Exhibit 10(d)

 

AMENDMENT NO. 1

TO THE

DELAWARE INVESTMENTS U.S., INC.

STOCK OPTION PLAN

Effective December 30, 2004

 

This Amendment, made pursuant to Section 8(e) of the Delaware Investments U.S.,
Inc. Stock Option Plan, Effective January 1, 2001 (the “Plan”), and approved by
the Compensation Committee of the Board of Directors of Lincoln National
Corporation by unanimous written consent on April 12, 2005, amends the Plan
effective as of the 30th day of December, 2004.

 

The Plan is amended as follows:

 

1. Section 4(d) of the Plan is amended in its entirety to read as follows:

 

“(d) Call Feature. Upon a Stock holder’s termination of employment with the
Corporation and all its affiliates, the Corporation or, if directed by the
Committee, DIUS will call all shares of Stock held by the Stock holder as of his
termination of employment. In addition, the Committee may, in its sole
discretion, require the Corporation or DIUS to call shares of Stock. Subject to
the following sentence, called Shares will be reacquired by the Corporation or
DIUS as soon as practicable after the call for an amount per share equal to (1)
the Fair Market Value of a share as of the Valuation Date preceding the date of
the call if the call occurs before the expiration of the period after the
Valuation Date during which the shares may be put to the Corporation or DIUS (in
accordance with Section 4(e) below), or (2) the Fair Market Value of a share as
of the Valuation Date following the date of the call if the call occurs after
the expiration of the period after the preceding Valuation Date during which the
shares may be put to the Corporation or DIUS (in accordance with Section 4(e)
below). However, in the case of a share acquired as the result of the exercise
of an Option occurring prior to April 12, 2005, the Corporation or DIUS will pay
to such shareowner the Fair Market Value of such share determined under (1) or
(2) above, less $13.31. Notwithstanding the foregoing, (1) shares that have been
held for six months or less as of the date of a call will not be called as of
that date, but will be called on the date as of which the Stock holder has held
the shares for six months and one day for an amount equal to the amount
determined in accordance with the preceding sentence, and (2) the Corporation or
DIUS may, in the sole discretion of the Committee, delay calling shares held by
a Stock holder for less than one year until the day after the first anniversary
of the date on which the Stock holder acquired such shares, in which case the
shares will be reacquired by the Corporation or DIUS for an amount determined in
accordance with the preceding sentence. Shares called other than upon
termination of employment will be called from each holder of Stock in proportion
to the holder’s total Stock holdings. In the event that a change of control of
the Corporation or DIUS occurs within one year after shares are called from
Stock holder, other than shares that are called as a result of the Stock
holder’s termination of employment, the Stock holder will receive a payment
equal to the excess of the Change of Control Price over the amount paid for a
share pursuant to the call, multiplied by the number of shares called from the
Stock holder.”

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2. Section 4(e) of the Plan is amended in its entirety to read as follows:

 

“(e) Put Option. An individual who has acquired shares upon the exercise of an
Option and has held those shares for more than six months may put the shares
back to the Corporation. Shares may be put to the Corporation only during the
sixty-day period beginning on the date on which valuation results are
communicated to Stock holders, and the Corporation will pay to the shareholder
the Fair Market Value determined as of the immediately preceding Valuation Date.
Notwithstanding the foregoing, in the case of a share acquired as the result of
the exercise of an Option occurring prior to April 12, 2005, the Corporation or
DIUS will pay to such shareowner the Fair Market Value of such share determined
as described above, less $13.31. At the Corporation’s sole discretion, the
amount the Corporation is required to pay pursuant to the preceding sentence may
be paid in (i) cash, (ii) a promissory note (in substantially the form of the
note attached hereto as Appendix B) that requires payment over a period not to
exceed five years with interest each year at a rate equal to the rate paid on
Treasury notes of similar term and similar subordination plus the increment over
that rate paid on borrowings of similar term and similar subordination by
Lincoln with such note to be guaranteed by Lincoln (with a guaranty in
substantially the form of the agreement attached hereto as Appendix C), (iii)
freely tradable shares of common stock of Lincoln having a market value on the
date of transfer to the employee equal to the amount payable to the employee, or
(iv) any combination of (i) and (ii) or (i) and (iii).”

 

3. Appendix A of the Plan is amended in its entirety to read as follows:

 

“APPENDIX A

 

Market Transaction Approach to Valuation

 

General

 

The Market Transaction Approach is a “top down” approach to business valuation
that involves valuing a company based on the market valuation of entire
companies that have been sold or the prices at which significant interests in
companies have been transacted. Although each business entity may be regarded as
a unique income producing enterprise, the fair market value of DIUS can be
estimated by multiplying valuation benchmark figures by the median multiples
derived using actual transaction prices paid for similar investment management
companies.

 

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Application

 

To estimate the respective fair market value of DIUS, an independent valuation
firm will consider three commonly applied valuation benchmarks in the asset
management industry: price to assets under management (“AUM”); price to
revenues; and, price to earnings before interest, taxes, depreciation, and
amortization (“EBITDA”). The sub-advised assets will be valued separately from
the advised assets, and the independent valuation firm may, in its judgment,
apply different median multiples to the sub-advised assets than those used for
the advised assets.

 

For purposes of the Plan, the independent valuation firm will consistently apply
the following weightings to the valuation benchmark figures, multiplied by the
appropriate multiple, to arrive at estimates of fair market value for DIUS:

 

Benchmark

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   Weighting

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Price to AUM

   40.0 %

Price to Revenue

   20.0 %

Price to EBITDA

   40.0 %

 

Advantages

 

•   Over time, semiannual updates of the Market Transaction Database will
reflect changes in the valuation multiples paid for investment management
companies

 

•   Most weight given to valuation benchmarks displaying least variability,
mitigating the potential for unreasonable estimates of value

 

•   Consideration given to all commonly used valuation benchmarks used to price
asset management businesses

 

•   Use of more than one benchmark multiple reduces volatility from market
trends and dilutes impact of pricing anomalies (e.g. recent premia paid by
foreign buyers)

 

•   No required adjustments for discounts/premia as all information impounded
into market data

 

•   Adds a degree of certainty and stability to valuation updates

 

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Fair Market Value Determinations in the Event of Certain Business Transactions

 

A. In the event of a sale transaction in which any material source of revenues
within the business of DIUS is not included in the sale, an appropriate
adjustment should be made by the appraiser using a methodology consistent with
those used in prior valuations.

 

B. In the event of a “Change of Control” of Lincoln, the Fair Market Value of
DIUS shall be calculated in a manner that will take into account an allocable
portion of any control premium associated with the Change of Control of Lincoln.
The control premium percentage to be used for this purpose will be calculated by
comparing the average of the closing price of LNC stock for the 90-day period
preceding the announcement of such Change of Control with the actual Change of
Control purchase price. The announcement date to be used will be the date of the
initial announcement which precipitates the change of control. The Change of
Control premium percentage so computed will be applied to the Fair Market Value
of DIUS for the valuation applicable to the Lincoln Change of Control date.

 

Committee/Appraiser Coordination

 

In the event of any corporate transaction or any other event which the appraiser
reasonably believes should, in order to provide consistency and fairness, result
in an adjustment to the Fair Market Value or in an adjustment to the exercise
price, grant price, number of options or shares or other feature of the plan,
the appraiser shall consult with and coordinate with the Committee (see Section
8(c) of the Plan) to determine what adjustments are appropriate and that those
adjustments are correctly and consistently applied.”

 

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Exhibit B

 

to the Unanimous Consent

of the Compensation Committee

of the Lincoln National Corporation Board of Directors

 

Nonqualified Stock Option Agreement

Under the Delaware Investments U.S., Inc. Stock Option Plan

 

This Nonqualified Stock Option Agreement (the “Agreement”) evidences the terms
of the grant by Delaware Investments U.S., Inc. (“DIUS”) of a Nonqualified Stock
Option (the “Option”) to                                        
                      (“Grantee”) on April 12, 2005 (the “Date of Grant”), and
Grantee’s acceptance of the Option under the Delaware Investments U.S., Inc.
Stock Option Plan (the “Plan”) and this Agreement. DIUS and Grantee agree as
follows:

 

1. Shares Optioned and Option Price

 

Grantee shall have an Option to purchase                      shares of common
stock of DIUS (the “Shares”). The exercise price for each share shall be the
Fair Market Value of a share of Stock as determined as of the most recent
Valuation Date (December 31, 2004).

 

2. Vesting Dates

 

The Option shall be forfeited upon Grantee’s termination of employment except as
provided below. During Grantee’s employment, the Option shall vest as follows:

 

             Shares on April 12, 2006;

 

             Shares on April 12, 2007;

 

             Shares on April 12, 2008;

 

             Shares on April 12, 2009.

 

In addition, unvested Options 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 Retirement or
Total Disability (as defined below);

 

(c) the date of Grantee’s involuntary termination of employment with Delaware
Management Holdings, Inc. (“Delaware”) and all subsidiaries, other than for
Cause (as defined below), provided, however, that (i) the sale or disposition of
the business that includes Grantee’s employment will not in and of itself be
considered to give rise to the Grantee’s termination of employment, but a
termination of employment will occur when Grantee ceases to have any employment
relationship with Delaware and all subsidiaries and with the purchaser of the
business that includes Grantee’s employment and (ii) vesting under

 

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this Paragraph 2(c) is contingent upon Grantee’s executing an Agreement, Waiver
and General Release, in form and substance satisfactory to Delaware, in
connection with such termination of employment, in which case the Options shall
vest on the later of the date of such involuntary termination of employment and
the date such agreement shall have become effective; or

 

(d) the date of a Change of Control of Lincoln National Corporation (“LNC”) as
defined in the Plan.

 

“Retirement” means Grantee’s termination of employment after the attainment of
age 65 (or some earlier age that reflects retirement as defined by Grantee’s
employer).

 

“Total Disability” means a disability which 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, be expected to continue
for an additional six months or longer, or to result in death. The Secretary of
Delaware (“Secretary”) determines whether Grantee’s employment terminated on
account of Total Disability.

 

“Cause” means (as determined by Delaware 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
Delaware or DIUS, or (2) the willful and continued failure of Grantee to
substantially perform Grantee’s duties with Delaware or DIUS 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 Delaware
business day at Delaware’s executive offices until the first to occur of:

 

(a) the tenth anniversary of the Date of Grant;

 

(b) the first anniversary of the date of Grantee’s termination of employment
with Delaware and all subsidiaries and affiliates on account of death or Total
Disability;

 

(c) the fifth anniversary of Grantee’s Retirement;

 

(d) the date three months after Grantee’s involuntary termination of employment
with Delaware and all subsidiaries and affiliates (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

 

(e) the date that Grantee’s employment with Delaware and all subsidiaries and
affiliates terminates for any reason other than those described in (b), (c), or
(d) of this paragraph.

 

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Delaware shall determine what constitutes “termination of employment.”

 

4. Exercise

 

During the Exercise Period, all or part of the Option which has not been
exercised may be exercised by delivering or mailing to the Secretary written
notice of the exercise in the form specified by the Secretary, along with full
payment of the exercise price and the certification described in paragraph 7
below. The payment may be in any combination of cash (including by wire or other
electronic fund transfer), personal check or Shares, provided, however, that (a)
payment may be made in Shares only if (i) the Option is exercised and the Shares
are surrendered during a period in which Grantee would be entitled to put the
shares to Delaware or DIAL Holding in accordance with paragraph 6(c) below, and
(ii) the Shares have been owned for more than six months, and (b) the value of
the Shares surrendered will be the Fair Market Value (as defined in the Plan) of
the Shares as of the immediately preceding Valuation Date (as defined in the
Plan). The exercise will be effective on the date described in the notice.

 

5. Transfer of Shares Upon Exercise

 

As soon as practicable after the exercise date, the Secretary shall cause the
appropriate number of Shares to be issued to Grantee. The Secretary shall not
issue Shares until any required tax withholding payments are made by Grantee.
Delaware may permit Grantee to surrender Shares to satisfy tax withholding
obligations of Grantee.

 

6. Transferability

 

Shares issued pursuant to an Option are subject to the following conditions:

 

(a) 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.

 

(b) Upon Grantee’s termination of employment with Delaware and its subsidiaries
and affiliates, Delaware or, if so directed by the Committee, DIUS will, subject
to the provisions of the Plan, call all Shares held by Grantee as of his
termination of employment. In addition, the Committee may, in its sole
discretion and in accordance with the terms of the Plan, require Delaware or
DIUS to call Shares. Called Shares will be reacquired by Delaware or DIUS as
soon as practicable after the call for an amount per share equal to (1) the Fair
Market Value of a Share as of the Valuation Date preceding the date of the call
if the call occurs before the expiration of the period after the Valuation Date
during which the Shares may be put to Delaware (as described in Paragraph 6(c)
below) or (2) the Fair Market Value of a share as of the Valuation Date
following the date of the call if the call occurs after the expiration of the
period after the preceding Valuation Date during which the Shares may be put to
Delaware (as described in Paragraph 6(c) below). Notwithstanding the foregoing,
if so directed by LNC, (1)

 

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Delaware or DIUS may delay calling shares that have been held for six months or
less until the date as of which Grantee has held the Shares for six months and
one day for an amount equal to the amount determined in accordance with the
preceding sentence, and (2) Delaware may delay calling Shares held by Grantee
for less than one year until the day after the first anniversary of the date on
which Grantee acquired such Shares, in which case the Shares will be reacquired
by Delaware or DIUS for an amount determined in accordance with the preceding
sentence. Shares called other than upon termination of employment will be called
from each holder of Shares in proportion to the holder’s total Share holdings.
In the event that a change of control of Delaware or DIUS occurs within one year
after Shares are called from Grantee, other than Shares that are called as a
result of Grantee’s termination of employment, Grantee will receive a payment
equal to the excess of the Change of Control Price (as defined in the Plan) over
the amount paid for a Share pursuant to the call, multiplied by the number of
Shares called from Grantee. In the event that a change of control of DIUS occurs
in connection with a change of control of Delaware in which the Change of
Control Price is set in a manner that does not indicate a specific Change of
Control Price for DIUS, the Change of Control Price for DIUS will be equal to
(i) the aggregate Change of Control Price for Delaware, (ii) multiplied by a
fraction, the numerator of which equals the aggregate Fair Market Value of all
shares of stock of DIUS, and the denominator of which equals the aggregate Fair
Market Value of all shares of all classes of stock of DIUS plus the aggregate
Fair Market Value of all shares of stock of DIAL Holding Company, Inc., and
(iii) divided by the number of outstanding shares of DIUS.

 

(c) If Grantee has acquired Shares upon the exercise of an Option and has held
those Shares for more than six months may, Grantee may put the shares back to
Delaware (although the Committee may direct that DIUS repurchase the put
Shares). Shares may be put only during the sixty-day period beginning on a date
on which valuation results are first communicated to Grantee, and Grantee will
be paid the Fair Market Value determined as of the immediately preceding
Valuation Date. At Delaware’s sole discretion, the amount Delaware is required
to pay pursuant to the preceding sentence may be paid in (i) cash, (ii) a
promissory note requiring payment over a period not to exceed five years with
interest each year at a rate equal to the rate paid on Treasury notes of similar
term plus the increment over that rate paid on borrowings of similar term and
similar subordination by LNC with such note to be guaranteed by LNC, (iii)
readily tradable shares of common stock of LNC having a market value on the date
of transfer to Grantee equal to the amount payable to Grantee, or (iv) any
combination of (i) and (ii) or (i) and (iii).

 

7. Consequences of Competitive Activity or Violation of Confidences

 

The grant and exercise of this Option are subject to the following requirements:

 

(a) Grantee may not render services for any organization or engage directly or
indirectly in any business that, in the sole judgment of the Chief Executive
Officer of Delaware or other senior officer designated by the Compensation
Committee of the LNC Board of Directors, is or becomes competitive with Delaware
or 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) Grantee shall not, without prior written authorization from Delaware or LNC,
disclose to anyone outside of Delaware or LNC, or use in other than Delaware’s
or LNC’s business, any confidential information or material relating to the
business of Delaware or LNC that is acquired by Grantee either during or after
employment with Delaware or LNC.

 

(c) Grantee shall disclose promptly and assign to Delaware or LNC all right,
title, and interest in any invention or idea, patentable or not, made or
conceived by Grantee during employment by Delaware or LNC, relating in any
manner to the actual or anticipated business, research or development work of
Delaware or LNC and shall do anything reasonably necessary to enable Delaware or
LNC to secure a patent where appropriate in the United States and in foreign
countries.

 

(d) Upon exercise of the Option, Grantee shall certify compliance with the terms
and conditions in this paragraph 7. 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. Delaware or LNC must
notify Grantee in writing of any such rescission. Delaware or LNC, in its
discretion, may waive compliance in whole or part in any individual case. Within
ten days after receiving a rescission notice from Delaware or LNC, Grantee must
pay Delaware or 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 Delaware and its subsidiaries and affiliates 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.

 

IN WITNESS WHEREOF, the                      of Delaware Investments U.S., Inc.
has signed this Agreement as of the day and year first above written.

 

DELAWARE INVESTMENTS U.S., INC.

 

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By:

 

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