of The Lincoln National Life Insurance Company and its affiliates who participate in the Plan (singly, an "Agent"; collectively, the "Agents"). A previous registration is still in effect with respect to the above-mentioned shares of Lincoln National Corporation Common Stock. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. (NOTE: FOUR (4) OF THE THIRTEEN INVESTMENT OPPORTUNITIES AVAILABLE TO PARTICIPATING AGENTS ARE HIGH-RISK COMMON STOCK FUNDS. SEE PAGE __ OF THE PROSPECTUS.) No person is authorized to give any information or to make any representation not contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by Lincoln National Corporation or the Plan. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to or from any person to whom it is unlawful to make or solicit such offer in such jurisdiction. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances create any implication that there has or has not been any change in the information contained herein since the date hereof. The date of this Prospectus is _____________, 1995. TABLE OF CONTENTS Page* GENERAL INFORMATION . . . . . . . . . . . . . . . . . SUMMARY OF THE PLAN . . . . . . . . . . . . . . . . . Purpose . . . . . . . . . . . . . . . . . . . . . Eligibility and Participation . . . . . . . . . . Agent Contributions . . . . . . . . . . . . . . . Rollover Contributions. . . . . . . . . . . . . . Suspension of Agent Contributions . . . . . . . . Employer Contributions. . . . . . . . . . . . . . Limitations on Contributions. . . . . . . . . . . Investment of Contributions . . . . . . . . . . . Valuation of Investments. . . . . . . . . . . . . Expenses of the Plan. . . . . . . . . . . . . . . Vesting . . . . . . . . . . . . . . . . . . . . . Accounts. . . . . . . . . . . . . . . . . . . . . Withdrawals . . . . . . . . . . . . . . . . . . . Agent Loans . . . . . . . . . . . . . . . . . . . Distributions . . . . . . . . . . . . . . . . . . Vested Amounts . . . . . . . . . . . . . . . Death, Disability, Retirement or Termination of Service. . . . . . . . . . Fractional Shares . . . . . . . . . . . . . . . . Employer Contribution Account . . . . . . . . . . Automatic Crediting of Account Balances. . . Withdrawals from the Retirement Option Account. . . . . . . . . . . . . . . . . . Investment of Contributions . . . . . . . . Beneficiary Designation . . . . . . . . . . . . . Assignment. . . . . . . . . . . . . . . . . . . . Amendment or Termination. . . . . . . . . . . . . Administration of the Plan. . . . . . . . . . . . Trustee. . . . . . . . . . . . . . . . . . . Plan Administrator . . . . . . . . . . . . . Voting of Shares. . . . . . . . . . . . . . . . . Federal Income Tax Consequences . . . . . . . . . Tax and Withholding . . . . . . . . . . . . . . . Employee Retirement Income Security Act of 1974 . Sale of Stock to the Trustee. . . . . . . . . . . Agent's Rights Under ERISA. . . . . . . . . . . . Participation Interests Are Securities. . . . . . Financial Statements. . . . . . . . . . . . . . . LINCOLN NATIONAL CORPORATION COMMON STOCK . . . . . . Dividend Rights . . . . . . . . . . . . . . . . . Voting Rights . . . . . . . . . . . . . . . . . . Liquidation Rights. . . . . . . . . . . . . . . . Pre-emptive Rights . . . . . . . . . . . . . . . Assessment. . . . . . . . . . . . . . . . . . . . Modification of Rights. . . . . . . . . . . . . . Other Provisions. . . . . . . . . . . . . . . . . INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS. . . . . . . . . . . . . . . . . . . . EXPERTS . . . . . . . . . . . . . . . . . . . . . . . LEGAL OPINION . . . . . . . . . . . . . . . . . . . . INCORPORATION OF ADDITIONAL DOCUMENTS . . . . . . . . INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . *Page numbers will be included in printed form of the prospectus when prepared for distribution. Lincoln National Corporation is subject to the informational requirements of the Securities and Exchange Act of 1934 and in accordance therewith files reports and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information can be inspected and copied at the Commission's Public Reference Room: 450 Fifth Street, N.W., Room 1024, Washington, D.C.; and at certain of its Regional Offices located at Room 1204, Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604; and at the Federal Building, 75 Park Place, Room 1228, New York, New York 10007. Copies of these materials may also be obtained from the Commission at prescribed rates by mailing a request to the Public Reference Branch, Securities and Exchange Commission, Washington, D.C. 20549. Such reports, proxy statements and other information can also be inspected at the offices of the New York, Midwest, Pacific, London and Tokyo Stock Exchanges. In addition, Lincoln National Corporation will provide without charge to each person to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any and all of the information that has been incorporated by reference into this Prospectus (excluding unincorporated exhibits) but not delivered with it. Such requests should be made to C. Suzanne Womack, Secretary, Lincoln National Corporation, 200 East Berry Street, Fort Wayne, Indiana 46802-2706, telephone: (219) 455-3271. GENERAL INFORMATION The Plan was first adopted by the Board of Directors of The Lincoln National Life Insurance Company (the "Company") on May 11, 1978, effective January 1, 1979, for the benefit of eligible Agents of the Company and any participating affiliates, sometimes collectively referred to in this Prospectus as "Employers". However, as of the date of this Prospectus, the Company was the only "Employer". The Plan enables eligible Agents serving the Employer as independent contractors a convenient and systematic method of saving. Under the Plan there are thirteen investment funds, one of which is the Lincoln National Corporation ("LNC") Stock Fund (see "Investment of Contributions"). Norwest Bank Fort Wayne, N.A., Fort Wayne, Indiana, is the Trustee of the Plan (see "Administration of the Plan - Trustee"). LNC, an Indiana corporation, is an insurance holding company which provides through its subsidiaries and on a national basis life and health insurance and annuities, property-casualty insurance, reinsurance and other financial services. The Company is a subsidiary of LNC. The principal executive offices of LNC are at 200 East Berry Street, Fort Wayne, Indiana 46802-2706. Its telephone number is (219)455-2000. The major features of the Plan, as amended, are described below. The statements contained in this Prospectus concerning the Plan are brief summaries and are qualified in their entirety by reference to the terms of the Plan itself. Copies of the Plan may be examined by eligible Agents and their beneficiaries upon request at the principal executive offices of the Company. SUMMARY OF THE PLAN Purpose The purpose of the Plan is to encourage and assist eligible Agents in adopting a regular savings and investment program and to help provide additional security for their retirement. Eligibility and Participation Agents who are at least 21 years of age and have completed one Eligibility Year of Service are qualified to participate in the Plan. An Agent is an independent contractor classified by an Employer as a full-time life insurance salesman under the Federal Insurance Contributions Act and operating under a contract directly with an Employer. This definition does not include any person who is a party to a subsidy or an advance agreement with an Employer. An Eligibility Year of Service is the first twelve-month period in which an Agent has completed at least 22 weeks of service. If 22 weeks of service are not completed in the initial twelve-month period, an Eligibility Year of Service will be any calendar year (including the calendar year next following an Agent's first day of service) in which the Agent has completed at least 22 weeks of service. For purposes of determining eligibility, service includes any service as an employee of the Company or of an affiliate. An eligible Agent may become a participant in the Plan by filing an appropriate enrollment form with the Plan Administrator (see "Plan Admini- strator") which designates his rate of pre-tax contributions (minimum 1%), the manner in which his contributions are to be invested (see "Investment of Contributions"), and a beneficiary to receive benefits under the Plan in the event of the Agent's death. The enrollment form also authorizes the Employers to reduce an Agent's earned commissions for his contributions. Enrollment forms are available from the Company's Benefit Section. Parti- cipation in the Plan will become effective on the Enrollment Date (which is defined as January 1, April 1, July 1, or October 1) next following (by at least 10 days) the date the form is received by the Plan Administrator. As of December 1, 1994, there were 1204 Agents eligible to participate in the Plan, and 925 Agents actually participating in the Plan. PARTICIPATION IN THE PLAN IS ENTIRELY VOLUNTARY, AND THE EMPLOYERS MAKE NO RECOMMENDATIONS AS TO WHETHER ANY ELIGIBLE AGENT SHOULD OR SHOULD NOT PARTICIPATE. Agent Contributions A participating Agent may make pre-tax contributions at a rate of at least 1%, but not more than 15%, of his earned commissions provided, however, that the percentage rate of Pre-Tax contributions for any highly compensated Agent shall not exceed the greater of the annual deferral percentage allowed for the highly compensated for the immediately preceding Plan Year and 6%. The Agent consents to this reduction of compensation in his enrollment form. Contributions must be made in whole multiples of 1%. An Agent may change the rate of contributions on any payday, by completing a new enrollment card with his Employer within ten working days prior to that payday. Rollover Contributions An Agent who is or may become a Participant may, in accordance with procedures established by the LNC Benefits Committee, make a Rollover Contribution to the Plan, in the form and manner required by the Plan and the Code. Suspension of Agent Contributions A participating Agent, upon written notice to the Plan Administrator, may suspend contributions to the Plan. An Agent who suspends contributions may again begin contributing to the Plan only upon executing and filing a new enrollment form (see "Eligibility and Participation"). Employer Contributions The Employer will make a contribution based on the ratio of the percentage increase in LNC Common Stock book value to the average percentage increase in book value over a three-year period ending with the Plan Year of a peer group of companies as selected by the Compensation Committee of the LNC Board of Directors prior to the end of the first quarter of each plan year. This ratio will be determined annually for purposes of the Plan by the LNC Board of Directors. The Employer will contribute an amount determined from the following schedule for each dollar contributed up to 6% of eligible commissions each pay period: Percentage Increase in LNC Book Value as a Percentage of Peer Group Average Increase Employer Contribution 100% or less $ .25 110% .50 120% .75 130% 1.00 140% 1.25 150% 1.50
In the event that the book value comparison falls between the increments noted in the schedule above, the Employer contribution will be adjusted proportionately. For example, if the comparison is 124%, the Employer contribution will be $.85. The minimum Employer contribution ($.25) will be made each pay period. Any additional Employer contribution necessary to bring the total employer contribution to the level noted above will be made in a lump sum following the annual determination of the ratio of percentage increase. To be eligible for this additional amount, the individual must have been either a full time life insurance salesman or an employee on the last day of the plan year for which the contribution is being made. Agents who terminated due to death, disability, or retirement are deemed not to have terminated prior to the last day of the Plan Year for purposes of this section. Limitations on Contributions It may be necessary to amend the Plan from time to time in order to establish and maintain its qualified status under the Internal Revenue Code of 1986, as amended (the "Code"). These amendments may cause prospective reductions to the Agent and Employer contributions. The Employer also reserves the right to amend or terminate the Plan at any time; however, such termination shall not affect already earned benefits. The Plan (and other similar plans maintained by the Employer), must meet specified non-discrimination rules as established by the Internal Revenue Service ("IRS"). The IRS has established these rules to assure that the Plan does not favor higher paid Agents. If it is determined that the Plan (separately or, at the Employer's option, when combined with other plans maintained by the Employer) is not in compliance and does not meet the non- discrimination rules, adjustments may be necessary and may require that the Plan Administrator revoke or modify the Agent's election to make Contributions, or direct the Employer to delay payment of Agent Pre-Tax Contributions for a period not to exceed 30 days past the end of the Plan Year in question. If the foregoing limits are exceeded, then, first, in order to reduce the excess, the Plan Administrator will reduce the amount of employer con- tributions for that year to the extent necessary to eliminate the excess; and, if additional adjustments are required, the Plan Administrator will then reduce the Agent's contributions for that year, to the extent necessary to eliminate the excess. Excess Agent contributions will be refunded and excess Employer contributions will be held in a suspense account to reduce the amount of Employer contributions under the Plan due thereafter, or, if the Plan is terminated, the excess amount will be allocated pro rata to the other Agents participating in the Plan as of the date of Plan termination. Notwithstanding the foregoing, during any calendar year, the sum of the Agent's pre-tax contributions and Employer contributions may not exceed the lesser of 25% of the Agent's taxable income or $30,000. In addition, the maximum amount of compensation to be taken into account in determining benefits under the Plan may not exceed $150,000 for 1995, and the Agent's pre-tax contributions may not exceed $9,240 for calendar year 1995. The figures for calendar year 1996 and thereafter, may also change, depending upon certain cost-of-living adjustments. Investment of Contributions ALL CONTRIBUTIONS UNDER THE PLAN WILL BE HELD IN TRUST FOR THE AGENTS. ALL AGENTS' PRE-TAX AND ROLLOVER [IF ANY] CONTRIBUTIONS (AND EARNINGS THEREON) WILL BE INVESTED BY THE TRUSTEE IN ONE OR MORE OF THE FOLLOWING FUNDS AT THE DIRECTION OF THE AGENT: 1. LNC Common Stock Fund, which invests in shares of LNC Common Stock ("Common Stock" or "LNC Common Stock"). A fund such as the LNC Common Stock Fund which invests in the stock of a single issuer is not diversified and therefore is a riskier investment than a fund which invests in a diversified pool of stocks of companies with similar characteristics as the LNC Common Stock. 2. Government Bond Fund, which directly or indirectly invests in fixed income securities issued by the U.S. Government. This is a moderate risk fund. Because this account invests 100% of its monies in bonds guaranteed by the U.S. government, there is no default risk. However, this account will often produce lower returns than other bond accounts because of its shorter maturities and lower risk. The Trustee currently holds a group annuity contract issued by The Lincoln National Life Insurance Company ("LNL") which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Government Bond Fund. 3. Guaranteed Fund, which invests primarily in contracts which guarantee a rate of interest and principal. This fund is considered a safe investment because of the guarantee of the principal investment, as well as a minimum interest guarantee. The Trustee currently holds a group annuity contract issued by LNL which is the primary asset of this Fund. 4. Core Equity Fund, which directly or indirectly primarily invests in the common stock of established companies. This is a conservative equity fund and has lower risk than investments in the more aggresive equity funds, because this fund invets primarily in large, well-established companies which are generally less risky than a new company or a company that is not well established. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Core Equity Fund. 5. Medium Capitalization Equity Fund, which directly or indirectly primarily invests in the stock of new, rapid growth companies. This is a high risk aggressive equity fund and is riskier than investments in large, established companies, because the stock of medium-size companies may not be as well known and may experience more sudden fluctuations. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Medium Capitaliza- tion Equity Fund. The current description of that segregated account identifies it as a high-risk, aggressive common stock fund. 6. Short Term Fund, which invests directly or indirectly primarily in notes of government agencies and private corporations. This is considered a low risk investment. Because investments in this fund are high quality and have short maturities, they are considered relatively safe. However, the fund will generally produce lower returns than both bonds and stocks. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Short Term Fund. 7. Large Capitalization Equity Fund, which directly or indirectly invests primarily in high-risk common stocks which have the potential for a significant appreciation in value over an 18 to 24-month period. The additional risk over that associated with other common stock funds may result in greater returns. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Large Capitalization Equity Fund. 8. Government/Corporate Bond Fund, which invests directly or indirectly in Corporate and U.S. Government bonds, and mortgage-backed securities. This is a moderate risk fund, with less risk than the High Yield Fund because it invests mostly in higher-quality bonds. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as the Government/Corporate Bond Fund. 9. Value Equity Fund, which directly or indirectly primarily invests in large capitalization stocks of conservative companies which are leaders in their industries. This is a conservative stock account. Therefore, investments in this account are not as risky as investments in aggressive equity accounts because the account invests in stocks of large, well- known companies that are bought at low prices but which have strong earning power. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Value Equity Fund. 10. International Equity Fund, which directly or indirectly invests in stocks of non-United States companies. The International Equity Fund is an aggressive equity account which is a high-risk investment in non-U.S. stocks involving the same type of risk as in domestic aggressive equity stocks but bears an additional risk factor because of changes in the exchange rates between U.S. dollars and foreign currencies and other variables associated with international investing. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the International Equity Fund. 11. High Yield Fund, which directly or indirectly primarily invests in below-investment-grade bonds. This is a high-risk fund. There is greater risk in investing in this fund than in the Government/Cor- porate Bond Fund because this fund invests in lower- quality bonds (commonly known as "junk bonds") and there is a higher chance that the issuer will not be able to repay the promised interest or principal. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the High Yield Bond Fund. 12. Small Capitalization Equity Fund, which directly or indirectly primarily invests in stocks of small companies which have the potential to grow rapidly and produce superior returns. This Fund is an aggressive equity account that has higher risk than investments in large- and medium-sized companies. The additional risk over that associated with other common stock funds may result in greater returns. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Small Capitalization Equity Fund. 13. Balanced Fund, which directly or indirectly primarily invests in three different assets classes: stocks, bonds, and money market instruments. Because the Balanced Fund contains a wide variety of investments, it has a correspondingly wide variety of risk characteristics across those securities. A wide variety of risk characteristics means that balanced accounts can have less volatility over time than a fund which invests in only one type of security. The Balanced Fund is riskier than a pure bond account but less risky than a conservative stock account. The Trustee currently holds a group annuity contract issued by LNL which provides for contributions to an LNL segregated investment account whose investment objectives are the same as those of the Balanced Fund. DEPENDING ON HIS OR HER INVESTMENT NEEDS AND OBJECTIVES, AN AGENT MAY CONCENTRATE OR DIVERSIFY THE INVESTMENT OF DEPOSITS IN THE FUNDS LISTED ABOVE. ANY DIRECTION BY AN AGENT FOR THE INVESTMENT OF DEPOSITS WILL BE DEEMED A CONTINUING DIRECTION UNTIL CHANGED BY THE AGENT. THE TRUSTEE WILL INVEST AN AGENT'S DEPOSITS IN THE SHORT TERM FUND IF NO INVESTMENT DIRECTION IS IN EFFECT. ALL EMPLOYER CONTRIBUTIONS (AND EARNINGS THEREON), WHEN MADE, WILL BE INVESTED BY THE TRUSTEE IN THE LNC COMMON STOCK FUND. Distributions will generally be in cash or, in the case of the LNC Common Stock Fund, in LNC Common Stock. The named fiduciary reserves the right to direct the Trustee to make distributions of assets of the Trust in kind (see "Distributions"). An Agent may terminate his election to invest in a particular Fund or change investment selection for his future deposits by filing with the Plan Administrator a written direction specifying such termination or change. In addition, other than with respect to Employer contributions which have not matured (been in the Plan for at least two plan years after the plan year for which they were contributed), an Agent may, no more than once each quarter, transfer part or all of the current Fund balances to another Fund or Funds, subject to any limitations imposed by a particular fund. Forms for making changes are available from the Company's Benefits Section. Any such terminations, changes, or transfers permitted by this paragraph and for which the Plan Administrator is given proper written direction, will take effect on a date to be determined by the Plan Administrator, which, under normal circumstances, will be the next valuation date following receipt of the written direction. In the event market conditions restrict the ability of the Trustee to comply with transfer requests, transfer amounts will be pro-rated per each Participant making a transfer request. This will be based on the total value of the amounts being requested for transfer. Amounts contributed to the Plan will be invested by the Trustee as soon as reasonably possible after receipt, and in accordance with the Agent's directions and the provisions of the Plan. Assets acquired under the Plan are purchased primarily in the open market. In addition to purchasing LNC Common Stock on the open market, the Trustee may from time to time purchase authorized and unissued shares directly from LNC, or purchase outstanding shares directly from LNC shareholders. Under the terms of the Plan certain fees, commissions, and other expenses are charged to the Plan. The election of investment Funds is the sole responsibility of the Agent and should be made in light of his investment needs and objectives. The following Table sets forth, for the various Investment Funds in the Plan, the annualized yield earned on investments in those Funds (assuming the reinvestment of dividends and interest, respectively) for the Plan Years 1989 through 1994. The comparison is based on past performance of the Investment Funds and is not necessarily indicative of future performance. **** AGENTS -- PLEASE READ: This table has been prepared to assist you in making your investment designations under the Plan. However, THE VALUE OF THIS INFORMATION IS LIMITED, AND YOU SHOULD CONSULT A QUALIFIED INVESTMENT ADVISER BEFORE MAKING YOUR DESIGNATIONS. **** COMPARATIVE PERFORMANCE OF INVESTMENT FUNDS [Percentage Increase/(Decrease) in Value of Investments, Assuming Such Investments Were Held in Each Fund for a Plan Year](1)1 Investment Plan Year Fund 1990 1991 1992 1993 1994 - ---------------------------------------------------------------------------- LNC Common Stock Fund (26.94%) 37.24% 37.51% 15.10% (16.06%) Government Bond Fund 8.33% 12.83% 6.81% 7.21% (1.60%) Guaranteed Fund(4) 8.95% 8.70% 8.15% 7.25% 7.27% Core Equity Fund .40% 29.06% 2.00% 11.63% 1.00% Medium Capitalization Equity Fund 5.19% 55.43% 12.01% 12.71% (2.40%) Short Term Fund 8.09% 5.95% 3.49% 2.97% 3.90% Large Capitalization Equity Fund 2,3 N/A 48.05% 6.24% 10.88% (2.50%) Government/Corporate Bond Fund 6.31% 16.43% 7.25% 12.36% (4.00%) Balanced Fund 5 N/A N/A N/A N/A (2.30%) High Yield Fund 5 N/A N/A N/A N/A .40% Value Equity Fund 5 N/A N/A N/A N/A (.70%) Small Capitalization Equity Fund 5 N/A N/A N/A N/A (3.60%) International Equity Fund 5 N/A N/A N/A N/A 1.40% Footnotes: 1) The yield information given here is measured by overall performance of each Fund as if the investments were held for the entire Plan Year. This table should not be compared to tables presented prior to April 30, 1986. For the 1990 Plan Year, the last day of the Plan Year was December 30. For all other years it is December 31. 2) This is a high-risk fund. See "Investment of Contributions", in this Prospectus. 3) Effective January 1, 1991, the Plan began offering the Large Capitaliza- tion Equity Fund. 4) Effective April 1, 1994, the rate which is guaranteed is no longer guaranteed for twelve (12) months, but rather just for the calendar quarter in which the investment is received. Monies invested in quarters beginning prior to April 1, 1994, are guaranteed at a minimum to be credited with a rate of interest not less than the guaranteed rate on those monies for the remainder of the period of the existing guarantee. 5) Effective April 1, 1994, the Plan began offering the Balanced Fund, High Yield Fund, Value Equity Fund, Small Capitalization Equity Fund, and International Equity Fund.
RISK FACTORS BECAUSE OF FLUCTUATIONS IN THE STOCK MARKET WHICH ARE GENERALLY INHERENT IN COMMON STOCK INVESTING, IT SHOULD BE NOTED THAT INVESTMENT IN EQUITY (I.E., STOCK) FUNDS IS GENERALLY MORE RISKY THAN INVESTMENT IN BOND FUNDS, THE SHORT TERM FUND OR THE GUARANTEED FUND. Investing in Foreign Securities. Investments in foreign securities involve risks that are different in some respects from investments in securities of U.S. issuers, such as the risk of fluctuations in the value of the currencies in which they are denominated; the risk of adverse political and economic developments; and, with respect to certain countries, the possibility of expropriation, nationalization, or confiscatory taxation, or of limitations on the removal of funds or other assets of the particular fund in question. Securties of such foreign countries are less liquid and more volatile than securities of comparable domestic companies. There may be less publicly available information about foreign issuers than domestic issuers, and foreign issuers generally are not subject to the uniform accounting, auditing and financial reporting standards, practices and requirements applicable to domestic issuers. Delays may be encountered in settling securities transactions in certain foreign markets, and the Fund in question will incur costs in converting foreign currencies into U.S. dollars. Custody charges are generally higher for foreign securities. Special currency-hedging strategies may also be necessary as the relationship of the foreign issuer's currency to the U.S. dollar changes. High-Yield/High Risk Bonds. Lower-rated bonds involve a higher degree of credit risk (the risk that the issuer will not make interest or principal payments when due). In the event of an unanticipated default, the Fund in question would experience a reduction in its income, and could expect a decline in the market value of the securities so affected. During an economic downturn or substantial period of rising interest rates, highly- leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals, and to obtain additional financing. The market prices for lower-grade securities are generally less sensitive to interest rate changes than are the prices for higher-rated investments, but they are more sensitive to adverse economic or political changes (or, in the case of corporate issuers, to individual corporate developments.) Periods of economic or political uncertainty and change can be expected to result in volatility of prices of these securities. Since the last major economic recession, there has been a substantial increase in the use of high-yield debt securities to fund highly-leveraged corporate acquisitions and restructurings, so past experience with high-yield securities in a prolonged economic downturn may not provide an accurate indication of future performance during such periods. Lower-rated securities may also have less liquid markets than higher-rated securities, and their liquidity as well as their value may be negatively affected by adverse economic conditions. Adverse publicity and investor perceptions, as well as new or proposed laws, may also have a negative impact on the market for high-yield/high-risk bonds. Finally, unrated debt securities--including sovereign debt of foreign governments--may also be deemed high-risk securities by the Fund in question. Valuation of Investments Securities authorized for investment under the Plan will be valued as of the Valuation Date on the basis of (1) the closing price on an exchange on which such securities are listed, (2) the average bid quotations for such securities (3) quotations from other sources deemed by the Plan Administrator to be reliable as fairly reflecting the market price or redemption price of the securities, (4) the value as reported by an insurance company with respect to a segregated investment account in which the Plan invests, or (5) the average sale or purchase price of the securities when the Trustee is required to sell or purchase securities on the open market to comply with the requests of employees. A Valuation Date is the date following a payday, on which all distributions, loans and transfers are processed but normally no longer than 14 days from the payday following receipt of the written request. The named fiduciary may declare additional Valuation Dates throughout the year. Expenses of the Plan Expenses of administration of the Plan, including fees, brokerage commissions and annuity sales charges, transfer taxes and other expenses charged or incurred by the Trustee, will be paid out of the assets of the Plan except to the extent paid by the Employers. Vesting An Agent is fully vested in his pre-tax contributions under the Plan at all times. Employer contributions vest based upon years of service: Years of Service Percent Vested 1 0% 2 50% 3 or more 100%
A "year of service" means any calendar year in which the Agent is at least 18 years of age and is either a full-time life insurance salesman or an employee in the service of the Employer on the last day of that Plan Year. Accounts The Trustee will establish and maintain for each participating Agent separate participant accounts. A "Pre-tax Contribution Account" will be created for each participating Agent to hold the portion of an Agent's interest in the Plan which is attributable to his pre-tax contributions. An "After-tax Contribution Account" will also be maintained for each Agent who had an interest in the Plan attributable to his after-tax contributions prior to 1989. "Employer Contribution Accounts" will be created for each participating Agent to hold the portion of his interest in the Plan which is attributable to Employer contributions made on that Agent's behalf, including one account for Employer contributions that have been in the Plan for at least two plan years after the plan year for which they were contributed, and a second account for Employer contributions in the Plan less than two plan years after the plan year for which they were contributed. A "Rollover Account" will be created to hold rollover contributions, if any, accepted into the Plan. Shortly after the end of each Plan Year, the Trustee will furnish to each participating Agent a current statement of his accounts in the Plan. This statement will indicate the amount of investments purchased during the Plan Year with that Agent's contributions and Employer contributions, the amount, if any, of cash credits to that Agent's accounts and a statement of the assets currently being held by the Trustee for that Agent. Within nine months after the end of each Plan Year, the Plan Administrator will furnish each participating Agent a Summary Annual Report (see "Agents' Rights under ERISA"). Appropriate adjustments resulting from stock dividends, stock splits and similar changes will be made in Agent's accounts invested in the LNC Common Stock Fund. Withdrawals If a participating Agent needs to withdraw money, the Agent may do so, but the rules for withdrawing money differ for withdrawals from different accounts. An Agent may withdraw the entire balance of his after-tax Account for any completed Plan Year subject to any limitation applicable to the Fund in which such contribution is invested. An Agent may elect to withdraw all or a portion of his Matured Company Contribution Account, subject to any limitation of the Investment Fund in which is it invested and further subject to the following limitations: 1) the minimum amount an Agent can withdraw is $500; 2) if the amount in the Matured Company Contribution Account is less than $500, the Agent must withdraw the entire amount; 3) no more than four withdrawals may be made in twelve months; and, 4) the Agent cannot make withdrawals if the Plan is terminated or if a notice of Plan termination has been issued. Even though an Agent may be 100% vested in his Employer contributions, he may only withdraw the matured Employer contributions. These are contribu- tions that have been in the Plan for at least two Plan Years after the Plan Year for which they were contributed. Non-matured Employer contributions are amounts contributed which have not been in the Plan for at least two Plan Years after the Plan Year for which they were contributed, and are not available for withdrawal. An Agent may withdraw all or a portion of the Rollover Account, subject to any withdrawal limitations which apply to the Fund in which the Account is invested and further subject to the following limitations: 1) the minimum withdrawal is $500; 2) no more than four withdrawals may be made in twelve months; 3) amounts attributable to Employer contributions in the Account may not be withdrawn for two years from the date of the rollover; and, 4) the Agent cannot make withdrawals if the Plan is terminated or if a notice of Plan termination has been issued. If an Agent has no balance in his After-Tax Contribution Account, or his matured Employer Contribution Account, and he has attained age 59-1/2, he may make a full withdrawal or partial withdrawals from his Pre-Tax Contribution Account, subject to the following conditions: 1) these withdrawals are limited to 4 in a 12-month period; 2) each must be for a minimum of $500; and 3) the maximum available for withdrawal will be reduced, under a formula provided in the Plan, if the Agent has outstanding loan balances with the Plan at the time he requests withdrawal. If an Agent has no balance in his After-Tax Contribution Account, matured Employer Contribution Account or Rollover Account and has not attained age 59- 1/2, then it may be possible for that Agent to withdraw amounts which the Agent contributed (not including earnings on such amounts) from the Pre-Tax Contribution Account for a hardship. Only the following four situations are currently designated by I.R.S. regulations to be hardship situations: 1) existence of nonreimbursable medical expenses; 2) tuition for post-secondary education for the Agent or the Agent's dependents; 3) purchase of a primary residence; and 4) imminent foreclosure of or eviction from the Agent's primary residence. Such a withdrawal must be demonstrably necessary due to an Agent's immediate and heavy financial need and the withdrawal cannot exceed the exact amount required to meet the hardship. (However, the withdrawal may include an amount necessary to pay any taxes and penalties associated with the withdrawal.) In order to be deemed to meet the immediate and heavy financial need requirement, the Agent must fulfill the following conditions: 1) the Agent must have obtained all distributions other than hardship distributions, and all non-taxable loans currently available under all plans maintained by his Employer; 2) the Agent may not make any contributions to the Pre-Tax Contribution Account or to any other pension, profit-sharing or deferred compensation plan for 12 months from the date of receipt of the hardship withdrawal; and 3) the amount which may be contributed to the Pre-Tax Contribution Account during the calendar year after the year in which the hardship withdrawal is received is reduced by the amount contributed by the Agent in the year of the hardship withdrawal. Subject to the foregoing discussion, a withdrawal will be made upon the written request of the Agent delivered to the Plan Administrator. At the election of the Agent, the Trustee will deliver to the Agent the securities and cash in the applicable account, or a total cash distribution (based upon the current market value or any applicable current redemption value of the securities in the account as of the date of withdrawal). See "Fractional Shares" for settlement of fractional share interests in LNC Common Stock. A withdrawal payment will be paid by check normally within 60 days after the Valuation Date. Agent Loans An Agent may, subject to the consent of the Plan Administrator, obtain a loan from the Plan. The amount which the Agent may borrow is determined as follows: 1. The Agent may borrow up to fifty percent (50%) of the VESTED ACCOUNT, but not more than the total value of the Pre-Tax Contribution, matured Employer Contribution, and Rollover Accounts, and further limited to a maximum loan in any event of $50,000. VESTED ACCOUNT is defined to mean the value of Pre-Tax Contributions, After-Tax Contributions, Vested Employer Contributions (if any), and the Rollover Account. 2. The $50,000 maximum loan referred to in (1) above will be further reduced by the highest outstanding loan balance for the previous 12-month period. 3. The loan will be evidenced by a written note which pro- vides for repayment by the Agent through payroll deduc- tion over a period of one, three or five years (10, 15, or 20 years if the loan is used to acquire a principal residence of the Agent, as defined by Section 267(c)(4) of the Code) and for interest at the then prevailing rate for loans of a similar nature. 4. The loan is subject to withdrawal restrictions applica- ble to the Funds in which the Pre-Tax Contribution Account, the matured Employer Contribution Account, and the Rollover Account are invested. 5. The Plan Administrator may from time to time impose such other terms and conditions that he shall determine in his sole discretion. 6. In the event that an Agent has an outstanding loan balance when his Pre-Tax Contribution Account is paid to him or to his beneficiary on account of death, disability, termination or attainment of age 59-1/2, the loan balance (including accrued interest) will be deducted from the amount otherwise payable. Distributions Vested Amounts Distribution of the Pre-Tax Contribution Account is not made until termination of service or attainment of age 59-1/2 (see below). All amounts in the Agent's non-matured Employer Contribution Account are transferred to the matured Employer Contribution Account as soon as practicable after December 31 of the year in which these contributions have been in the Plan for two years. An Agent who has invested in funds other than the LNC Stock Fund will generally not receive the underlying investment at distribution; subject, however, to the Plan Administrator directing the Trustee to make an in-kind distribution. Instead, the Trustee will distribute in cash the value of the Agent's proportionate share of the fund in which his contributions have been invested. Distributions from the LNC Stock Fund are, at the election of the Agent, in cash or in kind. (see "Fractional Shares" for treatment of fractional share interest in LNC Common Stock.) The amount in an Agent's Pre-Tax Contribution Account will only be distributed upon an Agent's death, disability, retirement or termination of service with the Company and all its affiliates. Death, Disability, Retirement or Termination of Service An Agent (or his beneficiary or legal representative in the event of his death) will be entitled to the full value of the Agent's Pre-Tax Contribution, Employer Contribution, and After-Tax Contribution Accounts upon the date of his termination of service by reason of death, disability or retirement ("Termination Date"). Such amount shall be paid in a lump sum, in accordance with the following rules: 1. If the total amount of the distribution is no more than $3,500 or if the distribution is to a Beneficiary on account of the death of a Agent, distribution shall be made either (i) as soon as practicable after the last day of the Plan Year in which an Agent's Termination Date occurs, unless the Plan Administrator in its sole discretion directs an earlier distribution; or (ii) in the case of an Agent's Termination Date prior to age 55, as soon as practicable after that Termination Date. 2. If the total amount of the distribution is greater than $3,500, the agent's termination date is prior to age 55, and the Agent has elected in a writing filed with the Plan Administrator to receive the distribution, distribution shall be made as soon as practicable after his Termination Date. 3. If the total amount of the distribution is greater than $3,500 and the Agent has not filed an election in accordance with Rule (2) above, distribution shall be made no later than the sixtieth calendar day next following the last day of the Plan Year in which the latest of the following occurs: (i) the Agent attains age 65 years; (ii) the Agent's Termination Date occurs; or (iii) the 10th anniversary of the Plan Year in which the Agent commenced his participation in the Plan. 4. If the account balances have not been distributed in accordance with the preceding three rules, then distribution shall be made no later than the April 1 next following the last day of the calendar year in which the Agent attains age 70-1/2 years, regardless of the Agent's termination date. If an Agent's service is terminated prior to age 55 and for any reason other than death or disability the balances in all of his accounts except the balance in his Employer Contribution Account which is non-vested and earnings thereon, will be distributable. In the event that an Agent forfeits amounts in his Employer Contribution Account and such Agent does not incur a 5-year-break-in- service, such forfeited amount shall be recredited to his Employer Contribution Account upon his return to service as an agent or employee of the Company or an affiliate, and shall vest in accordance with the Plan's vesting schedule. A 5-year-break-in-service is a period of five consecutive Plan Years, beginning with the Plan Year in which the Agent terminates, during which the Agent is not a full-time life insurance salesman under the Internal Revenue Code of 1986, as amended, a general agent, or an employee of an Employer or an Affiliate on the last day of each Plan Year. For the purposes of determining a break-in-service, any Plan Year in which an Agent is absent from work on the last day of the Plan Year on account of pregnancy of the Agent; the birth of a child of the Agent; the placement of a child with the Agent in connection with the adoption of that child by that Agent; or the care of a child for a period beginning immediately after a child's birth or placement because of the preceding three reasons, and the Agent is a full-time life insurance salesman under the Federal Income Contributions Act, a general agent, or an employee of an Employer, Related Company or Affiliate on the last day of the Plan Year next following the Plan Year in which the Agent's termination occurs, shall not be counted in determining the break-in- service. If an Agent is no longer a full-time life insurance salesman and becomes an employee of the Company or of an affiliate, no further contributions will be made on behalf of that Agent and the securities and cash in his Employer Contribution Account will continue to vest. Fractional Shares Interests in fractional shares of LNC Common Stock will not be subject to distribution or withdrawal. Rather, fractional share interests in LNC Common Stock will be paid in cash on the basis of the market value of such security, as of the valuation date immediately preceding the date of distribution, termination of service or withdrawal, as may be applicable. Employer Contribution Account Automatic Crediting of Account Balances. Two years after the end of any given Plan Year, the then value of an Agent's non-matured Employer Contribution Account from that given year shall be automatically credited to the matured Employer Contribution Account as of the Valuation Date following the end of that given Plan Year. Withdrawals from the Employer Contribution Account. Subject to certain restrictions, an Agent may from time to time with- draw all or any part of the assets in his matured Employer Contribution Account. (See "Withdrawals") Investment of Contributions The Trustee will administer the matured Employer Contribution Account assets in a manner similar to that applicable to the other accounts until the Agent's Termination Date (see "Investment of Contributions"). Beneficiary Designation Each Agent may designate on an appropriate form filed with the Plan Administrator, a beneficiary or beneficiaries to whom, in the event of the Agent's death, any securities and cash to which the Agent is entitled under the Plan will be payable. A beneficiary designation may be changed or can- celled by an Agent from time to time by filing an appropriate form with the Plan Administrator. If the Agent was married on the date of his death, his surviving spouse shall be deemed to be his Beneficiary, unless that survi- ving spouse has consented (in the manner required by the Code) by writing filed with the Plan Administrator in such form as it may require, to the otherwise effective Beneficiary designation by the Agent. If no Beneficiary designated by the Agent survives to receive payment of benefits on account of the death of the Agent, then payment shall be made to the Agent's surviving spouse, if any, or, if none, to the estate of the Agent. Assignment No right or interest of any Agent or beneficiary in the Plan is assign- able or transferable in whole or in part, either directly or by operation of law or otherwise, including, without limitation, execution, levy, garnish- ment, attachment, pledge, or bankruptcy, except in connection with a loan from the Plan to an Agent, or as provided under the terms of a qualified domestic relations order (as defined in 414(p) of the Code) as determined by the Plan Administrator. Amendment or Termination By action of its Board of Directors, the Company may terminate or amend the Plan or suspend the operation of any provision of the Plan, provided, however, that: 1. No amendment shall be made which will result in the recovery by an Employer of any part of its contribution to the Plan, except under limited circumstances as may be provided under the trust agreement and permitted under the Code; 2. Any amendment that affects the rights and duties of the Trustee may be made only with the consent of the Trustee; 3. No amendment of the Plan shall affect the rights of an Agent as to the continuance of vesting of such securities and cash attributable to Employer contributions or earnings thereon; 4. Upon the termination or suspension of the Plan, the rights of all Agents to the amounts credited to their account as of the date of such termination or suspension shall be nonforfeitable. An Employer may at any time by action of its Board of Directors termi- nate the participation of its Agents in the Plan by giving to the Plan Administrator a certified copy of such resolution. At such time as an Employer ceases to be an affiliate of the Company, the Plan shall terminate as to such Employer and its Agents. Upon termination of an Employer's participation in the Plan, the Trustee shall make available for distribution amounts attributable to the participants as to whom the Plan terminated, except as to such arrangements as a terminating Employer may make with the Plan Administrator. Administration of the Plan Trustee The Company, acting by its Board of Directors, has the authority to appoint one or more individuals or corporations to act as Trustee. The Trustee is responsible for the custody, investment and distribution of Plan assets. No specific bond is furnished by the Trustee in connection with custody of Plan assets. The Trustee, Norwest Bank Fort Wayne, N.A., 116 East Berry Street, Fort Wayne, Indiana, 46802 ("NBFW"), is a major banking facility used in processing monies received by the Company and its affiliates and is the principal bank through which the Company and its affiliates make payments to policyholders and others. As of April 21, 1995, the Company and its affiliates owned no outstanding common stock of the trustee. The Trustee, in its capacity as trustee for various corporations and individuals, may own shares of LNC Common Stock for its beneficiaries. The Trustee serves pursuant to the terms of a written trust agreement. This agreement is available for inspection by Plan participants. The Com- pany may discharge or remove the Trustee and appoint a successor Trustee upon 30 days' written notice to the Trustee; provided, however, that such successor is a banking institution legally qualified to serve as a Trustee. In the event of discharge or removal, the Trustee agrees to transfer the Trust assets to its named successor, and upon such transfer, the Trustee will be discharged and relieved of its duties. In the event of discontin- uance of the Plan, the Trust Agreement may be discontinued by action of the Company's Board of Directors; provided, however, that until all assets of the trust have been distributed, the Trustee will have all the rights and powers given to it by the Trust Agreement. The Employers assume all expenses reasonably incurred by the Trustee in connection with the administration and operation of the trust and the Plan. The Trustee receives no compensation from the assets of the Plan. Plan Administrator The LNC Benefits Committee ("Committee")is the Plan Administrator and Named Fiduciary. Members of the Committee are appointed by the Chief Executive Officer of LNC. A listing of current members appears below. Members of the Committee are "named fiduciaries", as that term is defined by ERISA, and, as such, have the authority to control and manage the operation and administration of the Plan. Members of the Committee receive no compensation from the Plan. The Committee's responsibilities include enforcing the Plan in accordance with its terms; determining all questions arising under the Plan (including determinations of eligibility and of benefits payable); and directing payments of benefits. In aid of its responsibilities, the Committee is empowered to adopt regulations and procedures necessary for the proper and efficient administration of the Plan. A Committee member may resign by giving 10 days' written notice to the Company, to the Employer, and to the other Committee members. The Company may remove a member at any time by giving advanced written notice to the member, to the Employers, and to the other Committee members. MEMBERS OF THE LINCOLN NATIONAL CORPORATION BENEFITS COMMITTEE Committee Name Title Title - --------------------------------------------------------------------------- Frederick P. Farkas Chairman Second Vice President of LNC George E. Davis Member Senior Vice President of LNC Peter P. Fettig Member Assistant Secretary of LNL Collin Kebo Member American States Insurance Company B. Jane Kite Member Assistant Vice President of Lincoln National Life Reinsurance Company Jan A. Tindall Member Assistant Vice President of LNL
The business address of Messrs. Farkas, Davis, and Fettig is 200 E. Berry Street, Fort Wayne, Indiana 46802; the business address of Mr. Kebo is 500 North Meridian Street, Post Office Box 1636, Indianapolis, Indiana, 46206; the business address of Ms. Kite is One Reinsurance Place, 1700 Magnavox Way, Fort Wayne, Indiana, 46804; the business address of Ms. Tindall is 1300 South Clinton Street, Fort Wayne, Indiana 46802. Voting of Shares Voting rights with respect to all securities held by the Plan will be exercised by the Trustee or by a proxy solicited by the Trustee. Federal Income Tax Consequences The following is a general discussion of the federal income tax effects of participation in the plan based on provisions of the Code and applicable regulations as in effect as of the date of this Supplement to the Prospectus. The actual tax consequences for any individual will depend on his or her own circumstances. EACH AGENT SHOULD CONSULT A QUALIFIED TAX ADVISER TO DETERMINE THE APPLICATION OF THE FEDERAL INCOME TAX LAWS TO HIS OR HER INDIVIDUAL CIRCUMSTANCES. The Plan is a qualified employee benefit plan under Section 401(a) of the Code. Employer contributions to the plan are deductible by the Employers under Section 404(a) of the Code. Agents will not be subject to Federal Income Tax on employer contributions, on their contributions, or on income of the trust except to the extent they receive distribution or withdrawals from the Plan. Agents will not be taxed on loans from the Plan made in accordance with Federal Tax requirements if they are repaid in accordance with their terms. Agents' pre-tax contributions will, however, be subject to social security taxes and federal unemployment taxes. Income of the trust is exempt from federal income tax. The Code limits current contributions to the lesser of 15% of compensa- tion or $7,000 annually, with certain cost of living adjustments ($9,240.00 for the 1995 tax year). The Code also requires that the sum of pre-tax contributions, Employer contributions plus all after-tax contributions may not exceed the lesser of 25% of compensation or $30,000.00 (also subject to certain cost of living adjustments). Amounts received by an Agent upon withdrawal prior to termination of service will be taxable as ordinary income to the extent that the amounts received exceed the amount of that Agent's after-tax contributions made prior to January 1, 1987 and not previously received ("Net Unrecovered Contributions"). Once the amount of after-tax contributions made prior to January 1, 1987, is deemed to have been recovered, subsequent distributions will be taxed as pro-rata distributions of after-tax contributions and earn- ings thereon. If the Agent receives LNC Common Stock, the fair market value of the stock on the date of distribution over its basis ("Net Unrealized Appreciation") attributable to that Agent's after-tax contributions will not be taxed at the time of distribution (unless the Agent elects to be taxed at that time, under procedures to be prescribed by the IRS). In general, a distribution under the Plan upon an Agent's retirement, disability, death, or other separation from service is taxable as ordinary income to the extent that it exceeds the amount of the Agent's Net Unrecovered Contributions and Net Unrealized Appreciation attributed to the Agent's after- tax contributions (unless the Agent elects to be taxed on this latter amount). However, if distribution of all amounts to the Agent's credit under the Plan is received within one taxable year in a lump sum distribution as defined in Section 402(e) of the Code and the Agent does not rollover all or a part of the lump sum distribution, the Agent will be taxed as follows: 1. The Net Unrecovered Contributions and the total Net Unrealized Appreciation in LNC Common Stock received are not taxable to the Agent. 2. The remaining amount is taxable to the Agent as ordinary income and may be eligible for a special income averaging method of taxation. The special income averaging rules, for amounts distributed, have been modified, subject to transi- tional rules for individuals who attained age 50 before January 1, 1986. An Agent may also be eligible to make a tax-free rollover of a distri- bution of the Agent's Accounts. In general, the amount that may be rolled over is the taxable portion of the distribution. If less than 100% of the balance of the Agent's Accounts is distributed, any subsequent distribution will not be eligible for the special lump sum distribution rules described above. If 100% of the balance of the Agent's Accounts is distributed, the rollover may be made to an individual retirement account or annuity or to another qualified plan. Rollovers must be made within 60 days of receipt of the distribution and are subject to other rules. The Code provisions for required distributions from the Plan have been modified and require distributions to commence by April 1 of the calendar year after an Agent attains age 70-1/2, even if the Agent has not separated from service. Distributions prior to death, disability or age 59-1/2 are subject to a penalty tax of 10% of the taxable amount distributed unless certain exceptions are applicable. A 15% penalty tax will generally be imposed on the aggregate amount of distributions from the Plan and other specified retirement arrangements in excess of $150,000 annually, subject to transitional rules and certain other special rules. For purposes of taxation on the subsequent sale or disposition of any LNC Common Stock received by an Agent in a distribution, the Agent's basis in the stock will be equal to the sum of the amount of the distribution that is required to be included as income by the Agent in the year of distribution plus the amount, if any, of the distribution of the LNC Common Stock attributable to the Agent's after-tax contributions (plus any other amount of the distribution of LNC Common Stock on which the Agent was taxed at his election at the time of distribution). Upon the sale or other taxable dis- position of the LNC Common Stock acquired from the Plan as a lump sum dis- tribution as defined in Section 402(e) of the Code, any gain up to the amount of the Net Unrealized Appreciation which was not taxed at the time of distribution shall be treated as long-term capital gain. Any additional gain on LNC Common Stock acquired in a lump sum distribution will be treated as long-term or short-term capital gain, depending on the combined holding period of the Plan and the Seller. All gain on LNC Common Stock acquired from the Plan other than a lump sum distribution, will be treated as long-term or short-term capital gain, depending on the Seller's holding period. Long-term capital gains generally are taxed at the same rates as ordinary income, but capital gains will still be offset against capital losses. If an Agent dies, the amount of the distribution paid to his estate or beneficiary which is attributable to Employer contributions, up to $5,000, may be exempt from federal income tax. Generally, the amount which is not exempt from federal income tax will be taxable to the beneficiary under the same rules which are applicable to distributions to the Agent. A benefici- ary who is the surviving spouse of the Agent may be eligible to make a tax- free rollover of a distribution under the same rules applicable to rollovers by Agents. Other beneficiaries may not make rollovers. Tax and Withholding Under the Unemployment Compensation Amendments of 1992 ("UCA"), twenty percent (20%) income tax withholding may apply to "eligible rollover distri- butions." All taxable distributions from the Plan are "eligible rollover distributions," except (1) annuities paid out over life or life expectancy, (2) installments paid for a period spanning ten (10) years or more, and (3) required minimum distributions. The UCA imposes mandatory twenty percent (20%) income tax withholding on any eligible rollover distribution that an Agent does not elect to have paid in a direct rollover to another qualified plan, or individual retirement account. In the event a distribution is comprised of LNC Common Stock, LNC Common Stock is not required to be sold to satisfy income tax withholding requirements. Employee Retirement Income Security Act of 1974 The Plan is subject to many of the provisions of the Employee Retire- ment Income Security Act of 1974 (ERISA). Principal among these are ERISA requirements regarding reporting and disclosure to government agencies and participants, fiduciary responsibility and transactions with parties-in- interest. The Plan is a profit-sharing plan and is, therefore, not subject to the funding standards of Title I of ERISA. The Plan is an "individual account plan," and is, therefore, not covered by the plan termination insurance program of Title IV of ERISA which is administered by the Pension Benefit Guaranty Corporation. Agents' Rights Under ERISA Agents in the Plan are entitled to certain rights and protections under ERISA. ERISA provides that all Plan participants are entitled to: Examine, without charge, at the Plan Administrator's office and at other locations, all Plan documents including copies of all documents filed by the Plan Administrator with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions. Obtain copies of all Plan documents and other Plan informa- tion upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report. In addition to creating rights for Plan participants, ERISA imposes duties upon the persons who are responsible for the operation of the Plan. The persons who operate the Plan, called "fiduciaries," have a duty to do so prudently and in the interest of Plan participants and beneficiaries. Fiduciaries who violate ERISA may be removed and required to repay losses they have caused the Plan. No one, including an Employer, a union, or any other person, may fire or otherwise discriminate against an Agent in any way to prevent him from obtaining a Plan benefit or exercising any rights under ERISA. If a claim for Plan benefits is denied in whole or in part, a written explanation of the reason for the denial must be provided to the claimant. The claimant has the right to have the Plan Administrator review and reconsider a claim. Under ERISA, there are steps an Agent can take to enforce the above rights. For instance, if a participant requests materials from the Plan Administrator and does not receive them within 30 days, he may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay up to $100 a day until the materials are provided, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If a participant has a claim for benefits which is denied or ignored, in whole or in part, he may file suit in a state or federal court. If the Plan fiduciaries misuse the Plan's money, or if a participant is discriminated against for asserting any of his rights, the participant may seek assistance from the U.S. Department of Labor, or may file suit in a federal court. The court will decide who should pay court costs and legal fees. If the participant is successful, the court may order the person he has sued to pay these costs and fees. If the participant loses, the court may order the participant to pay these costs and fees, for example, if it finds the claim is frivolous. If a participant has any questions about the Plan, he should contact the Plan Administrator. If a participant has any questions about this statement or about his rights under ERISA, he should contact the nearest Area Office of the U.S. Labor-Management Services Administration, Department of Labor. Participation Interests are Securities Agents participating in the Plan acquire an interest in the Plan assets held and administered by the Trustee. This interest is itself a security and its acquisition entails the risk of loss as well as the possibility of gain. The character and extent of the participant's interest in the Plan assets and his rights and options in relation thereto are discussed in detail beginning on page 4 of this Prospectus. Before deciding to participate, Agents should carefully consider and assess the risks and opportunities in view of their individual situation. Financial Statements The Statements of Net Assets Available for Plan Benefits as of December 31, 1994 and 1993, and the related Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 1994, 1993 and 1992, and the report of Ernst & Young LLP, independent auditors, thereon, appear elsewhere herein, and in the Registration Statement. LINCOLN NATIONAL CORPORATION COMMON STOCK The Plan enables Agents to acquire shares of LNC Common Stock. LNC is authorized to issue 800,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. LNC currently has three Series of Preferred Stock: 1) $3.00 Cumulative Convertible Preferred Stock, Series A ("Series A Preferred Stock"); 2) 5 1/2% Cumulative Convertible, Exchangeable Preferred Stock, Series E ("Series E Preferred Stock"); and 3) 5 1/2% Cumulative Convertible, Exchangeable Preferred Stock, Series F ("Series F Preferred Stock"). A portion of the shares of Common Stock is authorized for quotation on the New York, Midwest, Pacific, London And Tokyo Stock Exchanges. A portion of the shares of Series A Preferred Stock is authorized for quotation on the New York and Midwest Stock Exchanges. On March 18, 1995, the following number of shares was issued and outstanding: Common Stock: 94,725,811; Series A Preferred Stock: 46,306; Series E Preferred Stock: 2,201,443; Series F Preferred Stock: 2,216,454. The following brief summary contains certain information regarding the LNC Common Stock and does not purport to be complete, but is qualified in its entirety by reference to the LNC Articles of Incorporation, The Indiana General Corporation Act, and the LNC By-laws. The Articles of Incorporation of LNC contain provisions relating to the size, classification and removal of directors, and to the fair pricing of LNC stock, which could have the effect of delaying, deferring, or preventing a hostile or unsolicited attempt to gain control of LNC. Dividend Rights Holders of Common Stock are entitled to dividends when and as declared by the Board of Directors out of funds legally available for the payment of dividends after dividends accrued on all preferred or special classes of shares entitled to preferential dividends have been paid, or declared and set apart for payment. Voting Rights Each shareholder of LNC Common Stock has the right to one vote for each share of LNC Common Stock standing in his name on the books of LNC on each matter submitted to a vote at any meeting of the shareholders. The vote of holders of at least three-fourths of the outstanding shares of LNC Common Stock is necessary to approve (i) the sale, lease, exchange, mortgage, pledge or other disposition of the shares of LNC Common Stock and (ii) the removal of any or all members of the Board of Directors of LNC. Liquidation Rights On any liquidation or dissolution of LNC the holders of LNC Common Stock are entitled to share ratably in such assets of LNC as remain after due payment or provision for payment of the debts and other liabilities of LNC including amounts to which the holders of preferred or special classes of shares may be entitled. Pre-Emptive Rights Holders of LNC Common Stock have no pre-emptive right to subscribe for or purchase additional issues of shares or any treasury shares of LNC Common Stock. Assessment The LNC Common Stock issued and outstanding is fully paid and non- assessable, and the LNC Common Stock when issued upon conversion of the Series A, E and F Preferred Stock will be fully paid and non-assessable. Modification of Rights The rights of holders of LNC Common Stock are subject to the preference granted to the holders of the Series A, E and F Preferred Stock and any additional preferred stock of LNC. Holders of Series A, E and F Preferred Stock have the right to vote, upon the basis of one vote per share, together with the holders of LNC Common Stock, upon matters submitted to shareholders; and, to vote as a class, to elect two directors at the next annual meeting of shareholders if six or more quarterly dividends on the Series A, E and F Preferred Stock shall be in default. Other Provisions The LNC Common Stock has no conversion rights or cumulative voting rights for the election of directors. There are no restrictions on the repurchase or redemption of shares of LNC Common Stock from funds legally available therefor. First National Bank of Boston acts as Transfer Agent and Registrar for the LNC Common Stock. INDEMNIFICATION OF OFFICERS, DIRECTORS, AND EMPLOYEES The By-Laws of LNC and the Company, pursuant to authority contained in the Indiana Business Corporation Law and the Indiana Insurance Law, provide for the indemnification of their officers, directors, and employees against reasonable expenses that may be incurred by them in connection with the defense of any action, suit or proceeding to which they are made or threatened to be made parties except with respect to matters as to which they are adjudged liable for negligence or misconduct in the performance of duties to their respective corporations. LNC and the Company may also reimburse such officers, directors, and employees for reasonable costs of settlement of any such action, suit or proceeding. In the case of directors, a determination as to whether indemnification or reimbursement is proper shall be made by a majority of the disinterested directors or a committee thereof or by special legal counsel. In the case of individuals who are not directors, such determination shall be made by the chief executive officer of the respective corporation or, if he so directs, in the manner it would be made if the individual were a director of the corporation. Such indemnification may apply to claims arising under the Securities Act of 1933, as amended. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling LNC and the Company pursuant to the foregoing provisions, LNC and the Company have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in that Act and therefore unenforceable. EXPERTS The financial statements and schedules of Lincoln National Corporation and The Lincoln National Life Insurance Company Agents' Savings and Profit- Sharing Plan appearing or incorporated by reference in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein and in the Registration Statement or incorporated by reference. The financial statements and schedules have been included herein or incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. LEGAL OPINION Certain matters with respect to the LNC Common Stock to which this Prospectus relates were passed upon for LNC by John L. Steinkamp, Esquire, Associate General Counsel of LNC, 200 East Berry Street, Fort Wayne, Indiana 46802. Certain matters with respect to the interests in the Plan to which this Prospectus relates were passed upon for the Plan by Jacquelyn M. Abbott, Esquire, Senior Counsel of LNC, 1300 South Clinton Street, Fort Wayne, Indiana 46802. INCORPORATION OF ADDITIONAL DOCUMENTS BY REFERENCE LNC hereby incorporates the following documents by reference into this prospectus: 1. LNC's 1994 Annual Report on Form 10-K filed pursuant to the Securities Exchange Act of 1934 (the "1934 Act"). 2. All other LNC reports filed pursuant to Section 13(a) or 15 (d) of the 1934 Act since December 31, 1994. 3. LNC's definitive proxy statement filed pursuant to Section 14 of the 1934 Act in connection with LNC's latest annual meeting of stockholders. 4. The description of LNC Common Stock contained in Form 10 filed by LNC pursuant to the 1934 Act on April 28, 1969, including any amendment or reports filed for the purpose of updating such description. In addition, all documents filed by LNC with the Commission pursuant to Sections 13, 14, and 15(d) of the 1934 Act prior to the termination of the offering made hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part thereof from the date of filing of such documents. Financial Statements Year Ended December 31, 1994 The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Fort Wayne, Indiana The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Financial Statements Years ended December 31, 1994, 1993 and 1992 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Net Assets Available for Plan Benefits 2 Statements of Changes in Net Assets Available for Plan Benefits 3 Notes to Financial Statements 4 -iii- Report of Independent Auditors Lincoln National Corporation Benefits Investment Committee Lincoln National Corporation We have audited the accompanying statements of net assets available for plan benefits of The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan as of December 31, 1994 and 1993, and the related statements of changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 1994 and 1993, and the changes in its net assets available for plan benefits for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP March 10, 1995 -1- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan
Statements of Net Assets Available for Plan Benefits December 31 1994 1993 Assets Investments (Notes 3, 7 and 8): Common stock-Lincoln National Corporation (cost: 1994-$24,599,109; 1993-$19,799,192) $28,245,385 $30,625,566 Segregated investment accounts-The Lincoln National Life Insurance Company Separate Accounts (cost: 1994-$15,974,421; 1993-$12,740,656) 19,372,295 17,039,061 Unallocated insurance contracts-The Lincoln National Life Insurance Company 10,725,398 10,431,214 Participant loans 2,809,857 2,761,764 Total investments 61,152,935 60,857,605 Accrued interest receivable 5,640 6,509 Cash and invested cash 495,281 326,609 Other receivables -- 51,905 Contributions receivable- The Lincoln National Life Insurance Company 2,829,134 3,206,975 Total assets 64,482,990 64,449,603 Miscellaneous payables 84,871 30,367 Net assets available for plan benefits $64,398,119 $64,419,236 See accompanying notes.
-2- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan
Statements of Changes in Net Assets Available for Plan Benefits Year ended December 31 1994 1993 1992 Investment income: Cash dividends-Lincoln National Corporation $ 1,239,781 $ 1,031,836 $ 960,231 Interest: The Lincoln National Life Insurance Company 746,163 665,851 703,971 Other 227,602 252,487 247,825 Total interest 973,765 918,338 951,796 Total investment income 2,213,546 1,950,174 1,912,027 Net realized gain on sale, distribution and forfeitures of investments (Note 3): Common stock-Lincoln National Corporation 694,283 1,422,975 948,569 Segregated investment accounts- The Lincoln National Life Insurance Company Separate Accounts 704,323 424,288 402,143 Total net realized gain on sale 1,398,606 1,847,263 1,350,712 Net unrealized appreciation (depreciation) of investments (Note 3) (8,080,629) 3,742,424 5,754,416 Contributions: Agents 4,603,511 4,364,477 3,700,880 The Lincoln National Life Insurance Company (net of forfeitures: 1994-$3,355; 1993-$323; 1992-$1,238) 3,351,434 3,806,346 2,988,118 Total contributions 7,954,945 8,170,823 6,688,998 Distributions to participants (deduction) (3,413,968) (3,823,008) ( 2,674,106) Administrative expenses (deduction) (Note 7) (93,617) (56,171) -- Net increase (decrease) in net assets available for plan benefits (21,117) 11,831,505 13,032,047 Net assets available for plan benefits at beginning of the year 64,419,236 52,587,731 39,555,684 Net assets available for plan benefit at end of the year $64,398,119 $64,419,236 $52,587,731 See accompanying notes. -3-
The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements December 31, 1994 1. Significant Accounting Policies Investments The investment in Lincoln National Corporation ("LNC") common stock is valued at the last reported sales price per the national securities exchange on the last business day of the year. The fair value of the participation units owned by the The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan ("Plan") in segregated investment accounts is based on quoted redemption value on the last business day of the year. The unallocated insurance contracts are valued at contract value as estimated by The Lincoln National Life Insurance Company ("Company"). Contract value represents net contributions made under the contract plus interest at the contract rate. Participant loans are valued at cost which approximates fair value. The cost of investments sold, distributed or forfeited is determined using the average cost method. 2. Description of the Plan The Plan is a contributory, defined contribution plan which covers eligible agents of the Company. Any person 21 years of age or older who is a full-time agent of the Company is eligible to enroll in the Plan if the agent has completed one eligibility year of service as defined in the Plan agreement. A participant may make pre-tax contributions at a rate of at least 1%, but not more than 15% of earned commissions, up to a maximum annual amount as determined and adjusted annually by the Internal Revenue Service ("IRS"). Prior to January 1, 1989, the Plan accepted after-tax contributions at rates as defined in the Plan agreement. Participants direct the Plan to invest their contributions in any combination of the investment options as described in Note 4. Participants can direct employer contributions, but only after the contributions have been in the Plan for two full plan years following the plan year for which they were contributed. -4- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 2. Description of the Plan (continued) The Company's contributions to the Plan are based on an amount equal to a participant's contributions, not to exceed 6% of eligible earnings, multiplied by a percentage, ranging from 25% to 150%, which varies according to LNC's increase in book value in relation to similar companies in the insurance industry. The Company's contributions are invested in the LNC Common Stock Fund. Agents are fully vested in their contributions. The Company contributions vest based upon years of service as defined in the Plan agreement as follows: Years of Service Percent Vested 1 0% 2 50% 3 or more 100% The Plan allows loans to participants in amounts up to 50% of the vested account value to a maximum of $50,000 but not more than the total value of the pre-tax account plus the retirement option account, less the highest outstanding loan balance in the previous twelve month period. The Company has the right under the Plan to discontinue contributions at any time and terminate the Plan. In the event of termination of the Plan, all amounts allocated to participants' accounts shall become vested. -5- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 3. Investment The following is a summary of assets held for investment: December 31, 1994 December 31, 1993 Number of Market Number of Market Shares Value Shares Value Common stock-Lincoln National Corporation 807,011 $28,245,385 704,036 $30,625,566 Segregated investment accounts-The Lincoln National Life Insurance Company Separate Accounts: U.S. Government Bond Fund 473,960.551 603,684 555,928.450 718,722 Core Equity Fund 1,219,492.936 6,136,775 1,246,703.712 6,172,485 Medium Capitalization Equity Fund 816,126.469 4,774,932 743,490.277 4,484,882 Short-Term Fund 450,952.570 1,117,774 558,333.482 1,331,690 Government/Corporate Bond Fund 214,023.379 856,606 234,598.932 977,581 Large Capitalization Equity Fund 992,370.701 3,692,555 872,313.615 3,353,701 Balanced Fund 39,585.942 126,049 -- -- High Yield Bond Fund 50,940.273 81,173 -- -- Small Capitalization Equity Fund 150,548.518 401,161 -- -- Value Equity Fund 217,759.920 229,030 -- -- International Equity Fund 327,689.633 1,352,556 -- -- Total segregated investment accounts 19,372,295 17,039,061
-6- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 3. Investments (continued) December 31, 1994 December 31, 1993 Par Market Par Market Amount Value Amount Value Unallocated insurance contracts-The Lincoln National Life Insurance Company $10,725,398 $10,725,398 $10,431,214 $10,431,214 Participant loans 2,809,857 2,809,857 2,761,764 2,761,764 Total investments $61,152,935 $60,857,605
Net realized gain on sale, distribution and forfeitures of investments is summarized as follows: Year ended December 31 1994 1993 1992 Common stock: Proceeds from disposition of stock $6,145,172 $4,695,158 $7,041,177 Cost of stock disposed 5,450,889 3,272,183 6,092,608 Net realized gain on sale, distribution and forfeitures of common stock $ 694,283 $1,422,975 $ 948,569 Segregated investment accounts: Proceeds from disposition of units $4,329,973 $3,664,248 $3,154,773 Cost of units disposed 3,625,650 3,239,960 2,752,630 Net realized gain on sale, distribution and forfeitures of common stock $ 704,323 $ 424,288 $ 402,143
-7- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 3. Investments (continued) The net unrealized appreciation (depreciation) of investments in total and by investment classification is summarized as follows: Year ended December 31 1994 1993 1992 Market value in excess of cost: At beginning of the year $15,124,779 $11,382,355 $ 5,627,939 At end of the year 7,044,150 15,124,779 11,382,355 Net unrealized appreciation (depreciation) of investments $(8,080,629) $ 3,742,424 $ 5,754,416 Common stock $(7,180,098) $ 2,819,868 $ 5,370,972 Segregated investment accounts (900,531) 922,556 383,444 Net unrealized appreciation (depreciation) of investments $(8,080,629) $ 3,742,424 $ 5,754,416
-8- SEE PAGES 9 TO 11 FOLLOWING PAGE 15 The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 4. Investment Options (continued) Information with respect to investment options is as follows: Option Description of Investment Option 1 LNC Common Stock Fund, which invests exclusively in the stock of Lincoln National Corporation. 2 U.S. Government Bond Fund, which invests primarily in bonds backed by the United States government that will mature in 3 to 5 years. 3 Guaranteed Fund, which invests primarily in contracts which guarantee a rate of return and principal. 4 Core Equity Fund, which invests primarily in large capitalization stocks of well-established companies. 5 Medium Capitalization Equity Fund, which invests primarily in medium-sized companies. 6 Short-Term Fund, which invests in high quality money market securities that include commercial paper, bankers acceptances, certificates of deposit, loan participation and short-term U.S. government debt. 7 Government/Corporate Bond Fund, which invests primarily in corporate and U.S. government bonds and mortgage-backed securities. 8 Large Capitalization Equity Fund, which invests primarily in high-risk common stocks which have the potential for a significant appreciation in value within 18 months from the date of purchase. -12- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 4. Investment Options (continued) Option Description of Investment Option 9 Balanced Fund, which invests in three different asset classes: stocks, bonds and money market instruments, which provides growth through the stock portion and reduced risk through the bond and money market portion. 10 High Yield Bond Fund, which invests primarily in below-investment-grade bonds, providing higher rates of return to compensate higher risk. 11 Small Capitalization Equity Fund, which invests primarily in the stock of new, rapid growth companies. 12 Value Equity Fund, which invests primarily in large capitalization stocks of undervalued companies that are industry leaders. 13 International Equity Fund, which invests primarily in stocks of non-United States companies. The information as to the number of agents selecting each investment option is not readily available. Beginning January 1, 1994, the Plan began offering investment options 9 through 13 noted above to participants. Interest charged on new loans to participants is established monthly based upon prevailing rates for similar loans. Loans are repaid over five or ten year periods depending on the purpose of the loan or when a participant withdraws from the Plan. 5. Income Tax Status The IRS ruled (February 9, 1995) that the Plan qualifies as defined by Section 401(a) of the Internal Revenue Code ("IRC") and, therefore, is not subject to tax under the present income tax laws. Further, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan's administrator is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. -13- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 6. Tax Implications to Participating Agents There are no income tax consequences to participating agents arising from their pre-tax contributions, the Company's contributions and income earned in the Plan until actual distribution or withdrawal from the Plan. The tax basis of securities distributed to the agent is provided by the Lincoln National Corporation Benefits Investment Committee. 7. Related Parties Transactions All investments held by the Plan and related investment transactions, except for short-term cash investments, were with the Company. Prior to January 1, 1993, the Company paid the third party adminstrative expenses of the Plan. Beginning in 1993, these expenses were paid by the Plan. Expenses incurred solely for the LNC Stock Fund are charged directly to the LNC Stock Fund while all other administrative expenses are charged to earnings of the other investment options based upon the market value of the respective funds applicable to each investment option. The Plan incurred administrative expenses of $93,617 and $56,171 in 1994 and 1993, respectively. 8. Concentrations of Credit Risks The Plan has investments in common stock of LNC, and in segregated investment accounts and unallocated insurance contracts with the Company of $28,245,385, $19,372,295 and $10,725,398, respectively, at December 31, 1994 (43.9%, 30.1% and 16.7% of net assets, respectively). LNC and the Company operate predominately in the insurance industry. -14- The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 9. Reconciliation of Financial Statements to 1994 Form 5500 The following is a reconciliation of net assets available for plan benefits per the financial statements to the 1994 Form 5500: December 31 1994 1993 Net assets available for plan benefits per the financial statements $64,398,119 $64,419,236 Amounts allocated to withdrawing participants (450,814) (289,810) Net assets available for plan benefits per the 1994 Form 5500 $63,947,305 $64,129,426
The following is a reconciliation of distributions to participants per the financial statements to the 1994 Form 5500: Year ended December 31, 1994 Distributions to participants per the financial statements $3,413,968 Add amounts allocated to withdrawing participants at December 31, 1994 450,814 Deduct amounts allocated to withdrawing participants at December 31, 1993 (289,810) Distributions to participants per the 1994 Form 5500 $3,574,972
Amounts allocated to withdrawing participants are recorded on the Form 5500 for distributions that have been processed and approved for payment prior to year-end but have not yet been paid. The Plan reported on the 1994 Form 5500 net realized losses and net unrealized depreciation of $2,369,251 (unaudited) and $4,312,772 (unaudited), respectively, for the year ended December 31, 1994. Such amounts, which differ from the amounts reported herein, were computed in accordance with the requirements of the Department of Labor. -15- PAGES 9 - 11 The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan Notes to Financial Statements (continued) 4. Investment Options The detail of the net assets available for plan benefits by investment option is as follows: December 31, 1994 Investment Options Total 1 2 Assets Investments: Common stock $28,245,385 $28,245,385 Segregated investment accounts 19,372,295 $603,684 Unallocated insurance contracts 10,725,398 Participant loans 2,809,857 Total investments 61,152,935 28,245,385 603,684 Accrued interest receivable 5,640 Cash and invested cash 495,281 87,428 Contribution receivable- The Lincoln National Life Insurance Company 2,829,134 2,829,134 Total assets 64,482,990 31,161,947 603,684 Miscellaneous payables (84,871) (33,439) Net assets available for plan benefits $64,398,119 $31,128,508 $603,684
3 4 5 Assets Investments: Common stock Segregated investment accounts $6,136,775 $4,774,932 Unallocated insurance contracts $10,725,398 Participant loans Total investments 10,725,398 6,136,775 4,774,932 Accrued interest receivable Cash and invested cash 262,880 39,223 55,801 Contribution receivable- The Lincoln National Life Insurance Company Total assets 10,988,278 6,175,998 4,830,733 Miscellaneous payables (210) (8,497) (16,823) Net assets available for plan benefits $10,988,068 $6,167,501 $4,813,910
6 7 8 Assets Investments: Common stock Segregated investment accounts $1,117,774 $856,606 $3,692,555 Unallocated insurance contracts Participant loans Total investments 1,117,774 856,606 3,692,555 Accrued interest receivable Cash and invested cash 1,422 32,506 Contribution receivable- The Lincoln National Life Insurance Company Total assets 1,119,196 856,606 3,725,061 Miscellaneous payables (9,881) Net assets available for plan benefits $1,119,196 $856,606 $3,715,180
9 10 11 Assets Investments: Common stock Segregated investment accounts $126,049 $81,173 $401,161 Unallocated insurance contracts Participant loans Total investments 126,049 81,173 401,161 Accrued interest receivable Cash and invested cash 2,000 3,000 Contribution receivable- The Lincoln National Life Insurance Company Total assets 126,049 83,173 404,161 Miscellaneous payables (2,000) (3,000) Net assets available for plan benefits $126,049 $81,173 $401,161
12 13 Loans Assets Investments: Common stock Segregated investment accounts $229,030 $1,352,556 Unallocated insurance contracts Participant loans $2,809,857 Total investments 229,030 1,352,556 2,809,857 Accrued interest receivable 5,640 Cash and invested cash 2,999 8,022 Contribution receivable- The Lincoln National Life Insurance Company Total assets 229,030 1,355,555 2,823,519 Miscellaneous payables (2,999) (8,022) Net assets available for plan benefits $229,030 $1,352,556 $2,815,497
December 31, 1993 Investment Options Total 1 2 Assets Investments: Common stock $30,625,566 $30,625,566 Segregated investment accounts 17,039,061 $718,722 Unallocated insurance contracts 10,431,214 Participant loans 2,761,764 Total investments 60,857,605 30,625,566 718,722 Accrued interest receivable 6,509 Cash and invested cash (overdraft) 326,609 117,647 (1,502) Other receivables 51,905 43,853 1,502 Contribution receivable- The Lincoln National Life Insurance Company 3,206,975 3,206,975 Total assets 64,449,603 33,994,041 718,722 Miscellaneous payables (30,367) (30,367) Net assets available for plan benefits $64,419,236 $33,963,674 $718,722
3 4 5 Assets Investments: Common stock Segregated investment accounts $6,172,485 $4,484,882 Unallocated insurance contracts $10,431,214 Participant loans Total investments 10,431,214 6,172,485 4,484,882 Accrued interest receivable Cash and invested cash (overdraft) (270) 172,119 (2,354) Other receivables 270 415 2,354 Contribution receivable- The Lincoln National Life Insurance Company Total assets 10,431,214 6,345,019 4,484,882 Miscellaneous payables -- -- -- Net assets available for plan benefits $10,431,214 $6,345,019 $4,484,882
6 7 8 Assets Investments: Common stock Segregated investment accounts $1,331,690 $997,581 $3,353,701 Unallocated insurance contracts Participant loans Total investments 1,331,690 997,581 3,353,701 Accrued interest receivable Cash and invested cash (overdraft) (1,011) (1,002) (1,495) Other receivables 1,011 1,002 1,495 Contribution receivable- The Lincoln National Life Insurance Company Total assets 1,331,690 997,581 3,353,701 Miscellaneous payables -- -- -- Net assets available for plan benefits $1,331,690 $997,581 $3,353,701
Loans Assets Investments: Common stock Segregated investment accounts Unallocated insurance contracts Participant loans $2,761,764 Total investments 2,761,764 Accrued interest receivable 6,509 Cash and invested cash (overdraft) 44,477 Other receivables 3 Contribution receivable- The Lincoln National Life Insurance Company Total assets 2,812,753 Miscellaneous payables Net assets available for plan benefits $2,812,753
-9- 4. Investment Options (continued) The detail of the changes in net assets available for plan benefits by investment option is as follows: Year ended December 31, 1994 Investment Options Total 1 2 Investment income: Cash dividends $ 1,239,781 $ 1,239,781 Interest 973,765 Total investment income 2,213,546 1,239,781 Net realized gain (loss) on sale, distribution and forfeitures of investments: Common stock 694,283 694,283 Segregated investment accounts 704,323 $ 16,784 Total net realized gain (loss) 1,398,606 694,283 16,784 Net unrealized appreciation (depreciation) of investments (8,080,629) (7,180,098) (26,448) Contributions: Agents 4,603,511 1,176,997 50,527 The Lincoln National Life Insurance Company 3,351,434 3,351,434 Total contributions 7,954,945 4,528,431 50,527 Distributions to participants (deduction) (3,413,968) (1,771,486) (84,469) Administrative expenses (deduction) (93,617) (78,744) (317) Net transfers (deduction) -- (267,333) (71,115) Net increase (decrease) in net assets available for plan benefits (21,117) (2,835,166) (115,038) Net assets available for plan benefits at beginning of the year 64,419,236 33,963,674 718,722 Net assets available for plan benefits at end of the year $64,398,119 $31,128,508 $603,684
3 4 5 Investment income: Cash dividends Interest $ 746,163 Total investment income 746,163 Net realized gain (loss) on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 279,387 $ 226,810 Total realized gain (loss) 279,387 226,810 Net unrealized appreciation (depreciation) of investments (169,276) (373,844) Contributions: Agents 432,329 725,798 765,034 The Lincoln National Life Insurance Company Total Contributions 432,329 725,798 765,034 Distributions to participants (deduction) (623,233) (393,695) (193,109) Administrative expenses (deduction) (5,563) (3,107) (2,411) Net transfers (deduction) 7,158 (616,625) (93,452) Net increase (decrease) in net assets available for plan benefits 556,854 (177,518) 329,028 Net assets available for plan benefits at beginning of the year 10,431,214 6,345,019 4,484,882 Net assets available for plan benefits at end of the year $10,988,068 $6,167,501 $4,813,910
6 7 8 Investment income: Cash dividends Interest Total investment income Net realized gain (loss) on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 65,801 $ 41,814 $ 73,006 Total net realized gain (loss) 65,801 41,814 73,006 Net unrealized appreciation (depreciation) of investments (19,300) (78,492) (194,754) Contributions: Agents 139,329 125,867 778,686 The Lincoln National Life Insurance Company Total Contributions 139,329 125,867 778,686 Distributions to participants (deduction) (20,387) (109,478) (121,048) Administrative expenses (deduction) (620) (448) (1,818) Net transfers (deduction) (377,317) (100,238) (172,593) Net increase (decrease) in net assets available for plan benefits (212,494) (120,975) 361,479 Net assets available for plan benefits at beginning of the year 1,331,690 977,581 3,353,701 Net assets available for plan benefits at end of the year $1,119,196 $856,606 $3,715,180
9 10 11 Investment income: Cash dividends Interest Total investment income Net realized gain (loss) on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 11 $ 21 $ 30 Total net realized gain (loss) 11 21 30 Net unrealized appreciation (depreciation) of investments 306 1,456 (2,408) Contributions: Agents 20,754 14,032 90,582 The Lincoln National Life Insurance Company Total Contributions 20,754 14,032 90,582 Distributions to participants (deduction) (25) (15) (361) Administrative expenses (deduction) (48) (11) (111) Net transfers (deduction) 105,051 65,690 313,429 Net increase (decrease) in net assets available for plan benefits 126,049 81,173 401,161 Net assets available for plan benefits at beginning of the year -- -- -- Net assets available for plan benefits at end of the year $126,049 $81,173 $401,161
12 13 Loans Investment income: Cash dividends Interest $ 227,602 Total investment income 227,602 Net realized gain (loss) on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 831 $ (172) Total net realized gain (loss) 831 (172) Net unrealized appreciation (depreciation) of investments 7,160 (44,931) Contributions: Agents 30,701 252,875 The Lincoln National Life Insurance Company Total Contributions 30,701 252,875 Distributions to participants (deduction) (658) (96,004) Administrative expenses (deduction) (59) (360) Net transfers (deduction) 190,397 1,145,802 (128,854) Net increase (decrease) in net assets available for plan benefits 229,030 1,352,556 2,744 Net assets available for plan benefits at beginning of the year -- -- 2,812,753 Net assets available for plan benefits at end of the year $229,030 $1,352,556 $2,815,497
Year ended December 31, 1993 Investment Options Total 1 2 Investment income: Cash dividends $1,031,836 $1,031,836 Interest 918,338 Total investment income 1,950,174 1,031,836 Net realized gain on sale, distribution and forfeitures of investments: Common stock 1,422,975 1,422,975 Segregated investment accounts 424,288 $ 30,713 Total net realized gain 1,847,263 1,422,975 30,713 Net unrealized appreciation (depreciation) of investments 3,742,424 2,819,868 13,065 Contributions: Agents 4,364,477 1,246,320 70,397 The Lincoln National Life Insurance Company 3,806,346 3,806,346 Total Contributions 8,170,823 5,052,666 70,397 Distributions to participants (deduction) (3,823,008) (2,085,728) (96,162) Administrative expenses (deduction) (56,171) (40,293) (445) Net transfers (deduction) (310,428) (36,902) Net increase (decrease) in net available for plan benefits 11,831,505 7,890,896 (19,334) Net assets available for plan benefits at beginning of the year 52,587,731 26,072,778 738,056 Net assets available for plan benefits at end of the year $64,419,236 $33,963,674 $718,722
3 4 5 Investment income: Cash dividends Interest $ 665,851 Total investment income 665,851 Net realized gain on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 134,993 $ 119,958 Net realized gain 134,993 119,958 Net unrealized appreciation (depreciation) of investments 436,205 198,293 Contributions: Agents 631,515 831,779 725,553 The Lincoln National Life Insurance Company Total Contributions 631,515 831,779 725,553 Distributions to participants (deduction) (1,084,881) (5,515) (269,254) Administrative expenses (deduction) (6,248) (3,562) (2,409) Net transfers (deduction) 86,793 (229,862) 197,840 Net increase (decrease) in net available for plan benefits 293,030 1,164,038 969,981 Net assets available for plan benefits at beginning of the year 10,138,184 5,180,981 3,514,901 Net assets available for plan benefits at end of the year $10,431,214 $6,345,019 $4,484,882
6 7 8 Investment income: Cash dividends Interest Total investment income Net realized gain on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 36,281 $ 46,491 $ 55,852 Total net realized gain 36,281 46,491 55,852 Net unrealized appreciation (depreciation) of investments (11,404) 49,764 236,633 Contributions: Agents 93,977 129,777 635,159 The Lincoln National Life Insurance Company Total Contributions 93,977 129,777 635,159 Distributions to participants (deduction) (34,161) (52,390) (25,732) Administrative expenses (deduction) (828) (578) (1,808) Net transfers (deduction) (256,081) (94,229) 334,227 Net increase (decrease) in net available for plan benefits (172,216) 78,835 1,234,331 Net assets available for plan benefits at beginning of the year 1,503,906 898,746 2,119,370 Net assets available for plan benefits at end of the year $1,331,690 $977,581 $3,353,701
Loans Investment income: Cash dividends Interest $ 252,487 Total investment income 252,487 Net realized gain on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts Net unrealized appreciation (depreciation) of investments Contributions: Agents The Lincoln National Life Insurance Company Total Contributions Distributions to participants (deduction) (169,185) Administrative expenses (deduction) Net transfers (deduction) 308,642 Net increase (decrease) in net available for plan benefits 391,944 Net assets available for plan benefits at beginning of the year 2,420,809 Net assets available for plan benefits at end of the year $2,812,753
-10- 4. Investment Options (continued) The detail of the changes in net assets available for plan benefits by investment option is as follows: Year ended December 31, 1992 Investment Options Total 1 2 3 Investment income: Cash dividends $ 960,231 $ 960,231 Interest 951,796 $ 703,971 Total investment income 1,912,027 960,231 703,971 Net realized gain on sale, distribution and forfeitures of investments: Common stock 948,569 948,569 Segregated investment accounts 402,143 $ 25,857 Total net realized gain 1,350,712 948,569 25,857 Net unrealized appreciation (depreciation) of investments 5,754,416 5,370,972 18,469 Contributions: Agents 3,700,880 1,101,494 53,782 634,157 The Lincoln National Life Insurance Company 2,988,118 2,988,118 Total Contributions 6,688,998 4,089,612 53,782 634,157 Distributions to participants (deduction) (2,674,106) (1,341,691) (37,650) (683,002) Net transfers (deduction) (2,488,136) 25,335 1,391,747 Net increase in net assets available for plan benefits 13,032,047 7,539,557 85,793 2,046,873 Net assets available for plan benefits at beginning of the year 39,555,684 18,533,221 652,263 8,091,311 Net assets available for plan benefits at end of the year $52,587,731 $26,072,778 $738,056 $10,138,184
4 5 6 7 Investment income: Cash dividends Interest Total investment income Net realized gain on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 119,044 $ 140,906 $ 59,197 $ 34,831 Total net realized gain 119,044 140,906 59,197 34,831 Net unrealized appreciation (depreciation) of investments (7,000) 245,940 (7,590) 18,577 Contributions: Agents 793,120 444,698 118,822 96,678 The Lincoln National Life Insurance Company Total Contributions 793,120 444,698 118,822 96,678 Distributions to participants (deduction) (158,122) (126,437) (112,517) (42,182) Net transfers (deduction) 370,346 131,015 (911) 113,907 Net increase in net assets available for plan benefits 1,117,388 836,122 57,001 221,811 Net assets available for plan benefits at beginning of the year 4,063,593 2,678,779 1,446,905 676,935 Net assets available for plan benefits at end of the year $5,180,981 $3,514,901 $1,503,906 $898,746
8 Loans Investment income: Cash dividends Interest $ 247,825 Total investment income 247,825 Net realized gain on sale, distribution and forfeitures of investments: Common stock Segregated investment accounts $ 22,308 Total net realized gain 22,308 Net unrealized appreciation (depreciation) of investments 115,048 Contributions: Agents 458,129 The Lincoln National Life Insurance Company Total Contributions 458,129 Distributions to participants (deduction) (36,655) (135,850) Net transfers (deduction) 499,355 (42,658) Net increase in net assets available for plan benefits 1,058,185 69,317 Net assets available for plan benefits at beginning of the year 1,061,185 2,351,492 Net assets available for plan benefits at end of the year $2,119,370 $2,420,809
-11- FORM S-1 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution Reference is hereby made to Item 14 of Form S-3, "Other Expenses of Issuance and Distribution." Item 14. Indemnification of Directors and Officers Pursuant to Indiana law (IND. CODE ANN. Sec. 23-1-37-1 et seq. (Burns, 1989)), as amended from time to time, and to the respective by-laws of LNC and the Company, present and former directors, officers, or employees of LNC and the Company will be indemnified by their respective corporations against liability incurred in their capacities as directors, officers, or employees, or arising from their status as such. Further, as permitted by IND. CODE ANN. Sec. 23-1-37-14 (Burns 1994), as amended from time to time, and the by-laws, LNC and LNL have purchased insurance designed to protect and indemnify their officers, directors, and employees in the event they are required to pay any amounts arising from certain civil claims, including claims under the Securities Act of 1933, which might be made against them by reason of any actual or alleged act, error, omission, misstatement, misleading statement, neglect or breach of duty while acting in their respective capacities as directors, officers, employees or agents of the Company. Item 15. Recent Sales of Unregistered Securities Not Applicable. Item 16. Exhibits and Financial Statement Schedules a) The exhibits furnished with this Registration Statement are listed on page II-5. b) All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information has been included in the financial statements, and therefore has been omitted. Item 17. Undertakings (a) The undersigned registrant undertakes -- (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Form S-3 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution Set forth below are estimates of all additional expenses incurred or to be incurred by the Issuer paid in calendar year 1994, in connection with the issuance and distribution of the securities to be registered, other than underwriting discounts and commission. Registration fees $ -0- Printing and engraving -0- Legal fees -0- Accounting fees 4,000 State blue sky fees and expenses -0- Miscellaneous -0- ------ TOTAL $4,000
The Registrant paid in 1995 an annual premium of approximately $907,808 (for itself and all subsidiaries) in respect of directors' and officers' liability insurance which would cover, among other things, certain claims made against its directors and officers including claims arising under the Securities Act of 1933, as amended. Item 15. Indemnification of Directors and Officers Pursuant to Indiana law (IND. CODE ANN. Sec. 23-1-37-1 et seq. (Burns 1989), as amended from time to time and to the respective by-laws of LNC and the Company, present and former directors, officers, or employees of LNC and the Company will be indemnified by their respective corporations against liability incurred in their capacities as directors, officers, or employees, or arising from their status as such. Further, as permitted by IND. CODE ANN. Sec. 23-1-37-14 (Burns 1989) as amended from time to time, and the by-laws, LNC and LNL have purchased insurance designed to protect and indemnify their officers, directors, or employees in the event they are required to pay any amounts arising from certain civil claims, including claims under the Securities Act of 1933, which might be made against them by reason of any actual or alleged act, error, omission, misstatement, misleading statement, neglect or breach of duty while acting in their respective capacities as directors, officers, employees or agents of the Company. Item 16. Exhibits The exhibits furnished with this Registration Statement are listed on page II-5. Item 17. Undertakings (a) The undersigned registrant undertakes -- (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES-REGISTRANT Lincoln National Corporation ("Registrant") - Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Wayne, State of Indiana on April 21, 1995. LINCOLN NATIONAL CORPORATION /S/ROBERT A. ANKER Robert A. Anker, President Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /S/IAN M. ROLLAND Chairman of the Board, CEO 4/21/95 (Ian M. Rolland) & Director (Principal Executive Officer) /S/ROBERT A. ANKER President, Chief Operating 4/21/95 (Robert A. Anker) Officer and Director /S/DONALD L. VANWYNGARDEN Second Vice President & 4/21/95 (Donald L. VanWyngarden) Controller (Principal Accounting Officer) /S/RICHARD C. VAUGHAN Executive Vice President 4/21/95 (Richard C. Vaughan) (Principal Financial Officer) Director (J. Patrick Barrett) **/S/THOMAS D. BELL, JR. 4/24/95 (Thomas D. Bell, Jr.) Director */S/DANIEL K. EFROYMSON 4/24/95 (Daniel K. Efroymson) Director **/S/HARRY L. KAVETAS 4/24/95 (Harry L. Kavetas) Director */S/M. LEANNE LACHMAN 4/24/95 (M. Leanne Lachman) Director Director (Leo J. McKernan) */S/EARL L. NEAL 4/24/95 (Earl L. Neal) Director **/S/JOHN M. PIETRUSKI 4/24/95 (John M. Pietruski) Director */S/JILL S. RUCKELSHAUS 4/24/95 (Jill S. Ruckelshaus) Director */S/GORDON A. WALKER 4/24/95 (Gordon A. Walker) Director **/S/GILBERT R. WHITAKER, JR. 4/24/95 (Gilbert R. Whitaker, Jr.) Director *John L. Steinkamp pursuant to a Power of Attorney filed with the original Registration Statement, effective April 30, 1986. **John L. Steinkamp pursuant to a Power of Attorney Statement, filed with Post-Effective Amendment No. 5 to the registration statement, effective April 30, 1991. POWER OF ATTORNEY LET IT BE KNOWN that each officer or director of The Lincoln National Life Insurance Company whose signature appears in paragraph (b) under "SIGNATURES-REGISTRANT" below revokes all Powers of Attorney authorizing any person to act as his/her attorney-in-fact relative to The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan which were previously executed by him/her and appoints John L. Steinkamp, Dennis L. Schoff, and C. Suzanne Womack, jointly and severally, his/her attorneys-in- fact, with power of substitution, for him/her in all capacities to sign amendments and post-effective amendments to the Registration Statement of The Lincoln National Life Insurance Company Agents' Savings and Profit Sharing Plan, and to file such amendments with exhibits with the Securities and Exchange Commission, hereby ratifying all that each attorney-in-fact may do or cause to be done by virtue of this power. SIGNATURES-REGISTRANT (a) Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requiremetns for filing on Forms S-3 and S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Wayne, State of Indiana, on April 26, 1995. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: /S/JON A. BOSCIA (Jon A. Boscia, President) (b) Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /S/ROBERT A. ANKER Chairman of the board and 4/26/95 (Robert A. Anker) Chief Executive Officer and Director /S/JON A. BOSCIA President and Chief Operating 4/26/95 (Jon A. Boscia) Officer and Director /S/O. DOUGLAS WORTHINGTON Vice President, Controller and 4/26/95 (O. Douglas Worthington) Assistant Secretary (Principal Financial and Accounting Officer) /S/JACK D. HUNTER Director 4/26/95 (Jack D. Hunter) /S/H. THOMAS MCMEEKIN Director 4/26/95 (H. Thomas McMeekin) /S/IAN M. ROLLAND Director 4/26/95 (Ian M. Rolland) Director (Gabriel L. Shaheen) /S/RICHARD C. VAUGHAN Director 4/26/95 (Richard C. Vaughan) SIGNATURES-PLAN The Lincoln National Life Insurance Company Agents' Savings and Profit- Sharing Plan ("Plan"). Pursuant to the requirements of the Securities Act of 1933, the Plan certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Wayne, State of Indiana on April 24, 1995. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AGENTS' SAVINGS AND PROFIT- SHARING PLAN By: /S/FREDERICK P. FARKAS Frederick P. Farkas, Chairman Lincoln National Corporation Benefits Committee INDEX TO EXHIBITS Page No. in the Sequential Numbering Exhibit No. Description System 23 Consent of Ernst & Young LLP, Independent Auditors EX-23 2 ERNST & YOUNG CONSENT EXHIBIT 23 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the captions "Experts" and "Financial Statements" in Post-Effective Amendment No. 9 to the Registration Statement (Form S-1 No. 33-4711) and related Prospectus pertaining to The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan and (a) to the use of our report dated March 10, 1995, pertaining to The Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan in the Registration Statement and related Prospectus and (b) to the incorporation by reference therein of our report dated February 8, 1995, with respect to the consolidated financial statements and schedules of Lincoln National Corporation included in its Annual Repoprt (Form 10-K), both for the year ended December 31, 1994, filed with the Securities and Exchange Commission. /S/ Ernst & Young LLP Fort Wayne, Indiana April 24, 1995 -----END PRIVACY-ENHANCED MESSAGE-----