LINCOLN NATIONAL CORPORATION NONQUALIFIED STOCK OPTION AGREEMENT

LINCOLN NATIONAL CORPORATION



NONQUALIFIED STOCK OPTION AGREEMENT



For Senior Management Committee (other than CEO)

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 <First Name> <Last Name> (“Grantee”) on <Grant Date> (the “Grant Date”), and Grantee’s acceptance of the Option, in accordance with and subject to the terms and provisions of the Lincoln National Corporation 2014 Incentive Compensation Plan effective May 22, 2014 (the “Plan”) and this Agreement.  LNC and Grantee agree as follows:

Grantee shall have an Option to purchase <Granted Amount> shares of LNC common stock (the “Shares”) for <Grant Price>  (in United States Dollars) for each Share.

The Option shall vest as follows, provided the Grantee remains in Service (defined in Paragraph 9, below) through the specified vesting date:

1/3 of the Option on the first anniversary of the Grant Date;

1/3 of the Option on the second anniversary of the Grant Date; and

1/3 of the Option on the third anniversary of the Grant Date.

In addition, upon Grantee’s termination of Service for any of the following reasons, the unvested portion of the Option shall vest as indicated:

An Option that vests pro-rata upon the event described in Subparagraph 2(d)   above shall vest according to a pro-ration formula equal to the total number of days of Service that Grantee provides during the applicable Vesting Period (defined below),  divided by the number of days in the applicable Vesting Period in which the event described in Subparagraph 2(d) occurs, multiplied by the number of Shares subject to the Option that may vest during the applicable

Vesting Period (rounding up to the nearest whole Share).  For purposes of pro-rating, the applicable “Vesting Period” is the one-year period between the Grant Date and first anniversary of the Grant Date during which a portion of the Option vests, or the one-year period between anniversaries of the Grant Date during which a portion of the Option vests.

Except as provided above, any portion of the Option that is unvested upon Grantee’s termination of Service shall be deemed forfeited immediately following termination. 

Grantee may exercise all or part of the Option, to the extent vested, prior to the close of business at LNC headquarters on any LNC business day (in accordance with procedures established by LNC) until the first to occur of:



To exercise an Option, Grantee must:    (a) accept the terms of this award by delivering an acknowledgment (in the form specified by LNC);  (b) deliver notice of the exercise (in the form specified by LNC) to the LNC stock option administrator; and (c) submit full payment of the exercise price.  Payment of the exercise price may be made in any combination of cash, certified check, Shares (including the surrender of Shares held by the Grantee or those that would otherwise be issued on exercise of the Option), or, to the extent LNC has adopted a broker assisted cashless exercise program, through a broker assisted cashless exercise.  Any surrendered or withheld Shares will constitute payment to the extent of their Fair Market Value. 



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.  In accordance with procedures established by the Compensation Committee of the LNC Board of Directors (the “Committee”),  Grantee may satisfy any required tax withholding payments in any combination of cash, certified check, or Shares (including the surrender of Shares held by the Grantee or those that would otherwise be issued on exercise of the Option) or, to the extent LNC has adopted a broker assisted cashless

exercise program, through a broker assisted cashless exercise.    Any surrendered or withheld Shares will constitute satisfaction of any required tax withholding to the extent of their Fair Market Value. 

Unless otherwise approved by the Committee, 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 and distribution. 

(a)If Grantee’s Service is terminated for Cause, any Shares acquired upon exercise of the Option during the six (6) month period prior to such termination for Cause shall be rescinded and any remaining portion of the Option shall be cancelled without further action by the Committee or its delegate. 

(b)If Grantee fails to comply with the non-competition, non-solicitation, non-disparagement, or non-disclosure provisions described in Subparagraphs 8(a), 8(b), 8(c), and 8(d), below, before the Option is exercised, the Option shall be cancelled without further action by the Committee or its delegate. 

(c)If requested by LNC, upon exercise of the Option, Grantee shall certify in a form acceptable to LNC that Grantee is in compliance with the terms and conditions described in Subparagraphs 8(a), 8(b), 8(c), and 8(d), below.  Grantee’s failure to comply with Subparagraphs 8(a) through 8(d) at any time from the Grant Date through the six (6) month period after any exercise of this Option shall cause such Option and/or any Shares acquired upon exercise of the Option to be rescinded.  

(d)(1) LNC shall notify Grantee in writing of any such rescission: (A) in the case of Subparagraph 7(a), not later than 90 days after such termination for Cause; and (B)  not later than 180 days after LNC obtains knowledge of Grantee’s failure to comply with Subparagraphs 8(a), 8(b), 8(c), or 8(d). 

(2) Within ten (10) days after receiving a rescission notice from LNC: (A) Grantee must surrender to LNC the Shares acquired upon exercise of the Option, less a number of Shares having a Fair Market Value equal to the aggregate exercise price of the Option; or (B) if the Shares acquired upon exercise of the Option have been sold or transferred, (i) Grantee must make a payment to LNC of the proceeds from such sale or transfer, or (ii) if there are no proceeds from such transfer, Grantee must make a payment to LNC equal to the Fair Market Value of the Shares on the date of such transfer.  

In all cases, Grantee shall pay to LNC the gross amount of any gain realized or payment received (not net of any withholding or other taxes paid by Grantee) as a result of the Option. 

Notwithstanding anything to the contrary herein,  LNC may, in its discretion, waive Grantee’s compliance with Subparagraphs 8(a), 8(b), 8(c), or 8(d) in whole or part in any individual case.  Moreover, if Grantee’s Service is terminated by LNC other than for Cause, a failure by Grantee to comply with the provisions of Subparagraph 8(a), above, after such termination shall not in and of itself cause rescission to the extent the Option was exercised before Grantee’s termination.    

As used in this Agreement:

 “Cause” means a conviction of a felony or any fraudulent or willful misconduct by Grantee that is materially and demonstrably injurious to the business or reputation of LNC or its affiliates.  Cause shall be determined in the sole discretion of the Committee. 

“Retires” or “Retirement” means Grantee’s termination of Service from LNC or any Subsidiary either (i) at age 55 or older with at least five (5) years of Service or (ii) at any age with at least seven (7) years of Service as a member of LNC’s Senior Management Committee.  

“Service” means Grantee’s continuous service as a common law employee of, or as a planner with a full-time agent’s contract with, LNC or any Subsidiary.  Service as a common law employee is the period of time Grantee is on the payroll of LNC or a Subsidiary.  Service as a planner is the period of time Grantee’s full-time agent’s contract is in effect.

“Subsidiary” means any corporation in which LNC has ownership of at least twenty-five percent. 

“Total Disability” means (as determined by the Committee) 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 (6) months and be expected to continue for at least six (6) more months or be expected to continue unto death.    

This award is subject to the terms and conditions of the Plan.  Such terms and conditions of the Plan are incorporated into and made a part of this Agreement by reference.  In the event of any conflicts between the provisions of this Agreement and the terms of the Plan, the terms of the Plan will control.  Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Plan unless the context clearly requires an alternative meaning.



IN WITNESS WHEREOF, LNC, by its duly authorized officer has signed this Agreement as of the day and year first above written.



LINCOLN NATIONAL CORPORATION