10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark One)

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2006.

¨Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number 1-6028

LINCOLN NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Indiana	35-1140070
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1500 Market Street, Suite 3900, Philadelphia, Pennsylvania	19102-2112
(Address of principal executive offices)	(Zip Code)

(215) 448-1400

Registrant’s telephone number, including area code

Not Applicable

Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non- accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

(Check one): Large accelerated filer x Accelerated filer ¨ Non- accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨    No  x

As of July 31, 2006, 280,786,053 shares of common stock of the registrant were outstanding.

Item 1. Financial Statements

LINCOLN NATIONAL CORPORATION

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2006			2005
	(Unaudited)
	(in millions)
ASSETS
Investments:
Securities available-for-sale, at fair value:
Fixed maturity (cost: 2006- $54,451; 2005-$32,384)	$	54,024		$	33,443
Equity (cost: 2006- $569; 2005-$137)		579			145
Trading securities		3,109			3,246
Mortgage loans on real estate		7,741			3,663
Real estate		429			183
Policy loans		2,716			1,862
Derivative investments		280			175
Other investments		836			452
Total Investments		69,714			43,169
Cash and invested cash		1,500			2,312
Deferred acquisition costs and value of businesses acquired		8,328			5,163
Premiums and fees receivable		344			343
Accrued investment income		879			526
Amounts recoverable from reinsurers		7,967			6,926
Goodwill		4,503			1,194
Other assets		3,050			1,480
Assets held in separate accounts		71,095			63,747
Total Assets	$	167,380		$	124,860
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Insurance and Investment Contract Liabilities:
Insurance policy and claim reserves	$	14,724		$	11,703
Investment contract and policyholder funds		58,629			35,592
Total Insurance and Investment Contract Liabilities		73,353			47,295
Short-term debt		560			120
Long-term debt
Senior notes		2,330			999
Junior subordinated debentures issued to affiliated trusts		330			334
Capital securities		1,072			-
Reinsurance related derivative liability		127			292
Funds withheld reinsurance liabilities		2,071			2,012
Deferred gain on indemnity reinsurance		798			836
Other liabilities		4,240			2,841
Liabilities related to separate accounts		71,095			63,747
Total Liabilities		155,976			118,476
Shareholders' Equity:
Series A preferred stock-10,000,000 shares authorized
(2006 liquidation value-$1)		1			1
Common stock-800,000,000 shares authorized		7,426			1,775
Retained earnings		4,013			4,081
Accumulated Other Comprehensive Income (Loss):
Net unrealized gain (loss) on securities available-for-sale		(151	)		497
Net unrealized gain on derivative instruments		51			7
Foreign currency translation adjustment		128			83
Minimum pension liability adjustment		(64	)		(60	)
Total Accumulated Other Comprehensive Income (Loss)		(36	)		527
Total Shareholders' Equity		11,404			6,384
Total Liabilities and Shareholders' Equity	$	167,380		$	124,860

See accompanying Notes to the Consolidated Financial Statements.

1

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
	(Unaudited)
	(in millions, except per share amounts)
Revenue:
Insurance premiums	$	454		$	73		$	533		$	143
Insurance fees		690			426			1,164			846
Investment advisory fees		81			62			159			117
Communications sales		58			-			58			-
Net investment income		1,068			704			1,747			1,364
Realized gain (loss)		(5	)		(9	)		(6	)		3
Amortization of deferred gain on indemnity reinsurance		19			19			37			38
Other revenue and fees		131			100			225			183
Total Revenue		2,496			1,375			3,917			2,694
Benefits and Expenses:
Benefits		1,179			590			1,760			1,161
Underwriting, acquisition, insurance and other expenses		717			525			1,220			1,013
Communications expenses		30			-			30
Interest and debt expense		65			22			87			44
Total Benefits and Expenses		1,991			1,137			3,097			2,218
Income before Federal income taxes		505			238			820			476
Federal income taxes		156			40			250			99
Net Income	$	349		$	198		$	570		$	377
Net Income Per Common Share:
Basic	$	1.25		$	1.15		$	2.51		$	2.18
Diluted	$	1.23		$	1.13		$	2.47		$	2.14

See accompanying Notes to the Consolidated Financial Statements.

2

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

	Six Months Ended June 30,
	Number of Shares						Amounts
	2006			2005			2006			2005
	(Unaudited)						(Unaudited)
	(in millions, except for share amounts)
Series A Preferred Stock:
Balance at beginning-of-year		15,515			16,912		$	1		$	1
Conversion into common stock		(987	)		(656	)		-			-
Balance at June 30		14,528			16,256			1			1
Common Stock:
Balance at beginning-of-year		173,768,078			173,557,730			1,775			1,655
Issued for acquisition		112,301,906			-			5,632			-
Conversion of series A preferred stock		15,792			10,496			-			-
Stock compensation/issued for benefit plans		3,353,059			1,067,931			92			55
Deferred compensation payable in stock		158,342			51,079			9			2
Retirement of common stock		(8,060,131	)		(2,331,000	)		(82	)		(22	)
Balance at June 30		281,537,046			172,356,236			7,426			1,690
Retained Earnings:
Balance at beginning-of-year								4,081			3,590
Comprehensive income								7			361
Less other comprehensive income (loss) (net of
federal income tax):
Net unrealized loss on securities available-
for-sale, net of reclassification adjustment								(648	)		28
Net unrealized gain (loss) on derivative instruments								44			(2	)
Foreign currency translation adjustment								45			(45	)
Minimum pension liability adjustment								(4	)		3
Net Income								570			377
Retirement of common stock								(423	)		(81	)
Dividends declared:
Series A preferred ($1.50 per share)								-			-
Common (2006-$0.76; 2005-$0.73)								(215	)		(127	)
Balance at June 30								4,013			3,759
Net Unrealized Gain on Securities Available-for-Sale:
Balance at beginning-of-year								497			823
Change during the period								(648	)		28
Balance at June 30								(151	)		851
Net Unrealized Gain on Derivative Instruments:
Balance at beginning-of-year								7			14
Change during the period								44			(2	)
Balance at June 30								51			12
Foreign Currency Translation Adjustment:
Accumulated adjustment at beginning-of-year								83			154
Change during the period								45			(45	)
Balance at June 30								128			109
Minimum Pension Liability Adjustment:
Balance at beginning-of-year								(60	)		(61	)
Change during the period								(4	)		3
Balance at June 30								(64	)		(58	)
Total Shareholders' Equity at June 30							$	11,404		$	6,364
Common Stock at End of Quarter:
Assuming conversion of preferred stock								281,769,494			172,616,332
Diluted basis								284,958,226			174,843,027

See accompanying Notes to the Consolidated Financial Statements.

3

LINCOLN NATIONAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
	2006			2005
	(Unaudited)
	(in millions)
Cash Flows from Operating Activities:
Net income	$	570		$	377
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred acquisition costs		(249	)		(139	)
Premiums and fees receivable		61			10
Accrued investment income		2			(12	)
Policy liabilities and accruals		(277	)		(102	)
Contractholder funds		533			725
Net trading securities purchases, sales and maturities		(20	)		(74	)
Gain on reinsurance embedded derivative/trading securities		(8	)		1
Increase in funds withheld liability		59			70
Amounts recoverable from reinsurers		255			(174	)
Federal income taxes		52			66
Stock-based compensation expense		30			27
Depreciation		30			46
Gain on sale of subsidiaries/business		-			(14	)
Realized loss on investments and derivative instruments		14			11
Amortization of deferred gain		(38	)		(38	)
Other		(92	)		(259	)
Net Adjustments		352			144
Net Cash Provided by Operating Activities		922			521
Cash Flows from Investing Activities:
Securities-available-for-sale:
Purchases		(3,718	)		(2,968	)
Sales		2,565			1,596
Maturities		1,348			1,162
Purchase of other investments		(697	)		(400	)
Sale or maturity of other investments		449			464
Increase in cash collateral on loaned securities		133			98
Purchase of Jefferson Pilot Stock, net of cash acquired of $39		(1,847	)		-
Proceeds from sale of subsidiaries/business		-			14
Other		(123	)		186
Net Cash Provided by (Used in) Investing Activities		(1,890	)		152
Cash Flows from Financing Activities:
Issuance of long-term debt		2,045			-
Payment of long-term debt		-			(241	)
Net increase (decrease) in short-term debt		(557	)		201
Universal life and investment contract deposits		3,136			2,516
Universal life and investment contract withdrawals		(3,004	)		(2,296	)
Investment contract transfers		(817	)		(658	)
Common stock issued for benefit plans		71			34
Retirement of common stock		(503	)		(104	)
Dividends paid to shareholders		(215	)		(128	)
Net Cash (Used in) Provided by Financing Activities		156			(676	)
Net (Decrease) Increase in Cash and Invested Cash		(812	)		(3	)
Cash and Invested Cash at Beginning-of-Year		2,312			1,662
Cash and Invested Cash at June 30	$	1,500		$	1,659

 See accompanying Notes to the Consolidated Financial Statements.

4

LINCOLN NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying Consolidated Financial Statements include Lincoln National Corporation and its majority-owned subsidiaries (“LNC” or the “Company” which also may be referred to as “we” or “us”). As discussed below in Note 2 we completed our merger with Jefferson-Pilot Corporation on April 3, 2006. Through subsidiary companies, we operate multiple insurance and investment management businesses divided into seven business segments (see Note 8). The collective group of companies uses “Lincoln Financial Group” as its marketing identity. We report less than majority-owned entities in which we have at least a 20% interest on the equity basis. These unaudited Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, these statements include all normal recurring adjustments necessary for a fair presentation of the results.

These financial statements should be read in conjunction with the audited Consolidated Financial Statements and the accompanying notes incorporated by reference into our latest annual report on Form 10-K for the year ended December 31, 2005 (“2005 Form 10-K”). On April 3, 2006, LNC filed a Current Report on Form 8-K dated April 3, 2006 that incorporated the audited financial statements and notes for Jefferson-Pilot as of December 31, 2005 and 2004, and for the years ended December 31, 2005, 2004 and 2003 from Jefferson-Pilot’s Annual Report on Form 10-K for the year ended December 31, 2005. The accompanying consolidated financial statements should also be read in conjunction with those financial statements and notes.

Operating results for the three and six months ended June 30, 2006 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2006. All material intercompany accounts and transactions have been eliminated in consolidation.

 Certain amounts reported in prior periods' unaudited Consolidated Financial Statements have been reclassified to conform to the 2006 presentation. These reclassifications have no effect on net income or shareholders’ equity of the prior periods. Included in these reclassifications is the change in the definition of cash flows from funds withheld liabilities from financing to operating cash flows in the unaudited Consolidated Statements of Cash Flows. While this had no effect on total cash flow, for the six months ended June 30, 2005, net cash provided by operating activities and net cash used in financing activities were increased and decreased, respectively, by $70 million. A similar reclassification in our Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003 would have increased net cash provided by operating activities (with corresponding decreases in net cash provided by (used) in financing activities) by $117 million, $77 million, and $56 million, resulting in net cash provided by operating activities of $1.1 billion, $1.1 billion and $1.0 billion, respectively.

2. Business Combination

On April 3, 2006, we completed our merger with Jefferson-Pilot Corporation (“Jefferson-Pilot”) by acquiring 100% of the outstanding shares of Jefferson-Pilot in a transaction accounted for under the purchase method of accounting prescribed by SFAS No.141, “Business Combinations” (“SFAS 141”). Jefferson-Pilot’s results of operations are included in our results of operations beginning April 3, 2006. As a result of the merger, our product portfolio was expanded, and we now offer fixed and variable universal life, fixed annuities, including indexed annuities, variable annuities, mutual funds and institutional accounts, 401(k) and 403(b) offerings, and group life, disability and dental insurance products. We also own and operate television and radio stations in selected markets in the Southeastern and Western United States and produce and distribute sports programming.

The aggregate consideration paid for the merger is as follows:

(in millions, except share data)	Share Amounts
LNC common shares issued		112,301,906
Purchase price per share of LNC common share (1)	$	48.98
Fair value of common shares issued			$	5,501
Cash paid to Jefferson Pilot shareholders				1,800
Fair value of Jefferson-Pilot stock options (2)				131
Transaction costs				86
Total purchase price			$	7,518

5

(1) The value of the shares of LNC common stock exchanged with Jefferson-Pilot shareholders was based upon the average of the closing prices of LNC common stock for the five day trading period ranging from two days before, to two days after, October 10, 2005, the date the merger was announced.

(2) Includes certain stock options that vested immediately upon the consummation of the merger. Any future income tax deduction related to these vested stock options will be recognized on the option exercise date as an adjustment to the purchase price and recorded to goodwill.

The fair value of Jefferson-Pilot’s net assets assumed in the merger was $4.2 billion. Goodwill of $3.3 billion resulted from the excess of purchase price over the fair value of Jefferson-Pilot’s net assets. We paid a premium over the fair value of Jefferson-Pilot’s net assets for a number of potential strategic and financial benefits that are expected to be realized as a result of the merger including, but not limited to, the following:

· Greater size and scale with improved earnings diversification and strong financial flexibility;

· Broader, more balanced product portfolio;

· Larger distribution organization; and

· Value creation opportunities through expense savings and revenue enhancements across business units.

SFAS 141 requires that the total purchase price be allocated to the assets acquired and liabilities assumed based on their fair values at the merger date. We are in the process of finalizing our internal studies of the fair value of the net assets acquired including investments, value of business acquired (“VOBA”), intangible assets and certain liabilities. As such, the preliminary fair values in the table below are subject to adjustment as additional information is obtained, which may result in adjustments to goodwill, which we do not expect to be material. The following table summarizes the preliminary fair values of the net assets acquired as of the acquisition date:

(in millions)	Preliminary Fair Value
Investments	$	27,908
Due from reinsurers		1,296
Value of business acquired		2,474
Goodwill		3,307
Other assets		1,654
Assets held in separate accounts		2,574
Policy liabilities		(26,522	)
Long-term debt		(905	)
Income tax liabilities		(849	)
Accounts payable, accruals and other liabilities		(845	)
Liabilities related to separate accounts		(2,574	)
Total purchase price	$	7,518

The goodwill resulting from the merger was allocated to the following segments:

(in millions)
Individual Markets:
Life Insurance	$	1,333
Annuities		987
Total Individual Markets		2,320
Employer Markets: Benefit Partners		279
Lincoln Financial Media		708
Total goodwill	$	3,307

6

The following table summarizes the fair value of identifiable intangible assets acquired in the merger and reported in other assets.

			Weighted
			Average
			Amortization
(in millions)			Period
Lincoln Financial Media:
FCC licenses	$	638		N/A
Sports production rights		11		5 years
Network affiliation agreements		10		21 years
Other		11		16 years
Total Lincoln Financial Media		670
Individual Markets - Life Insurance:
Sales force		100		25 years
Total indentifiable intangibles	$	770
Identifiable intangibles not subject to amortization	$	638		N/A
Identifiable intangibles subject to amortization		132		22 years
Total identifiable intangibles	$	770

The following unaudited pro forma condensed consolidated results of operations assume that the merger with Jefferson-Pilot was completed as of January 1, 2006 and 2005:

	Three		Six Months Ended
	Months Ended		June 30,
(in millions, except per share amounts)	June 30, 2005		2006		2005
Revenue	$	2,417	$	4,989	$	4,749
Net income		339		684		683
Net income per common share:
Basic	$	1.06	$	3.01	$	2.12
Diluted	$	1.05	$	2.97	$	2.10

We initially financed the cash portion of the merger consideration by borrowing $1.8 billion under a credit agreement that we entered into with a group of banks in December 2005 (the “bridge facility”). During the second quarter of 2006, we issued the following debt securities:

	Net
	Proceeds
Security	(in millions)		Interest Due
$500M Floating Rate Senior Notes, due 4/6/2009 (1)	$	499		Quarterly in January, April, July and October
$500M 6.15% Senior Notes, due 4/7/2036 (2)		492		Semi-annually in April and October
Capital Securities
$275M 6.75% Junior Subordinated Debentures, due 4/20/2066 (3)		266		Quarterly in January, April, July and October
$800M 7% Junior Subordinated Debentures, due 5/17/2066 (4)		788		Semi-annually in May and November
Total proceeds	$	2,045

(1) Interest at a rate of three-month LIBOR plus 0.11%.

(2) Redeemable any time subject to a make-whole provision.

(3) Redeemable in whole or in part on or after April 20, 2011 (and prior to such date in whole or in part under certain circumstances).

(4) Redeemable in whole or in part on or after May 17, 2016 (and prior to such date in whole or in part under certain circumstances). Beginning May 17, 2016, interest is due quarterly in February, May, August and November.

We used the net proceeds from the offerings, and other cash, to repay the outstanding loan balance under the bridge facility.

At June 30, 2006, we maintain the following debt securities that were previously issued by Jefferson-Pilot and are included within our Consolidated Balance Sheet:

7

·      Junior subordinated debentures issued by Jefferson-Pilot in 1997 consist of $211 million at an interest rate of 8.14% and $107 million at an interest rate of 8.285%. Interest is paid semi-annually. These debentures mature in 2046, but are redeemable prior to maturity at our option beginning January 15, 2007, with two-thirds subject to a call premium of 4.07% and the remainder subject to a call premium of 4.14%, each grading to zero as of January 15, 2017. Premiums arose from recording these securities at their respective fair values, which were based on discounted cash flows using our incremental borrowing rate at the date of the merger. The premiums are being amortized to the respective call dates using an approximate effective yield methodology. The unamortized premiums included in the amounts above totaled $9 million. As we expect to call these securities within the next twelve months, they have been reported in short-term debt on our consolidated balance sheet.

·   Ten-year term notes of $284 million at 4.75% and $300 million of floating rate EXtendible Liquidity Securities® (“EXL”s) that currently have a maturity of August 2007, subject to periodic extension through 2011. Each quarter, the holders must make an election to extend the maturity of the EXLs for 13 months, otherwise they become due and payable on the next maturity date to which they had previously been extended. The EXLs bear interest at LIBOR plus a spread, which increases annually to a maximum of 10 basis points. The amount reported on our consolidated balance sheet is net of a $16 million discount that arose from recording the ten-year term notes at their respective fair values based on discounted cash flows using our incremental borrowing rate at the date of merger. The discount is being accreted over the remaining life using an approximate effective yield methodology.

See our current reports on Form 8-K filed with the SEC on April 3, 2006, April 7, 2006, April 20, 2006, May 9, 2006 and May 17, 2006 for additional information.

3. Changes in Accounting Principles and Changes in Estimates

SFAS No. 123(r) - Share-Based Payment. In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”), which is a revision of SFAS 123, “Accounting for Stock-based Compensation” (“SFAS 123”). SFAS 123(R) requires us to recognize at fair value all costs resulting from share-based payments to employees, except for equity instruments held by employee share ownership plans. Similar to SFAS 123, under SFAS 123(R) the fair value of share-based payments are recognized as a reduction to earnings over the period an employee is required to provide service in exchange for the award. We had previously adopted the retroactive restatement method under SFAS No. 148, “Accounting for Stock-based Compensation - Transition and Disclosure,” and restated all periods presented to reflect stock-based employee compensation cost under the fair value accounting method for all employee awards granted, modified or settled in fiscal years beginning after December 15, 1994.

Effective January 1, 2006, we adopted SFAS 123(R), using the modified prospective transition method. Under that transition method, compensation cost recognized in 2006 includes: (a) compensation cost for all share-based payments granted prior to but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). Results from prior periods have not been restated. The effect of adopting SFAS 123(R) did not have a material effect on our income before Federal income taxes, net income and basic and diluted earnings per share.

SFAS 123(R) eliminates the alternative under SFAS 123 permitting the recognition of forfeitures as they occur. Expected forfeitures, resulting from the failure to satisfy service or performance conditions, must be estimated at the grant date, thereby recognizing compensation expense only for those awards expected to vest. In accordance with SFAS 123(R), we have included estimated forfeitures in the determination of compensation costs for all share-based payments. Estimates of expected forfeitures must be reevaluated at each balance sheet date, and any change in the estimate recognized retrospectively in net income in the period of the revised estimate.

Prior to the adoption of SFAS 123(R), we presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Statement of Cash Flows. SFAS 123(R) requires the cash flows from tax benefits resulting from tax deductions in excess of the compensation costs recognized to be classified as financing cash flows. Our excess tax benefits are classified as financing cash flows, prospectively, in our Statement of Cash Flows for the six months ended June 30, 2006.

 We issue share-based compensation awards under an authorized plan, subject to specific vesting conditions. Generally, compensation expense is recognized ratably over a three-year vesting period, but recognition may be accelerated upon the occurrence of certain events. For awards that specify an employee will vest upon retirement and an employee is eligible to retire before the end of the normal vesting period, we would record compensation expense over the period from the grant date

8

to the date of retirement eligibility. As a result of adopting SFAS 123(R), we have revised the prior method of recording unrecognized compensation expense upon retirement and use the non-substantive vesting period approach for all new share-based awards granted after January 1, 2006. Under the non-substantive vesting period approach, we recognize compensation cost immediately for awards granted to retirement-eligible employees, or ratably over a period from the grant date to the date retirement eligibility is achieved. If we would have applied the non-substantive vesting period approach to all share based compensation awards granted prior to January 1, 2006, it would not have a material effect on our results of operations or financial position.

See Note 11 for more information regarding our stock-based compensation plans.

FSP 115-1 - The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (“FSP 115-1”). The guidance in FSP 115-1 nullifies the accounting and measurement provisions of Emerging Issues Task Force No. 03-1 - “The Meaning of Other Than Temporary Impairments and Its Application to Certain Investments” references existing guidance, and supersedes EITF Topic No. D-44 “Recognition of Other-Than-Temporary Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value.” FSP 115-1 was effective for reporting periods beginning after December 15, 2005, on a prospective basis. Our existing policies for recognizing other-than-temporary impairments are consistent with the guidance in FSP 115-1. We adopted FSP 115-1 effective January 1, 2006. The adoption of FSP 115-1 did not have a material effect on our consolidated financial condition or results of operations.

Statement of Position 05-1. In September 2005, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position (“SOP”) 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts” (“SOP 05-1”). SOP 05-1 addresses the accounting for Deferred Acquisition Costs (“DAC”) on internal replacements other than those described in SFAS No. 97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments.” An internal replacement is defined by SOP 05-1 as a modification in product benefits, features, rights or coverages that occurs by (a) exchanging the contract for a new contract, (b) amending, endorsing or attaching a rider to the contract, or (c) electing a feature or coverage within a replaced contract. Contract modifications that result in a substantially unchanged contract will be accounted for as a continuation of the replaced contract. Contract modifications that result in a substantially changed contract should be accounted for as an extinguishment of the replaced contract, and any unamortized DAC, unearned revenue and deferred sales charges must be written-off. SOP 05-1 is to be applied prospectively and is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. We expect to adopt SOP 05-1 effective January 1, 2007. We are currently evaluating the potential effects of SOP 05-1 on our consolidated financial condition and results of operations.

SFAS No. 155 - Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140. In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140” (“SFAS 155”), which permits fair value remeasurement for a hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. Under SFAS 155, an entity may make an irrevocable election to measure a hybrid financial instrument at fair value, in its entirety, with changes in fair value recognized in earnings. SFAS 155 also: (a) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”); (b) eliminates the interim guidance in SFAS 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” and establishes a requirement to evaluate beneficial interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (c) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (d) eliminates restrictions on a qualifying special-purpose entity’s ability to hold passive derivative financial instruments that pertain to beneficial interests that are or contain a derivative financial instrument. We expect to adopt SFAS 155 for all financial instruments acquired, issued, or subject to a remeasurement event occurring after January 1, 2007. Upon adoption of SFAS 155, the fair value election may also be applied to hybrid financial instruments that had previously been bifurcated pursuant to SFAS 133. Prior period restatement is not permitted. We are currently evaluating the potential effects of SFAS 155 on our consolidated financial condition and results of operations.

FASB Interpretation No. 48 - Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109. In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”). SFAS No. 109, “Accounting for Income Taxes” does not contain specific guidance on how to address uncertainty in accounting for income tax assets and liabilities. With the issuance of FIN 48, the FASB provides criteria which an individual tax position must meet for any part of the benefit of the tax position to be recognized in the financial statements. The criterion includes determining whether it is more-likely-than-not that a tax position will be sustained upon examination by the appropriate taxing authority. If the tax position meets the more-likely-than-not threshold, the position is measured as the largest amount of benefit that is greater than fifty percent likely of

9

being realized upon ultimate settlement. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit is not recognized in the financial statements. Upon adoption of FIN 48, the guidance will be applied to all tax positions, and only those tax positions meeting the more-likely-than-not threshold will be recognized or continue to be recognized in the financial statements. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. In addition, FIN 48 expands disclosure requirements to include additional information related to unrecognized tax benefits. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are currently evaluating the potential effects of FIN 48 on our consolidated financial condition and results of operations.

4. Federal Income Taxes

The effective tax rate on net income is lower than the prevailing corporate Federal income tax rate principally from tax-preferred investment income. LNC earns tax-preferred investment income that does not change proportionately with the overall change in earnings or losses before Federal income taxes.

We are required to establish a valuation allowance for any gross deferred tax assets that are unlikely to reduce taxes payable in future years’ tax returns. At June 30, 2006, we believe that it is more likely than not that all gross deferred tax assets will reduce taxes payable in future years. Our Federal income tax liability at December 31, 2004 included a valuation allowance of $47 million attributable to the net operating losses of our foreign life reinsurance subsidiary domiciled in Barbados. This valuation allowance was reduced to zero as of December 31, 2005, including a reduction of $24 million and $29 million in the second quarter and first six months of 2005, respectively.

We are subject to annual tax examinations from the Internal Revenue Service ("IRS"). During the first quarter of 2006, the IRS completed its examination for the tax years 1999 through 2002 with assessments resulting in a payment that was not material to our consolidated results of operations. In addition to taxes assessed and interest, the payment included a deposit relating to a portion of the assessment, which we continue to challenge. We believe this portion of the assessment is inconsistent with existing law, and are protesting it through the established IRS appeals process. We do not anticipate that any adjustments that might result from such audits would be material to our consolidated results of operations or financial condition. The Jefferson-Pilot subsidiaries acquired in the April 2006 merger are subject to a separate IRS examination cycle. During the second quarter of 2006, the IRS completed its examinations for the tax years 2000-2003 of Jefferson-Pilot Corporation and its subsidiaries, resulting in a refund that was not material to our consolidated results of operations.

5. Supplemental Financial Data

A rollforward of DAC and value of business acquired on the Consolidated Balance Sheet is as follows:

	Six Months Ended
	June 30,
(in millions)	2006			2005
Balance at beginning-of-year	$	5,163		$	4,590
Business acquired		2,474			-
Deferral		636			435
Amortization		(387	)		(297	)
Adjustment related to realized gains on securities available-for-sale		(30	)		(26	)
Adjustment related to unrealized losses on securities
available-for-sale		416			11
Foreign currency translation adjustment		56			(56	)
Balance at end-of-period	$	8,328		$	4,657

Realized gains and losses on investments and derivative instruments on the Consolidated Statements of Income for the six months ended June 30, 2006 and 2005 are net of amounts amortized against DAC of $30 million and $26 million, respectively. In addition, realized gains and losses for the six months ended June 30, 2006 and 2005 are net of adjustments made to policyholder reserves of $(3) million and $(2) million, respectively. We have either a contractual obligation or a consistent historical practice of making allocations of investment gains or losses to certain policyholders and to certain reinsurance arrangements.

10

A rollforward of deferred sales inducements, included in other assets on the Consolidated Balance Sheet, is as follows:

	Six Months Ended
	June 30,
(in millions)	2006			2005
Balance at beginning-of-year	$	129		$	86
Capitalized		36			29
Amortization		(10	)		(8	)
Balance at end-of-period	$	155		$	107

Details underlying underwriting, acquisition, insurance and other expenses on the Consolidated Statements of Income are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2006			2005			2006			2005
Commissions	$	396		$	200		$	612		$	379
General and administrative expenses		421			357			752			686
Deferred acquisition costs net of amortization		(170	)		(81	)		(249	)		(138	)
Other intangibles amortization		6			2			8			4
Taxes, licenses and fees		47			24			80			57
Restructuring charges - includes merger-integration expenses		10			23			10			25
Other merger-integration expenses		7			-			7			-
Total	$	717		$	525		$	1,220		$	1,013

As discussed in Note 2, the excess of the purchase price for the Jefferson-Pilot merger over the fair value of net assets acquired totaled $3.3 billion

The carrying amount of goodwill by reportable segment as of June 30, 2006 is as follows:

(in millions)	Balance at December 31, 2005		Jefferson- Pilot Merger  (Note 2)		Balance at June 30, 2006
Individual Markets:
Annuities	$	44	$	987	$	1,031
Life Insurance		855		1,333		2,188
Employer Markets:
Retirement Products & Other		20		-		20
Benefit Partners		-		279		279
Investment Management		261		-		261
Lincoln Financial Media		-		708		708
Lincoln UK*		14		-		16
Total	$	1,194	$	3,307	$	4,503

* Changes in the carrying amount goodwill for the Lincoln UK segment from December 31, 2005 to June 30, 2006, are due to the translation of the balances from British pounds to U.S. dollars based on the prevailing exchange rate as of the respective balance sheet dates.

Details of investment contract and policyholder funds on the Consolidated Balance Sheet are as follows:

11

	June 30,		December 31,
(in millions)	2006		2005
Premium deposit funds	$	21,199	$	21,713
Other policyholder funds		36,518		12,972
Deferred front end loads		833		796
Undistributed earnings on participating business		79		111
Total	$	58,629	$	35,592

6. Insurance Benefit Reserves

We issue variable contracts through our separate accounts for which investment income and investment gains and losses accrue directly to, and investment risk is borne by, the contractholder (traditional variable annuities). We also issue variable annuity and life contracts through separate accounts that include various types of guaranteed minimum death benefit (“GMDB”) features, a guaranteed minimum withdrawal benefit (“GMWB”) and guaranteed income benefits (“GIB”). The GMDB features generally include those where we contractually guarantee that the contractholder receives (a) a return of no less than total deposits made to the contract less any partial withdrawals, (b) total deposits made to the contract less any partial withdrawals plus a minimum return, or (c) the highest contract value on any contract anniversary date through age 80 minus any payments or withdrawals following such contract anniversary.

The following table provides information on the GMDB features outstanding at June 30, 2006 and December 31, 2005. (Note that our variable contracts with guarantees may offer more than one type of guarantee in each contract; therefore, the amounts listed are not mutually exclusive.) The net amount at risk (“NAR”) is defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date.

	In Event of Death
	June 30,			December 31,
(dollars in billions)	2006			2005
Return of net deposit
Account value	$	33.9		$	31.9
NAR		0.1			0.1
Average attained age of contractholders		53			53
Return of net deposits plus a minimum return
Account value	$	0.4		$	0.3
NAR		-			-
Average attained age of contractholders		66			66
Guaranteed minimum return		5	%		5	%
Highest specified anniversary account value minus
withdrawals post anniversary
Account value	$	20.2		$	18.8
NAR		0.4			0.4
Average attained age of contractholders		63			63

The following summarizes the liabilities for GMDB:

	June 30,			June 30,
(in millions)	2006			2005
Balance at beginning of year	$	15		$	18
Changes in reserves		11			12
Benefits paid		(3	)		(6	)
Balance at end-of-period	$	23		$	24

The changes to the benefit reserves amounts above are reflected in benefits in the Consolidated Statements of Income. Also included in benefits are the results of the hedging program, which included gains (losses) of $0 and $(2) million for GMDB for the three and six months ended June 30, 2006, respectively, and $(2) million and $2 million for the three and six months ended June 30, 2005, respectively.

12

Approximately $10.6 billion and $8.2 billion of separate account values at June 30, 2006 and December 31, 2005 were attributable to variable annuities with a GMWB feature. This GMWB feature offers the contractholder a guarantee equal to the initial deposit adjusted for any subsequent purchase payments or withdrawals. There are one-year and five-year step-up options, which allow the contractholder to step up the guarantee. GMWB features are considered to be derivatives under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” resulting in the guarantees being recognized at fair value, with changes in fair value being reported in net income.

Approximately $1.6 billion and $1.2 billion of separate account values at June 30, 2006 and December 31, 2005, respectively, were attributable to variable annuities with a GIB feature. Similar to GMWB features, the GIB feature is considered a derivative with the resulting guarantees being recognized at fair value and changes in fair value being reported in net income.

Separate account balances attributable to variable annuity contracts with guarantees are as follows:

	June 30,			December 31,
(in billions)	2006			2005
Asset Type
Domestic equity	$	34.7		$	32.2
International equity		4.8			4.2
Bonds		5.5			5.1
Total		45.0			41.5
Money market		4.6			4.0
Total	$	49.6		$	45.5
Percent of total variable annuity separate account values		72	%		84	%

7. Restrictions and Contingencies

Statutory Restrictions

Our insurance subsidiaries are subject to certain insurance department regulatory restrictions as to the transfer of funds and payment of dividends to the holding company. Generally, these restrictions pose no short-term liquidity concerns for the holding company. For example, under Indiana laws and regulations, our Indiana insurance subsidiaries, including one of our major insurance subsidiaries, The Lincoln National Life Insurance Company (“LNL”), may pay dividends to LNC only from unassigned surplus, without prior approval of the Indiana Insurance Commissioner (the “Commissioner”), or must receive prior approval of the Commissioner to pay a dividend if such dividend, along with all other dividends paid within the preceding twelve consecutive months, would exceed the statutory limitation. The current statutory limitation is the greater of (i) 10% of the insurer’s policyholders’ surplus, as shown on its last annual statement on file with the Commissioner or (ii) the insurer’s statutory net gain from operations for the previous twelve months, but in no event to exceed statutory unassigned surplus. Indiana law gives the Commissioner broad discretion to disapprove requests for dividends in excess of these limits. Our other major insurance subsidiaries, Jefferson-Pilot Life Insurance Company, Jefferson-Pilot Financial Insurance Company, and Jefferson-Pilot LifeAmerica Insurance Company are domiciled in North Carolina, Nebraska and New Jersey, respectively, and are subject to similar, but not identical, restrictions.

LNL is recognized as an accredited reinsurer in the state of New York, which effectively enables it to conduct reinsurance business with unrelated insurance companies that are domiciled within the state of New York. As a result, in addition to regulatory restrictions imposed by the state of Indiana, LNL is also subject to the regulatory requirements that the State of New York imposes upon authorized insurers. These include reserve requirements, which differ from Indiana’s requirements.

The New York regulations require LNL to report more reserves to the state of New York. As a result, the level of statutory surplus that LNL reports to New York is less than the statutory surplus reported to Indiana and the National Association of Insurance Commissioners. If New York requires us to maintain a higher level of capital to remain an accredited reinsurer in New York, LNL’s ability to pay dividends to us could be constrained. However, we do not expect that LNL’s ability to pay dividends during 2006 will be constrained as a result of our status in New York.

Lincoln UK’s operations consist primarily of unit-linked life and pension products, which are similar to U.S. produced variable life and annuity products. Lincoln UK’s insurance subsidiaries are regulated by the U.K. Financial Services Authority (“FSA”) and are subject to capital requirements as defined by the U.K. Capital Resources Requirement (formerly the Required Minimum Solvency Margin). All insurance companies operating in the U.K. also have to complete a risk-based capital (“RBC”) assessment to demonstrate to the FSA that they hold sufficient capital to cover their risks. RBC requirements in the U.K. are different than the NAIC requirements. In addition, the FSA has imposed certain minimum

13

capital requirements for the combined U.K. subsidiaries. Lincoln UK maintains approximately 1.5 to 2 times the required capital as prescribed by the regulatory margin. As is the case with regulated insurance companies in the U.S., changes to regulatory capital requirements can impact the dividend capacity of the UK insurance subsidiaries and cash flow to us.

Reinsurance

Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers. We obtain reinsurance from a diverse group of reinsurers and we monitor concentration, as well as financial strength ratings of our principal reinsurers. Swiss Re Life & Health America, Inc. ("Swiss Re") represents our largest reinsurance exposure. In 2001, we sold our reinsurance business to Swiss Re primarily through indemnity reinsurance arrangements. Because we are not relieved of our liability to the ceding companies for this business, the liabilities and obligations associated with the reinsured contracts remain on our Consolidated Balance Sheets with a corresponding reinsurance receivable from the business sold to Swiss Re, which totaled $4.1 billion at June 30, 2006 and December 31, 2005. Swiss Re has funded a trust with a balance of $1.7 billion at June 30, 2006 to support this business. In addition to various remedies that we would have in the event of a default by Swiss Re, we continue to hold assets in support of certain of the transferred reserves. These assets consist of those reported as trading securities and certain mortgage loans. Our liabilities for funds withheld and embedded derivatives included $2.1 billion and $0.1 billion, respectively, at June 30, 2006 related to the business sold to Swiss Re.

We recorded the gain related to the indemnity reinsurance transactions on the business sold to Swiss Re as deferred gain in the liability section of our Consolidated Balance Sheet in accordance with the requirements of SFAS No. 113, “Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts” (“FAS 113”). We amortize the deferred gain into income at the rate that earnings on the reinsured business are expected to emerge, over a period of 15 years.

Because the reserves related to the personal accident business are based upon various estimates that are subject to considerable uncertainty, the reserves carried on the Consolidated Balance Sheet at June 30, 2006 may ultimately prove to be either excessive or deficient. For instance, in the event that future developments indicate that these reserves should be increased, under FAS 113 we would record a current period non-cash charge to record the increase in reserves. Because Swiss Re is responsible for paying the underlying claims to the ceding companies, we would record a corresponding increase in reinsurance recoverable from Swiss Re. However, FAS 113 does not permit us to take the full benefit in earnings for the recording of the increase in the reinsurance recoverable in the period of the change. Rather, we would increase the deferred gain recognized upon the closing of the indemnity reinsurance transaction with Swiss Re and would report a cumulative amortization “catch-up” adjustment to the deferred gain balance as increased earnings recognized in the period of change. Any amount of additional increase to the deferred gain above the cumulative amortization “catch-up” adjustment must continue to be deferred and will be amortized into income in future periods over the remaining period of expected run-off of the underlying business. No cash would be transferred between Swiss Re and us as a result of these developments.

United Kingdom Selling Practices

Various selling practices of the Lincoln UK operations have come under scrutiny by the U.K. regulators. These include the sale and administration of individual pension products and mortgage endowments. Regarding the sale and administration of pension products to individuals, regulatory agencies have raised questions as to what constitutes appropriate advice to individuals who bought pension products as an alternative to participation in an employer-sponsored plan. In cases of alleged inappropriate advice, an extensive investigation has been or is being carried out and the individual put in a position similar to what would have been attained if the individual had remained in an employer-sponsored plan.

At June 30, 2006 and December 31, 2005, the aggregate liability associated with Lincoln UK selling practices was $10 million and $13 million, respectively. On an ongoing basis, Lincoln UK evaluates various assumptions underlying these estimated liabilities, including the expected levels of future complaints and the potential implications with respect to the adequacy of the aggregate liability associated with UK selling practice matters. Any changes in the regulatory position on time limits for making a complaint regarding the sale of mortgage endowment contracts or higher than expected levels of complaints may result in Lincoln UK revising its estimate of the required level of these liabilities. The reserves for these issues are based on various estimates that are subject to considerable uncertainty. Future changes in complaint levels could affect Lincoln UK’s ultimate exposure to mis-selling issues, although we believe that any future change would not materially affect our consolidated financial position.

In July 2006 we negotiated a memorandum of understanding with certain of our liability carriers, who have agreed to reimburse us $26 million for certain costs incurred in connection with certain United Kingdom selling practices. The reimbursement will be recorded in net income upon final settlement and receipt of cash, which is expected in the third quarter. We continue to pursue claims with other liability carriers.

14

Marketing and Compliance Issues

There continues to be a significant amount of federal and state regulatory activity in the industry relating to numerous issues including, but not limited to, market timing and late trading of mutual fund and variable insurance products and broker-dealer access arrangements. Like others in the industry, we have received inquiries including requests for information and/or subpoenas from various authorities including the SEC, National Association of Securities Dealers (“NASD”), and the New York Attorney General, as well as notices of potential proceedings from the SEC and NASD. We are in the process of responding to, and in some cases have settled or are in the process of settling, certain of these inquiries and potential proceedings. We continue to cooperate fully with such authorities.

Regulators also continue to focus on replacement and exchange issues. Under certain circumstances companies have been held responsible for replacing existing policies with policies that were less advantageous to the policyholder. Our management continues to monitor compliance procedures to minimize any potential liability. Due to the uncertainty surrounding all of these matters, it is not possible to provide a meaningful estimate of the range of potential outcomes; however it is management’s opinion that future developments will not materially affect our consolidated financial position.

Media Commitments

Lincoln Financial Media has commitments to purchase future sports programming rights, and for employment contracts, leases and syndicated television programming of approximately $279 million through 2011. We have offset the purchase of these programming rights by receiving commitments from other entities to purchase a portion of our sports programming rights of approximately $199 million through 2011, as well as by entering into advertising contracts with customers for the airing of commercials. These commitments are not reflected as an asset or liability in our Consolidated Balance Sheet because the programs are not currently available for use.

 

Other Contingency Matters

We and our subsidiaries are involved in various pending or threatened legal proceedings, including purported class actions, arising from the conduct of business. In some instances, these proceedings include claims for unspecified or substantial punitive damages and similar types of relief in addition to amounts for alleged contractual liability or requests for equitable relief. After consultation with legal counsel and a review of available facts, it is management’s opinion that these proceedings ultimately will be resolved without materially affecting our consolidated financial position.

State guaranty funds assess insurance companies to cover losses to policyholders of insolvent or rehabilitated companies. Mandatory assessments may be partially recovered through a reduction in future premium taxes in some states. We have accrued for expected assessments net of estimated future premium tax deductions.

Guarantees

We have guarantees with off-balance-sheet risks having contractual values of $3 million and $4 million at June 30, 2006 and December 31, 2005, respectively.

Certain of our subsidiaries have sold commercial mortgage loans through grantor trusts, which issued pass-through certificates. These subsidiaries have agreed to repurchase any mortgage loans which remain delinquent for 90 days at a repurchase price substantially equal to the outstanding principal balance plus accrued interest thereon to the date of repurchase. In case of default by the borrowers, we have recourse to the underlying real estate. It is management’s opinion that the value of the properties underlying these commitments is sufficient that in the event of default, the impact would not be material to us. These guarantees expire in 2009.

We guarantee the repayment of operating leases on facilities that we have subleased to third parties, which obligate us to pay in the event the third parties fail to perform their payment obligations under the subleasing agreements. We have recourse to the third parties enabling us to recover any amounts paid under our guarantees. The annual rental payments subject to these guarantees are $15 million and expire in 2009.

Derivative Instruments

We maintain an overall risk management strategy that incorporates the use of derivative instruments to minimize significant unplanned fluctuations in earnings that are caused by interest rate risk, foreign currency risk, equity risk, and credit risk. We assess these risks by continually identifying and monitoring changes in interest rate exposure, foreign currency exposure, equity market exposure, and credit exposure that may adversely impact expected future cash flows and by evaluating hedging opportunities. Derivative instruments that are currently used as part of our interest rate risk management strategy include interest rate swaps, interest rate futures and interest rate caps. Derivative instruments that are used as part of our foreign currency risk management strategy include foreign currency swaps and foreign exchange forwards. Call options

15

on our stock, total return swaps, put options and equity futures are used as part of our equity market risk management strategy. We also use credit default swaps as part of our credit risk management strategy.

As a result of our acquisition of Jefferson-Pilot, we now distribute indexed annuity contracts. These contracts permit the holder to elect an interest rate return or an equity market component, where interest credited to the contracts is linked to the performance of the S&P 500^® index. Policyholders may elect to rebalance index options at renewal dates, either annually or biannually. At each renewal date, we have the opportunity to re-price the indexed component by establishing participation rates, subject to minimum guarantees. We purchase S&P 500^® index call options that are highly correlated to the portfolio allocation decisions of our policyholders, such that we are economically hedged with respect to equity returns for the current reset period. The mark-to-market of the options held impacts net investment income and generally offsets the change in value of the embedded derivative within the indexed annuity which is recorded as a component of interest credited to policyholders’ within insurance benefits. SFAS 133 requires that we calculate fair values of index options we may purchase in the future to hedge policyholder index allocations in future reset periods. These fair values represent an estimate of the cost of the options we will purchase in the future, discounted back to the date of the balance sheet, using current market indicators of volatility and interest rates. Changes in the fair values of these liabilities are included in interest credited. The notional amounts of policyholder fund balances allocated to the equity-index options were $2.1 billion at June 30, 2006.

By using derivative instruments, we are exposed to credit risk (our counterparty fails to make payment) and market risk (the value of the instrument falls and we are required to make a payment). When the fair value of a derivative contract is positive, this generally indicates that the counterparty owes us and, therefore, creates a credit risk for us equal to the extent of the fair value gain in the derivative. When the fair value of a derivative contract is negative, we owe the counterparty and therefore we have no credit risk, but have been affected by market risk. We minimize the credit risk in derivative instruments by entering into transactions with high quality counterparties with minimum credit ratings that are reviewed regularly by us, by limiting the amount of credit exposure to any one counterparty, and by requiring certain counterparties to post collateral if our credit risk exceeds certain limits. We also maintain a policy of requiring that all derivative contracts be governed by an International Swaps and Derivatives Association (“ISDA”) Master Agreement. We do not believe that the credit or market risks associated with derivative instruments are material to any insurance subsidiary or the Company.

We and our insurance subsidiaries are required to maintain minimum ratings as a matter of routine practice in negotiating ISDA agreements. Under some ISDA agreements our insurance subsidiaries have agreed to maintain certain financial strength or claims-paying ratings. A downgrade below these levels could result in termination of the derivatives contract at which time any amounts payable by us would be dependent on the market value of the underlying derivative contract. In certain transactions, we and the counterparty have entered into a collateral support agreement requiring us to post collateral upon significant downgrade. We do not believe the inclusion of termination or collateralization events pose any material threat to the liquidity position of any insurance subsidiary or the Company.

Market risk is the adverse effect that a change in interest rates, currency rates, implied volatility rates, or a change in certain equity indexes or instruments has on the value of a financial instrument. We manage the market risk by establishing and monitoring limits as to the types and degree of risk that may be undertaken.

Our derivative instruments are monitored by our risk management committee as part of that committee’s oversight of our derivative activities. Our derivative instruments committee is responsible for implementing various hedging strategies that are developed through our analysis of financial simulation models and other internal and industry sources. The resulting hedging strategies are then incorporated into our overall risk management strategies.

8. Segment Information

In the quarter ended June 30, 2006, we completed our merger with Jefferson-Pilot and changed our management organization. We also realigned our reporting segments to reflect the current manner by which our chief operating decision makers view and manage the business. All segment data for reporting periods have been adjusted to reflect the current segment reporting. As a result of these changes, we provide products and services in five operating businesses: (1) Individual Markets, (2) Employer Markets, (3) Investment Management, (4) Lincoln UK and (5) Lincoln Financial Media, and report results through seven business segments. The following is a brief description of these segments.

Individual Markets. The Individual Markets business provides its products through two segments, Individual Annuities and Individual Life Insurance. Through its Individual Annuities segment, Individual Markets provides tax-deferred investment growth and lifetime income opportunities for its clients by offering individual fixed annuities, including indexed annuities, and variable annuities. The Individual Life Insurance segment offers wealth protection and transfer opportunities through both single and survivorship versions of universal life, variable universal life, interest-sensitive whole life, term insurance, as well as a linked-benefit product, which is a universal life insurance policy linked with riders that provide for long-term care costs.

16

Employer Markets. The Employer Markets business provides its products through two segments, Retirement Products & Other and Benefit Partners. Through its Retirement Products & Other segment, Employer Markets provides employer-sponsored variable and fixed annuities, mutual-fund based programs in the 401(k), 403(b), and 457 marketplaces and corporate/bank owned life insurance. The Benefit Partners segment offers group non-medical insurance products, principally term life, disability and dental, to the employer marketplace through various forms of contributory and noncontributory plans. Most of our group contracts are sold to employers with fewer than 500 employees.

Investment Management.    The Investment Management segment, through Delaware Investments, provides a broad range of managed accounts and portfolios, mutual funds, subadvised funds, and other investment products to individual investors and to institutional investors such as private and public pension funds, foundations, and endowment funds. Delaware Investments is the marketing name for Delaware Management Holdings, Inc. and its subsidiaries.

Lincoln UK. Lincoln UK is headquartered in Barnwood, Gloucester, England, and is licensed to do business throughout the United Kingdom. Lincoln UK primarily focuses on protecting and enhancing the value of its existing customer base. The segment accepts new deposits from existing relationships and markets a limited range of new products. Lincoln UK’s product portfolio principally consists of unit-linked life and pension products, which are similar to U.S. produced variable life and annuity products, where the risk associated with the underlying investments is borne by the policyholders.

Lincoln Financial Media. The Lincoln Financial Media segment operates domestic radio and television broadcasting stations and produces syndicated collegiate sports programming. Federal Communications Commission (“FCC”) licenses, which are required for operations, are subject to periodic renewal.All of our licenses are current.

We also have “Other Operations,” which includes the financial data for operations that are not directly related to the business segments, unallocated items (such as corporate investment income on assets not allocated to our business units, interest expense on short-term and long-term borrowings, and certain expenses, including restructuring and merger-related expenses) and the historical results of the former reinsurance segment, which was sold to Swiss Re Life & Health America Inc. (“Swiss Re”) in the fourth quarter of 2001, along with the ongoing amortization of deferred gain on the indemnity reinsurance portion of the transaction with Swiss Re.

Segment operating revenue and income (loss) from operations are internal measures used by our management and Board of Directors to evaluate and assess the results of our segments. Operating revenue is GAAP revenue excluding realized gains and losses on investments and derivative instruments, gains and losses on reinsurance embedded derivative/trading securities, gains and losses on sale of subsidiaries/businesses and the amortization of deferred gain arising from reserve development on business sold through reinsurance. Income (loss) from operations is GAAP net income excluding net realized investment gains and losses, losses on early retirement of debt, reserve development net of related amortization on business sold through reinsurance and cumulative effect of accounting changes. Our management and Board of Directors believe that operating revenue and income (loss) from operations explain the results of our ongoing businesses in a manner that allows for a better understanding of the underlying trends in our current businesses because net realized investment gains and losses, reserve development net of related amortization on business sold through reinsurance and cumulative effect of accounting changes are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and in many instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. Operating revenue and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

17

The following tables show financial data by segment:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2006			2005			2006			2005
Revenue:
Segment Operating Revenue:
Individual Markets:
Individual Annuities	$	552		$	348		$	927		$	688
Life Insurance		901			475			1,402			951
Individual Markets Total		1,453			823			2,329			1,639
Employer Markets:
Retirement Products & Other		350			287			656			574
Benefit Partners		355			-			355			-
Employer Markets Total		705			287			1,011			574
Investment Management (1)		135			114			274			224
Lincoln UK		81			79			151			153
Lincoln Financial Media(2)		58			-			58			-
Other Operations		98			102			157			160
Consolidating adjustments		(29	)		(21	)		(57	)		(59	)
Net realized investment results (3)		(5	)		(9	)		(6	)		3
Total	$	2,496		$	1,375		$	3,917		$	2,694
Net Income:
Segment Operating Income:
Individual Markets:
Individual Annuities	$	89		$	52		$	155		$	102
Life Insurance		147			63			216			121
Individual Markets Total		236			115			371			223
Employer Markets:
Retirement Products & Other		70			50			131			96
Benefit Partners		37			-			37			-
Employer Markets Total		107			50			168			96
Investment Management (1)		12			(1	)		27			3
Lincoln UK		10			10			21			20
Lincoln Financial Media		12			-			12			-
Other Operations		(26	)		30			(26	)		33
Net realized investment results (4)		(2	)		(6	)		(3	)		2
Net Income	$	349		$	198		$	570		$	377

(1)  Revenues for the Investment Management segment include inter-segment revenues for asset management services provided to our other segments. These inter-segment revenues totaled $24 million for the three months ended June 30, 2006 and 2005, and $48 million and $49 million for the six months ended June 30, 2006 and 2005, respectively.

(2)  Lincoln Financial Media revenues are net of $9 million of commissions paid to agencies.

(3)  Includes realized losses on investments and derivative instruments of $7 million and $4 million for the three months ended June 30, 2006 and 2005, respectively; gain (loss) on reinsurance embedded derivative/trading securities of $2 million and $(5) million for the three months ended June 30, 2006 and 2005, respectively. Includes realized losses on investments and derivative instruments of $14 million and $11 million for the six months ended June 30, 2006 and 2005, gain on reinsurance embedded derivative/trading securities of $8 million for the six months ended June 30, 2006; and gain on sale of subsidiaries/businesses of $14 million for the six months ended June 30, 2005.

(4)  Includes realized losses on investments and derivative instruments of $3 million for the three months ended June 30, 2006 and 2005; gain (loss) on reinsurance embedded derivative/trading securities of $1 million and $(3) million for the three months ended June 30, 2006 and 2005, respectively. Includes realized losses on investments and derivative instruments of $8 million and $7 million for the six months ended June 30, 2006 and 2005, respectively; gain on reinsurance embedded derivative/trading securities of $5 million for the six months ended June 30, 2006; and gain on sale of subsidiaries/businesses of $9 million for the six months ended June 30, 2005.

	As of
(in millions)	June 30, 2006
Assets:
Individual Markets
Individual Life Insurance	$	41,163
Individual Annuities		65,281
Employer Markets
Retirement Products & Other		35,136
Benefit Partners		2,262
Investment Management		534
Lincoln UK		10,108
Lincoln Financial Media		1,486
Other Operations		24,728
Consolidating adjustments		(13,318	)
Total	$	167,380

18

9. Earnings Per Share

The income used in the calculation of our diluted earnings per share is net income reduced by minority interest adjustments related to outstanding stock options under the Delaware Investments U.S., Inc. (“DIUS”) stock option incentive plan of less than $1 million for all periods presented.

A reconciliation of the denominator in the calculations of basic and diluted net income and income before cumulative effect of accounting change per share is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2006			2005			2006			2005
Denominator: [number of shares]
Weighted-average shares as used in basic calculation		279,117,917			172,758,060			227,136,449			173,224,239
Conversion of preferred stock		235,656			260,096			239,492			264,471
Non-vested stock		1,112,575			837,829			1,336,800			841,289
Average stock options outstanding during the period		16,716,416			4,798,166			12,783,702			5,836,051
Assumed acquisition of shares with assumed proceeds and
benefits from exercising stock options		(14,253,642	)		(4,180,042	)		(11,047,731	)		(5,104,262	)
Shares repurchaseable from measured but unrecognized
stock option expense		(1,552,553	)		(383,813	)		(1,188,658	)		(498,273	)
Average deferred compensation shares		1,243,972			1,262,731			1,272,201			1,247,731
Weighted-average shares, as used in diluted calculation		282,620,341			175,353,027			230,532,255			175,811,246

We have stock options outstanding that were issued at prices that are above the current average market price of our common stock. In the event the average market price of our common stock exceeds the issue price of stock options, such options would be dilutive to our earnings per share and will be shown in the table above. Participants in our deferred compensation plans that select our stock for measuring the investment return attributable to their deferral amounts will be paid out in our stock. These deferred compensation plan obligations are dilutive and are shown in the table above.

19

10.   Employee Benefit Plans

Pension and Other Post-retirement Plans

As a result of our merger with Jefferson-Pilot, we maintain defined benefit pension plans and post-retirement benefit plans for the former U.S. employees of Jefferson-Pilot and have included these plans in the tables below as of April 3, 2006. The components of net periodic benefit expense for our defined benefit pension plans and post-retirement benefit plans are as follows:

							Other Post-retirement
	Pension Benefits						Benefits
	Three months ended						Three months ended
	June 30,						June 30,
(in millions)	2006			2005			2006		2005
U.S. Plans:
Service cost	$	9		$	5		$	1	$	1
Interest cost		15			8			2		1
Expected return on plan assets		(19	)		(11	)		-		-
Recognized net actuarial losses		1			-			-		-
Net periodic benefit expense	$	6		$	2		$	3	$	2
Non-U.S. Plans:
Service cost	$	-		$	-
Interest cost		4			4
Expected return on plan assets		(4	)		(3	)
Recognized net actuarial (gains) losses		1			1
Net periodic benefit expense	$	1		$	2
		Pension Benefits						Other Post-retirement Benefits
		Six months ended						Six months ended
		June 30,						June 30,
(in millions)		2006			2005			2006		2005
U.S. Plans:
Service cost	$	14		$	10		$	1	$	1
Interest cost		23			17			3		3
Expected return on plan assets		(30	)		(22	)		-		-
Recognized net actuarial losses		2			-			1		-
Net periodic benefit expense	$	9		$	5		$	5	$	4
Non-U.S. Plans:
Service cost	$	-		$	1
Interest cost		8			8
Expected return on plan assets		(8	)		(7	)
Recognized net actuarial (gains) losses		2			2
Net periodic benefit expense	$	2		$	4

20

11. Stock-Based Incentive Compensation Plans

See Note 8 to the Consolidated Financial Statements in our 2005 Form 10-K for a detailed discussion of stock and incentive compensation.

We have various incentive plans for our employees, agents and directors and our subsidiaries that provide for the issuance of stock options, stock incentive awards, stock appreciation rights (“SARs”), restricted stock awards, restricted stock units (“performance shares”), and deferred stock units. DIUS has a separate stock option incentive plan. We have a policy of issuing new shares to satisfy option exercises. Total pre-tax compensation expense (income) for all of our stock-based incentive compensation plans is as follows:

	Three Months Ended				Six Months Ended
(in millions)	June 30,				June 30,
	2006		2005		2006		2005
Stock options	$	3	$	1	$	5	$	2
Shares		7		6		10		12
Cash awards		1		1		1		2
DIUS stock options		2		5		5		8
SARs		-		1		-		2
Restricted stock		1		-		1		1
Total	$	14	$	14	$	22	$	27
Recognized tax benefit	$	5	$	5	$	8	$	9

Outstanding options to acquire Jefferson-Pilot common stock that existed immediately prior to the date of the merger remain subject to the same terms and conditions that existed, except that each of these stock options is now or will be exercisable for LNC common stock equal to the number of shares of Jefferson-Pilot common stock subject to such option multiplied by 1.0906 (rounded down to the nearest whole share), with the exercise price determined by dividing the exercise price of the Jefferson-Pilot options by 1.0906 (rounded up to the sixth decimal place). Grants of Jefferson-Pilot stock options in February 2006 will generally continue to vest in one-third annual increments. All employee and director stock options outstanding as of December 31, 2005 vested and became exercisable upon closing the merger. Jefferson-Pilot stock options held by its non-employee agents did not become fully vested and exercisable in connection with the merger, but will vest in accordance with the applicable option agreement.

21

LNC Stock-Based Incentive Plans

Information with respect to stock option and performance share awards, granted under our long-term incentive plans is provided in the table below.

	June 30,
	2006		2005
Awards
10-year LNC stock options		-		370,646
Non-employee agent stock options		-		-
Performance share units		174,173		435,827
Outstanding at June 30
10-year LNC stock options		888,527		988,787
Non-employee agent stock options		559,072		-
Performance share units		1,068,413		1,594,026

In the second quarter of 2006, a performance period from 2006 - 2008 was approved by the Compensation Committee. Participants in this performance period received one-half of their award in 10-year LNC stock options, with the remainder of the award in a combination of performance shares and cash. Stock options granted for this performance period vest ratably over the three-year period, based solely on a service condition. Depending on the performance, the actual amount of performance units could range from zero to 200% of the granted amount.

For the three-year performance periods 2004-2006 and 2005-2007, the performance measures for determining the actual amount of 10-year LNC stock options and all performance share units were established at the beginning of each three-year performance period. Depending on the performance, the actual amount of stock options and performance share units awarded could range from zero to 200% of the granted amount, with the amount in excess of 100% resulting in a payout of additional shares. Certain Jefferson-Pilot executives were brought into the 2004-2006 and 2005-2007 plans on a pro-rata basis. Non-employee agent stock options are five-year options with some vesting based on the agents’ future performance and others vesting upon grant based on past performance.

The option price assumptions used for our stock option incentive plans were as follows:

	Six Months Ended June 30, 2006			Six Months Ended June 30, 2005
Dividend yield		2.7	%		3.1	%
Expected volatility		23.1	%		26.5	%
Risk-free interest rate		4.9	%		4.0	%
Expected life (in years)		4.5			4.1
Weighted-average fair value per option granted	$	11.57		$	9.10

Expected volatility is measured based on the historical volatility of the LNC stock price for the previous three-year period. The expected term of the options granted represents the weighted-average period of time from the grant date to the exercise date, weighted for the number of shares exercised for an option grant relative to the number of options exercised over the previous three-year period.

As of June 30, 2006, there was $37 million of unrecognized compensation cost related to non-vested awards under these plans. The cost is expected to be recognized over a weighted-average period of 2.1 years. Information with respect to our incentive plans involving stock options with performance conditions is as follows:

22

						Weighted-
						Average		Aggregate
				Weighted-		Remaining		Intrinsic
				Average		Contractual		Value
Options	Shares			Exercise Price		Term		(in millions)
Outstanding at December 31, 2005		988,787		$	43.01
Jefferson-Pilot agent options converted to LNC		573,144			46.97
Exercised (includes shares tendered)		(105,681	)		27.81
Forfeited or expired		(8,651	)		46.77
Outstanding at June 30, 2006		1,447,599		$	45.69		6.11	$	16
Vested or expected to vest at June 30, 2006 (1)		1,426,161		$	45.67		6.07	$	15
Exercisable at June 30, 2006		456,347		$	41.13		3.50	$	7

⁽¹⁾Includes estimated forfeitures.

The total fair value of options vested during the six months ended June 30, 2006 and 2005 was $1 million and $2 million, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2006 was $3 million. There were no options with performance conditions exercised during the six months ended June 30, 2005 as no performance period had been completed.

Information with respect to our incentive plans involving stock options with service conditions is as follows:

						Weighted-
						Average		Aggregate
				Weighted-		Remaining		Intrinsic
				Average		Contractual		Value
Options	Shares			Exercise Price		Term		(in millions)
Outstanding at December 31, 2005		7,928,931		$	44.58
Granted-original		817,966			56.36
Granted-reloads		77,783			56.93
Jefferson-Pilot options converted to LNC		10,280,363			41.84
Exercised (includes shares tendered)		(2,771,537	)		41.03
Forfeited or expired		(70,614	)		49.83
Outstanding at June 30, 2006		16,262,892		$	44.09		5.24	$	201
Vested or expected to vest at June 30, 2006 (1)		16,199,977		$	44.04		5.22	$	201
Exercisable at June 30, 2006		14,182,579		$	42.60		4.65	$	196

⁽¹⁾ Includes estimated forfeitures.

The total fair value of options vested during the six months ended June 30, 2006 and 2005 was $4 million and $5 million, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2006 and 2005 was $43 million and $17 million, respectively.

Information with respect to our performance shares at June 30, 2006 is as follows: 

				Weighted-Average
				Grant-Date
	Shares			Fair Value
Nonvested at December 31, 2005		1,577,278		$	37.65
Granted		174,173			56.04
Vested (1)		(641,736	)		25.88
Forfeited		(41,302	)		46.99
Nonvested at June 30, 2006		1,068,413		$	47.36

⁽¹⁾ Shares vested at December 31, 2005, but were not issued until the second quarter of 2006.

23

Delaware Stock Option Incentive Plan

The option price assumptions used for the DIUS stock option incentive plans were as follows:

	Six Months Ended June 30, 2006			Six Months Ended June 30, 2005
Dividend yield		1.3	%		2.6	%
Expected volatility		38.0	%		45.0	%
Risk-free interest rate		4.7	%		3.9	%
Expected life (in years)		4.1			4.6
Weighted-average fair value per option granted	$	51.35		$	48.84

Expected volatility is measured based on several factors including the historical volatility of the DIUS valuation since the inception of the plan in 2001 and comparisons to other public management companies with similar operating structures. The expected term of the options granted represents the weighted-average period of time from the grant date to the exercise date, based on the historical expected life of DIUS options.

At June 30, 2006, DIUS had 10,092,485 shares of common stock outstanding. Included in other liabilities on our Consolidated Balance Sheet is $40 million related to this plan. Information with respect to the DIUS incentive plan involving stock options is as follows:

						Weighted-
						Average		Aggregate
				Weighted-		Remaining		Intrinsic
				Average		Contractual		Value
Options	Shares			Exercise Price		Term		(in millions)
Outstanding at December 31, 2005		1,469,194		$	128.74
Granted - original		68,000			155.73
Exercised (includes shares tendered)		(92,485	)		116.83
Forfeited or expired		(122,530	)		131.04
Outstanding at June 30, 2006		1,322,179		$	130.75		6.9	$	33
Vested or expected to vest at June 30, 2006 (1)		1,284,788		$	130.66		6.9	$	32
Exercisable at June 30, 2006		769,955		$	123.82		6.4	$	25

⁽¹⁾ Includes estimated forfeitures.

The total fair value of shares that became fully vested during the six months ended June 30, 2006 and 2005 was $12 million and $7 million, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2006 and 2005 was $4 million and $1 million, respectively. Unrecognized compensation expense related to nonvested awards under this plan was $21 million as of June 30, 2006. The cost is expected to be recognized over a weighted-average period of 2.6 years. The amount of cash received and the tax benefit realized from stock option exercises under this plan during the six months ended June 30, 2006 was $11 million and $1 million, respectively, compared to $5 million and $0.4 million for the six months ended June 30, 2005.

The value of DIUS shares is determined using a market transaction approach based on profit margin, assets under management and revenues. The valuation is performed by a third-party appraiser at least semi-annually and reviewed by the Compensation Committee. The last valuation was performed as of December 31, 2005 with a value of $155.73 per share. The value of outstanding shares exercised under this plan and the intrinsic value of vested and partially vested options totaled $40 million at June 30, 2006 and is included in other liabilities on the Consolidated Balance Sheet.

Stock Appreciation Rights Incentive Plan

We recognize compensation expense for SARs based on the fair value method using an option-pricing model. Compensation expense and the related liability are recognized on a straight-line basis over the vesting period of the SARs. The SARs liability is marked-to-market through net income, which causes volatility in net income as a result of changes in the market value of our stock. We hedge this volatility by purchasing call options on LNC stock. Call options hedging vested

24

SARs are also marked-to-market through net income. The mark-to-market gain (loss) recognized through net income on the call options on LNC stock was $1 million and $2 million for the three and six months ended June 30, 2006, respectively, compared to $0.3 million and $(1) million for the three and six months ended June 30, 2005. The SARs liability at June 30, 2006 and December 31, 2005 was $6 million and $8 million, respectively. As of June 30, 2006, there was $6 million of unrecognized compensation cost related to nonvested awards under this plan excluding the effect of call options. The cost is expected to be recognized over a weighted-average period of 3.6 years.

The option pricing assumptions used for our SAR plan were as follows:

	Six Months Ended  June 30, 2006			Six Months Ended June 30, 2005
Dividend yield		2.8	%		3.2	%
Expected volatility		23.5	%		23.1	%
Risk-free interest rate		5.7	%		3.9	%
Expected life (in years)		2.6			2.4
Weighted-average fair value per option granted	$	14.70		$	8.50

Expected volatility is measured based on the historical volatility of the LNC stock price. The expected term of the options granted represents time from the grant date to the exercise date.

Information with respect to our SAR plan is as follows:

						Weighted-
						Average		Aggregate
				Weighted-		Remaining		Intrinsic
				Average		Contractual		Value
SARs	Shares			Exercise Price		Term		(in millions)
Outstanding at December 31, 2005		1,098,126		$	44.24
Granted-original		182,550			54.91
Exercised (includes shares tendered)		(375,125	)		43.30
Forfeited or expired		(33,567	)		43.52
Outstanding at June 30, 2006		871,984		$	46.87		2.70	$	8
Vested or expected to vest at June 30, 2006 (1)		838,937		$	46.70		2.60	$	8
Exercisable at June 30, 2006		383,361		$	46.25		1.48	$	4

⁽¹⁾ Includes estimated forfeitures.

The payment for SARs exercised during the six months ended June 30, 2006 and 2005 was $5 million and $4 million, respectively.

In addition to the stock-based incentives discussed above, we have awarded restricted shares of our stock (non-vested stock) under the incentive compensation plan, generally subject to a three-year vesting period. Information with respect to our restricted stock at June 30, 2006 is as follows:

				Weighted-Average
				Grant-Date
	Shares			Fair Market Value
Nonvested at December 31, 2005		177,598		$	43.01
Granted		124,168			55.68
Vested		(51,953	)		38.23
Nonvested at June 30, 2006		249,813		$	50.41

As of June 30, 2006, there was $9 million of unrecognized compensation cost related to nonvested awards under this plan. The cost is expected to be recognized over a weighted-average period of 2.48 years.

25

12. Restructuring Charges

Merger with Jefferson-Pilot

Upon completion of the merger with Jefferson-Pilot, we implemented a restructuring plan related to the integration of our legacy operations with those of Jefferson-Pilot. The realignment is designed to enhance productivity, efficiency and scalability while positioning us for future growth. During the second quarter of 2006, we recorded an expense of $9 million in underwriting, acquisition, insurance and other expenses on the Consolidated Statements of Income related to this restructuring plan. The expense was recorded to Other Operations and the related reserve is included in other liabilities on the Consolidated Balance Sheets.

The following table provides information regarding merger-related expenses and restructuring:

(in millions)	Total
Total expected costs (1)	$	180
Employee severance and termination benefits		9
Incurred through June 30, 2006		-
Restructuring reserve at June 30, 2006	$	9
Additional amounts expended that do not qualify as restructuring charges	$	7
Expected completion date		4th Quarter 2009

⁽¹⁾ Includes $13 million of merger-integration costs for the involuntary employee termination benefits that were included in accounts payable, accruals and other liabilities in the purchase price allocation in Note 2. As of June 30, 2006, approximately $2 million of these costs were incurred.

13. Stock Repurchases

On April 3, 2006, we entered into an agreement to purchase a variable number of shares of our common stock from a third party broker-dealer, using an accelerated stock buyback program for an aggregate purchase price of $500 million. Shortly thereafter, we received approximately 8 million shares of our common stock. The number of shares repurchased under this agreement was based on the volume weighted average share price of our common stock over the program’s duration. On July 17, 2006, we received our final delivery of shares under the program, bringing the total aggregate shares retired under the plan to approximately 8.8 million shares. All shares were retired upon receipt.

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of the financial condition of Lincoln National Corporation and its consolidated subsidiaries (“LNC” or the “Company” which also may be referred to as “we” or “us”). On April 3, 2006, LNC completed its merger with Jefferson-Pilot Corporation (Jefferson-Pilot). Beginning on April 3, 2006, the results of operations and financial condition of Jefferson-Pilot, after being adjusted for the effects of purchase accounting, were consolidated with LNC’s. Accordingly, all financial information presented herein for the three months ended and as of June 30, 2006 includes the consolidated accounts of LNC and Jefferson-Pilot. The financial information presented herein for the six months ended June 30, 2006, reflects the accounts of LNC for the three months ended March 31, 2006, and the consolidated accounts of LNC and Jefferson-Pilot for the three months ended June 30, 2006. The data presented herein for 2005 periods reflects the accounts of LNC. The balance sheet information presented below is as of June 30, 2006 and December 31, 2005. The statement of operations information is for the three and six months ended June 30, 2006 and 2005.

For more information regarding the completion of the merger, including the calculation and allocation of the purchase price, see Note 2 to the Consolidated Financial Statements in this Form 10-Q.

This discussion and analysis should be read in conjunction with our Consolidated Financial Statements and Notes thereto presented in Item 1 (“Consolidated Financial Statements”) and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in our latest annual report on Form 10-K for the year ended December 31, 2005 (“2005 Form 10-K”). On April 3, 2006, LNC filed a Current Report on Form 8-K dated April 3, 2006 that incorporated the audited financial statements and notes for Jefferson-Pilot as of December 31, 2005 and 2004, and for the years ended December 31, 2005, 2004 and 2003 from Jefferson-Pilot’s Annual Report on Form 10-K for the year ended December 31, 2005. The accompanying consolidated financial statements should also be read in conjunction with those financial statements and notes.

You should also read our discussion below of “Critical Accounting Policies” for an explanation of those accounting estimates that we believe are most important to the portrayal of our financial condition and results of operations and that require our most difficult, subjective and complex judgments. Financial information in the tables that follow is presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”), unless otherwise indicated. Certain reclassifications have been made to prior periods’ financial information to conform to the 2006 presentation.

Forward-Looking Statements—Cautionary Language

Certain statements made in this report and in other written or oral statements made by LNC or on LNC’s behalf are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: “believe”, “anticipate”, “expect”, “estimate”, “project”, “will”, “shall” and other words or phrases with similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, operations, trends or financial results. LNC claims the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the results contained in the forward-looking statements. Risks and uncertainties that may cause actual results to vary materially, some of which are described within the forward-looking statements include, among others:

· Problems arising with the ability to successfully integrate our and Jefferson-Pilot’s businesses, which may affect our ability to operate as effectively and efficiently as expected or to achieve the expected synergies from the merger or to achieve such synergies within our expected timeframe, and the application of purchase price accounting on results of operations;

· Legislative, regulatory or tax changes, both domestic and foreign, that affect the cost of, or demand for, LNC’s products, the required amount of reserves and/or surplus, or otherwise affect our ability to conduct business, including changes to statutory reserves and/or risk-based capital requirements related to secondary guarantees under universal life and variable annuity products such as Actuarial Guideline 38; restrictions on revenue sharing and 12b-1 payments; and the potential for U.S. Federal tax reform;

· The initiation of legal or regulatory proceedings against LNC or its subsidiaries and the outcome of any legal or regulatory proceedings, such as: (a) adverse actions related to present or past business practices common in businesses in which LNC and its subsidiaries compete; (b) adverse decisions in significant actions including, but

27

not limited to, actions brought by federal and state authorities, and extra-contractual and class action damage cases; (c) new decisions that result in changes in law; and (d) unexpected trial court rulings; 

· Changes in interest rates causing a reduction of investment income, the margins of LNC’s fixed annuity and life insurance businesses and demand for LNC’s products;

· A decline in the equity markets causing a reduction in the sales of LNC’s products, a reduction of asset fees that LNC charges on various investment and insurance products, an acceleration of amortization of deferred acquisition costs (“DAC”), the value of business acquired (“VOBA”), deferred sales inducements (“DSI”) and deferred front-end loads (“DFEL”) and an increase in liabilities related to guaranteed benefit features of LNC’s variable annuity products;

· Ineffectiveness of LNC’s various hedging strategies used to offset the impact of declines in and volatility of the equity markets;

· A deviation in actual experience regarding future persistency, mortality, morbidity, interest rates or equity market returns from LNC’s assumptions used in pricing its products, in establishing related insurance reserves, and in the amortization of intangibles that may result in an increase in reserves and a decrease in net income;

· Changes in accounting principles generally accepted in the United States (“GAAP”) that may result in unanticipated changes to LNC’s net income;

· Lowering of one or more of LNC’s debt ratings issued by nationally recognized statistical rating organizations, and the adverse impact such action may have on LNC’s ability to raise capital and on its liquidity and financial condition;

· Lowering of one or more of the insurer financial strength ratings of LNC’s insurance subsidiaries, and the adverse impact such action may have on the premium writings, policy retention, and profitability of its insurance subsidiaries;

· Significant credit, accounting, fraud or corporate governance issues that may adversely affect the value of certain investments in the portfolios of LNC’s companies requiring that LNC realize losses on such investments;

· The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including LNC’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;

· The adequacy and collectibility of reinsurance that LNC has purchased;

· Acts of terrorism or war that may adversely affect LNC’s businesses and the cost and availability of reinsurance;

· Competitive conditions, including pricing pressures, new product offerings and the emergence of new competitors, that may affect the level of premiums and fees that LNC can charge for its products;

· The unknown impact on LNC’s business resulting from changes in the demographics of LNC’s client base, as aging baby-boomers move from the asset-accumulation stage to the asset-distribution stage of life;

· Loss of key management, portfolio managers in the Investment Management segment, financial planners or wholesalers; and

· Changes in general economic or business conditions, both domestic and foreign, that may be less favorable than expected and may affect foreign exchange rates, premium levels, claims experience, the level of pension benefit costs and funding, and investment results.

The risks included here are not exhaustive. Other sections of this report and LNC’s annual reports on Form 10-K, current reports on Form 8-K and other documents filed with the SEC include additional factors which could impact LNC’s business and financial performance. Moreover, LNC operates in a rapidly changing and competitive environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors.

Further, it is not possible to assess the impact of all risk factors on LNC’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undo reliance on forward-looking statements as a prediction of actual results. In addition, LNC disclaims any obligation to update any forward-looking statements to reflect events or circumstances that occur after the date of this report.

28

INTRODUCTION

Executive Summary

We are a holding company that operates multiple insurance and investment management businesses as well as broadcasting and sports programming business through subsidiary companies. Through our business segments, we sell a wide range of wealth protection, accumulation and retirement income products and solutions. These products include institutional and/or retail fixed and indexed annuities, variable annuities, universal life insurance, variable universal life insurance, term life insurance, mutual funds, “529” college savings plans and managed accounts.

Our individual products and services are distributed primarily through brokers, planners, agents and other intermediaries with sales and marketing support provided by Lincoln Financial Distributors (“LFD”), our wholesaling distribution arm. Our group products and services are distributed primarily through financial advisors, employee benefit brokers, third party administrators, and other employee benefit firms with sales support provided by Lincoln’s Employer Markets group and retirement sales specialists. Our retail distributor, Lincoln Financial Retail Distribution, offers LNC and non-proprietary products and advisory services through a national network of approximately 4,100 full-time financial planners and advisors, along with more than 11,000 general agents, all operating under multiple affiliation models and open architecture.

On April 3, 2006, Jefferson-Pilot, a financial services and broadcasting holding company, merged with and into one of our wholly owned subsidiaries. Through its subsidiaries, Jefferson-Pilot provided products and services in four major businesses: (1) life insurance, (2) annuities and investment products, (3) group life, disability and dental insurance and (4) broadcasting and sports programming production and distribution.

In the discussion of the results of operations that follows, we identify the results of the merger with Jefferson-Pilot in the period over period comparisons as the results for Jefferson-Pilot were not included in our results until the effective date of the merger. The Jefferson-Pilot amounts that have been isolated represent the results of the acquired Jefferson-Pilot’s companies. During the three months ended June 30, 2006, these amounts represent the impact of the merger; however, as we adopt new processes for expenses and capital allocations, the identification of the results of the Jefferson-Pilot legal entities will not necessarily be indicative of the impact of the merger on our results. Also as part of the merger, we realigned our businesses to conform to the way we intend to manage and assess our business going forward. Accordingly, all prior period segment results have been adjusted to reflect the new segmentation.

As a result of our merger with Jefferson-Pilot, we provide products and services in five operating businesses: (1) Individual Markets, (2) Employer Markets, (3) Investment Management, (4) Lincoln UK and (5) Lincoln Financial Media, and are reporting results through seven business segments. The following is a brief description of these segments.

Individual Markets. The Individual Markets business provides its products through two segments, Individual Annuities and Individual Life Insurance. Through its Individual Annuities segment, Individual Markets provides tax-deferred investment growth and lifetime income opportunities for its clients by offering individual fixed annuities, including indexed annuities, and variable annuities. The Individual Life Insurance segment offers wealth protection and transfer opportunities through both single and survivorship versions of universal life, variable universal life, interest-sensitive whole life, term insurance, as well as a linked-benefit product, which is a universal life insurance policy linked with riders that provide for long-term care costs.

Employer Markets. The Employer Markets business provides its products through two segments, Retirement Products & Other and Benefit Partners. Through its Retirement Products & Other segment, Employer markets provides employer-sponsored variable and fixed annuities, mutual-fund based programs in the 401(k), 403(b), and 457 marketplaces and corporate owned life insurance. The Benefit Partners segment offers group non-medical insurance products, principally term life, disability and dental, to the employer marketplace through various forms of contributory and noncontributory plans. Most of our group contracts are sold to employers with fewer than 500 employees.

Investment Management.    The Investment Management segment, through Delaware Investments, provides a broad range of managed accounts and portfolios, mutual funds, subadvised funds, and other investment products to individual investors and to institutional investors such as private and public pension funds, foundations, and endowment funds. Delaware Investments is the marketing name for Delaware Management Holdings, Inc. and its subsidiaries.

Lincoln UK. Lincoln UK is headquartered in Barnwood, Gloucester, England, and is licensed to do business throughout the United Kingdom. Lincoln UK primarily focuses on protecting and enhancing the value of its existing customer base. The segment accepts new deposits from existing relationships and markets a limited range of new products. Lincoln UK’s product

29

portfolio principally consists of unit-linked life and pension products, which are similar to U.S. produced variable life and annuity products, where the risk associated with the underlying investments is borne by the policyholders.

Lincoln Financial Media. The Lincoln Financial Media segment operates 18 domestic radio and 3 television broadcasting stations and produces and distributes syndicated collegiate sports programming. Profitability for this segment is drivenby market growth, audience levels (ratings), which drives demandfor advertising inventory and pricing, and operating efficiencies. We focus our efforts at the local level, combining sound business practices with service to the community.

We also have “Other Operations,” which includes the financial data for operations that are not directly related to the business segments, unallocated corporate items (such as investment income on investments related to the amount of statutory surplus in our insurance subsidiaries that is not allocated to our business units and other corporate investments, interest expense on short-term and long-term borrowings, and certain expenses, including restructuring and merger-related expenses) and the historical results of the former reinsurance segment, which was sold to Swiss Re Life & Health America Inc. (“Swiss Re”) in the fourth quarter of 2001, along with the ongoing amortization of deferred gain on the indemnity reinsurance portion of the transaction with Swiss Re.

We view our business similar to a columned structure. The base of the structure is our employees. Overlaying the base is financial and risk management, and operating efficiency, which are the cornerstones of our management and business philosophy. Talented employees and strong financial and risk management provide the foundation from which we operate and grow our company. Our April 2006 combination with Jefferson-Pilot, well known within the industry for their operational effectiveness, further strengthens the foundation to deliver on our strategic intent. With that as a foundation, there are three pillars that we focus on—product excellence, power of the brand and distribution reach.

Product excellence is one of the pillars of our business. It is important that we continually develop and provide products to the marketplace that not only meet the needs of our customers and compete effectively, but also satisfy our risk profile and meet our profitability standards.

Our merger with Jefferson-Pilot has increased our distribution breadth through retail distribution channels. In addition, we have expanded the life and annuity products available for our existing channels. During 2006 and into 2007, we will be focusing on making a larger, unified product suite available to our distribution force.

The creation of our Employer Markets segment should allow us to better capitalize on the success we have already had in this market place - more than $35 billion in assets under management and administration - and on trends in employer- sponsored benefit plans. These trends include a decline in defined benefit pension plans and an increase in voluntary defined contribution plans such as 401(k)s / 403(b)s, and a similar trend towards voluntary group life and disability, giving way to a convergence of distribution strategies. We see opportunities to capitalize on revenue synergies by leveraging our Benefit Partners group business with Retirement Products’ defined contribution platform for a single employer solution; which we believe will be appealing in the small and mid-case markets.

Within the Individual Markets’ variable annuity arena, our Lincoln Smart Security^SM Advantage, with its one and five-year reset feature, continued to experience growth in the first six months, with elections totaling 55% of deposits for the first six months of 2006. As a result of our merger with Jefferson-Pilot, we now offer an indexed fixed annuity which offers upside growth from equity markets with fixed return protection. We believe that the baby-boomer generation reaching retirement age will present an emerging opportunity for companies like ours that offer products allowing baby-boomers to better manage their wealth accumulation, retirement income and wealth transfer needs.

In our Individual Markets Life Insurance segment, we continue to face competitive pressures, especially related to life insurance products with secondary guarantees. For products with lapse protection riders, we remain committed to maintaining appropriate risk management and pricing discipline despite the competitive environment. Sales of insurance products with secondary guarantees comprised 65% of our life insurance sales for the second quarter of 2006. In addition, we are seeking capital market solutions in response to new regulations requiring increases in statutory reserves for these products.

Our mutual fund offerings have had strong performance over the one-, three-, and five-year performance periods, resulting in strong deposits and net flows and adding to the assets under management for both the retail and institutional products lines in our Investment Management segment. Growth in deposits and net flows have also benefited from the changes we made during 2005 in the management of certain asset category offerings.

We continue to expect our major challenges in 2006 to include:

30

§  The successful integration of the Jefferson-Pilot businesses. 

§  While recent increases in long-term rates has eased pressure on spreads a continuation of the low interest rate environment creates a challenge for our products that generate investment margin profits, such as fixed annuities and universal life insurance.

§  The continued, successful expansion of our wholesale distribution businesses.  

§ The continuation of competitive pressures in the life insurance marketplace.

§  Increased regulatory scrutiny of the life and annuity industry, which may lead to higher product costs and negative perceptions about the industry.  

§  Continued focus by the government on tax reform, which may impact our products. 

Recent Developments

On April 3, 2006, we completed our merger with Jefferson-Pilot. We paid $1.8 billion in cash and issued approximately 112 million shares of our common stock to the former holders of Jefferson-Pilot common stock in connection with the merger. We financed the cash portion of the merger consideration by borrowing $1.8 billion under the credit agreement that we entered into with a group of banks in December 2005 (the “bridge facility”). As a result of the merger, we offer fixed and variable universal life, fixed annuities, including indexed annuities, variable annuities, mutual funds, 401(k) and 403(b) offerings, and group life, disability and dental insurance products. We also operate television and radio stations and produce and distribute syndicated collegiate sports programming.

On April 3, 2006, we issued $500 million of Floating Rate Senior Notes due April 6, 2009 (the “Floating Rate Notes”), from which we received net proceeds of approximately $499 million. The Floating Rate Notes bear interest at a rate of three-month LIBOR plus 0.11% basis points. Also on April 3, 2006, we also issued $500 million of 6.15% Senior Notes due April 7, 2036 (the “Fixed Rate Notes”), from which we received net proceeds of approximately $492 million. On April 20, 2006, we issued $275 million of 6.75% junior subordinated debentures due 2066, from which we received net proceeds of approximately $266 million. On May 17, 2006, we issued $800 million of 7% junior subordinated debentures due 2066, from which we received proceeds of $788 million. The junior subordinated debentures are referred to collectively as Capital Securities. For a more detailed discussion of these financing arrangements see Note 2 to the Consolidated Financial Statements. We used the net proceeds from the offerings, and additional cash to repay the outstanding loan balance under the bridge facility.

On April 3, 2006, we entered into an agreement to purchase a variable number of shares of our common stock from a third party broker-dealer, using an accelerated stock buyback program for an aggregate purchase price of $500 million. Shortly thereafter, we received approximately 8 million shares of our common stock, which were retired. The number of shares repurchased under this agreement was based on the volume weighted average share price of our common stock over the program’s duration. On July 17, 2006, we received our final delivery of shares under the program, bringing the total aggregate shares retired under the plan to 8.8 million shares. We retired the shares and recorded a reduction to shareholders’ equity in our Consolidated Balance Sheet.

See Note 2 to the Consolidated Financial Statements in this Form 10-Q and our current reports on Form 8-K filed with the SEC on April 3, 2006, April 7, 2006 and April 20, 2006 for additional information.

Critical Accounting Policies

The MD&A included in our 2005 Form 10-K contains a detailed discussion of our critical accounting policies. The following information updates the critical accounting policies provided in the 2005 Form 10-K.

Intangible Assets

Accounting for intangible assets requires numerous assumptions, such as estimates of expected future profitability for our operations and our ability to retain existing blocks of life and annuity business in force. Our accounting policies for the deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), deferred sales inducements (“DSI”) and the liability for deferred front-end loads (“DFEL”) impact Individual Annuities, Individual Life Insurance, Employer Markets Retirement Products and Other, Benefit Partners, and Lincoln UK segments. DAC, VOBA, DSI and DFEL may be referred to hereinafter collectively as DAC, unless otherwise noted.

31

Acquisition costs for variable annuity contracts, universal and variable universal life insurance policies are amortized over the lives of the contracts in relation to the incidence of estimated gross profits (“EGPs”) derived from the contracts. Acquisition costs are those costs that vary with and are primarily related to new or renewal business. These costs include commissions and other expenses that vary with new business volume. The costs that we defer are recorded as an asset on our balance sheet as DAC for products we sold or VOBA for books of business we acquired. In addition, we defer costs associated with DSI and revenues associated with DFEL. DFEL is a balance sheet liability, and when amortized, increases revenues and income.

During the third quarter of each year, we conduct our annual comprehensive review of the assumptions underlying the amortization of DAC, VOBA and DFEL. We review the various assumptions including investment margins, mortality and retention. This comprehensive review may result in changes to amortization expense for DAC that could materially impact operating results. Additionally, as a result of our merger with Jefferson-Pilot, as part of our annual review in the third quarter of 2006, we intend to harmonize several assumptions and related processes that may affect the amortization pattern of DAC, VOBA and DFEL. These changes could result in a material adjustment to amortization expense for DAC, VOBA and DFEL. Management is not currently able to estimate the impact of these changes.

The table below presents the balances by business segment as of June 30, 2006.

	Individual Markets				Employer Markets
June 30, 2006 (in millions)	Annuities		Life Insurance		Retirement Products & Other		Benefit Partners		Lincoln UK			Total
DAC & VOBA	$	1,994	$	4,592	$	838	$	121	$	783	$	8,328
DSI		155		-		-		-		-		155
Total DAC & VOBA and DSI		2,149		4,592		838		121		783		8,483
DFEL		85		348		20		-		381		834
Net DAC & VOBA, DSI and DFEL	$	2,064	$	4,244	$	818	$	121	$	402	$	7,649

Note:      The above table includes DAC and VOBA amortized in accordance with SFAS No. 60, “Accounting and Reporting by Insurance Enterprises.” Under SFAS No. 60, acquisition costs for traditional life insurance and Benefit Partners’ products, which include whole life and term life insurance contracts, and group life, dental and disability contracts, are amortized over periods of 10 to 30 years for life products and up to 15 years for group products, on either a straight-line basis or as a level percent of premium of the related policies depending on the block of business. No DAC is being amortized under SFAS No. 60 for fixed and variable payout annuities.

As more fully discussed in our 2005 Form 10-K, we utilize a “reversion to the mean” (“RTM”) process to compute our best estimate long-term gross growth rate assumption to evaluate the carrying value of DAC for our variable annuity, annuity-based 401(k) and unit-linked product blocks of business. Under our enhanced RTM process, on each valuation date, future EGPs are projected using stochastic modeling of a large number of future equity market scenarios in conjunction with best estimates of lapse rates, interest margins and mortality to develop a statistical distribution of the present value of future EGPs for each of the blocks of business. The statistical distribution is designed to identify when deviations in equity market returns from expected returns become significant enough to warrant a change of the future equity return EGP assumption.

The stochastic modeling performed for our variable annuity blocks of business is used to develop a range of reasonably possible future EGPs. We compare the range of the present value of the future EGPs from the stochastic modeling to that used in the DAC amortization model. A set of intervals around the mean of these scenarios is utilized to calculate two separate statistical ranges of reasonably possible EGPs. These intervals are compared to the present value of the EGPs used in the DAC amortization model. If the present value of EGP assumptions utilized in the DAC amortization model were to exceed the margin of the reasonable range of statistically calculated EGPs, a revision of the EGPs used to calculate DAC amortization would occur. If a revision is deemed necessary, future EGPs would be re-projected using the current account values at the end of the period during which the revision occurred along with a revised long-term annual equity market gross return assumption such that the re-projected EGPs would be our best estimate of EGPs.

Given where our best estimate of EGPs for the Individual Markets and Employer Markets annuity products was positioned in the range at June 30, 2006, if we were to assume a 9% long-term gross equity market growth assumption from June 30, 2006 forward in determining the revised EGPs, we estimate that it would result in a cumulative decrease to DAC amortization (positive DAC unlocking) of approximately $128 million pre-tax ($83 million after-tax). To further illustrate the position in the range of our best estimate of EGPs for the Individual Markets Annuity segment at June 30, 2006, a one-quarter equity market movement of positive 15% would bring us to the first of the two statistical ranges while a one quarter equity market movement of positive 40% would bring us to the second of the two ranges for this segment. Subsequent equity market performance that would keep us at or move us beyond the first statistical range would likely result in positive

32

unlocking. Negative equity market performance would have to be significantly greater than the above percentages for us to exceed the lower end of the two statistical ranges.

For a more detailed discussion of the RTM process, refer to the discussion in Critical Accounting Policies - Intangible Assets, included in our 2005 Form 10-K.

Guaranteed Minimum Benefits

The Individual Markets Annuity segment has a hedging strategy designed to mitigate the risk and income statement volatility caused by changes in the equity markets, interest rates, and volatility associated with the Lincoln Smart Security^SM Advantage guaranteed minimum withdrawal benefit (“GMWB”) and our various guaranteed minimum death benefit (“GMDB”) features available in our variable annuity products. The hedging strategy is designed such that changes in the value of the hedge contracts move in the opposite direction of changes in the value of the embedded derivative of the GMWB or changes in the reserve for GMDB contracts subject to the hedging strategy. Account balances covered in this hedging program combined with account balances for which there is no death benefit represent approximately 94% of total variable annuity account balances, which excludes the Alliance mutual fund business. We have not implemented a hedging strategy for our guaranteed income benefit (“GIB”) feature, as less than 3% of variable annuity account balances are subject to this feature and substantially all of these outstanding contracts are still in the accumulation phase. As account balances with the GIB feature increase in size, we intend to add the GIB benefit to the hedge program.

The reserves related to the GMDB are based on the application of a benefit ratio to total assessments related to the variable annuity. The level and direction of the change in reserves will vary over time based on the emergence of the benefit ratio (which is based on both historical and projected future level of benefits) and the level of assessments (both historical and projected) associated with the variable annuity. We utilize a delta hedging strategy for variable annuity products with a GMDB feature, which uses futures on U.S.-based equity market indices to hedge against movements in equity markets. Because the GMDB reserves are based upon projected long-term equity market return assumptions, and since the value of the hedging contracts will reflect current capital market conditions, the quarterly changes in values for the GMDB reserves and the hedging contracts may not offset each other on an exact basis. Despite these short-term fluctuations in values, we intend to continue to hedge our long-term GMDB exposure in order to mitigate the risk associated with falling equity markets. Our hedging program covers substantially all exposures for these policies.

We utilize a dynamic hedging strategy for variable annuity products with a GMWB feature, which uses futures on U.S.-based equity indices to hedge against movements in the equity markets, as well as interest rate and equity derivative securities to hedge against changes in reserves associated with changes in interest rates and market implied volatilities. As of June 30, 2006, the notional amounts of the underlying hedge instruments are such that the magnitude of the change in the value of the hedge instruments due to changes in equity markets, interest rates, and implied volatilities is designed to offset the magnitude of the change in the fair value of the GMWB guarantee caused by those same factors. At June 30, 2006, the embedded derivative for GMWB was an asset valued at $59 million. The embedded derivative is an asset at June 30, 2006 as the estimated present value of expected future contract charges is greater than the estimated present value of expected future claims.

As part of our current hedging program, policyholder behavior and equity, interest rate, and volatility market conditions are monitored on a daily basis. We rebalance our hedge positions based upon changes in these factors as needed. While we actively manage our hedge positions, our hedge positions may not be totally effective to offset changes in assets and liabilities caused by movements in these factors due to, among other things, differences in timing between when a market exposure changes and corresponding changes to the hedge positions, extreme swings in the equity markets and interest rates, market volatility, policyholder behavior, divergence between the performance of the underlying funds and the hedging indices, divergence between the actual and expected performance of the hedge instruments, or our ability to purchase hedging instruments at prices consistent with our desired risk and return trade-off.

We also have in place a hedging program for the indexed annuities we obtained through our merger with Jefferson-Pilot. These contracts permit the holder to elect an interest rate return or an equity market component, where interest credited to the contracts is linked to the performance of the S&P 500^® index. Policyholders may elect to rebalance index options at renewal dates, either annually or biannually. At each renewal date, we have the opportunity to re-price the indexed component by establishing participation rates, subject to minimum guarantees. We purchase options that are highly correlated to the portfolio allocation decisions of our policyholders, such that we are economically hedged with respect to equity returns for the current reset period. The mark-to-market of the options held impacts net investment income and generally offsets the change in value of the embedded derivative within the indexed annuity which is recorded as a component of interest credited to policyholders’ within insurance benefits. SFAS 133 requires that we calculate fair values of index options we may purchase in the future to hedge policyholder index allocations in future reset periods. These fair values represent an estimate of the cost of the options we will purchase in the future, discounted back to the date of the balance sheet, using current market indicators of volatility and interest rates. Changes in the fair values of these liabilities are included in benefit expense.

33

RESULTS OF CONSOLIDATED OPERATIONS

	Three Months									Six Months
							Increase									Increase
Periods ended June 30, (in millions)	2006			2005			(Decrease)			2006			2005			(Decrease)
Insurance premiums	$	454		$	73			NM		$	533		$	143			273	%
Insurance fees		690			426			62	%		1,164			846			38	%
Investment advisory fees		81			62			31	%		159			117			36	%
Communications sales		58			-			NM			58			-			NM
Net investment income		1,068			704			52	%		1,747			1,364			28	%
Amortization of deferred gain		19			19			-			37			38			-3	%
Other revenues and fees		131			100			31	%		225			183			23	%
Net realized investment losses		(5	)		(9	)		44	%		(6	)		(11	)		45	%
Gain on sale of subsidiaries		-			-			NM			-			14			-100	%
Total Revenue		2,496			1,375			82	%		3,917			2,694			45	%
Insurance benefits		1,179			590			100	%		1,760			1,161			52	%
Underwriting, acquisition, insurance and
other expenses		717			525			37	%		1,220			1,013			20	%
Communications expenses		30			-			NM			30			-			NM
Interest and debt expenses		65			22			195	%		87			44			98	%
Total Benefits and Expenses		1,991			1,137			75	%		3,097			2,218			40	%
Income before federal income taxes		505			238			112	%		820			476			72	%
Federal income taxes		156			40			290	%		250			99			153	%
Net Income	$	349		$	198			76	%	$	570		$	377			51	%
Items Included in Net Income (after-tax):
Realized loss on investments and
derivative instruments	$	(3	)	$	(3	)				$	(8	)	$	(7	)
Net gain on reinsurance embedded
derivative/trading securities		1			(3	)					5			-
Gain on sale of subsidiaries		-			-						-			9
Restructuring charges		(6	)		(15	)					(6	)		(16	)

The table below provides a detailed comparison of items included within net realized investment losses.

	Three Months									Six Months
							Increase									Increase
Periods ended June 30, (in millions)	2006			2005			(Decrease)			2006			2005			(Decrease)
Realized gains on investments	$	41		$	34			21	%	$	66		$	61			8	%
Realized losses on investments		(28	)		(17	)		65	%		(48	)		(37	)		30	%
Realized gain (loss) on derivative instruments		-			(5	)		-100	%		4			(3	)		NM
Amounts amortized to balance sheet accounts		(19	)		(14	)		36	%		(30	)		(27	)		11	%
Gain on reinsurance embedded derivative/trading securities		2			(5	)		NM			8			-			NM
Investment expenses		(1	)		(2	)		-50	%		(6	)		(5	)		20	%
Net losses on investments and derivative instruments	$	(5	)	$	(9	)		-44	%	$	(6	)	$	(11	)		-45	%
Write-downs for other-than-temporary impairments included in
realized losses on investments above	$	(2	)	$	(2	)		-		$	(3	)	$	(12	)		75	%

34

Following are deposits and net flows by business segment. For additional detail of deposit and net flow information, see the discussion in “Results of Operations by Segment” below:

	Three Months									Six Months
							Increase									Increase
Periods ended June 30, (in billions)	2006			2005			(Decrease)			2006			2005			(Decrease)
Deposits:
Individual Markets:
Annuities	$	2.749		$	1.862			48	%	$	4.886		$	3.623			35	%
Life Insurance		1.023			0.470			118	%		1.511			0.938			61	%
Employer Markets:
Retirement Products & Other		1.159			1.032			12	%		2.400			2.312			4	%
Executive Benefits		0.077			0.056			38	%		0.124			0.101			23	%
Investment Management		6.047			10.444			-42	%		15.111			16.203			-7	%
Consolidating Adjustments (1)		(1.138	)		(0.842	)		35	%		(1.877	)		(1.742	)		8	%
Total Deposits	$	9.917		$	13.022			-24	%	$	22.155		$	21.435			3	%
Net Flows:
Individual Markets:
Annuities	$	0.844		$	0.748			13	%	$	1.614		$	1.392			16	%
Life Insurance		0.547			0.263			108	%		0.805			0.500			61	%
Employer Markets:
Retirement Products & Other		0.114			0.181			-37	%		0.296			0.418			-29	%
Executive Benefits		0.035			0.045			-22	%		0.075			0.070			7	%
Investment Management		1.009			6.022			-83	%		5.906			8.794			-33	%
Consolidating Adjustments (1)		(0.056	)		0.189			NM			(0.012	)		0.064			NM
Total Net Flows	$	2.493		$	7.448			-67	%	$	8.684		$	11.238			-23	%

					As of
	As of June 30,				December 31,		Increase over			Increase over
(in billions)	2006		2005		2005		Prior quarter			Prior year
Assets Under Management by Advisor (2)
Investment Management:
External Assets	$	85.9	$	66.8	$	77.6		29	%		11	%
Insurance-related Assets		65.6		43.9		43.1		49	%		52	%
Lincoln UK		9.2		8.3		8.6		11	%		7	%
Within Business Units (Policy Loans)		2.7		1.9		1.9		42	%		42	%
By Non-LNC Entities		49.1		35.5		40.6		38	%		21	%
	$	212.5	$	156.4	$	171.8		36	%		24	%

(1) Consolidating adjustments represent the elimination of deposits and net flows on products affecting more than one segment.

(2) Assets under management by advisor provide a breakdown of assets that we manage or administer either directly or through unaffiliated third parties. These assets represent our investments, assets held in separate accounts and assets that we manage or administer for individuals or other companies. We earn insurance fees, investment advisory fees or investment income on these assets.

NM - Not Meaningful

35

Comparison of Three and Six Months Ended June 30, 2006 to 2005

Net income increased $151 million, or 76%, and $193 million for the three months and six months ended June 30, 2006 compared to the same periods in 2005, respectively. Included in the current period is $142 million of net income from the Jefferson-Pilot companies acquired in the merger. Excluding the Jefferson-Pilot companies, net income increased $9 million or 5% and $51 million or 14% for the comparable three month and six month periods due to revenue growth outpacing expenses as described below.

Revenues

The April 2006 merger with Jefferson-Pilot was the primary driver for the increase in insurance premiums and fees for the three and six month periods ended June 30, 2006, compared with the same 2005 periods. Revenues from Jefferson-Pilot companies were $1.0 billion for the second quarter of 2006. Excluding the impact of the Jefferson-Pilot legal companies, the increase in insurance fees and investment advisory fees in the second quarter and first six months of 2006 reflects growth in deposits and assets under management, and to a lesser extent, the effects of favorable equity market performance. Assets under management increased 36% as a result of approximately $28 billion from the Jefferson-Pilot merger and positive net flows and market value gains throughout 2005 and the first six months of 2006. The average level of the equity markets was higher in 2006 compared to 2005, resulting in higher fee income. Excluding the impact of dividends, the S&P 500 index was 6.6% higher and the average daily S&P 500 index was 8.1% higher in the first six months of 2006 than the first six months of 2005.

The increase in net investment income in the second quarter of 2006 compared to the same period in 2005 primarily reflects the addition of Jefferson-Pilot investment assets, higher portfolio yields and higher invested assets due to the favorable effect of asset growth from net flows. Net investment income from the Jefferson-Pilot companies was $387 million for the second quarter of 2006.

Included in revenues were net realized losses on investments of $5 million and $9 million for the second quarters of 2006 and 2005, respectively, and $6 million and $11 million for the first six months of 2006 and 2005, respectively. See “Consolidated Investments” below for additional information on our investment performance. Revenues from the sale of subsidiaries/businesses in the first six months of 2005 included a pre-tax gain of $14 million from an agreement to settle in full the residual contingent payments resulting from the arrangement to outsource Lincoln UK’s back-office operations to Capita Life and Pension Services Limited, a subsidiary of Capita Group Plc, (“Capita”) the outsourcing firm for Lincoln UK’s customer and policy administration functions.

Benefits and Expenses

Consolidated benefits and expenses for the second quarter and first six months of 2006 increased $854 million, or 75%, and $879 million, or 40%, compared to the same periods in 2005, including $831 million from the Jefferson-Pilot companies. See “Results of Operations by Segment” below for further discussion by segment. Excluding the increase from the Jefferson-Pilot companies, the increase resulted from growth in our business partially offset by the effect of spread management through lower crediting rates on interest-sensitive business and movements from fixed to variable annuity products. 

Expenses for the second quarter and first six months of 2006 include expenses of $17 million related to the merger with Jefferson-Pilot for related integration costs, including restructuring charges that were the result of actions undertaken by us to eliminate duplicate operations and functions as a result of the Jefferson-Pilot merger. These actions will be ongoing and are expected to be completed in 2008, with a total estimated cost of $180 million pre-tax. Expenses for the second quarter and first six months of 2005 included restructuring charges of $23 million pre-tax and $25 million, respectively, and were the result of expense initiatives undertaken by us during 2003 to improve operational efficiencies. For additional information on restructuring charges see Note 12 to the Consolidated Financial Statements of this Form 10-Q. Federal income tax expense for the second quarter and first six months of 2005 included reductions of $24 million and $29 million, respectively, related to a partial release of a deferred tax valuation allowance in our Barbados insurance company, which was included in Other Operations.

RESULTS OF OPERATIONS BY SEGMENT

In this MD&A, in addition to providing consolidated revenues and net income (loss), we also provide segment operating revenue and income (loss) from operations because we believe they are meaningful measures of revenues and the profit or loss generated by our operating segments. Operating revenue is GAAP revenue excluding realized gains and losses on investments and derivative instruments, gains and losses on reinsurance embedded derivative/trading securities, gains and losses on sale of subsidiaries/businesses and the amortization of deferred gain arising from reserve development on business sold through reinsurance. Income (loss) from operations is GAAP net income excluding net realized investment gains and losses, losses on early retirement of debt, reserve development net of related amortization on business sold through reinsurance and cumulative effect of accounting changes. Operating revenue and income (loss) from operations are the financial performance measures we use to evaluate and assess the results of our segments. Accordingly, we report operating revenue

36

and income (loss) from operations by segment in Note 8 to our Consolidated Financial Statements. Our management and Board of Directors believe that operating revenue and income (loss) from operations explain the results of our ongoing businesses in a manner that allows for a better understanding of the underlying trends in our current businesses because net realized investment gains and losses, reserve development net of related amortization on business sold through reinsurance and cumulative effect of accounting changes are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments, and in many instances, decisions regarding these items do not necessarily relate to the operations of the individual segments. Operating revenue and income (loss) from operations do not replace revenues and net income as the GAAP measures of our consolidated results of operations.

37

Following is a reconciliation of our segment revenue and income from operations to our consolidated revenue and net income:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in millions)	2006			2005			2006			2005
Revenue:
Segment Operating Revenue:
Individual Markets:
Individual Annuities	$	552		$	348		$	927		$	688
Life Insurance		901			475			1,402			951
Individual Markets Total		1,453			823			2,329			1,639
Employer Markets:
Retirement Products & Other		350			287			656			574
Benefit Partners		355			-			355			-
Employer Markets Total		705			287			1,011			574
Investment Management (1)		135			114			274			224
Lincoln UK		81			79			151			153
Lincoln Financial Media(2)		58			-			58			-
Other Operations		98			102			157			160
Consolidating adjustments		(29	)		(21	)		(57	)		(59	)
Net realized investment results (3)		(5	)		(9	)		(6	)		3
Total	$	2,496		$	1,375		$	3,917		$	2,694
Net Income:
Segment Operating Income:
Individual Markets:
Individual Annuities	$	89		$	52		$	155		$	102
Life Insurance		147			63			216			121
Individual Markets Total		236			115			371			223
Employer Markets:
Retirement Products & Other		70			50			131			96
Benefit Partners		37			-			37			-
Employer Markets Total		107			50			168			96
Investment Management (1)		12			(1	)		27			3
Lincoln UK		10			10			21			20
Lincoln Financial Media		12			-			12			-
Other Operations		(26	)		30			(26	)		33
Net realized investment results (4)		(2	)		(6	)		(3	)		2
Net Income	$	349		$	198		$	570		$	377

(1)  Revenues for the Investment Management segment include inter-segment revenues for asset management services provided to our other segments. These inter-segment revenues totaled $24 million for the three months ended June 30, 2006 and 2005, and $48 million and $49 million for the six months ended June 30, 2006 and 2005, respectively.

(2)  Lincoln Financial Media revenues are net of $9 million of commissions paid to agencies.

(3)  Includes realized losses on investments and derivative instruments of $7 million and $4 million for the three months ended June 30, 2006 and 2005, respectively; gain (loss) on reinsurance embedded derivative/trading securities of $2 million and $(5) million for the three months ended June 30, 2006 and 2005, respectively. Includes realized losses on investments and derivative instruments of $14 million and $11 million for the six months ended June 30, 2006 and 2005, gain on reinsurance embedded derivative/trading securities of $8 million for the six months ended June 30, 2006; and gain on sale of subsidiaries/businesses of $14 million for the six months ended June 30, 2005.

(4)  Includes realized losses on investments and derivative instruments of $3 million for the three months ended June 30, 2006 and 2005; gain (loss) on reinsurance embedded derivative/trading securities of $1 million and $(3) million for the three months ended June 30, 2006 and 2005, respectively. Includes realized losses on investments and derivative instruments of $8 million and $7 million for the six months ended June 30, 2006 and 2005, respectively; gain on reinsurance embedded derivative/trading securities of $5 million for the six months ended June 30, 2006; and gain on sale of subsidiaries/businesses of $9 million for the six months ended June 30, 2005.

38

INDIVIDUAL MARKETS

The Individual Markets business provides its products through two segments - Individual Annuities and Individual Life Insurance. Through its Individual Annuities segment, Individual Markets provides tax-deferred investment growth and lifetime income opportunities for its clients by offering individual fixed annuities, including indexed annuities, and variable annuities. The Individual Life Insurance segment offers wealth protection and transfer opportunities through both single and survivorship versions of universal life, variable universal life, interest-sensitive whole life, term insurance, as well as a linked-benefit product, which is a universal life insurance policy linked with riders that provide for long-term care costs.

Individual Markets - Individual Annuities

	Three Months Ended							Six Months Ended
	June 30							June 30
					Increase							Increase
Operating Summary (in millions)	2006		2005		(Decrease)			2006		2005		(Decrease)
Operating Revenues:
Insurance premiums	$	15	$	7		114	%	$	24	$	18		33	%
Insurance fees		192		137		40	%		367		267		37	%
Net investment income		263		155		70	%		411		312		32	%
Other revenues and fees		82		49		67	%		125		91		37	%
Total Operating Revenues		552		348		59	%		927		688		35	%
Operating Expenses:
Insurance benefits		214		130		65	%		330		252		31	%
Underwriting, acquisition, insurance and other expenses		217		153		42	%		389		310		25	%
Total Operating Expenses		431		283		52	%		719		562		28	%
Income from operations before taxes		121		65		86	%		208		126		65	%
Federal income taxes		32		13		146	%		53		24		121	%
Income from Operations	$	89	$	52		71	%	$	155	$	102		52	%

	Three Months Ended									Six Months Ended
	June 30									June 30
							Improvement									Improvement
Net Flows (in billions)	2006			2005			(Decline)			2006			2005			(Decline)
Variable Portion of Variable Annuity Deposits	$	1.877		$	1.327			41	%	$	3.543		$	2.616			35	%
Variable Portion of Variable Annuity Withdrawals		(1.013	)		(0.775	)		-31	%		(1.973	)		(1.531	)		-29	%
Variable Portion of Variable Annuity Net Flows		0.864			0.552			57	%		1.570			1.085			45	%
Fixed Portion of Variable Annuity Deposits		0.507			0.489			4	%		0.956			0.906			6	%
Fixed Portion of Variable Annuity Withdrawals		(0.185	)		(0.113	)		-64	%		(0.348	)		(0.225	)		-55	%
Fixed Portion of Variable Annuity Net Flows		0.322			0.376			-14	%		0.608			0.681			-11	%
Total Variable Annuity Deposits		2.384			1.816			31	%		4.499			3.522			28	%
Total Variable Annuity Withdrawals		(1.198	)		(0.888	)		-35	%		(2.321	)		(1.756	)		-32	%
Total Variable Annuity Net Flows		1.186			0.928			28	%		2.178			1.766			23	%
Indexed Annuity Deposits		0.228			-			N/M			0.228			-			N/M
Indexed Annuity Withdrawals		(0.047	)		-			N/M			(0.047	)		-			N/M
Indexed Annuity Net Flows		0.181			-			N/M			0.181			-			N/M
Fixed Annuity Deposits		0.137			0.046			198	%		0.159			0.101			57	%
Fixed Annuity Withdrawals		(0.660	)		(0.226	)		-192	%		(0.904	)		(0.475	)		-90	%
Fixed Annuity Net Flows		(0.523	)		(0.180	)		-191	%		(0.745	)		(0.374	)		-99	%
Total Annuity Deposits		2.749			1.862			48	%		4.886			3.623			35	%
Total Annuity Withdrawals		(1.905	)		(1.114	)		-71	%		(3.272	)		(2.231	)		-47	%
Total Annuity Net Flows		0.844			0.748			13	%		1.614			1.392			16	%
Annuities Incremental Deposits	$	2.711		$	1.816			49	%	$	4.822		$	3.529			37	%

39

							Increase
June 30, (in billions)	2006			2005			(Decrease)
Account Values:
Variable Annuities	$	41.5		$	32.8			27	%
Fixed Annuities		19.6			11.4			72	%
Fixed Annuities Ceded to Reinsurers		(2.1	)		(2.3	)		-9	%
Total Fixed Annuities		17.5			9.1			92	%
Total Annuities	$	59.0		$	41.9			41	%
Fixed Portion of Variable Annuities		4.1			3.1			32	%

	Three Months						Six Months
					Increase						Increase
June 30, (in billions)	2006		2005		(Decrease)		2006		2005		(Decrease)
Average Daily Variable Account Values	$	41.2	$	31.7		30%	$	40.6	$	31.3		30	%

Interest Margins

	Three Months									Six Months
							Increase									Increase
							(Decrease)									(Decrease)
Periods Ended June 30,	2006			2005			(basis points)			2006			2005			(basis points)
Net investment income yield		5.67	%		5.74	%		(7	)		5.72	%		5.76	%		(4	)
Interest rate credited to policyholders		3.81	%		3.95	%		(14	)		3.89	%		3.96	%		(7	)
Interest rate margin		1.86	%		1.79	%		7			1.83	%		1.80	%		3
Effect on yield and interest rate margin from
commercial mortgage loan prepayment
and bond makewhole premiums		0.02	%		0.02	%		-			0.04	%		0.01	%		3
Interest rate margin adjusted		1.84	%		1.77	%		7			1.79	%		1.79	%		0
Average fixed annuity account values (in billions)	$	19.2		$	10.3					$	14.5		$	10.4
Effect on income from operations (after-tax,
after-DAC) (in millions)
Commercial mortgage loan prepayment
and bond makewhole premiums	$	1		$	1					$	1		$	-

Comparison of Three and Six Months Ended June 30, 2006 to 2005

Income from operations for this segment increased $37 million, or 71%, and $53 million for the three months and six months ended June 30, 2006 compared to the same periods in 2005, respectively. Included in the current period is $18 million of income from operations from the Jefferson-Pilot companies. Excluding the Jefferson-Pilot companies, income from operations increased $39 million, or 34%, and $35 million, or 34%, for the comparable three month and six month periods due primarily to growth in account values from positive net flows and favorable market conditions.

Revenues

Insurance fees increased 40% in the second quarter and 37% in the first six months of 2006 compared to the same periods in 2005, due to increases in average daily variable annuity account values. The increase in account values reflects cumulative positive net flows and improvement in the equity markets between periods. Excluding the impact of dividends, the S&P 500 index was 6.6% higher and the average daily S&P index was 8.1% higher in the first six months of 2006 than the first six months of 2005. The increase in fixed annuity product sales from the same periods in the previous year includes $56 million from the indexed annuity business acquired from the Jefferson-Pilot merger.

New deposits are an important component of our effort to grow the annuity business. Although deposits do not significantly impact current period income from operations, they are an important indicator of future profitability. In the past several years, we have concentrated our efforts on both product and distribution breadth. Annuity deposits increased 48% in the second quarter of 2006 and 35% for the first six months of 2006 compared to the same 2005 periods, primarily due to growth in the variable annuity business. New deposits for the second quarter of 2006 include $346 million from Jefferson-Pilot.

The growth in individual variable annuity deposits was primarily a result of continued strong sales of products with the Lincoln Smart Security^SM Advantage feature and the expansion of the wholesaling force in LFD. Variable annuity gross deposits in our Lincoln ChoicePlus^SM and American Legacy products were up 30% and 27 % for the second quarter and first six months of 2006 compared to the same 2005 periods.

40

Individual fixed annuity deposits increased in the second quarter and first six months of 2006 compared to the same 2005 periods, primarily due to $323 million of Jefferson-Pilot fixed annuity sales, including $228 million for indexed annuities. This growth was partially offset due to the effects of the continued low interest rate environment.

The other component of net flows is retention of the business. One of the key assumptions in pricing a product is the account persistency, which we refer to as the lapse rate. The lapse rate compares the amount of withdrawals to the retained account values. One way to measure a company’s success in retaining assets is to look at the overall level of withdrawals from period to period. Additionally, by comparing actual lapse rates to the rates assumed in designing the annuity product, it is possible to gauge the impact of persistency on profitability. Overall lapse rates for the first six months of 2006 and 2005 were 10.8% and 9.1%, respectively. See the discussion below for the drivers of the increased lapse rates. In both periods, overall lapse rates have been more favorable than the level of persistency assumed in product pricing.

One of our fixed annuity products, the Step Five Fixed Annuity has a sixty-day window period following each five year fixed guarantee period. Crediting rates for each subsequent five-year, fixed guarantee period are set at the beginning of the window period. During the window period, account holders can withdraw their funds without incurring a surrender charge. Account values for this product were $2.8 billion at December 31, 2005, with approximately $1.2 billion and $1.1 billion of account values entering the window period during 2006 and 2007, respectively. Through June 30, 2006 approximately $380 million of account value entered the window period, with the remainder of the 2006 amount spread fairly evenly over the balance of the year. For the second quarter and first six months of 2006, we experienced lapse rates on these accounts of 42% and 54%, respectively. Our DAC amortization assumption is a lapse rate of 40% for this product, and will be reviewed as part of our third quarter review of assumptions. Given the current interest rate environment, we would expect to see our lapse rate increase in 2006 as a portion of these account holders withdraw their funds, but we would not expect the after-DAC, after-tax effect to be significant to the earnings of the segment, helped in part by a 50% coinsurance arrangement on 87% of the account values. See “Reinsurance” for additional information on this arrangement.

In addition to the Step Five Fixed Annuity product discussed above, included in the fixed annuity business acquired with the Jefferson-Pilot merger is approximately $4.1 billion of average fixed annuity policyholder fund balances with crediting rates that are reset on an annual basis and are not subject to surrender charges. The average crediting rates in the second quarter of 2006 for the Jefferson-Pilot business were approximately 21 basis points in excess of average minimum guaranteed rates, including 54% that were already at their minimum guaranteed rates. Approximately $2.5 billion of fixed annuity policyholder fund balances acquired with the Jefferson-Pilot merger have multi-year guarantees, approximately $0.7 billion of which have begun to reset in 2006. As multi-year guarantees expire, policyholders have the opportunity to renew their annuities at rates in effect at that time. Our ability to retain these annuities will be subject to then-current competitive conditions. The average spread to the minimum underlying guarantee on these products is approximately 186 basis points. In the second quarter 2006, $163 million of fixed annuity policyholder fund balances reset, of which approximately $117 million lapsed where the holder did not select another product that we offer. In the third quarter of 2006, approximately $541 million of fixed annuities with multi-year guarantees will reset and we expect that approximately $352 million will lapse based upon emerging experience.

For the two products combined, approximately $1.7 billion of account values ($1.2 billion, net of reinsurance) will be subject to renewal over the remainder of 2006. Of that amount, we expect a reduction of up to $800 million in fixed annuity account values (net of reinsurance) related to the multi-year guarantee products.

Net investment income increased 70% for the second quarter and 32% for the first six months of 2006 compared with the same 2005 periods. Net investment income includes $121 million from the Jefferson-Pilot companies. Excluding the increase from the Jefferson-Pilot companies, net investment income declined due to lower investment portfolio yields and lower average fixed annuity account values. Net investment income included $1 million from commercial mortgage loan prepayment and bond makewhole premiums for the three and six month periods ended June 30, 2006, compared to $1 million for the second quarter of 2005 and an immaterial amount for the first six months of 2005. Net investment income for the second quarter of 2005 includes $3 million higher income for partnerships. Net investment income for the second quarter of 2006 also includes a reduction of $14 million from the mark-to-market adjustment for call options supporting the hedge program for the indexed annuity business acquired in the April 2006 merger with Jefferson-Pilot. This adjustment is offset in insurance benefits expense.

When analyzing the impact of net investment income, it is important to understand that a portion of the investment income earned is credited to the policyholders of our fixed annuity products. The interest credited to policyholders is included in the segment’s insurance benefits. Annuity product interest rate margins represent the excess of the yield on earning assets over the average crediting rate. The yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products less bonus credits and excess interest on policies with the dollar cost averaging feature, divided by the average fixed account values net of coinsured account values. Fixed account values reinsured under modified coinsurance agreements are included in account values for this calculation. Interest credited to policyholder balances increased for the second quarter and first six months of 2006 compared to the same 2005 period as a result of the Jefferson-Pilot merger, partially offset by lower average fixed account values and lower average crediting rates.

41

The interest rate margin table above summarizes the effect of changes in the portfolio yield, the rate credited to policyholders, as well as the impact of prepayment premiums on results on an after-DAC, after-tax basis. The adjusted interest rate margin was 1.84% and 1.77% for the second quarters of 2006 and 2005, respectively, and 1.79% for the corresponding six-month periods. Declines in quarter-over-quarter investment income yield were more than offset by a reduction in crediting rates, while declines in investment income yield were offset by declines in crediting rates for the six-month periods. As interest rates increase and the gap between new money rates and portfolio rates narrows, we expect to manage the effect of spreads for near term operating income through a combination of rate actions and portfolio management. Our expectation includes the assumption that there are no significant changes in net flows in or out of our fixed accounts or other changes which may cause interest rate margins to differ from our expectation. For information on interest rate margins and the interest rate risk due to falling interest rates, see "Item 3 - Quantitative and Qualitative Disclosures About Market Risk" of this Form 10-Q.

Benefits and Expenses

Insurance benefits include interest credited to policyholders of $169 million and $264 million in the second quarter and first six months of 2006, compared to $99 million and $199 million for the same periods in 2005. The increase is a result of $77 million attributable to the fixed annuity business of Jefferson-Pilot acquired in April 2006, partially offset by past actions taken to lower crediting rates commensurate with the reduction in the overall investment yield over the last several years. See the table above for the interest rate credited to policyholders. Interest credited to policyholders for the second quarter of 2006 also includes $13 million from the mark-to-market adjustment for call options supporting the hedge program for the fixed indexed annuity business acquired in the merger with Jefferson-Pilot. This adjustment is offset in net investment income.

Also included in insurance benefits are the costs associated with guaranteed benefits included within variable annuities with the GMDB, GMWB or GIB riders. Due to favorable market conditions in 2006, insurance benefits for the GMDB and GMWB riders were favorable compared to the same 2005 periods. This favorable effect was offset by unfavorable hedge results. The effect of changes in net reserve and benefit payments and results of the hedge program during the second quarter and first six months of 2006 attributable to these guaranteed benefits was such that the period over period variances on an after-DAC and after-tax basis were not significant.

At June 30, 2006, the segment’s net amount at risk (“NAR”) related to contracts with a GMDB feature was $0.5 billion. The related GAAP and statutory reserves were $22 million and $45 million, respectively. The comparable amounts at December 31, 2005, were a NAR of $0.5 billion, GAAP reserves of $15 million and statutory reserves of $43 million. At any point in time, the NAR is the difference between the potential death benefit payable and the total account value, with a floor of zero (when account values exceed the potential death benefit there is no amount at risk). Accordingly, the NAR represents the maximum amount we would have to pay if all policyholders died. In evaluating the GMDB exposures that exist within our variable annuity business relative to industry peers, it is important to distinguish between the various types of GMDB features, and other factors such as average account values, average amounts of NAR, and the age of contractholders. The following table and discussion provides this information for our variable annuity business as of June 30, 2006:

	Type of GMDB Feature
	Return of		High Water
	Premium		Mark		Roll-up		No GMDB		Total
Variable Annuity Account Value (billions)	$	20.3	$	20.2	$	0.4	$	4.8	$	45.7
% of Total Annuity Account Value		44.4%		44.2%		0.9%		10.5%		100.0%
Average Account Value (thousands)	$	95.2	$	96.6	$	70.4	$	66.3	$	91.5
Average NAR (thousands)	$	4.7	$	5.2	$	12.4		N/A	$	5.4
NAR (billions)	$	0.1	$	0.4	$	-		N/A	$	0.5
Average Age of Contract Holder		64		63		66		62		63
% of Contract Holders > 70 Years of Age		13.4%		30.1%		38.8%		29.7%		19.0%

We have variable annuity contracts containing GMDBs that have a dollar for dollar withdrawal feature. Under such a feature, withdrawals reduce both current account value and the GMDB amount on a dollar for dollar basis. For contracts containing this dollar for dollar feature, the account holder could withdraw a substantial portion of their account value resulting in a GMDB that is multiples of the current account value. Our exposure to this dollar for dollar risk is somewhat mitigated by the fact that we do not allow for partial 1035 exchanges on non-qualified contracts. To take advantage of the dollar for dollar feature, the contractholder must take constructive receipt of the withdrawal and pay any applicable surrender charges. We report the appropriate amount of the withdrawal that is taxable to the Internal Revenue Service, as well as indicating whether or not tax penalties apply under the premature distribution tax rules. We closely monitor the dollar for dollar withdrawal GMDB exposure. The GMDB feature offered on new sales is a pro-rata GMDB feature whereby each dollar of withdrawal reduces the GMDB benefit in proportion to the current GMDB to account value ratio. As of June 30,

42

2006, there were 805 contracts for which the death benefit to account value ratio was greater than ten to one. The NAR on these contracts was $52 million.

Underwriting, acquisition, insurance and other expenses increased $64 million, or 42%, and $79 million, or 25%, for the second quarter and first six months of 2006, respectively, compared to the same 2005 periods. The increases were driven principally by $51 million from the Jefferson-Pilot companies, and account value growth from sales and favorable equity markets, which resulted in higher commission expenses, net of deferrals and higher DAC amortization. These increases were partially offset by the favorable effects on DAC amortization from the third quarter 2005 unlocking.

43

Individual Markets - Life Insurance

	Three Months Ended							Six Months Ended
	June 30							June 30
					Increase							Increase
Operating Summary (in millions)	2006		2005		(Decrease)			2006		2005		(Decrease)
Operating Revenues:
Insurance premiums	$	90	$	48		88	%	$	141	$	93		52	%
Insurance fees		383		189		103	%		584		382		53	%
Net investment income		416		228		82	%		655		452		45	%
Other revenues and fees		12		10		20	%		22		24		-8	%
Total Operating Revenues		901		475		90	%		1,402		951		47	%
Operating Expenses:
Insurance benefits		497		257		93	%		760		510		49	%
Underwriting, acquisition, insurance and other expenses		183		125		46	%		316		262		21	%
Total Operating Expenses		680		382		78	%		1,076		772		39	%
Income from operations before taxes		221		93		138	%		326		179		82	%
Federal income taxes		74		30		147	%		110		58		90	%
Income from Operations	$	147	$	63		133	%	$	216	$	121		79	%

	Three Months Ended									Six Months Ended
	June 30									June 30
							Increase									Increase
(in millions)	2006			2005			(Decrease)			2006			2005			(Decrease)
Sales by Product
Universal Life ("UL")
Excluding MoneyGuardSM	$	97.5		$	47.3			106	%	$	138.8		$	85.8			62	%
MoneyGuardSM		7.5			8.0			-6	%		15.2			15.4			-1	%
Total Universal Life		105.0			55.3			90	%		154.0			101.2			52	%
Variable Universal Life ("VUL")		15.7			10.2			54	%		25.7			19.7			30	%
Whole Life		0.3			0.2			50	%		1.1			1.0			10	%
Term		11.3			8.6			31	%		19.5			17.7			10	%
Total	$	132.3		$	74.3			78	%	$	200.3		$	139.6			43	%
Net Flows (in billions)
Deposits	$	1.023		$	0.470			118	%	$	1.511		$	0.938			61	%
Withdrawals & Deaths		(0.476	)		(0.207	)		130	%		(0.706	)		(0.438	)		61	%
Net Flows	$	0.547		$	0.263			108	%	$	0.805		$	0.500			61	%
Policyholder Assessments	$	0.571		$	0.281			103	%	$	0.864		$	0.561			54	%
As of June 30,							Increase
(in billions)	2006			2005			(Decrease)
Account Values
Universal Life	$	18.6		$	9.0			107	%
Variable Universal Life		4.7			2.3			104	%
Interest-Sensitive Whole Life ("ISWL")		2.2			2.2			0	%
Total Life Insurance Account Values	$	25.5		$	13.5			89	%
In Force-Face Amount
Universal Life and Other	$	260.9		$	126.1			107	%
Term Insurance		229.1			180.6			27	%
Total In-Force	$	490.0		$	306.7			60	%
Net Amount at Risk
Universal Life and Other	$	231.6		$	110.2			110	%
Term Insurance		228.0			179.8			27	%
Total Net Amount at Risk	$	459.6		$	290.0			58	%

44

Interest Rate Margins

	Three Months									Six Months
							Increase									Increase
							(Decrease)									(Decrease)
Periods Ended June 30,	2006			2005			(basis points)			2006			2005			(basis points)
Interest Sensitive Products
Net investment income yield		6.22	%		6.38	%		(16	)		6.31	%		6.34	%		(3	)
Interest rate credited to policyholders		4.46	%		4.64	%		(18	)		4.51	%		4.69	%		(18	)
Interest rate margin		1.76	%		1.74	%		2			1.80	%		1.65	%		15
Effect on Yield and Interest Rate Margin
Commercial mortgage loan prepayment and
bond makewhole premiums		0.13	%		0.12	%		1			0.12	%		0.06	%		6
Interest rate margin, excluding the above items		1.63	%		1.62	%		1			1.68	%		1.59	%		9
Effect on Income from Operations (After-tax, after-DAC) (in millions)
Commercial mortgage loan prepayment and
bond makewhole premiums	$	2		$	1					$	3		$	1
Traditional Products
Net investment income yield		6.59	%		6.59	%		-			6.65	%		6.59	%		6
Effect on Yield
Commercial mortgage loan prepayment and
bond makewhole premiums		0.14	%		0.15	%		(1	)		0.15	%		0.11	%		4
Net investment income yield after adjusted for above items		6.45	%		6.44	%		1			6.50	%		6.48	%		2
Effect on Income from Operations (After-tax) (in millions)
Commercial mortgage loan prepayment and
bond makewhole premiums	$	1		$	1					$	1		$	-

Comparison of Three and Six Months Ended June 30, 2006 to 2005

Income from operation for this segment increased $84 million, or 133%, and $95 million for the three months and six months ended June 30, 2006 compared to the same periods in 2005, respectively. Included in the current period is $66 million of income from operations from the Jefferson-Pilot companies. Excluding the Jefferson-Pilot companies, income from operations increased $18 million or 29% and $29 million or 24% for the comparable three month and six month periods due largely to better than expected investment returns and favorable DAC unlocking due to favorable mortality and persistency experience.

Revenues, First Year Premium, In-force and Net Amount at Risk

Revenues for the second quarter and first six months of 2006 increased 90% and 47% compared to the same 2005 periods and include $405 million from the Jefferson-Pilot companies. Premiums increased 88% and 52% for the second quarter and first six months of 2006 compared to the 2005 periods. Revenues from insurance fees were up 103% and 53% for the second quarter and first six months of 2006 compared to the 2005 periods. Insurance fees include mortality assessments, expense assessments (net of DFEL deferrals and amortization) and surrender charges. Excluding the effects of the merger, which contributed $39 million, or 43%, and $186 million, or 49% respectively, to premiums and insurance fees for the second quarter of 2006, growth in mortality and expense assessments in the second quarter and first six months of 2006 compared to the same periods in 2005 was primarily related to increased sales of universal life products and favorable persistency. Partially offsetting this growth was lower revenues from surrender charges due to favorable persistency. The improved persistency results in higher business in force, which should positively affect future revenues.

For the second quarter and first six months of 2006, we experienced growth in life insurance in-force and NAR in both term life and UL and other permanent products, both as a result of and in addition to the Jefferson-Pilot merger. It is important to view the in-force and NAR growth separately for term products versus UL and other permanent products, as term products by design have a lower profitability to face amount relationship than do permanent life insurance products. Insurance premium revenue relates primarily to whole life and term life insurance products. Term and whole life insurance products have insurance fees and COIs generated from the NAR. These are components of the change in policy reserves on these products, and are reflected in insurance benefits. Insurance premiums for the second quarter and first six months of 2006 include $39 million from the Jefferson-Pilot merger. Excluding the impact of the Jefferson-Pilot companies, insurance premiums increased 6% and 10% for the second quarter and first six months of 2006 compared to the same periods in 2005. Insurance premiums for term insurance increased 32% and 38% for the second quarter and first six months of 2006 compared to the same periods in 2005, while insurance premiums for whole life decreased 8% and 6% for the same periods. For term insurance, gross premiums grew 6% for the second quarter and 7% for the first six months from continued growth in the book of business. Also contributing to the growth in net term insurance premiums was a 4% reduction in premiums paid for reinsurance coverage in the second quarter and first six months of 2006 compared to the same periods in 2005, primarily resulting from restructuring our reinsurance program in September 2005. Under the restructured program, we reduced the percentage of each new term policy reinsured and changed from using coinsurance to using renewable term reinsurance. See “Reinsurance” below for additional information regarding our reinsurance coverage.

45

Sales in the table above and as discussed below are reported as follows:

§ UL, VUL, MoneyGuard - 100% of annualized expected target premium plus 5% of paid excess premium, including an adjustment for internal replacements at approximately 50% of target,

§ Whole Life and Term - 100% of first year paid premiums.

Previously, we reported sales as first year paid premium, excluding internal replacements, for all products. We changed our basis of reporting to one consistent with industry reporting segments.

Sales are not part of revenues (other than for term products) and do not have a significant impact on current quarter income from operations, but are indicative of future profitability. Total sales for the second quarter and first six months of 2006 increased 78% and 43% compared to the same periods in 2005, and included $63 million (48%) in the second quarter attributable to Jefferson-Pilot products. Excluding the effects of the merger, growth in UL sales was constrained due to restructuring in our retail distribution operation that is now complete, maintaining pricing discipline in a highly competitive environment and a more disciplined approach to investor-owned life insurance sales.

Net investment income increased $188 million or 82%, and $203 million or 45%, in the three and six month periods ended June 30, 2006, compared to the same 2005 periods, including $177 million (43% and 27% for the second quarter and first six months) attributable to the Jefferson-Pilot companies. Excluding the Jefferson-Pilot companies, net investment income increased $11 million or 5%, and $26 million or 6%, in the comparable periods. This increase was due to growth in in-force and higher commercial mortgage loan prepayment and bond make whole premiums.

Interest rate margins for interest sensitive products improved 2 and 15 basis points in the second quarter and first six months of 2006, respectively, compared to the same 2005 periods. Excluding the effects of commercial mortgage loan prepayment and bond make-whole premiums, interest rate margins for interest sensitive products improved 1 and 9 basis points in the second quarter and first six months of 2006, respectively, compared to the same 2005 periods. Interest sensitive products include UL and ISWL and provide for interest to be credited to policyholder accounts. The difference between what we credit to policyholder accounts and interest income we earn on interest sensitive assets is interest rate margin. Traditional products include term and whole life insurance with interest income used to build the policy reserves. At June 30, 2006 and 2005, interest-sensitive products represented approximately 80% and 77%, respectively, of total interest sensitive and traditional products earning assets.

At June 30, 2006, spreads between new money rates and general account yields have narrowed. Going forward, we expect to be able to manage the effects of spreads on near term operating income through a combination of rate actions and portfolio management. This assumes no significant changes in net flows into or out of our fixed accounts or other changes which may cause interest rate margins to differ from our expectations. At June 30, 2006, 51% of the interest sensitive account values have crediting rates at contract guaranteed levels, and 42% have crediting rates within 50 basis points of contractual guarantees. For information on interest rate margins and the interest rate risk due to falling interest rates, see “Item 3. Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-Q.

Benefits and Expenses

Insurance benefits include interest credited to policyholders of $241 million and $384 million in the second quarter and first six months of 2006, respectively, compared to $138 million and $277 million for the same periods in 2005. The increase for the second quarter and first six months of 2006 includes $98 million attributable to the Jefferson-Pilot companies. Excluding the Jefferson-Pilot companies, interest credited to policyholders increased $5 million and $9 million for the comparable periods. Actions taken by the segment to lower crediting rates commensurate with the reductions in the overall investment yield in 2005 offset the effects of growth in the book of business. Refer to the table above for the interest rate credited to policyholders.

The segment had positive retrospective DAC and VOBA unlocking of $7 million pre-tax ($4 million after-tax) in the second quarter of 2006, primarily due to favorable persistency and expenses, and positive prospective unlocking of $2 million pre-tax ($1 million after-tax) resulting from updating mortality and expense assessment fees on variable products. Retrospective DAC and VOBA unlocking in the second quarter of 2005 was not significant. The segment had positive retrospective DAC and VOBA unlocking of $11 million pre-tax ($7 million after-tax) in the first six months of 2006, primarily due to favorable persistency, mortality, and expenses, and positive prospective unlocking of $2 million pre-tax ($1 million after-tax) resulting from updating expense assessment fees on variable products. Retrospective DAC and VOBA unlocking in the first six months of 2005 was not significant.

46

UL and VUL products with secondary guarantees, which we refer to as our lapse protection rider (“LPR”) product, represented approximately 23% of permanent life insurance in-force at June 30, 2006 and approximately 71% of sales for these products. As more fully discussed in our 2005 Form 10-K, new business written after July 1, 2005 for these products is subject to Actuarial Guideline 38 (also known as “AXXX”) statutory reserve requirements. See "Review of Consolidated Financial Condition - Sources of Liquidity and Cash Flow - Financing Activities" for further information on the manner in which we reinsure our AXXX reservers.  Application of this guideline has resulted in an increase to statutory reserves for these products of approximately $387 million, which reduced statutory surplus by approximately $239 million at June 30, 2006. There was no impact to GAAP reserves. We continue to evaluate potential modifications to our universal life products with secondary guarantees that may be made in response to the revised regulation. Although the ultimate impact of AXXX on future sales of guaranteed no-lapse UL cannot be predicted, it may result in a price increase for such products.

Underwriting, acquisition insurance and other expenses increased $58 million and $54 million, for the second quarter and first six months of 2006 compared to the same 2005 periods and include $67 million from the Jefferson-Pilot companies. Excluding the effect of the Jefferson-Pilot companies, expenses decreased $9 million and $13 million for the same periods, primarily due to the favorable DAC and VOBA unlocking discussed above.

47

Employer Markets

The Employer Markets business provides its products through two segments, Retirement Products & Other and Benefit Partners. The Retirement Products & Other segment operates through two lines of business - Retirement Products, which provides employer-sponsored variable and fixed annuities, mutual-fund based programs in the 401(k), 403(b), and 457 marketplaces; and Executive Benefits and Other, which provides corporate and bank owned life insurance. The Benefit Partners segment of Employer Markets offers group life, disability, and dental insurance to employers.

Employer Markets - Retirement Products & Other

Retirement Products & Other
	Three Months Ended							Six Months Ended
	June 30							June 30
					Increase							Increase
Operating Summary (in millions)	2006		2005		(Decrease)			2006		2005		(Decrease)
Operating Revenues:
Insurance fees	$	70	$	58		21	%	$	136	$	115		18	%
Net investment income		274		222		23	%		508		444		14	%
Other revenues and fees		6		7		-14	%		12		15		-20	%
Total Operating Revenues		350		287		22	%		656		574		14	%
Operating Expenses:
Insurance benefits		173		140		24	%		316		281		12	%
Underwriting, acquisition, insurance and other expenses		77		79		-3	%		155		161		-4	%
Total Operating Expenses		250		219		14	%		471		442		7	%
Income from operations before taxes		100		68		47	%		185		132		40	%
Federal income taxes		30		18		67	%		54		36		50	%
Income from Operations	$	70	$	50		40	%	$	131	$	96		36	%
Retirement Products
	Three Months Ended							Six Months Ended
	June 30							June 30
					Increase								Increase
Operating Summary (in millions)	2006		2005		(Decrease)			2006		2005			(Decrease)
Operating Revenues:
Insurance fees	$	57	$	51		12	%	$	115	$	102		13	%
Net investment income		187		177		6	%		373		353		6	%
Other revenues and fees		5		6		-17	%		10		13		-23	%
Total Operating Revenues		249		234		6	%		498		468		6	%
Operating Expenses:
Insurance benefits		102		100		2	%		203		200		2	%
Underwriting, acquisition, insurance and other expenses		70		71		-1	%		143		145		-1	%
Total Operating Expenses		172		171		1	%		346		345		0	%
Income from operations before taxes		77		63		22	%		152		123		24	%
Federal income taxes		23		17		35	%		45		35		29	%
Income from Operations	$	54	$	46		17	%	$	107	$	88		22	%

	June 30,				Increase
Account Values (in billions)	2006		2005		(Decrease)
Variable Annuities	$	16.1	$	14.7		10	%
Fixed Annuities		11.1		10.7		4	%
Total Annuities		27.2		25.4		7	%
Alliance Mutual Funds		4.3		3.4		26	%
Total Annuities and Alliance	$	31.5	$	28.8		9	%
Fixed Portion of Variable Annuity	$	7.5	$	7.1		6	%

48

	Periods Ended June 30,									Periods Ended June 30,
	Three Months									Six Months
							Improvement									Improvement
Net Flows (in billions)	2006			2005			(Decline)			2006			2005			(Decline)
Variable Portion of Variable Annuity Deposits	$	0.714		$	0.524			36	%	$	1.380		$	1.085			27	%
Variable Portion of Variable Annuity Withdrawals		(0.647	)		(0.497	)		-30	%		(1.303	)		(1.009	)		-29	%
Variable Portion of Variable Annuity Net Flows		0.067			0.027			148	%		0.077			0.076			1	%
Fixed Portion of Variable Annuity Deposits		0.120			0.151			-21	%		0.237			0.306			-23	%
Fixed Portion of Variable Annuity Withdrawals		(0.231	)		(0.254	)		9	%		(0.446	)		(0.508	)		12	%
Fixed Portion of Variable Annuity Net Flows		(0.111	)		(0.103	)		8	%		(0.209	)		(0.202	)		3	%
Total Variable Annuity Deposits		0.834			0.675			24	%		1.617			1.391			16	%
Total Variable Annuity Withdrawals		(0.878	)		(0.751	)		-17	%		(1.749	)		(1.517	)		-15	%
Total Variable Annuity Net Flows		(0.044	)		(0.076	)		-42	%		(0.132	)		(0.126	)		5	%
Fixed Annuity Deposits		0.121			0.135			-10	%		0.261			0.278			-6	%
Fixed Annuity Withdrawals		(0.113	)		(0.078	)		-45	%		(0.245	)		(0.282	)		13	%
Fixed Annuity Net Flows		0.008			0.057			86	%		0.016			(0.004	)		500	%
Total Annuity Deposits		0.955			0.810			18	%		1.878			1.669			13	%
Total Annuity Withdrawals		(0.991	)		(0.829	)		-20	%		(1.994	)		(1.799	)		-11	%
Total Annuity Net Flows		(0.036	)		(0.019	)		89	%		(0.116	)		(0.130	)		-11	%
Alliance Mutual Fund Deposits		0.204			0.222			-8	%		0.522			0.643			-19	%
Alliance Mutual Fund Withdrawals		(0.054	)		(0.022	)		145	%		(0.110	)		(0.095	)		16	%
Total Alliance Mutual Fund Net Flows		0.150			0.200			-25	%		0.412			0.548			-25	%
Total Annuity and Alliance Deposits		1.159			1.032			12	%		2.400			2.312			4	%
Total Annuity and Alliance Withdrawals		(1.045	)		(0.851	)		-23	%		(2.104	)		(1.894	)		-11	%
Total Annuity and Alliance Net Flows	$	0.114		$	0.181			-37	%	$	0.296		$	0.418			-29	%
Annuities Incremental Deposits	$	0.935		$	0.805			16	%	$	1.843		$	1.656			11	%
Alliance Mutual Fund Incremental Deposits		0.204			0.222			-8	%		0.522			0.643			-19	%
Total Annuities and Alliance Incremental Deposits (1)	$	1.139		$	1.027			11	%	$	2.365		$	2.299			3	%

(1)Incremental Deposits represent gross deposits reduced by transfers from other segment products.

49

Interest Rate Margins

	Three Months									Six Months
							Increase									Increase
							(Decrease)									(Decrease)
Periods Ended June 30,	2006			2005			(basis points)			2006			2005			(basis points)
Net investment income yield		6.31	%		6.25	%		6			6.33	%		6.27	%		6
Interest rate credited to policyholders		3.73	%		3.68	%		5			3.70	%		3.69	%		1
Interest rate margin		2.58	%		2.57	%		1			2.63	%		2.58	%		5
Effect on yield and interest rate margin from
commercial mortgage loan prepayment
and bond makewhole premiums		0.12	%		0.13	%		(1	)		0.14	%		0.12	%		2
Interest rate margin adjusted		2.46	%		2.44	%		2			2.49	%		2.46	%		3
Average fixed annuity account values (in billions)	$	10.9		$	10.5					$	10.8		$	10.5
Effect on income from operations (after-tax,
after-DAC) (in millions)
Commercial mortgage loan prepayment
and bond makewhole premiums	$	1		$	1					$	2		$	2

Comparison of Three and Six Months Ended June 30, 2006 to 2005

Income from operations for this segment's Retirement Products business increased $8 million, or 17%, and $19 million, or 22%, for the three and six months ended June 30, 2006 compared to the same periods in 2005, respectively. Income from operations from the Jefferson-Pilot companies for this business is not significant. The improvements are due largely to increases in account values from cumulative positive net flows and improvement in the equity markets between periods.

Revenues

Insurance fees increased 12% in the second quarter and 13% in the first six months of 2006 compared to the same periods in 2005 as a result of increases in average daily variable annuity account values. The merger with Jefferson-Pilot was not a factor for this business. The increase in account values reflects cumulative positive net flows and improvement in the equity markets between periods. Excluding the impact of dividends, the S&P 500 index was 6.6% higher and the average daily S&P index was 8.1% higher in the first six months of 2006 than the first six months of 2005. Variable product sales increased 24% in the second quarter and 16% in the first six months of 2006 over the same 2005 periods while fixed product and Alliance mutual fund sales were down from the same period in the previous year.

New deposits are an important component of our effort to grow the annuity business. Although deposits do not significantly impact current period income from operations, they are an important indicator of future profitability. Annuity deposits increased 18% in the second quarter of 2006 and 13% for the first six months of 2006 compared to the same 2005 periods, primarily due to growth in the annuity-based 401(k) Director business.

Alliance program deposits were $218 million and $740 million (including Alliance program fixed annuity deposits) in the second quarter and first six months of 2006, declines of 35% and 16% from the same 2005 periods. The Alliance program bundles our fixed annuity products with mutual funds, along with recordkeeping and employee education components. We earn fees for the services we provide to mutual fund accounts and investment margins on fixed annuities of Alliance program accounts. The amounts associated with the Alliance mutual fund program are not included in the separate accounts reported in our Consolidated Balance Sheets. During the first six months of 2006, we restructured the Alliance program sales organization and now have a dedicated team in place. We would expect to see deposit growth going forward. Deposits in our traditional annuity products in the employer-sponsored business increased in the second quarter and first six months of 2006 compared to the same 2005 periods.

In July 2006, we provided the third-party wholesaler of our 401(k) Director product with a 90-day notice of termination. Although the effect of the termination on sale of the 401(K) Director product is unknown, we do not expect the termination to have a material adverse effect on our results of operations.

The other component of net flows is lapse rates. Overall lapse rates were 13% for the three and first six months ended June 30, 2006, compared to 9% and 10% for the second quarter and fist six months of 2005. In both periods, overall lapse rates have been more favorable than the level of persistency assumed in product pricing. The lapse rate for the first six

50

months of 2005 included the impact of three large employer-sponsored case withdrawals aggregating $121 million. The persistency of the employer-sponsored business tends to be higher than in the individual annuity marketplace as employer-sponsored products involve systematic deposits, are part of an overall employee benefit plan, and are generally not subject to the level of exchange activity typically experienced in the individual marketplace.

Net investment income increased 6% in the three and six month periods ended June 30, 2006, compared with the same 2005 periods. The increases were due to growth in fixed annuity account values. The increase also includes $3 million and $7 million from commercial mortgage loan prepayment and bond makewhole premiums for the second quarter and first six months of 2006 compared to $3 million and $7 million for the same 2005 periods.

A portion of the investment income in this segment is credited to our fixed annuity policyholders. The interest credited to policyholders is included in the segment’s expenses. As stated above, annuity product interest rate margins represent the excess of the yield on earning assets over the average crediting rate. The yield on earning assets is calculated as net investment income on fixed product investment portfolios divided by average earning assets. The average crediting rate is calculated using interest credited on annuity products divided by the average fixed account values. Interest credited to policyholder balances decreased for the second quarter and first six months of 2006 compared to the same 2005 periods as a result of lower average fixed account values and lower average crediting rates.

The interest rate margin table above summarizes the effect of changes in the portfolio yield, the rate credited to policyholders, as well as the impact of prepayment premiums on results on an after-DAC, after-tax basis. The interest rate margin increased to 2.58% for the second quarter of 2006 from 2.57% for the same 2005 period. This was driven by an increase in quarter-over-quarter investment income yield, partially offset by an increase in crediting rates. After removing the effects of prepayment premiums, the interest rate margin was 2.46% for the second quarter of 2006 compared to 2.44% for the second quarter of 2005. In response to the competitive environment, we increased crediting rates in April 2006 by 10 basis points for one of our products with approximately $8 billion of account values. We are currently evaluating further crediting rate actions, with the expectation of maintaining stable spreads over the near term, excluding the effects of prepayment premiums. For information on interest rate margins and the interest rate risk due to falling interest rates, see "Item 3 - Quantitative and Qualitative Disclosures About Market Risk" of this Form 10-Q.

Benefits and Expenses

Interest credited to policyholders is included in insurance benefits and increased 2% in the second quarter and first six months of 2006, compared to the same periods in 2005. The increase is a result of the increase in crediting rates discussed above. See the table above for the interest rate credited to policyholders.

Underwriting, acquisition, insurance and other expenses decreased 1% for the second quarter and first six months of 2006, respectively, compared to the same 2005 periods. These decreases were primarily the result of change in expense allocation methodology put into effect in the second quarter of 2006 as a result of the April 2006 Jefferson-Pilot merger, which shifted expenses to other business segment. The change in methodology was not material to the other segments and did not affect consolidated expenses.

A portion of the variable annuity contracts in the segment contain GMDB’s in the form of a Return of Premium (“ROP”) GMDB feature.  At June 30, 2006, approximately $13.6 billion or 60% of variable annuity contract account values contained an ROP death benefit feature and the net amount at risk related to these contracts was $27.9 million.  The remaining variable annuity contract account values, including all of the 401(k) Director product contain no GMDB feature.

Executive Benefits and Other

	Three Months Ended							Six Months Ended
	June 30							June 30
					Increase							Increase
Operating Summary (in millions)	2006		2005		(Decrease)			2006		2005		(Decrease)
Operating Revenues:
Insurance fees	$	13	$	7		86	%	$	21	$	13		62	%
Net investment income		87		45		93	%		135		91		48	%
Other revenues and fees		1		1		0	%		2		2		0	%
Total Operating Revenues		101		53		91	%		158		106		49	%
Operating Expenses:
Insurance benefits		71		40		78	%		113		81		40	%
Underwriting, acquisition, insurance and other expenses		7		8		-13	%		12		16		-25	%
Total Operating Expenses		78		48		63	%		125		97		29	%
Income from operations before taxes		23		5		360	%		33		9		267	%
Federal income taxes		7		1		NM			9		1		NM
Income from Operations	$	16	$	4		300	%	$	24	$	8		200	%

51

Net Flows and Account Values

	Three Months Ended									Year-to-Date
(in billions)	June 30,						Increase			June 30,						Increase
	2006			2005			(Decrease)			2006			2005			(Decrease)
COLI/BOLI- Balance Beginning-of-Period	$ 1.387			$ 1.138			22		%	$ 1.318			$ 1.122			17		%
Business acquired		2.795			-			NM			2.795			-			NM
Deposits		0.077			0.056			36	%		0.124			0.101			23	%
Withdrawals & deaths		(0.042	)		(0.011	)		276	%		(0.049	)		(0.031	)		57	%
Net flows		0.035			0.045			-22	%		0.075			0.070			75	%
Policyholder assessments		(0.017	)		(0.008	)		102	%		(0.026	)		(0.016	)		57	%
Interest credited and change in market value		0.028			0.019			43	%		0.066			0.018			267	%
COLI/BOLI-Balance End-of-Period	$	4.228		$	1.194			254	%	$	4.228		$	1.194			254	%
		As of June 30,
COLI/BOLI In-Force	$	15.373		$	7.278			111	%
Institutional Pensions -Account Values	$	2.707		$	2.883			-6	%

Comparison of Three and Six Months Ended June 30, 2006 to 2005

Income from operations for Executive Benefits and Other business increased $12 million, or 300%, and $16 million, or 200% for the for the three months and six months ended June 30, 2006 compared to the same periods in 2005, respectively. Included in the current period is $6 million of income from operations from the Jefferson-Pilot companies. Excluding the Jefferson-Pilot companies, income from operations increased $6 million, or 150%, and $10 million, or 125%, for the comparable three month and six month periods due largely to growth in COLI/BOLI in-force and favorable mortality in the Institutional Pension business.

Revenues

Insurance fees for this business increased 86% and 62% for the second quarter and first six months of 2006, respectively, and includes $6 million, or 46% and 29%, respectively from the COLI/BOLI business acquired in the April 2006 Jefferson-Pilot merger.

 Included in the COLI/BOLI acquired with the Jefferson-Pilot companies are life insurance products sold to community banks, which accounted for $2.0 billion in policyholder fund balances. At June 30, 2006 VOBA balances, net of unearned revenue reserves, related to these blocks was approximately $124 million. These policies were primarily originated through, and continue to be serviced by, two marketing organizations. The surrender rate for this product may increase beyond current experience due to the absence of surrender charges and rising interest rates that may result in returns available to policyholders on competitors’ products being more attractive than on our policies in force. The following factors may influence policyholders to continue these coverages: 1) our ability to adjust crediting rates; 2) relatively high minimum rate guarantees; 3) the difficulty of re-underwriting existing and additional covered lives; and 4) unfavorable tax attributes of certain surrenders. Our assumptions for amortizing VOBA and unearned revenue for these policies reflect a higher long-term expected lapse rate than other blocks of business due to the factors noted above. Lapse experience for this block in a particular period could vary significantly from our long-term lapse assumptions.

Net investment income increased 93% and 48% in the three and six month periods ended June 30, 2006, respectively, compared with the same 2005 periods, including $40 million, or 46% and 30%, respectively, attributable to the Jefferson-Pilot companies. The increases were also due to higher investment portfolio yields offset by lower fixed annuity account values.

Benefits and Expenses

Insurance benefits, which includes interest credited to policyholders, increased $31 million, or 78%, in the second quarter and $32 million, or 40%, in the first six months of 2006, compared to the same periods in 2005. The increase is primarily due to $31 million of interest credited to policyholders attributable to the Jefferson-Pilot companies. Excluding the increase from Jefferson-Pilot companies, insurance benefits for 2006 were level with the same 2005 periods, as increased interest credited on the COLI/BOLI business from growth in account values and rate increases was offset by favorable mortality in the Institutional Pension business. On July 1, 2006 we implemented a 25 basis point increase in crediting rates on our Jefferson-Pilot BOLI business.

Underwriting, acquisition, insurance and other expenses decreased $1 million, or 13%, and $4 million, or 25%, for the second quarter and first six months of 2006, respectively, compared to the same 2005 periods. These decreases were primarily the result of change in expense allocation methodology put into effect in the second quarter of 2006 as a result of the April 2006 Jefferson-Pilot merger. The change in methodology did not affect consolidated expenses.

Employer Markets - Benefit Partners

The Benefit Partners segment offers group life, disability, and dental insurance to employers. The segment’s products are marketed primarily through a national distribution system of regional group offices. These offices develop

52

business through employee benefit brokers, third-party administrators and other employee benefit firms. The Benefit Partners segment was added as a result of our merger with Jefferson-Pilot. Therefore, its results are included in our consolidated results effective with the second quarter 2006.

	Three & Six Months Ended
	June 30
Operating Summary (in millions)	2006
Operating Revenues:
Insurance premiums	$	329
Net investment income		25
Other revenues and fees		1
Total Operating Revenues		355
Operating Expenses:
Insurance benefits		226
Underwriting, acquisition, insurance and other expenses		72
Total Operating Expenses		298
Income from operations before taxes		57
Federal income taxes		20
Income from Operations	$	37

Product Line Data	Three Months Ended June 30, 2006
	Income from			Annualized
(in millions)	Operations			Premiums (1)		Loss Ratios
Life	$	14		$	15		67.8	%
Disability		21			23		59.4	%
Dental		1			7		76.3	%
Other		1			-
Total (1)	$	37		$	45		64.7	%
Expense Ratios
Earned Premiums to General and Administrative Expense		9.7	%
Earned Premiums to Operating and Acquisition Expense		21.9	%
(1) Annualized premiums are expected annualized First year premiums
(2) The loss ratio total is the ratio of total non-medical losses to earned premiums

Income from operations for this segment was $37 million for the second quarter and first six months of 2006, and benefited from favorable long-term disability claim experience. We recognize premium receipts for this segment as revenues and claims as incurred. Because group underwriting risks may change over time, management focuses on trends in loss ratios to compare actual experience with pricing expectations. The level of expenses is also an important driver of profitability for this segment, as group insurance contracts are offered within an environment that competes on the basis of price and service. Reported sales relate to long-duration contracts sold to new policyholders and new programs sold to existing policyholders. The trend in sales is an important indicator of development of business in force over time.

53

Revenues

The Employer Markets Benefit Partners segment did not experience any substantial change as a result of the merger. Insurance premiums for the second quarter of 2006 increased modestly compared to the trends experienced prior to merger, primarily due to higher premiums from its non-core Exec-U-Care® business, which offset a decline in its core life and dental businesses and flat premium growth in disability. The Exec-U-Care® business provides an insured medical expense reimbursement vehicle to executives for non-covered health plan costs, produces significant revenues and benefits expenses for this segment but only a limited amount of segment earnings. Discontinuance of this product would significantly impact segment revenues. Premium growth for life has declined and slowed for disability, as sales for these products were adversely affected by premium rate increases that were implemented in recent quarters.

Benefits and Expenses

Insurance benefits for the second quarter of 2006 decreased compared to trends experienced prior to the merger. Policy benefits reflect a total non-medical loss ratio of 64.7%, driven primarily by better than expected long-term disability results that we do not believe are sustainable. We experienced favorable long-term disability claims incidence and favorable claims terminations that significantly decreased our loss ratios and reduced policy benefits by $12 million pre-tax. Effective claims management contributed to the favorable claim termination experience. We believe that loss ratios in the low-to-mid 70s are more representative of longer-term expectations on this line of business. The discount rate used to calculate long-term disability and life waiver reserves is 5.25%.

Underwriting, acquisition, insurance and other expenses for the second quarter of 2006 were favorable due to lower DAC and VOBA amortization as a result of purchase accounting adjustments, which resulted in pre-merger DAC being written-off and VOBA being established. VOBA is generally amortized over a 15-year period. Excluding the effects of VOBA amortization, the operating expense ratio was consistent with trends experienced prior to the merger.

54

Investment Management

	Periods Ended June 30,								Periods Ended June 30,
	Three Months								Six Months
						Increase							Increase
Operating Summary (in millions)	2006		2005			(Decrease)			2006		2005		(Decrease)
Operating Revenues:
Investment advisory fees	$	81	$	62			31	%	$	159	$	117		36	%
Investment advisory fees - insurance-related		24		24			-			48		49		(2	%)
Other revenues and fees		30		28			7	%		67		58		16	%
Total Operating Revenues		135		114			18	%		274		224		22	%
Operating Expenses:
Operating and administrative expenses		117		116			1	%		232		219		6	%
Total Operating Expenses		117		116			1	%		232		219		6	%
Income (loss) from operations before Federal income taxes		18		(2	)		NM			42		5		NM
Federal income taxes		6		(1	)		NM			15		2		NM
Income (loss) from Operations	$	12	$	(1	)		NM		$	27	$	3		NM

Assets Under Management 

June 30, (in billions)	2006		2005		Increase
Retail-Equity	$	36.036	$	27.725		30	%
Retail-Fixed		10.007		9.095		10	%
Total Retail		46.043		36.820		25	%
Institutional-Equity		21.729		16.627		31	%
Institutional-Fixed		18.154		13.404		35	%
Total Institutional		39.883		30.031		33	%
Insurance-related Assets		65.637		43.917		49	%
Total Assets Under Management	$	151.563	$	110.768		37	%
Total Sub-advised Assets, included in above amounts
Retail	$	16.899	$	12.202		38	%
Institutional		4.592		4.564		1	%
Total Sub-advised Assets at the End of the Period	$	21.491	$	16.766		28	%

55

Net Flows

	Three Months									Six Months
							Increase									Increase
Periods Ended June 30, (in billions)	2006			2005			(Decrease)			2006			2005			(Decrease)
Retail:
Equity:
Fund deposits	$	2.249		$	3.429			-34	%	$	5.318		$	6.089			-13	%
Redemptions and transfers		(2.167	)		(1.493	)		45	%		(4.020	)		(2.967	)		35	%
Net flows-Equity		0.082			1.936			-96	%		1.298			3.122			-58	%
Fixed Income:
Fund deposits		1.034			0.905			14	%		1.985			1.811			10	%
Redemptions and transfers		(0.794	)		(0.694	)		14	%		(1.656	)		(1.359	)		22	%
Net flows-Fixed Income		0.240			0.211			14	%		0.329			0.452			-27	%
Total Retail:
Fund deposits		3.283			4.334			-24	%		7.303			7.900			-8	%
Redemptions and transfers		(2.961	)		(2.187	)		35	%		(5.676	)		(4.326	)		31	%
Net flows-Total Retail		0.322			2.147			-85	%		1.627			3.574			-54	%
Institutional:
Equity:
Inflows/deposits		1.130			4.638			-76	%		3.094			5.300			-42	%
Withdrawals and transfers		(1.335	)		(1.213	)		10	%		(2.343	)		(1.744	)		34	%
Net flows-Equity		(0.205	)		3.425			NM			0.751			3.556			-79	%
Fixed Income:
Inflows/deposits		1.634			1.472			11	%		4.714			3.003			57	%
Withdrawals and transfers		(0.742	)		(1.022	)		-27	%		(1.186	)		(1.339	)		-11	%
Net flows-Fixed Income		0.892			0.450			98	%		3.528			1.664			112	%
Total Institutional:
Inflows/deposits		2.764			6.110			-55	%		7.808			8.303			-6	%
Withdrawals and transfers		(2.077	)		(2.235	)		-7	%		(3.529	)		(3.083	)		14	%
Net flows-Total Institutional		0.687			3.875			-82	%		4.279			5.220			-18	%
Combined Retail and Institutional:
Deposits/inflows		6.047			10.444			-42	%		15.111			16.203			-7	%
Redemptions, withdrawals and transfers		(5.038	)		(4.422	)		14	%		(9.205	)		(7.409	)		24	%
Net flows-Combined Retail and Institutional	$	1.009		$	6.022			-83	%	$	5.906		$	8.794			-33	%

Note:The term deposits in the above table and in the following discussion represents purchases of mutual funds and managed accounts, deposits in variable annuity funds, and inflows in advisory accounts.

Investment Management - Comparison of Three and Six Months Ended June 30, 2006 to 2005

Income from operations for the second quarter and first six months of 2006 was $12 million and $27 million, respectively, compared to a loss of $1 million and income of $3 million for the same 2005 periods. These improvements were driven by growth in assets under management and the absence of expenses associated with investment talent acquisitions.

Revenues, Deposits and Net Flows

Investment advisory fees increased 31% and 36% for the second quarter and first six months of 2006 compared to the same periods in 2005, due to a higher average level of assets under management resulting from positive net flows and changes in product mix. Improved returns in the equity markets also contributed to the increase in the first six months of 2006 compared to the first six months of 2005. We believe that the increase in the asset base and continued growth in net flows were attributable to several factors, including changes in the management of certain asset category offerings and the recognition in the marketplace of improving investment performance. The level of net flows may vary considerably from period to period and net flows in one quarter may not be indicative of net flows in subsequent quarters.

Investment advisory fees include amounts that are ultimately paid to sub-advisors for managing the sub-advised assets. The amounts paid to sub-advisors are included in the segment’s expenses. In addition, included in the investment advisory fees—external are fees earned from managing funds included within our variable annuity and life insurance products.

Investment advisory fees - insurance-related is made up of fees for asset management services this segment provides for our general account assets supporting our fixed products and surplus, including those of the Individual and Employer Markets businesses. In the second quarter of 2006, we lowered the fees being charged for this service, which is subject to regulatory approval, to 9 basis points on assets managed from 16 basis points. The effect on revenue was generally offset by an increase in general account assets from the Jefferson-Pilot April 2006 merger.

56

The increase in assets under management from June 30, 2005 to 2006 is primarily the result of positive net flows, market value gains and the increase in general account assets from the Jefferson-Pilot merger. Net flows for the twelve months ended June 30, 2006, were $4.5 billion in retail and $7.8 billion in institutional. Market value gains were $4.7 billion in retail and $2.0 billion in institutional for the same period.

The International ADR managed accounts product currently sub-advised by Mondrian Investment Partners has been closed to new investors. This closure was primarily driven by investment considerations surrounding capacity limitations and the need to protect the interests of our existing customers. Compared to the same 2005 periods, our flow of funds from new managed accounts declined as a result of this product closing for the three and six month periods ended June 30, 2006. This decline was partially offset by flows into other asset classes we have to attract new accounts, such as another International ADR vehicle to sell into this marketplace. The closing of the International ADR managed accounts did not have an adverse material effect on our results of operations.

In May 2006, we closed the Delaware Large Cap Growth Equity (SMA) product to new accounts. The product remains open to contributions from existing accounts. This product has experienced significant growth in the last several quarters. Similar to the International ADR product, this closure was primarily driven by investment considerations surrounding capacity limitations and the need to protect the interests of our existing customers. We do not expect the closing of this product to have an adverse material effect on our results of operations.

Expenses

Operating and administrative expenses increased 1% in the second quarter and 6% for the first six months of 2006 compared to the same periods in 2005, primarily from expenses that vary with revenues and levels of assets under management. Unlike the capitalization of acquisition costs with insurance products, we are not able to capitalize the acquisition costs of new business in the asset management business. The increase in expenses largely reflects the second quarter 2005 additions of a large cap equity growth team and an international equity team, as well as an increase in sub-advisory fees due to an increase in assets under management.

 In July 2006, Jude T. Driscoll, President of Lincoln National Investment Company and Delaware Management Holdings, Inc., announced his resignation, and Patrick P. Coyne, Executive Vice President and Chief Equity Investments Officer was named President.  The leadership of the various equity and fixed income teams remains unchanged.   

57

Lincoln UK

	Three Months							Six Months
Operating Summary for the Periods					Increase							Increase
Ended June 30, (in millions)	2006		2005		(Decrease)			2006		2005		(Decrease)
Operating Revenues:
Insurance premiums	$	20	$	16		25	%	$	37	$	31		19	%
Insurance fees		43		43		0	%		79		82		-4	%
Net investment income		18		20		-10	%		35		40		-13	%
Total Operating Revenues		81		79		3	%		151		153		-1	%
Operating Expenses:
Insurance benefits		27		28		-4	%		53		53		0	%
Underwriting, acquisition, insurance and other expenses		39		35		11	%		66		69		-4	%
Total Operating Expenses		66		63		5	%		119		122		-2	%
Income before taxes		15		16		-6	%		32		31		3	%
Federal income taxes		5		6		-17	%		11		11		0	%
Income from Operations	$	10	$	10		0	%	$	21	$	20		5	%
					Increase
June 30, (in billions)	2006		2005		(Decrease)
Unit-Linked Assets	$	7.9	$	6.9		14	%
Individual Life Insurance In-Force		18.3		18.5		-1	%
Exchange Rate Ratio-U.S. Dollars to Pounds Sterling:
Average for the Period		1.791		1.880		-5	%
End of Period		1.849		1.792		3	%

Lincoln UK - Comparison of Three and Six Months Ended June 30, 2006 to 2005

Revenues

The average exchange rate for the U.S. dollar relative to the British pound sterling declined 1% for the second quarter of 2006 and 5% for the first six months of 2006 compared to the same periods in 2005. Excluding the effect of the exchange rate, insurance premiums and insurance fees increased 23% and 4%, respectively, for the second quarter of 2006 compared to the second quarter of 2005, and 24% and 2%, respectively, for the first six months of 2006 compared to the same period in 2005. The increase in insurance premiums reflects an increase in the annuitization of vesting pension policies. The receipt of these premiums results in a corresponding increase in benefits. Our annualized policy lapse rate, as measured by the number of policies in-force, was 6.8% for the six months ended June 30, 2006, compared to 7.0% for the comparable 2005 period. The growth in insurance fees was due to higher average equity-linked account values resulting from favorable U.K. equity markets, partially offset by lower tax related fees. The average value of the FTSE 100 index was 18% higher in the first six months of 2006 compared to the same period in 2005.

Expenses

Operating expenses were 5% higher in the second quarter of 2006 and 2% lower in the first six months of 2006 compared to the same periods in 2005, primarily due to the impact of the exchange rate and higher project related expenses in the first quarter and first six months of 2006 compared to the same periods in 2005. Excluding the effect of the exchange rate, operating expenses were 7% and 3% higher in the first quarter and first six months of 2006 than the same periods in 2005.

The services provided to the segment under the Capita agreement are currently deemed to be exempt from value added tax (“VAT”). In 2005, the European Court of Justice indicated that VAT should be applied to such an arrangement. The European Commission has announced that they are to conduct a review of the treatment of VAT within financial services. It is uncertain when this review will be completed and what the outcome will be. Future changes in the application of VAT to Lincoln UK’s outsourcing arrangement with Capita could impact the segment’s results, although we believe that any future change would not materially effect our consolidated financial position. 

58

Lincoln Financial Media

The Lincoln Financial Media segment consists of 18 radio and 3 television broadcasting stations located in selected markets in the Southeastern and Western United States and also produces and distributes syndicated collegiate basketball and football sports programming. Operations of this segment were acquired in the April 2006 merger with Jefferson-Pilot.

	Three and Six Months
	Ended June 30,
Operating Summary (in millions)	2006
Operating Revenue
Communications revenues (net) (1)	$	58
Operating Expenses
Operating expenses		38
Income from operations before Federal income taxes		20
Federal income taxes		8
Income from Operations	$	12
(1) Communications revenues are net of commissions of  $9 million paid to agencies.

Communications revenues and earnings declined compared with periods immediately preceding the merger. Revenues were below expectations due to softness in most of our markets caused by declining spending on advertising by the automotive sector, lower real estate advertising, and political spending late in the quarter.

Operating expenses and income from operations includes amortization expense of $4 million pre-tax for intangibles arising from the application of purchase accounting related to the merger. The primary driver of the amortization in this period is related to an intangible for advertising contracts that is now fully amortized. The remaining intangible assets with a determinant useful life are valued at $32 million at June 30, 2006 and are amortized over a period of 5 to 21 years. See Note 2 to the unaudited Consolidated Financial Statements for additional details.

Profitability for Lincoln Financial Media is seasonal and is principallyinfluenced by such factors as retail events, special and sporting events and political advertising. Generally, results are most favorable in the fourth quarter.

Because our broadcasting businesses rely on advertising revenues, they are sensitive to cyclical changes in both the general economy and in the economic strength of local markets. Furthermore, our stations derived 21% of their advertising revenues from the automotive industry in the second quarter of 2006, a number that has been declining for several quarters. If automotive advertising is further curtailed, it could have an even greater negative impact on broadcasting revenues than has been experienced to date. In the second quarter of 2006, 7% of television revenues came from a network agreement with our CBS-affiliated stations that expires in 2011. The trend in the industry is away from networks compensating affiliates for carrying their programming and there is a possibility those revenues will be eliminated when the contract is renewed. Many different businesses compete for available advertising sales in our markets, including newspapers, magazines, billboards and other radio and television broadcasters. Technological media changes, such as satellite radio and the internet, and consolidation in the broadcast and advertising industries, may increase competition for audiences and advertisers.

59

Other Operations

Other Operations includes investments related to amount of statutory surplus in our insurance subsidiaries that is not allocated to our business units, other corporate investments, benefit plan net assets, and the unamortized deferred gain on the indemnity reinsurance portion of the sales transaction for our former reinsurance segment, which was sold to Swiss Re Life & Health America Inc. (“Swiss Re”) in 2001. Income from operations for Other Operations includes earnings on the investments, and financial data for operations that are not directly related to the business segments, unallocated corporate items (such as corporate investment income and interest expense on short-term and long-term borrowings, and certain expenses, including restructuring and merger-related expenses) and the amortization of the deferred gain on the indemnity reinsurance portion of the transaction with Swiss Re.

	Three Months									Six Months
	Ended June 30,						Increase			Ended June 30,						Increase
Operating Summary (in millions)	2006			2005			(Decrease)			2006			2005			(Decrease)
Income (Loss) from Operations by Source:
Earnings on investments & other income	$	49		$	60			-18	%	$	62		$	62			0	%
Amortization of deferred gain on indemnity reinsurance		19			19			0	%		37			38			-3	%
Interest on debt		(64	)		(23	)		178	%		(86	)		(44	)		95	%
Operating expenses		(47	)		(49	)		-4	%		(58	)		(56	)		4	%
Income (loss) from operations before taxes		(43	)		7			NM			(45	)		-			NM
Federal income tax benefit		(17	)		(23	)		26	%		(19	)		(33	)		42	%
Income (Loss) from Operations	$	(26	)	$	30			NM		$	(26	)	$	33			NM

Other Operations - Comparison of Three and Six Months Ended June 30, 2006 to 2005

Earnings on investments and other income decreased 18% for the three month period ended June 30, 2006, and were unchanged for the first six months of 2006, compared to the same 2005 periods. The decrease for the second quarter reflects $26 million pre-tax of fees from standby real estate equity commitments received in the second quarter of 2005, higher investment income on investment partnerships in the 2005 periods, partially offset by $24 million pre-tax earnings from the Jefferson-Pilot companies for the three month period ended June 30, 2006. We utilize an internal formula to determine the amount of capital that is allocated to our business segments. Investment income on capital in excess of the calculated amounts is reported in Other Operations.

Interest on debt for the second quarter and first six months of 2006 increased 178% and 95%, respectively, compared to the same 2005 periods. Corporate borrowings increased $3.0 billion in the second quarter of 2006, including approximately $2.1 billion used to finance the $1.8 billion cash portion of the Jefferson-Pilot merger consideration and the $500 million stock repurchase. The increase also includes $0.9 billion for the fair value of Jefferson-Pilot corporate debt. Interest expense on short-term borrowings for the second quarter and first six months of 2006 includes $8 million for borrowings under the bridge facility utilized to initially fund the April 2006 Jefferson-Pilot merger.

Operating expenses in the three and six month periods ended June 30, 2006 include expenses of $17 million related to the merger with Jefferson-Pilot for related integration costs, including restructuring charges. In 2005, we had restructuring charges of $23 million and $25 million for the three and six month periods ended June 30, 2005. The restructuring charges in 2005 related to our 2005 restructuring activities in our retail distribution unit and the 2003 restructuring plan related to the realignment of our business units. See Note 11 to the unaudited Consolidated Financial Statements for additional information.

Included in income from operations for the three and six month periods ended June 30, 2005 are reductions in Federal income tax expense of $24 million and $29 million, respectively, related to partial releases of a deferred tax allowance in our Barbados insurance company.

In July 2006 we negotiated a memorandum of understanding with certain of our liability carriers, who have agreed to reimburse us $26 million for certain costs incurred in connection with certain United Kingdom selling practices, The reimbursement will be recorded in net income upon final settlement and receipt of cash, which is expected in the third quarter. We continue to pursue claims with other liability carriers.

60

CONSOLIDATED INVESTMENTS

The following table presents consolidated invested assets, net investment income and investment yield.

				June 30,			December 31,			June 30,
(in billions)				2006			2005			2005
Total Consolidated Investments (at Fair Value)				$	69.7		$	43.2		$	44.9
Average Invested Assets (at Amortized Cost) (1)				$	57.6			43.9			43.8
	Three Months Ended						Six Months Ended
	June 30,						June 30,
($ in millions)	2006			2005			2006			2005
Net Investment Income	$	1,068		$	704		$	1,747		$	1,363
Investment Yield (ratio of net investment income to
average invested assets)		6.03	%		6.44	%		6.07	%		6.24	%
Items Included in Net Investment Income:
Limited partnership investment income	$	15		$	21		$	27		$	30
Prepayment and makewhole premiums		15			4			26			6
Standby real estate equity commitments		-			26			-			26

⁽¹⁾Based on the average of invested asset balances at the beginning and ending of each quarter within the period.

The increase in our investment portfolio for the first six months of 2006 is primarily the result of the Jefferson-Pilot merger, which added $27.9 billion of investment assets after purchase accounting adjustments, and by purchases of investments as a result of cash flow generated by our business segments. The increase was partially offset by a decline in the fair value of securities available-for-sale.

Diversification across asset classes is fundamental to our investment policy. Our investment portfolio, excluding cash and invested cash, is composed of fixed maturity securities, mortgage loans on real estate, real estate either wholly owned or in joint ventures and other long-term investments. We purchase investments for our segmented portfolios that have yield, duration and other characteristics that take into account the liabilities of the products being supported. The dominant investments held are fixed maturity securities available-for-sale, which represent approximately 77.5% of the investment portfolio. Trading securities, which are primarily fixed maturity securities, represent approximately 4.5% of the investment portfolio.

We have the ability to maintain our investment holdings throughout credit cycles because of our capital position, the long-term nature of our liabilities and the matching of our portfolios of investment assets with the liabilities of our various products.

The quality of our available-for-sale fixed maturity securities portfolio, as measured at fair value and by the percentage of fixed maturity securities invested in various ratings categories, relative to the entire available-for-sale fixed maturity security portfolio, as of June 30, 2006 was as follows:

61

			Amortized		Estimated
	Rating Agency		Cost		Fair Value		% of
NAIC Designation	Equivalent Designation		(in millions)				Total
1		AAA / AA / A	$	32,314	$	32,095		59.4	%
2		BBB		18,290		18,095		33.5	%
3		BB		2,421		2,406		4.4	%
4		B		1,246		1,238		2.3	%
5		CCC and lower		157		152		0.3	%
6		In or near default		24		38		0.1	%
			$	54,452	$	54,024		100.0	%

The National Association of Insurance Commissioners (“NAIC”) assigns securities quality ratings and uniform valuations called “NAIC Designations” which are used by insurers when preparing their annual statements. The NAIC assigns designations to publicly traded as well as privately placed securities. The designations assigned by the NAIC range from class 1 to class 6, with designations in classes 1 and 2 generally considered investment grade.

Fixed maturity securities available-for-sale invested in below investment grade securities (NAIC designations 3 thru 6) were $3.8 billion, or 7.1%, and $2.5 billion, or 7.5%, of all fixed maturity securities available-for-sale, as of June 30, 2006 and December 31, 2005, respectively. This represents 5.5% of the total investment portfolio at June 30, 2006 compared to 5.8% at December 31, 2005. On an amortized cost basis, below investment grade securities represented 7.1% of available-for-sale fixed maturity securities at June 30, 2006 compared to 7.6% at December 31, 2005.

Fixed Maturity and Equity Securities Portfolios: Fixed maturity securities and equity securities consist of portfolios classified as available-for-sale and trading. Mortgage-backed and private securities are included in both available-for-sale and trading portfolios.

Available-for-Sale: Securities that are classified as “available-for-sale” make up 95% of our fixed maturity and equity securities portfolio. These securities are carried at fair value on our Consolidated Balance Sheets. Changes in fair value, net of related DAC, amounts required to satisfy policyholder commitments and taxes, are charged or credited directly to shareholders’ equity. Changes in fair value that are other than temporary are recorded as realized losses in the Consolidated Statements of Income.

Trading Securities: Investment results for these portfolios, including gains and losses from sales, are passed directly to the reinsurers through the contractual terms of the reinsurance arrangements. Trading securities are carried at fair value and changes in fair value are recorded in net income as they occur. Offsetting these amounts are corresponding changes in the fair value of the embedded derivative liability associated with the underlying reinsurance arrangement.

Mortgage-Backed Securities: Our fixed maturity securities include mortgage-backed securities. These securities are subject to risks associated with variable prepayments, which may result in these securities having a different actual cash flow and maturity than expected at the time of purchase. We limit the extent of our risk on mortgage-backed securities by prudently limiting exposure to the asset class, by generally avoiding the purchase of securities with a cost that significantly exceeds par, by purchasing securities backed by stable collateral and by concentrating on securities with enhanced priority in their trust structure. Such securities with reduced risk typically have a lower yield (but higher liquidity) than higher-risk mortgage-backed securities. At selected times, higher-risk securities may be purchased if they do not compromise the safety of the general portfolio.

62

Mortgage Loans on Real Estate and Real Estate:

The following summarizes key information on mortgage loans:

	June 30,			December 31,
(dollars in millions)	2006			2005
Total Portfolio (net of reserves)	$	7,741		$	3,663
Percentage of total investment portfolio		11.1	%		8.5	%
Percentage of investment by property type
Commercial office buildings		32.9	%		40.9	%
Retail stores		25.9	%		19.2	%
Industrial buildings		21.3	%		18.9	%
Apartments		11.3	%		11.5	%
Hotels/motels		6.7	%		6.4	%
Other		1.9	%		3.1	%
Impaired mortgage loans	$	34		$	66
Impaired mortgage loans as a percentage of total mortgage loans		0.4	%		1.8	%
Restructured loans in good standing	$	57		$	45
Reserve for mortgage loans	$	3		$	9

In addition to the dispersion by property type, the mortgage loan portfolio is geographically diversified throughout the United States.

All mortgage loans that are impaired have an established allowance for credit loss. Changing economic conditions impact our valuation of mortgage loans. Changing vacancies and rents are incorporated into the discounted cash flow analysis that we perform for monitored loans and may contribute to the establishment of (or an increase or decrease in) an allowance for credit losses. In addition, we continue to monitor the entire commercial mortgage loan portfolio to identify risk. Areas of current emphasis are the hotel, retail, office and industrial properties that have deteriorating credits or have experienced debt coverage reduction. Where warranted, we have established or increased loss reserves based upon this analysis. Impaired mortgage loans were 0.4% and 1.8% of total mortgage loans at June 30, 2006 and December 31, 2005, respectively. As of June 30, 2006 and December 31, 2005, all commercial mortgage loans were current as to principal and interest payments.

Limited Partnership Investments: As of June 30, 2006 and December 31, 2005, our consolidated investments included limited partnership investments of $456 million and $312 million, respectively. These include investments in approximately 62 different partnerships that allow us to gain exposure to a broadly diversified portfolio of asset classes such as venture capital, hedge funds, and oil and gas. The partnerships do not represent off-balance sheet financing and generally involve several third-party partners. Select partnerships contain “capital calls” which require us to contribute capital upon notification by the general partner. These capital calls are contemplated during the initial investment decision and are planned for well in advance of the call date. The capital calls are not material in size and pose no threat to our liquidity. Limited partnership investments are accounted for using the equity method of accounting and the majority of these investments are included in other investments in the Consolidated Balance Sheets.

Net Investment Income: Net investment income increased 52% and 28% in the second quarter and first six months of 2006, respectively, compared to the same 2005 periods. Excluding commercial mortgage loan prepayment and bond makewhole premiums, the increase in net investment income in the second quarter and first six months of 2006 compared to the same periods in 2005 primarily reflects higher portfolio yields and higher invested assets due to the April 2006 Jefferson-Pilot merger, which added $27.9 billion in invested assets, and the favorable effect of asset growth from net flows.

As of June 30, 2006 and December 31, 2005, the carrying amount of fixed maturity securities, mortgage loans on real estate and real estate that were non-income producing was $54 million and $67 million, respectively.

The following discussion addresses our invested assets excluding trading account securities. As discussed above, investment results attributable to the trading securities are passed directly to the reinsurers under the terms of the reinsurance arrangements. See the discussion in our 2005 Form 10-K under “Consolidated Investments” for additional information regarding our investments.

Realized Gains and Losses on Investments and Derivative Instruments: We had net pre-tax realized losses on investments and derivatives of $7 million and $4 million for the three months ended June 30, 2006 and 2005, respectively, and $14 and $11 million for the first six months ended June 30, 2006 and 2005, respectively. Prior to the amortization of DAC, provision for policyholder commitments and investment expenses, pre-tax net realized gains were $13 million and $12 million for the three months ended June 30, 2006 and 2005, respectively and $22 million and $21 million for the first six months ended June 30, 2006 and 2005, respectively.

63

Included within net realized losses are write-downs for impairments on fixed maturities and equity securities of $2 million and $3 million for the three and six months ended June 30, 2006, respectively, compared to $2 million and $12 million for the same periods in 2005.

For additional information regarding our process for determining whether declines in fair value of securities available-for-sale are other than temporary, see “Critical Accounting Policies - Write-Downs for Other-Than Temporary Impairments and Allowance for Losses” in our 2005 Form 10-K.

Unrealized Gains and Losses—Available-for-Sale Securities: When considering unrealized gain and loss information, it is important to realize that the information relates to the status of securities at a particular point in time and may not be indicative of the status of our investment portfolios subsequent to the balance sheet date. Further, since the timing of the recognition of realized investment gains and losses through the selection of which securities are sold is largely at management’s discretion, it is important to consider the information provided below within the context of the overall unrealized gain or loss position of our investment portfolios. These are important considerations that should be included in any evaluation of the potential impact of unrealized loss securities on our future earnings.

At June 30, 2006 and December 31, 2005, gross unrealized gains on securities available-for-sale were $769 million and $1,380 million, respectively, and gross unrealized losses on securities available-for-sale were $1,186 million and $313 million, respectively. At June 30, 2006, gross unrealized gains and losses on fixed maturity securities available-for-sale were $755 million and $1,182 million, respectively, and gross unrealized gains and losses on equity securities available-for-sale were $14 million and $4 million, respectively. At December 31, 2005, gross unrealized gains and losses on fixed maturity securities available-for-sale were $1,371 million and $312 million, respectively, and gross unrealized gains and losses on equity securities available-for-sale were $9 million and $1 million, respectively. Changes in unrealized gains and losses can be attributed to changes in interest rates and credit spreads, which have created temporary price fluctuations. Interest rates rose during the first six months of 2006 as indicated by a change in the 10-year treasury yield from 4.36% at December 31, 2005 to 5.15% at June 30, 2006.

For total publicly traded and private securities that we held at June 30, 2006 that were in an unrealized loss position, the fair value, amortized cost, unrealized loss and total time period that the security has been in an unrealized loss position are presented in the table below:

			% Fair			Amortized		% Amortized			Unrealized			% Unrealized
(in millions)	Fair Value		Value			Cost		Cost			Loss			Loss
<= 90 days	$	14,467		37.1	%	$	14,715		36.7	%	$	(248	)		20.9	%
> 90 days but <= 180 days		15,737		40.4	%		16,151		40.2	%		(414	)		34.9	%
> 180 days but <= 270 days		2,083		5.4	%		2,172		5.4	%		(89	)		7.5	%
> 270 days but <= 1 year		4,395		11.3	%		4,643		11.6	%		(248	)		20.9	%
> 1 year		2,277		5.8	%		2,464		6.1	%		(187	)		15.8	%
Total	$	38,959		100.0	%	$	40,145		100.0	%	$	(1,186	)		100.0	%

64

The composition by industry categories of securities that we held at June 30, 2006 in an unrealized loss position is presented in the table below:

			% Fair			Amortized		% Amortized			Unrealized			% Unrealized
(in millions)	Fair Value		Value			Cost		Cost			Loss			Loss
Collateralized Mortgage Obligations	$	4,571		11.7	%	$	4,694		11.7	%		(123	)		10.4	%
Banking		4,164		10.7	%		4,286		10.7	%		(122	)		10.3	%
Electric		3,478		8.9	%		3,579		8.9	%		(101	)		8.5	%
Commercial Mortgage Backed Securities		1,804		4.6	%		1,868		4.7	%		(64	)		5.4	%
Automotive		366		0.9	%		413		1.0	%		(47	)		4.0	%
Asset Backed Securities		1,313		3.4	%		1,351		3.4	%		(38	)		3.2	%
Food and Beverage		1,478		3.8	%		1,516		3.8	%		(38	)		3.2	%
Media - Noncable		1,066		2.7	%		1,104		2.7	%		(38	)		3.2	%
Pipelines		1,224		3.1	%		1,260		3.1	%		(36	)		3.0	%
Property & Casualty		871		2.2	%		906		2.3	%		(35	)		2.9	%
Paper		663		1.7	%		696		1.7	%		(33	)		2.8	%
Wirelines		633		1.6	%		659		1.6	%		(26	)		2.2	%
Distributors		909		2.3	%		934		2.3	%		(25	)		2.1	%
Real Estate Investment Trusts		1,050		2.7	%		1,073		2.7	%		(23	)		1.9	%
Sovereign		546		1.4	%		568		1.4	%		(22	)		1.9	%
Metals and Mining		591		1.5	%		613		1.5	%		(22	)		1.9	%
Government Sponsored		608		1.6	%		629		1.6	%		(21	)		1.8	%
Chemicals		639		1.6	%		657		1.6	%		(18	)		1.5	%
Entertainment		476		1.2	%		493		1.2	%		(17	)		1.4	%
Technology		503		1.3	%		520		1.3	%		(17	)		1.4	%
Retailers		435		1.1	%		452		1.1	%		(17	)		1.4	%
Independent		602		1.6	%		618		1.5	%		(16	)		1.3	%
Diversified Manufacturing		634		1.6	%		649		1.6	%		(15	)		1.3	%
Integrated		496		1.3	%		510		1.3	%		(14	)		1.2	%
Oil Field Services		608		1.6	%		622		1.5	%		(14	)		1.2	%
Transportation Services		554		1.4	%		568		1.4	%		(14	)		1.2	%
Brokerage		556		1.4	%		568		1.4	%		(12	)		1.0	%
Home Construction		262		0.7	%		273		0.7	%		(11	)		0.9	%
Life Insurance		513		1.3	%		524		1.3	%		(11	)		0.9	%
Consumer Products		379		1.0	%		390		1.0	%		(11	)		0.9	%
Industrial - Other		526		1.4	%		536		1.3	%		(10	)		0.8	%
Building Materials		432		1.1	%		442		1.1	%		(10	)		0.8	%
Healthcare		375		1.0	%		385		1.0	%		(10	)		0.8	%
Non-Captive Diversified		350		0.9	%		360		0.9	%		(10	)		0.8	%
Non Captive Consumer		430		1.1	%		440		1.1	%		(10	)		0.8	%
Railroads		387		1.0	%		396		1.0	%		(9	)		0.8	%
Conventional 30 Year		339		0.9	%		348		0.9	%		(9	)		0.8	%
Financial - Other		198		0.5	%		206		0.5	%		(8	)		0.7	%
Pharmaceuticals		284		0.7	%		292		0.7	%		(8	)		0.7	%
Owned No Guarantee		169		0.4	%		177		0.4	%		(8	)		0.7	%
Wireless		185		0.5	%		192		0.5	%		(7	)		0.6	%
Supermarkets		344		0.9	%		351		0.9	%		(7	)		0.6	%
Health Insurance		233		0.6	%		240		0.6	%		(7	)		0.6	%
Media Cable		211		0.5	%		217		0.5	%		(6	)		0.5	%
Municipal		201		0.5	%		207		0.5	%		(6	)		0.5	%
Gaming		206		0.5	%		212		0.5	%		(6	)		0.5	%
Local Authorities		142		0.4	%		148		0.4	%		(6	)		0.5	%
Packaging		186		0.5	%		191		0.5	%		(5	)		0.4	%
Construction Machinery		257		0.7	%		261		0.7	%		(4	)		0.3	%
Aerospace/Defense		243		0.6	%		247		0.6	%		(4	)		0.3	%
Textile		71		0.2	%		75		0.2	%		(4	)		0.3	%
Consumer Cyclical Services		116		0.3	%		120		0.3	%		(4	)		0.3	%
Non-Agency		77		0.2	%		81		0.2	%		(4	)		0.3	%
Refining		158		0.4	%		161		0.4	%		(3	)		0.3	%
Lodging		144		0.4	%		147		0.4	%		(3	)		0.3	%
Restaurants		112		0.3	%		115		0.3	%		(3	)		0.3	%
Supranational		82		0.2	%		85		0.2	%		(3	)		0.3	%
Airlines		110		0.3	%		113		0.3	%		(3	)		0.3	%
Treasuries		113		0.3	%		115		0.3	%		(2	)		0.2	%
Tobacco		73		0.2	%		75		0.2	%		(2	)		0.2	%
Utility - Other		70		0.2	%		71		0.2	%		(1	)		0.1	%
Government Guarantee		71		0.2	%		72		0.2	%		(1	)		0.1	%
Environmental		40		0.1	%		41		0.1	%		(1	)		0.1	%
Industries with Unrealized Losses < $1MM		32		0.1	%		33		0.1	%		(1	)		0.1	%
Total	$	38,959		100.0	%	$	40,145		100.0	%		(1,186	)		100.0	%

Unrealized losses on available-for-sale securities subject to enhanced analysis were $3 million at June 30, 2006, compared with $5 million at December 31, 2005.

65

Unrealized Loss on All Below-Investment-Grade Available-for-Sale Fixed Maturity Securities: Gross unrealized losses on all available-for-sale below-investment-grade securities were $124 million at June 30, 2006, representing 10.5% of total gross unrealized losses on all available-for-sale securities. Generally, below-investment-grade fixed maturity securities are more likely than investment-grade securities to develop credit concerns. The remaining $1,062 million or 89.5% of the gross unrealized losses relate to investment grade available-for-sale securities. The ratios of fair value to amortized cost reflected in the table below are not necessarily indicative of the fair value to amortized cost relationships for the securities throughout the entire time that the securities have been in an unrealized loss position nor are they necessarily indicative of these ratios subsequent to June 30, 2006.

For fixed maturity securities that we held at June 30, 2006 that are below-investment-grade and in an unrealized loss position, the fair value, amortized cost, unrealized loss and the ratios of market value to amortized cost are presented in the table below.

	Ratio of Amortized				Amortized		Unrealized
Aging Category (in millions)	Cost to Fair Value		Fair Value		Cost		Loss
<=90 days		70% to 100%	$	1,345	$	1,379	$	(34	)
>90 days but <=180 days		70% to 100%		408		421		(13	)
>180 days but <=270 days		70% to 100%		62		67		(5	)
>270 days but <=1 year		70% to 100%		61		66		(5	)
<= 1 year Total				1,876		1,933		(57	)
>1 year		70% to 100%		435		485		(50	)
		40% to 70%		8		14		(6	)
		Below 40%		5		16		(11	)
				448		515		(67	)
Total Below-Investment-Grade			$	2,324	$	2,448	$	(124	)

At June 30, 2006, the range of maturity dates for publicly traded and private securities held that were subject to enhanced analysis and monitoring for potential changes in unrealized loss status varies, with 68.5% of these securities maturing in greater than 10 years and the remaining securities maturing in one year or less. At December 31, 2005, the range of maturity dates for these securities varies, with 36.9% maturing between 5 and 10 years, 47.7% maturing after 10 years and the remaining securities maturing in less than 5 years. At June 30, 2006, 2.2% of these securities were rated as investment grade compared to less than 0.5% at December 31, 2005.

Unrealized Loss on Fixed Maturity Securities Available-for-Sale in Excess of $10 million: At June 30, 2006 fixed maturity securities available-for-sale with gross unrealized losses greater than $10 million are presented in the table below.

			Amortized		Unrealized			Length of time
(in millions)	Fair Value		Cost		Loss			in Loss Position
Investment Grade
Daimler Chrysler AG	$	72	$	82	$	(10	)		> 1 year
Total Investment-Grade	$	72	$	82	$	(10	)
Non-Investment Grade
Ford Motor Co. & affiliates	$	50	$	69	$	(19	)		> 1 year
Satellite telecommunications company		46		57		(11	)		> 1 year
Total Non-Investment-Grade	$	96	$	126	$	(30	)

At June 30, 2006, including those not in an unrealized loss position, our total available-for-sale holdings in Daimler Chrysler AG had a fair value of $107 million and an amortized cost of $116 million, and our total available-for-sale holdings in Ford Motor and its affiliates and securities it guarantees had a fair value of $73 million and an amortized cost of $92 million. In addition, at June 30, 2006, we held fixed maturity securities available-for-sale of General Motors Corp. and affiliates with fair value of $94 million and amortized cost of $93 million. Our total gross unrealized loss on available-for-sale securities for these three companies was $33 million. Our investments also include a mortgage loan on real estate of $9 million secured by a property that is leased to General Motors.

The information presented above is subject to rapidly changing conditions. As such, we expect that the level of securities with overall unrealized losses will fluctuate, as will the level of unrealized loss securities that are subject to enhanced analysis and monitoring.

66

REINSURANCE

Our insurance companies cede insurance to other companies. The portion of risks exceeding each company’s retention limit is reinsured with other insurers. We seek reinsurance coverage within the businesses that sell life insurance to limit our exposure to mortality losses and enhance our capital management.

As a result of the Jefferson-Pilot merger, we currently have two reinsurance programs - one for LNL and its insurance subsidiaries, Lincoln Life & Annuity Company of New York and First Penn-Pacific Life Insurance Company (the “LNL program”), and one for the Jefferson-Pilot insurance companies (the “JP program”). Under the LNL program, we reinsure approximately 85% to 90% of the mortality risk on newly issued non-term life insurance contracts and approximately 35% to 40% of total mortality risk including term insurance contracts. Our policy for this program is to retain no more than $5 million on a single insured life issued on fixed and variable universal life insurance contracts. Additionally, the retention per single insured life for term life insurance and for Corporate Owned Life Insurance (COLI) is $1 million and $2 million, respectively.

The insurance subsidiaries participating in the JP program are Jefferson Pilot Financial Insurance Company, Jefferson Pilot LifeAmerica Insurance Company and Jefferson Pilot-Life Insurance Company. For the JP program, our policy is to reinsure risks in excess of retention, which ranges from $0.4 million to $2.1 million, depending on the retention limit set for various individual life and annuity products, on a single insured life. We also attempt to reduce exposure to losses that may result from unfavorable events or circumstances by reinsuring certain levels and types of accident and health insurance risks underwritten.

Beginning in September 2005, we changed the LNL program for our primary term products from coinsurance to renewable term and from 90% to 80% on a first dollar quota share basis. In January 2006, we changed this program from 80% first dollar quota share to an excess of retention program.

These changes have the effect of reducing premiums paid to reinsurers while increasing our exposure to mortality losses, and could result in more volatility in results for our Individual Markets Life Insurance segment. With respect to annuities, we had previously reinsured a portion of our fixed annuity business, but beginning in 2004, we have retained the full risk on newly issued contracts.

In a coinsurance program, the reinsurer shares proportionately in all financial terms of the reinsured policies, i.e. premiums, expenses, claims, etc. based on their respective quota share of the risk. In a renewable term program, the reinsurer is paid a renewable term premium to cover the proportionate share of mortality risk assumed by the reinsurer. In a first dollar quota share program, the reinsurer receives a proportionate share of all risks issued based on their respective quota share of the risk. In an excess of retention program, the reinsurer assumes a proportionate share of risks that exceed our per life retention.

With the integration of the Lincoln and Jefferson-Pilot companies and their products, an effort is underway to evaluate corporate-wide retention levels for existing and new products concerning any one individual life and in the aggregate. This evaluation, to maximize profitability while minimizing mortality risk, will include the impact of changes in mortality retention balanced with the impact of premiums paid to reinsurers. This evaluation is expected to be completed prior to the end of 2006.

Portions of our deferred annuity business have been reinsured on a modified coinsurance basis with other companies to limit our exposure to interest rate risks. At June 30, 2006, the reserves associated with these reinsurance arrangements totaled $2.1 billion. To cover products other than life insurance, we acquire other insurance coverages with retentions and limits that management believes are appropriate for the circumstances. The accompanying financial statements reflect premiums, benefits and DAC, net of insurance ceded. See “Part I—Item 1—Risk Factors” and “Forward-looking Statements—Cautionary Language” and Note 5 to the Consolidated Financial Statements in our 2005 Form 10-K for further information. Our insurance companies remain liable if their reinsurers are unable to meet contractual obligations under applicable reinsurance agreements.

Our amounts recoverable from reinsurers represent receivables from and reserves ceded to reinsurers. At June 30, 2006 the amounts recoverable from reinsurers was $8.0 billion, compared to $6.9 billion at December 31, 2005. We obtain reinsurance from a diverse group of reinsurers and we monitor concentration, as well as financial strength ratings of our principal reinsurers. Swiss Re represents our largest exposure. In 2001, we sold our reinsurance business to Swiss Re primarily through indemnity reinsurance arrangements. Because we are not relieved of our liability to the ceding companies for this business, the liabilities and obligations associated with the reinsured contracts remain on our Consolidated Balance Sheets with a corresponding reinsurance receivable from the business sold to Swiss Re, which totaled $4.1 billion at June 30, 2006 and December 31, 2005. Swiss Re has funded a trust with a balance of $1.7 billion at June 30, 2006 to support this business. In addition to various remedies that we would have

67

in the event of a default by Swiss Re, we continue to hold assets in support of certain of the transferred reserves. These assets consist of those reported as trading securities and certain mortgage loans. Our liabilities for funds withheld and embedded derivatives included $2.1 billion and $0.1 billion, respectively, at June 30, 2006 related to the business sold to Swiss Re.

During the third quarter one of our reinsurers, Scottish Re Group Ltd (“Scottish Re”), received rating downgrades from various rating agencies. Of the $1.5 billion of fixed annuity business that we reinsure with Scottish Re, approximately 80% is reinsured through the use of modified coinsurance treaties, in which we possess the investments that support the reserves ceded to Scottish Re. For our annuity business ceded on a coinsurance basis, Scottish Re had previously established an irrevocable investment trust for the benefit of LNC that supports the reserves. In addition to fixed annuities, we have approximately $73 million of policy liabilities on the life insurance business we reinsure with Scottish Re. Scottish Re continues to perform under its contractual responsibilities to us. We are still evaluating the impact of these ratings downgrades with respect to our existing exposures to Scottish Re as well as with respect to reinsuring any new business with Scottish Re. Based on current information, we do not believe that Scottish Re’s ratings downgrades will have a material adverse effect on our results of operations, liquidity or financial condition.

REVIEW OF CONSOLIDATED FINANCIAL CONDITION

Liquidity and Capital Resources

Liquidity refers to the ability of an enterprise to generate adequate amounts of cash from its normal operations to meet cash requirements with a prudent margin of safety. Our principal sources of cash flow from operating activities are insurance premiums and fees, investment advisory fees and investment income, while sources of cash flows from investing activities result from maturities and sales of invested assets. We use cash to pay policy claims and benefits, operating expenses, commissions and taxes, to purchase new investments, to pay dividends to our shareholders and to repurchase our stock and debt securities. Our operating activities provided cash of $922 million and $521 million in the first six months of 2006 and 2005, respectively.When considering our liquidity and cash flow it is important to distinguish between the needs of our insurance subsidiaries and the needs of the holding company, LNC. As a holding company with no operations of its own, LNC derives its cash primarily from its operating subsidiaries.

The liquidity resources of the holding company are principally comprised of dividends and interest payments from subsidiaries augmented by holding company short-term investments, bank lines of credit, a commercial paper program, and the ongoing availability of long-term financing under an SEC shelf registration. These sources of liquidity and cash flow support the general corporate needs of the holding company including its common stock dividends, interest and debt service, funding of callable securities, securities repurchases, and acquisitions.

Sources of Liquidity and Cash Flow

The following table summarizes the primary sources of holding company cash flow. The table focuses on significant and recurring cash flow items and excludes the effects of certain financing activities, namely the periodic issuance and retirement of debt and cash flows related to our intercompany cash management account. Taxes have been eliminated from the analysis due to a tax sharing agreement among our primary subsidiaries resulting in a modest impact on net cash flows at the holding company. Also excluded from this analysis is the modest amount of investment income on short-term investments of the holding company.

68

	Three Months Ended				Six Months Ended				Year Ended
	June 30,				June 30,				December 31,
(in millions)	2006		2005		2006		2005		2005
Dividends from Subsidiaries
LNL	$	50	$	-	$	150	$	100	$	200
Jefferson Pilot Life Insurance Company		2		-		2		-		-
Jefferson Pilot Financial Insurance Company		73		-		73		-		-
Non-regulated companies (1)		235		-		235		-		-
Lincoln Financial Media		13		-		13		-		-
Delaware Investments		12		10		24		21		42
Lincoln UK		20		-		40		-		44
Other		-		-		-		-		1
Subsidiary Loan Repayments & Interest
LNL Interest on Surplus Notes (2)		20		20		39		39		78
	$	425	$	30	$	576	$	160	$	365
Other Cash Flow and Liquidity Items
Return of seed capital	$	4	$	15	$	4	$	15	$	19
Net capital received from stock option exercises		23		5		63		31		83
	$	27	$	20	$	67	$	46	$	102

⁽¹⁾ Represents dividend of proceeds from sale of equity securities used to repay borrowings under the bridge facility.

⁽²⁾ Represents interest on the holding company’s $1.25 billion in surplus note investments in LNL.

Subsidiaries

Our insurance subsidiaries are subject to certain insurance department regulatory restrictions as to the transfer of funds and payment of dividends to the holding company. Generally, these restrictions pose no short-term liquidity concerns for the holding company. For example, under Indiana laws and regulations, our Indiana insurance subsidiaries, including one of our major insurance subsidiaries, The Lincoln National Life Insurance Company (“LNL”), may pay dividends to LNC only from unassigned surplus, without prior approval of the Indiana Insurance Commissioner (the “Commissioner”), or must receive prior approval of the Commissioner to pay a dividend if such dividend, along with all other dividends paid within the preceding twelve consecutive months, would exceed the statutory limitation. The current statutory limitation is the greater of (i) 10% of the insurer’s policyholders’ surplus, as shown on its last annual statement on file with the Commissioner or (ii) the insurer’s statutory net gain from operations for the previous twelve months, but in no event to exceed statutory unassigned surplus. Indiana law gives the Commissioner broad discretion to disapprove requests for dividends in excess of these limits. Our other major insurance subsidiaries, Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance Company, and Jefferson Pilot LifeAmerica Insurance Company are domiciled in North Carolina, Nebraska and New Jersey, respectively, and are subject to similar, but not identical, restrictions.

Our domestic insurance subsidiaries paid dividends of $125 million and $225 million for the second quarter and first six months of 2006 compared to zero and $100 million for the second quarter and first six months of 2005, respectively.  Based upon anticipated ongoing positive statutory earnings and favorable credit markets, we expect our domestic insurance subsidiaries could pay dividends of approximately $850 million in 2006 without prior approval from the respective insurance commissioners. The actual amount of surplus that our insurance subsidiaries could pay as dividends is constrained by the amount of surplus we hold to maintain our ratings, to provide an additional layer of margin for risk protection, and for future investment in our businesses. As a part of the merger with Jefferson-Pilot, we are using our economic capital model to deploy our capital based upon the unique and specific nature of the risks inherent in our businesses; and accordingly, during the second quarter of 2006, we changed the level of capital allocated to our businesses based upon this model. Our non-regulated subsidiaries could pay dividends of approximately $200 million at June 30, 2006.

Lincoln UK’s operations consist primarily of unit-linked life and pension products, which are similar to U.S. produced variable life and annuity products. Lincoln UK’s insurance subsidiaries are regulated by the U.K. Financial Services Authority (“FSA”) and are subject to capital requirements as defined by the U.K. Capital Resources Requirement (formerly the Required Minimum Solvency Margin). All insurance companies operating in the U.K. also have to complete a risk-based capital (“RBC”) assessment to demonstrate to the FSA that they hold sufficient capital to cover their risks. RBC requirements in the U.K. are different than the NAIC requirements. In addition, the FSA has imposed certain minimum capital requirements for the combined U.K. subsidiaries. Lincoln UK maintains approximately 1.5 to 2 times the required capital as prescribed by the regulatory margin. As is the case with regulated insurance companies in the U.S., changes to regulatory capital requirements can impact the dividend capacity of the UK insurance subsidiaries and cash flow to the holding company.

Through the April 2006 merger with Jefferson-Pilot, we acquired certain non insurance companies that held equity and fixed income securities with a fair value at June 30, 2006 of $409 million, which are available to meet the liquidity needs of the holding company.

69

Financing Activities

Although our subsidiaries generate adequate cash flow to meet the needs of our normal operations, periodically we may issue debt or equity securities to fund internal growth, acquisitions, and the retirement of our debt and equity securities. As discussed in more detail below, we issued approximately $2.1 billion of debt securities to finance the cash portion of our April 2006 merger with Jefferson-Pilot and second quarter 2006 stock repurchase activity.

Our Board of Directors has authorized us to issue up to $4 billion of securities, including debt securities, preferred stock, common stock, warrants, stock purchase contracts and stock purchase units of LNC and trust preferred securities of four subsidiary trusts. In March 2006, we filed a new shelf registration with the SEC. In April 2006, we issued $1.3 billion of securities, and in May 2006 we issued $0.8 billion of securities, which leaves us with $1.9 billion of remaining authorization.

During the three months ended June 30, 2006 we issued the following debt securities:

o $500 million Floating Rate Senior Notes due 2009 (the “Floating Rate Notes”), from which we received net proceeds of approximately $499 million. The Floating Rate Notes bear interest at a rate of three-month LIBOR plus 11 basis points, with quarterly interest payments in April, July, October and January.

o $500 million of 6.15% Senior Notes due April 7, 2036 (the “Fixed Rate Notes”), from which we received net proceeds of approximately $492 million. We will pay interest on the Fixed Rate Notes semi-annually in April and October. We may redeem the Fixed Rate Notes at any time subject to a make-whole provision.

o $275 million of 6.75% junior subordinated debentures due 2066 (the “Retail Capital Securities”), from which we received net proceeds of approximately $266 million. We will pay interest on the Retail Capital Securities quarterly in January, April, July and October. We may redeem the capital securities in whole or in part on or after April 20, 2011 (and prior to such date under certain circumstances).

o $800 million of 7.0% Capital Securities due 2066 (the “Capital Securities”), from which we received net proceeds of approximately $789 million. We will pay interest on the Capital Securities semi-annually in May and November through May 2016. Beginning in May 2016 interest will be paid quarterly in February, May, August and November at an annual rate of 3-month LIBOR plus 2.3575%. We may redeem the capital securities in whole or in part on or after May 17, 2016 (and prior to such date under certain circumstances).

At June 30, 2006, we maintain the following debt securities that were previously issued by Jefferson-Pilot and are included within our consolidated balance sheet:

·   Junior subordinated debentures issued by Jefferson-Pilot in 1997 consist of $211 million at an interest rate of 8.14% and $107 million at an interest rate of 8.285%. Interest is paid semi-annually. These debentures mature in 2046, but are redeemable prior to maturity at our option beginning January 15, 2007, with two-thirds subject to a call premium of 4.07% and the remainder subject to a call premium of 4.14%, each grading to zero as of January 15, 2017. Premiums arose from recording these securities at their respective fair values, which were based on discounted cash flows using our incremental borrowing rate at the date of the merger. The premiums are being amortized to the respective call dates using an approximate effective yield methodology. The unamortized premiums included in the amounts above totaled $9 million. As we expect to call these securities within the next twelve months, they have been reported in short-term debt on our consolidated balance sheet.

·   Ten-year term notes of $284 million at 4.75% and $300 million of floating rate EXtendible Liquidity Securities® (“EXL”s) that currently have a maturity of August 2007, subject to periodic extension through 2011. Each quarter, the holders must make an election to extend the maturity of the EXLs for 13 months, otherwise they become due and payable on the next maturity date to which they had previously been extended. The EXLs bear interest at LIBOR plus a spread, which increases annually to a maximum of 10 basis points. The amount reported on our consolidated balance sheet is net of a $16 million discount that arose from recording the ten-year term notes at their respective fair values based on discounted cash flows using our incremental borrowing rate at the date of merger. The discount is being accreted over the remaining life using an approximate effective yield methodology.

At June 30, 2006, we maintained four credit facilities with a group of domestic and foreign banks:

· a $1.5 billion five-year credit facility entered into in March 2006 and maturing in March 2011, allowing for borrowing or issuances of letters of credit (“LOC”),

70

· a $1.0 billion five-year credit facility entered into in February 2006 and maturing in February 2011, allowing for borrowing or issuances of LOCs,

· the bridge facility, which is a $2.3 billion credit facility entered into in December 2005 and maturing in December 2006. The bridge facility closed on May 17, 2006, and

· a U.K. facility for use by our U.K. subsidiary, which was renewed in January 2006 for 10 million pounds sterling ($18 million at June 30, 2006), maturing in November 2006.

At June 30, 2006, we did not have any loans outstanding under any of the bank lines. On April 3, 2006 we used a $1.8 billion loan from the bridge facility to close our merger with Jefferson-Pilot. On April 8, 2006, we used a $0.5 billion loan from the bridge facility for the accelerated stock buyback program. Borrowings under the bridge facility were to be used only in connection with our merger with Jefferson-Pilot and share repurchase described below. All borrowings under the bridge facility were repaid as of June 30, 2006.

At June 30, 2006, there were approximately $848 million in outstanding LOCs under the various credit agreements. These LOCs support intercompany reinsurance transactions and specific treaties associated with our former Reinsurance segment. LOCs are primarily used to satisfy the U.S. regulatory requirements of domestic clients of the former Reinsurance segment who have contracted with the reinsurance subsidiaries not domiciled in the United States and for the reserve credit provided by our affiliated offshore reinsurance company to our domestic insurance companies for ceded business.

Under the credit agreements, we must maintain a minimum consolidated net worth level. In addition, the agreements contain covenants restricting our ability to incur liens, merge or consolidate with another entity where we are not the surviving entity and dispose of all or substantially all of our assets. At June 30, 2006, we were in compliance with all such covenants. All of our credit agreements are unsecured.

If current debt ratings and claims paying ratings were downgraded in the future, certain covenants of various contractual obligations may be triggered which could negatively impact overall liquidity. In addition, contractual selling agreements with intermediaries could be negatively impacted which could have an adverse impact on overall sales of annuities, life insurance and investment products. At June 30, 2006, we maintained adequate current financial strength and senior debt ratings and do not anticipate any ratings-based impact to future liquidity.

As discussed above, our insurance subsidiaries are employing strategies to lessen the burden of increased AXXX and XXX statutory reserves associated with certain LPR products and other products with secondary guarantees subject to these statutory reserving requirements. Currently, a portion of LPR business is reinsured with a wholly owned non-U.S. domiciled subsidiary of LNC. Included in the amounts outstanding at June 30, 2006 discussed above was approximately $545 million of outstanding LOCs supporting the reinsurance obligations of our non-U.S. domiciled subsidiary to LNL on this LPR business. Recognizing that LOCs are generally one to five years in duration, it is likely LNL will apply a mix of LOCs, reinsurance and capital market strategies in addressing long-term AXXX and XXX needs. The changes in statutory reserving requirements for LPR products sold after July 1, 2005 resulted in an increase of approximately $90 million in our outstanding LOCs at June 30, 2006. LOCs and related capital market alternatives lower the RBC impact of the LPR product. An inability to obtain the necessary LOC capacity or other capital market alternatives could impact our returns on the LPR product.

During 2005, we established a wholly-owned domestic reinsurance subsidiary to reinsure a portion of the XXX statutory reserves associated with our term products in anticipation of employing a capital markets solution to mitigate the impact of our term products to statutory capital and surplus in 2007. No reserves were ceded to this new subsidiary as of June 30, 2006.

Alternative Sources of Liquidity

In order to maximize the use of available cash, the holding company maintains an intercompany cash management account where subsidiaries can borrow from the holding company to meet their short-term needs and can invest their short-term funds with the holding company. Depending on the overall cash availability or need, the holding company invests excess cash in short-term investments or borrows funds in the financial markets. Our insurance subsidiaries, by virtue of their general account fixed income investment holdings, can access liquidity through securities lending programs and repurchase agreements. At June 30, 2006, our insurance subsidiaries had $1 billion carrying value of securities out on loan under the securities lending program, and $0.5 billion carrying value subject to repurchase agreements.

One of the life insurance subsidiaries we acquired with the Jefferson-Pilot merger had previously established a program for an unaffiliated trust to sell up to $1 billion of medium-term notes under Rule 144A of the Securities Act of 1933. Proceeds from the sale of the medium-term notes were used to purchase funding agreements issued by the life insurance subsidiary. At June 30, 2006, we had $300 million of funding agreements outstanding under this program. The funding

71

agreements were issued at a variable rate and provide for quarterly interest payments, indexed to the 3-month LIBOR plus 7 basis points, with principal due at maturity on June 2, 2008. Concurrent with this issuance, the subsidiary executed aninterest rate swap for a notional amount equal to the proceeds of the funding agreements. The swap qualifies for cash flow hedge accounting treatment and converts the variable rate of the funding agreements to a fixed rate of 4.28%.

Uses of Capital

Return of Capital to Shareholders

One of the holding company’s principal uses of cash is to provide a return to our shareholders. Through dividends and stock repurchases, we have an established record of providing significant cash returns to our shareholders. We have increased our dividend in each of the last 22 years. In determining our dividend payout, we balance the desire to increase the dividend against capital needs, rating agency considerations and requirements for financial flexibility. The following table summarizes this activity for 2006 and 2005.

	Three Months Ended				Six Months Ended				Year Ended
	June 30,				June 30,				December 31,
(in millions)	2006		2005		2006		2005		2005
Dividends to shareholders	$	147	$	64	$	215	$	127	$	257
Repurchase of common stock		503		69		503		104		104
Total Cash Returned to Shareholders	$	650	$	133	$	718	$	231	$	361
Number of shares repurchased (in thousands)		8,060		1,576		8,060		2,331		2,331
Average price per share (1)	$	56.98	$	43.78	$	56.98	$	44.44	$	44.44

(1)Adjusted to include approximately 800,000 shares delivered in July to complete the accelerated stock buyback program described below.

On April 3, 2006, we entered into an agreement to purchase a variable number of shares of our common stock from a third party broker-dealer, using an accelerated stock buyback program for an aggregate purchase price of $500 million. On April 10, 2006, we funded the agreement by borrowing $500 million under the bridge facility and received approximately 8 million shares of our common stock. We also made a payment of approximately $2.5 million to provide for dividends on shares that may not have been acquired by the third party broker-dealer prior to the close of the program. The program was completed in July of 2006, with a total of 8.8 million shares repurchased under the program, all of which were retired. Our Board of Directors had previously authorized total share repurchases of $1.8 billion. After the purchases under this program, the remaining amount of authorized share repurchases will be $1.3 billion.

72

During the remainder of 2006, we intend to repurchase shares of our common stock for a total of $350 to $500 million. As part of this repurchase activity we expect to execute another accelerated stock buyback program of approximately $350 million as soon as practicable. We would expect to fund this through a combination of internally generated funds, commercial paper borrowings and asset sales. The remaining repurchase activity for 2006 is subject to market and other conditions.

The following table summarizes the primary uses of holding company cash flow. The table focuses on significant and recurring cash flow items and excludes the effects of certain financing activities, namely the periodic retirement of debt and cash flows related to our intercompany cash management account. Taxes have been eliminated from the analysis due to a tax sharing agreement among our primary subsidiaries resulting in a modest impact on net cash flows at the holding company.

	Three Months Ended				Six Months Ended				Year Ended
	June 30,				June 30,				December 31,
(in millions)	2006		2005		2006		2005		2005
Debt service (interest paid)	$	40	$	27	$	62	$	46	$	90
Capital contribution to Delaware Investments		-		4		-		14		14
Common dividends		107		64		174		128		255
Common stock repurchase		505		75		505		104		104
Total	$	652	$	170	$	741	$	292	$	463

Contingencies and Off-Balance Sheet Arrangements

We have guarantees with off-balance sheet risks having contractual values of $3 million and $4 million at June 30, 2006 and December 31, 2005, respectively. Certain of our subsidiaries have sold commercial mortgage loans through grantor trusts, which issued pass-through certificates. These subsidiaries have agreed to repurchase any mortgage loans which remain delinquent for 90 days at a repurchase price substantially equal to the outstanding principal balance plus accrued interest thereon to the date of repurchase. In case of default by the borrowers, we have recourse to the underlying real estate. It is management’s opinion that the value of the properties underlying these commitments is sufficient that in the event of default, the impact would not be material to us. These guarantees expire in 2009.

We guarantee the repayment of operating leases on facilities which we have subleased to third parties, which obligate us to pay in the event the third parties fail to perform their payment obligations under the subleasing agreements. We have recourse to the third parties enabling us to recover any amounts paid under our guarantees. The annual rental payments subject to these guarantees are $15 million and expire in 2009.

We have purchase obligations consisting of Lincoln Financial Media commitments for future sports programming rights and other contracts and purchases of syndicated television programming. We have estimated the amount of the future obligations that will be required under the present terms of these arrangements to be $279 million as of June 30, 2006, payable through the year 2011. We have commitments to sell a portion of the sports programming rights to other entities and advertising contracts with customers for the airing of commercials totaling $199 million over the same period. These commitments are not reflected as an asset or liability in our balance sheets because the programs are not currently available for use. We expect advertising revenues that are sold on an annual basis to fund the purchase commitments. In 2005, Lincoln Financial Media executed an agreement that gives Lincoln Financial Sports and its broadcasting partner 50/50 television syndication rights to Atlantic Coast Conference football and basketball games through the 2010 seasons. Through June 30, 2006, Lincoln Financial Media held the football rights individually.

Shareholders’ Equity

Total shareholders’ equity increased $5.0 billion during the six months ended June 30, 2006, primarily due to $5.6 billion of common stock issued to acquire the outstanding shares of Jefferson-Pilot in April 2006 and, to a lesser extent, net income, partially offset by unrealized losses of securities available-for-sale included in accumulated other comprehensive income resulting from higher interest rates.

OTHER MATTERS

Other Factors Affecting Our Business

In general, our businesses are subject to a changing social, economic, legal, legislative and regulatory environment. Some of the changes include initiatives to require more reserves to be carried by our insurance subsidiaries, to make permanent recent reductions in individual tax rates, to permanently repeal the estate tax and to increase regulation of our annuity and investment management businesses. Although the eventual effect on us of the changing environment in which we

73

operate remains uncertain, these factors and others could have a material effect on our results of operations, liquidity and capital resources.

Recent Accounting Pronouncements

For a discussion of accounting pronouncements that have been implemented during the periods presented or that have been issued and are to be implemented in the future, see Note 3 to the Consolidated Financial Statements.

Restructuring Activities

See Note 12 to the Consolidated Financial Statements for the detail of our restructuring activities

74

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We provided a discussion of our market risk in Item 7A of our 2005 Form 10-K. During the first six months of 2006, there was no substantive change in our market risk except for the items noted below:

Interest Rate Risk—Falling Rates. As discussed in the Quantitative and Qualitative Disclosures About Market Risk section of our 2005 Form 10-K, spreads on our fixed annuity and interest-sensitive whole life, universal life and fixed portion of variable universal life insurance policies, are at risk if interest rates decline and remain low for a period of time. The following table provides detail on the difference between interest crediting rates and minimum guaranteed rates as of June 30, 2006. For example, at June 30, 2006, there are $5.1 billion of combined Individual Markets - Annuities and Individual Markets - Life Insurance account values where the excess of the crediting rate over contract minimums is between 0.21% and 0.30%. The analysis presented below ignores any non-guaranteed elements within the life insurance products such as cost of insurance or expense loads, which for many products may be redetermined in the event that interest margins deteriorate below the level that would cause the credited rate to equal the minimum guaranteed rate.

									Percent
Excess of Crediting Rates	Account Values								of Total
over Contract Minimums	Emp Mkts		Ind Mkts		Ind Mkts				Account
As of June 30, 2006	Annuities		Annuities		Life		Total		Values
	(in millions)
CD and On-Benefit type annuities	$	865	$	10,575	$	-	$	11,440		22.06	%
Discretionary rate setting products*
No difference		3,165		6,107		10,720		19,992		38.54	%
up to .1%		5,358		1,435		1,073		7,866		15.17	%
0.11% to .20%		2		112		22		136		0.26	%
0.21% to .30%		0		209		4,895		5,104		9.84	%
0.31% to .40%		1		109		2,278		2,388		4.60	%
0.41% to .50%		190		61		610		861		1.66	%
0.51% to .60%		1,044		64		30		1,138		2.19	%
0.61% to .70%		6		510		111		627		1.21	%
0.71% to .80%		0		3		793		796		1.53	%
0.81% to .90%		0		2		34		36		0.07	%
0.91% to 1.0%		118		9		19		146		0.28	%
1.01% to 1.50%		11		74		428		513		0.99	%
1.51% to 2.00%		30		347		0		377		0.73	%
2.01% to 2.50%		0		275		0		275		0.53	%
2.51% to 3.00%		2		3		0		5		0.01	%
3.01% and above		166		3		0		169		0.33	%
Total Discretionary rate setting products		10,093		9,323		21,013		40,429		77.94	%
Grand Total-Account Values	$	10,958	$	19,898	$	21,013	$	51,869		100.00	%

*For purposes of this table, contracts currently within new money rate bands are grouped according to the corresponding portfolio rate band in which they will fall upon their first anniversary.

We expect to manage interest spreads through the interest rate credit management process for the Employer Markets - Annuities, Individual Markets - Annuities and Individual Markets - Life Insurance segments during the remainder of 2006. Refer to Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations by Segment for the effects of such expected changes in interest rate environments.

Derivatives. As indicated in Note 8 of our 2005 Form 10-K, we have entered into derivative transactions to reduce our exposure to rapid rises in interest rates, the risk of changes in liabilities indexed to equity markets, credit risk, foreign exchange risk and to increase our exposure to certain investments in exchange for a premium. In addition, we are subject to risks associated with changes in the value of our derivatives; however, such changes in value are generally offset by changes in the value of the items being hedged by such contracts. Modifications to our derivative strategy are initiated periodically upon review of our overall risk assessment. During the first six months of 2006, the more significant changes in our derivative positions are as follows:

1. Entered into $0.6 billion notional of interest rate cap agreements that are used to hedge our annuity business against the negative impact of a significant and sustained rise in interest rates. A total of $0.1 billion interest rate caps expired, resulting in no gain or loss. A total of $6.0 billion notional is outstanding.

75

 

2.   Entered into $92 million notional of interest rate swap agreements hedging floating rate bond coupon payments. A total of $20 million notional matured or was terminated, resulting in a remaining notional of $1.1 billion. A loss of $0.1 million was recognized on the termination. These interest rate swap agreements convert floating rate bond coupon payments into a fixed rate of return. The total remaining notional includes an additional $581 million notional related to the acquisition of Jefferson-Pilot.

3.   Entered into $1.1 billion notional of forward-starting interest rate swap agreements. These swaps partially hedged the future cash flows of a forecasted debt issuance by us to finance the merger with Jefferson-Pilot. The entire $1.1 billion notional was terminated after the acquisition was finalized resulting in a $41 million gain recorded in Other Comprehensive Income. The gain will be recognized into income over the life of the debt.

4.   Terminated $200 million notional of treasury lock agreements. These treasury lock agreements partially hedged the future cash flows of a forecasted debt issuance by us to finance the acquisition of Jefferson-Pilot. The termination resulted in an $11 million gain recorded in Other Comprehensive Income. The gain will be recognized into income over the life of the debt.

5.   Terminated 0.4 million call options on LNC stock, resulting in a remaining total of 1 million call options on an equal number of shares of LNC stock. These call options are hedging the increase in liabilities arising from stock appreciation rights granted on LNC stock.

6.   We had financial futures net purchase/termination activity in the amount of $0.1 billion notional resulting in a remaining notional of $1.9 billion. These futures are hedging a portion of the liability exposure on certain options in variable annuity products. No gain or loss was recognized as a result of the expirations or terminations.

7.   Entered into $10 million notional of credit default swap agreements. A total of $10 million notional matured, resulting in a remaining notional of $20 million. We offer credit protection to investors through selling credit default swaps. These swap agreements allow the credit exposure of a particular obligor to be passed onto us in exchange for a quarterly premium.

8.   Entered into $275 million notional of put option agreements. A total of $150 million notional was terminated, resulting a remaining notional of $1.5 billion notional. These put options are hedging a portion of the liability exposure on certain options in variable annuity products. We will receive a payment from the counterparty if the strike rate in the agreement is higher than the specified index rate at maturity.

9.   Entered into foreign exchange forward contracts in the amount of $40 million notional that are hedging dividends received from our Lincoln UK subsidiary. The full amount expired resulting in no remaining notional. No gain or loss was recognized in net income as a result of the expirations.

10.   Entered into $30 million notional of foreign currency swaps, resulting in a remaining notional of $88 million. These foreign currency swap agreements are part of a hedging strategy. We own various foreign issue securities. Interest payments from these securities are received in a foreign currency and then swapped into U.S. dollars.

11.   Entered into $494 million notional of S&P 500 call options. A total of $326 million notional expired, resulting in a remaining notional of $2.1 billion. These call options are hedging the impact of the equity-index interest credited to our indexed annuity products. The total remaining notional includes an additional $1.9 billion notional related to the acquisition of Jefferson-Pilot.

We are exposed to credit loss in the event of non-performance by counterparties on various derivative contracts. However, we do not anticipate non-performance by any of the counterparties. The credit risk associated with such agreements is minimized by purchasing such agreements from financial institutions with long-standing superior performance records.

Item 4. Controls and Procedures

(a) Conclusions Regarding Disclosure Controls and Procedures

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic reports under the Exchange Act.

76

(b) Changes in Internal Control Over Financial Reporting

As a result of the April 2006 merger with Jefferson-Pilot Corporation, the Company made a number of significant changes in its internal controls over financial reporting beginning in the second quarter of 2006.  The changes involved combining and centralizing the financial reporting process and the attendant personnel, and system changes.  Except as described above, there was no change in the Company’s internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2006 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system’s objectives will be met. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. Projections of any evaluation of controls' effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

77

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c)The following table summarizes purchases of equity securities by the issuer during the quarter ended June 30, 2006:

			(c) Total Number of Shares
	(a) Total Number		(or Units) Purchased as	(d) Approximate Dollar Value
	of Shares (or	(b) Average	Part of Publicly	of Shares that May Yet Be
	Units)	Price Paid per	Announced Plans or	Purchased Under the Plans or
Period	Purchased (1)(5)	Share (or Unit) (2)	Programs (3)	Programs (in millions) (4)
4/1/06 - 4/30/06	8,081,826	$56.86	8,060,131	$1,322
5/1/06 - 5/31/06	28,732	58.73	-	1,322
6/1/06 - 6/30/06	1,264	56.86	-	1,322

⁽¹⁾ Of the total number of shares purchased, 49,033 shares were received in connection with the exercise of stock options and related taxes and 2,658 shares were withheld for taxes on the vesting of restricted stock.

⁽²⁾ Price paid per share of $56.85 for 8 million shares purchased under our publicly announced accelerated stock repurchase is based on the final delivery of shares totaling 8.84 million on July 18, 2006. See Note 13 to the Consolidated Financial Statements for additional information.

⁽³⁾ In January 2006, our Board of Directors approved a $1.6 billion increase in the share repurchase authorization. There is no termination date in connection with this authorization. The amount and timing of share repurchase depends on key capital ratios, rating agency expectations, the generation of free cash flow and an evaluation of the costs and benefits associated with alternative uses of capital.

⁽⁴⁾ As of the last day of the applicable month.

⁽⁵⁾  A domestic Rabbi trust holds shares for the directors' fee deferrals for the former Jefferson-Pilot director. The fund was frozen but buys shares for dividends earned on shares held in the trust. In addition, during the second quarter of 2006, the Rabbi trust purchased shares with the cash portion of the merger consideration. Trust purchases during the second quarter of 2006 totaled 14,404 shares with an average price of $55.79, all purchased during July. These are not included in the table above because such shares held by the trust are still outstanding.

Item 4. Submission of Matters to a Vote of Security Holders

(a) Our 2006 annual meeting of shareholders was held on June 9, 2006.

(b) Proxies were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934 and there was no solicitation in opposition to the management nominees. All five nominees named in our proxy statement were elected to serve as directors for a three-year term expiring at the 2009 Annual Meeting.

(c) The matters voted upon at the meeting and the votes cast with respect to such matters are as follows:

Election of Directors

Nominee	Votes Cast For	Votes Withheld
Jon A. Boscia	221,467,203	5,830,963
George W. Henderson, III	224,063,573	3,234,593
Eric G. Johnson	224,283,860	3,014,306
M. Leanne Lachman	221,109,626	6,188,540
Isaiah Tidwell	224,112,912	3,185,254

Proposal: To ratify the appointment of Ernst & Young LLP, as our independent registered public accounting firm for 2006.

			Broker
For	Against	Abstain	Non-Votes
222,056,260	3,756,371	1,489,535	-

Item 6. Exhibits

The Exhibits are listed in the Exhibit Index beginning on page E-1, which is incorporated by reference.

78

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LINCOLN NATIONAL CORPORATION
	By:	/S/ FREDERICK J. CRAWFORD
		Frederick J. Crawford Senior Vice President and Chief Financial Officer
	By:	/S/ DOUGLAS N. MILLER
		Douglas N. Miller Vice President and Chief Accounting Officer
Date: August 9, 2006

79

LINCOLN NATIONAL CORPORATION

Exhibit Index for the Report on Form 10-Q

For the Quarter Ended June 30, 2006  

3.1	Amended and Restated Bylaws of LNC is incorporated by reference to Exhibit 3.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on June 12, 2006.
4.1	Form of Floating Rate Senior Note due April 6, 2009 is incorporated by reference to Exhibit 4.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
4.2	Form of 6.15% Senior Note due April 6, 2036 is incorporated by reference to Exhibit 4.2 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
4.3	Second Supplemental Junior Subordinated Indenture between LNC and J.P. Morgan Trust Company, National Association, as trustee, dated April 20, 2006 is incorporated by reference to Exhibit 4.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 20, 2006.
4.4	Form of 6.75% Capital Securities due 2066 of Lincoln Financial Corporation is incorporated by reference to Exhibit 4.2 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 20, 2006.
4.5	Third Supplemental Junior Subordinated Indenture between LNC and J.P. Morgan Trust Company, National Association, as trustee, dated May 17, 2006 is incorporated by reference to Exhibit 4.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on May 17, 2006.
4.6	Form of 7% Capital Securities due 2066 of Lincoln National Corporation is incorporated by reference to Exhibit 4.2 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on May 17, 2006.
4.7	Indenture, dated as of November 21, 1995, between Jefferson-Pilot Corporation and Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina).
4.8	Third Supplemental Indenture, dated as of January 27, 2004, to Indenture dated as of November 21, 1995.
4.9	Fourth Supplemental Indenture, dated as of January 27, 2004, to Indenture dated as of November 21, 1995.
4.10	Fifth Supplemental Indenture, dated as of April 3, 2006 among Lincoln JP Holdings, L.P. and Wachovia Bank, National Association, as trustee, to Indenture, dated as of November 21, 1995, incorporated by reference to Exhibit 10.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 3, 2006.
10.1	Letter Agreement between Theresa M. Stone and the Lincoln National Corporation is incorporated by reference to Exhibit 10.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on June 5, 2006.
10.2	Overview of 2006 long-term incentives for senior management committee members under the Amended and Restated Incentive Compensation Plan is incorporated by reference to Exhibit 10.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 18, 2006.

E-1

10.3	2006 Annual Incentive Award Measures and 2006-2008 Long-Term Incentive Award Measures under the LNC Amended and Restated Annual Incentive Compensation Plan and certain compensation information.
10.4	Form of Long-Term incentive award agreement for senior management committee members (2006-2008 cycle) is incorporated by reference to Exhibit 10.2 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 18, 2006.
10.5	Form of Stock Option Agreement is incorporated by reference to Exhibit 10.3 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 18, 2006.
10.6	Employment Agreement of Dennis R. Glass, dated December 6, 2003, is incorporated by reference to Exhibit 10.1 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.7	Amendment No. 1 to Employment Agreement of Dennis R. Glass, dated March 23, 2005, is incorporated by reference to Exhibit 10.2 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.8	Jefferson Pilot Corporation Long Term Stock Incentive Plan, as amended in February 2005, is incorporated by reference to Exhibit 10.3 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.9	Jefferson Pilot Corporation Non-Employee Directors’ Stock Option Plan, as amended in February 2005, is incorporated by reference to Exhibit 10.4 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.10	Jefferson Pilot Corporation Non-Employee Directors’ Stock Option Plan, as last amended in 1999, is incorporated by reference to Exhibit 10.5 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.11	Jefferson Pilot Corporation Supplemental Benefit Plan, as amended, is incorporated by reference to Exhibit 10.6 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.12	Jefferson Pilot Corporation Executive Special Supplemental Benefit Plan, which now operates under the Supplemental Benefit Plan, is incorporated by reference to Exhibit 10.7 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.13	Jefferson Pilot Corporation Executive Change in Control Severance Plan, is incorporated by reference to Exhibit 10.8 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.14	1999 Amendment to the Jefferson Pilot Corporation Executive Change in Control Severance Plan, is incorporated by reference to Exhibit 10.9 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.15	2005 Amendment to the Jefferson Pilot Corporation Executive Change in Control Severance Plan, is incorporated by reference to Exhibit 10.10 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.16	Jefferson Pilot Corporation Separation Pay Plan, adopted February 12, 2006, is incorporated by reference to Exhibit 10.11 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.17	Jefferson Pilot Corporation Forms of stock option terms for non-employee directors are incorporated by reference to Exhibit 10.12 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.

E-2

10.18	Jefferson Pilot Corporation Forms of stock option terms for officers are incorporated by reference to Exhibit 10.13 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.19	Deferred Fee Plan for Jefferson-Pilot Non-Employee Directors, as amended in March 2006 is incorporated by reference to Exhibit 10.14 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.20	Form of LNC restricted stock grant agreement is incorporated by reference to Exhibit 10.15 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 7, 2006.
10.21	First Supplemental Indenture, dated as of April 3, 2006 among Lincoln JP Holdings, Inc. and JPMorgan Chase Bank, N.A., as trustee, under the Junior Subordinated Indenture, dated as of January 15, 1997, among Jefferson-Pilot and JPMorgan Chase Bank, N.A., as trustee is incorporated by reference to Exhibit 10.2 of LNC’s Form 8-K (File No. 1-6028) filed with the SEC on April 3, 2006.
10.22	First Amendment of Lease, dated as of June 16, 2006, between Trona Cogeneration Corporation and The Lincoln National Life Insurance Company.
10.23	Master Confirmation Agreement and related Supplemental Confirmation, dated April 3, 2006, and Trade Notification, dated April 10, 2006, relating to LNC’s accelerated stock repurchase with Goldman, Sachs & Co.*
12	Historical Ratio of Earnings to Fixed Charges.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*	Portions of the exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission (“SEC”) pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

E-3

EX-4.7

Exhibit 4.7

JEFFERSON-PILOT CORPORATION

TO

FIRST UNION NATIONAL BANK OF NORTH CAROLINA

 Trustee

Indenture

Dated as of November 21, 1995

TABLE OF CONTENTS
		PAGE
PARTIES		1
RECITALS OF THE COMPANY		1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101.	Definitions:
	Act	2
	Affiliate; control	2
	Authenticating Agent	2
	Board of Directors	2
	Board Resolution	2
	Business Day	2
	Closing Price	2
	Commission	2
	Company	2
	Company Request; Company Order	3
	Corporate Trust Office	3
	corporation	3
	Covenant Defeasance	3
	Defaulted Interest	3
	Defeasance	3
	Depositary .	3
	Event of Default	3
	Exchange Act	3
	Expiration Date	3
	Global Security	3
	Holder	3
	Indebtedness	3
	Indenture	4
	interest	4
	Interest Payment Date	4
	Investment Company Act	4
	Material Subsidiary	4
	Maturity	4
	Notice of Default	4
	Officers' Certificate	4
	Opinion of Counsel	5

NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.

		PAGE
	Original Issue Discount Security	5
	Outstanding	5
	Paying Agent	6
	Person	6
	Place of Payment	6
	Predecessor Security	6
	Qualified Preferred Stock	6
	Redemption Date	6
	Redemption Price	6
	Regular Record Date	6
	Responsible Officer	6
	Restricted Subsidiary	7
	Securities	7
	Securities Act	7
	Security Register; Security Registrar	7
	Special Record Date	7
	Stated Maturity	7
	Subsidiary; voting stock	7
	Trading Day	7
	Trust Indenture Act	7
	Trustee	7
	U.S. Government Obligation	8
	Vice President	8
SECTION 102	Compliance Certificates and Opinions	8
SECTION 103.	Form of Documents Delivered to Trustee	8
SECTION 104.	Acts of Holders; Record Dates	9
SECTION 105.	Notices, Etc., to Trustee and Company	11
SECTION 106.	Notice to Holders; Waiver	11
SECTION 107.	Conflict with Trust Indenture Act	12
SECTION 108.	Effect of Headings and Table of Contents	12
SECTION 109.	Successors and Assigns	12
SECTION 110.	Separability Clause	12
SECTION 111.	Benefits of Indenture	13
SECTION 112.	Governing Law	13
SECTION 113.	Legal Holidays	13
ARTICLE TWO
SECURITY FORMS
SECTION 201.	Forms Generally	13
SECTION 202.	Form of Face of Security	14

-ii-

		PAGE
SECTION 203.	Form of Reverse of Security	15
SECTION 204.	Form of Legend for Global Securities	20
SECTION 205.	Form of Trustee’s Certificate of Authentication	20
ARTICLE THREE
THE SECURITIES
SECTION 301.	Amount Unlimited; Issuable in Series	20
SECTION 302.	Denominations	23
SECTION 303.	Execution, Authentication, Delivery and Dating	23
SECTION 304.	Temporary Securities	25
SECTION 305.	Registration, Registration of Transfer and Exchange	25
SECTION 306.	Mutilated, Destroyed, Lost and Stolen Securities	27
SECTION 307.	Payment of Interest; Interest Rights Preserved	28
SECTION 308.	Persons Deemed Owners	29
SECTION 309.	Cancellation	29
SECTION 310.	Computation of Interest	30
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401.	Satisfaction and Discharge of Indenture	30
SECTION 402.	Application of Trust Money	23
ARTICLE FIVE
REMEDIES
SECTION 501.	Events of Default	31
SECTION 502.	Acceleration of Maturity; Recission and Annulment	33
SECTION 503.	Collection of Indebtedness and Suits for
	Enforcement by Trustee	34
SECTION 504.	Trustee May File Proofs of Claim	35
SECTION 505.	Trustee May Enforce Claims Without Possession
	of Securities	35
SECTION 506.	Application of Money Collected	36
SECTION 507.	Limitation on Suits	36

-iii-

		PAGE
SECTION 508.	Unconditional Right of Holders to Receive Principal,
	Premium and Interest	37
SECTION 509.	Restoration of Rights and Remedies	37
SECTION 510.	Rights and Remedies Cumulative	37
SECTION 511.	Delay or Omission Not Waiver	37
SECTION 512.	Control by Holders	38
SECTION 513.	Waiver of Past Defaults	38
SECTION 514.	Undertaking for Costs	38
SECTION 515.	Waiver of Usury, Stay or Extension Laws	39
ARTICLE SIX
THE TRUSTEE
SECTION 601.	Certain Duties and Responsibilities	39
SECTION 602.	Notice of Defaults	39
SECTION 603.	Certain Rights of Trustee	40
SECTION 604.	Not Responsible for Recitals or Issuance of Securities	41
SECTION 605.	May Hold Securities	41
SECTION 606.	Money Held in Trust	41
SECTION 607.	Compensation and Reimbursement	41
SECTION 608.	Conflicting Interests	42
SECTION 609.	Corporate Trustee Required; Eligibility	42
SECTION 610.	Resignation and Removal; Appointment of Successor	42
SECTION 611.	Acceptance of Appointment by Successor	44
SECTION 612.	Merger, Conversion, Consolidation or Succession
	to Business	45
SECTION 613.	Preferential Collection of Claims Against Company	45
SECTION 614.	Appointment of Authenticating Agent	45
ARTICLE SEVEN
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701.	Company to Furnish Trustee Names and Addresses
	of Holders	47
SECTION 702.	Preservation of Information; Communications
	to Holders	47
SECTION 703.	Reports by Trustee	48
SECTION 704.	Reports by Company	48

-iv-

PAGE
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801.	Company May Consolidate, Etc., Only on
	Certain Terms	48
SECTION 802.	Successor Substituted	49
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901.	Supplemental Indentures Without Consent of Holders	50
SECTION 902.	Supplemental Indentures with Consent of Holders	51
SECTION 903.	Execution of Supplemental Indentures	52
SECTION 904.	Effect of Supplemental Indentures	52
SECTION 905.	Conformity with Trust Indenture Act	53
SECTION 906.	Reference in Securities to Supplemental Indentures	53
ARTICLE TEN
COVENANTS
SECTION 1001.	Payment of Principal, Premium and Interest	53
SECTION 1002.	Maintenance of Office or Agency	53
SECTION 1003.	Money for Securities Payments to be Held in Trust	54
SECTION 1004.	Statement by Officers as to Default	55
SECTION 1005.	Existence	55
SECTION 1006.	Maintenance of Properties	55
SECTION 1007.	Payment of Taxes and Other Claims	56
SECTION 1008.	Limitation on Liens	56
SECTION 1009.	Limitation on Disposition
	of Stock of Restricted Subsidiaries	56
SECTION 1010.	Waiver of Certain Covenants	57

-v-

PAGE
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101.	Applicability of Article	57
SECTION 1102.	Election to Redeem; Notice to Trustee	57
SECTION 1103.	Selection by Trustee of Securities to be Redeemed	58
SECTION 1104.	Notice of Redemption	58
SECTION 1105.	Deposit of Redemption Price	59
SECTION 1106.	Securities Payable on Redemption Date	59
SECTION 1107.	Securities Redeemed in Part	60
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201.	Applicability of Article	60
SECTION 1202.	Satisfaction of Sinking Fund Payments with Securities	60
SECTION 1203.	Redemption of Securities for Sinking Fund	61
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301.	Company’s Option to Effect Defeasance or
	Covenant Defeasance	61
SECTION 1302.	Defeasance and Discharge	61
SECTION 1303.	Covenant Defeasance	62
SECTION 1304.	Conditions to Defeasance or Covenant Defeasance	62
SECTION 1305.	Deposited Money and U.S. Government Obligations
	to Be Held in Trust; Miscellaneous Provisions	64
SECTION 1306.	Reinstatement	65
ARTICLE FOURTEEN
EXCHANGE OF SECURITIES
SECTION 1401.	Applicability of Article	65
SECTION 1402.	Election to Exchange; Notice to Trustee and Holders	65
SECTION 1403.	No Fractional Shares	66

-vi-

		PAGE
SECTION 1404.	Adjustment of Exchange Rate	66
SECTION 1405.	Payment of Certain Taxes Upon Exchange	67
SECTION 1406.	Shares Free and Clear	67
SECTION 1407.	Cancellation of Security	67
SECTION 1408.	Duties of Trustee Regarding Exchange	67
SECTION 1409.	Repayment of Certain Funds Upon Exchange	66
TESTIMONIUM		69
SIGNATURES AND SEALS		69
ACKNOWLEDGEMENTS		70

-vii-

Certain Sections of this Indenture relating to Sections 310 through 318,

inclusive, of the Trust Indenture Act of 1939:

Trust Indenture Act Section		Indenture Section
§ 310	(a)(1)	609
	(a)(2)	609
	(a)(3)	Not Applicable
	(a)(4)	Not Applicable
	(b)	608
		610
§ 311	(a)	613
	(b)	613
§ 312	(a)	701
		702
	(b)	702
	(c)	702
§ 313	(a)	703
	(b)	703
	(c)	703
	(d)	703
§ 314	(a)	704
	(a)(4)	101
		1004
	(b)	Not Applicable
	(c)(1)	102
	(c)(2)	102
	(c)(3)	Not Applicable
	(d)	Not Applicable
	(e)	102
§ 315	(a)	601
	(b)	602
	(c)	601
	(d)	601
	(e)	514
§ 316	(a)	101
	(a)(1)(A)	502
		512
	(a)(1)(B)	513
	(a)(2)	Not Applicable
	(b)	508
	(c)	104
§ 317	(a)(1)	503
	(a)(2)	504
	(b)	1003
§ 318	(a)	107

NOTE: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.

INDENTURE, dated as of November 21, 1995, between Jefferson-Pilot Corporation, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company”), having its principal office at 100 North Greene Street, Greensboro, North Carolina 27401, and First Union National Bank of North Carolina, a national banking association duly organized and existing under the laws of the United States, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided.

All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

Now, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:

ARTICLE ONE

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION

SECTION 101.Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;

(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation;

(4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; and

(5) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

"Act", when used with respect to any Holder, has the meaning specified in Section 104.

“Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

"Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more series.

"Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board.

"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

"Business Day", when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close.

"Closing Price" has the meaning specified in Section 1403.

"Commission" means the Securities and Exchange Commission, from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

"Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person.

-2-

"Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, its Vice Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

"Corporate Trust Office" means the principal office of the Trustee in Charlotte, North Carolina at which at any particular time its corporate trust business shall be administered.

"corporation" means a corporation, association, company, joint-stock company or business trust.

"Covenant Defeasance" has the meaning specified in Section 1303.

"Defaulted Interest" has the meaning specified in Section 307.

"Defeasance" has the meaning specified in Section 1302.

"Depositary" means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301.

"Event of Default" has the meaning specified in Section 501.

"Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time.

"Expiration Date" has the meaning specified in Section 104.

"Global Security" means a Security that evidences all or part of the Securities of any series and bears the legend set forth in Section 204 (or such legend as may be specified as contemplated by Section 301 for such Securities).

"Holder" means a Person in whose name a Security is registered in the Security Register.

"Indebtedness" means the principal of and premium, if any, and interest due on indebtedness of a Person, whether outstanding on the date hereof or thereafter created, incurred or assumed, which is (a) indebtedness for money borrowed, and (b) any amendments, renewals, extensions, modifications and refundings of any such indebtedness, For the purposes of this definition, "indebtedness for money borrowed" means (i) any obligation of, or any obligation guaranteed by, such Person for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, (ii) any obligation of, or any such obligation guaranteed by, such Person evidenced by bonds, debentures, notes or similar written instruments, including obligations assumed or incurred in connection with the acquisition of property,

-3-

assets or businesses (provided, however, that the deferred purchase price of any other business, property or assets shall not be considered Indebtedness if the purchase price thereof is payable in full within 90 days from the date on which such indebtedness was created), and (iii) any obligations of such Person as lessee under leases required to be capitalized on the balance sheet of the lessee under generally accepted accounting principles and leases of property or assets made as part of any sale and lease-back transaction to which such Person is a party. Indebtedness also includes any obligation of, or any obligation guaranteed by, any Person for the payment of amounts due under a swap agreement or similar instrument or agreement, or under a foreign currency hedge, exchange or similar instrument or agreement.

"Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term "Indenture" shall also include the terms of particular series of Securities established as contemplated by Section 301.

"interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

"Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an instalment of interest on such Security.

"Investment Company Act" means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time.

"Material Subsidiary" means any of Jefferson-Pilot Life Insurance Company, Alexander Hamilton Life Insurance Company of America or Jefferson-Pilot Communications Company.

"Maturity", when used with respect to any Security, means the date on which the principal of such Security or an instalment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

"Notice of Default" means a written notice of the kind specified in Section 501(4) or 501(5).

"Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 1004 shall be the principal executive, financial or accounting officer of the Company.

-4-

"Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee.

"Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.

"Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(2) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; providedthat, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

(3) Securities as to which Defeasance has been effected pursuant to Section 1302; and

(4) Securities which have been paid pursuant to Section 1306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;

provided, however. that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, (A) the principal amount of an Original Issue Discount Security which shall be deemed to be Outstanding shall be the amount of the principal thereof which would be due and payable as of such date upon acceleration of the Maturity thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable at the Stated Maturity of a Security is not determinable, the principal amount of such Security which shall be deemed to be Outstanding shall be the amount as specified or determined as contemplated by Section 301, (C) the principal amount of a Security denominated in one or more foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of such date in the manner provided as contemplated by Section 301, of the principal amount of such Security (or, in the case of a Security described in Clause (A) or (B) above, of the amount determined as provided in such Clause), and (D) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded

-5-

and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

"Paying Agent" means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company.

"Person^” means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

"Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the Securities of that series are payable as specified as contemplated by Section 301.

"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

"Qualified Preferred Stock" means preferred stock which under no circumstances carries the right either separately or considered together with any other preferred stock of the issuer to control more than a majority of the voting power of such issuer.

"Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

"Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.

"Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301.

"Responsible Officer", when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above

-6-

designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

"Restricted Subsidiary" means either of Jefferson-Pilot Life Insurance Company or the Alexander Hamilton Life Insurance Company of America.

"Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.

"Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time.

"Security Register" and "Security Registrar" have the respective meanings specified in Section 305.

"Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.

"Stated Maturity", when used with respect to any Security or any instalment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such instalment of principal or inter-est is due and payable.

"Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

"Trading Day" means a day on which the security the Closing Price of which is being determined (A) is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and (B) has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of such security.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

"Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person,

-7-

"Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.

"U.S. Government Obligation" has the meaning specified in Section 1304.

"Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president".

SECTION 102.Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture.

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include,

(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

SECTION 103.Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

-8-

Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

SECTION 104.Acts of Holders; Record Dates.

Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

The ownership of Securities shall be proved by the Security Register.

Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by

-9-

the Trustee or the Company in reliance thereon_, whether or not notation of such action is made upon such Security.

The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request_, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that at the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action_, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.

The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section 512, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the

-10-

applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.

With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.

Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

SECTION 105.Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust, or

(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company.

SECTION 106.Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where

-11-

notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

SECTION 107.Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

SECTION 108.Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

SECTION 109.Successors and Assigns.

All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.

SECTION 110.Separability Clause.

In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

-12-

SECTION 111. Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 112.Governing Law.

This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York.

SECTION 113.Legal Holidays.

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwith-standing any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity.

ARTICLE TWO

SECURITY FORMS

SECTION 201.Forms Generally.

The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Reso-lution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities.

-13-

The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

SECTION 202.Form of Face of Security.

[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]

.........................................................................

……………………………………………………………………….

No…………… $..............

Jefferson-Pilot Corporation, a corporation duly organized and existing under the laws of North Carolina (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ………………………………………... , or registered assigns, the principal sum of …………………………………..Dollars on ………………………………………….. [if the Security is to bear interest prior to Maturity, insert -- , and to pay interest thereon from……….or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on …………and ………………. in each year, commencing ……………., at the rate of ……% per annum, until the principal hereof is paid or made available for payment [if applicable, insert -- , provided that any principal and premium, and any such instalment of interest, which is overdue shall bear interest at the rate of ….. % per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the ………or ………… (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].

[If the Security is not to bear interest prior to Maturity, insert -- The Principal of this Security shall not bear interest except in the case of a default in payment of principal

-14-

upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any overdue premium shall bear interest at the rate of ……% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment. Interest on any overdue principal or premium shall be payable on demand. [Any such interest on overdue principal or premium which is not paid on demand shall bear interest at the rate of ........ % per annum (to the extent that the payment of such interest on interest shall be legally enforceable), from the date of such demand until the amount so demanded is paid or made available for payment. Interest on any overdue interest shall be payable on demand.]]

Payment of the principal of (and premium, if any) and.[if applicable, insert -- any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in ............., in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert -- ; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register].

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

Dated:

	................................................ By.........................................................
Attest:
...............................................................

SECTION 203.Form of Reverse of Security.

This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of ....................... (herein called the "Indenture", which term shall have

-15-

the meaning assigned to it in such instrument), between the Company and ......................, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [if applicable, insert- , limited in aggregate principal amount to $.................].

[If applicable, insert - The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, [if applicable, insert-- (1) on .................. in any year commencing with the year ........... and ending with the year ........... through operation of the sinking fund for this series at a Redemption Price equal to 100 % of the principal amount, and (2)] at any time [if applicable, insert-- on or after .........., 19 .. ], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [if applicable, insert - on or before ......................, …..%, and if redeemed] during the 12-month period beginning.................... of the years indicated,

Year	Redemption	Year	Redemption
	Price		Price

and thereafter at a Redemption Price equal to …… % of the principal amount, together in the case of any such redemption [if applicable, insert- (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]

[If applicable, insert- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, (1) on ..................... in any year commencing with the year ….. and ending with the year ….. through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [if applicable, insert- on or after ................................], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through

-16-

operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning ……………. of the years indicated,

	Redemption Price
	For Redemption	Redemption Price For
	Through Operation	Redemption Otherwise
	of the	Than Through Operation
Year	Sinking Fund	of the Sinking Fund

and thereafter at a Redemption Price equal to ….. % of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]

[If applicable, insert- Notwithstanding the foregoing, the Company may not, prior to ..................., redeem any Securities of this series as contemplated by [if applicable,insert - Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than ….. % per annum.]

[If applicable, insert- The sinking fund for this series provides for the redemption on .................... in each year beginning with the year ……… and ending with the year …… of [If applicable, insert- not less than $ ……………. ("mandatory sinking fund") and not more than] $ …........ aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by the Company otherwise than through [If applicable, insert - mandatory] sinking fund payments may be credited against subsequent [If applicable, insert- mandatory] sinking fund payments otherwise required to be made [If applicable, insert - , in the inverse order in which they become due].]

[If the Security is subject to redemption of any kind, insert- In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]

-17-

[If applicable, insert paragraph regarding subordination of the Security.]

[If applicable, insert - The Indenture contains provisions for defeasance at any time of [the entire indebtedness of this Security] [or] [certain restrictive covenants and Events of Default with respect to this Security] [, in each case] upon compliance with certain conditions set forth in the Indenture.]

[If the Security is not an Original Issue Discount Security, insert - If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]

[If the Security is an Original Issue Discount Security, insert - If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to -- -insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal, premium and interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and premium and interest, if any, on the Securities of this series shall terminate.]

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25 % in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have

-18-

failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities of this series are issuable only in registered form without coupons in denominations of $ ................... and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

-19-

SECTION 204.Form of Legend for Global Securities.

Unless otherwise specified as contemplated by Section 301 for the Securities evidenced thereby, every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

SECTION 205.Form of Trustee's Certificate of Authentication.

The Trustee's certificates of authentication shall be in substantially the following form:

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

______________________________________,

As Trustee

By____________________________________,

Authorized Officer

ARTICLE THREE

THE SECURITIES

SECTION 301.Amount Unlimited; Issuable in Series.

The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,

-20-

(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);

(2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder);

(3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;

(4) the date or dates on which the principal of any Securities of the series is payable;

(5) the rate or rates at which any Securities of the series shall bear interest, if any, the date or dates from which any such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date for any such interest payable on any Interest Payment Date;

(6) the place or places where the principal of and any premium and interest on any Securities of the series shall be payable;

(7) the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or in part, at the option of the Company and, if other than by a Board Resolution, the manner in which any election by the Company to redeem the Securities shall be evidenced;

(8) the obligation, if any, of the Company to redeem or purchase any Securities of the series pursuant to any sinking fund or analogous provisions or at the option of the Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

(9) if applicable, the terms of any right to exchange, or any automatic or mandatory exchange of, the Securities of the Series into other securities or property (including securities of other issuers, providedthat such securities are registered under Section 12 of the Exchange Act and such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) of the Company;

(10) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which any Securities of the series shall be issuable;

-21-

(11) if the amount of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined;

(12) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose, including for purposes of the definition of "Outstanding" in Section 101;

(13) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined);

(14) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502;

(15) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of anyone or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined);

(16) if applicable, that the Securities of the series, in whole or any specified part, shall be defeasible pursuant to Section 1302 or Section 1303 or both such Sections and, if other than by a Board Resolution, the manner in which any election by the Company to defease such Securities shall be evidenced;

(17) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 204 and any circumstances in addition to or in lieu of those set forth in Clause (2) of the last paragraph of Section 305 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof;

-22-

(18) any addition to or change in the Events of Default which applies to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 502;

(19) any addition to or change in the covenants set forth in Article Ten which applies to Securities of the series; and

(20) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(5)).

All Securities of anyone series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers' Certificate referred to above or in any such indenture supplemental hereto.

If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series or determining the manner in which such terms shall be established.

SECTION 302.Denominations.

The Securities of each series shall be issuable only in registered form without coupons and only in such denominations as shall be specified as contemplated by Section 301. In the absence of any such specified denomination with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

SECTION 303.Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

-23-

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. The Stated Maturity, original issue date, interest rate and any other terms of the Securities of such series may, if not previously established by a Board Resolution, Officers' Certificate or indenture supplemental hereto pursuant to Section 301, be determined by or pursuant to such Company Order and procedures. If provided for in such procedures, such Company Order may authorize authentication and delivery pursuant to oral or electronic instructions from the Company or its duly authorized agent, which instructions, if oral, shall be promptly confirmed in writing. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,

(1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture;

(2) if the terms of such Securities, or the manner of determining such terms, have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms, or such manner of determining such terms, have been established in conformity with the provisions of this Indenture; and

(3) that such Securities, when authenticated. and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.

Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.

-24-

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

SECTION 304.Temporary Securities.

Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor.

SECTION 305.Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities.

-25-

The Trustee is hereby appointed "Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided.

Upon surrender for registration of transfer of any Security of a series at the office or agency of the Company in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount.

At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.

No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

If the Securities of any series (or of any series and specified tenor) are to be redeemed in part, the Company shall not be required (A) to issue, register the transfer of or exchange any Securities of that series (or of that series and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities:

(1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof

-26-

and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (C) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 301.

(3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct.

(4) Every Security authenticated and delivered upon registration of transfer of, or

. in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

SECTION 306.Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee. the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then. in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

-27-

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307.Payment of Interest; Interest Rights Preserved.

Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below:

(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Prede-cessor Securities) are registered at the close of business on aSpecial Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such

-28-

Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder of Securities of such series in the manner set forth in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2).

(2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

SECTION 308.Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 309.Cancellation.

All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly

-29-

permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order.

SECTION 310.Computation of Interest.

Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.

ARTICLE FOUR

SATISFACTION AND DISCHARGE

SECTION 401.Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(1) either

(A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or

(B) all such Securities not theretofore delivered to the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their Stated Maturity within one year, or

(iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium

-30-

and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive until such obligations have been performed in full.

SECTION 402.Application of Trust Money.

Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee.

ARTICLE FIVE

REMEDIES

SECTION 501.Events of Default.

"Event of Default", wherever used herein with respect to Securities of any series, means anyone of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or

(2) default in the payment of the principal of or any premium on any Security of that series at its Maturity; or

-31-

(3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or

(4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

(5) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company (including a default with respect to Securities of any series other than that series), or under any mortgage, indenture or instrument (including this Indenture) under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company, whether such indebtedness now exists or shall hereafter be created, which default

(A) shall constitute a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace period with respect thereto or (B) shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without, in the case of Clause (A), such indebtedness having been discharged or without, in the case of Clause (B), such indebtedness having been discharged or such acceleration having been rescinded or annulled, in each such case within a period of 10 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Securities of that series a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled, as the case may be, and stating that such notice is a "Notice of Default" hereunder; provided, however, that, subject to the provisions of Sections 601 and 602, the Trustee shall not be deemed to have knowledge of such default unless either (A) a Responsible Officer of the Trustee shall have actual knowledge of such default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such indebtedness or from the trustee under any such mortgage, indenture or other instrument; or

(6) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or any Material Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company or any Material Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in

-32-

respect of the Company or any Material Subsidiary under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Material Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or

(7) the commencement by the Company or any Material Subsidiary of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company or any Material Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking pos-session by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Material Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any Material Subsidiary in furtherance of any such action;· or

(8) any other Event of Default provided with respect to Securities of that series.

SECTION 502.Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than an Event of Default specified in Section 501(6) or 501(7)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable (subject to Article Fourteen). If an Event of Default specified in Section 501(6) or 501 (7) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable.

-33-

At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if

(1) the Company has paid or deposited with the Trustee a sum sufficient to pay

(A) all overdue interest on all Securities of that series,

(B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities,

(C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and

(D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel;

and

(2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 503.Collection of Indebtedness and Suits for Enforcement by Trustee.

The Company covenants that if

(1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or

(2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for princi-pal and any premium and interest and, to the extent that payment of such interest shall

-34-

be legally enforceable, interest on any overdue principal and premium and on any overdue interest. at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504.Trustee May File Proofs of Claim.

In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee.

SECTION 505.Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable

-35-

compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 506.Application of Money Collected.

Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due the Trustee under Section 607; and

SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium and interest, respectively.

SECTION 507.Limitation on Suits.

No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;

(2) the Holders of not less than 25 % in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series;

-36-

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.

SECTION 508.Unconditional Right of Holders to Receive Principal, Premium and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive (subject to Article Fourteen) payment of the principal of and any premium and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

SECTION 509.Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

SECTION 510.Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost, or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 511.Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or

-37-

remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

SECTION 512.Control by Holders.

The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that

(l) such direction shall not be in conflict with any rule of law or with this Indenture, and

(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

SECTION 513.Waiver Of Past Defaults.

The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default

(1) in the payment of the principal of or any premium or interest on any Security of such series, or

(2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

SECTION 514.Undertaking/or Costs.

In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the

-38-

Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company.

SECTION 515.Waiver of Usury, Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE SIX

THE TRUSTEE

SECTION 601.Cenain Duties and Responsibilities.

The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

SECTION 602.Notice of Defaults.

If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to the extent provided by the Trust Indenture Act; provided, however, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.

-39-

SECTION 603.Certain Rights of Trustee.

Subject to the provisions of Section 601:

(1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties or reasonably believed by it to be the proper party or parties;

(2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution;

(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate;

(4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

. .

(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;

(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and

(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

-40-

SECTION 604.Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof.

SECTION 605.May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

SECTION 606.Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company.

SECTION 607.Compensation and Reimbursement.

The Company agrees

(1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and

(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or

-41-

liability in connection with the exercise or performance of any of its powers or duties hereunder.

SECTION 608.Conflicting Interests.

If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series.

SECTION 609.Corporate Trustee Required; Eligibility.

There shall at all times be one (and only one) Trustee hereunder with respect to the Securities of each series, which may be Trustee hereunder for Securities of one or more other series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee with respect to the Securities of any series shall cease to be eligible in accor-dance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

SECTION 610.Resignation and Removal; Appointment of Successor.

No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.

The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.

-42-

If at any time:

(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or

(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or

(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,.

then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.

If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the name of the successor

-43-

Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

SECTION 611.Acceptance of Appointment by Successor.

In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee re1ates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.

-44-

Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be.

No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.

SECTION 612.Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

SECTION 613.Preferential Collection of Claims Against Company.

If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor).

SECTION 614.Appointment of Authenticating Agent.

The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia,

-45-

authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 106 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607.

If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form:

-46-

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

__________________________

As Trustee

By __________________________

As Authenticating Agent

By __________________________

Authorized Officer

ARTICLE SEVEN

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701.Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee

(1) semi-annually, not later than January 15 and July 15 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of each series as of the preceding January 1 or July 1, as the case may be, and

(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar.

SECTION 702.Preservation of Information; Communications to Holders.

The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the

-47-

Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.

The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.

Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

SECTION 703.Reports by Trustee.

The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto.

A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee when any Securities are listed on any stock exchange.

SECTION 704.Reports by Company.

The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission.

ARTICLE EIGHT

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801.Company May Consolidate, Etc., Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company

-48-

or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

(1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a cor-poration, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed;

(2) immediately after giving effect to such transaction and treating any indebted-ness which becomes an obligation of the Company or any Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing;

(3) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Company or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and

(4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with.

SECTION 802.Successor Substituted.

Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter,

-49-

except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities.

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 901.Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:

(1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

(2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or

(3) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or

(4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or

(5) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding; or

(6) to secure the Securities; or

-50-

(7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or

(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611; or

(9) to make provision with respect to the exchange rights of Holders pursuant to the requirements of Article Fourteen; or

(10) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this Clause (9) shall not adversely affect the interests of the Holders of Securities of any series.

SECTION 902.Supplemental Indentures With Consent of Holders.

With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,

(1) change the Stated Maturity of the principal of, or any instalment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security or any other Security which would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or modify the provisions of this Indenture with respect to the subordination of the Securities in a manner adverse to the Holders, or

(2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain

-51-

provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or

(3) modify any of the provisions of this Section, Section 513 or Section 1010, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1010, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(8), or

(4) make any change that adversely affects the right to exchange any Security as provided in Article Fourteen or pursuant to Section 301 (except as permitted by Section 901(9)) or decrease the exchange rate of any such Security.

A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 903.Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904.Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

-52-

SECTION 905.Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act.

SECTION 906.Reference in Securities to Supplemental Indentures.

Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.

ARTICLE TEN

COVENANTS

SECTION 1001.Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.

SECTION 1002.Maintenance of Office or Agency.

The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange, where Securities of that series may be exchanged in accordance with Article Fourteen and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presen-tations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided.

-53-

however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

SECTION 1003.Money for Securities Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

The Company will cause each Paying Agent for any series. of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust;

-54-

and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 1004.Statement by Officers as to Default.

The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.

SECTION 1005.Existence.

Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders.

SECTION 1006.Maintenance of Properties.

The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however,that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the Holders.

-55-

SECTION 1007.Payment of Taxes and Other Claims.

The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.

SECTION 1008. Limitation on Liens.

The Company may not, and may not permit any subsidiary of the Company to, directly or indirectly, create, assume, incur or permit to exist any Indebtedness secured by any lien on the capital stock of the Restricted Subsidiaries unless the Outstanding Securities (and, if the Company so elects, any other Indebtedness of the Company that is not subordinate to the Securities and with respect to which the governing instruments require, or pursuant to which the Company is otherwise obligated, to provide such security) shall be secured equally and ratably with such Indebtedness for at least the time period such other Indebtedness is so secured.

SECTION 1009.Limitation on Disposition of Stock of Restricted Subsidiaries.

So long as any Securities are Outstanding and except as described in Article Eight, the Company may not issue, sell, transfer or otherwise dispose of any shares of, securities convertible or exchangeable into, or warrants, rights or options to subscribe for or purchase shares of, capital stock (other than Qualified Preferred Stock) of a Restricted Subsidiary, and may not permit a Restricted Subsidiary to issue (other than to the Company) any shares (other than directors' qualifying shares) of. or securities convertible or exchangeable into, or warrants, rights or options to subscribe for or purchase shares of, capital stock (other than Qualified Preferred Stock) of such Restricted Company, if, after giving effect to any such transaction and the issuances of the maximum number of shares issuable upon the conversion or exercise of all such convertible securities, warrants, rights or options, the Company would own, directly or indirectly, less than 80% of the shares of such Restricted Subsidiary (other than Qualified Preferred Stock); provided, however, that (i) any issuance, sale, transfer or other disposition permitted by the foregoing may only be made for at least a fair market value consideration as determined by the Board of Directors pursuant to a Board Resolution adopted in good faith, and (ii) the foregoing shall not prohibit any such issuance or disposition of securities if required by any law or any regulation or order of any governmental or insurance regulatory authority. Notwithstanding the foregoing, the Company may (i) merge or consolidate a Restricted Subsidiary into or with another direct wholly owned Subsidiary of the Company and (ii) subject to Article Eight, sell, transfer or otherwise dispose of the entire capital stock of a Restricted Subsidiary at one time for at least a fair

-56-

market value consideration as determined by the Board of Directors pursuant to a Board Resolution adopted in good faith.

SECTION 1010.Waiver of Certain Covenants.

Except as otherwise specified as contemplated by Section 301 for Securities of such series, the Company may, with respect to the Securities of any series, omit in any particular instance to comply with any term, provision or condition set forth in any covenant provided pursuant to Section 301(18), 901(2) or 901(7) for the benefit of the Holders of such series, if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term. provision or condition shall remain in full force and effect.

ARTICLE ELEVEN

REDEMPTION OF SECURITIES .

SECTION 1101.Applicability of Article.

Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for such Securities) in accordance with this Article.

SECTION 1102.Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. In case of any redemption at the election of the Company of less than all the Securities of any series (including any such redemption affecting only a single Security), the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction.

-57-

SECTION 1103.Selection by Trustee of Securities to Be Redeemed.

If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series; provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence.

The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid. the principal amount thereof to be redeemed.

The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104.Notice of Redemption.

Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

-58-

(3) if less than all the Outstanding Securities of any series consisting of more than a single Security are to be redeemed, the identification (and, in the case of partial redemption of any such Securities, the principal amounts) of the particular Securities to be redeemed and, if less than all the Outstanding Securities of any series consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed.

(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,

(5) the place or places where each such Security is to be surrendered for payment of the Redemption Price, and

(6) that the redemption is for a sinking fund, if such is the case.

Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be irrevocable.

SECTION 1105.Deposit of Redemption Price.

Subject to the right of the Company to deliver securities or property other than cash upon redemption of Securities of any series, prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date. 

SECTION 1106.Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.

-59-

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

SECTION 1107.Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

ARTICLE TWELVE

SINKING FUNDS

SECTION 1201.Applicability of Article.

The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 301 for such Securities.

The minimum amount of any sinking fund payment provided for by the terms of any Securities is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of such Securities is herein referred to as an "optional sinking fund payment". If provided for by the terms of any Securities, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities as provided for by the terms of such Securities.

SECTION 1202.Satisfaction of Sinking Fund Payments with Securities.

The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to any Securities of such series required to be made pursuant to the terms of such Securities as and to the extent provided for by the

-60-

terms of such Securities; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

SECTION 1203.Redemption of Securities for Sinking Fund.

Not less than 45 days prior to each sinking fund payment date for any Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 1202 and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days prior to each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107.

ARTICLE THIRTEEN

DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1301.Company's Option to Effect Defeasance or Covenant Defeasance.

The Company may elect, at its option at any time, to have Section 1302 or Section 1303 applied to any Securities or any series of Securities, as the case may be, designated pursuant to Section 301 as being defeasible pursuant to such Section 1302 or 1303, in accordance with any applicable requirements provided pursuant to Section 301 and upon compliance with the conditions set forth below in this Article. Any such election shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities.

SECTION 1302.Defeasance and Discharge.

Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, the Company shall be deemed to have been discharged from its obligations with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness

-61-

represented by such Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of and any premium and interest on such Securities when payments are due, (2) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to compliance with this Article, the Company may exercise its option (if any) to have this Section applied to any Securities notwithstanding the prior exercise of its option (if any) to have Section 1303 applied to such Securities.

SECTION 1303.Covenant Defeasance.

Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, (1) the Company shall be released from its obligations under Section 801(3), Sections 1006 through 1009, inclusive, and any covenants provided pursuant to Section 301(18), 901(2) or 901(7) for the benefit of the Holders of such Securities and (2) the occurrence of any event specified in Sections 501(4) (with respect to any of Section 801(3), Sections 1006 through 1009, inclusive, and any such covenants provided pursuant to Section 301(18), 901(2) or 901(7)), 501(5) and 501(8) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called "Covenant Defeasance^t'). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 501(4)), Whether directly orindirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby.

SECTION 1304.Conditions to Defeasance or Covenant Defeasance.

The following shall be the conditions to the application of Section 1302 or Section 1303 to any Securities or any series of Securities, as the case may be:

(1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 609 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefits of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which

-62-

through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, the principal of and any premium and interest on such Securities on the respective Stated Maturities, in accordance with the terms of this Indenture and such Securities. As used herein, "U.S. Government Obligation" means (x) any security which is (i) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is uncondi-tionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S. Govern-ment Obligation which is specified in Clause (x) above and held by such bank. for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

(2) In the event of an election to have Section 1302 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this instrument, there has been a change in the applicable Federal income tax law, in either case (A) or (B) to the effect that, and based thereon such opinion shall confirm that, the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur.

(3) In the event of an election to have Section 1303 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur.

-63-

(4) The Company shall have delivered to the Trustee an Officer's Certificate to the effect that neither such Securities nor any other Securities of the same series, if then listed on any securities exchange, will be delisted as a result of such deposit.

(5) No event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in Sections 501(6) and (7), at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day).

(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities are in default within the meaning of such Act).

(7) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound.

(8) Such Defeasance or Covenant Defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act unless such trust shall be registered under such Act or exempt from registration thereunder.

(9) The Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with.

SECTION 1305.Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions.

Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with' the Trustee or other qualifying trustee (solely for purposes of this Section and Section 1306. the Trustee and any such other trustee are referred to collectively as the "Trustee") pursuant to Section 1304 in respect of any Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any such Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law.

The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other

-64-

than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities.

Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 with respect to any Securities which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities.

SECTION 1306.Reinstatement.

If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations under this Indenture and such Securities from which the Company has been discharged or released pursuant to Section 1302 or 1303 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 1305 with respect to such Securities in accordance with this Article; provided. however, that if the Company makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust.

ARTICLE FOURTEEN

EXCHANGE OF SECURITIES

SECTION 1401.Applicability of Article.

The provisions of this Article shall be applicable to the Securities of any series which are exchangeable for other securities or property (including securities of other issuers, provided that such securities are registered under Section 12 of the Exchange Act and such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) of the Company, except as otherwise specified as contemplated by Section 301 for the Securities of such series.

SECTION 1402.Election to Exchange,' Notice to Trustee and Holders.

The election of the Company to exchange any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. On or prior to the seventh Business Day prior to Maturity of the Securities, the Company shall provide notice to the Holders of record of the Securities and to the

-65-

Trustee and will publish a notice in a daily newspaper of national circulation stating whether the Company has made such election.

SECTION 1403.No Fractional Shares.

No fractional shares of securities shall be delivered upon exchanges of Securities of any series. If more than one Security shall be surrendered for exchange at one time by the same Holder, the number of full shares which shall be delivered upon exchange shall be computed on the basis of the aggregate principal amount of the Securities (or specified portions thereof to the extent permitted hereby) so surrendered. If, except for the provisions of this Section 1402, any Holder of a Security or Securities would be entitled to a fractional share of a security upon the exchange of such Security or Securities, or specified portions thereof, the Company shall pay to such Holder an amount in cash equal to the current market value of such fractional share computed on the basis of an average Closing Price of such security. The "Closing Price" of any security on any date of determination means, (i) if such security is listed or admitted to unlisted trading privileges on a national securities exchange, the last reported sale price regular way on such exchange, or (ii) if such security is not at the time so listed or admitted to unlisted trading privileges on a national securities exchange, the average of the bid and asked prices of such security in the over-the-counter market, as reported by the National Quotation Bureau, Incorporated or similar organization if the National Quotation Bureau, Incorporated is no longer reporting such information, or if not so available, the market price as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company.

SECTION 1404.Adjustment of Exchange Rate.

The exchange rate of Securities of any series that is exchangeable for other securities or property (including securities of other issuers, provided that such securities are registered under Section 12 of the Exchange Act and such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) of the Company shall be adjusted for any stock dividends, stock splits, reclassification, combinations or similar transactions or any consolidation, merger or other reorganization event in accordance with the terms of the supplemental indenture or Board Resolution setting forth the terms of the Securities of such series.

Whenever the exchange rate is adjusted, the Company shall compute the adjusted exchange rate in accordance with terms of the applicable Board Resolution or supplemental indenture and shall prepare an Officers' Certificate setting forth the adjusted exchange rate and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed at each office or agency maintained for the purpose of exchange of Securities pursuant to Section 1002 and, if different, with the Trustee. The Company shall forthwith cause a notice setting forth the adjusted exchange rate to be mailed, first class postage prepaid to each Holder of Securities of such series at its address appearing on the Security Register and to any exchange agent other than the Trustee.

-66-

SECTION 1405.Payment of Certain Taxes Upon Exchange.

The Company will pay any and all taxes that may be payable in respect of the transfer and delivery of shares of other securities or property (including securities of other issuers, provided that such securities are registered under Section 12 of the Exchange Act and. such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) of the Company on exchange of Securities pursuant hereto. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the delivery of shares of securities in a name other than that of the Holder of the Security or Securities to be exchanged, and no such transfer or delivery shall be made unless and until the person requesting such transfer has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such tax has been paid.

SECTION 1406.Shares Free and Clear.

The Company hereby warrants that upon exchange of Securities of any series, the Holder of a Security shall receive all rights held by the Company in such security for which such Security is at such time exchangeable under this Article Fourteen. free and clear of any and all liens, claims, charges and encumbrances other than any liens, claims, charges and encumbrances which may have been placed on any such security by the prior owner thereof, prior to the time such security was acquired by the Company. Except as provided in Section 1404, the Company will pay all taxes and charges with respect to the delivery of such security delivered in exchange for Securities hereunder.

SECTION 1407.Cancellation of Security.

Upon receipt by the Trustee of Securities of any series delivered to it for exchange under this Article Fourteen, the Trustee shall cancel and dispose of the same as provided in Section 309.

SECTION 1408.Duties of Trustee Regarding Exchange.

Neither the Trustee nor any exchange agent shall at any time be under any duty or responsibility to any Holder of Securities of any series that is exchangeable into other securities or property (including securities of other issuers, provided that such securities are registered under Section 12 of the Exchange Act and such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) of the Company to determine whether any facts exist which may require any adjustment of the exchange rate, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, whether herein or in any supplemental indenture, any resolutions of the Board of Directors or written instrument executed by one or more officers of the Company provided to be employed in making the same. Neither the Trustee nor any exchange agent shall be accountable with respect to the validity or value (or the kind or amount) of any securities or property (including securities of other issuers, provided that such securities are registered under Section 12

-67-

of the Exchange Act and such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) of the Company, or of any Securities and neither the Trustee nor any exchange agent makes any representation with respect thereto. Subject to the provisions of Section 601, neither the Trustee nor any exchange agent shall be responsible for any failure of the Company to issue, transfer or deliver any stock certificates or other securities or property (including securities of other issuers, provided that such securities are registered under Section 12 of the Exchange Act and such issuer is then eligible to use Form S-3 (or any successor form) for a primary offering of its securities) upon the surrender of any Security for the purpose of exchange or to comply with any of the covenants of the Company contained in this Article Fourteen or in the applicable supplemental indenture, resolutions of the Board of Directors or written instrument executed by one or more duly authorized officers of the Company.

SECTION 1409.Repayment of Certain Funds Upon Exchange.

Any funds which at any time shall have been deposited by the Company or on its behalf with the Trustee or any other paying agent for the purpose of paying the principal of, and premium, if any, and interest, if any, on any of the Securities (including funds deposited for the sinking fund referred to in Article Twelve hereof) and which shall not be required for such purposes because of the exchange of such Securities as provided in this Article Fourteen shall after such exchange be repaid to the Company by the Trustee upon the Company's written request.

-68-

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together

constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

JEFFERSON-PILOT CORPORATION,

As Issuer

By /s/ Dennis R. Glass

Attest.

/s/ Robert A. Reed

FIRST UNION NATIONAL BANK OF NORTH CAROLINA.

as Trustee

By //s//

Attest:

//s//

-69-

STATE OF NC	)
	) ss.:
COUNTY OF Guilford	)

On the 29^th day of November, 1995 before me personally came Dennis R. Glass to me known, who, being by me duly sworn, did depose and say that he is Sr. VP & CFO of Jefferson-Pilot Corporation, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

/s/ Sandra J Woodruff

My Commission Expires June 13, 199-

STATE OF	)
	) ss.:
COUNTY OF	)

On the ….. day of , , before me personally came ……………., to me known, who, being by me duly sworn, did depose and say that he is ……………………of …………………….., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

-70-

STATE OF NEW YORK	)
	) ss.:
COUNTY OF NEW YORK	)

On the ….. day of , , before me personally came ……………., to me known, who, being by me duly sworn, did depose and say that he is ……………………of …………………….., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

STATE OF NORTH CAROLINA	)
	) ss.:
COUNTY OF MECKLENBORG	)

On the 29th day of November, 1995, before me personally came Pablo de la Canal to me known, who, being by me duly sworn, did depose and say that he is an AVP of First Union Nat’l Bank NC, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

 /s/ Debra A. Kirkpatrick

My Commission Expires March 6, 2000

-71-

EX-4.8

Exhibit 4.8

EXECUTION COPY

THIRD SUPPLEMENTAL INDENTURE, dated as of January 27, 2004, between Jefferson-Pilot Corporation, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company"), having its principal offices at 100 North Greene Street, Greensboro, North Carolina 27401, and Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), a national banking association organized and existing under the laws of the United States, as Trustee (herein called the "Trustee" ) .

RECITALS OF THE COMPANY

The Company has heretofore duly executed and delivered to the Trustee an Indenture, dated as of November 21,1995 (the "Indenture"), providing for the issuance from time to time of its unsecured debentures, notes, or other evidences of indebtedness (the "Securities"), to be issued in one or more series.

The Company intends to issue $300,000,000 principal amount of its Senior Floating Rate Notes, Series A (EXtendible Liquidity Securities® (EXLs®)) (the "Standard Notes") under the Indenture. The Standard Notes are subject to conversion into subseries of notes in certain circumstances (collectively, such subseries of notes, the "Short-Term Notes").

Section 901(7) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, to establish the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Indenture.

Section 901(5) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, to add to, change, or eliminate any of the provisions of the Indenture with respect to one or more series of Securities, subject to certain conditions provided in such Section 901(5).

All things necessary to make this Third Supplemental Indenture a valid agreement of the Company, and a valid supplement to the Indenture, have been done.

NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, solely for the benefit of the Holders of the Notes, as follows:

ARTICLE ONE

Definitions and Other Provisions

of General Application

SECTION 1.01. Definitions.

As used in this Third Supplemental Indenture and the Indenture, to the extent applicable, the following terms shall have the meanings given to them below in this Section 1.01:

"Agent Member" means any member of, or participant in, the Depository.

"Applicable Procedures" means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of the Depository for such Note, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect at the time of such transfer or transaction.

"Clearstream" means Clearstream Banking, société anonyme (or any successor securities clearing agency).

"Closing Date" means January 27, 2004.

"DTC" means The Depository Trust Company, a New York corporation.

"Euroclear" means the Euroclear Clearance System (or any successor securities clearing agency).

"Global Note" means a Note that is registered in the Security Register in the name of a Depository or a nominee thereof.

''Notes'' means the Standard Notes and the Short-Term Notes.

"Purchase Agreement" means that certain Purchase Agreement, dated January 21, 2004, between the Company and Morgan Stanley & Co. Incorporated, as representative of the several Initial Purchasers set forth in Schedule I thereto.

"Regulation S” means Regulation S under the Securities Act.

"Regulation S Certificate" means a certificate substantially in the form set forth in Annex A.

"Regulation S Global Note" means a Regulation S Note that is also a Global Note.

-2-

"Regulation S Note" means a Note (i) purchased from the Company by the Initial Purchasers pursuant to the Purchase Agreement that was initially resold by the Initial Purchasers to non-U.S. Persons in reliance on Regulation S, or (ii) exchanged from a Restricted Note into a Regulation S Note pursuant to the terms of Section 3.02 or (iii) converted into a Short-Term Note from a Standard Note that is a Regulation S Note.

"Restricted Period" means the period of 40 consecutive days beginning on the later of (i) the day on which Notes are first offered to persons other than distributors (as defined in regulation S) in reliance on Regulation S and (ii) the Closing Date.

"Restricted Global Note" means a Restricted Note that is also a Global Note.

"Restricted Note" means a Note (i) purchased from the Company by the Initial Purchasers pursuant to the Purchase Agreement that was initially sold by the Initial Purchasers to purchasers in reliance on Rule 144A under the Securities Act, or (ii) exchanged from a Regulation S Note into a Restricted Note pursuant to the terms of Section 3.02 or (iii) converted into a Short-Term Note from a Standard Note that is a Restricted Note.

"Restricted Notes Certificate" means a certificate substantially in the form set forth in Annex B.

"Restricted Subsidiary" means any of Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance Company or Jefferson Pilot LifeAmerica Insurance Company.

"Rule 144" means Rule 144 under the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended.

"Securities Act Legend" means the following:

"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(l) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) IN

-3-

ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THESE SECURITIES WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH."

"Successor Note" of any particular Note means every Note issued after, and evidencing all or a portion of the same debt as that evidenced by, such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 306 of the Indenture in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.

"Unrestricted Notes Certificate" means a certificate substantially in the form set forth in Annex C.

"U.S. Person" means (i) any natural person in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate of which an executor or administrator is a U.S. Person (other than an estate governed by foreign law and of which at least one executor or administrator is a non-U.S. Person who has sole or shared investment discretion with respect to its assets), (iv) any trust of which a professional fiduciary acting as trustee is a U.S. Person (other than a trust of which at least one trustee is a non-U.S. Person who has sole or shared investment discretion with respect to its assets and no beneficiary of the trust (and no settlor if the Trust is revocable) is a U.S. Person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States (other than such an account held for the benefit or account of a non-U.S. Person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a US . Person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meaning of Rule 501(a) under the Securities Act who are not natural persons, estates or trusts); provided, however, that the term "U.S. Person" does not include (A) a branch or agency of a U.S. Person that is located and operating outside the United States for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country or (C) the international

-4-

organizations set forth in Section 902(o)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, affiliates and pension plans.

All other capitalized terms used in this Third Supplemental Indenture and not defined herein shall have the meanings assigned to them in the Indenture.

ARTICLE TWO

Note Form

SECTION 2.01. Form Generally.

(a) Each Standard Note and the Trustee's certificate of authentication therefor shall be in substantially the form, and have the terms, set forth in Schedule I hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture (as amended and supplemented by this Third Supplemental Indenture), and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Standard Note, as evidenced by their execution of such Standard Note.

(b) Each Short-Term Note and the Trustee's certificate of authentication therefor shall be in substantially the form, and have the terms, set forth in Schedule II hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture (as amended and supplemented by this Third Supplemental Indenture), and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Short-Term Note, as evidenced by their execution of such Short-Term Note.

Upon their original issuance, Restricted Notes of the same tranche shall be issued in the form of one or more Global Notes without interest coupons registered in the name of DTC, as Depository, or its nominee and deposited with the Trustee (or any party acceptable to the Company, DTC and the Trustee), as custodian for DTC, for credit by DTC to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct) in accordance with the rules thereof.

Upon their original issuance, Regulation S Notes of the same tranche shall be issued in the form of one or more Global Notes without coupons registered in the name of DTC, as Depository, or its nominee and deposited with the Trustee (or any party acceptable to the Company, DTC and the Trustee), as custodian for DTC, for credit to, Euroclear Bank S.A./N.V., as operator of Euroclear, and Clearstream to the respective

-5-

accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct) in accordance with the rules thereof.

(c) The Standard Notes may be reopened for issuance of additional Standard Notes, whether Regulation S Notes or Restricted Notes, without the consent of the Holders.

ARTICLE THREE

The Notes

SECTION 3.01. Global Notes.

(a) If any Global Note is to be exchanged for other Notes or cancelled in whole, it shall be surrendered by or on behalf of the Depository or its nominee to the Security Registrar for exchange or cancellation as provided in Section 305 of the Indenture. If any Global Note is to be exchanged for other Notes or cancelled in part, or if another Note is to be exchanged in whole or in part for a beneficial interest in any Global Note, then either (i) such Global Note shall be so surrendered for exchange or cancellation as provided in Section 305 of the Indenture or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or cancelled, or equal to the principal amount of such other Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Security Registrar, whereupon the Security Registrar, in accordance with the Applicable Procedures, shall instruct the Depository or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Note, the Trustee shall, subject to Section 3.02(b) and as otherwise provided in the Indenture (as amended and supplemented by this Third Supplemental Indenture), authenticate and deliver any Notes issuable in exchange for such Global Note (or any portion thereof) to or upon the written order of, and registered in such names as may be directed by, the Depository or its authorized representative. Upon the request of the Trustee in connection with the occurrence of any of the events specified in the eighth paragraph of Section 305 of the Indenture, the Company shall promptly make available to the Trustee a reasonable supply of Notes that are not in the form of Global Notes. The Trustee shall be entitled to rely upon any order, direction or request of the Depository or its authorized representative which is given or made pursuant to this Article Three if such order, direction or request is given or made in accordance with the Applicable Procedures.

(b) Every Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note or any portion thereof, whether pursuant to this Article Three or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note, unless such Note is

-6-

registered in the name of a Person other than the Depository for such Global Note or a nominee thereof.

(c) The Depository or its nominee, as registered owner of a Global Note, shall be the Holder of such Global Note for all purposes under this Third Supplemental Indenture, the Indenture and the Notes, and owners of beneficial interests in a Global Note shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such owner's beneficial interest in a Global Note will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depository or its nominee or its Agent Members.

SECTION 3.02. Transfers and Exchanges: Securities Act Legends.

(a) Certain Transfers and Exchanges. Notwithstanding any other provision of this Third Supplemental Indenture, the Indenture or the Notes, transfers and exchanges of Notes and beneficial interests in a Global Note of the kinds specified in this Section 3.02(a) shall be made only in accordance with this Section 3.02(a).

(i) Restricted Global Note to Regulation S Global Note. If the owner of a beneficial interest in a Restricted Global Note wishes at any time to transfer such interest to a Person who wishes to acquire the same in the form of a beneficial interest in a Regulation S Global Note, such transfer may be effected only in accordance with the provisions of this Clause (a)(i) subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) an order given by the Depository or its authorized representative directing that a beneficial interest in a Regulation S Global Note in a specified principal amount be credited to a specified Agent Member's account and that a beneficial interest in a Restricted Global Note in an equal principal amount be debited from another specified Agent Member's account and (B) a Regulation S Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar and duly executed by the owner of such beneficial interest in such Restricted Global Note or his attorney duly authorized in writing, then the Security Registrar shall reduce the principal amount of such Restricted Global Note and increase the principal amount of such Regulation S Global Note by such specified principal amount as provided in Section 3.01(a).

(ii) Regulation S Global Note to Restricted Global Note. If the owner of a beneficial interest in a Regulation S Global Note wishes prior to the expiration of the Restricted Period to transfer such interest to a Person who wishes to acquire the same in the form of a beneficial interest in a Restricted Global Note, such transfer may be effected only in accordance with this Clause (a)(ii) and subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) an order given by the Depository or its authorized

-7-

representative directing that a beneficial interest in a Restricted Global Note in a specified principal amount be credited to a specifed Agent Member's account and that a beneficial interest in a Regulation S Global Note in an equal principal amount be debited from another specifed Agent Member's account and (B) a Restricted Notes Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar and duly executed by the owner of such beneficial interest in such Regulation S Global Note or his attorney duly authorized in writing, then the Security Registrar, shall reduce the principal amount of such Regulation S Global Note and increase the principal amount of such Restricted Global Note by such specifed principal amount as provided in Section 3.01(a).

(iii) Exchanges between Global Note and Non-Global Note. A beneficial interest in a Global Note may be exchanged for a Note that is not a Global Note (A) as provided in the eighth paragraph of Section 305 of the Indenture or (B) notwithstanding any provision of Section 305 of the Indenture to the contrary, if the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes that are not Global Notes; provided that, if such interest is a beneficial interest in a Restricted Global Note, or if such interest is a beneficial interest in a Regulation S Global Note, then such interest shall be exchanged for a Restricted Note or a Regulation S Note, respectively (subject in each case to Section 3.02(b)).

(b) Securities Act Legends. A Note and its Successor Note bear the Securities Act Legend, subject to the following:

(i) at any time after a Note may be freely transferred without registration under the Securities Act or without being subject to transfer restrictions pursuant to the Securities Act, a new Note which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note which bears such a legend if the Security Registrar has received an Unrestricted Notes Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar and duly executed by the Holder of such legended Note or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall, at the written direction of the Security Registrar, authenticate and deliver such a new Note in exchange for or in lieu of such other Note in the manner provided for in the Indenture (as amended and supplemented by this Third Supplemental Indenture);

(ii) a new Note which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note or any portion thereof which bears such a legend if, in the Security Registrar's judgment, placing such a legend upon such new Note is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Security

-8-

Registrar, shall authenticate and deliver such a new Note in the manner provided for in the Indenture (as amended and supplemented by this Third Supplemental Indenture); and

(iii) notwithstanding the foregoing provisions of this Section 3.02(b), a Successor Note of a Note that does not bear the Securities Act Legend shall bear such form of legend if the Security Registrar has reasonable cause to believe that such Successor Note is a "restricted security" within the meaning of Rule 144, in which case the Trustee, at the written direction of the Security Registrar, shall authenticate and deliver a new Note bearing a Securities Act Legend in exchange for such Successor Note in the manner provided for in the Indenture (as amended and supplemented by this Third Supplemental Indenture).

SECTION 3.03. Events of Default.

The occurrence of an event specified in Section 501(5) of the Indenture shall not be deemed to be an Event of Default with respect to the Notes.

SECTION 3.04. Defeasance and Covenant Defeasance.

The provisions of Article Thirteen of the Indenture shall apply to the Notes.

ARTICLE FOUR

Miscellaneous

The Indenture, as supplemented and amended by this Third Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Third Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

This Third Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

-9-

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

JEFFERSON-PILOT CORPORATION
By:	/s/ Theresa M. Stone
Name:	Theresa M. Stone
Title:	Executive Vice President
	and Chief Financial Officer

Attest:

/s/ Robert A. Reed

Name: Robert A. Reed

Vice President

and Secretary

WACHOVIA BANK, NATIONAL ASSOCIATION
as Trustee
By:	/s/ Patrick L. Teague
Name:	Patrick L. Teague
Title:	Assistant Vice President

Attest:

 /s/ Terry Hefner

Name: Terry Hefner

Title: Vice President

ANNEX A - Form of

Regulation S Certificate

REGULATION S CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

         Re: Senior Floating Rate Notes, Series A

(EXtendible Liquidity Securities® (EXLS®))

(the "Notes") of Jefferson-Pilot

Corporation                                             

Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Third Supplemental Indenture, dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

This certificate relates to US. $ principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

CUSIP No(s). _________________________

CERTIFICATE No(s). _________________________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

The Owner has requested that the Specified Notes be transferred to a person (the "Transferee") who will take delivery in the form of a Regulation S Note. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 904 or Rule 144 under the Securities Act and

A-1

with all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows:

(1)Rule 904 Transfers. If the transfer is being effected in accordance with Rule 904:

(A) the Owner is not a distributor of the Notes, an affiliate of the Company or any such distributor or a person acting on behalf of any of the foregoing;

(B) the offer of the Specified Notes was not made to a person in the United States;

(C) either:

(i) at the time the buy order was originated, the Transferee was outside the United States or the Owner and any person acting on its behalf reasonably believed that the Transferee was outside the United States, or

(ii) the transaction is being executed in, on or through the facilities of the Eurobond market, as regulated by the Association of International Bond Dealers, or another designated offshore securities market and neither the Owner nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States;

(D) no directed selling efforts have been made in the United States by or on behalf of the Owner or any affiliate thereof;

(E) if the Owner is a dealer in securities or has received a selling concession, fee or other renumeration in respect of the Specified Notes, and the transfer is to occur during the Restricted Period, then the requirements of Rule 904(b)(1) or (b)(3) have been satisfied; and

(F) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

(2) Rule 144 Transfers. If the transfer is being effected pursuant to Rule 144:

(A) the transfer is occurring after a holding period of at least one year (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and is being effected

A-2

in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

(B) the transfer is occurring after a holding period of at least two years has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

Dated:

(Print the name of the Undersigned, as such

term is defined in the second paragraph of

this certificate.)

          By:

          &# 160;     Name:

          &# 160;     Title:

(If the Undersigned is a corporation,

partnership or fiduciary, the title of the

person signing on behalf of the

Undersigned must be stated.

A-3

ANNEX B - Form of Restricted

Notes Certificate

RESTRICTED NOTES CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

Re: Senior Floating Rate Notes, Series A

(EXtendible Liquidity Securities® (EXLS®))

(the "Notes") of Jefferson-Pilot

      Corporation                                                                

Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Third Supplemental Indenture (the "Third Supplemental Indenture"), dated as of January 27,2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

This certificate relates to U.S. $__________principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

CUSIP No(s). _________________

CERTIFICATE No(s). _________________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

The Owner has requested that the Specified Notes be transferred to a person (the "Transferee") who will take delivery in the form of a Restricted Note. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, (i) the Owner is not a U.S. Person (as defined in the Third Supplemental Indenture) and

B-1

(ii) such transfer is being effected in accordance with Rule 144A or Rule 144 under the Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows:

(1) Rule 144A Transfers. If the transfer is being effected in accordance with Rule 144A:

(A) the Specified Notes are being transferred to a person that the Owner and any person acting on its behalf reasonably believe is a "qualified institutional buyer" within the meaning of Rule 144A, acquiring for its own account or for the account of a qualified institutional buyer; and

(B) the Owner and any person acting on its behalf have taken reasonable steps to ensure that the Transferee is aware that the Owner may be relying on Rule 144A in connection with the transfer; and

(2) Rule 144 Transfers. If the transfer is being effected pursuant to Rule 144:

(A) the transfer is oncoming after a holding period of at least one year (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

(B) the transfer is occurring after a holding period of at least two years has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

B-2

Dated:

(Print the name of the Undersigned, as such

term is defined in the second paragraph of

this certificate.)

          By:

                 Name:

                 Title:

(If the Undersigned is a corporation,

partnership or fiduciary, the title of the

person signing on behalf of the

Undersigned must be stated.

B-3

ANNEX C -- Form of Unrestricted

Notes Certificate

UNRESTRICTED NOTES CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

Re: Senior Floating Rate Notes, Series A

(Extendible Liquidity Securities® (EXLS®))

(the "Notes") of Jefferson-Pilot

Corporation

Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Third Supplemental Indenture (the "Third Supplemental Indenture"), dated as of January 27,2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Rule under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

This certificate relates to U.S. $_____________ principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

CUSIP No(s). _________________

CERTIFICATE No(s). _________________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

The Owner has requested that the Specified Notes be exchanged for Notes bearing no Securities Act Legend pursuant to Section 3.02 of the Third Supplemental Indenture. In connection with such exchange, the Owner hereby certifies that the exchange is occurring after a holding period of at least two years (computed in

C-1

accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. The Owner also acknowledges that any future transfers of the Specified Notes must comply with all applicable securities laws of the states of the United States and other jurisdictions.

This certificate and the statements contained herein are made for you1 benefit and the benefit of the Company and the Initial Purchasers.

Dated:

(Print the name of the Undersigned, as such

term is defined in the second paragraph of

this certificate.)

          By:

                 Name:

                 Title:

(If the Undersigned is a corporation,

partnership or fiduciary, the title of the

person signing on behalf of the

Undersigned must be stated.

C-2

SCHEDULE I

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSPERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALFED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 14A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 14A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THESE SECURITIES WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH.

JEFFERSON-PILOT CORPORATION

SENIOR FLOATING RATE NOTES, SERIES A

EXTENDIBLE LIQUIDITY SECURITIES® (EXLs®)

REGISTERED	CUSIP No. __________
No. __________	U.S.$__________

JEFFERSON-PILOT CORPORATION

SENIOR FLOATING RATE NOTES, SERIES A

EXTENDIBLE LIQUIDITY SECURITIES® (EXLs®)

ORIGINAL ISSUE DATE:	INITIAL MATURITY DATE:
January 27,2004	February 17,2005, or if such day is not a
	Business Day, the immediately preceding  Business Day.

INTEREST ACCRUAL DATE:	FINAL MATURITY DATE:
January 27,2004	February 17, 2011, or if such day is not a
	Business Day, the immediately preceding
	Business Day.

INITIAL INTEREST RATE: One month LIBOR, Plus 0.00%; to be determined two London Banking Days prior to the Original Issue Date.    EXTENDED MATURITY DATES: As to any given Election Date, the date that is 366 calendar days from and including the 17th day of the month immediately succeeding such Election Date, or if such 366th day is not a Business Day, the immediately preceding Business Day.

INITIAL INTEREST RESET DATE February 17, 2004                      INEREST PAYMENT DATE(S): The 17thday of each month, commencing on February 17, 2004. The final Interest Payment Date for this Security shall be the Final Maturity Date and interest for the final interest payment period will accrue from and including the Interest Payment Date in the month immediately preceding the Final Maturity Date to but excluding the Final Maturity Date. Any Interest Payment Date specified above that would fall on a day that is not a Business Day, other than an Interest Payment Date that is also a date of Maturity, shall be the next succeeding day that is a Business Day (and interest will accrue to but excluding such next succeeding Business Day). except that if such following Business Day is in the next calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day (and interestwill accrue to but excluding such immediately preceding Business Day) If the date of Maturity would fall on a day that is not a Business Day, the payment of principal and interest shall be made on the immediately preceding day that is a Business Day (and interest will accrue to but excluding such immediately preceding Business Day) and such immediately preceding Business Day shall be the date of Maturity.

2

SPREAD (PLUS OR MINUS): ELECTION DATES: The 17th day of INTEREST RESET PERIOD: Monthly. The plus 0.00% per annum from andeach January, April, July and October first Interest Reset Period will be the period including the Original Issue Date to from April 17, 2004 to January 17, but excluding February 17, 2004; 2010, inclusive, whether or not such plus 0.00% per annum from and day is a Business Day. including February 17, 2004 but excluding February 17, 2005; plus 0.03% per annum from and including February 17, 2005 to but excluding February 17, 2006; plus 0.06% per annum from and including February 17, 2006 to but excluding February 17, 2007; plus  0.08% per annum from and including 2007 to but excluding February 17, 2008; plus 0.10% per annum from and including February 17, 2008 to but excluding February 17, 2009; plus 0.10% per annum from and including February 17, 2009 to but excluding February 17; 2010; and plus 0.10% per annum from and including February 17, 2010 to but excluding' February 17, 2011.	ELECTION DATES:  The 17th day of each January, April, July and October from April 17, 2004 to January 17, 2010, inclusive, whether or not much day is a Business Day.	INTEREST RESET PERIOD: Monthly. The first Interest Reset Period will be the period from and including February 17, 2004, to but excluding the immediately succeeding Interest  Reset Date; provided that the final Interest Reset Period for this Security will be the period from and including the Interest Reset Date in the month immediately preceding the Final Maturity Date to the Final Maturity Date.
INTEREST DETERMINATION DATES: Two London Banking Days prior to Interest Reset Dates.		INTEREST RESET DATE(S): Each Interest Payment Date.
ISSUE PRICE: 100% and accrued interest, if any	CALCULATION AGENT:  Wachovia Bank, National Association	DEPOSITORY: The Depository Trust Company
OTHER/ ADDITIONAL TERMS: See below.

3

OTHER/ ADDITIONAL TERMS

NOTICE:                                     Delivery of a notice during an Election Period (as defined below) electing to extend the maturity of this Security or any portion thereof to Wachovia Bank, National association .as the paying agent; will be revocable during each day of such Election Period. until 12:00 noon New York City time. on the last Business Day of such Election Period, at which time such notice will become irrevocable. The holder of a Short-Tern Security (as defined below) received as a consequence of the failure to make such election may not elect to exchange such Short-Term Security for an interest in this Security.

MATURITY      EXTENSION: This Security shall mature on the Initial Maturity Date, unless the maturity of all or any portion of the principal mount hereof is extended in accordance with the procedures described herein under "Option to Extend  Maturity."

OPTION TO EXTEND MATURITY:    During the Election Period for any Election Date, if the option to extend thematurity of this Security is exercised, the maturity of this Security, or of any portion of this Security having a principal amount of $100,000 or any larger multiple of $1,000 in excess thereof for which such option has been exercised. shall be extended to the Extended Maturity Date corresponding to such Election Date. In order to exercise the option to extend the maturity of all, or any portion, of the principal amount of this Security, the Holder of this Security must deliver to the Paying Agent during the relevant Election Period (i) the form entitled "Option to extend Maturity" Included below duly completed and, in the event of an election to extend the maturity of only a portion of the principal amount of this Security, this Security or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange or the National Association of Securities Dealers. Inc. or a commercial bank or a trust company in the United States of America setting forth the name of the Holder of this Security, the principal amount hereof, the certificate number of this Security or a description of this Security's tenor or terms, a statement that the option to elect extension of maturity is being exercised thereby, the principal amount hereof with respect to which such option is being exercised and a guarantee that the form entitled "Option to Extend Maturity" included below has been duly completed and, in the event of an election to extend the maturity of only a portion of the principal amount of this Security, this Security will be received by the Paying Agent no later than five Business Days after the date of such telegram, telex, facsimile transmission or letter; provided that such telegram, telex, facsimile transmission or letter shall not be effective unless this Security (if required to be surrendered as aforesaid) and such form duly completed are received by the Paying Agent by such fifth Business Day. Such option may be exercised by the Holder for less than the entire principal mount hereof provided that the principal amount for which such option is not exercised is at least $100,000 or any larger amount that is an integral multiple of $1,000.   If the option to extend the maturity of any portion hereof is not duly exercised within the Election Period for any such Election Date, a new Security or Securities in the form attached hereto as Exhibit A (each, a "Short-Term Security") for all or that portion of the principal amount hereof as to which such option to extend has not been made and having as its or their "Stated Maturity Date" (as such tern is used in each such Short-Term Security) the date that is the later of (i) the Initial Maturity Date or (ii) the date to which this Security or such portion hereof has previously been extended in accordance with the terms hereof, or if such day is not a Business Day, the immediately preceding Business Day, shall be issued (whose issuance date shall be such Election Date) in the name of the Holder hereof, subject to delivery of this Security to the Paying Agent, and Schedule I hereto shall be annotated as of such Election Date to reflect the corresponding decrease in the principal mount hereof. The failure to elect to extend the maturity of all or any portion of this Security will be irrevocable and will be binding upon any subsequent holder of this Security.

4

The Company and the Trustee shall deem this Security cancelled as to any portion of the principal amount hereof for which a duly completed form entitled "Option to Extend Maturity" and, if applicable, this Security are not delivered to the Paying Agent within the applicable Election Period in accordance with the terms of this Security.

The maturity of this Security will not be extended beyond February 17, 2010, or if such day is not a Business Day, the immediately preceding Business Day.

The Company may redeem the principal amount of any Short-Term Security, in whole or in part, in increments of $1,000, on any Interest Payment Date, other than the Stated Maturity Date of such Short-Term Security (each a "Redemption Date") at a price equal to 100% of the principal amount of the Short-Term Security to be redeemed (the "Redemption Price") together with any unpaid interest accrued hereon up to but excluding such Redemption Date.

The Company shall give written notice of such a redemption to the Holder not more than 20 nor less than 15 days prior to the applicable Redemption Date stating; (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than the full principal amount of any Short-Term Security is to he redeemed, the identification (and, in the case of a partial redemption, the principal amount) of such Short-Term Security to be redeemed; (iv) in the case of a partial redemption of any Short-Term Security, the Holder will receive, without charge. upon the surrender of such Short-Term Security, a new certificate representing an authorized denomination of the principal amount of the Short-Term Security remaining unredeemed; (v) that on the applicable Redemption Date, the Redemption Price shall become due and payable upon the Short-Term Securities so redeemed and that interest thereon shall cease to accrue on and after the applicable Redemption Date; (vi) the place or places where each applicable certificate or certificates representing such Short-Term Security or Securities is to be surrendered for the payment of the Redemption Price together with any unpaid interest thereon to the applicable Redemption Date; and (vii) the CUSIP number of any Short-Term Security or portion of such Short-Term Security to be redeemed.

ELECTION     PERIOD: With respect to any Election Date, the period beginning on the fifth Business Day preceding such Election Date to, and including, such Election Date; provided. however, that if the Election Date is not a Business Day, the notice period will be extended to the next day that is a Business Day; provided, further, that the holder of this Security must deliver its duly completed "Option to Extend Maturity" on or prior to 5:00 p.m., New York City time, on the last Business Day in the Election Period.

5

 JEFFERSON-PILOT CORPORATION, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal amount specified in Schedule I hereto, or such other principal amount (which, when taken together with the principal amounts of all other Outstanding Securities other than Short-Term Securities, shall not exceed, at any time, the sum of the principal amounts specified in Schedule I hereto and in Schedule I in the [Restricted Global Note] [Regulation S Note]) as may be set forth in the records of the Trustee hereinafter referred to in accordance with the Indenture, on the Initial Maturity Date specified above or, to the extent the maturity date of any portion of the principal amount of this Security is extended in accordance with the procedures set forth above to an Extended Maturity Date, as defined above, on such Extended Maturity Date, and to pay interest on the principal amount hereof outstanding from time to time, on the Interest Payment Dates specified above, commencing with the first Interest Payment Date specified above following January 27, 2004 at a rate per a equal to the Initial Interest Rate specified above until February 17,2004, and thereafter at a rate per annum determined in accordance with the provisions on the reverse hereof under the heading "Interest Rate Reset".

 Notwithstanding the foregoing, if "Other/Additional Terms" apply to this Security as specified above, this Security shall be subject to the terms set forth in such "Other Additional Terms."

 The principal and interest on this Security is payable by the Company in US dollars.

 Any Interest Payment Date specified above that would fall on a day that is not a Business Day, other than an Interest Payment Date that is also a date of Maturity, shall be the next succeeding day that is a Business Day (and interest will a c m e to but excluding such next succeeding Business Day), except that, if such following Business Day is in the next calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day (and interest will accrue to but excluding such immediately preceding Business Day). If the date of Maturity would fall on a day that is not a Business Day, the payment of principal and interest shall be made on the immediately preceding day that is a Business Day (and interest will accrue to but excluding such immediately preceding Business Day) and such immediately preceding Business Day shall be the date of Maturity. For purposes of this Security, "Business Day" means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City. The provisions of this paragraph apply to the Securities in lieu of the provisions of Section 113 of the Indenture.

 For purposes of this security, "London Banking Day" means any day on which dealings in deposits in US . dollars are transacted in the London interbank market.

 Interest payments on this Security shall be the amount of interest accrued from and including January 27,2004 or from and including the last date to which interest has been paid or duly provided for, as the case may be, to but excluding, the following Interest Payment Date or the date of Maturity.

 The interest so payable on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date (whether or not a Business Day) immediately preceding such Interest Payment Date, and interest payable upon the Maturity (whether or not such date of Maturity is an Interest Payment Date) shall be paid to the Person to whom principal is payable. "Regular Record Date" shall mean the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date.

 Any interest not punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

 Payment of the principal of and interest on this Security will be made at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, New York, maintained for such purpose, in such coin

6

or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; provided further that all payments of the principal and interest on this Security, the Holder of which has given wire transfer instructions to the Company or its agent at least 10 Business Days prior to the applicable payment date will be required to be made by wire transfer of immediately available funds to the accounts specified by such Holder in such instructions.

 The Company shall pay any administrative costs imposed by banks on payors in making payments on this Security in immediately available funds and the Holder of this Security will pay any administrative costs imposed by banks on payees in connection with such payments. Any tax, assessment or governmental charge imposed upon payments on this Security shall be borne by the Holder of this Security.

 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, or an Authenticating Agent, by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

7

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

DATED:_____________________________     

            

	JEFFERSON-PILOT CORPORATION
	By:
	Name:   Theresa M. Stone
	Title:  Executive Vice President and
	Chief Financial Officer
[SEAL]	Attest:
	Name:   Robert A. Reed
	Title:  Vice President and Secretary

8

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the

series designated therein referred to

in the within-mentioned Indenture.

WACHOVIA BANK, NATIONAL ASSOCIATION

as Trustee

By:  ______________________________________

Authorized Officer

By: WACHOVIA BANK, NATIONAL ASSOCIATION

as Authenticating Agent

By: ______________________________________

Authorized Officer:

9

[Reverse of Note]

General

 This Security is one of a duly authorized series of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of November 21,1995, as supplemented by the Thud Supplemental Indenture, dated as of January 27, 2004 (as so supplemented, herein called the "Indenture"), each between the Company and Wachovia Bank, National Association ( f/k/a First Union National Bank of North Carolina), as Trustee (herein called the 'Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for; a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and am to be, authenticated and delivered. This Security is one of the series of the Securities designated on the face hereof of the Company.

 The Securities are issuable only in registered form without coupons and will be either (a) hook-entry securities represented by one or more global securities recorded in the book-entry system maintained by the Depository or (b) certificated securities issued to and registered in the names of, the beneficial owners or their nominees.

Interest Rate Reset

 The interest rate in effect from January 27, 2004 to February 17, 2004 shall be the Initial Interest Rate specified above. Commencing on February 17.2004, the rate at which interest on this Security is payable shall be adjusted as specified above under "Interest Reset Period". Each such adjusted rate shall be applicable from and including the Interest Reset Date to which it relates to but not including the next succeeding Interest Reset Date or until Maturity, as the case may be. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date, the rate of interest on this Security shall be the rate determined with respect to the Interest Determination Date next preceding such Interest Reset Date in accordance with the provisions set forth below under 'Determination of LIBOR" and adjusted by the addition or subtraction of the Spread specified above.

 If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be the following Business Day, except that if such following Business Day is in the next calendar month, such Interest Reset Date shall be the immediately preceding Business Day.

 Accrued interest shall be calculated by multiplying the principal amount by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day in the period for which interest is being paid. The interest factor for each such day will be computed by dividing the interest rate (expressed as a decimal) applicable to such day by 360.

 Unless otherwise specified herein, all percentages resulting from any calculation referred to herein shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of one percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or ,0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts used in or resulting from any such calculation on this Security shall he rounded to the nearest cent (with one-half cent being rounded upwards).

 At the request of the Holder hereof, the Calculation Agent shall provide to the Holder hereof the interest rate hereon then in effect and, if determined, the interest rate that shall become effective on the next Interest Reset Date with respect to this Security. The Calculation Agent's determination of any interest rate shall he final and binding in the absence of manifest error.

Determination of LIBOR

 LIBOR will be determined by the Calculation Agent in accordance with the following provisions in the order set forth below:

10

l On each Interest Determination Date, LIBOR will be determined on the basis of the offered rate for deposits in US dollars having a maturity of one month commencing on such Interest Reset Date which appears on the Telerate LIBOR Page 3750 as of 11:00 A.M., London time, on such Interest Determination Date.

l On any Interest Determination Date on which no offered rate appears on the Telerate LIBOR Page as specified above, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent at approximately 1:M) A.M., London time, on such Interest Determination Date to prime banks in the London interbank market, having a maturity of one month, commencing on the Interest Reset Date and in a principal amount that is representative for a single transaction in such market at such time. The Calculation Agent will request the principal London office of each of those four major banks to provide a quotation of its rate. If at least two such quotations-are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one hundred thousandth of a percentage point) of such quotations.

l If fewer than two quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the rates quoted by three major banks in New York City, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent at approximately 11:00 AM., New York City time, on such Interest Determination Date for loans in US  dollars to leading European banks, having a maturity of one month commencing on the Interest Reset Date and in a principal amount that is representative for a single transaction in such market at such time.

l If the banks in New York City selected by the Calculation Agent are not quoting as mentioned in the previous bullet point, LIBOR with respect to such Interest Determination Date will be LIOR in effect on such Interest Determination Date.

 Telerate LIBOR Page means the display on Bridge Telerate, Inc., or any successor service, for the purpose of displaying the London interbank rates of major banks of US. dollar deposits.

Events of Default

 If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

Modification and Waivers; Obligation of the Company Absolute

 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 No reference herein to 'the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

11

Defeasance and Covenant Defeasance

 The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness evidenced by this Security and (b) certain restrictive covenants, in each case, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security.

Authorized Denominations

 The Securities of this series are issuable only in registered form without coupons in denominations of $100,000 and integral multiples of $1,000 in excess thereof.

Registration of Transfer

 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

Defined Terms

 All terms used in this Security not otherwise defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

Governing Law

 This Security shall be governed by and construed in accordance with the laws of the State of New York.

12

SCHEDULE I

SCHEDULE OF EXCHANGES

 The initial principal amount of this Security is $________ . The following exchanges of a portion of this Security for an interest in a Short-Term Security have been made:

 Date of Exchange Principal Amount Exchanged for Short- Term Security Reduced Principal Amount Outstanding Following Such Exchange Notation Made by or on Behalf of Trustee

13

OPTION TO EXTEND MATURITY

 The undersigned hereby elects to extend the maturity of Jefferson-Pilot Corporation Senior Floating Rate Note, Series A No. 1 (EXtendible Liquidity Securities®) EXLs®) CUSIP [])  (or the portion thereof specified below) with the effect provided in said Security by delivering this form of "Option to Extend Maturity" duly completed by the Holder of said Security to Wachovia Bank, National Association, NC1179, 401 South Tryon Street, 12" Floor, Charlotte, North Carolina 28288-1179 or such other address or paying agent of which the Company shall from time to time notify the Holders of the Securities, and, in the event of an election to extend the maturity of only a portion of the principal amount of said Security by surrendering said Security.

 If the option to extend the maturity of less than the entire principal amount of said Security is elected, specify the portion of said Security (which shall be $100,000 or an integral multiple of $1,000 in excess thereof) as to which the Holder elects to extend the maturity: and specify the denomination or denominations (which shall be $10,000or an integral multiple of $1,000 in excess thereof) of the Securities in the form attached to said Security as Exhibit A to be issued to the holder for the portion of said Security as to which the option to extend the maturity is not being elected (in the absence of any such specification one such Security in the f o m of said Exhibit A will be issued for the portion as to which the option to extend maturity is not being made):

$____________________.

Dated: ________________________________
	NOTICE: The signature on this Option to Extend Maturity must correspond with the name as written upon the face of the Security in every particular, without alteration or enlargement or any change whatever.

14

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM -- as tenants in common

TEN ENT -- as tenants by the entireties

JT TEN --   as joint tenants with right

          of survivorship and not

as tenants in common

UNIF GIFT MIN ACT --___________________Custodian______________________

     (Cust) (Minor)

Under Uniform Gifts to Minors Act

___________________________

 (State)

 Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

Please Insert Social Security or

Other Identifying Number of Assignee

_____________________________

______________________________________________________________________________________

______________________________________________________________________________________

______________________________________________________________________________________

     (PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

the within Security of Jefferson-Pilot Corporation and all rights thereunder and does hereby irrevocably constitute and appoint _______________ attorney to transfer the said Security on the books of the within-named Company, with full power of substitution in the premises.

Dated: _____________________________

   ____________________________

Signature Guaranteed: ________________________________

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Security in every particular, without alteration or enlargement or any change whatsoever.

15

EXHIBIT A TO SENIOR FLOATING RATE NOTE

[FORM OF FACE OF SECURITY]

 THIS SECURITY IS A GLOBAL SECURITY WITHINTHE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AN IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED N THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.. ANY TRANSFER. PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE CO., HAS AN INTEREST HEREIN.

 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(L) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 14A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 1A. (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE W E D STATES AND OTHER JURISDICTIONS. THESE SECURITIES WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH.

JEFFERSON-PILOT CORPORATION

 SENIOR FLOATING RATE NOTES, SERIES A

REGISTERED	CUSIP No.
No. _______________________________	U.S. $ _____________________________________

A-1

		STATED MATURITY DATE: ________________, or if such day is not a Business Day, the immediately preceeding Business Day.
	INTEREST ACCRUAL DATE: [Insert date of issuance of Short-Term Security]	INTEREST PAYMENT DATES:  The 17th day of each month, commencing on ____________.  The final Interest Payment Date for this Security Shall be the Stated Maturity Date and interest for the final interest payment period will accrue from and including the Interest Payment Date in the month immediately preceeding the Stated Maturity Date to but excluding the Stated Maturity Date.
	INITIAL INTEREST RESET DATE: [Insert the 17th day of the month immediately following the date of issuance of Short-Term Security]	INTEREST RESET PERIOD:  Monthly. The first Interest Reset Period will be the period from and including _____________ to but excluding the immediately succeeding Interest Reset Date.  Thereafter, the Interest Reset Periods will be the periods from and including an Interest Reset Date to but excluding the immediately suceeding Interest Reset Date; Provided that the final Interest Reset Period for this Security will be the period from and including the Interest Reset Date in the month immediately preceeding the Stated Maturity Date to the Stated Maturity Date.
INITIAL INTEREST RATE: One month LIBOR, minus or plus, as the case may be, the spread applicable on the date of issuance of Short-Term Security, as determined in accordance with the provisions of the Predecessor Security.		SPREAD (PLUS OR MINUS): plus  0.00% per annum from the OriginalIssue Date to but excluding February 17, 2004;  plus 0.00% per annum from and including February 17, 2004 to but excluding February 17, 2005; plus  0.03% per annum from and including February 17, 2005 to but excluding February 17, 2006; plus 0.06% per annum from and including February 17, 2006, to but excluding February 17, 2007; plus 0.08% per annum per annum from and including February 17, 2007, to but excluding February 17, 2008; plus 0.10% per annum from and including February 17, 2008, to but excluding February 17, 2009; plus 0.10% per annum from and including February 17, 2009, to but excluding February 17, 20010; and plus 0.10%

A-2

		per annum from and including February 17, 2010 to but excluding February 17, 2011.
CALCULATION AGENT: Wachovia Bank, National Association	INTEREST PAYMENT PERIOD: Monthly	INTEREST RESET DATES (S): Each Interest Payment Date.
INTEREST DETERMINATION DATES:  Two London Banking Days prior to Interest Reset Dates.	DEPOSITORY: The Depository Trust Company.

OTHER ADDITIONAL TERMS

REDEMPTION.         The Company may redeem the principal amount of this Security, in whole or in part, in integrals of $1,000, on any Interest Payment Date, other than the Stated Maturity Date of this Security (each a "Redemption Date") at a price equal to 100% of the principal amount of this Security to be redeemed (the "Redemption Price") together with any unpaid interest accrued hereon up to be excluding such Redemption Date.     The Company shall give written notice of such a redemption to the Holder not more than 20 nor less than 15 days prior to the applicable Redemption Date stating: (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than the full principal amount of this Security is to be redeemed. the identification (and, in the case of a partial redemption, the principal amount) of this Security to be redeemed; (iv) in the case of a partial redemption of this Security, the Holder will receive, without charge, upon the surrender of this Security, a new certificate representing an authorized denomination of the principal amount of this Security remaining unredeemed; (v) that on the applicable Redemption Date, the Redemption Price shall become due and payable upon the Securities so redeemed and that interest thereon shall cease to accrue on and after the applicable Redemption Date; (vi) the place or places where the applicable certificate or certificates representing this Security is to be surrendered for the payment of the Redemption Price together with any unpaid interest thereon to the applicable Redemption Date; and (vii) the CUSIP number of the Security or portion of such Security to be redeemed.

A-3

 JEFFERSON-PILOT CORPORATION, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede Co., or registered assigns, the principal sum of __________Dollars ($__________) on the Stated Maturity Date shown above and to pay interest on the principal amount hereof on the Interest Payment Dates specified above, commencing with the first Interest Payment Date specified above following the Interest Accrual Date specified above at rate per anuum equal to the Initial Interest Rate (as defined below) until the Initial Interest Reset Date specified above, and thereafter at a rate per annum determined in accordance with the provisions on the reverse hereof under the heading "Interest Rate Reset". "Initial Interest Rate" means the rate of interest determined in accordance with the provisions of the Predecessor Security (i) on the Interest Reset Date with respect to the Predecessor Security occurring on the Interest Accrual Date specified above or (ii) if no such Interest Reset Date occurred on the Interest Accrual Date, on the Interest Reset Date with respect to the Predecessor Security occurring immediately preceding the Interest Accrual Date.

 The principal and interest on this Security is payable by the Company in US . dollars.

 Any Interest Payment Date specified above that would fall on a day that is not a Business Day, other than an Interest Payment Date that is also a date of Maturity, shall be the next succeeding day that is a Business Day (and interest will accrue to but excluding such next succeeding Business Day), except that, if such following Business Day is in the next calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day (and interest will a c me to but excluding such immediately preceding Business Day). If the date of Maturity would fall on a day that is not a Business Day, the payment of principal and interest shall be made on the immediately preceding day that is a Business Day (and interest will accrue to but excluding such immediately preceding Business Day) and such immediately preceding Business Day shall be the date of Maturity. For purposes of this Security, "Business Day" means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City. The provisions of this paragraph apply to the Securities in lieu of the provisions of Section 113 of the Indenture.

 For purposes of this Security, "London Banking Day" means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

 Interest payments on this Security shall be the amount of interest accrued from and including the Interest Accrual Date specified above or from and including the last date to which interest has been paid or duly provided for, as the case may be, to but excluding, the following Interest Payment Date or the date of Maturity.

 The interest so payable on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date (whether or not a Business Day) immediately preceding such Interest Payment Date, and interest payable upon the Maturity (whether or not such date of Maturity is an Interest Payment Date) shall be paid to the Person to whom principal is payable. "Regular Record Date" shall mean the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date.

 Any interest not punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

A-4

 Payment of the principal of and interest on this Security will be made at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, New York, maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; provided further that all payments of the principal and interest on this Security, the Holder of which has given wire transfer instructions to the Company or its agent at least 10 Business Days prior to the applicable payment date will be required to be made by wire transfer of immediately available funds to the accounts specified by such Holder in such instructions.

 The Company shall pay any administrative costs imposed by banks on payors in making payments on this Security in immediately available funds and the Holder of this Security will pay any administrative costs imposed by banks on payees in connection with such payments. Any tax, assessment or governmental charge imposed upon payments on this Security shall be borne by the Holder of this Security.

 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse thereof, or an Authenticating Agent, by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

A-5

 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

DATED: _________________________

JEFFERSON-PILOT CORPORATION

Name: _________________________

Title: __________________________

[SEAL]

Attest: ____________________________

Name: ______________________

Title:  _______________________

A-6

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the

series designated therein refined to

in the within-mentioned Indenture.

WACHOVIA BANK, NATIONAL ASSOCIATION

as Trustee

By: ____________________________________

Authorized Officer

WACHOVIA BANK, NATIONAL ASSOCIATION

as Authenticating Agent

By: __________________________________

Authorized Officer

A-7

[Reverse of Note]

General

 This Security is one of a duly authorized series of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of November 21, 1995, as supplemented by the Third Supplemental Indenture, dated as of January 27, 2004 (as so supplemented, herein called the "Indenture"), each between the Company and Wachovia Bank, National Association (f/k/a First Union National Bank of North Carolina), as Trustee (herein called the 'Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series of the Securities designated on the face hereof of the Company.

 The Securities are issuable only in registered form without coupons and will be either (a) book-entry securities represented by one or more global securities recorded in the book.-entry system maintained by the Depository or (b) certificated securities issued to and registered in the names of, the beneficial owners or their nominees.

Interest Rate Reset

 The interest rate in effect from the Interest Accrual Date to the Initial Interest Reset Date specified above shall be the Initial Interest Rate specified above. Commencing with the Initial Interest Reset Date specified above following the Interest Accrual Date specified above, the rate at which interest on this Security is payable shall be adjusted as specified above under "Interest Reset Period". Each such adjusted rate shall be applicable from and including the Interest Reset Date to which it relates to but not including the next succeeding Interest Reset Date or until Maturity, as the case may be. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date, the rate of interest on this Security shall be the rate determined with respect to the Interest Determination Date next preceding such Interest Reset Date in accordance with the provisions set forth below under "Determination of LIBOR" and adjusted by the addition or subtraction of the Spread specified above.

 If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be the following Business Day, except that if such following Business Day is in the next calendar month, such Interest Reset Date shall be the immediately preceding Business Day.

 Accrued interest shall be calculated by multiplying the principal amount by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day in the period for which interest is being paid. The interest factor for each such day will be computed by dividing the interest rate (expressed as a decimal) applicable to such day by 360.

 Unless otherwise specified herein, all percentages resulting from any calculation referred to herein shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of one percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts used in or resulting from any such calculation on this Security shall be rounded to the nearest cent (with one-half cent being rounded upwards).

 At the request of the Holder hereof, the Calculation Agent shall provide to the Holder hereof the interest rate hereon then in effect and, if determined, the interest rate that shall become effective on the next Interest Reset Date with respect to this Security. The Calculation Agent's determination of any interest rate shall be final and binding in the absence of manifest error.

A-8

Determination of LIBOR

 LIBOR will be determined by the Calculation Agent in accordance with the following provisions in the order set forth below:

•  On each Interest Determination Date, LIBOR will be determined on the basis of the offered rate for deposits in U.S. dollars having a maturity of one month commencing on such Interest Reset Date which appears on the Telerate LIBOR Page 3750 as of 11:00 A.M., London time, on such Interest Determination Date.

•  On any Interest Determination Date on which no offered rate appears on the Telerate LIBOR Page as specified above, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent at approximately 11:00 A.M., London time, on such Interest Determination Date to prime banks in the London interbank market, having a maturity of one month, commencing on the Interest Reset Date and in a principal amount that is representative for a single transaction in such market at such time. The Calculation Agent will request the principal London office of each of those four major banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of such quotations. 

•  If fewer than two quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the rates quoted by three major banks in New York City, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent at approximately 11:00 A.M., New York City time, on such Interest Determination Date for loans in U.S. dollars to leading European banks, having a maturity of one month commencing on the Interest Reset Date and in a principal amount that is representative for a single transaction in such market at such time. 

•  If the banks in New York City selected by the Calculation Agent are not quoting as mentioned in the previous bullet point, LIBOR with respect to such Interest Determination Date will be LIBOR in effect on such Interest Determination Date.  

 Telerate LIBOR Page means the display on Bridge Telerate, Inc., or any successor service, for the purpose of displaying the London interbank rates of major banks of U.S. dollar deposits.

Events of Default

 If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

Modification and Waivers; Obligation of the Company Absolute

 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder

A-9

of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

Defeasance and Covenant Defeasance

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness evidenced by this Security and (b) certain restrictive covenants, in each case, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security.

Authorized Denominations

The Securities of this series are issuable only in registered form without coupons in denominations of $100,000 and integral multiples of $1,000 in excess thereof.

Registration of Transfer

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

Defined Terms

All terms used in this Security not otherwise defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

Governing Law

This Security shall be governed by and construed in accordance with the laws of the State of New York.

A-10

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	--	as tenants in common
TEN ENT	--	as tenants by the entireties
JT TEN	--	as joint tenants with right
		of survivorship and not
		as tenants in common

UNIF GIFT MIN ACT	--		Custodian
		(Cust)		(Minor)

Under Uniform Gifts to Minors Act

_____________________

 (State)

 Additional abbreviations may also be used though not in the above list.

 FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

Please Insert Social Security or

Other Identifying Number of Assignee

(PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

the within Security of Jefferson-Pilot Corporation and all rights thereunder and does hereby irrevocably constitute and appoint_____________attorney to transfer the said Security on the books of the within-named Company, with full power of substitution in the premises.

Dated: ____________________________

Signature Guaranteed:

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Security in every particular, without alteration or enlargement or any change whatsoever.

A-1l

SCHEDULE II

EXHIBIT A TO SENIOR FLOATING RATE NOTE

[FORM OF FACE OF SECURITY]

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITORY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THESE SECURITIES WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH.

JEFFERSON-PILOT CORPORATION

SENIOR FLOATING RATE NOTES, SERIES A

REGISTERED	CUSIP No.
No. _________	U.S. $__________

A-1

		STATED MATURITY DATE:
		________________, or if such
		day is not a Business Day, the
		immediately preceding Business Day.
	INTEREST ACCRUAL DATE:	INTEREST PAYMENT DATES: The
	[Insert date of issuance of Short-	17th day of each month, commencing
	Term Security.]	on__________. The final
		Interest Payment Date for this
		Security shall be the Stated Maturity
		Date and interest for the final interest
		payment period will accrue from and
		including the Interest Payment Date in
		the month immediately preceding the
		Stated Maturity Date to but excluding
		the Stated Maturity Date.
	INITIAL INTEREST RESET	INTEREST RESET PERIOD:
	DATE:[Insert the 17th day of the	Monthly. The first Interest Reset
	month immediately following the	Period will be the period from and
	date of issuance of Short-Term	including___________, to but
	Security]	excluding the immediately succeeding
		Interest Reset Date. Thereafter, the
		Interest Reset Periods will be the
		periods from and including an Interest
		Reset Date to but excluding the
		immediately succeeding Interest Reset
		Date; provided that the final Interest
		Reset Period for this Security will be
		the period from and including the
		Interest Reset Date in the month
		immediately preceding the Stated
		Maturity Date to the Stated Maturity
		Date.
INITIAL INTEREST RATE: One		SPREAD (PLUS OR MINUS): plus
month LIBOR, minus or plus, as the		0.00% per annum from the Original
case may be, the spread applicable on		Issue Date to but excluding February
the date of issuance of Short-Term		17, 2004; plus 0.00% per annum from
Security, as determined in accordance		and including February 17, 2004 to
with the provisions of the		but excluding February 17, 2005; plus
Predecessor Security		0.03% per annum from and including
		February 17, 2005 to but excluding
		February 17, 2006; plus 0.06% per
		annum from and including February
		17, 2006 to but excluding February
		17, 2007; plus 0.08% per annum
		from and including February 17, 2007
		to but excluding February 17, 2008;
		plus 0.10% per annum from and
		including February 17, 2008 to but
		excluding February 17, 2009; plus
		0.10% per annum from and including
		February 17, 2009 to but excluding
		February 17, 2010; and plus 0.10%

A-2

		per annum from and including
		February 17, 2010 to but excluding
		February 17, 2011.
CALCULATION AGENT:	INTEREST PAYMENT PERIOD:	INTEREST RESET DATE(S): Each
Wachovia Bank, National	Monthly	Interest Payment Date.
Association
INTEREST DETERMINATION	DEPOSITORY: The Depository
DATES: Two London Banking Days prior to Interest Reset Dates.	Trust Company.

OTHER/ADDITIONAL TERMS

REDEMPTION: The Company may redeem the principal amount of this Security, in whole or in part, in integrals of $ 1,000, on any Interest Payment Date, other than the Stated Maturity Date of this Security (each a "Redemption Date") at a price equal to 100% of the principal amount of this Security to be redeemed (the "Redemption Price") together with any unpaid interest accrued hereon up to be excluding such Redemption Date.   The Company shall give written notice of such a redemption to the Holder not more than 20 nor less than 15 days prior to the applicable Redemption Date stating: (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than the full principal amount of this Security is to be redeemed, the identification (and, in the case of a partial redemption, the principal amount) of this Security to be redeemed; (iv) in the case of a partial redemption of this Security, the Holder will receive, without charge, upon the surrender of this Security, a new certificate representing an authorized denomination of the principal amount of this Security remaining unredeemed; (v) that on the applicable Redemption Date, the Redemption Price shall become due and payable upon the Securities so redeemed and that interest thereon shall cease to accrue on and after the applicable Redemption Date; (vi) the place or places where the applicable certificate or certificates representing this Security is to be surrendered for the payment of the Redemption Price together with any unpaid interest thereon to the applicable Redemption Date; and (vii) the CUSIP number of the Security or portion of such Security to be redeemed.

A-3

JEFFERSON-PILOT CORPORATION, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of__________________________________Dollars ($_______) on the Stated Maturity Date shown above and to pay interest on the principal amount hereof on the Interest Payment Dates specified above, commencing with the first Interest Payment Date specified above following the Interest Accrual Date specified above at a rate per annum equal to the Initial Interest Rate (as defined below) until the Initial Interest Reset Date specified above, and thereafter at a rate per annum determined in accordance with the provisions on the reverse hereof under the heading "Interest Rate Reset". "Initial Interest Rate" means the rate of interest determined in accordance with the provisions of the Predecessor Security (i) on the Interest Reset Date with respect to the Predecessor Security occurring on the Interest Accrual Date specified above or (ii) if no such Interest Reset Date occurred on the Interest Accrual Date, on the Interest Reset Date with respect to the Predecessor Security occurring immediately preceding the Interest Accrual Date.

The principal and interest on this Security is payable by the Company in U.S. dollars.

Any Interest Payment Date specified above that would fall on a day that is not a Business Day, other than an Interest Payment Date that is also a date of Maturity, shall be the next succeeding day that is a Business Day (and interest will accrue to but excluding such next succeeding Business Day), except that, if such following Business Day is in the next calendar month, such Interest Payment Date shall be the immediately preceding day that is a Business Day (and interest will accrue to but excluding such immediately preceding Business Day). If the date of Maturity would fall on a day that is not a Business Day, the payment of principal and interest shall be made on the immediately preceding day that is a Business Day (and interest will accrue to but excluding such immediately preceding Business Day) and such immediately preceding Business Day shall be the date of Maturity. For purposes of this Security, "Business Day" means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or required by law or regulation to close in New York City. The provisions of this paragraph apply to the Securities in lieu of the provisions of Section 113 of the Indenture.

For purposes of this Security, "London Banking Day" means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

Interest payments on this Security shall be the amount of interest accrued from and including the Interest Accrual Date specified above or from and including the last date to which interest has been paid or duly provided for, as the case may be, to but excluding, the following Interest Payment Date or the date of Maturity.

The interest so payable on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date (whether or not a Business Day) immediately preceding such Interest Payment Date, and interest payable upon the Maturity (whether or not such date of Maturity is an Interest Payment Date) shall be paid to the Person to whom principal is payable. "Regular Record Date" shall mean the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date.

Any interest not punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

A-4

Payment of the principal of and interest on this Security will be made at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, New York, maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; provided further that all payments of the principal and interest on this Security, the Holder of which has given wire transfer instructions to the Company or its agent at least 10 Business Days prior to the applicable payment date will be required to be made by wire transfer of immediately available funds to the accounts specified by such Holder in such instructions.

The Company shall pay any administrative costs imposed by banks on payors in making payments on this Security in immediately available funds and the Holder of this Security will pay any administrative costs imposed by banks on payees in connection with such payments. Any tax, assessment or governmental charge imposed upon payments on this Security shall be borne by the Holder of this Security.

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse thereof, or an Authenticating Agent, by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

A-5

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

DATED: ___________________	JEFFERSON-PILOT CORPORATION
	By:
		Name:
		Title:
[SEAL]
	Attest:
		Name:
		Title:

A-6

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the

series designated therein referred to

in the within-mentioned Indenture.

WACHOVIA BANK, NATIONAL ASSOCIATION
	as Trustee
By:
	Authorized Officer
WACHOVIA BANK., NATIONAL ASSOCIATION
	as Authenticating Agent
By:
	Authorized Officer

A-7

[Reverse of Note]

General

This Security is one of a duly authorized series of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture dated as of November 21, 1995, as supplemented by the Third Supplemental Indenture, dated as of January 27, 2004 (as so supplemented, herein called the "Indenture"), each between the Company and Wachovia Bank, National Association (f/k/a First Union National Bank of North Carolina), as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series of the Securities designated on the face hereof of the Company.

The Securities are issuable only in registered form without coupons and will be either (a) book-entry securities represented by one or more global securities recorded in the book-entry system maintained by the Depository or (b) certificated securities issued to and registered in the names of, the beneficial owners or their nominees.

Interest Rate Reset

The interest rate in effect from the Interest Accrual Date to the Initial Interest Reset Date specified above shall be the Initial Interest Rate specified above. Commencing with the Initial Interest Reset Date specified above following the Interest Accrual Date specified above, the rate at which interest on this Security is payable shall be adjusted as specified above under "Interest Reset Period". Each such adjusted rate shall be applicable from and including the Interest Reset Date to which it relates to but not including the next succeeding Interest Reset Date or until Maturity, as the case may be. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date, the rate of interest on this Security shall be the rate determined with respect to the Interest Determination Date next preceding such Interest Reset Date in accordance with the provisions set forth below under `Determination of LIBOR" and adjusted by the addition or subtraction of the Spread specified above.

If any Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be the following Business Day, except that if such following Business Day is in the next calendar month, such Interest Reset Date shall be the immediately preceding Business Day.

Accrued interest shall be calculated by multiplying the principal amount by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day in the period for which interest is being paid. The interest factor for each such day will be computed by dividing the interest rate (expressed as a decimal) applicable to such day by 360.

Unless otherwise specified herein, all percentages resulting from any calculation referred to herein shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of one percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts used in or resulting from any such calculation on this Security shall be rounded to the nearest cent (with one-half cent being rounded upwards).

At the request of the Holder hereof, the Calculation Agent shall provide to the Holder hereof the interest rate hereon then in effect and, if determined, the interest rate that shall become effective on the next Interest Reset Date with respect to this Security. The Calculation Agent's determination of any interest rate shall be final and binding in the absence of manifest error.

A-8

Determination of LIBOR

 LIBOR will be determined by the Calculation Agent in accordance with the following provisions in the order set forth below:

·   On each Interest Determination Date, LIBOR will be determined on the basis of the offered rate for deposits in U.S. dollars having a maturity of one month commencing on such Interest Reset Date which appears on the Telerate LIBOR Page 3750 as of 11:00 A.M., London time, on such Interest Determination Date.

·   On any Interest Determination Date on which no offered rate appears on the Telerate LIBOR Page as specified above, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars are offered by four major banks in the London interbank market, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent at approximately 11:00 A.M., London time, on such Interest Determination Date to prime banks in the London interbank market, having a maturity of one month, commencing on the Interest Reset Date and in a principal amount that is representative for a single transaction in such market at such time. The Calculation Agent will request the principal London office of each of those four major banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of such quotations.

·   If fewer than two quotations are provided, LIBOR in respect of such Interest Determination Date will be the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the rates quoted by three major banks in New York City, which may include the Calculation Agent and its affiliates, as selected by the Calculation Agent at approximately 11:00 A.M., New York City time, on such Interest Determination Date for loans in U.S. dollars to leading European banks, having a maturity of one month commencing on the Interest Reset Date and in a principal amount that is representative for a single transaction in such market at such time.

·   If the banks in New York City selected by the Calculation Agent are not quoting as mentioned in the previous bullet point, LIBOR with respect to such Interest Determination Date will be LIBOR in effect on such Interest Determination Date.

 Telerate LIBOR Page means the display on Bridge Telerate, Inc., or any successor service, for the purpose of displaying the London interbank rates of major banks of U.S. dollar deposits.

Events of Default

 If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

Modification and Waivers; Obligation of the Company Absolute

 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder

A-9

of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

Defeasance and Covenant Defeasance

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness evidenced by this Security and (b) certain restrictive covenants, in each case, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security.

Authorized Denominations

The Securities of this series are issuable only in registered form without coupons in denominations of $100,000 and integral multiples of $1,000 in excess thereof.

Registration of Transfer

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

Defined Terms

All terms used in this Security not otherwise defined herein which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

Governing Law

This Security shall be governed by and construed in accordance with the laws of the State of New York.

A-10

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM	--	as tenants in common
TEN ENT	--	as tenants by the entireties
JT TEN	--	as joint tenants with right of survivorship and not as tenants in common

UNIF GIFT MIN ACT	--		Custodian
		(Cust)		(Minor)

Under Uniform Gifts to Minors Act

_____________________________

(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

Please Insert Social Security or

Other Identifying Number of Assignee

(PLEASE PRINT OR TYPE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

the within Security of Jefferson-Pilot Corporation and all rights thereunder and does hereby irrevocably constitute and appoint___________________attorney to transfer the said Security on the books of the within-named Company, with full power of substitution in the premises.

Dated: __________________________

 Signature Guaranteed:

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within Security in every particular, without alteration or enlargement or any change whatsoever.

A-11

EX-4.9 4 ex4-9.htm EXHIBIT 4.9

Exhibit 4.9

EXECUTION COPY

 FOURTH SUPPLEMENTAL INDENTURE, dated as of January 27, 2004, between Jefferson-Pilot Corporation, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company"), having its principal offices at 100 North Greene Street, Greensboro, North Carolina 27401, and Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), a national banking association organized and existing under the laws of the United States, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

 The Company has heretofore duly executed and delivered to the Trustee an Indenture, dated as of November 21, 1995 (the "Indenture"), providing for the issuance from time to time of its unsecured debentures, notes, or other evidences of indebtedness (the "Securities"), to be issued in one or more series.

 The Company intends to issue $300,000,000 principal amount of its 4.75% Notes due 2014 (the "Notes") under the Indenture.

 Section 901(7) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, to establish the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Indenture.

 Section 901(5) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, to add to, change, or eliminate any of the provisions of the Indenture with respect to one or more series of Securities, subject to certain conditions provided in such Section 901(5).

 All things necessary to make this Fourth Supplemental Indenture a valid agreement of the Company, and a valid supplement to the Indenture, have been done.

 NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:

 For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, solely for the benefit of the Holders of the Notes, as follows:

- 1 -

ARTICLE ONE

Definitions and Other Provisions
of General Application

SECTION 1.01.Definitions.

 As used in this Fourth Supplemental Indenture and the Indenture, to the extent applicable, the following terms shall have the meanings given to them below in this Section 1.01:

 "Agent Member" means any member of, or participant in, the Depository.

 "Applicable Procedures" means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of the Depository for such Note, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect at the time of such transfer or transaction.

 "Clearstream" means Clearstream Banking, société anonyme (or any successor securities clearing agency).

 "Closing Date" means January 27, 2004.

 "DTC" means The Depository Trust Company, a New York corporation.

 "Euroclear" means the Euroclear Clearance System (or any successor securities clearing agency).

 "Exchange Notes" means Securities issued by the Company in exchange for Outstanding Notes, pursuant to the Registration Rights Agreement.

 "Global Note" means a Note that is registered in the Security Register in the name of a Depository or a nominee thereof.

 "Notes" means the Company's 4.75% Notes due 2014.

 "Purchase Agreement" means that certain Purchase Agreement, dated January 20, 2004, between the Company and Morgan Stanley & Co. Incorporated acting severally on behalf of themselves and the initial purchasers set forth on Schedule I thereto (the "Initial Purchasers").

 "Registration Rights Agreement" means that certain Registration Rights Agreement, dated as of January 27, 2004, between the Company and Morgan Stanley & Co. Incorporated, as representative of the several Initial Purchasers.

 "Regulation S" means Regulation S under the Securities Act.

- 2 -

 "Regulation S Certificate" means a certificate substantially in the form set forth in Annex A.

 "Regulation S Global Note" means a Regulation S Note that is also a Global Note.

 "Regulation S Note" means a Note (i) purchased from the Company by the Initial Purchasers, pursuant to the Purchase Agreement that was initially resold by the Initial Purchasers to non-U.S. Persons in reliance on Regulation S, or (ii) exchanged from a Restricted Note into a Regulation S Note pursuant to the terms of Section 3.02.

 "Restricted Global Note" means a Restricted Note that is also a Global Note.

 "Restricted Period" means the period of 40 consecutive days beginning on the later of (i) the day on which Notes are first offered to persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the Closing Date.

 "Restricted Note" means a Note (i) purchased from the Company by the Initial Purchasers, pursuant to the Purchase Agreement, that was initially sold by the Initial Purchasers to purchasers in reliance on Rule 144A under the Securities Act, or (ii) exchanged from a Regulation S Note into a Restricted Note pursuant to the terms of Section 3.02.

 "Restricted Notes Certificate" means a certificate substantially in the form set forth in Annex B.

 "Restricted Subsidiary" means any of Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance Company or Jefferson Pilot LifeAmerica Insurance Company.

 "Rule 144" means Rule 144 under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Securities Act Legend" means the following:

 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS

- 3 -

OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THESE SECURITIES WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH."

 "Successor Note" of any particular Note means every Note issued after, and evidencing all or a portion of the same debt as that evidenced by, such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 306 of the Indenture in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.

 "Unrestricted Notes Certifcate" means a certifcate substantially in the form set forth in Annex C.

 "U.S. Person" means (i) any natural person resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate of which an executor or administrator is a U.S. Person (other than an estate governed by foreign law and of which at least one executor or administrator is a non-U.S. Person who has sole or shared investment discretion with respect to its assets), (iv) any trust of which a professional fiduciary acting as trustee is a U.S. Person (other than a trust of which at least one trustee is a non-U.S. Person who has sole or shared investment discretion with respect to its assets and no benefciary of the trust (and no settlor if the Trust is revocable) is a U.S. Person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the beneft or account of a U.S. Person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States (other than such an account held for the beneft or account of a non-U.S. Person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meaning of Rule 501(a) under the Securities Act who are not natural persons, estates or trusts); provided, however, that the term "U.S. Person" does not include (A) a branch or agency of a U.S.

- 4 -

Person that is located and operating outside the United States for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country or (C) the international organizations set forth in Section 902(o)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, affiliates and pension plans.

 All other capitalized terms used in this Fourth Supplemental Indenture and not defined herein shall have the meanings assigned to them in the Indenture.

ARTICLE TWO

Note Form

SECTION 2.01.Form Generally.

 (a)Each Note and the Trustee's certificate of authentication therefor shall be in substantially the form, and have the terms, set forth in Schedule I hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture (as amended and supplemented by this Fourth Supplemental Indenture), and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Note, as evidenced by their execution of such Note.

 Upon their original issuance, Restricted Notes of the same tranche shall be issued in the form of one or more Global Notes without interest coupons registered in the name of DTC, as Depository, or its nominee and deposited with the Trustee (or any party acceptable to the Company, DTC and the Trustee), as custodian for DTC, for credit by DTC to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct) in accordance with the rules thereof.

 Upon their original issuance, Regulation S Notes of the same tranche shall be issued in the form of one or more Global Notes without coupons registered in the name of DTC, as Depository, or its nominee and deposited with the Trustee (or any party acceptable to the Company, DTC and the Trustee), as custodian for DTC, for credit to Euroclear Bank S.A./N.V., as operator of Euroclear, and Clearstream to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct) in accordance with the rules thereof.

 (b) The Notes may be reopened for issuance of additional Notes, whether Regulation S Notes or Restricted Notes, without the consent of the Holders.

- 5 -

ARTICLE THREE

The Notes

SECTION 3.01.Global Notes.

 (a)If any Global Note is to be exchanged for other Notes or cancelled in whole, it shall be surrendered by or on behalf of the Depository or its nominee to the Security Registrar for exchange or cancellation as provided in Section 305 of the Indenture. If any Global Note is to be exchanged for other  Notes or cancelled in part, or if another Note is to be exchanged in whole or in part for a beneficial interest in any Global Note, then either (i) such Global Note shall be so surrendered for exchange or cancellation as provided in Section 305 of the Indenture or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or cancelled, or equal to the principal amount of such other Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Security Registrar, whereupon the Security Registrar, in accordance with the Applicable Procedures, shall instruct the Depository or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Note, the Trustee shall, subject to Section 3.02(b) and as otherwise provided in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture), authenticate and deliver any Notes issuable in exchange for such Global Note (or any portion thereof) to or upon the written order of, and registered in such names as may be directed by, the Depository or its authorized representative. Upon the request of the Trustee in connection with the occurrence of any of the events specified in the eighth paragraph of Section 305 of the Indenture, the Company shall promptly make available to the Trustee a reasonable supply of Notes that are not in the form of Global Notes. The Trustee shall be entitled to rely upon any order, direction or request of the Depository or its authorized representative which is given or made pursuant to this Article Three if such order, direction or request is given or made in accordance with the Applicable Procedures.

 (b) Every Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note or any portion thereof, whether pursuant to this Article Three or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note, unless such Note is registered in the name of a Person other than the Depository for such Global Note or a nominee thereof.

 (c) The Depository or its nominee, as registered owner of a Global Note, shall be the Holder of such Global Note for all purposes under this Fourth Supplemental Indenture, the Indenture and the Notes, and owners of

- 6 -

beneficial interests in a Global Note shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such owner's beneficial interest in a Global Note will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depository or its nominee or its Agent Members.

SECTION 3.02.Transfers and Exchanges; Securities Act Legends.

 (a)Certain Transfers and Exchanges. Notwithstanding any other provision of this Fourth Supplemental Indenture, the Indenture or the Notes, transfers and exchanges of Notes and beneficial interests in a Global Note of the kinds specified in this Section 3.02(a) shall be made only in accordance with this Section 3.02(a).

 (i) Restricted Global Note to Regulation S Global Note. If the owner of a beneficial interest in a Restricted Global Note wishes at any time to transfer such interest to a Person who wishes to acquire the same in the form of a beneficial interest in a Regulation S Global Note, such transfer may be effected only in accordance with the provisions of this Clause (a)(i) subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) an order given by the Depository or its authorized representative directing that a beneficial interest in a Regulation S Global Note in a specified principal amount be credited to a specified Agent Member's account and that a beneficial interest in a Restricted Global Note in an equal principal amount be debited from another specified Agent Member's account and (B) a Regulation S Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar, and duly executed by the owner of such beneficial interest in such Restricted Global Note or his attorney duly authorized in writing, then the Security Registrar shall reduce the principal amount of such Restricted Global Note and increase the principal amount of such Regulation S Global Note by such specified principal amount as provided in Section 3.01(a).

 (ii) Regulation S Global Note to Restricted Global Note. If the owner of a beneficial interest in a Regulation S Global Note wishes prior to the expiration of the Restricted Period to transfer such interest to a Person who wishes to acquire the same in the form of a beneficial interest in a Restricted Global Note, such transfer may be effected only in accordance with this Clause (a)(ii) and subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) an order given by the Depository or its authorized representative directing that a beneficial interest in a Restricted Global Note in a specified principal amount be credited to a specified Agent Member's account and that a beneficial interest in a Regulation S Global Note in an equal principal amount be debited from another specified Agent Member's account and (B) a Restricted Notes Certificate (or such other form of certificate as may be

- 7 -

acceptable to the Company), satisfactory to the Security Registrar and duly executed by the owner of such beneficial interest in such Regulation S Global Note or his attorney duly authorized in writing, then the Security Registrar, shall reduce the principal amount of such Regulation S Global Note and increase the principal amount of such Restricted Global Note by such specified principal amount as provided in Section 3.01(a).

 (iii) Exchanges between Global Note and Non-Global Note.  A beneficial interest in a Global Note may be exchanged for a Note that is not a Global Note (A) as provided in the eighth paragraph of Section 305 of the Indenture or (B) notwithstanding any provision of Section 305 of the Indenture to the contrary, if the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes that are not Global Notes; provided that, if such interest is a beneficial interest in a Restricted Global Note, or if such interest is a beneficial interest in a Regulation S Global Note, then such interest shall be exchanged for a Restricted Note or a Regulation S Note, respectively (subject in each case to Section 3.02(b)).

 (b) Securities Act Legends. A Note and its Successor Note shall bear the Securities Act Legend, subject to the following:

 (i) at any time after a Note may be freely transferred without registration under the Securities Act or without being subject to transfer restrictions pursuant to the Securities Act a new Note which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note which bears such a legend if the Security Registrar has received an Unrestricted Notes Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar and duly executed by the Holder of such legended Note or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall, at the written direction of the Security Registrar, authenticate and deliver such a new Note in exchange for or in lieu of such other Note in the manner provided for in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture);

 (ii) a new Note which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note or any portion thereof which bears such a legend if, in the Security Registrar's judgment, placing such a legend upon such new Note is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Security Registrar, shall authenticate and deliver such a new Note in the manner provided for in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture); and

 (iii) notwithstanding the foregoing provisions of this Section 3.02(b), a Successor Note of a Note that does not bear the Securities Act Legend shall bear

- 8 -

such form of legend if the Security Registrar has reasonable cause to believe that such Successor Note is a "restricted security" within the meaning of Rule 144, in which case the Trustee, at the written direction of the Security Registrar, shall authenticate and deliver a new Note bearing a Securities Act Legend in exchange for such Successor Note in the manner provided for in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture).

SECTION 3.03.Events of Default.

The occurrence of an event specified in Section 501(5) of the Indenture shall not be deemed to be an Event of Default with respect to the Notes.

SECTION 3.04.Defeasance and Covenant Defeasance.

The provisions of Article Thirteen of the Indenture shall apply to the Notes.

ARTICLE FOUR

Miscellaneous

 The Indenture, as supplemented and amended by this Fourth Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

 This Fourth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

- 9 -

 IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

    JEFFERSON-PILOT CORPORATION

    By/s/ Theresa M. Stone

    Name: Theresa M. Stone

    Title: Executive Vice President 
and Chief Financial Officer

Attest:

/s/ Robert A. Reed
Name: Robert A. Reed

Title: Vice President

and Secretary

    WACHOVIA BANK, NATIONAL ASSOCIATION

     as Trustee

By/s/ Patrick L. Teague

      Name: Patrick L. Teague

    Title: Assistant Vice President

Attest:

/s/ Terry Hefner

Name: Terry Hefner

Title: Vice President

- 10 -

ANNEX A - Form of

Regulation S Certificate

REGULATION S CERTIFICATE

Wachovia Bank, National Association
Attn: Corporate Trust Department

Re: 4.75% Notes due 2014 of Jefferson-Pilot 
       Corporation (the "Notes")

 Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Fourth Supplemental Indenture, dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

 This certificate relates to U.S. $___principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

 CUSIP No(s). 475070AC2

 CERTIFICATE No(s). ____________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

 The Owner has requested that the Specified Notes be transferred to a person (the "Transferee") who will take delivery in the form of a Regulation S Note. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 904 or Rule 144 under the Securities Act and with all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows:

A-1

(1)Rule 904 Transfers. If the transfer is being effected in accordance with Rule 904:

 (A)the Owner is not a distributor of the Notes, an affiliate of the Company or any such distributor or a person acting on behalf of any of the foregoing;

 (B)the offer of the Specified Notes was not made to a person in the United States;

 (C)either:

   (i)at the time the buy order was originated, the Transferee was outside the United States or the Owner and any person acting on its behalf reasonably believed that the Transferee was outside the United States, or

  (ii) the transaction is being executed in, on or through the facilities of the Eurobond market, as regulated by the Association of International Bond Dealers, or another designated offshore securities market and neither the Owner nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States;

 (D) no directed selling efforts have been made in the United States by or on behalf of the Owner or any affiliate thereof;

 (E) if the Owner is a dealer in securities or has received a selling concession, fee or other renumeration in respect of the Specified Notes, and the transfer is to occur during the Restricted Period, then the requirements of Rule 904(b)(1) or (b)(3) have been satisfied; and

 (F)the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

(2)Rule 144 Transfers. If the transfer is being effected pursuant to  Rule 144:

 (A) the transfer is occurring after a holding period of at least one year (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

A-2

 (B)the transfer is occurring after a holding period of at least two years has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

Dated:                                                                                                                        _______________________________                          

           (P rint the name of the Undersigned, as such term is defined in the second paragraph of

           th is certificate.)

           By : ______________________________________

           Na me:

           Ti tle:

            ;(If the Undersigned is a corporation, partnership or fiduciary, the title of the

           pe rson signing on behalf of the Undersigned must be stated.

A-3

ANNEX B - Form of Restricted
Notes Certificate

RESTRICTED NOTES CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

Re: 4.75% Notes due 2014 of Jefferson-Pilot 

 Corporation (the "Notes")

 Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Fourth Supplemental Indenture (the "Fourth Supplemental Indenture") dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

 This certificate relates to U.S. $____principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

 CUSIP No(s). U04468AB7

 CERTIFICATE No(s). ______________________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

 The Owner has requested that the Specified Notes be transferred to a person (the "Transferee") who will take delivery in the form of a Restricted Note. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, (i) the Owner is not a U.S. Person (as defined in the Fourth Supplemental Indenture) and (ii) such transfer is being effected in accordance with Rule 144A or Rule 144 under the

B-1

Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows:

 (1) Rule 144A Transfers. If the transfer is being effected in accordance with Rule 144A:

  (A) the Specified Notes are being transferred to a person that the Owner and any person acting on its behalf reasonably believe is a "qualified institutional buyer" within the meaning of Rule 144A, acquiring for its own account or for the account of a qualified institutional buyer; and

  (B) the Owner and any person acting on its behalf have taken reasonable steps to ensure that the Transferee is aware that the Owner may be relying on Rule 144A in connection with the transfer; and

 (2)Rule 144 Transfers. If the transfer is being effected pursuant to Rule 144:

  (A) the transfer is occurring after a holding period of at least one year (computed in accordance with paragraph (d) of Rule 144) has

elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

  (B) the transfer is occurring after a holding period of at least two years has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

B-2

Dated:               ________________________________

            ;    (Print the name of the Undersigned, as such

            ;     term is defined in the second paragraph of

     this certificate.)

    By:

     Name: _________________________

    Title: __________________________

    (If the Undersigned is a corporation,

      partnership or fiduciary, the title of the person

      signing on behalf of the Undersigned must be stated.

B-3

ANNEX C - Form of Unrestricted

Notes Certificate

UNRESTRICTED NOTES CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

Re: 4.75% Notes due 2014 of Jefferson-Pilot

 Corporation (the "Notes")

 Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Fourth Supplemental Indenture (the "Fourth Supplemental Indenture") dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

 This certificate relates to U.S. $___principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

 CUSIP No(s). [475070AC2] or [U04468AB7]

 CERTIFICATE No(s). __________________

 The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

 The Owner has requested that the Specified Notes be exchanged for Notes bearing no Securities Act Legend pursuant to Section 3.02 of the Fourth Supplemental Indenture. In connection with such exchange, the Owner hereby certifies that the exchange is occurring after a holding period of at least two years (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later,

C-1

and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. The Owner also acknowledges that any future transfers of the Specified Notes must comply with all applicable securities laws of the states of the United States and other jurisdictions.

 This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers.

Dated:                                                                                                                                          ;                                _________________________________

   (Print the name of the Undersigned, as such

   term is defined in the second paragraph of

           &# 160;       this certificate.)

    By: _______________________________

            ;    Name:

            ;    Title:

                                                                                                                                         &# 160;                                          (If the Undersigned is a corporation, partnership

                                                                                                                                         &# 160;                                          or fiduciary, the title of the person signing on

                                                                                                                                         &# 160;                                          behalf of the Undersigned must be stated.

C-2

EX-10.3 5 ex10-3.htm EXHIBIT 10.3

Exhibit 10.3

Performance Targets for Annual Incentive Program and Certain Compensation Actions

(1)The 2006 corporate performance goals for the Annual Incentive Program under the Lincoln National Corporation Amended and Restated Incentive Compensation Plan (the “ICP”), which apply to the Corporate Center executive officers are:

·growth in our income from operations per share (with a weighting of 50%),

·sales growth (with a weighting of 30%), and

·merger-related expense savings (with a weighting of 20%)

The 2006 performance goals for executive officers in our business lines, include the corporate goals weighted as follows:

·growth in income from operations per share (with a weighting of 15%),

·sales growth (with a weighting of 5%), and

·merger-related expense savings (with a weighting of 5%).

In addition, executive officers in our business lines, with the exception of Delaware, have the following goals weighted as follows

·line of business income from operations (with a weighting of 35%),

·line of business sales growth (with a weighting of 25%), and

·line of business merger-related expense savings (with a weighting of 15%).

In addition, executive officers in Delaware have the following goals weighted as follows:

·line of business income from operations (with a weighting of 20%),

·line of business sales growth (with a weighting of 20%),

·line of business merger-related expense savings (with a weighting of 15%)

·retail investment performance (10%), and

·institutional investment performance (10%).

(2)The performance goals for the three-year (2006-2008) ICP long-term performance cycle are as follows:

·growth in income from operations per share (with a weighting of 33.3%)

·sales growth (with a weighting of 33.3%), and

·return on equity (with a weighting of 33.3%).

Income from operations is defined for the purposes of paragraphs (1) and (2) above as net income determined in accordance with generally accepted accounting principles (“GAAP”) excluding, as applicable, the after-tax effects of realized gain or losses on investments and derivatives, gains (losses) related to reinsurance embedded derivatives/trading account assets, cumulative effect of accounting changes, reserve changes on business sold through reinsurance net of related deferred gain amortization, gains (losses) on the sale of subsidiaries and blocks of business, and losses on early retirement of debt, including subordinated debt. In addition, income from operations for the purposes of paragraphs (1) and (2) above will exclude the after tax merger/integration related expenses.

(3)The salary of Jon A. Boscia, our chairman and chief executive officer, was increased from $850,000 to $925,000. This was the first increase in Mr. Boscia’s salary in five years. The salaries of the other named executive officers in our 2006 proxy statement are not changed from the year ended December 31, 2005. The salary for Dennis R. Glass, president and chief operating officer, is $900,000.

(4)Dennis R. Glass, our president and chief operating officer, may use the corporate aircraft for business as well as personal travel, when practical. The policy was adopted due to security concerns and to allow for more efficient travel time so that the chief operating officer can devote more time to our business.

(5)David A. Stonecipher in his capacity as lead director may receive an office and secretarial support, and access to company aircraft for business purposes, plus up to 25 hours per year of flight time for personal use, with imputation of taxable income for any such use. Mr. Stonecipher will forego regular board compensation including retainer, meeting fees and stock options while serving in this capacity. The foregoing is subject to change or termination at any time by the Corporate Governance Committee of our Board of Directors.

EX-10.22 6 ex10-22.htm EXHIBIT 10.22

Exhibit 10.22

FIRST AMENDMENT OF LEASE

THIS FIRST AMENDMENT OF LEASE, dated as of June 16, 2006 (this “Amendment”), between TRONA COGENERATION CORPORATION, a Delaware corporation, having an address at c/o DaimlerChrysler Services North America LLC, CIMS 405-23-05, 27777 Inkster Road, Farmington Hills, Michigan 48334-5326, Attention: Raymond M. McGowan (hereinafter referred to as “Lessor”), and THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation, having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46802, Attention: Director of Facilities (hereinafter referred to as “Lessee”).

WITNESSETH:

Whereas Clinton Street Limited Partnership, an Indiana limited partnership, as lessor (the “Original Lessor”), entered into that certain Lease and Agreement dated as of August 1, 1984 (the “Lease”) with Lessee, which Lease was guaranteed by Lincoln National Corporation (“Guarantor”) pursuant to the Guaranty, dated as of August 1, 1984, from Guarantor to Original Lessor andthe Memorandum of Lease and Agreement recorded August 29, 1984 as Instrument Number 1984-21065, Reassignment of Lease and Guaranty recorded August 29, 1984 as Instrument Number 84-21069, Second Reassignment of Lease recorded August 29, 1984 as Instrument Number 84-21073, as well as Assignment of Lease and Guaranty dated August 1, 1984 and recorded August 29, 1984 as Instrument Number 84-21067;

WHEREAS, capitalized terms used and not defined herein shall have the respective meanings ascribed thereto in the Lease;

WHEREAS, the Lease demised to Lessee the land more particularly described on Exhibit A hereto (the “Original Land”) and all improvements thereon (the “Original Improvements”);

WHEREAS, by General Warranty Deed, dated as of March 24, 1987 (the “Meridian Deed”), from Original Lessor to Chrysler Meridian Corporation (“Meridian”), a copy of which was recorded on March 25, 1987 as Instrument Number 87-014806, Original Lessor conveyed to Meridian the Original Improvements and an “Estate for Years” in the Original Land, subject to the Lease and the rights of Lessee thereunder;

WHEREAS, by that certain Master Assignment, Assumption and Agreement, dated as of March 24, 1987, a copy of which was recorded on March 25, 1987 as Instrument Number 87-14808, among Original Lessor, Meridian and the Clinton Street Realty Trust (the “Trust”), Original Lessor assigned the Lease and the Guaranty to Meridian, and Meridian accepted such assignment and assumed such rights and obligations;

WHEREAS, by the General Warranty Deed, dated as of March 24, 1987 (the “Trust Deed”), a copy of which was recorded on March 25, 1987 as Instrument Number 87-014807, from Original Lessor to the Trust, Original Lessor conveyed to the Trust the Original Land, subject to the Meridian Deed and the rights of Meridian thereunder, and subject to the Lease and the rights of Lessee thereunder

WHEREAS, by Trustee Special Warranty Deed from the Trust to Lessor, dated as of the date hereof, a copy of which is to be recorded with the Allen County office of the recorder, the Trust conveyed its interest in the Original Land to Lessor, subject to the Lease and the rights of Lessee thereunder;

WHEREAS, by Special Warranty Deed from Meridian to the Lessor, dated as of the date hereof, a copy of which is to be recorded with the Allen County office of the recorder, Meridian conveyed its interest (including its Estate for Years) in the Original Land to the Lessor, subject to the Lease and the rights of Lessee thereunder;

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of the date hereof (“Assignment and Assumption”), Meridian assigned its rights and obligations under the Lease and the Guaranty to the Lessor and Lessor assumed and agreed to perform the same; and

WHEREAS, immediately preceding the execution and delivery of this Amendment, Lessee has conveyed to Lessor the land more particularly described on Exhibit B attached hereto (the “Additional Land”) and all improvements thereon (the “Additional Improvements”);

WHEREAS, the Lessor and the Lessee wish to amend the Lease to, among other things, exercise Lessee’s option to extend the term for the first two (2) “Extended Terms” and add the Additional Land and the Additional Improvements to the premises demised under the Lease, so that the Land Parcel (as defined in the Lease) shall consist of the Original Land and the Additional Land;

NOW THEREFORE, in consideration of One Dollar and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.Schedule A of the Lease is hereby deleted in its entirety and replaced by Schedule A attached hereto.

2.Paragraphs 6 and 7 to Schedule B to the Lease are hereby deleted in their entirety and replaced with Schedule B attached hereto.

3.Schedule C to the Lease is hereby deleted in its entirety and replaced with Schedule C attached hereto with respect to the period commencing on the date of this Amendment.

4.Section 2(a) of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof: “(a) the rights of any parties in possession and the existing state of the title as of the commencement of the term of this Lease or, for any property added to the Land Parcel by an amendment to this Lease (Added Property), as of the date on which such property is so added to the Land Parcel,”.

5.Section 2(d) of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof: “(d) the condition of any buildings, structures and other improvements located thereon, as of the commencement of the term of this Lease or, for any

2

buildings, structures and other improvements located on any Added Property, on the date such Added Property is added to the Land Parcel by an amendment of this Lease, without representation or warranty by Lessor.”

6.In accordance with Section 4 of the Lease, Lessees hereby irrevocably exercises the right and option to extend the term of the Lease for the first two (2) Extended Terms (as defined in the Lease), such that the term of the Lease shall expire on August 31, 2019 (the period September 1, 2009 to August 31, 2019 being herein called the “Initial Extended Term”), unless sooner terminated as provided in the Lease. Notwithstanding anything in the Lease to the contrary, this will constitute exercise by the Lessee of the first two (2) Extended Terms, and nothing in this Amendment shall be construed as to prevent the Lessee from subsequently extending the term of the Lease for the remaining four (4) additional Extended Terms of five (5) years each in accordance with, and subject to, the terms of the Lease and this Amendment (“Subsequent Extension Terms”). Lessee irrevocably waives any right to give a notice not to extend the Lease for the first or the second Extended Terms.

7.The first sentence of Section 9 of the Lease is hereby amended by deleting the beginning portion of said sentence ending with the parenthetical “(collectively, the Indemnified Parties)”, and by substituting in lieu thereof the following: “Lessee shall defend all actions or claims against Lessor, or any partner, member, shareholder, officer or director of Lessor, or any assignee of Lessor, or any partner, member, shareholder, officer or director of such assignee (collectively, the Indemnified Parties)”.

8.Section 11(c) of the Lease is hereby deleted in its entirety and replaced with the following:

“(c) Lessee may, at its expense, upon 45 days prior notice to Lessor, construct improvements on any portion of the Land Parcel on which there is not already a permanent structure for which improvements it has not and will not obtain reimbursement from Lessor (Lessee’s Improvements), provided that upon completion thereof, the use and market value of the remaining Leased Premises shall not thereby be materially lessened, and provided further that all such Lessee’s Improvements shall comply with all applicable laws, regulations, zoning requirements and building codes. The Lessee’s Improvements shall be and remain the property of Lessee and Lessee may make additions and alterations to Lessee’s Improvements and substitutions and replacements thereof which are otherwise in compliance with the provisions of this subparagraph (c).”

9.The second sentence of Section 12(b) of the Lease, and the portion of the third sentence of Section 12(b) of the Lease ending with the phrase “this Lease shall terminate on the Termination Date”, are hereby deleted in their entirety and the following is substituted in lieu thereof:

“If the Termination Date occurs during the Interim or Primary Term, or during the first two (2) Extended Terms (i.e., during the period September 1, 2009 through August 31, 2019), such notice to Lessor shall be accompanied by an irrevocable

3

offer by Lessee to purchase the Leased Premises on the Termination Date at a price determined in accordance with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such Purchase Offer by notice given to Lessee not later than the 30th day prior to the Termination Date, or (2) the Termination Date occurs during an Extended Term commencing on or after September 1, 2019, this Lease shall terminate on the Termination Date”.

10.Section 12(c) of the Lease is hereby deleted in its entirety and replaced with the following:

“(c) If during any Term (i) a portion of the Leased Premises shall be taken by condemnation or other eminent domain proceedings, which taking is not sufficient to require that Lessee give a Purchase Offer or (ii) the use or occupancy of the Leased Premises or any part thereof shall be temporarily taken by any governmental authority, then this Lease shall continue in full effect without abatement or reduction of Basic Rent, additional rent or other sums payable by Lessee hereunder notwithstanding such partial or temporary taking. Except as hereinafter set forth, Lessee shall (whether or not it has received any portion of the Net Award), promptly after any such temporary taking ceases, at its expense, repair any damage caused thereby in conformity with the requirements of paragraph 11(a), so that, thereafter, the Leased Premises shall be, as nearly as possible, in a condition and have a market value as good as the condition and market value thereof immediately prior to such taking. Lessee shall not be required to repair any damage to Lessee’s Improvements so long as such failure shall not materially lessen the use or value of the remaining Leased Premises; provided, however, that if, in Lessee’s good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee’s Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 12(a), any Net Award payable in connection with such occurrence shall be paid to the Permitted Mortgagee (as defined in paragraph 29(m)) unless such Permitted Mortgage has assets which total in aggregate less than $200,000,000, in which case any Net Award payable in connection with any condemnation or eminent domain proceeding shall be paid to the Proceeds Trustee (as defined in paragraph 12(e)), provided, that if in such event no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of the Net Award, such Net Award shall be paid to the Lessor, in all events for application pursuant to this paragraph 12(c). Lessee shall be entitled to receive the Net Award but only against certificates by the President or any Vice President of Lessee delivered to Lessor and the Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive any Net Award in an aggregate amount of up to

4

$100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Award remaining after such repairs have been made is less than $250,000, such remaining Net Award shall be paid to Lessee. If such remaining Net Award equals or exceeds $250,000, all of the remaining Net Award shall be retained by the Permitted Mortgagee, Proceeds Trustee, or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Permitted Mortgage then outstanding. To the extent that any Net Award is not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Award not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term and during the first two (2) Extended Terms (i.e., during the period September 1, 2009 through August 31, 2019) the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). In the event of any temporary requisition, this Lease shall remain in full effect and Lessee shall be entitled to receive the Net Award allocable to such temporary requisition; except that such portion of the Net Award allocable to the period after the expiration of the Term of this Lease shall be paid to Lessor. If the cost of any repairs required to be made by Lessee pursuant to this paragraph 12(c) shall exceed the amount of such Net Award, the deficiency shall be paid by Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c) for so long as any default shall have happened and shall be continuing under this Lease.”

11. Section 12 (e) of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof:

“(e) The trustee (the Proceeds Trustee) of the Net Award and Net Casualty Proceeds (as defined in Section 14(a)) shall be the holder of the first mortgage lien on the Leased Premises, who shall be an institutional lender, or if there shall not be such a lien, or if such lien shall be held by a person other than an institutional lender,

5

or if Section 12(c) or Section 14(b) otherwise requires that a Proceeds Trustee be appointed, then a bank or trust company, designated by Lessee and acceptable to Lessor and the Permitted Mortgagee, having an office in the State of Indiana. The Proceeds Trustee shall have a combined capital and surplus of at least $100,000,000 and shall be duly authorized to act as such trustee. All charges and fees of the Proceeds Trustee shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and Net Casualty Proceeds (as hereinafter defined) pursuant to such mutual agreement as may be made between Lessor and Lessee. Lessor and Lessee agree that Genworth Life Insurance Company of New York is an institutional lender for all purposes of this Lease.”

12.Section 14(b) of the Lease is hereby deleted in its entirety and replaced with the following:

“(b) After an occurrence of the character referred to in paragraph 14(a), except as hereinafter set forth, Lessee shall (whether or not it has received any Net Casualty Proceeds), at its expense, rebuild, replace or repair any damage to the Leased Premises caused by such event in conformity with the requirements of paragraph 11(a) so as to restore the Leased Premises (as nearly as practicable) to the condition and market value thereof immediately prior to such occurrence. Lessee shall not be required to rebuild or replace any damage to Lessee’s Improvements so long as such failure shall not materially lessen the value or use of the remaining Leased Premises; provided, however, that if, in Lessee’s good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee’s Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection with such occurrence shall be paid to the Permitted Mortgage, and this Lease shall continue in full effect, provided, that if no Permitted Mortgage has been named pursuant to paragraph 12(e) at the time of payment of Net Casualty Proceeds or if such Permitted Mortgagee shall have assets which in aggregate equal less than $200,000,000, such Net Casualty Proceeds shall be paid to the Proceeds Trustee, and if there is no Proceeds Trustee then to Lessor, in all events for application pursuant to this paragraph 14(b). Lessee shall be entitled to receive the Net Casualty Proceeds, but only against certificates of the President or any Vice President of Lessee delivered to Lessor and Permitted Mortgagee (or Proceeds Trustee as applicable) from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive the Net Casualty Proceeds in an aggregate amount of up to $100,000 in

6

connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Casualty Proceeds remaining after such repairs have been made are less than $250,000 they shall be paid to Lessee. If such remaining Net Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be retained by the Permitted Mortgagee Proceeds Trustee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Permitted Mortgage then outstanding. To the extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the First Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term and during the first two (2) Extended Terms (i.e., during the period September 1, 2009 through August 31, 2019) the amount by which each such installment of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). If the cost of any repairs required to be made by Lessee pursuant to this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the deficiency shall be paid by Lessee.”

13.Section 14(c) of the Lease is hereby deleted in its entirety and replaced with the following:

“(c) If the Leased Premises shall be substantially damaged or destroyed in any single casualty so that, in Lessee’s good faith judgment, the Leased Premises shall be unsuitable for restoration for continued use and occupancy in Lessee’s business, then at Lessee’s option in lieu of rebuilding, replacing and repairing the Leased Premises, Lessee may give notice to Lessor, within 30 days after the occurrence of such damage or destruction, of Lessee’s intention to terminate this Lease on the next Basic Rent Payment Date which occurs not less than 210 days after the delivery of such notice (the Termination Date), provided that, if the Termination

7

Date occurs during the Primary Term or the Initial Extension Term, such notice shall be accompanied by (i) an irrevocable offer of Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the Termination Date at a price determined in accordance with Schedule C hereof (the Purchase Offer), and (ii) a certificate signed by the President or any Vice President of Lessee stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased Premises unsuitable for restoration, replacement and rebuilding for Lessee’s continued use and occupancy and that the Leased Premises will not be restored. If Lessor shall reject such offer by notice to Lessee not later than the 30th day prior to the Termination Date, the Net Casualty Proceeds and the right thereto shall be assigned to and shall belong to Lessor and this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee under this Lease, actual or contingent, which have arisen on or prior to the Termination Date, but only upon payment by Lessee of all Basic Rent, additional rent, and other sums due and payable by it under this Lease to and including the Termination Date; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 of the Lease), shall be paid to Lessee as determined by the Appraisal Procedure. Unless Lessor shall have rejected such offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and on the Termination Date, Lessor shall convey the remaining portion of the Leased Premises, if any, and all its interest in the Net Casualty Proceeds in accordance with paragraph 16. If the Termination Date shall occur after the Initial Extension Term, Lessee shall not be required to offer to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall belong to Lessor and this Lease shall terminate; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 of the Lease), shall be paid to Lessee as determined by the Appraisal Procedure. If the conditions set forth in the first sentence of this paragraph 14(c) are fulfilled and Lessee fails to commence to rebuild, replace or repair the Leased Premises within 30 days after the final adjustment of all insurance claims made in connection therewith (but in no event later than one hundred eighty days after the occurrence of such damage or destruction), Lessee conclusively shall be deemed to have made such Purchase Offer and in the absence of a written Purchase Offer by Lessee the Termination Date shall be deemed to be the next Basic Rent Payment Date which occurs not less than 210 days after such Purchase Offer is presumed to have been made; but nothing in this sentence shall relieve Lessee of its obligation actually to deliver such Purchase Offer.

8

14.The text of Section 15 of the Lease is hereby deleted in its entirety and replaced with the following: “[Intentionally Deleted].”

15.Section 16(a) of the Lease is hereby amended by adding the following after the phrase “on the date of the commencement of the Term hereof”, in both places where it appears, the following: “, or, for any buildings, structures and other improvements located on any Added Property, on the date such Added Property is added to the Land Parcel by an amendment of this Lease”.

16.Section 17 of the Lease is hereby modified to add the following sentence after the existing last sentence of said section: “Notwithstanding anything in the Lease or this Amendment to the contrary, no assignment in accordance with Section 17 of the Lease shall be valid or binding on the Lessor unless the Guarantor has consented to such assignment, and has reaffirmed the Guaranty in relation to such assignment, by a instrument reasonably acceptable to Lessor.” Contemporaneously herewith, Guarantor has reaffirmed the Guaranty, and a reaffirmation consistent therewith shall satisfy the foregoing requirement.

17.[Intentionally Deleted].

18.[Intentionally Deleted].

19.Section 21 of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof:”

“21. Notices, Demands and Other Instruments. All notices, demands, requests, consents, approvals and other instruments (each a ‘Notice’ and, collectively, “Notices”) required or permitted to be given pursuant to the terms of this Lease shall be in writing and shall be deemed to have been properly given if (a) with respect to Lessee, addressed to The Lincoln National Life Insurance Company, 1300 South Clinton Street, Fort Wayne, Indiana 46802, Attn.: Director of Facilities, and delivered by any of the following methods: (i) registered or certified mail, return receipt requested, postage prepaid, (ii) hand delivery, or (iii) nationally recognized overnight delivery service, and (b) with respect to Lessor, addressed to Trona Cogeneration Corporation, c/o DaimlerChrysler Services North America LLC, CIMS 405-23-05, 27777 Inkster Road, Farmington Hills, Michigan 48334-5326, Attention: Raymond M. McGowan, with a copy to Trona Cogeneration Corporation, c/o DaimlerChrysler Services North America LLC, CIMS 405-27-10, 27777 Inkster Road, Farmington Hills, Michigan 48334-5326, Attention: Office of the General Counsel, and delivered by any of the following methods: (i) registered or certified mail, return receipt requested, postage prepaid, (ii) hand delivery, or (iii) nationally recognized overnight delivery service. Lessor and Lessee shall each have the right from time to time to specify as its address for purposes of this Lease any other address or addresses in the United States of America upon giving of 15 days’ prior Notice thereof,

9

similarly given to the other party. Notices sent hereunder shall be deemed delivered when received, or when receipt is refused.”

20.Section 22(a) of the Lease is hereby deleted in its entirety and replaced with the following:

“Estoppel Certificates; Consents and Financial Statements. (a) Lessee and Lessor will, at any time and from time to time, upon not less than twenty days’ prior request by the other party, deliver a Certificate, certifying that this Lease is unmodified (except by First Amendment of Lease, dated as of June __, 2006, between Lessor and Lessee) and in full effect (or setting forth any modifications and that this Lease is in full effect as modified) and the dates to which the Basic Rent, additional rent and other sums payable hereunder have been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer may have knowledge, and containing such other statements as the requesting party shall reasonably request; it being intended, interalia, that any such certificate may be relied upon by any mortgagee or prospective purchaser or prospective mortgagee of the Leased Premises.

21.Section 22(b) of the Lease is hereby amended by deleting the parenthetical “(but only with respect to the initial financing involving the Permitted Mortgagee)” and substituting in lieu thereof the following: “(but only with respect to (x) the initial financing involving the Permitted Mortgagee, and (y) the refinancing with Genworth Life Insurance Company of New York which was closed on June __, 2006.”

22.Section 29(a) of the Lease is hereby deleted in its entirety and replaced with the following:

“(a) The term ‘Appraisal Procedure’ means, if Lessor and Lessee cannot agree on the value in question, that either party can notify the other party of its desire to conduct an appraisal, in which event each party, within 10 business days after such notice, shall select an independent MAI appraiser and notify the other party of the identity of such appraiser. Such value shall be determined by agreement of the full appraisals of such two appraisers pursuant to the terms of this Lease. If the appraisals do not agree, and if the difference between the two appraisals is less than or equal to 10% of the lowest appraised value, the average of the two appraisals will be used as the value. In the event that the difference between the appraisals is greater than 10% of the lowest appraised value, such value shall be determined by the full appraisal of a third independent MAI appraiser, who shall be selected by the original two appraisers. Lessor and Lessee shall agree on reasonable and customary instructions to be given each appraiser; provided, however, that in the absence of agreement on instructions, the terms and conditions of this Lease shall control.”

23.Section 29(c) of the Lease is hereby deleted in its entirety and replaced with the following:

10

“(c) The term ‘Guaranty’ means:

The Guaranty, dated the date hereof, from Guarantor to Lessor, guaranteeing performance of Lessee’s obligations under this Lease as the same may be amended, modified or reaffirmed from time to time.

24.Section 29(e) of the Lease is hereby deleted in its entirety.

25.Section 29(j) of the Lease is hereby deleted in its entirety and replaced with the following:

“(j) The term ‘Permitted Mortgage’ means:

any mortgage, deed of trust, security agreement, assignment of lease or other security instrument relating to the Leased Premises and this Lease, subject to the rights of Lessee under this Lease, and securing a borrowing by Lessor from a lender, made at any time after the time of execution of this Lease, including any refinancing thereof (the Permitted Mortgage). As of June __, 2006, the Permitted Mortgage is the Mortgage, Assignment of Rents and Leases and Security Agreement (Also Constituting a Fixture Filing), dated as of June _, 2006, between Lessor and Genworth Life Insurance Company of New York.

26.Section 29(k) of the lease is hereby modified to delete the phrase “and the Junior Permitted Mortgagee.”

27.Section 29(m) of the Lease is hereby deleted in its entirety and replaced with the following:

“(m) The term ‘Permitted Mortgagee’ means the holder, mortgagee or beneficiary from time to time of a Permitted Mortgage. As of June ___, 2006, Genworth Life Insurance Company of New York is the Permitted Mortgagee.”

28.Section 29 of the Lease is hereby amended by adding the following at the end thereof:

(o) “The term ‘Initial Extended Term’ means, collectively, the first two (2) Extended Terms, covering the period September 1, 2009 through August 31, 2019.”

(p) “The term ‘CPI’ shall mean the ‘U.S. City Average, All Items’ Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (Base: 1982-1984=100), or any successor index thereto. If the Consumer Price Index is hereafter converted to a different standard reference base or otherwise revised, any determination hereunder that uses the Consumer Price Index shall be made with the use of such conversion factor, formula or table for converting the Consumer Price Index as may be published by the Bureau of Labor Statistics, or, if the Bureau shall no longer publish the same, then with the use of such conversion factor, formula or table as may be published by Prentice Hall, Inc., or, failing such publication, by any other nationally recognized publisher of similar statistical information. If for any reason the Bureau of Labor Statistics does not furnish such an index and such information, the parties will instead mutually select, accept and use such other index or comparable statistics on the cost of living in Fort Wayne, Indiana, D.C. that is computed and published by an agency of the United States or a responsible financial periodical of recognized authority.”

11

29.The first sentence of Section 30(a) of the Lease is amended by deleting “(x) on the last day of the Primary Term or (y) on the last day of the first, second, third, fourth, fifth and sixth Extended Terms”, and by substituting in lieu thereof the following:

“on the last day of the second, third, fourth, fifth and sixth Extended Terms (it being understood that the last day of the second Extended Term would be August 31, 2019)”

30.The third to last sentence of Section 30(b) of the Lease is hereby deleted, and the following is substituted in lieu thereof:

“On the date of such purchase, Lessor shall convey and assign the Leased Premises to Lessee, provided that such conveyance and assignment shall be made subject to the Permitted Exceptions listed in Schedule D hereto, to any other matters created by or consented to by Lessee, or any person or entity in possession of any part of the Leased Premises by, through or under Lessee, and to such liens, encumbrances, charges, exceptions and restrictions affecting the Leased Premises as such third party is willing to accept in such offer, and provided further that this Lease and, at Lessor’s option, any Permitted Mortgage, shall continue in full force and effect.”

31.The Lease is hereby amended by adding, as Schedule D to the Lease, Schedule D attached hereto (which specified “Permitted Encumbrances”).

32.Representative, Warranties, and Covenants.

(a)As of the date of this Amendment, Lessee represents and warrants that there are no Lessee Improvements and there are no Reimbursable Expenses (as such terms are respectively defined in the Lease) for which the Lessor has received notice, nor are their any Reimbursable Expenses which are due and owing, or which in the future may under any circumstance become due and owing, by Lessor.

(b)Lessor and Lessee hereby acknowledge and confirm that Genworth Life Insurance Company of New York is an institutional lender within the meaning of such term under the Lease and is entitled to all of the rules and privileges of an institutional lender under the Lease.

12

(c)Lessor and Lessee hereby acknowledge and confirm that Genworth is a Permitted Mortgagee under the Lease entitled to all of the rights and privileges of a Permitted Mortgagee under the Lease including, but not limited to, all of the rights and privileges contained in Section 22(b) of the Lease.

33.This Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument, shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, and may not be amended except by a writing signed by both parties.

34.This Amendment shall be governed by and interpreted under the laws of the State of Indiana.

[Signature Pages to Follow]

13

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date and year first above written.

TRONA COGENERATION CORPORATION

By: _______________________________

Name:

Title:

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By: _______________________________

Name:

Title:

14

Exhibit A

Original Land

PARCEL 1:

Lots Numbered 52, 53 and 54 in Brackenridge’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 38 page 170, in the Office of the Recorder of Allen County, Indiana.

Together with the vacated alley lying west of and adjacent to said lots.

Also together with an overhead walkway as set out and described proceedings under Declaratory Resolution 1402-75 adopted August 14, 1975 as set out in transcript recorded October 17, 1984 as Instrument Number 84-25309.

PARCEL 2:

Lots Numbered 84, 85, 86, 87, 88 and 89 in Brackenridge’s Addition to the City of Fort Wayne, Indiana as per plat thereof recorded in Deed Record 38 page 170 in the Office of the Recorder of Allen County, Indiana.

Together with the vacated alley lying west of and adjacent to said lots and also together with the vacated alley lying north and adjacent to Lot 89.

PARCEL 3:

A parcel of land situated in the City of Fort Wayne, Allen County, Indiana bound by a line commencing at the point where the North boundary line of Brackenridge Street in said City intersects the East boundary line of Harrison Street in said City and running thence East on the North boundary line of said Brackenridge Street, a distance of 231.5 feet, more or less, to the West boundary line of the alley running North from said Brackenridge Street to Douglas Avenue, between Harrison and Calhoun Streets; thence North, along the West boundary line of said alley, a distance of 131 feet, more or less to the South boundary line of an alley running West to Harrison Street between Brackenridge Street and Douglas Avenue; thence West on the South boundary line of the alley last above described a distance of 231.5 feet, more or less to the East boundary line of said Harrison Street; thence South, on the East boundary line of said Harrison street a distance of 131 feet, more or less to the point of beginning.

PARCEL 4:

That part of the Northwest Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, Allen County, Indiana, beginning at a point where the East line of Harrison Street intersects with and crosses the South line of Douglas Avenue; thence running South along the East line of Harrison Street, a distance of 134 feet to an alley; thence East, along the alley a distance of 231.5 feet to an alley; thence North and parallel with said Harrison Street to the South line of Douglas Avenue; thence West along the South line of Douglas Avenue to the point of beginning.

PARCEL 5:

That part of a vacated alley lying between Parcel 3 and Parcel 4.

PARCEL 6:

The East 46 feet of Lots 91, 92 and 93 in Hamilton’s Third Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana.

PARCEL 7:

Part of the West 84 feet of Lots 91, 92 and 93 in Hamilton’s Third Addition to the City of Fort Wayne as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana, being more particularly described as follows:

Beginning at the Northwest corner of said Lot 93; thence East on and along the North line of said Lot 93 a distance of 84 feet; thence South, a distance of 60 feet to the South line of said Lot 91; thence Northwesterly on the arc of a regular curve to the right having a radius of 172 feet, a distance of 105.34 feet to the point of beginning.

PARCEL 8:

Lots 94, 95, 96, 97, 98, 99, 100, and 101 and all that part of Lot 103 South of the centerline of the brick wall along the South line of said Lot; Lots 104, 105, 106, 107 and the North 19.5 feet of Lot 103 all in Hamilton’s Third Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana.

Together with an overhead walkway described under Declaratory Resolution 1402-75 adopted August 14, 1975 as set out in transcript recorded October 17, 1984 as Instrument Number 84-25309.

PARCEL 9:

Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, Allen County, Indiana, more particularly described as follows, to-wit:

Commencing at the intersection of the South line of Montgomery Street, now Douglas Avenue, in the City of Fort Wayne, with the East line of an alley next East of and parallel with Calhoun Street in said City; thence South on the East line of said Alley, 160.71 feet, more or less to the center of a vacated alley lying South of Montgomery Street, now Douglas Avenue, and extending from Clinton Street West to the first alley East of Calhoun Street, said alley having been vacated by the Board of Public Works of the City of Fort Wayne, by Declaratory Resolution No. 401, adopted April 22, 1920, and confirmed May 13, 1920, running thence East along the centerline of said vacated alley 70 feet to a point; thence North and parallel to the East line of the first alley East of Calhoun Street 160.71 feet, more or less, to the South line of Montgomery Street, now Douglas Avenue in said City of Fort Wayne; thence West 70 feet to the place of beginning.

PARCEL 11:

The tract of land in the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, Allen County, described as follows, to-wit:

Commencing at the intersection of the South property line of Montgomery Street (now Douglas Street) and the West property line of Clinton Street, as said lines existed in 1925; thence West on said South property line of Montgomery Street (now Douglas Street) 159 feet, more or less, to the East line of the tract conveyed to Chester J. Nathan and S. Louis Wolf by deed recorded in Deed Record 290 page 210 of the Deed Records of Allen County, State of Indiana; thence South along said East property line 160.71 feet to the centerline of the vacated 14 foot alley between Montgomery (now Douglas) and Holman (now Brackenridge) Streets; thence East along said centerline of said vacated alley, 159 feet more or less to the west property line of Clinton Street as it existed in 1925; thence North along the said west property line of Clinton Street to the place of beginning.

PARCEL 12:

The vacated alley lying East of and adjacent to Lots Numbered 91 to 101, Inclusive and Lots Numbered 103 to 107 inclusive, in Hamilton’s Third Addition to the City of Fort Wayne, Allen County, Indiana vacated under Declaratory Resolution 1401-1975.

PARCEL 13:

Lots Numbered 62, 63 and 64 in Brackenridge’s Addition to the City of Fort Wayne, Allen County, Indiana as per plat thereof recorded in Plat Book 0, page 82, in the Office of the Recorder of Allen County, Indiana.

Together with that part of an alley lying south and adjacent to said Lots 62, 63, and 64 heretofore vacated by proceedings under General Ordinance G-25-85.

Also together with an overhead walkway as described in Declaratory Resolution Number 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works, recorded October 28, 1984 as Instrument Number 84-25847.

PARCEL 14:

Lot 7 and the East one-half of Lot 8 in Baker’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 31 page 20 in the Office of the Recorder of Allen County, Indiana.

Together with the west half of a vacated alley lying east of and adjacent to said Lot 7.

Also together with the south half of a vacated alley lying north of and adjacent to said Lots 7 and 8.

PARCEL 15:

Lots Numbered 4, 5 and 6 in Baker’s Addition to the City of Fort Wayne, Indiana as per plat thereof recorded in Deed Record 31, page 20 in the Office of the Recorder of Allen County, Indiana.

Together with the east half of vacated alley lying west of and adjacent to said Lots 4, 5 and 6.

PARCEL 16:

Lots Numbered 55, 56, 57, 58, 59, 60 and 61 in Brackenridge’s Addition to the City of Fort Wayne, Indiana as per plat thereof recorded in Plat Book 0 page 82, in the Office of the Recorder of Allen County, Indiana.

Together with the east half of a vacated alley lying west of and adjacent to said Lots 55, 56, 57, 58, 59, 60 and 61.

Also together with an overhead walkway as described in Declaratory Resolution Number 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works, recorded October 28, 1984 as Document Number 84-25847.

PARCEL 17:

The East half of Lot Numbered 57 and all of Lots Numbered 58, 59, 60 and 61 in Hamilton’s Second Addition to the City of Fort Wayne as per plat thereof recorded in Deed Record 31 page 176.

Together with the vacated alley between Lots 57 and 58.

Also together with that part vacated Railroad Street lying south andadjacent to said Lots heretofore vacated by proceedings under Declaratory Resolution Number 1251-1969.

PARCEL 18:

Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, Fort Wayne, Allen County, Indiana, described as follows:

Beginning at a point on the North line of vacated Railroad Street, 131.44 feet East of the East line of Calhoun Street; thence East along the North line of vacated Railroad Street, a distance of 237.56 feet to the West line of Clinton Street; thence South along the West line of Clinton Street, 144.65 feet; thence Westerly, at right angles to the last described course, 20.0 feet; thence Southerly, at right angles to the last described course, 10.5 feet (recorded as 12 feet) to the Northerly face of a concrete retaining wall; thence Westward along the North face of said retaining wall, following a curved course to the right to a point 133.03 feet East of the East line of Calhoun Street, measured along the North face of said retaining wall; thence North 128.4 feet to the point of beginning.

PARCEL 19:

The West Half of Lot Numbered 8 in Baker’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 31 page 20, in the Office of the Recorder of Allen County, Indiana.

Together with the south half of vacated alley lying north of and adjacent to said Lot 8.

PARCEL 20:

Lots Numbered 65 and 66 in Brackenridge’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 28, page 93 in the Office of the Recorder of Allen County, Indiana.

Together with the north half of vacated alley lying south of and adjacent to said lots 65 and 66.

PARCEL 21:

That part of Lot 11 in Baker’s Addition to the City of Fort Wayne, Allen County, Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana, being described as follows:

Beginning at the Northwest corner of said Lot 11; thence East along the North end of said Lot to the East side thereof; thence South along the East side of said Lot to the South end thereof; thence in a straight line in the Northwesterly direction to the point of beginning.

Together with the south half of a vacated alley lying north of and adjacent to said Lot 11.

PARCEL 22:

Lots 9 and 10 in Baker’s Addition to the City of Fort Wayne, Allen County Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana.

Together with the south half of a vacated alley lying north of and adjacent to said Lots 9 and 10.

PARCEL 23:

Lots 62 and 63 in the continuation of Hamilton’s Second Addition to the City of Fort Wayne, as per plat thereof recorded in Deed Record 31 page 176, in the Office of the Recorder of Allen County, Indiana.

PARCEL 24:

The portion of that certain 10 foot north-south alley which is bounded on the west by Lot 62 of Brackenridge Addition to the City of Fort Wayne, by Lot 7 of Baker’s Addition to the City of Fort Wayne, and which said alley is bounded on the east by Lots 55 through 61 inclusive, of

Brackenridge Addition to the City of Fort Wayne, by Lots 4 through 6, inclusive, in Baker’s Addition to the City of Fort Wayne (herein after referred to as north-south alley); and

The portion of that certain 10 foot east-west alley which is bounded on the north by Lots 62 through 66, inclusive, of Brackenridge Addition to the City of Fort Wayne, and which is bounded on the south by Lots 7 through 11 inclusive of Baker’s Addition to the City of Fort Wayne (hereinafter referred to as east-west alley).

Exhibit B

Additional Land (Parking Facility) Description

Lot Numbered 4 and the south half of a vacated alley adjacent to said Lot in Hamilton’s Homestead Addition to the City of Fort Wayne, Allen County, Indiana, being described as follows:

A parcel of real estate located in the East Half of the Northeast Quarter of Section 11, Township 30 North, Range 12 East in the City of Fort Wayne, Allen County, Indiana, and described as follows:

That tract of real estate in the City of Fort Wayne, bounded on the East by the West property line of Clinton Street, on the South by the North property line of Holman Street, (Brackenridge Street 1976); on the West by the East property line of the alley between Calhoun Street and Clinton Street in Hamilton’s Third Addition to the City of Fort Wayne, on the North by the centerline of the vacated alley between Holman (Brackenridge Street 1976) and Montgomery Street (Douglas Street 1976) and extending from Clinton Street to the said alley between Clinton Street and Calhoun Street in said Hamilton’s Third Addition.

Schedule A

Fort Wayne, Indiana

Lincoln National Life Insurance Company

(“Harrison Site”)

A-1

Schedule B

Basic Rent Payments

[NOTE: Paragraphs 1 through 5 remain unchanged.]

6.Each installment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 2004 and ending on and including August 31, 2009 shall be $7,912,625 and should be payable semi-annually in arrears commencing on February 28, 2005 and thereafter on the last day of each August and February thereafter to and including August 31, 2009.

7.Each installment of Basic Rent for the Leased Premises during the Initial Extended Term (i.e., during the period September 1, 2009 through August 31, 2019) shall be $2,100,000, and shall be payable semi-annually in arrears commencing on February 28, 2010 and thereafter on the last day of each August and February thereafter to and including August 31, 2019.

8.Each installment of Basic Rent for the Leased Premises during any Extended Term commencing on or after September 1, 2019 shall be equal to the Semiannual Basic Rent (as hereinafter defined), and shall be payable semi-annually in arrears commencing on the first February 28 following the commencement of such Extended Term and thereafter on the last day of each August and February thereafter occurring during such Extended Term.

9.For purposes of this Schedule, the term “Semiannual Basic Rent” shall mean $2,100,000, increased proportionally by an amount equal to the same relative percentage increase as that of the Consumer Price Index over a base of September 1, 2009, and will be compared to the Consumer Price Index as of August 31 of the year in which the new Extended Term in question commences. For example if the CPI on September 1, 2009 was 150 and on

B-1

August 31, 2019 the CPI had increased to 207, the proportionate increase in the Basic Rent would be 38% (209/150 = 1.38). The Semiannual Basic Rent payable during the Extension Term ending on August 31, 2024 would be for this example $2,898,000 (1.38 x $2,100,000). Notwithstanding the above, in no event will the Semiannual Basic Rent be less than $2,100,000, nor more than $3,595,500, at any time during the portion of the term of this Lease commencing September 1, 2019.

10.If any installment of Basic Rent shall be payable on a date which shall not be a business day, then such installment shall be payable on the first business day thereafter.

B-2

Schedule C

To Lease

COMPUTATION OF PURCHASE PRICES

Upon the purchase of the Leased Premises during the Primary Term (subsequent to June __, 2006) or the Initial Extended Term pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall be an amount equal to the amount set forth in column 2 below opposite the period in which such purchase occurs (the first such amount being called “Lessor’s Cost”) (period 1 being the period beginning on March 1, 2006 and ending on and including August 31, 2006, period 2 being the period beginning on September 1, 2006 and ending on and including February 28, 2007, and each succeeding period being the following semiannual period to and including period 27).

COLUMN 1	COLUMN 2
PURCHASE PERIOD	APPLICABLE AMOUNT
1	44,032,767.00
2	44,032,935.00
3	40,443,935.00
4	36,633,700.00
5	32,586,089.00
6	23,798,894.00
7	18,841,141.00
8	15,214,841.92
9	14,738,271.19
10	14,247,736.95
11	13,742,830.05
12	13,223,129.37
13	12,688,201.47
14	12,137,600.18
15	11,570,866.27
16	10,987,527.06
17	10,387,096.01
18	9,769,072.33

C-1

COLUMN 1	COLUMN 2
PURCHASE PERIOD	APPLICABLE AMOUNT

19	9,132,940.55
20	8,478,170.12
21	7,804,214.91
22	7,110,512.81
23	6,396,485.25
24	5,661,536.67
25	4,905,054.10
26	4,126,406.59
27	3,324,944.71

Upon a partial prepayment of the indebtedness secured by the Senior Permitted Mortgage referred to in paragraph 12(c) or 14(b) of this Lease, the amounts set forth above shall be reduced by an amount equal to the amount of the reduction of the principal amount of such indebtedness scheduled to be outstanding during each purchase period, after giving effect to the revised amortization thereof resulting from such partial prepayment in accordance with the terms thereof. (In case such indebtedness is prepaid or otherwise refinanced, the amounts so determined shall be reduced as if such indebtedness had remained outstanding.)

C-2

Schedule D

Permitted Encumbrances

D-1

EX-10.23 7 ex10-23.htm EXHIBIT 10.23

Exhibit 10.23

CONFIDENTIAL TREATMENT REQUESTED FOR CERTAIN PORTIONS

Goldman Sachs & Co. | 85 Broad Street | New York, New York 10004 | Tel: 212 902 1000

Opening Transaction

To:	Lincoln National Corporation 1500 Market Street, Suite 3900 Philadelphia, Pennsylvania 19102-2112
A/C:	[Insert Account Number]
From:	Goldman, Sachs & Co.
Re:	Prepaid Enhanced VWAP Repurchase Transaction
Ref. No:	[Insert Reference Number]
Date:	April 3, 2006

This master confirmation (this “Master Confirmation”), dated as of April 3, 2006, is intended to supplement the terms and provisions of certain Transactions (each, a “Transaction”) entered into from time to time between Goldman, Sachs & Co. (“GS&Co.”) and Lincoln National Corporation (“Counterparty”). This Master Confirmation, taken alone, is neither a commitment by either party to enter into any Transaction nor evidence of a Transaction. The terms of any particular Transaction shall be set forth in (i) a Supplemental Confirmation in the form of Schedule A hereto (a “Supplemental Confirmation”), which shall reference this Master Confirmation and supplement, form a part of, and be subject to this Master Confirmation and (ii) a Trade Notification in the form of Schedule B hereto (a “Trade Notification”), which shall reference the relevant Supplemental Confirmation and supplement, form a part of, and be subject to such Supplemental Confirmation. This Master Confirmation, each Supplemental Confirmation and the related Trade Notification together shall constitute a “Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Master Confirmation. This Master Confirmation, each Supplemental Confirmation and the related Trade Notification evidence a complete binding agreement between the Counterparty and GS&Co. as to subject matter and the terms of each Transaction to which this Master Confirmation, such Supplemental Confirmation and Trade Notification relate and shall supersede all prior or contemporaneous written or oral communications with respect thereto.

This Master Confirmation, each Supplemental Confirmation and each Trade Notification supplement, form a part of, and are subject to an agreement in the form of the 1992 ISDA Master Agreement (Multi-Currency Cross Border) (the “Agreement”) as if GS&Co. and Counterparty had executed the Agreement on the date of this Master Confirmation (but without any Schedule except for (i) the election of Loss and Second Method, New York law (without regard to the conflicts of law principles) as the governing law and US Dollars (“USD”) as the Termination Currency, (ii) the election that subparagraph (ii) of Section 2(c) will not apply to Transactions, (iii) the election that the “Cross Default” provisions of Section 5(a)(vi) shall apply to Counterparty, with a “Threshold Amount” of USD 50 million); provided that Section 5(a)(vi) is amended to delete the phrase “or becoming capable at such time of being declared” in the seventh line thereof. Notwithstanding the terms of Sections 5 and 6 of the Agreement, if at any time and so long as Counterparty has satisfied its payment obligations under Section 2(a)(i) of the Agreement in respect of all Transactions and has at the time no further payment obligations under such Section, then unless GS&Co. is required pursuant to appropriate proceedings to return to Counterparty, or otherwise returns to Counterparty upon demand of Counterparty, any portion of any such payment, (a) the occurrence of an event

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

described in Section 5(a) (excluding Section 5(a)(ii) and Section 5(a)(iv)) of the Agreement with respect to Counterparty shall not constitute an Event of Default or a Potential Event of Default with respect to Counterparty as the Defaulting Party and (b) GS&Co. shall be entitled to designate an Early Termination Date pursuant to Section 6 of the Agreement only as a result of the occurrence of a Termination Event set forth in (i) Sections 5(b)(i), 5(b)(ii) and 5(b)(v) of the Agreement with respect to GS&Co. as the Affected Party, (ii) Section 5(b)(iii) of the Agreement with respect to GS&Co. as the Burdened Party and (iii) Section 5(b)(v) of the Agreement with respect to Counterparty. All provisions contained or incorporated by reference in the Agreement shall govern this Master Confirmation, each Supplemental Confirmation and each Trade Notification except as expressly modified herein.

If, in relation to any Transaction to which this Master Confirmation, a Supplemental Confirmation and a Trade Notification relate, there is any inconsistency between the Agreement, this Master Confirmation, any Supplemental Confirmation, any Trade Notification and the Equity Definitions, the following will prevail for purposes of such Transaction in the order of precedence indicated: (i) such Trade Notification, (ii) such Supplemental Confirmation; (iii) this Master Confirmation; (iv) the Agreement; and (v) the Equity Definitions.

1.Each Transaction constitutes a Share Forward Transaction for the purposes of the Equity Definitions. Set forth below are the terms and conditions which, together with the terms and conditions set forth in the related Supplemental Confirmation and Trade Notification (in respect of the relevant Transaction), shall govern each such Transaction.

General Terms:

Trade Date: For each Transaction, as set forth in the Supplemental Confirmation.

Buyer: Counterparty

Seller: GS&Co.

Shares: Shares of common stock of Counterparty (Ticker: LNC)

Forward Price: The average of the VWAP Prices for each Exchange Business Day in the Calculation Period.

VWAP Price: For any Exchange Business Day, the New York Stock Exchange 10b-18 Volume Weighted Average Price per Share for the regular trading session (including any extensions thereof) for such Exchange Business Day (without regard to pre-open or after hours trading outside of any regular trading session for such Exchange Business Day), as published by Bloomberg at 4:15 p.m., New York time, on such Exchange Business Day, on Bloomberg page “LNC.N EQUITY AQR SEC” (or any successor thereto).

Forward Price

Adjustment Amount: For each Transaction, as set forth in the Trade Notification.

Calculation Period: The period from and including the first Exchange Business Day following the Hedge Completion Date to and including the Termination Date (as adjusted in accordance with the provisions hereof).

Termination Date: For each Transaction, the date set forth in the Supplemental Confirmation(as the same may be postponed in accordance with the provisions hereof); provided that GS&Co. may elect to accelerate the Termination Date to any date during the Acceleration Period.

Acceleration Period: For each Transaction, as set forth in the Supplemental Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Hedge Period: The period from and including the day immediately after the Trade Date to and including the Hedge Completion Date (as adjusted in accordance with the provisions hereof).

Hedge Completion Date: For each Transaction, the Exchange Business Day on which GS&Co. finishes establishing its initial Hedge Positions in respect of such Transaction, as determined by GS&Co. in its good faith and commercially reasonable discretion, which date shall be as set forth in the Supplemental Confirmation and Trade Notification (as the same may be postponed in accordance with the provisions herein).

Hedge Period Reference

Price: The average of the VWAP Prices for each Exchange Business Day in the Hedge Period.

Market Disruption Event: The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time” and inserting the words “at any time on any Scheduled Trading Day during the Hedge Period or Calculation Period or” after the word “material,” in the third line thereof.

Notwithstanding anything to the contrary in the Equity Definitions, to the extent that any Exchange Business Day in the Calculation Period or Hedge Period is a Disrupted Day, the Calculation Agent may postpone the Termination Date or the Hedge Completion Date, as the case may be. In such event, the Calculation Agent must determine whether (i) such Disrupted Day is a Disrupted Day in full, in which case the VWAP Price for such Disrupted Day shall not be included for purposes of determining the Forward Price or the Hedge Period Reference Price, as the case may be, or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day effected before the relevant Market Disruption Event occurred and/or after the relevant Market Disruption Event ended, and the weighting of the VWAP Price for the relevant Exchange Business Days during the Calculation Period or Hedge Period, as the case may be, shall be adjusted by the Calculation Agent for purposes of determining the Forward Price or the Hedge Period Reference Price, as the case may be, with such adjustments based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares.

If a Disrupted Day occurs during the Calculation Period or the Hedge Period, and each of the 9 immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Trading Day based on the volume, historical trading patterns and price of the Shares and such other factors as it deems appropriate or (ii) further extend the Hedge Period and/or the Calculation Period as it deems necessary to determine the VWAP Price.

Exchange: NYSE

Related Exchange(s): All Exchanges.

Prepayment\Variable

Obligation: Applicable

Prepayment Amount: For each Transaction, as set forth in the Supplemental Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Prepayment Date: One (1) Exchange Business Day following the Hedge Completion Date.

Counterparty Additional

Payment Amount: For each Transaction, as set forth in the Supplemental Confirmation. Counterparty shall pay to GS&Co. the Counterparty Additional Payment Amount, if any, on the Counterparty Additional Payment Date.

Counterparty Additional

Payment Date: One (1) Exchange Business Day following the Hedge Completion Date.

Settlement Terms:

Physical Settlement: Applicable; provided that GS&Co. does not, and shall not, make the agreement or the representations set forth in Section 9.11 of the Equity Definitions related to the restrictions imposed by applicable securities laws with respect to any Shares delivered by GS&Co. to Counterparty under any Transaction.

Number of Shares

to be Delivered: A number of Shares equal to (a) the Prepayment Amount divided by (b) the Forward Price minus the Forward Price Adjustment Amount; provided that the Number of Shares to be Delivered will be not less than the Minimum Shares and not greater than the Maximum Shares. The Number of Shares to be Delivered on the Settlement Date shall be reduced, but not below zero, by any Shares delivered pursuant to the Initial Share Delivery described below.

Excess Dividend Amount: For the avoidance of doubt, all references to the Excess Dividend Amount shall be deleted from Section 9.2(a)(iii) of the Equity Definitions.

Settlement Date: Three (3) Exchange Business Days following the Termination Date.

Settlement Currency: USD (all amounts shall be converted to the Settlement Currency by the Calculation Agent using the spot rate at the time of conversion)

Initial Share Delivery: GS&Co. shall deliver a number of Shares equal to the Minimum Shares to Counterparty on the Initial Share Delivery Date in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.

Initial Share Delivery Date: One (1) Exchange Business Day following the Hedge Completion Date.

Minimum Shares: For each Transaction, as set forth in the Supplemental Confirmation.

Maximum Shares: For each Transaction, as set forth in the Supplemental Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Share Adjustments:

Potential Adjustment Event: Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.

Extraordinary Dividend: For any calendar quarter, any dividend or distribution on the Shares with an ex-dividend date occurring during such calendar quarter (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) (a “Dividend”) the amount or value of which (as determined by the Calculation Agent), when aggregated with the amount or value (as determined by the Calculation Agent) of any and all previous Dividends with ex-dividend dates occurring in the same calendar quarter, exceeds the Ordinary Dividend Amount.

Ordinary Dividend Amount: For each Transaction, as set forth in the Supplemental Confirmation.

Method of Adjustment: Calculation Agent Adjustment

Extraordinary Events:

Consequences of

Merger Events and

Tender Offers:

(a) Share-for-Share: Modified Calculation Agent Adjustment

(b) Share-for-Other: Cancellation and Payment

(c) Share-for-Combined: Component Adjustment

Determining Party: GS&Co.

Tender Offer: Applicable

Nationalization,

Insolvency or Delisting: Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange or The NASDAQ National Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange.

Additional Disruption Events:

(a)Change in Law:Applicable

*

Maximum Stock Loan Rate *

Hedging Party: GS&Co.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Determining Party: GS&Co.

Non-Reliance/Agreements and

Acknowledgements Regarding

Hedging Activities/Additional

Acknowledgements: Applicable

Transfer: Notwithstanding anything to the contrary in the Agreement, GS&Co. may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of GS&Co. under this Transaction, in whole or in part, to an affiliate of GS&Co. that is guaranteed by The Goldman Sachs Group, Inc. without the consent of Counterparty; provided, however, that GS&Co. may not assign its rights or delegate its obligations under this Transaction if such assignment or delegation shall result in (A) an Event of Default with respect to which GS&Co. is the Defaulting Party, a Termination Event, a Potential Event of Default with respect to which GS&Co. would be the Defaulting Party or a potential Termination Event, (B) Counterparty being required to pay to the transferee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) greater than the amount that Counterparty would have been required to pay GS&Co. in the absence of such transfer, or (C) Counterparty receiving a payment from which an amount has been withheld or deducted, on account of a Tax under Section 2(d)(i) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)), in excess of the amount that GS&Co. would have been required to so withhold or deduct in the absence of such transfer, unless the transferee would be required to make additional payments pursuant to Section 2(d)(i)(4) corresponding to such withholding or deduction.

GS&Co. Payment Instructions: Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.

A/C #930-1-011483

ABA: 021-000021

Counterparty’s Contact Details

for Purpose of Giving Notice: To be provided by Counterparty

GS&Co.’s Contact Details for

Purpose of Giving Notice: Telephone No.: (212) 902-8996

Facsimile No.: (212) 902-0112

Attention: Equity Operations: Options and Derivatives

With a copy to:

Kelly Coffey

Equity Capital Markets

One New York Plaza

New York, NY 10004

Telephone No.: (212) 902-1037

Facsimile No.: (212) 256-4298

2.Calculation Agent.GS&Co.; provided that any disagreement regarding the determination made by the Calculation Agent shall be resolved in accordance with Section 19 of this Master Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

3.Additional Mutual Representations, Warranties and Covenants. In addition to the representations and warranties in the Agreement, each party represents, warrants and covenants to the other party that:

(a)Eligible Contract Participant. It is an “eligible contract participant”, as defined in the U.S. Commodity Exchange Act (as amended), and is entering into each Transaction hereunder as principal and not for the benefit of any third party.

(b)Accredited Investor. Each party acknowledges that the offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof and the provisions of Regulation D thereunder (“Regulation D”). Accordingly, each party represents and warrants to the other that (i) it has the financial ability to bear the economic risk of its investment in each Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D, (iii) it will purchase each Transaction for investment and not with a view to the distribution or resale thereof in a manner that would violate the Securities Act, and (iv) the disposition of each Transaction is restricted under this Master Confirmation, the Securities Act and state securities laws.

4.Additional Representations, Warranties and Covenants of Counterparty. In addition to the representations, warranties and covenants in the Agreement and those contained herein, as of (i) the date hereof, (ii) the Trade Date and (iii) to the extent indicated below, each day during the Hedge Period and Calculation Period, Counterparty represents, warrants and covenants to GS&Co. that:

(a)it is not aware of any third party tender offer for its Shares and is not entering into this Transaction as part of a self-tender offer for its Shares under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(b)it is not entering into any Transaction on the basis of, and is not aware of, any material non-public information with respect to the Shares or in anticipation of, in connection with, or to facilitate, a distribution of its securities, a self tender offer or a third-party tender offer;

(c)each Transaction is being entered into pursuant to a publicly disclosed Share buy-back program and its Board of Directors has approved the use of derivatives to effect the Share buy-back program;

(d)Counterparty acknowledges that, notwithstanding the generality of Section 13.1 of the Equity Definitions, it acknowledges that GS&Co. is not making any representations or warranties with respect to the treatment of any Transaction under FASB Statements 128, 133 as amended or 149, 150, EITF 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project;

(e)Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as amended and supplemented to the date of this representation, do not, as of their respective filing dates, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(f)Counterparty shall report each Transaction as required under Regulation S-K under the Exchange Act;

(g)on the Trade Date the Shares or securities that are convertible into, or exchangeable or exercisable for Shares are not subject to a “restricted period” as such term is defined in Regulation M promulgated under the Exchange Act;

(h)Counterparty acknowledges that each Transaction is a derivatives transaction in which it has granted GS&Co. an option. GS&Co. may purchase shares for its own account at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of the related Transaction; and

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

(i)Counterparty is not and, after giving effect to the Transaction, will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

4A.Additional Representations, Warranties and Covenants of GS&Co. With respect to (i) all purchases of Shares made by GS&Co. during any relevant Hedge Period in respect of any Transaction and (ii) purchases during the related Calculation Period of a number of Shares equal to the Maximum Shares for such Transaction less the number of Shares so purchased during the related Hedge Period in respect of such Transaction, GS&Co. will use good faith efforts to effect such purchases in accordance with Rule 10b-18(b)(2), (3) and (4), and effect calculations in respect thereof, as if those sections applied to GS&Co., taking into account any applicable Securities and Exchange Commission no-action letters as appropriate and subject to any delays between the execution and reporting of a trade of the Shares on the Exchange and other circumstances beyond its control.

5.Suspension of Hedge Period and/or Calculation Period.

(a)If Counterparty concludes that it will be engaged in a distribution of the Shares for purposes of Regulation M, Counterparty agrees that it will, on one Scheduled Trading Day’s prior written notice, direct GS&Co. not to purchase Shares in connection with hedging any Transaction during the “restricted period” (as defined in Regulation M). If on any Scheduled Trading Day Counterparty delivers written notice (and confirms by telephone) by 8:30 a.m. New York Time (the “Notification Time”) then such notice shall be effective to suspend the Calculation Period or the Hedge Period, as the case may be, as of such Notification Time. In the event that Counterparty delivers notice and/or confirms by telephone after the Notification Time, then the Calculation Period or the Hedge Period, as the case may be, shall be suspended effective as of 8:30 a.m. New York Time on the following Scheduled Trading Day or as otherwise required by law or agreed between Counterparty and GS&Co. The Hedge Period and/or the Calculation Period shall be suspended and the Hedge Completion Date and/or the Termination Date extended for each Scheduled Trading Day in such restricted period; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 6 below.

(b)In the event that GS&Co. concludes, in its good faith discretion, based on advice of outside legal counsel, that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures (x) are imposed by law or (y) have been voluntarily adopted by GS&Co. and, in the case of (y), in existence on the date of this Master Confirmation), for it to refrain from purchasing Shares on any Scheduled Trading Day during the Hedge Period or Calculation Period, GS&Co. may by written notice to Counterparty elect to suspend the Hedge Period or Calculation Period, as the case may be, for such number of Scheduled Trading Days as is specified in the notice. The notice shall not specify, and GS&Co. shall not otherwise communicate to Counterparty, the reason for GS&Co.’s election to suspend the Hedge Period or Calculation Period. The Hedge Period or Calculation Period, as the case may be, shall be suspended and the Hedge Period Completion Date or the Termination Date, as the case may be, extended for each Scheduled Trading Day occurring during any such suspension.

(c)In the event that the Hedge Period or Calculation Period is suspended pursuant to Section 5(a) or 5(b) above during the regular trading session on the Exchange, such suspension shall be deemed to be an additional Market Disruption Event, and the second paragraph under “Market Disruption Event” shall apply to any Disrupted Day occurring during the Hedge Period or the Calculation Period solely as a result of such additional Market Disruption Event.

(d)In the event that the Calculation Period is extended pursuant to any provision hereof (including, without limitation, pursuant to Section 9(d) below), the Calculation Agent shall adjust any relevant terms of the related Transaction if necessary to preserve as nearly as practicable the economic terms of such Transaction prior to such extension; provided that Counterparty shall not be required to make any additional cash payments or deliver any Shares in connection with any such adjustments.

6.10b5-1 Plan. Counterparty represents, warrants and covenants to GS&Co. that for each Transaction:

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

(a)Counterparty is entering into this Master Confirmation and each Transaction hereunder in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”). It is the intent of the parties that each Transaction entered into under this Master Confirmation comply with the requirements of Rule 10b5-1(c)(1)(i)(A) and (B) and each Transaction entered into under this Master Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c).

(b)Counterparty will not seek to control or influence GS&Co. to make "purchases or sales" (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under any Transaction entered into under this Master Confirmation, including, without limitation, GS&Co.’s decision to enter into any hedging transactions. Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Master Confirmation, each Supplemental Confirmation and each Trade Notification under Rule 10b5-1.

(c)Counterparty acknowledges that any amendment or modification of this Master Confirmation, the relevant Supplement Confirmation or Trade Notification must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c).

7.Counterparty Purchases.

Counterparty (or any “affiliated purchaser” as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall not, without the prior written consent of GS&Co., directly or indirectly purchase any Shares, listed contracts on the Shares or securities that are convertible into, or exchangeable or exercisable for Shares (including, without limitation, any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18)) during any Hedge Period or Calculation Period (as extended pursuant to the provisions hereof). During this time, any such purchases by Counterparty shall be made through GS&Co., or if not through GS&Co., with the prior written consent of GS&Co., and in compliance with Rule 10b-18 or otherwise in a manner that Counterparty and GS&Co. believe is in compliance with applicable requirements.

8.Additional Termination Event. The declaration of any Extraordinary Dividend by the Issuer during the Calculation Period will constitute an Additional Termination Event, with Counterparty as the sole Affected Party and all Transactions hereunder as the Affected Transactions.

9.Special Provisions for Merger Transactions. Notwithstanding anything to the contrary herein or in the Equity Definitions, to the extent that an public announcement (as defined in Rule 165(f) under the Securities Act of 1933, as amended) for a Merger Transaction (as defined below) occurs during any Hedge Period or Calculation Period,

(a)Counterparty shall, at the same time of making any such public announcement, notify GS&Co. of such public announcement;

(b)promptly provide GS&Co. with written notice specifying (i) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the Announcement Date that were not effected through GS&Co. or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the Announcement Date. Such written notice shall be deemed to be a certification by Counterparty to GS&Co. that such information is true and correct. Counterparty understands that GS&Co. will use this information in calculating the trading volume for purposes of Rule 10b-18. In addition, Counterparty shall promptly notify GS&Co. of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such notice may cause the terms of any Transaction to be adjusted or such Transaction to be terminated; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 6; and

(c)GS&Co. in its good faith and commercially reasonable discretion may (i) make adjustments to the terms of any Transaction, including, without limitation, the Termination Date and the Maximum Shares to account for the number of Shares that could be purchased on each day during the Calculation Period in compliance with Rule

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

10b-18 following such public announcement, provided that Counterparty shall not be required to make any additional cash payments or deliver any Shares in connection with any such adjustments or (ii) treat the occurrence of such public announcement as an Additional Termination Event with Counterparty as the sole Affected Party.

“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

10. Acknowledgments. The parties hereto intend for:

(a)Each Transaction to be a “securities contract” as defined in Section 741(7) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), a “swap agreement” as defined in Section 101(53B) of the Bankruptcy Code, or a “forward contract” as defined in Section 101(25) of the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362)b)(27), 555, 556, 560 and 561 of the Bankruptcy Code;

(b)This Agreement to be a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code;

(c)A party’s right to liquidate or terminate any Transaction, net out or offset termination values of payment amounts, and to exercise any other remedies upon the occurrence of any Event of Default or Termination Event under the Agreement with respect to the other party or any Extraordinary Event that results in the termination or cancellation of any Transaction to constitute a “contractual right” (as defined in the Bankruptcy Code);

(d)Any cash, securities or other property transferred as performance assurance, credit support or collateral with respect to each Transaction to constitute “margin payments” (as defined in the Bankruptcy Code); and

(e)All payments for, under or in connection with each Transaction, all payments for the Shares and the transfer of such Shares to constitute “settlement payments” and “transfers” (as defined in the Bankruptcy Code).

11.Credit Support Documents. The parties hereto acknowledge that no Transaction hereunder is secured by any collateral that would otherwise secure the obligations of Counterparty herein or pursuant to the Agreement.

12.Limitation on Set-off. (a) Notwithstanding anything to the contrary in the Agreement or the Equity Definitions, the calculation of any Settlement Amounts, Unpaid Amounts and amounts owed in respect of cancelled Transactions under Article 12 of the Equity Definitions shall be calculated separately for (A) all Terminated Transactions (it being understood that such term for purposes of this paragraph includes Transactions cancelled pursuant to Article 12 of the Equity Definitions) in the Shares of the Issuer that qualify as equity under applicable accounting rules (collectively, the “Equity Shares”) as determined by the Calculation Agent and (B) all other Terminated Transactions under the Agreement including, without limitation, Transactions in Shares other than those of the Issuer (collectively, the “Other Shares”) and the netting and set-off provisions of the Agreement shall only operate to provide netting and set-off (i) among Terminated Transactions in the Equity Shares and (ii) among Terminated Transactions in the Other Shares. In no event shall the netting and set-off provisions of the Agreement operate to permit netting and set-off between Terminated Transactions in the Equity Shares and Terminated Transactions in the Other Shares.

(b)The parties agree to amend Section 6 of the Agreement by adding a new Section 6(f) thereto as follows:

“(f) Upon the occurrence of an Event of Default or Termination Event with respect to a party who is the Defaulting Party or the Affected Party or upon the occurrence of an Extraordinary Event that results in the termination or cancellation of any Transaction (such Defaulting Party, Affected Party or, in the case of such an Extraordinary Event, either party, “X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

or any other person to set-off or apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y) owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give notice to the other party of any set-off effected under this Section 6(f).

Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency. If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section 6(f) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”

(c)Notwithstanding anything to the contrary in the foregoing, GS&Co. agrees not to set off or net amounts due from Counterparty with respect to any Transaction against amounts due from GS&Co. to Counterparty under obligations other than Equity Contracts. “Equity Contract” means any transaction relating to Shares between the parties (or any of their affiliates) that qualifies as ‘equity’ under applicable accounting rules.

13. Early Termination. In the event that (i) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to any Transaction or (ii) an Extraordinary Event occurs that results in the cancellation or termination of any Transaction pursuant to Article 12 of the Equity Definitions (except, in the case of clause (ii), a Merger Event in which the consideration or proceeds to be paid to holders of Shares consists solely of cash), if GS&Co. would owe any amount to Counterparty pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (in each case, calculated as if the Transactions being terminated or cancelled on such Early Termination Date or as a result of such Extraordinary Event were the sole Transactions under the Agreement) (any such amount, a “GS&Co. Amount”), then, in lieu of any payment of such GS&Co. Amount, Counterparty may, no later than the Early Termination Date or the date on which such Transaction is cancelled or terminated, as the case may be, elect for GS&Co. to deliver to Counterparty a number of Shares (or, in the case of a Merger Event, a number of units, each comprising the number or amount of the securities or property that a hypothetical holder of one Share would receive in such Merger Event (each such unit, an “Alternative Delivery Unit” and, the securities or property comprising such unit, “Alternative Delivery Property”)) with a value equal to the GS&Co. Amount, as determined by the Calculation Agent (and the parties agree that, in making such determination of value, the Calculation Agent may take into account a number of factors, including the market price of the Shares or Alternative Delivery Property on the date of early termination and the prices at which GS&Co. purchases Shares or Alternative Delivery Property to fulfill its delivery obligations under this Section 13); provided that in determining the composition of any Alternative Delivery Unit, if the relevant Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

14. Payment Date upon Early Termination. Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement, all amounts calculated as being due in respect of an Early Termination Date under Section 6(e) of the Agreement will be payable on the day that notice of the amount payable is effective; provided that if Counterparty elects to receive Shares or Alternative Delivery Property in accordance with Section 13, such Shares or Alternative Delivery Property shall be delivered on a date selected by GS&Co, which date shall be no later than third Exchange Business Day after the day that notice of the amount payable is effective or

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

such later date as determined by GS&Co. to be the date that would allow GS&Co. to purchase Shares or Alternative Delivery Property to be delivered by GS&Co. under this provision in accordance with Rule 10b-18(b)(2), (3) and (4), as if those sections applied to GS&Co.

15. Special Provisions for Counterparty Payments. The parties hereby agree that, notwithstanding anything to the contrary herein or in the Agreement, in the event that (i) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to any Transaction and, as a result, Counterparty owes to GS&Co. an amount calculated under Section 6(e) of the Agreement or (ii) an Extraordinary Event occurs that results in the termination or cancellation of any Transaction pursuant to Article 12 of the Equity Definitions and, as a result, Counterparty owes to GS&Co. a Cancellation Amount or other amount in respect of such Transaction (in each case, calculated as if the Transactions being terminated or cancelled on such Early Termination Date or as a result of such Extraordinary Event were the sole Transactions under the Agreement), such amount shall be deemed to be zero.

16. Claim in Bankruptcy. GS&Co. agrees that in the event of the bankruptcy of Counterparty, GS&Co. shall not have rights or assert a claim that is senior in priority to the rights and claims available to the shareholders of the common stock of Counterparty.

17. Governing Law. The Agreement, this Master Confirmation, each Supplemental Confirmation and all matters arising in connection with the Agreement, this Master Confirmation and each Supplemental Confirmation shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (without reference to its choice of laws doctrine).

18. Offices.

(a)The Office of GS&Co. for each Transaction is: One New York Plaza, New York, New York 10004.

(b)The Office of Counterparty for each Transaction is: 1500 Market Street, Suite 3900, Philadelphia, Pennsylvania 19102-2112.

19.Arbitration. The Agreement, this Master Confirmation and each Supplemental Confirmation are subject to the following arbitration provisions:

(a)All parties to this Confirmation are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.

(b)Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited.

(c)The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.

(d)The arbitrators do not have to explain the reason(s) for their award.

(e)The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry, unless Counterparty is a member of the organization sponsoring the arbitration facility, in which case all arbitrators may be affiliated with the securities industry.

(f)The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.

(g)The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Counterparty agrees that any and all controversies that may arise between Counterparty and GS&Co., including, but not limited to, those arising out of or relating to the Agreement or any Transaction hereunder, shall be determined by arbitration conducted before The New York Stock Exchange, Inc. (“NYSE”) or NASD Dispute Resolution (“NASD-DR”), or, if the NYSE and NASD-DR decline to hear the matter, before the American Arbitration Association, in accordance with their arbitration rules then in force. The award of the arbitrator shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction.

No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) Counterparty is excluded from the class by the court.

Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Confirmation except to the extent stated herein.”

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Counterparty hereby agrees (a) to check this Master Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of the agreement between GS&Co. and Counterparty with respect to any particular Transaction to which this Master Confirmation relates, by manually signing this Master Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Equity Derivatives Documentation Department, Facsimile No. 212-428-1980/83.

Yours faithfully,

GOLDMAN, SACHS & CO.

By:/s/ Kelly C. Coffey

Authorized Signatory

Agreed and Accepted By:

LINCOLN NATIONAL CORPORATION

By: /s/Duane Bernt

Name: Duane Bernt

Title:Vice President and Treasurer

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

SUPPLEMENTAL CONFIRMATION

To:	Lincoln National Corporation
From:	Goldman, Sachs & Co.
Subject:	Issuer VWAP Prepaid Share Forward Transaction
Ref. No:	[Insert Reference No.]
Date:	April 3, 2006

The purpose of this Supplemental Confirmation is to confirm the terms and conditions of the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Lincoln National Corporation (“Counterparty”) (together, the “Contracting Parties”) on the Trade Date specified below. This Supplemental Confirmation is a binding contract between GS&Co. and Counterparty as of the relevant Trade Date for the Transaction referenced below.

1.This Supplemental Confirmation supplements, forms part of, and is subject to the Master Confirmation dated as of April 3, 2006 (the “Master Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. All provisions contained in the Master Confirmation govern this Supplemental Confirmation except as expressly modified below.

2.The terms of the Transaction to which this Supplemental Confirmation relates are as follows:

Trade Date:	April 3, 2006
Hedge Completion Date:	As set forth in the Trade Notification, but in no event later than April 10, 2006.
Termination Date:	*
Acceleration Period:	*
Prepayment Amount:	USD 500 million
Counterparty Additional Payment Amount:	*
Minimum Shares:	A number of shares equal to (a) the Prepayment Amount divided by (b)*% of the Hedge Period Reference Price.
Maximum Shares:	A number of shares equal to (a) the Prepayment Amount divided by (b) *% of the Hedge Period Reference Price.
Ordinary Dividend Amount:	For any calendar quarter, USD 0.38

3.Counterparty represents and warrants to GS&Co. that neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during the four full calendar weeks immediately preceding the Trade Date.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Counterparty hereby agrees (a) to check this Supplemental Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of the agreement between GS&Co. and Counterparty with respect to this Transaction, by manually signing this Supplemental Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Equity Derivatives Documentation Department, facsimile No. 212-428-1980/83.

Yours sincerely,

GOLDMAN, SACHS & CO.

By:/s/ Kelly C. Coffey

Authorized Signatory

Agreed and Accepted By:

LINCOLN NATIONAL CORPORATION

By:/s/ Duane Bernt

Name: Duane Bernt

Title: Vice President and Treasurer

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

TRADE NOTIFICATION

To:	Lincoln National Corporation
From:	Goldman, Sachs & Co.
Subject:	Issuer VWAP Prepaid Share Forward Transaction
Ref. No:	1620916856
Date:	April 10, 2006

The purpose of this Trade Notification is to notify you of certain terms in the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Lincoln National Corporation(“Counterparty”) (together, the “Contracting Parties”) on the Trade Date specified below.

This Trade Notification supplements, forms part of, and is subject to the Supplemental Confirmation dated as of April 3, 2006 (the “Supplemental Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. The Supplemental Confirmation is subject to the Master Confirmation dated as of April 3, 2006 (the “Master Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. All provisions contained in the Master Confirmation and the Supplemental Confirmation govern this Trade Notification except as expressly modified below.

Trade Date:	April 3, 2006
Hedge Completion Date:	April 10, 2006
Termination Date:	*
Acceleration Period:	*
Forward Price Adjustment Amount:	USD 0
Minimum Shares:	*
Maximum Shares:	*

Yours sincerely,

GOLDMAN, SACHS & CO.

By:/s/ Kelly C. Coffey

Authorized Signatory

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

EX-12 8 ex12.htm EXHIBIT 12

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

EXHIBIT 12—RATIO OF EARNINGS TO FIXED CHARGES

	Six Months Ended
	June 30,
(dollars in millions)	2006		2005
Income before Federal Income Taxes and Cumulative Effect of Accounting Changes	$	820	$	476
Sub-total of Fixed Charges		97		56
Sub-total of Adjusted Net Income		917		532
Interest on Annuities & Financial Products		996		781
Adjusted Income Base	$	1,913	$	1,313
Fixed Charges:
Interest and Debt Expense	$	87	$	45
Portion of Rent Expense Representing Interest		11		11
Sub-total of Fixed Charges		98		56
Interest on Annuities & Financial Products		996		781
Sub-total of Fixed Charges		1,094		837
Preferred Dividends (Pre-tax)		*		*
Total Fixed Charges	$	1,094	$	837
* Less than $100,000
Ratio of Earnings to Fixed Charges:
Ratio of Earnings to Fixed Charges (Including Interest on Annuities and Financial Products) (1)		1.75		1.57
Excluding Interest on Annuities and Financial Products (2)		9.36		9.56
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (3)		1.75		1.57

_____________________

1.	For purposes of determining this ratio, earnings consist of income before Federal income taxes, cumulative effect of accounting change, if any, and minority interests adjusted for the difference between income or losses from unconsolidated equity investments and cash distributions from such investments, plus fixed charges. Fixed charges consist of 1) interest and debt expense on short and long-term debt and junior subordinated debentures issued to affiliated trusts; 2) interest on annuities and financial products and; 3) the portion of operating leases that are representative of the interest factor.
2.	Same as the ratio of earnings to fixed charges, except fixed charges and earnings in this calculation do not include interest on annuities and financial products. This coverage ratio is not required, but is provided as additional information. This ratio is commonly used by individuals who analyze LNC’s results.
3.	Same as the ratio of earnings to fixed charges, including interest on annuities and financial products, except that fixed charges include the pre-tax earnings required to cover preferred stock dividend requirements.

EX-31.1 9 ex31-1.htm EXHIBIT 31.1

EXHIBIT 31.1

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Jon A. Boscia, Chairman and Chief Executive Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lincoln National Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ JON A. BOSCIA

Jon A. Boscia

Chairman and Chief Executive Officer

Dated: August 9, 2006

EX-31.2 10 ex31-2.htm EXHIBIT 31.2

EXHIBIT 31.2

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Frederick J. Crawford, Senior Vice President and Chief Financial Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lincoln National Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ FREDERICK J. CRAWFORD

Frederick J. Crawford

Senior Vice President and Chief Financial Officer

Dated: August 9, 2006

EX-32.1 11 ex32-1.htm EXHIBIT 32.1

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Lincoln National Corporation (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2006		/S/ JON A. BOSCIA
	Name: Title:	Jon A. Boscia Chairman and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required under Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 12 ex32-2.htm EXHIBIT 32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Lincoln National Corporation (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2006		/S/ FREDERICK J. CRAWFORD
	Name: Title:	Frederick J. Crawford Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required under Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

-----END PRIVACY-ENHANCED MESSAGE-----

EX-4.9

Exhibit 4.9

EXECUTION COPY

 FOURTH SUPPLEMENTAL INDENTURE, dated as of January 27, 2004, between Jefferson-Pilot Corporation, a corporation duly organized and existing under the laws of the State of North Carolina (herein called the "Company"), having its principal offices at 100 North Greene Street, Greensboro, North Carolina 27401, and Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), a national banking association organized and existing under the laws of the United States, as Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

 The Company has heretofore duly executed and delivered to the Trustee an Indenture, dated as of November 21, 1995 (the "Indenture"), providing for the issuance from time to time of its unsecured debentures, notes, or other evidences of indebtedness (the "Securities"), to be issued in one or more series.

 The Company intends to issue $300,000,000 principal amount of its 4.75% Notes due 2014 (the "Notes") under the Indenture.

 Section 901(7) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, to establish the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Indenture.

 Section 901(5) of the Indenture provides that, without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more supplemental indentures, in form satisfactory to the Trustee, to add to, change, or eliminate any of the provisions of the Indenture with respect to one or more series of Securities, subject to certain conditions provided in such Section 901(5).

 All things necessary to make this Fourth Supplemental Indenture a valid agreement of the Company, and a valid supplement to the Indenture, have been done.

 NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:

 For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, solely for the benefit of the Holders of the Notes, as follows:

- 1 -

ARTICLE ONE

Definitions and Other Provisions
of General Application

SECTION 1.01.Definitions.

 As used in this Fourth Supplemental Indenture and the Indenture, to the extent applicable, the following terms shall have the meanings given to them below in this Section 1.01:

 "Agent Member" means any member of, or participant in, the Depository.

 "Applicable Procedures" means, with respect to any transfer or transaction involving a Global Note or beneficial interest therein, the rules and procedures of the Depository for such Note, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect at the time of such transfer or transaction.

 "Clearstream" means Clearstream Banking, société anonyme (or any successor securities clearing agency).

 "Closing Date" means January 27, 2004.

 "DTC" means The Depository Trust Company, a New York corporation.

 "Euroclear" means the Euroclear Clearance System (or any successor securities clearing agency).

 "Exchange Notes" means Securities issued by the Company in exchange for Outstanding Notes, pursuant to the Registration Rights Agreement.

 "Global Note" means a Note that is registered in the Security Register in the name of a Depository or a nominee thereof.

 "Notes" means the Company's 4.75% Notes due 2014.

 "Purchase Agreement" means that certain Purchase Agreement, dated January 20, 2004, between the Company and Morgan Stanley & Co. Incorporated acting severally on behalf of themselves and the initial purchasers set forth on Schedule I thereto (the "Initial Purchasers").

 "Registration Rights Agreement" means that certain Registration Rights Agreement, dated as of January 27, 2004, between the Company and Morgan Stanley & Co. Incorporated, as representative of the several Initial Purchasers.

 "Regulation S" means Regulation S under the Securities Act.

- 2 -

 "Regulation S Certificate" means a certificate substantially in the form set forth in Annex A.

 "Regulation S Global Note" means a Regulation S Note that is also a Global Note.

 "Regulation S Note" means a Note (i) purchased from the Company by the Initial Purchasers, pursuant to the Purchase Agreement that was initially resold by the Initial Purchasers to non-U.S. Persons in reliance on Regulation S, or (ii) exchanged from a Restricted Note into a Regulation S Note pursuant to the terms of Section 3.02.

 "Restricted Global Note" means a Restricted Note that is also a Global Note.

 "Restricted Period" means the period of 40 consecutive days beginning on the later of (i) the day on which Notes are first offered to persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the Closing Date.

 "Restricted Note" means a Note (i) purchased from the Company by the Initial Purchasers, pursuant to the Purchase Agreement, that was initially sold by the Initial Purchasers to purchasers in reliance on Rule 144A under the Securities Act, or (ii) exchanged from a Regulation S Note into a Restricted Note pursuant to the terms of Section 3.02.

 "Restricted Notes Certificate" means a certificate substantially in the form set forth in Annex B.

 "Restricted Subsidiary" means any of Jefferson-Pilot Life Insurance Company, Jefferson Pilot Financial Insurance Company or Jefferson Pilot LifeAmerica Insurance Company.

 "Rule 144" means Rule 144 under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Securities Act Legend" means the following:

 "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS

- 3 -

OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THESE SECURITIES WILL NOT BE ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS THE REGISTRAR OR TRANSFER AGENT IS SATISFIED THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN COMPLIED WITH."

 "Successor Note" of any particular Note means every Note issued after, and evidencing all or a portion of the same debt as that evidenced by, such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 306 of the Indenture in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note.

 "Unrestricted Notes Certifcate" means a certifcate substantially in the form set forth in Annex C.

 "U.S. Person" means (i) any natural person resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate of which an executor or administrator is a U.S. Person (other than an estate governed by foreign law and of which at least one executor or administrator is a non-U.S. Person who has sole or shared investment discretion with respect to its assets), (iv) any trust of which a professional fiduciary acting as trustee is a U.S. Person (other than a trust of which at least one trustee is a non-U.S. Person who has sole or shared investment discretion with respect to its assets and no benefciary of the trust (and no settlor if the Trust is revocable) is a U.S. Person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the beneft or account of a U.S. Person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States (other than such an account held for the beneft or account of a non-U.S. Person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meaning of Rule 501(a) under the Securities Act who are not natural persons, estates or trusts); provided, however, that the term "U.S. Person" does not include (A) a branch or agency of a U.S.

- 4 -

Person that is located and operating outside the United States for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country or (C) the international organizations set forth in Section 902(o)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, affiliates and pension plans.

 All other capitalized terms used in this Fourth Supplemental Indenture and not defined herein shall have the meanings assigned to them in the Indenture.

ARTICLE TWO

Note Form

SECTION 2.01.Form Generally.

 (a)Each Note and the Trustee's certificate of authentication therefor shall be in substantially the form, and have the terms, set forth in Schedule I hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture (as amended and supplemented by this Fourth Supplemental Indenture), and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Note, as evidenced by their execution of such Note.

 Upon their original issuance, Restricted Notes of the same tranche shall be issued in the form of one or more Global Notes without interest coupons registered in the name of DTC, as Depository, or its nominee and deposited with the Trustee (or any party acceptable to the Company, DTC and the Trustee), as custodian for DTC, for credit by DTC to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct) in accordance with the rules thereof.

 Upon their original issuance, Regulation S Notes of the same tranche shall be issued in the form of one or more Global Notes without coupons registered in the name of DTC, as Depository, or its nominee and deposited with the Trustee (or any party acceptable to the Company, DTC and the Trustee), as custodian for DTC, for credit to Euroclear Bank S.A./N.V., as operator of Euroclear, and Clearstream to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct) in accordance with the rules thereof.

 (b) The Notes may be reopened for issuance of additional Notes, whether Regulation S Notes or Restricted Notes, without the consent of the Holders.

- 5 -

ARTICLE THREE

The Notes

SECTION 3.01.Global Notes.

 (a)If any Global Note is to be exchanged for other Notes or cancelled in whole, it shall be surrendered by or on behalf of the Depository or its nominee to the Security Registrar for exchange or cancellation as provided in Section 305 of the Indenture. If any Global Note is to be exchanged for other  Notes or cancelled in part, or if another Note is to be exchanged in whole or in part for a beneficial interest in any Global Note, then either (i) such Global Note shall be so surrendered for exchange or cancellation as provided in Section 305 of the Indenture or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or cancelled, or equal to the principal amount of such other Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Security Registrar, whereupon the Security Registrar, in accordance with the Applicable Procedures, shall instruct the Depository or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Note, the Trustee shall, subject to Section 3.02(b) and as otherwise provided in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture), authenticate and deliver any Notes issuable in exchange for such Global Note (or any portion thereof) to or upon the written order of, and registered in such names as may be directed by, the Depository or its authorized representative. Upon the request of the Trustee in connection with the occurrence of any of the events specified in the eighth paragraph of Section 305 of the Indenture, the Company shall promptly make available to the Trustee a reasonable supply of Notes that are not in the form of Global Notes. The Trustee shall be entitled to rely upon any order, direction or request of the Depository or its authorized representative which is given or made pursuant to this Article Three if such order, direction or request is given or made in accordance with the Applicable Procedures.

 (b) Every Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note or any portion thereof, whether pursuant to this Article Three or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note, unless such Note is registered in the name of a Person other than the Depository for such Global Note or a nominee thereof.

 (c) The Depository or its nominee, as registered owner of a Global Note, shall be the Holder of such Global Note for all purposes under this Fourth Supplemental Indenture, the Indenture and the Notes, and owners of

- 6 -

beneficial interests in a Global Note shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such owner's beneficial interest in a Global Note will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depository or its nominee or its Agent Members.

SECTION 3.02.Transfers and Exchanges; Securities Act Legends.

 (a)Certain Transfers and Exchanges. Notwithstanding any other provision of this Fourth Supplemental Indenture, the Indenture or the Notes, transfers and exchanges of Notes and beneficial interests in a Global Note of the kinds specified in this Section 3.02(a) shall be made only in accordance with this Section 3.02(a).

 (i) Restricted Global Note to Regulation S Global Note. If the owner of a beneficial interest in a Restricted Global Note wishes at any time to transfer such interest to a Person who wishes to acquire the same in the form of a beneficial interest in a Regulation S Global Note, such transfer may be effected only in accordance with the provisions of this Clause (a)(i) subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) an order given by the Depository or its authorized representative directing that a beneficial interest in a Regulation S Global Note in a specified principal amount be credited to a specified Agent Member's account and that a beneficial interest in a Restricted Global Note in an equal principal amount be debited from another specified Agent Member's account and (B) a Regulation S Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar, and duly executed by the owner of such beneficial interest in such Restricted Global Note or his attorney duly authorized in writing, then the Security Registrar shall reduce the principal amount of such Restricted Global Note and increase the principal amount of such Regulation S Global Note by such specified principal amount as provided in Section 3.01(a).

 (ii) Regulation S Global Note to Restricted Global Note. If the owner of a beneficial interest in a Regulation S Global Note wishes prior to the expiration of the Restricted Period to transfer such interest to a Person who wishes to acquire the same in the form of a beneficial interest in a Restricted Global Note, such transfer may be effected only in accordance with this Clause (a)(ii) and subject to the Applicable Procedures. Upon receipt by the Security Registrar of (A) an order given by the Depository or its authorized representative directing that a beneficial interest in a Restricted Global Note in a specified principal amount be credited to a specified Agent Member's account and that a beneficial interest in a Regulation S Global Note in an equal principal amount be debited from another specified Agent Member's account and (B) a Restricted Notes Certificate (or such other form of certificate as may be

- 7 -

acceptable to the Company), satisfactory to the Security Registrar and duly executed by the owner of such beneficial interest in such Regulation S Global Note or his attorney duly authorized in writing, then the Security Registrar, shall reduce the principal amount of such Regulation S Global Note and increase the principal amount of such Restricted Global Note by such specified principal amount as provided in Section 3.01(a).

 (iii) Exchanges between Global Note and Non-Global Note.  A beneficial interest in a Global Note may be exchanged for a Note that is not a Global Note (A) as provided in the eighth paragraph of Section 305 of the Indenture or (B) notwithstanding any provision of Section 305 of the Indenture to the contrary, if the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes that are not Global Notes; provided that, if such interest is a beneficial interest in a Restricted Global Note, or if such interest is a beneficial interest in a Regulation S Global Note, then such interest shall be exchanged for a Restricted Note or a Regulation S Note, respectively (subject in each case to Section 3.02(b)).

 (b) Securities Act Legends. A Note and its Successor Note shall bear the Securities Act Legend, subject to the following:

 (i) at any time after a Note may be freely transferred without registration under the Securities Act or without being subject to transfer restrictions pursuant to the Securities Act a new Note which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note which bears such a legend if the Security Registrar has received an Unrestricted Notes Certificate (or such other form of certificate as may be acceptable to the Company), satisfactory to the Security Registrar and duly executed by the Holder of such legended Note or his attorney duly authorized in writing, and after such date and receipt of such certificate, the Trustee shall, at the written direction of the Security Registrar, authenticate and deliver such a new Note in exchange for or in lieu of such other Note in the manner provided for in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture);

 (ii) a new Note which does not bear a Securities Act Legend may be issued in exchange for or in lieu of a Note or any portion thereof which bears such a legend if, in the Security Registrar's judgment, placing such a legend upon such new Note is not necessary to ensure compliance with the registration requirements of the Securities Act, and the Trustee, at the written direction of the Security Registrar, shall authenticate and deliver such a new Note in the manner provided for in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture); and

 (iii) notwithstanding the foregoing provisions of this Section 3.02(b), a Successor Note of a Note that does not bear the Securities Act Legend shall bear

- 8 -

such form of legend if the Security Registrar has reasonable cause to believe that such Successor Note is a "restricted security" within the meaning of Rule 144, in which case the Trustee, at the written direction of the Security Registrar, shall authenticate and deliver a new Note bearing a Securities Act Legend in exchange for such Successor Note in the manner provided for in the Indenture (as amended and supplemented by this Fourth Supplemental Indenture).

SECTION 3.03.Events of Default.

The occurrence of an event specified in Section 501(5) of the Indenture shall not be deemed to be an Event of Default with respect to the Notes.

SECTION 3.04.Defeasance and Covenant Defeasance.

The provisions of Article Thirteen of the Indenture shall apply to the Notes.

ARTICLE FOUR

Miscellaneous

 The Indenture, as supplemented and amended by this Fourth Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument.

 This Fourth Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

- 9 -

 IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.

    JEFFERSON-PILOT CORPORATION

    By/s/ Theresa M. Stone

    Name: Theresa M. Stone

    Title: Executive Vice President 
and Chief Financial Officer

Attest:

/s/ Robert A. Reed
Name: Robert A. Reed

Title: Vice President

and Secretary

    WACHOVIA BANK, NATIONAL ASSOCIATION

     as Trustee

By/s/ Patrick L. Teague

      Name: Patrick L. Teague

    Title: Assistant Vice President

Attest:

/s/ Terry Hefner

Name: Terry Hefner

Title: Vice President

- 10 -

ANNEX A - Form of

Regulation S Certificate

REGULATION S CERTIFICATE

Wachovia Bank, National Association
Attn: Corporate Trust Department

Re: 4.75% Notes due 2014 of Jefferson-Pilot 
       Corporation (the "Notes")

 Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Fourth Supplemental Indenture, dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

 This certificate relates to U.S. $___principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

 CUSIP No(s). 475070AC2

 CERTIFICATE No(s). ____________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

 The Owner has requested that the Specified Notes be transferred to a person (the "Transferee") who will take delivery in the form of a Regulation S Note. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, it is being effected in accordance with Rule 904 or Rule 144 under the Securities Act and with all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows:

A-1

(1)Rule 904 Transfers. If the transfer is being effected in accordance with Rule 904:

 (A)the Owner is not a distributor of the Notes, an affiliate of the Company or any such distributor or a person acting on behalf of any of the foregoing;

 (B)the offer of the Specified Notes was not made to a person in the United States;

 (C)either:

   (i)at the time the buy order was originated, the Transferee was outside the United States or the Owner and any person acting on its behalf reasonably believed that the Transferee was outside the United States, or

  (ii) the transaction is being executed in, on or through the facilities of the Eurobond market, as regulated by the Association of International Bond Dealers, or another designated offshore securities market and neither the Owner nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States;

 (D) no directed selling efforts have been made in the United States by or on behalf of the Owner or any affiliate thereof;

 (E) if the Owner is a dealer in securities or has received a selling concession, fee or other renumeration in respect of the Specified Notes, and the transfer is to occur during the Restricted Period, then the requirements of Rule 904(b)(1) or (b)(3) have been satisfied; and

 (F)the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

(2)Rule 144 Transfers. If the transfer is being effected pursuant to  Rule 144:

 (A) the transfer is occurring after a holding period of at least one year (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

A-2

 (B)the transfer is occurring after a holding period of at least two years has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

Dated:                                                                                                                        _______________________________                          

           (P rint the name of the Undersigned, as such term is defined in the second paragraph of

           th is certificate.)

           By : ______________________________________

           Na me:

           Ti tle:

            ;(If the Undersigned is a corporation, partnership or fiduciary, the title of the

           pe rson signing on behalf of the Undersigned must be stated.

A-3

ANNEX B - Form of Restricted
Notes Certificate

RESTRICTED NOTES CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

Re: 4.75% Notes due 2014 of Jefferson-Pilot 

 Corporation (the "Notes")

 Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Fourth Supplemental Indenture (the "Fourth Supplemental Indenture") dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Rule 144A or Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

 This certificate relates to U.S. $____principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

 CUSIP No(s). U04468AB7

 CERTIFICATE No(s). ______________________

The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

 The Owner has requested that the Specified Notes be transferred to a person (the "Transferee") who will take delivery in the form of a Restricted Note. In connection with such transfer, the Owner hereby certifies that, unless such transfer is being effected pursuant to an effective registration statement under the Securities Act, (i) the Owner is not a U.S. Person (as defined in the Fourth Supplemental Indenture) and (ii) such transfer is being effected in accordance with Rule 144A or Rule 144 under the

B-1

Securities Act and all applicable securities laws of the states of the United States and other jurisdictions. Accordingly, the Owner hereby further certifies as follows:

 (1) Rule 144A Transfers. If the transfer is being effected in accordance with Rule 144A:

  (A) the Specified Notes are being transferred to a person that the Owner and any person acting on its behalf reasonably believe is a "qualified institutional buyer" within the meaning of Rule 144A, acquiring for its own account or for the account of a qualified institutional buyer; and

  (B) the Owner and any person acting on its behalf have taken reasonable steps to ensure that the Transferee is aware that the Owner may be relying on Rule 144A in connection with the transfer; and

 (2)Rule 144 Transfers. If the transfer is being effected pursuant to Rule 144:

  (A) the transfer is occurring after a holding period of at least one year (computed in accordance with paragraph (d) of Rule 144) has

elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and is being effected in accordance with the applicable amount, manner of sale and notice requirements of Rule 144; or

  (B) the transfer is occurring after a holding period of at least two years has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later, and the Owner is not, and during the preceding three months has not been, an affiliate of the Company.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

B-2

Dated:               ________________________________

            ;    (Print the name of the Undersigned, as such

            ;     term is defined in the second paragraph of

     this certificate.)

    By:

     Name: _________________________

    Title: __________________________

    (If the Undersigned is a corporation,

      partnership or fiduciary, the title of the person

      signing on behalf of the Undersigned must be stated.

B-3

ANNEX C - Form of Unrestricted

Notes Certificate

UNRESTRICTED NOTES CERTIFICATE

Wachovia Bank, National Association

Attn: Corporate Trust Department

Re: 4.75% Notes due 2014 of Jefferson-Pilot

 Corporation (the "Notes")

 Reference is made to the Indenture, dated as of November 21, 1995, as amended and supplemented by the Fourth Supplemental Indenture (the "Fourth Supplemental Indenture") dated as of January 27, 2004 (as so amended and supplemented, the "Indenture"), each from Jefferson-Pilot Corporation (the "Company"), to Wachovia Bank, National Association (formerly known as First Union National Bank of North Carolina), as Trustee. Terms used herein and defined in the Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so defined.

 This certificate relates to U.S. $___principal amount of Notes, which are evidenced by the following certificate(s) (the "Specified Notes"):

 CUSIP No(s). [475070AC2] or [U04468AB7]

 CERTIFICATE No(s). __________________

 The person in whose name this certificate is executed below (the "Undersigned") hereby certifies that either (i) it is the sole beneficial owner of the Specified Notes or (ii) it is acting on behalf of all the beneficial owners of the Specified Notes and is duly authorized by them to do so. Such beneficial owner or owners are referred to herein collectively as the "Owner". If the Specified Notes are represented by a Global Note, they are held through the Depository or an Agent Member in the name of the Undersigned, as or on behalf of the Owner. If the Specified Notes are not represented by a Global Note, they are registered in the name of the Undersigned, as or on behalf of the Owner.

 The Owner has requested that the Specified Notes be exchanged for Notes bearing no Securities Act Legend pursuant to Section 3.02 of the Fourth Supplemental Indenture. In connection with such exchange, the Owner hereby certifies that the exchange is occurring after a holding period of at least two years (computed in accordance with paragraph (d) of Rule 144) has elapsed since the Specified Notes were last acquired from the Company or from an affiliate of the Company, whichever is later,

C-1

and the Owner is not, and during the preceding three months has not been, an affiliate of the Company. The Owner also acknowledges that any future transfers of the Specified Notes must comply with all applicable securities laws of the states of the United States and other jurisdictions.

 This certificate and the statements contained herein are made for your benefit and the benefit of the Company and the Initial Purchasers.

Dated:                                                                                                                                          ;                                _________________________________

   (Print the name of the Undersigned, as such

   term is defined in the second paragraph of

           &# 160;       this certificate.)

    By: _______________________________

            ;    Name:

            ;    Title:

                                                                                                                                         &# 160;                                          (If the Undersigned is a corporation, partnership

                                                                                                                                         &# 160;                                          or fiduciary, the title of the person signing on

                                                                                                                                         &# 160;                                          behalf of the Undersigned must be stated.

C-2

EX-10.3

Exhibit 10.3

Performance Targets for Annual Incentive Program and Certain Compensation Actions

(1)The 2006 corporate performance goals for the Annual Incentive Program under the Lincoln National Corporation Amended and Restated Incentive Compensation Plan (the “ICP”), which apply to the Corporate Center executive officers are:

·growth in our income from operations per share (with a weighting of 50%),

·sales growth (with a weighting of 30%), and

·merger-related expense savings (with a weighting of 20%)

The 2006 performance goals for executive officers in our business lines, include the corporate goals weighted as follows:

·growth in income from operations per share (with a weighting of 15%),

·sales growth (with a weighting of 5%), and

·merger-related expense savings (with a weighting of 5%).

In addition, executive officers in our business lines, with the exception of Delaware, have the following goals weighted as follows

·line of business income from operations (with a weighting of 35%),

·line of business sales growth (with a weighting of 25%), and

·line of business merger-related expense savings (with a weighting of 15%).

In addition, executive officers in Delaware have the following goals weighted as follows:

·line of business income from operations (with a weighting of 20%),

·line of business sales growth (with a weighting of 20%),

·line of business merger-related expense savings (with a weighting of 15%)

·retail investment performance (10%), and

·institutional investment performance (10%).

(2)The performance goals for the three-year (2006-2008) ICP long-term performance cycle are as follows:

·growth in income from operations per share (with a weighting of 33.3%)

·sales growth (with a weighting of 33.3%), and

·return on equity (with a weighting of 33.3%).

Income from operations is defined for the purposes of paragraphs (1) and (2) above as net income determined in accordance with generally accepted accounting principles (“GAAP”) excluding, as applicable, the after-tax effects of realized gain or losses on investments and derivatives, gains (losses) related to reinsurance embedded derivatives/trading account assets, cumulative effect of accounting changes, reserve changes on business sold through reinsurance net of related deferred gain amortization, gains (losses) on the sale of subsidiaries and blocks of business, and losses on early retirement of debt, including subordinated debt. In addition, income from operations for the purposes of paragraphs (1) and (2) above will exclude the after tax merger/integration related expenses.

(3)The salary of Jon A. Boscia, our chairman and chief executive officer, was increased from $850,000 to $925,000. This was the first increase in Mr. Boscia’s salary in five years. The salaries of the other named executive officers in our 2006 proxy statement are not changed from the year ended December 31, 2005. The salary for Dennis R. Glass, president and chief operating officer, is $900,000.

(4)Dennis R. Glass, our president and chief operating officer, may use the corporate aircraft for business as well as personal travel, when practical. The policy was adopted due to security concerns and to allow for more efficient travel time so that the chief operating officer can devote more time to our business.

(5)David A. Stonecipher in his capacity as lead director may receive an office and secretarial support, and access to company aircraft for business purposes, plus up to 25 hours per year of flight time for personal use, with imputation of taxable income for any such use. Mr. Stonecipher will forego regular board compensation including retainer, meeting fees and stock options while serving in this capacity. The foregoing is subject to change or termination at any time by the Corporate Governance Committee of our Board of Directors.

EX-10.22

Exhibit 10.22

FIRST AMENDMENT OF LEASE

THIS FIRST AMENDMENT OF LEASE, dated as of June 16, 2006 (this “Amendment”), between TRONA COGENERATION CORPORATION, a Delaware corporation, having an address at c/o DaimlerChrysler Services North America LLC, CIMS 405-23-05, 27777 Inkster Road, Farmington Hills, Michigan 48334-5326, Attention: Raymond M. McGowan (hereinafter referred to as “Lessor”), and THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation, having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46802, Attention: Director of Facilities (hereinafter referred to as “Lessee”).

WITNESSETH:

Whereas Clinton Street Limited Partnership, an Indiana limited partnership, as lessor (the “Original Lessor”), entered into that certain Lease and Agreement dated as of August 1, 1984 (the “Lease”) with Lessee, which Lease was guaranteed by Lincoln National Corporation (“Guarantor”) pursuant to the Guaranty, dated as of August 1, 1984, from Guarantor to Original Lessor andthe Memorandum of Lease and Agreement recorded August 29, 1984 as Instrument Number 1984-21065, Reassignment of Lease and Guaranty recorded August 29, 1984 as Instrument Number 84-21069, Second Reassignment of Lease recorded August 29, 1984 as Instrument Number 84-21073, as well as Assignment of Lease and Guaranty dated August 1, 1984 and recorded August 29, 1984 as Instrument Number 84-21067;

WHEREAS, capitalized terms used and not defined herein shall have the respective meanings ascribed thereto in the Lease;

WHEREAS, the Lease demised to Lessee the land more particularly described on Exhibit A hereto (the “Original Land”) and all improvements thereon (the “Original Improvements”);

WHEREAS, by General Warranty Deed, dated as of March 24, 1987 (the “Meridian Deed”), from Original Lessor to Chrysler Meridian Corporation (“Meridian”), a copy of which was recorded on March 25, 1987 as Instrument Number 87-014806, Original Lessor conveyed to Meridian the Original Improvements and an “Estate for Years” in the Original Land, subject to the Lease and the rights of Lessee thereunder;

WHEREAS, by that certain Master Assignment, Assumption and Agreement, dated as of March 24, 1987, a copy of which was recorded on March 25, 1987 as Instrument Number 87-14808, among Original Lessor, Meridian and the Clinton Street Realty Trust (the “Trust”), Original Lessor assigned the Lease and the Guaranty to Meridian, and Meridian accepted such assignment and assumed such rights and obligations;

WHEREAS, by the General Warranty Deed, dated as of March 24, 1987 (the “Trust Deed”), a copy of which was recorded on March 25, 1987 as Instrument Number 87-014807, from Original Lessor to the Trust, Original Lessor conveyed to the Trust the Original Land, subject to the Meridian Deed and the rights of Meridian thereunder, and subject to the Lease and the rights of Lessee thereunder

WHEREAS, by Trustee Special Warranty Deed from the Trust to Lessor, dated as of the date hereof, a copy of which is to be recorded with the Allen County office of the recorder, the Trust conveyed its interest in the Original Land to Lessor, subject to the Lease and the rights of Lessee thereunder;

WHEREAS, by Special Warranty Deed from Meridian to the Lessor, dated as of the date hereof, a copy of which is to be recorded with the Allen County office of the recorder, Meridian conveyed its interest (including its Estate for Years) in the Original Land to the Lessor, subject to the Lease and the rights of Lessee thereunder;

WHEREAS, pursuant to that certain Assignment and Assumption Agreement dated as of the date hereof (“Assignment and Assumption”), Meridian assigned its rights and obligations under the Lease and the Guaranty to the Lessor and Lessor assumed and agreed to perform the same; and

WHEREAS, immediately preceding the execution and delivery of this Amendment, Lessee has conveyed to Lessor the land more particularly described on Exhibit B attached hereto (the “Additional Land”) and all improvements thereon (the “Additional Improvements”);

WHEREAS, the Lessor and the Lessee wish to amend the Lease to, among other things, exercise Lessee’s option to extend the term for the first two (2) “Extended Terms” and add the Additional Land and the Additional Improvements to the premises demised under the Lease, so that the Land Parcel (as defined in the Lease) shall consist of the Original Land and the Additional Land;

NOW THEREFORE, in consideration of One Dollar and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.Schedule A of the Lease is hereby deleted in its entirety and replaced by Schedule A attached hereto.

2.Paragraphs 6 and 7 to Schedule B to the Lease are hereby deleted in their entirety and replaced with Schedule B attached hereto.

3.Schedule C to the Lease is hereby deleted in its entirety and replaced with Schedule C attached hereto with respect to the period commencing on the date of this Amendment.

4.Section 2(a) of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof: “(a) the rights of any parties in possession and the existing state of the title as of the commencement of the term of this Lease or, for any property added to the Land Parcel by an amendment to this Lease (Added Property), as of the date on which such property is so added to the Land Parcel,”.

5.Section 2(d) of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof: “(d) the condition of any buildings, structures and other improvements located thereon, as of the commencement of the term of this Lease or, for any

2

buildings, structures and other improvements located on any Added Property, on the date such Added Property is added to the Land Parcel by an amendment of this Lease, without representation or warranty by Lessor.”

6.In accordance with Section 4 of the Lease, Lessees hereby irrevocably exercises the right and option to extend the term of the Lease for the first two (2) Extended Terms (as defined in the Lease), such that the term of the Lease shall expire on August 31, 2019 (the period September 1, 2009 to August 31, 2019 being herein called the “Initial Extended Term”), unless sooner terminated as provided in the Lease. Notwithstanding anything in the Lease to the contrary, this will constitute exercise by the Lessee of the first two (2) Extended Terms, and nothing in this Amendment shall be construed as to prevent the Lessee from subsequently extending the term of the Lease for the remaining four (4) additional Extended Terms of five (5) years each in accordance with, and subject to, the terms of the Lease and this Amendment (“Subsequent Extension Terms”). Lessee irrevocably waives any right to give a notice not to extend the Lease for the first or the second Extended Terms.

7.The first sentence of Section 9 of the Lease is hereby amended by deleting the beginning portion of said sentence ending with the parenthetical “(collectively, the Indemnified Parties)”, and by substituting in lieu thereof the following: “Lessee shall defend all actions or claims against Lessor, or any partner, member, shareholder, officer or director of Lessor, or any assignee of Lessor, or any partner, member, shareholder, officer or director of such assignee (collectively, the Indemnified Parties)”.

8.Section 11(c) of the Lease is hereby deleted in its entirety and replaced with the following:

“(c) Lessee may, at its expense, upon 45 days prior notice to Lessor, construct improvements on any portion of the Land Parcel on which there is not already a permanent structure for which improvements it has not and will not obtain reimbursement from Lessor (Lessee’s Improvements), provided that upon completion thereof, the use and market value of the remaining Leased Premises shall not thereby be materially lessened, and provided further that all such Lessee’s Improvements shall comply with all applicable laws, regulations, zoning requirements and building codes. The Lessee’s Improvements shall be and remain the property of Lessee and Lessee may make additions and alterations to Lessee’s Improvements and substitutions and replacements thereof which are otherwise in compliance with the provisions of this subparagraph (c).”

9.The second sentence of Section 12(b) of the Lease, and the portion of the third sentence of Section 12(b) of the Lease ending with the phrase “this Lease shall terminate on the Termination Date”, are hereby deleted in their entirety and the following is substituted in lieu thereof:

“If the Termination Date occurs during the Interim or Primary Term, or during the first two (2) Extended Terms (i.e., during the period September 1, 2009 through August 31, 2019), such notice to Lessor shall be accompanied by an irrevocable

3

offer by Lessee to purchase the Leased Premises on the Termination Date at a price determined in accordance with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such Purchase Offer by notice given to Lessee not later than the 30th day prior to the Termination Date, or (2) the Termination Date occurs during an Extended Term commencing on or after September 1, 2019, this Lease shall terminate on the Termination Date”.

10.Section 12(c) of the Lease is hereby deleted in its entirety and replaced with the following:

“(c) If during any Term (i) a portion of the Leased Premises shall be taken by condemnation or other eminent domain proceedings, which taking is not sufficient to require that Lessee give a Purchase Offer or (ii) the use or occupancy of the Leased Premises or any part thereof shall be temporarily taken by any governmental authority, then this Lease shall continue in full effect without abatement or reduction of Basic Rent, additional rent or other sums payable by Lessee hereunder notwithstanding such partial or temporary taking. Except as hereinafter set forth, Lessee shall (whether or not it has received any portion of the Net Award), promptly after any such temporary taking ceases, at its expense, repair any damage caused thereby in conformity with the requirements of paragraph 11(a), so that, thereafter, the Leased Premises shall be, as nearly as possible, in a condition and have a market value as good as the condition and market value thereof immediately prior to such taking. Lessee shall not be required to repair any damage to Lessee’s Improvements so long as such failure shall not materially lessen the use or value of the remaining Leased Premises; provided, however, that if, in Lessee’s good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee’s Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 12(a), any Net Award payable in connection with such occurrence shall be paid to the Permitted Mortgagee (as defined in paragraph 29(m)) unless such Permitted Mortgage has assets which total in aggregate less than $200,000,000, in which case any Net Award payable in connection with any condemnation or eminent domain proceeding shall be paid to the Proceeds Trustee (as defined in paragraph 12(e)), provided, that if in such event no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of the Net Award, such Net Award shall be paid to the Lessor, in all events for application pursuant to this paragraph 12(c). Lessee shall be entitled to receive the Net Award but only against certificates by the President or any Vice President of Lessee delivered to Lessor and the Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive any Net Award in an aggregate amount of up to

4

$100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Award remaining after such repairs have been made is less than $250,000, such remaining Net Award shall be paid to Lessee. If such remaining Net Award equals or exceeds $250,000, all of the remaining Net Award shall be retained by the Permitted Mortgagee, Proceeds Trustee, or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Permitted Mortgage then outstanding. To the extent that any Net Award is not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Award not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term and during the first two (2) Extended Terms (i.e., during the period September 1, 2009 through August 31, 2019) the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). In the event of any temporary requisition, this Lease shall remain in full effect and Lessee shall be entitled to receive the Net Award allocable to such temporary requisition; except that such portion of the Net Award allocable to the period after the expiration of the Term of this Lease shall be paid to Lessor. If the cost of any repairs required to be made by Lessee pursuant to this paragraph 12(c) shall exceed the amount of such Net Award, the deficiency shall be paid by Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c) for so long as any default shall have happened and shall be continuing under this Lease.”

11. Section 12 (e) of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof:

“(e) The trustee (the Proceeds Trustee) of the Net Award and Net Casualty Proceeds (as defined in Section 14(a)) shall be the holder of the first mortgage lien on the Leased Premises, who shall be an institutional lender, or if there shall not be such a lien, or if such lien shall be held by a person other than an institutional lender,

5

or if Section 12(c) or Section 14(b) otherwise requires that a Proceeds Trustee be appointed, then a bank or trust company, designated by Lessee and acceptable to Lessor and the Permitted Mortgagee, having an office in the State of Indiana. The Proceeds Trustee shall have a combined capital and surplus of at least $100,000,000 and shall be duly authorized to act as such trustee. All charges and fees of the Proceeds Trustee shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and Net Casualty Proceeds (as hereinafter defined) pursuant to such mutual agreement as may be made between Lessor and Lessee. Lessor and Lessee agree that Genworth Life Insurance Company of New York is an institutional lender for all purposes of this Lease.”

12.Section 14(b) of the Lease is hereby deleted in its entirety and replaced with the following:

“(b) After an occurrence of the character referred to in paragraph 14(a), except as hereinafter set forth, Lessee shall (whether or not it has received any Net Casualty Proceeds), at its expense, rebuild, replace or repair any damage to the Leased Premises caused by such event in conformity with the requirements of paragraph 11(a) so as to restore the Leased Premises (as nearly as practicable) to the condition and market value thereof immediately prior to such occurrence. Lessee shall not be required to rebuild or replace any damage to Lessee’s Improvements so long as such failure shall not materially lessen the value or use of the remaining Leased Premises; provided, however, that if, in Lessee’s good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee’s Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection with such occurrence shall be paid to the Permitted Mortgage, and this Lease shall continue in full effect, provided, that if no Permitted Mortgage has been named pursuant to paragraph 12(e) at the time of payment of Net Casualty Proceeds or if such Permitted Mortgagee shall have assets which in aggregate equal less than $200,000,000, such Net Casualty Proceeds shall be paid to the Proceeds Trustee, and if there is no Proceeds Trustee then to Lessor, in all events for application pursuant to this paragraph 14(b). Lessee shall be entitled to receive the Net Casualty Proceeds, but only against certificates of the President or any Vice President of Lessee delivered to Lessor and Permitted Mortgagee (or Proceeds Trustee as applicable) from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive the Net Casualty Proceeds in an aggregate amount of up to $100,000 in

6

connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Casualty Proceeds remaining after such repairs have been made are less than $250,000 they shall be paid to Lessee. If such remaining Net Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be retained by the Permitted Mortgagee Proceeds Trustee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Permitted Mortgage then outstanding. To the extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the First Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term and during the first two (2) Extended Terms (i.e., during the period September 1, 2009 through August 31, 2019) the amount by which each such installment of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). If the cost of any repairs required to be made by Lessee pursuant to this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the deficiency shall be paid by Lessee.”

13.Section 14(c) of the Lease is hereby deleted in its entirety and replaced with the following:

“(c) If the Leased Premises shall be substantially damaged or destroyed in any single casualty so that, in Lessee’s good faith judgment, the Leased Premises shall be unsuitable for restoration for continued use and occupancy in Lessee’s business, then at Lessee’s option in lieu of rebuilding, replacing and repairing the Leased Premises, Lessee may give notice to Lessor, within 30 days after the occurrence of such damage or destruction, of Lessee’s intention to terminate this Lease on the next Basic Rent Payment Date which occurs not less than 210 days after the delivery of such notice (the Termination Date), provided that, if the Termination

7

Date occurs during the Primary Term or the Initial Extension Term, such notice shall be accompanied by (i) an irrevocable offer of Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the Termination Date at a price determined in accordance with Schedule C hereof (the Purchase Offer), and (ii) a certificate signed by the President or any Vice President of Lessee stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased Premises unsuitable for restoration, replacement and rebuilding for Lessee’s continued use and occupancy and that the Leased Premises will not be restored. If Lessor shall reject such offer by notice to Lessee not later than the 30th day prior to the Termination Date, the Net Casualty Proceeds and the right thereto shall be assigned to and shall belong to Lessor and this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee under this Lease, actual or contingent, which have arisen on or prior to the Termination Date, but only upon payment by Lessee of all Basic Rent, additional rent, and other sums due and payable by it under this Lease to and including the Termination Date; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 of the Lease), shall be paid to Lessee as determined by the Appraisal Procedure. Unless Lessor shall have rejected such offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and on the Termination Date, Lessor shall convey the remaining portion of the Leased Premises, if any, and all its interest in the Net Casualty Proceeds in accordance with paragraph 16. If the Termination Date shall occur after the Initial Extension Term, Lessee shall not be required to offer to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall belong to Lessor and this Lease shall terminate; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 of the Lease), shall be paid to Lessee as determined by the Appraisal Procedure. If the conditions set forth in the first sentence of this paragraph 14(c) are fulfilled and Lessee fails to commence to rebuild, replace or repair the Leased Premises within 30 days after the final adjustment of all insurance claims made in connection therewith (but in no event later than one hundred eighty days after the occurrence of such damage or destruction), Lessee conclusively shall be deemed to have made such Purchase Offer and in the absence of a written Purchase Offer by Lessee the Termination Date shall be deemed to be the next Basic Rent Payment Date which occurs not less than 210 days after such Purchase Offer is presumed to have been made; but nothing in this sentence shall relieve Lessee of its obligation actually to deliver such Purchase Offer.

8

14.The text of Section 15 of the Lease is hereby deleted in its entirety and replaced with the following: “[Intentionally Deleted].”

15.Section 16(a) of the Lease is hereby amended by adding the following after the phrase “on the date of the commencement of the Term hereof”, in both places where it appears, the following: “, or, for any buildings, structures and other improvements located on any Added Property, on the date such Added Property is added to the Land Parcel by an amendment of this Lease”.

16.Section 17 of the Lease is hereby modified to add the following sentence after the existing last sentence of said section: “Notwithstanding anything in the Lease or this Amendment to the contrary, no assignment in accordance with Section 17 of the Lease shall be valid or binding on the Lessor unless the Guarantor has consented to such assignment, and has reaffirmed the Guaranty in relation to such assignment, by a instrument reasonably acceptable to Lessor.” Contemporaneously herewith, Guarantor has reaffirmed the Guaranty, and a reaffirmation consistent therewith shall satisfy the foregoing requirement.

17.[Intentionally Deleted].

18.[Intentionally Deleted].

19.Section 21 of the Lease is hereby deleted in its entirety and the following is substituted in lieu thereof:”

“21. Notices, Demands and Other Instruments. All notices, demands, requests, consents, approvals and other instruments (each a ‘Notice’ and, collectively, “Notices”) required or permitted to be given pursuant to the terms of this Lease shall be in writing and shall be deemed to have been properly given if (a) with respect to Lessee, addressed to The Lincoln National Life Insurance Company, 1300 South Clinton Street, Fort Wayne, Indiana 46802, Attn.: Director of Facilities, and delivered by any of the following methods: (i) registered or certified mail, return receipt requested, postage prepaid, (ii) hand delivery, or (iii) nationally recognized overnight delivery service, and (b) with respect to Lessor, addressed to Trona Cogeneration Corporation, c/o DaimlerChrysler Services North America LLC, CIMS 405-23-05, 27777 Inkster Road, Farmington Hills, Michigan 48334-5326, Attention: Raymond M. McGowan, with a copy to Trona Cogeneration Corporation, c/o DaimlerChrysler Services North America LLC, CIMS 405-27-10, 27777 Inkster Road, Farmington Hills, Michigan 48334-5326, Attention: Office of the General Counsel, and delivered by any of the following methods: (i) registered or certified mail, return receipt requested, postage prepaid, (ii) hand delivery, or (iii) nationally recognized overnight delivery service. Lessor and Lessee shall each have the right from time to time to specify as its address for purposes of this Lease any other address or addresses in the United States of America upon giving of 15 days’ prior Notice thereof,

9

similarly given to the other party. Notices sent hereunder shall be deemed delivered when received, or when receipt is refused.”

20.Section 22(a) of the Lease is hereby deleted in its entirety and replaced with the following:

“Estoppel Certificates; Consents and Financial Statements. (a) Lessee and Lessor will, at any time and from time to time, upon not less than twenty days’ prior request by the other party, deliver a Certificate, certifying that this Lease is unmodified (except by First Amendment of Lease, dated as of June __, 2006, between Lessor and Lessee) and in full effect (or setting forth any modifications and that this Lease is in full effect as modified) and the dates to which the Basic Rent, additional rent and other sums payable hereunder have been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer may have knowledge, and containing such other statements as the requesting party shall reasonably request; it being intended, interalia, that any such certificate may be relied upon by any mortgagee or prospective purchaser or prospective mortgagee of the Leased Premises.

21.Section 22(b) of the Lease is hereby amended by deleting the parenthetical “(but only with respect to the initial financing involving the Permitted Mortgagee)” and substituting in lieu thereof the following: “(but only with respect to (x) the initial financing involving the Permitted Mortgagee, and (y) the refinancing with Genworth Life Insurance Company of New York which was closed on June __, 2006.”

22.Section 29(a) of the Lease is hereby deleted in its entirety and replaced with the following:

“(a) The term ‘Appraisal Procedure’ means, if Lessor and Lessee cannot agree on the value in question, that either party can notify the other party of its desire to conduct an appraisal, in which event each party, within 10 business days after such notice, shall select an independent MAI appraiser and notify the other party of the identity of such appraiser. Such value shall be determined by agreement of the full appraisals of such two appraisers pursuant to the terms of this Lease. If the appraisals do not agree, and if the difference between the two appraisals is less than or equal to 10% of the lowest appraised value, the average of the two appraisals will be used as the value. In the event that the difference between the appraisals is greater than 10% of the lowest appraised value, such value shall be determined by the full appraisal of a third independent MAI appraiser, who shall be selected by the original two appraisers. Lessor and Lessee shall agree on reasonable and customary instructions to be given each appraiser; provided, however, that in the absence of agreement on instructions, the terms and conditions of this Lease shall control.”

23.Section 29(c) of the Lease is hereby deleted in its entirety and replaced with the following:

10

“(c) The term ‘Guaranty’ means:

The Guaranty, dated the date hereof, from Guarantor to Lessor, guaranteeing performance of Lessee’s obligations under this Lease as the same may be amended, modified or reaffirmed from time to time.

24.Section 29(e) of the Lease is hereby deleted in its entirety.

25.Section 29(j) of the Lease is hereby deleted in its entirety and replaced with the following:

“(j) The term ‘Permitted Mortgage’ means:

any mortgage, deed of trust, security agreement, assignment of lease or other security instrument relating to the Leased Premises and this Lease, subject to the rights of Lessee under this Lease, and securing a borrowing by Lessor from a lender, made at any time after the time of execution of this Lease, including any refinancing thereof (the Permitted Mortgage). As of June __, 2006, the Permitted Mortgage is the Mortgage, Assignment of Rents and Leases and Security Agreement (Also Constituting a Fixture Filing), dated as of June _, 2006, between Lessor and Genworth Life Insurance Company of New York.

26.Section 29(k) of the lease is hereby modified to delete the phrase “and the Junior Permitted Mortgagee.”

27.Section 29(m) of the Lease is hereby deleted in its entirety and replaced with the following:

“(m) The term ‘Permitted Mortgagee’ means the holder, mortgagee or beneficiary from time to time of a Permitted Mortgage. As of June ___, 2006, Genworth Life Insurance Company of New York is the Permitted Mortgagee.”

28.Section 29 of the Lease is hereby amended by adding the following at the end thereof:

(o) “The term ‘Initial Extended Term’ means, collectively, the first two (2) Extended Terms, covering the period September 1, 2009 through August 31, 2019.”

(p) “The term ‘CPI’ shall mean the ‘U.S. City Average, All Items’ Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor (Base: 1982-1984=100), or any successor index thereto. If the Consumer Price Index is hereafter converted to a different standard reference base or otherwise revised, any determination hereunder that uses the Consumer Price Index shall be made with the use of such conversion factor, formula or table for converting the Consumer Price Index as may be published by the Bureau of Labor Statistics, or, if the Bureau shall no longer publish the same, then with the use of such conversion factor, formula or table as may be published by Prentice Hall, Inc., or, failing such publication, by any other nationally recognized publisher of similar statistical information. If for any reason the Bureau of Labor Statistics does not furnish such an index and such information, the parties will instead mutually select, accept and use such other index or comparable statistics on the cost of living in Fort Wayne, Indiana, D.C. that is computed and published by an agency of the United States or a responsible financial periodical of recognized authority.”

11

29.The first sentence of Section 30(a) of the Lease is amended by deleting “(x) on the last day of the Primary Term or (y) on the last day of the first, second, third, fourth, fifth and sixth Extended Terms”, and by substituting in lieu thereof the following:

“on the last day of the second, third, fourth, fifth and sixth Extended Terms (it being understood that the last day of the second Extended Term would be August 31, 2019)”

30.The third to last sentence of Section 30(b) of the Lease is hereby deleted, and the following is substituted in lieu thereof:

“On the date of such purchase, Lessor shall convey and assign the Leased Premises to Lessee, provided that such conveyance and assignment shall be made subject to the Permitted Exceptions listed in Schedule D hereto, to any other matters created by or consented to by Lessee, or any person or entity in possession of any part of the Leased Premises by, through or under Lessee, and to such liens, encumbrances, charges, exceptions and restrictions affecting the Leased Premises as such third party is willing to accept in such offer, and provided further that this Lease and, at Lessor’s option, any Permitted Mortgage, shall continue in full force and effect.”

31.The Lease is hereby amended by adding, as Schedule D to the Lease, Schedule D attached hereto (which specified “Permitted Encumbrances”).

32.Representative, Warranties, and Covenants.

(a)As of the date of this Amendment, Lessee represents and warrants that there are no Lessee Improvements and there are no Reimbursable Expenses (as such terms are respectively defined in the Lease) for which the Lessor has received notice, nor are their any Reimbursable Expenses which are due and owing, or which in the future may under any circumstance become due and owing, by Lessor.

(b)Lessor and Lessee hereby acknowledge and confirm that Genworth Life Insurance Company of New York is an institutional lender within the meaning of such term under the Lease and is entitled to all of the rules and privileges of an institutional lender under the Lease.

12

(c)Lessor and Lessee hereby acknowledge and confirm that Genworth is a Permitted Mortgagee under the Lease entitled to all of the rights and privileges of a Permitted Mortgagee under the Lease including, but not limited to, all of the rights and privileges contained in Section 22(b) of the Lease.

33.This Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument, shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, and may not be amended except by a writing signed by both parties.

34.This Amendment shall be governed by and interpreted under the laws of the State of Indiana.

[Signature Pages to Follow]

13

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date and year first above written.

TRONA COGENERATION CORPORATION

By: _______________________________

Name:

Title:

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By: _______________________________

Name:

Title:

14

Exhibit A

Original Land

PARCEL 1:

Lots Numbered 52, 53 and 54 in Brackenridge’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 38 page 170, in the Office of the Recorder of Allen County, Indiana.

Together with the vacated alley lying west of and adjacent to said lots.

Also together with an overhead walkway as set out and described proceedings under Declaratory Resolution 1402-75 adopted August 14, 1975 as set out in transcript recorded October 17, 1984 as Instrument Number 84-25309.

PARCEL 2:

Lots Numbered 84, 85, 86, 87, 88 and 89 in Brackenridge’s Addition to the City of Fort Wayne, Indiana as per plat thereof recorded in Deed Record 38 page 170 in the Office of the Recorder of Allen County, Indiana.

Together with the vacated alley lying west of and adjacent to said lots and also together with the vacated alley lying north and adjacent to Lot 89.

PARCEL 3:

A parcel of land situated in the City of Fort Wayne, Allen County, Indiana bound by a line commencing at the point where the North boundary line of Brackenridge Street in said City intersects the East boundary line of Harrison Street in said City and running thence East on the North boundary line of said Brackenridge Street, a distance of 231.5 feet, more or less, to the West boundary line of the alley running North from said Brackenridge Street to Douglas Avenue, between Harrison and Calhoun Streets; thence North, along the West boundary line of said alley, a distance of 131 feet, more or less to the South boundary line of an alley running West to Harrison Street between Brackenridge Street and Douglas Avenue; thence West on the South boundary line of the alley last above described a distance of 231.5 feet, more or less to the East boundary line of said Harrison Street; thence South, on the East boundary line of said Harrison street a distance of 131 feet, more or less to the point of beginning.

PARCEL 4:

That part of the Northwest Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, Allen County, Indiana, beginning at a point where the East line of Harrison Street intersects with and crosses the South line of Douglas Avenue; thence running South along the East line of Harrison Street, a distance of 134 feet to an alley; thence East, along the alley a distance of 231.5 feet to an alley; thence North and parallel with said Harrison Street to the South line of Douglas Avenue; thence West along the South line of Douglas Avenue to the point of beginning.

PARCEL 5:

That part of a vacated alley lying between Parcel 3 and Parcel 4.

PARCEL 6:

The East 46 feet of Lots 91, 92 and 93 in Hamilton’s Third Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana.

PARCEL 7:

Part of the West 84 feet of Lots 91, 92 and 93 in Hamilton’s Third Addition to the City of Fort Wayne as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana, being more particularly described as follows:

Beginning at the Northwest corner of said Lot 93; thence East on and along the North line of said Lot 93 a distance of 84 feet; thence South, a distance of 60 feet to the South line of said Lot 91; thence Northwesterly on the arc of a regular curve to the right having a radius of 172 feet, a distance of 105.34 feet to the point of beginning.

PARCEL 8:

Lots 94, 95, 96, 97, 98, 99, 100, and 101 and all that part of Lot 103 South of the centerline of the brick wall along the South line of said Lot; Lots 104, 105, 106, 107 and the North 19.5 feet of Lot 103 all in Hamilton’s Third Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana.

Together with an overhead walkway described under Declaratory Resolution 1402-75 adopted August 14, 1975 as set out in transcript recorded October 17, 1984 as Instrument Number 84-25309.

PARCEL 9:

Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, Allen County, Indiana, more particularly described as follows, to-wit:

Commencing at the intersection of the South line of Montgomery Street, now Douglas Avenue, in the City of Fort Wayne, with the East line of an alley next East of and parallel with Calhoun Street in said City; thence South on the East line of said Alley, 160.71 feet, more or less to the center of a vacated alley lying South of Montgomery Street, now Douglas Avenue, and extending from Clinton Street West to the first alley East of Calhoun Street, said alley having been vacated by the Board of Public Works of the City of Fort Wayne, by Declaratory Resolution No. 401, adopted April 22, 1920, and confirmed May 13, 1920, running thence East along the centerline of said vacated alley 70 feet to a point; thence North and parallel to the East line of the first alley East of Calhoun Street 160.71 feet, more or less, to the South line of Montgomery Street, now Douglas Avenue in said City of Fort Wayne; thence West 70 feet to the place of beginning.

PARCEL 11:

The tract of land in the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, Allen County, described as follows, to-wit:

Commencing at the intersection of the South property line of Montgomery Street (now Douglas Street) and the West property line of Clinton Street, as said lines existed in 1925; thence West on said South property line of Montgomery Street (now Douglas Street) 159 feet, more or less, to the East line of the tract conveyed to Chester J. Nathan and S. Louis Wolf by deed recorded in Deed Record 290 page 210 of the Deed Records of Allen County, State of Indiana; thence South along said East property line 160.71 feet to the centerline of the vacated 14 foot alley between Montgomery (now Douglas) and Holman (now Brackenridge) Streets; thence East along said centerline of said vacated alley, 159 feet more or less to the west property line of Clinton Street as it existed in 1925; thence North along the said west property line of Clinton Street to the place of beginning.

PARCEL 12:

The vacated alley lying East of and adjacent to Lots Numbered 91 to 101, Inclusive and Lots Numbered 103 to 107 inclusive, in Hamilton’s Third Addition to the City of Fort Wayne, Allen County, Indiana vacated under Declaratory Resolution 1401-1975.

PARCEL 13:

Lots Numbered 62, 63 and 64 in Brackenridge’s Addition to the City of Fort Wayne, Allen County, Indiana as per plat thereof recorded in Plat Book 0, page 82, in the Office of the Recorder of Allen County, Indiana.

Together with that part of an alley lying south and adjacent to said Lots 62, 63, and 64 heretofore vacated by proceedings under General Ordinance G-25-85.

Also together with an overhead walkway as described in Declaratory Resolution Number 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works, recorded October 28, 1984 as Instrument Number 84-25847.

PARCEL 14:

Lot 7 and the East one-half of Lot 8 in Baker’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 31 page 20 in the Office of the Recorder of Allen County, Indiana.

Together with the west half of a vacated alley lying east of and adjacent to said Lot 7.

Also together with the south half of a vacated alley lying north of and adjacent to said Lots 7 and 8.

PARCEL 15:

Lots Numbered 4, 5 and 6 in Baker’s Addition to the City of Fort Wayne, Indiana as per plat thereof recorded in Deed Record 31, page 20 in the Office of the Recorder of Allen County, Indiana.

Together with the east half of vacated alley lying west of and adjacent to said Lots 4, 5 and 6.

PARCEL 16:

Lots Numbered 55, 56, 57, 58, 59, 60 and 61 in Brackenridge’s Addition to the City of Fort Wayne, Indiana as per plat thereof recorded in Plat Book 0 page 82, in the Office of the Recorder of Allen County, Indiana.

Together with the east half of a vacated alley lying west of and adjacent to said Lots 55, 56, 57, 58, 59, 60 and 61.

Also together with an overhead walkway as described in Declaratory Resolution Number 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works, recorded October 28, 1984 as Document Number 84-25847.

PARCEL 17:

The East half of Lot Numbered 57 and all of Lots Numbered 58, 59, 60 and 61 in Hamilton’s Second Addition to the City of Fort Wayne as per plat thereof recorded in Deed Record 31 page 176.

Together with the vacated alley between Lots 57 and 58.

Also together with that part vacated Railroad Street lying south andadjacent to said Lots heretofore vacated by proceedings under Declaratory Resolution Number 1251-1969.

PARCEL 18:

Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, Fort Wayne, Allen County, Indiana, described as follows:

Beginning at a point on the North line of vacated Railroad Street, 131.44 feet East of the East line of Calhoun Street; thence East along the North line of vacated Railroad Street, a distance of 237.56 feet to the West line of Clinton Street; thence South along the West line of Clinton Street, 144.65 feet; thence Westerly, at right angles to the last described course, 20.0 feet; thence Southerly, at right angles to the last described course, 10.5 feet (recorded as 12 feet) to the Northerly face of a concrete retaining wall; thence Westward along the North face of said retaining wall, following a curved course to the right to a point 133.03 feet East of the East line of Calhoun Street, measured along the North face of said retaining wall; thence North 128.4 feet to the point of beginning.

PARCEL 19:

The West Half of Lot Numbered 8 in Baker’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 31 page 20, in the Office of the Recorder of Allen County, Indiana.

Together with the south half of vacated alley lying north of and adjacent to said Lot 8.

PARCEL 20:

Lots Numbered 65 and 66 in Brackenridge’s Addition to the City of Fort Wayne, Indiana, as per plat thereof recorded in Deed Record 28, page 93 in the Office of the Recorder of Allen County, Indiana.

Together with the north half of vacated alley lying south of and adjacent to said lots 65 and 66.

PARCEL 21:

That part of Lot 11 in Baker’s Addition to the City of Fort Wayne, Allen County, Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana, being described as follows:

Beginning at the Northwest corner of said Lot 11; thence East along the North end of said Lot to the East side thereof; thence South along the East side of said Lot to the South end thereof; thence in a straight line in the Northwesterly direction to the point of beginning.

Together with the south half of a vacated alley lying north of and adjacent to said Lot 11.

PARCEL 22:

Lots 9 and 10 in Baker’s Addition to the City of Fort Wayne, Allen County Indiana, as per plat thereof recorded in the Office of the Recorder of Allen County, Indiana.

Together with the south half of a vacated alley lying north of and adjacent to said Lots 9 and 10.

PARCEL 23:

Lots 62 and 63 in the continuation of Hamilton’s Second Addition to the City of Fort Wayne, as per plat thereof recorded in Deed Record 31 page 176, in the Office of the Recorder of Allen County, Indiana.

PARCEL 24:

The portion of that certain 10 foot north-south alley which is bounded on the west by Lot 62 of Brackenridge Addition to the City of Fort Wayne, by Lot 7 of Baker’s Addition to the City of Fort Wayne, and which said alley is bounded on the east by Lots 55 through 61 inclusive, of

Brackenridge Addition to the City of Fort Wayne, by Lots 4 through 6, inclusive, in Baker’s Addition to the City of Fort Wayne (herein after referred to as north-south alley); and

The portion of that certain 10 foot east-west alley which is bounded on the north by Lots 62 through 66, inclusive, of Brackenridge Addition to the City of Fort Wayne, and which is bounded on the south by Lots 7 through 11 inclusive of Baker’s Addition to the City of Fort Wayne (hereinafter referred to as east-west alley).

Exhibit B

Additional Land (Parking Facility) Description

Lot Numbered 4 and the south half of a vacated alley adjacent to said Lot in Hamilton’s Homestead Addition to the City of Fort Wayne, Allen County, Indiana, being described as follows:

A parcel of real estate located in the East Half of the Northeast Quarter of Section 11, Township 30 North, Range 12 East in the City of Fort Wayne, Allen County, Indiana, and described as follows:

That tract of real estate in the City of Fort Wayne, bounded on the East by the West property line of Clinton Street, on the South by the North property line of Holman Street, (Brackenridge Street 1976); on the West by the East property line of the alley between Calhoun Street and Clinton Street in Hamilton’s Third Addition to the City of Fort Wayne, on the North by the centerline of the vacated alley between Holman (Brackenridge Street 1976) and Montgomery Street (Douglas Street 1976) and extending from Clinton Street to the said alley between Clinton Street and Calhoun Street in said Hamilton’s Third Addition.

Schedule A

Fort Wayne, Indiana

Lincoln National Life Insurance Company

(“Harrison Site”)

A-1

Schedule B

Basic Rent Payments

[NOTE: Paragraphs 1 through 5 remain unchanged.]

6.Each installment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 2004 and ending on and including August 31, 2009 shall be $7,912,625 and should be payable semi-annually in arrears commencing on February 28, 2005 and thereafter on the last day of each August and February thereafter to and including August 31, 2009.

7.Each installment of Basic Rent for the Leased Premises during the Initial Extended Term (i.e., during the period September 1, 2009 through August 31, 2019) shall be $2,100,000, and shall be payable semi-annually in arrears commencing on February 28, 2010 and thereafter on the last day of each August and February thereafter to and including August 31, 2019.

8.Each installment of Basic Rent for the Leased Premises during any Extended Term commencing on or after September 1, 2019 shall be equal to the Semiannual Basic Rent (as hereinafter defined), and shall be payable semi-annually in arrears commencing on the first February 28 following the commencement of such Extended Term and thereafter on the last day of each August and February thereafter occurring during such Extended Term.

9.For purposes of this Schedule, the term “Semiannual Basic Rent” shall mean $2,100,000, increased proportionally by an amount equal to the same relative percentage increase as that of the Consumer Price Index over a base of September 1, 2009, and will be compared to the Consumer Price Index as of August 31 of the year in which the new Extended Term in question commences. For example if the CPI on September 1, 2009 was 150 and on

B-1

August 31, 2019 the CPI had increased to 207, the proportionate increase in the Basic Rent would be 38% (209/150 = 1.38). The Semiannual Basic Rent payable during the Extension Term ending on August 31, 2024 would be for this example $2,898,000 (1.38 x $2,100,000). Notwithstanding the above, in no event will the Semiannual Basic Rent be less than $2,100,000, nor more than $3,595,500, at any time during the portion of the term of this Lease commencing September 1, 2019.

10.If any installment of Basic Rent shall be payable on a date which shall not be a business day, then such installment shall be payable on the first business day thereafter.

B-2

Schedule C

To Lease

COMPUTATION OF PURCHASE PRICES

Upon the purchase of the Leased Premises during the Primary Term (subsequent to June __, 2006) or the Initial Extended Term pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall be an amount equal to the amount set forth in column 2 below opposite the period in which such purchase occurs (the first such amount being called “Lessor’s Cost”) (period 1 being the period beginning on March 1, 2006 and ending on and including August 31, 2006, period 2 being the period beginning on September 1, 2006 and ending on and including February 28, 2007, and each succeeding period being the following semiannual period to and including period 27).

COLUMN 1	COLUMN 2
PURCHASE PERIOD	APPLICABLE AMOUNT
1	44,032,767.00
2	44,032,935.00
3	40,443,935.00
4	36,633,700.00
5	32,586,089.00
6	23,798,894.00
7	18,841,141.00
8	15,214,841.92
9	14,738,271.19
10	14,247,736.95
11	13,742,830.05
12	13,223,129.37
13	12,688,201.47
14	12,137,600.18
15	11,570,866.27
16	10,987,527.06
17	10,387,096.01
18	9,769,072.33

C-1

COLUMN 1	COLUMN 2
PURCHASE PERIOD	APPLICABLE AMOUNT

19	9,132,940.55
20	8,478,170.12
21	7,804,214.91
22	7,110,512.81
23	6,396,485.25
24	5,661,536.67
25	4,905,054.10
26	4,126,406.59
27	3,324,944.71

Upon a partial prepayment of the indebtedness secured by the Senior Permitted Mortgage referred to in paragraph 12(c) or 14(b) of this Lease, the amounts set forth above shall be reduced by an amount equal to the amount of the reduction of the principal amount of such indebtedness scheduled to be outstanding during each purchase period, after giving effect to the revised amortization thereof resulting from such partial prepayment in accordance with the terms thereof. (In case such indebtedness is prepaid or otherwise refinanced, the amounts so determined shall be reduced as if such indebtedness had remained outstanding.)

C-2

Schedule D

Permitted Encumbrances

D-1

EX-10.23

Exhibit 10.23

CONFIDENTIAL TREATMENT REQUESTED FOR CERTAIN PORTIONS

Goldman Sachs & Co. | 85 Broad Street | New York, New York 10004 | Tel: 212 902 1000

Opening Transaction

To:	Lincoln National Corporation 1500 Market Street, Suite 3900 Philadelphia, Pennsylvania 19102-2112
A/C:	[Insert Account Number]
From:	Goldman, Sachs & Co.
Re:	Prepaid Enhanced VWAP Repurchase Transaction
Ref. No:	[Insert Reference Number]
Date:	April 3, 2006

This master confirmation (this “Master Confirmation”), dated as of April 3, 2006, is intended to supplement the terms and provisions of certain Transactions (each, a “Transaction”) entered into from time to time between Goldman, Sachs & Co. (“GS&Co.”) and Lincoln National Corporation (“Counterparty”). This Master Confirmation, taken alone, is neither a commitment by either party to enter into any Transaction nor evidence of a Transaction. The terms of any particular Transaction shall be set forth in (i) a Supplemental Confirmation in the form of Schedule A hereto (a “Supplemental Confirmation”), which shall reference this Master Confirmation and supplement, form a part of, and be subject to this Master Confirmation and (ii) a Trade Notification in the form of Schedule B hereto (a “Trade Notification”), which shall reference the relevant Supplemental Confirmation and supplement, form a part of, and be subject to such Supplemental Confirmation. This Master Confirmation, each Supplemental Confirmation and the related Trade Notification together shall constitute a “Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Master Confirmation. This Master Confirmation, each Supplemental Confirmation and the related Trade Notification evidence a complete binding agreement between the Counterparty and GS&Co. as to subject matter and the terms of each Transaction to which this Master Confirmation, such Supplemental Confirmation and Trade Notification relate and shall supersede all prior or contemporaneous written or oral communications with respect thereto.

This Master Confirmation, each Supplemental Confirmation and each Trade Notification supplement, form a part of, and are subject to an agreement in the form of the 1992 ISDA Master Agreement (Multi-Currency Cross Border) (the “Agreement”) as if GS&Co. and Counterparty had executed the Agreement on the date of this Master Confirmation (but without any Schedule except for (i) the election of Loss and Second Method, New York law (without regard to the conflicts of law principles) as the governing law and US Dollars (“USD”) as the Termination Currency, (ii) the election that subparagraph (ii) of Section 2(c) will not apply to Transactions, (iii) the election that the “Cross Default” provisions of Section 5(a)(vi) shall apply to Counterparty, with a “Threshold Amount” of USD 50 million); provided that Section 5(a)(vi) is amended to delete the phrase “or becoming capable at such time of being declared” in the seventh line thereof. Notwithstanding the terms of Sections 5 and 6 of the Agreement, if at any time and so long as Counterparty has satisfied its payment obligations under Section 2(a)(i) of the Agreement in respect of all Transactions and has at the time no further payment obligations under such Section, then unless GS&Co. is required pursuant to appropriate proceedings to return to Counterparty, or otherwise returns to Counterparty upon demand of Counterparty, any portion of any such payment, (a) the occurrence of an event

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

described in Section 5(a) (excluding Section 5(a)(ii) and Section 5(a)(iv)) of the Agreement with respect to Counterparty shall not constitute an Event of Default or a Potential Event of Default with respect to Counterparty as the Defaulting Party and (b) GS&Co. shall be entitled to designate an Early Termination Date pursuant to Section 6 of the Agreement only as a result of the occurrence of a Termination Event set forth in (i) Sections 5(b)(i), 5(b)(ii) and 5(b)(v) of the Agreement with respect to GS&Co. as the Affected Party, (ii) Section 5(b)(iii) of the Agreement with respect to GS&Co. as the Burdened Party and (iii) Section 5(b)(v) of the Agreement with respect to Counterparty. All provisions contained or incorporated by reference in the Agreement shall govern this Master Confirmation, each Supplemental Confirmation and each Trade Notification except as expressly modified herein.

If, in relation to any Transaction to which this Master Confirmation, a Supplemental Confirmation and a Trade Notification relate, there is any inconsistency between the Agreement, this Master Confirmation, any Supplemental Confirmation, any Trade Notification and the Equity Definitions, the following will prevail for purposes of such Transaction in the order of precedence indicated: (i) such Trade Notification, (ii) such Supplemental Confirmation; (iii) this Master Confirmation; (iv) the Agreement; and (v) the Equity Definitions.

1.Each Transaction constitutes a Share Forward Transaction for the purposes of the Equity Definitions. Set forth below are the terms and conditions which, together with the terms and conditions set forth in the related Supplemental Confirmation and Trade Notification (in respect of the relevant Transaction), shall govern each such Transaction.

General Terms:

Trade Date: For each Transaction, as set forth in the Supplemental Confirmation.

Buyer: Counterparty

Seller: GS&Co.

Shares: Shares of common stock of Counterparty (Ticker: LNC)

Forward Price: The average of the VWAP Prices for each Exchange Business Day in the Calculation Period.

VWAP Price: For any Exchange Business Day, the New York Stock Exchange 10b-18 Volume Weighted Average Price per Share for the regular trading session (including any extensions thereof) for such Exchange Business Day (without regard to pre-open or after hours trading outside of any regular trading session for such Exchange Business Day), as published by Bloomberg at 4:15 p.m., New York time, on such Exchange Business Day, on Bloomberg page “LNC.N EQUITY AQR SEC” (or any successor thereto).

Forward Price

Adjustment Amount: For each Transaction, as set forth in the Trade Notification.

Calculation Period: The period from and including the first Exchange Business Day following the Hedge Completion Date to and including the Termination Date (as adjusted in accordance with the provisions hereof).

Termination Date: For each Transaction, the date set forth in the Supplemental Confirmation(as the same may be postponed in accordance with the provisions hereof); provided that GS&Co. may elect to accelerate the Termination Date to any date during the Acceleration Period.

Acceleration Period: For each Transaction, as set forth in the Supplemental Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Hedge Period: The period from and including the day immediately after the Trade Date to and including the Hedge Completion Date (as adjusted in accordance with the provisions hereof).

Hedge Completion Date: For each Transaction, the Exchange Business Day on which GS&Co. finishes establishing its initial Hedge Positions in respect of such Transaction, as determined by GS&Co. in its good faith and commercially reasonable discretion, which date shall be as set forth in the Supplemental Confirmation and Trade Notification (as the same may be postponed in accordance with the provisions herein).

Hedge Period Reference

Price: The average of the VWAP Prices for each Exchange Business Day in the Hedge Period.

Market Disruption Event: The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time” and inserting the words “at any time on any Scheduled Trading Day during the Hedge Period or Calculation Period or” after the word “material,” in the third line thereof.

Notwithstanding anything to the contrary in the Equity Definitions, to the extent that any Exchange Business Day in the Calculation Period or Hedge Period is a Disrupted Day, the Calculation Agent may postpone the Termination Date or the Hedge Completion Date, as the case may be. In such event, the Calculation Agent must determine whether (i) such Disrupted Day is a Disrupted Day in full, in which case the VWAP Price for such Disrupted Day shall not be included for purposes of determining the Forward Price or the Hedge Period Reference Price, as the case may be, or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day effected before the relevant Market Disruption Event occurred and/or after the relevant Market Disruption Event ended, and the weighting of the VWAP Price for the relevant Exchange Business Days during the Calculation Period or Hedge Period, as the case may be, shall be adjusted by the Calculation Agent for purposes of determining the Forward Price or the Hedge Period Reference Price, as the case may be, with such adjustments based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares.

If a Disrupted Day occurs during the Calculation Period or the Hedge Period, and each of the 9 immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Trading Day based on the volume, historical trading patterns and price of the Shares and such other factors as it deems appropriate or (ii) further extend the Hedge Period and/or the Calculation Period as it deems necessary to determine the VWAP Price.

Exchange: NYSE

Related Exchange(s): All Exchanges.

Prepayment\Variable

Obligation: Applicable

Prepayment Amount: For each Transaction, as set forth in the Supplemental Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Prepayment Date: One (1) Exchange Business Day following the Hedge Completion Date.

Counterparty Additional

Payment Amount: For each Transaction, as set forth in the Supplemental Confirmation. Counterparty shall pay to GS&Co. the Counterparty Additional Payment Amount, if any, on the Counterparty Additional Payment Date.

Counterparty Additional

Payment Date: One (1) Exchange Business Day following the Hedge Completion Date.

Settlement Terms:

Physical Settlement: Applicable; provided that GS&Co. does not, and shall not, make the agreement or the representations set forth in Section 9.11 of the Equity Definitions related to the restrictions imposed by applicable securities laws with respect to any Shares delivered by GS&Co. to Counterparty under any Transaction.

Number of Shares

to be Delivered: A number of Shares equal to (a) the Prepayment Amount divided by (b) the Forward Price minus the Forward Price Adjustment Amount; provided that the Number of Shares to be Delivered will be not less than the Minimum Shares and not greater than the Maximum Shares. The Number of Shares to be Delivered on the Settlement Date shall be reduced, but not below zero, by any Shares delivered pursuant to the Initial Share Delivery described below.

Excess Dividend Amount: For the avoidance of doubt, all references to the Excess Dividend Amount shall be deleted from Section 9.2(a)(iii) of the Equity Definitions.

Settlement Date: Three (3) Exchange Business Days following the Termination Date.

Settlement Currency: USD (all amounts shall be converted to the Settlement Currency by the Calculation Agent using the spot rate at the time of conversion)

Initial Share Delivery: GS&Co. shall deliver a number of Shares equal to the Minimum Shares to Counterparty on the Initial Share Delivery Date in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.

Initial Share Delivery Date: One (1) Exchange Business Day following the Hedge Completion Date.

Minimum Shares: For each Transaction, as set forth in the Supplemental Confirmation.

Maximum Shares: For each Transaction, as set forth in the Supplemental Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Share Adjustments:

Potential Adjustment Event: Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.

Extraordinary Dividend: For any calendar quarter, any dividend or distribution on the Shares with an ex-dividend date occurring during such calendar quarter (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) (a “Dividend”) the amount or value of which (as determined by the Calculation Agent), when aggregated with the amount or value (as determined by the Calculation Agent) of any and all previous Dividends with ex-dividend dates occurring in the same calendar quarter, exceeds the Ordinary Dividend Amount.

Ordinary Dividend Amount: For each Transaction, as set forth in the Supplemental Confirmation.

Method of Adjustment: Calculation Agent Adjustment

Extraordinary Events:

Consequences of

Merger Events and

Tender Offers:

(a) Share-for-Share: Modified Calculation Agent Adjustment

(b) Share-for-Other: Cancellation and Payment

(c) Share-for-Combined: Component Adjustment

Determining Party: GS&Co.

Tender Offer: Applicable

Nationalization,

Insolvency or Delisting: Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, the American Stock Exchange or The NASDAQ National Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange.

Additional Disruption Events:

(a)Change in Law:Applicable

*

Maximum Stock Loan Rate *

Hedging Party: GS&Co.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Determining Party: GS&Co.

Non-Reliance/Agreements and

Acknowledgements Regarding

Hedging Activities/Additional

Acknowledgements: Applicable

Transfer: Notwithstanding anything to the contrary in the Agreement, GS&Co. may assign, transfer and set over all rights, title and interest, powers, privileges and remedies of GS&Co. under this Transaction, in whole or in part, to an affiliate of GS&Co. that is guaranteed by The Goldman Sachs Group, Inc. without the consent of Counterparty; provided, however, that GS&Co. may not assign its rights or delegate its obligations under this Transaction if such assignment or delegation shall result in (A) an Event of Default with respect to which GS&Co. is the Defaulting Party, a Termination Event, a Potential Event of Default with respect to which GS&Co. would be the Defaulting Party or a potential Termination Event, (B) Counterparty being required to pay to the transferee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) greater than the amount that Counterparty would have been required to pay GS&Co. in the absence of such transfer, or (C) Counterparty receiving a payment from which an amount has been withheld or deducted, on account of a Tax under Section 2(d)(i) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)), in excess of the amount that GS&Co. would have been required to so withhold or deduct in the absence of such transfer, unless the transferee would be required to make additional payments pursuant to Section 2(d)(i)(4) corresponding to such withholding or deduction.

GS&Co. Payment Instructions: Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.

A/C #930-1-011483

ABA: 021-000021

Counterparty’s Contact Details

for Purpose of Giving Notice: To be provided by Counterparty

GS&Co.’s Contact Details for

Purpose of Giving Notice: Telephone No.: (212) 902-8996

Facsimile No.: (212) 902-0112

Attention: Equity Operations: Options and Derivatives

With a copy to:

Kelly Coffey

Equity Capital Markets

One New York Plaza

New York, NY 10004

Telephone No.: (212) 902-1037

Facsimile No.: (212) 256-4298

2.Calculation Agent.GS&Co.; provided that any disagreement regarding the determination made by the Calculation Agent shall be resolved in accordance with Section 19 of this Master Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

3.Additional Mutual Representations, Warranties and Covenants. In addition to the representations and warranties in the Agreement, each party represents, warrants and covenants to the other party that:

(a)Eligible Contract Participant. It is an “eligible contract participant”, as defined in the U.S. Commodity Exchange Act (as amended), and is entering into each Transaction hereunder as principal and not for the benefit of any third party.

(b)Accredited Investor. Each party acknowledges that the offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof and the provisions of Regulation D thereunder (“Regulation D”). Accordingly, each party represents and warrants to the other that (i) it has the financial ability to bear the economic risk of its investment in each Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D, (iii) it will purchase each Transaction for investment and not with a view to the distribution or resale thereof in a manner that would violate the Securities Act, and (iv) the disposition of each Transaction is restricted under this Master Confirmation, the Securities Act and state securities laws.

4.Additional Representations, Warranties and Covenants of Counterparty. In addition to the representations, warranties and covenants in the Agreement and those contained herein, as of (i) the date hereof, (ii) the Trade Date and (iii) to the extent indicated below, each day during the Hedge Period and Calculation Period, Counterparty represents, warrants and covenants to GS&Co. that:

(a)it is not aware of any third party tender offer for its Shares and is not entering into this Transaction as part of a self-tender offer for its Shares under the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(b)it is not entering into any Transaction on the basis of, and is not aware of, any material non-public information with respect to the Shares or in anticipation of, in connection with, or to facilitate, a distribution of its securities, a self tender offer or a third-party tender offer;

(c)each Transaction is being entered into pursuant to a publicly disclosed Share buy-back program and its Board of Directors has approved the use of derivatives to effect the Share buy-back program;

(d)Counterparty acknowledges that, notwithstanding the generality of Section 13.1 of the Equity Definitions, it acknowledges that GS&Co. is not making any representations or warranties with respect to the treatment of any Transaction under FASB Statements 128, 133 as amended or 149, 150, EITF 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project;

(e)Counterparty is in compliance with its reporting obligations under the Exchange Act and its most recent Annual Report on Form 10-K, together with all reports subsequently filed by it pursuant to the Exchange Act, taken together and as amended and supplemented to the date of this representation, do not, as of their respective filing dates, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(f)Counterparty shall report each Transaction as required under Regulation S-K under the Exchange Act;

(g)on the Trade Date the Shares or securities that are convertible into, or exchangeable or exercisable for Shares are not subject to a “restricted period” as such term is defined in Regulation M promulgated under the Exchange Act;

(h)Counterparty acknowledges that each Transaction is a derivatives transaction in which it has granted GS&Co. an option. GS&Co. may purchase shares for its own account at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of the related Transaction; and

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

(i)Counterparty is not and, after giving effect to the Transaction, will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

4A.Additional Representations, Warranties and Covenants of GS&Co. With respect to (i) all purchases of Shares made by GS&Co. during any relevant Hedge Period in respect of any Transaction and (ii) purchases during the related Calculation Period of a number of Shares equal to the Maximum Shares for such Transaction less the number of Shares so purchased during the related Hedge Period in respect of such Transaction, GS&Co. will use good faith efforts to effect such purchases in accordance with Rule 10b-18(b)(2), (3) and (4), and effect calculations in respect thereof, as if those sections applied to GS&Co., taking into account any applicable Securities and Exchange Commission no-action letters as appropriate and subject to any delays between the execution and reporting of a trade of the Shares on the Exchange and other circumstances beyond its control.

5.Suspension of Hedge Period and/or Calculation Period.

(a)If Counterparty concludes that it will be engaged in a distribution of the Shares for purposes of Regulation M, Counterparty agrees that it will, on one Scheduled Trading Day’s prior written notice, direct GS&Co. not to purchase Shares in connection with hedging any Transaction during the “restricted period” (as defined in Regulation M). If on any Scheduled Trading Day Counterparty delivers written notice (and confirms by telephone) by 8:30 a.m. New York Time (the “Notification Time”) then such notice shall be effective to suspend the Calculation Period or the Hedge Period, as the case may be, as of such Notification Time. In the event that Counterparty delivers notice and/or confirms by telephone after the Notification Time, then the Calculation Period or the Hedge Period, as the case may be, shall be suspended effective as of 8:30 a.m. New York Time on the following Scheduled Trading Day or as otherwise required by law or agreed between Counterparty and GS&Co. The Hedge Period and/or the Calculation Period shall be suspended and the Hedge Completion Date and/or the Termination Date extended for each Scheduled Trading Day in such restricted period; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 6 below.

(b)In the event that GS&Co. concludes, in its good faith discretion, based on advice of outside legal counsel, that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures (x) are imposed by law or (y) have been voluntarily adopted by GS&Co. and, in the case of (y), in existence on the date of this Master Confirmation), for it to refrain from purchasing Shares on any Scheduled Trading Day during the Hedge Period or Calculation Period, GS&Co. may by written notice to Counterparty elect to suspend the Hedge Period or Calculation Period, as the case may be, for such number of Scheduled Trading Days as is specified in the notice. The notice shall not specify, and GS&Co. shall not otherwise communicate to Counterparty, the reason for GS&Co.’s election to suspend the Hedge Period or Calculation Period. The Hedge Period or Calculation Period, as the case may be, shall be suspended and the Hedge Period Completion Date or the Termination Date, as the case may be, extended for each Scheduled Trading Day occurring during any such suspension.

(c)In the event that the Hedge Period or Calculation Period is suspended pursuant to Section 5(a) or 5(b) above during the regular trading session on the Exchange, such suspension shall be deemed to be an additional Market Disruption Event, and the second paragraph under “Market Disruption Event” shall apply to any Disrupted Day occurring during the Hedge Period or the Calculation Period solely as a result of such additional Market Disruption Event.

(d)In the event that the Calculation Period is extended pursuant to any provision hereof (including, without limitation, pursuant to Section 9(d) below), the Calculation Agent shall adjust any relevant terms of the related Transaction if necessary to preserve as nearly as practicable the economic terms of such Transaction prior to such extension; provided that Counterparty shall not be required to make any additional cash payments or deliver any Shares in connection with any such adjustments.

6.10b5-1 Plan. Counterparty represents, warrants and covenants to GS&Co. that for each Transaction:

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

(a)Counterparty is entering into this Master Confirmation and each Transaction hereunder in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”). It is the intent of the parties that each Transaction entered into under this Master Confirmation comply with the requirements of Rule 10b5-1(c)(1)(i)(A) and (B) and each Transaction entered into under this Master Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c).

(b)Counterparty will not seek to control or influence GS&Co. to make "purchases or sales" (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under any Transaction entered into under this Master Confirmation, including, without limitation, GS&Co.’s decision to enter into any hedging transactions. Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of this Master Confirmation, each Supplemental Confirmation and each Trade Notification under Rule 10b5-1.

(c)Counterparty acknowledges that any amendment or modification of this Master Confirmation, the relevant Supplement Confirmation or Trade Notification must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c).

7.Counterparty Purchases.

Counterparty (or any “affiliated purchaser” as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall not, without the prior written consent of GS&Co., directly or indirectly purchase any Shares, listed contracts on the Shares or securities that are convertible into, or exchangeable or exercisable for Shares (including, without limitation, any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18)) during any Hedge Period or Calculation Period (as extended pursuant to the provisions hereof). During this time, any such purchases by Counterparty shall be made through GS&Co., or if not through GS&Co., with the prior written consent of GS&Co., and in compliance with Rule 10b-18 or otherwise in a manner that Counterparty and GS&Co. believe is in compliance with applicable requirements.

8.Additional Termination Event. The declaration of any Extraordinary Dividend by the Issuer during the Calculation Period will constitute an Additional Termination Event, with Counterparty as the sole Affected Party and all Transactions hereunder as the Affected Transactions.

9.Special Provisions for Merger Transactions. Notwithstanding anything to the contrary herein or in the Equity Definitions, to the extent that an public announcement (as defined in Rule 165(f) under the Securities Act of 1933, as amended) for a Merger Transaction (as defined below) occurs during any Hedge Period or Calculation Period,

(a)Counterparty shall, at the same time of making any such public announcement, notify GS&Co. of such public announcement;

(b)promptly provide GS&Co. with written notice specifying (i) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the Announcement Date that were not effected through GS&Co. or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the Announcement Date. Such written notice shall be deemed to be a certification by Counterparty to GS&Co. that such information is true and correct. Counterparty understands that GS&Co. will use this information in calculating the trading volume for purposes of Rule 10b-18. In addition, Counterparty shall promptly notify GS&Co. of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Counterparty acknowledges that any such notice may cause the terms of any Transaction to be adjusted or such Transaction to be terminated; accordingly, Counterparty acknowledges that its delivery of such notice must comply with the standards set forth in Section 6; and

(c)GS&Co. in its good faith and commercially reasonable discretion may (i) make adjustments to the terms of any Transaction, including, without limitation, the Termination Date and the Maximum Shares to account for the number of Shares that could be purchased on each day during the Calculation Period in compliance with Rule

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

10b-18 following such public announcement, provided that Counterparty shall not be required to make any additional cash payments or deliver any Shares in connection with any such adjustments or (ii) treat the occurrence of such public announcement as an Additional Termination Event with Counterparty as the sole Affected Party.

“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

10. Acknowledgments. The parties hereto intend for:

(a)Each Transaction to be a “securities contract” as defined in Section 741(7) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), a “swap agreement” as defined in Section 101(53B) of the Bankruptcy Code, or a “forward contract” as defined in Section 101(25) of the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362)b)(27), 555, 556, 560 and 561 of the Bankruptcy Code;

(b)This Agreement to be a “master netting agreement” as defined in Section 101(38A) of the Bankruptcy Code;

(c)A party’s right to liquidate or terminate any Transaction, net out or offset termination values of payment amounts, and to exercise any other remedies upon the occurrence of any Event of Default or Termination Event under the Agreement with respect to the other party or any Extraordinary Event that results in the termination or cancellation of any Transaction to constitute a “contractual right” (as defined in the Bankruptcy Code);

(d)Any cash, securities or other property transferred as performance assurance, credit support or collateral with respect to each Transaction to constitute “margin payments” (as defined in the Bankruptcy Code); and

(e)All payments for, under or in connection with each Transaction, all payments for the Shares and the transfer of such Shares to constitute “settlement payments” and “transfers” (as defined in the Bankruptcy Code).

11.Credit Support Documents. The parties hereto acknowledge that no Transaction hereunder is secured by any collateral that would otherwise secure the obligations of Counterparty herein or pursuant to the Agreement.

12.Limitation on Set-off. (a) Notwithstanding anything to the contrary in the Agreement or the Equity Definitions, the calculation of any Settlement Amounts, Unpaid Amounts and amounts owed in respect of cancelled Transactions under Article 12 of the Equity Definitions shall be calculated separately for (A) all Terminated Transactions (it being understood that such term for purposes of this paragraph includes Transactions cancelled pursuant to Article 12 of the Equity Definitions) in the Shares of the Issuer that qualify as equity under applicable accounting rules (collectively, the “Equity Shares”) as determined by the Calculation Agent and (B) all other Terminated Transactions under the Agreement including, without limitation, Transactions in Shares other than those of the Issuer (collectively, the “Other Shares”) and the netting and set-off provisions of the Agreement shall only operate to provide netting and set-off (i) among Terminated Transactions in the Equity Shares and (ii) among Terminated Transactions in the Other Shares. In no event shall the netting and set-off provisions of the Agreement operate to permit netting and set-off between Terminated Transactions in the Equity Shares and Terminated Transactions in the Other Shares.

(b)The parties agree to amend Section 6 of the Agreement by adding a new Section 6(f) thereto as follows:

“(f) Upon the occurrence of an Event of Default or Termination Event with respect to a party who is the Defaulting Party or the Affected Party or upon the occurrence of an Extraordinary Event that results in the termination or cancellation of any Transaction (such Defaulting Party, Affected Party or, in the case of such an Extraordinary Event, either party, “X”), the other party (“Y”) will have the right (but not be obliged) without prior notice to X

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

or any other person to set-off or apply any obligation of X owed to Y (or any Affiliate of Y) (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation) against any obligation of Y (or any Affiliate of Y) owed to X (whether or not matured or contingent and whether or not arising under the Agreement, and regardless of the currency, place of payment or booking office of the obligation). Y will give notice to the other party of any set-off effected under this Section 6(f).

Amounts (or the relevant portion of such amounts) subject to set-off may be converted by Y into the Termination Currency at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency. If any obligation is unascertained, Y may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section 6(f) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”

(c)Notwithstanding anything to the contrary in the foregoing, GS&Co. agrees not to set off or net amounts due from Counterparty with respect to any Transaction against amounts due from GS&Co. to Counterparty under obligations other than Equity Contracts. “Equity Contract” means any transaction relating to Shares between the parties (or any of their affiliates) that qualifies as ‘equity’ under applicable accounting rules.

13. Early Termination. In the event that (i) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to any Transaction or (ii) an Extraordinary Event occurs that results in the cancellation or termination of any Transaction pursuant to Article 12 of the Equity Definitions (except, in the case of clause (ii), a Merger Event in which the consideration or proceeds to be paid to holders of Shares consists solely of cash), if GS&Co. would owe any amount to Counterparty pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (in each case, calculated as if the Transactions being terminated or cancelled on such Early Termination Date or as a result of such Extraordinary Event were the sole Transactions under the Agreement) (any such amount, a “GS&Co. Amount”), then, in lieu of any payment of such GS&Co. Amount, Counterparty may, no later than the Early Termination Date or the date on which such Transaction is cancelled or terminated, as the case may be, elect for GS&Co. to deliver to Counterparty a number of Shares (or, in the case of a Merger Event, a number of units, each comprising the number or amount of the securities or property that a hypothetical holder of one Share would receive in such Merger Event (each such unit, an “Alternative Delivery Unit” and, the securities or property comprising such unit, “Alternative Delivery Property”)) with a value equal to the GS&Co. Amount, as determined by the Calculation Agent (and the parties agree that, in making such determination of value, the Calculation Agent may take into account a number of factors, including the market price of the Shares or Alternative Delivery Property on the date of early termination and the prices at which GS&Co. purchases Shares or Alternative Delivery Property to fulfill its delivery obligations under this Section 13); provided that in determining the composition of any Alternative Delivery Unit, if the relevant Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

14. Payment Date upon Early Termination. Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement, all amounts calculated as being due in respect of an Early Termination Date under Section 6(e) of the Agreement will be payable on the day that notice of the amount payable is effective; provided that if Counterparty elects to receive Shares or Alternative Delivery Property in accordance with Section 13, such Shares or Alternative Delivery Property shall be delivered on a date selected by GS&Co, which date shall be no later than third Exchange Business Day after the day that notice of the amount payable is effective or

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

such later date as determined by GS&Co. to be the date that would allow GS&Co. to purchase Shares or Alternative Delivery Property to be delivered by GS&Co. under this provision in accordance with Rule 10b-18(b)(2), (3) and (4), as if those sections applied to GS&Co.

15. Special Provisions for Counterparty Payments. The parties hereby agree that, notwithstanding anything to the contrary herein or in the Agreement, in the event that (i) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to any Transaction and, as a result, Counterparty owes to GS&Co. an amount calculated under Section 6(e) of the Agreement or (ii) an Extraordinary Event occurs that results in the termination or cancellation of any Transaction pursuant to Article 12 of the Equity Definitions and, as a result, Counterparty owes to GS&Co. a Cancellation Amount or other amount in respect of such Transaction (in each case, calculated as if the Transactions being terminated or cancelled on such Early Termination Date or as a result of such Extraordinary Event were the sole Transactions under the Agreement), such amount shall be deemed to be zero.

16. Claim in Bankruptcy. GS&Co. agrees that in the event of the bankruptcy of Counterparty, GS&Co. shall not have rights or assert a claim that is senior in priority to the rights and claims available to the shareholders of the common stock of Counterparty.

17. Governing Law. The Agreement, this Master Confirmation, each Supplemental Confirmation and all matters arising in connection with the Agreement, this Master Confirmation and each Supplemental Confirmation shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (without reference to its choice of laws doctrine).

18. Offices.

(a)The Office of GS&Co. for each Transaction is: One New York Plaza, New York, New York 10004.

(b)The Office of Counterparty for each Transaction is: 1500 Market Street, Suite 3900, Philadelphia, Pennsylvania 19102-2112.

19.Arbitration. The Agreement, this Master Confirmation and each Supplemental Confirmation are subject to the following arbitration provisions:

(a)All parties to this Confirmation are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.

(b)Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited.

(c)The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.

(d)The arbitrators do not have to explain the reason(s) for their award.

(e)The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry, unless Counterparty is a member of the organization sponsoring the arbitration facility, in which case all arbitrators may be affiliated with the securities industry.

(f)The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.

(g)The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this Confirmation.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Counterparty agrees that any and all controversies that may arise between Counterparty and GS&Co., including, but not limited to, those arising out of or relating to the Agreement or any Transaction hereunder, shall be determined by arbitration conducted before The New York Stock Exchange, Inc. (“NYSE”) or NASD Dispute Resolution (“NASD-DR”), or, if the NYSE and NASD-DR decline to hear the matter, before the American Arbitration Association, in accordance with their arbitration rules then in force. The award of the arbitrator shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction.

No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) Counterparty is excluded from the class by the court.

Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Confirmation except to the extent stated herein.”

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Counterparty hereby agrees (a) to check this Master Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of the agreement between GS&Co. and Counterparty with respect to any particular Transaction to which this Master Confirmation relates, by manually signing this Master Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Equity Derivatives Documentation Department, Facsimile No. 212-428-1980/83.

Yours faithfully,

GOLDMAN, SACHS & CO.

By:/s/ Kelly C. Coffey

Authorized Signatory

Agreed and Accepted By:

LINCOLN NATIONAL CORPORATION

By: /s/Duane Bernt

Name: Duane Bernt

Title:Vice President and Treasurer

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

SUPPLEMENTAL CONFIRMATION

To:	Lincoln National Corporation
From:	Goldman, Sachs & Co.
Subject:	Issuer VWAP Prepaid Share Forward Transaction
Ref. No:	[Insert Reference No.]
Date:	April 3, 2006

The purpose of this Supplemental Confirmation is to confirm the terms and conditions of the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Lincoln National Corporation (“Counterparty”) (together, the “Contracting Parties”) on the Trade Date specified below. This Supplemental Confirmation is a binding contract between GS&Co. and Counterparty as of the relevant Trade Date for the Transaction referenced below.

1.This Supplemental Confirmation supplements, forms part of, and is subject to the Master Confirmation dated as of April 3, 2006 (the “Master Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. All provisions contained in the Master Confirmation govern this Supplemental Confirmation except as expressly modified below.

2.The terms of the Transaction to which this Supplemental Confirmation relates are as follows:

Trade Date:	April 3, 2006
Hedge Completion Date:	As set forth in the Trade Notification, but in no event later than April 10, 2006.
Termination Date:	*
Acceleration Period:	*
Prepayment Amount:	USD 500 million
Counterparty Additional Payment Amount:	*
Minimum Shares:	A number of shares equal to (a) the Prepayment Amount divided by (b)*% of the Hedge Period Reference Price.
Maximum Shares:	A number of shares equal to (a) the Prepayment Amount divided by (b) *% of the Hedge Period Reference Price.
Ordinary Dividend Amount:	For any calendar quarter, USD 0.38

3.Counterparty represents and warrants to GS&Co. that neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during the four full calendar weeks immediately preceding the Trade Date.

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

Counterparty hereby agrees (a) to check this Supplemental Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by GS&Co.) correctly sets forth the terms of the agreement between GS&Co. and Counterparty with respect to this Transaction, by manually signing this Supplemental Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Equity Derivatives Documentation Department, facsimile No. 212-428-1980/83.

Yours sincerely,

GOLDMAN, SACHS & CO.

By:/s/ Kelly C. Coffey

Authorized Signatory

Agreed and Accepted By:

LINCOLN NATIONAL CORPORATION

By:/s/ Duane Bernt

Name: Duane Bernt

Title: Vice President and Treasurer

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

TRADE NOTIFICATION

To:	Lincoln National Corporation
From:	Goldman, Sachs & Co.
Subject:	Issuer VWAP Prepaid Share Forward Transaction
Ref. No:	1620916856
Date:	April 10, 2006

The purpose of this Trade Notification is to notify you of certain terms in the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”) and Lincoln National Corporation(“Counterparty”) (together, the “Contracting Parties”) on the Trade Date specified below.

This Trade Notification supplements, forms part of, and is subject to the Supplemental Confirmation dated as of April 3, 2006 (the “Supplemental Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. The Supplemental Confirmation is subject to the Master Confirmation dated as of April 3, 2006 (the “Master Confirmation”) between the Contracting Parties, as amended and supplemented from time to time. All provisions contained in the Master Confirmation and the Supplemental Confirmation govern this Trade Notification except as expressly modified below.

Trade Date:	April 3, 2006
Hedge Completion Date:	April 10, 2006
Termination Date:	*
Acceleration Period:	*
Forward Price Adjustment Amount:	USD 0
Minimum Shares:	*
Maximum Shares:	*

Yours sincerely,

GOLDMAN, SACHS & CO.

By:/s/ Kelly C. Coffey

Authorized Signatory

An [*] represents confidential information that has been omitted and filed separately with the Securities and Exchange Commission.

EX-12

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

EXHIBIT 12—RATIO OF EARNINGS TO FIXED CHARGES

	Six Months Ended
	June 30,
(dollars in millions)	2006		2005
Income before Federal Income Taxes and Cumulative Effect of Accounting Changes	$	820	$	476
Sub-total of Fixed Charges		97		56
Sub-total of Adjusted Net Income		917		532
Interest on Annuities & Financial Products		996		781
Adjusted Income Base	$	1,913	$	1,313
Fixed Charges:
Interest and Debt Expense	$	87	$	45
Portion of Rent Expense Representing Interest		11		11
Sub-total of Fixed Charges		98		56
Interest on Annuities & Financial Products		996		781
Sub-total of Fixed Charges		1,094		837
Preferred Dividends (Pre-tax)		*		*
Total Fixed Charges	$	1,094	$	837
* Less than $100,000
Ratio of Earnings to Fixed Charges:
Ratio of Earnings to Fixed Charges (Including Interest on Annuities and Financial Products) (1)		1.75		1.57
Excluding Interest on Annuities and Financial Products (2)		9.36		9.56
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (3)		1.75		1.57

_____________________

1.	For purposes of determining this ratio, earnings consist of income before Federal income taxes, cumulative effect of accounting change, if any, and minority interests adjusted for the difference between income or losses from unconsolidated equity investments and cash distributions from such investments, plus fixed charges. Fixed charges consist of 1) interest and debt expense on short and long-term debt and junior subordinated debentures issued to affiliated trusts; 2) interest on annuities and financial products and; 3) the portion of operating leases that are representative of the interest factor.
2.	Same as the ratio of earnings to fixed charges, except fixed charges and earnings in this calculation do not include interest on annuities and financial products. This coverage ratio is not required, but is provided as additional information. This ratio is commonly used by individuals who analyze LNC’s results.
3.	Same as the ratio of earnings to fixed charges, including interest on annuities and financial products, except that fixed charges include the pre-tax earnings required to cover preferred stock dividend requirements.

EX-31.1

EXHIBIT 31.1

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Jon A. Boscia, Chairman and Chief Executive Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lincoln National Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ JON A. BOSCIA

Jon A. Boscia

Chairman and Chief Executive Officer

Dated: August 9, 2006

EX-31.2

EXHIBIT 31.2

LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES

Certification Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

I, Frederick J. Crawford, Senior Vice President and Chief Financial Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lincoln National Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/S/ FREDERICK J. CRAWFORD

Frederick J. Crawford

Senior Vice President and Chief Financial Officer

Dated: August 9, 2006

EX-32.1

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Lincoln National Corporation (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2006		/S/ JON A. BOSCIA
	Name: Title:	Jon A. Boscia Chairman and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required under Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, the undersigned officer of Lincoln National Corporation (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2006		/S/ FREDERICK J. CRAWFORD
	Name: Title:	Frederick J. Crawford Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required under Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.