NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.3
This
Nonqualified Stock Option Agreement (the “Agreement”) evidences the terms of the
grant by Lincoln National Corporation (“LNC”) of a Nonqualified Stock Option
(the “Option”) to _______________________ (“Grantee”) on April 12, 2006 (the
“Date of Grant”), and Grantee’s acceptance of the Option in accordance with and
subject to the provisions of the Lincoln National Corporation Incentive
Compensation Plan (the “Plan”) and this Agreement. LNC and Grantee agree as
follows:
1. Shares
Optioned and Option Price
Grantee
shall have an Option to purchase _________ shares of LNC common stock (the
“Shares”) for $_____________ (United States dollars) for each Share.
2.
Vesting
Dates
The
Option for unvested Shares shall be forfeited upon Grantee’s termination of
employment except as provided below. During Grantee’s employment, Shares shall
vest as follows:
In
addition, unvested Shares shall be deemed vested as of:
(a)
the
date
of Grantee’s death;
(b)
the
date
of Grantee’s termination of employment as a result of Total Disability
(as
defined below);
(c) the
date
of Grantee’s Retirement (as defined below);
(d) the
date
of Grantee’s involuntary termination of employment with LNC and all
subsidiaries, other than for Cause (as defined below), including the sale or
disposition of the business that includes Grantee’s employment; provided,
however, that Grantee executes an Agreement, Waiver and General Release, in
form
and substance satisfactory to LNC, in connection with such termination of
employment (other than a termination due to the sale or disposition of the
business that includes Grantee’s employment), in which case the Shares shall
vest on the later of the date of such involuntary termination of employment
and
the date such agreement shall have become effective; or
(e)
the
date
of a Change of Control of LNC as defined in the Plan (“Change of Control”).
“Total
Disability” means (as determined by the Secretary of LNC) a disability that
results in Grantee being unable to engage in any occupation or employment for
wage or profit for which Grantee is, or becomes, reasonably qualified by
training, education or experience. In addition, the disability must have lasted
six months and be expected to continue for at least six more months or be
expected to continue unto death.
“Retirement”
means,
for purposes of this Agreement, Grantee’s retirement from LNC or a subsidiary at
age 65 or older with at least five years of service (with LNC or a subsidiary)
or, with the approval of Grantee’s employer, at age 55 or older with at least
five years of such service.
“Cause”
means (as determined by LNC in its sole discretion): (1) a conviction of a
felony, or other fraudulent or willful misconduct by Grantee that is materially
and demonstrably injurious to the business or reputation of LNC, or (2) the
willful and continued failure of Grantee to substantially perform Grantee’s
duties with LNC or a subsidiary (other than such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to Grantee by Grantee’s manager which
specifically identifies the manner in which the manager believes that Grantee
has not substantially performed Grantee’s duties.
3.
Exercise
Period
Grantee
may exercise all or part of the Option for vested Shares on any LNC business
day
at LNC’s executive offices until the first to occur of:
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(a)
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the
tenth anniversary of the Date of
Grant;
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(b)
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the
first anniversary of the date of Grantee’s termination of employment with
LNC and all subsidiaries on account of death or Total Disability;
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(c)
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the
fifth anniversary of Grantee’s
Retirement;
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(d)
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the
date three months after Grantee’s involuntary termination of employment
with LNC and all subsidiaries (other than a termination on account
of
fraud or other fidelity crimes), including the sale or disposition
of the
business that includes Grantee’s employment;
or
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(e)
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the
date that Grantee’s employment with LNC and all subsidiaries terminates
for any reason other than those described in (b), (c), or (d) of
this
paragraph.
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LNC
shall
determine what constitutes termination of employment but for purposes of this
Agreement (i) such termination shall not occur if Grantee has a full-time
agent’s contract with LNC or a subsidiary and (ii) “subsidiary” shall include
any corporation in which LNC has ownership of at least twenty-five
percent.
4.
Manner
of Exercise
To
exercise an option, Grantee must, on an LNC business day, (1) deliver, mail
or
fax written notice of the exercise (in the form specified by LNC) to the LNC
stock option administrative group and (2) submit full payment of the exercise
price and the certification of compliance described below. Payment may be made
in any combination of cash, personal check, or Shares. Such Shares must be
owned
for at least six months and will constitute payment to the extent of their
Fair
Market Value (as defined in the Plan).
5.
Transfer
of Shares Upon Exercise
As
soon
as practicable after the exercise date, LNC shall cause the appropriate number
of Shares to be issued to Grantee. LNC shall not issue Shares until any required
tax withholding payments are remitted to LNC by Grantee; and LNC may permit
Grantee to surrender Shares or withhold Shares (from those that would otherwise
be issued on exercise of the Option) to satisfy tax withholding
obligations.
6.
Transferability
No
rights
under this Agreement may be transferred except by will or the laws of descent
and distribution. The rights under this Agreement may be exercised during the
lifetime of Grantee only by Grantee. After Grantee’s death, the Option may be
exercised by the person or persons to whom the Option was transferred by will
or
the laws of descent or distribution.
7. Consequences
of Competitive and Other Activity
The
grant
and exercise of this Option are subject to the following
requirements:
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(a)
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Grantee
may not render services for any organization or engage directly or
indirectly in any business which, in the sole judgment of the Chief
Executive Officer of LNC or other senior officer designated by the
Compensation Committee of the LNC Board of Directors, is or becomes
competitive with LNC. If Grantee has terminated employment, Grantee
shall
be free, however, to purchase, as an investment or otherwise, stock
or
other securities of such organization or business so long as they
are
listed upon a recognized securities exchange or traded over-the-counter
and such investment does not represent a greater than five percent
equity
interest in the organization or business.
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(b)
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Grantee
shall not, without prior written authorization from LNC, disclose
to
anyone outside of LNC, or use in other than LNC’s business, any
confidential information or material relating to the business of
LNC that
is acquired by Grantee either during or after employment with
LNC.
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(c)
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Grantee
shall disclose promptly and assign to LNC all right, title, and interest
in any invention or idea, patentable or not, made or conceived by
Grantee
during employment by LNC, relating in any manner to the actual or
anticipated business, research or development work of LNC and shall
do
anything reasonably necessary to enable LNC to secure a patent where
appropriate in the United States and in foreign
countries.
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(d)
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Upon
exercise of the Option, Grantee shall certify compliance with the
terms
and conditions in this paragraph. Failure to comply with this paragraph
at
any time prior to, or during the six months after any exercise of
this
Option, shall cause such Option and any related exercise to be rescinded.
LNC must notify Grantee in writing of any such rescission. LNC, in
its
discretion, may waive compliance in whole or part in any individual
case.
Within ten days after receiving a rescission notice from LNC, Grantee
must
pay LNC the amount of any gain realized or payment received (net
of any
withholding or other taxes paid by Grantee) as a result of the rescinded
exercise. Such payment must be made either in cash or by returning
the
Shares Grantee received in connection with the rescinded exercise.
If
Grantee’s employment is terminated by LNC and its subsidiaries other than
for fraud or other fidelity crimes, however, a failure of Grantee
to
comply with the provisions of 7(a) above after such termination shall
not
in itself cause rescission to the extent the Option was exercised
before
the termination.
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IN
WITNESS WHEREOF, the Chairman and Chief Executive Officer of Lincoln National
Corporation has signed this Agreement as of the day and year first above
written.
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LINCOLN
NATIONAL CORPORATION
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Xxx
X. Xxxxxx
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Chairman
and Chief Executive Officer
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