NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.2
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 February 7, 2008 (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,
Option Shares shall vest as follows:
______
Option Shares on February 7,
2009;
______
Option Shares on February 7,
2010; and
______
Option Shares on February 7,
2011.
In
addition, unvested Options Shares shall be deemed vested as
follows:
(a)
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100% vested on the date
of Grantee’s death;
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(b)
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100% vested on the date
of Grantee’s termination of employment as a result of Total Disability (as
defined below);
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(c)
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Pro-rata as of the date
Grantee Retires (as defined in Paragraph 8 below)--except that if a
Grantee Retires at age 62 or older, the RSUs shall be 100% vested as of that
date;
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(d)
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Pro-rata as of the date
of Grantee’s involuntary termination of employment with LNC and all
subsidiaries, other than for Cause (as defined in Paragraph 8 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
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(e)
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100% as of the date of a
Change of Control of LNC, as defined in the LNC Executive Severance
Benefit Plan (“Change of Control”).
|
Option
Shares that vest pro-rata upon certain events shall vest according to a
pro-ration formula equal to the number of days in the calendar year in which the
event described in (c) and (d) occurred, divided by the total number of days of
Service that Grantee provides during that calendar year, multiplied by the
number of Option Shares subject to vesting during that calendar year (rounding
up the nearest whole Option Share).
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:
(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;
|
(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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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 in Paragraph 7
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; Grantee
may 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.
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Consequences
of Breach of Non-Competition, Non-Solicitation, Non-Disparagement and
Non-Disclosure Provisions or Termination for
Cause
|
Any
Option Shares may be cancelled by action of the Committee or its delegate if
Grantee is terminated for Cause (as defined below), or fails to comply with the
non-competition, non-solicitation, non-disparagement and/or non-disclosure
provisions described below before the Option is exercised. Upon
exercise of the Option, Grantee shall certify compliance with the terms and
conditions in this paragraph. Failure to comply with subsections (a),
(b), (c), or (d) of this Paragraph at any time prior to, or during the six
months after any exercise of this Option, shall cause such Option and/or any
related exercise to be rescinded. Termination for Cause at any time
shall cause such Option and/or 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 to 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
other than for Cause, however, a failure of Grantee to comply with the
provisions of 7(a) below after such termination shall not in itself cause
rescission to the extent the Option was exercised before Grantee’s
termination.
(a) Non-Competition. Grantee
may not become employed by, work on behalf of, or otherwise render services that
are the same or similar to the services rendered by Grantee to the business unit
employing Grantee for any other organization or business which competes with or
provides, or is planning to provide, the same or similar products and/or
services as the business unit in which Grantee was employed or otherwise had
responsibilities for at the time of his/her termination. Grantee
understands and agrees that this restriction is nationwide in
scope. 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.
(b) Non-Solicitation. Grantee
shall not directly or indirectly hire, manage, solicit or recruit any employees,
agents, financial planners, salespeople, financial advisors, vendors or service
providers of LNC (including, but not limited to, doing a “lift-out” of same)
whom Grantee had hired, managed, supervised, or otherwise became familiar with
as a result of his/her employment with LNC.
(c) Non-Disparagement. Grantee
shall not (i) make any public statements regarding his/her employment with LNC
(other than factual statements concerning the dates of employment and positions
held) or his/her termination or Retirement (as defined in Paragraph 8 below)
from LNC that are not agreed to by LNC, such approval not to be unreasonably
withheld or delayed; and (ii) Grantee shall not disparage LNC or any of its
subsidiaries or affiliates, its and their respective employees, executives,
officers, or Boards of Directors.
(d) Non-Disclosure & Ideas
Provision. Grantee shall not, without prior written
authorization from LNC, disclose to anyone outside LNC, or use in other than
LNC’s business, any information or material relating to the business of LNC that
LNC considers confidential and/or proprietary pursuant to its Code of
Conduct. Furthermore, Grantee agrees to disclose and assign to LNC
all rights and interest in any invention or idea that Grantee developed or
helped develop for actual or related business, research, or development work
during the period of their Service with LNC.
8. Definitions
“Cause”
means, a conviction of a felony or any fraudulent of willful misconduct by
Grantee that is materially and demonstrably injurious to the business or
reputation of LNC. With respect to an SMC member, Cause shall
be determined in the sole discretion of the Compensation Committee of the Board
of Directors. For any other Grantee, Cause shall be determined in the
sole discretion of the Senior Vice President of Human Resources for the
Corporation.
“Retires”
or “Retirement” means, for purposes of this Agreement, Grantee’s retirement from
LNC or a subsidiary at age 55 or older with at least five years of Service (with
LNC or a subsidiary).
“Service”
means, for purposes of this Agreement, service as a common law employee or
planner with a full-time agent’s contract with LNC or any
Subsidiary.
“Subsidiary”
means, for purposes of this Agreement, any corporation in which LNC has
ownership of at least twenty-five percent.
“Total
Disability” means, as determined by the Senior Vice President of Human
Resources, 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.
IN
WITNESS WHEREOF, the President and Chief Executive Officer of Lincoln National
Corporation has signed this Agreement as of the day and year first above
written.
LINCOLN
NATIONAL CORPORATION
Xxxxxx X.
Xxxxx
President
and Chief Executive Officer