form8k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
July
10,
2009
Date of
Report (Date of earliest event reported)
Lincoln
National
Corporation
(Exact
name of registrant as specified in its charter)
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Indiana
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1-6028
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35-1140070
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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150 N. Radnor Chester Road,
Radnor, PA 19087
(Address
of principal executive offices) (Zip Code)
(Registrant’s
telephone number including area code: (484)
583-1400
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement.
On July
10, 2009, Lincoln National Corporation (“LNC”) entered into a Letter Agreement,
which includes the Securities Purchase Agreement – Standard Terms (collectively,
the “Purchase Agreement”), and a related side letter (the “Side Letter”) with
the United States Department of the Treasury (the “Treasury”), as part of the
Capital Purchase Program (the “CPP”). Pursuant to the Purchase
Agreement, LNC issued and sold (i) 950,000 shares of LNC’s Fixed Rate Cumulative
Perpetual Preferred Stock, Series B (the “Preferred Stock”) and (ii) a warrant
(the “Warrant”) to purchase 13,049,451 shares of LNC common stock, no par value
per share (“Common Stock”), for an aggregate purchase price of $950,000,000 in
cash.
The
following summary of the terms of the Purchase Agreement, the Side Letter, the
Preferred Stock, the Warrant and Form of Waiver is not intended to be complete
and is qualified in its entirety by reference to the Purchase Agreement, the
Side Letter, the Articles of Amendment (as defined below), the Warrant and the
Form of Waiver, which are attached hereto as Exhibits 10.1, 10.2, 3.1, 4.1 and
10.3 respectively, and are incorporated herein by reference.
The
Preferred Stock has a liquidation preference of $1,000.00 per share and will pay
cumulative dividends at the rate of 5% per year for the first five years and 9%
per year thereafter. Although the Articles of Amendment provide that
LNC may not redeem the Preferred Stock during the first three years after its
issuance except with the proceeds from a “Qualified Equity Offering” (as defined
in the Articles of Amendment filed as Exhibit 3.1 hereto), the Side Letter
provides that LNC shall be permitted to repay the Preferred Stock in accordance
with the American Recovery and Reinvestment Act of 2009, as amended, and any
rules and regulations thereunder. The repurchase or redemption price
of the Preferred Stock is equal to the liquidation amount plus accrued and
unpaid dividends. Under current guidance and the Purchase Agreement,
when the Preferred Stock is repaid, LNC may repurchase the Warrants at “fair
market value” as defined in the Purchase Agreement. The Side Letter
and current guidance provide that, if LNC does not choose to exercise its option
to repurchase the Warrants in conjunction with the repurchase of the Preferred
Stock, the Treasury shall liquidate the Warrants associated with such Preferred
Stock.
The
Preferred Stock ranks senior to LNC’s Common Stock and pari passu with LNC’s
outstanding preferred stock and will rank pari passu with any other future
preferred stock (excepting any future preferred stock that by its terms ranks
junior to any other preferred stock).
The
Preferred Stock is generally non-voting, except for class voting rights on the
issuance of shares ranking senior to the Preferred Stock, amendments to the
rights of the holders of Preferred Stock or any merger, exchange or similar
transaction which would adversely affect the rights of the holders of the
Preferred Stock. In addition, if dividends on the Preferred Stock
have not been paid in full for an aggregate of six quarterly dividend periods or
more, whether consecutive or not, the holders of the Preferred Stock, voting
together with holders of any then outstanding voting parity stock, will have the
right to elect two directors.
The
Warrant has a 10-year term and is immediately exercisable upon its issuance,
with an exercise price, subject to adjustment pursuant to anti-dilution
provisions, equal to $10.92 per share of Common Stock. If LNC
receives aggregate gross cash proceeds of not less than $950,000,000 from
Qualified Equity Offerings on or prior to December 31, 2009, the number of
shares of Common Stock issuable pursuant to the Treasury’s exercise of the
Warrant will be reduced by one half of the original number of shares, taking
into account all adjustments, underlying the Warrant. Pursuant to the
Purchase Agreement, the Treasury has agreed not to exercise voting power with
respect to any shares of Common Stock issued to it upon exercise of the
Warrant.
Prior to
July 10, 2012, unless LNC has redeemed the Preferred Stock or the Treasury has
transferred the Preferred Stock to a third party, the consent of the Treasury
will be required for LNC to (1) declare or pay any dividend or make any
distribution on its Common Stock (other than regular quarterly cash dividends of
not more than $0.01 per share of Common Stock) or (2) redeem, purchase or
acquire any shares of its Common Stock or other capital stock or equity
securities, other than repurchases of Preferred Stock or repurchases in
connection with benefit plans consistent with past practice in the ordinary
course of business as specified in the Purchase Agreement. The redemption,
purchase or other acquisition of trust preferred securities of LNC or its
affiliates is also subject to restrictions set forth in the Purchase
Agreement. In addition, under the Articles of Amendment, LNC’s
ability to declare or pay dividends or repurchase shares of its Common Stock or
other capital stock or equity securities is subject to restrictions in the event
that LNC fails to declare and pay (or set aside for payment) full dividends on
the Preferred Stock.
Under the
terms of the Purchase Agreement and the Side Letter, LNC agreed that, until such
time as the Treasury ceases to own the Preferred Stock acquired pursuant to
the Purchase Agreement, LNC will take all necessary action to ensure that its
benefit plans with respect to its senior executive officers comply with Section
111 of the Emergency Economic Stabilization Act of 2008, as amended (the
“ESSA”), as implemented by any guidance or regulation under the ESSA that has
been issued and is in effect as of the date of issuance of the Preferred
Stock. LNC also agreed not to adopt any benefit plans with respect
to, or which cover, its senior executive officers that do not comply with the
ESSA.
Each of
LNC’s senior executive officers and certain other employees of LNC executed a
waiver pursuant to the terms of the Purchase Agreement, voluntarily waiving any
claim against the Treasury or LNC for any changes to his or her compensation or
benefits that are required to comply with the ESSA and any guidance or
regulation thereunder and acknowledging that such changes may require
modification of the employment, compensation, bonus, incentive and other benefit
plans, arrangements and policies and agreements (including so-called “golden
parachute” agreements) as they relate to the period the Treasury holds the
Preferred Stock.
The
Preferred Stock and Warrant were issued in a private placement exempt from
registration under Section 4(2) of the Securities Act of 1933, as
amended. LNC has granted the Treasury certain registration rights
with respect to the Preferred Stock, the Warrant and the shares of Common Stock
underlying the Warrant.
Item 3.02. Unregistered
Sales of Equity Securities.
The
information set forth under “Item 1.01. Entry into a Material Definitive
Agreement” is incorporated herein by reference.
Item 3.03. Material
Modification to Rights of Security Holders.
The
information set forth under “Item 1.01. Entry into a Material Definitive
Agreement” is incorporated herein by reference.
Item
5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
The
information set forth under “Item 1.01. Entry into a Material Definitive
Agreement” is incorporated herein by reference.
Item
5.03. Amendments to Articles of Incorporation or Bylaws; Change in
Fiscal Year.
On July
9, 2009, LNC filed Articles of Amendment (the “Articles of Amendment”) with the
Indiana Secretary of State for the purpose of amending its Restated Articles of
Incorporation to establish the designations, preferences, limitations and
relative rights of the Preferred Stock. The information set forth
under “Item 1.01. Entry into a Material Definitive Agreement” is incorporated
herein by reference.
Item
7.01 Regulation FD Disclosure.
On July
10, 2009, LNC issued a press release announcing the consummation of the
transaction described above under “Item 1.01. Entry into a Material Definitive
Agreement.” A copy of the press release is attached hereto as Exhibit
99.1.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
Exhibit
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 hereunto
duly authorized.
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LINCOLN
NATIONAL CORPORATION
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By /s/ Frederick J.
Crawford
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Name: Frederick
J. Crawford
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Title: Executive
Vice President and
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Chief
Financial Officer
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Date: July
10, 2009
INDEX
TO EXHIBITS
Exhibit