CONFIDENTIAL TREATMENT REQUESTED FOR CERTAIN PORTIONS
 
Lehman Brothers Logo [lehmanlogo.jpg]
Transaction

Date:
 
11 August, 2006
 
To:
Lincoln National Corporation
 
Central Square West Tower
 
1500 Market Street, Suite 3900
 
Philadelphia, PA 19102- 2112
     
Attention:     Fred Crawford
 
Facsimile:      215-448-3954
 
Telephone:      215-448-1435
   
From:
Lehman Brothers Finance S.A.
 
c/o Lehman Brothers, Inc
 
Andrew Yare - Transaction Management Group
 
Facsimile:      646-885-9546 (United States of America)
 
Telephone:     212-526-9986
 

 
Ref. Numbers: Risk ID: [] / Effort ID: N[] / Global Deal ID: []
 

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Dear Sir or Madam:
 
The purpose of this communication (this “Confirmation”) is to confirm the terms
and conditions of the transaction (the “Transaction”) entered into between
Lehman Brothers Finance S.A. (“Party A”) and Lincoln National Corporation
(“Party B”) on the Trade Date specified below. This Confirmation constitutes a
“Confirmation” as referred to in the Agreement specified below. This
Confirmation is sent on behalf both Party A and Lehman Brothers Inc. (“LBI”).
 
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of May 12, 2006, as amended and supplemented from time to
time, between Party A and Party B (the “Agreement”). All provisions contained in
the Agreement shall govern this Confirmation except as expressly modified below.
 
The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”) and the 2000 ISDA Definitions (the “Swap
Definitions”, and together with the Equity Definitions, the “Definitions”), in
each case as published by the International Swaps and Derivatives Association,
Inc. (“ISDA”) are incorporated into this Confirmation. References herein to
“Transaction” shall be deemed references to “Swap Transaction” for purposes of
the Swap Definitions. In the event of any inconsistency between the Equity
Definitions and the Swap Definitions, the Equity Definitions will govern. In the
event of any inconsistency between either set of Definitions and this
Confirmation, this Confirmation will govern.

The terms of the Transaction to which this Confirmation relates are as follows:
 
Agent:
 
LBI is acting as agent on behalf of Party A and Party B for this Transaction.
LBI has no obligations, by guarantee, endorsement or otherwise, with respect to
the performance of this Transaction by either party.
 
Trade Date:
 
August 11, 2006
 
Buyer:
 
Party B
 

 
 

LEHMAN BROTHERS FINANCE S.A.
TALSTRASSE 82 - P.O. BOX 2828 - CH-8021 ZURICH - SWITZERLAND
TELEPHONE (41-1) 287 88 42

1

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Seller:
 
Party A
 
Shares:
 
Common stock of Lincoln National Corporation (the “Issuer”) Ticker Symbol:
(“LNC”)
 
Number of Shares:
 5,536,485
 
Initial Share Purchase:
On the Initial Purchase Settlement Date, Party A shall deliver to Party B the
Number of Shares and Party B will pay to Party A the Initial Purchase Price (the
“Initial Share Purchase Amount”).
 
Initial Purchase Price:
 USD 350,000,000
 
Initial Purchase Settlement Date:
One Scheduled Trading Day following the Trade Date.
 
Prepayment:
 
Not Applicable
 
Variable Obligation:
 
Not Applicable
 
Exchange:
 
New York Stock Exchange
 
Related Exchange:
 
All Exchanges 
 
Valuation:
 
Trading Period:
 
The period of consecutive Trading Days from and including the first Scheduled
Trading Day following the Trade Date to and including October 17, 2006 (the
“Maximum Maturity Date”); provided that, Party A may designate any Scheduled
Trading Day on or after * (the “Minimum Maturity Date”) as the last Scheduled
Trading Day of the Trading Period (the “Maturity Date”). Party A shall notify
Party B of any designation made pursuant to this provision prior to 9:00 A.M.
(New York time) on the Scheduled Trading Day immediately following such
designated day.
 
Trading Day:
 
Any Scheduled Trading Day that is not a Disrupted Day.
 
Disrupted Day:
 
The definition of “Disrupted Day” in Section 6.4 of the Equity Definitions shall
be amended by adding the following sentence after the first sentence: “A
Scheduled Trading Day on which a Related Exchange fails to open during its
regular trading session will not be a Disrupted Day if the Calculation Agent
determines that such failure will not have a material impact on Party A’s
ability to purchase the relevant number of Shares.”
 
Consequence of Disrupted Days:
 
Section 6.6 of the Equity Definitions shall be deleted in its entirety and
replaced with the following;
 
“If any of the days during the Trading Period are Disrupted Days, then the
Trading Period shall be extended by a corresponding number of Scheduled Trading
Days”
 

 

An [*] represents confidential information that has been omitted and filed
separately with the Securities and Exchange Commission

Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
2

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Valuation Time:
 
The close of trading on the Exchange, without regard to extended trading hours.
 
Valuation Date:
 
The last Scheduled Trading Day during the Trading Period.
 
Settlement Terms:
 
Settlement Method Election:
 
Applicable; provided that references in the Equity Definitions to “Physical
Settlement” shall be deemed to be references to “Net Share Settlement” as
defined herein.
 
Electing Party:
 
Party B
 
Settlement Method Election Date:
 
The Valuation Date
 
Default Settlement Method:
 
Net Share Settlement
 
Cash Settlement Terms:
 
Cash Settlement:
 
Applicable to the extent it is elected or deemed to be elected under “Settlement
Terms” above
 
Settlement Currency:
 
USD
 
Settlement Price:
 
The amount equal to the difference of (i) the arithmetic average of the 10b-18
VWAPs for all Trading Days in the Trading Period minus (ii) USD *.
 
10b-18 VWAP:
 
(A) For any Trading Day, the volume-weighted average price at which the Shares
trade as reported in the composite transactions for each securities exchange
(without regard to pre-open or after-hours trading) on which such Shares are
then listed (or, if applicable, any the successor thereto), excluding (i) trades
that do not settle regular way, (ii) opening (regular way) reported trades in
the consolidated system on such Trading Day, (iii) trades that occur in the last
ten minutes before the scheduled close of trading on the Exchange on such
Trading Day and ten minutes before the scheduled close of the primary trading in
the market where the trade is effected, and (iv) trades on such Trading Day that
do not satisfy the requirements of Rule 10b-18(b)(3), as determined in good
faith by the Calculation Agent, or (B) for any Trading Day that is a Disrupted
Day, an amount determined in good faith by the Calculation Agent as 10b-18 VWAP.
Party B acknowledges that Party A may refer to the Bloomberg Page “LNC <Equity>
AQR SEC” (or any successor thereto), in its discretion, for such Trading Day to
determine the 10b-18 VWAP.
 
On each Monday (provided that if Monday is not a Exchange Business Day, then on
the next Exchange Business Day) Party A shall provide the daily 10b-18 VWAP
determinations from the previous week to Party B.
 

 
An [*] represents confidential information that has been omitted and filed
separately with the Securities and Exchange Commission

Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
3

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Forward Cash Settlement Amount:
 
Notwithstanding anything contained in Section 8.5 of the Definitions, the
Forward Cash Settlement Amount, as determined by the Calculation Agent, shall be
equal to (a) the Initial Share Purchase Amount minus (b) the product of (i) the
Number of Shares and (ii) the Settlement Price.
 
Cash Settlement Payment Date:
 
Three Currency Business Days after the Valuation Date.
 
Daily Share Balance:
 
On any day during the Trading Period, the difference between the Number of
Shares and the number of Shares repurchased by Party A in relation to this
Transaction as of such day (the “Repurchased Shares”).
 
Net Share Settlement Terms:
 
Net Share Settlement:
 
If Party B elects Net Share Settlement under the Settlement Method Election and
the Forward Cash Settlement Amount is (i) a positive number, “Net Share
Settlement by Party A” below shall apply, or (ii) a negative number, “Net Share
Settlement by Party B” below shall apply. For the avoidance of doubt, any Shares
delivered hereunder shall be free and clear of any lien, charge, claim or
encumbrance.
 
Net Share Settlement By Party A:
 
On a day that is three Scheduled Trading Days after the completion of the Net
Share Settlement Period (the “Refund Share Settlement Date”) Party A shall
deliver a number of Shares to Party B (the “Refund Shares”) equal to the Forward
Cash Settlement Amount divided by the volume weighted average price at which
Party A purchased the Refund Shares. No fractional Shares shall be delivered in
connection with Net Share Settlement by Party A, and the value of any fractional
Share otherwise deliverable shall be paid in cash to Party B on the Refund Share
Settlement Date (such value to be determined by multiplying such fractional
Share by the volume weighted average price at which Party A purchased the Refund
Shares).
 
Net Share Settlement Period:
 
The period during which Party A makes purchases of the Refund Shares, commencing
on the Scheduled Trading Day immediately following the Trading Period and ending
on the Scheduled Trading Day on which Party A completes its purchases of the
Refund Shares.
 

 
An [*] represents confidential information that has been omitted and filed
separately with the Securities and Exchange Commission

Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
4

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Net Share Settlement Price:
 
The closing price per Share as quoted by the Exchange at the Valuation Time on
the Valuation Date.
 
Net Share Settlement by Party B:
 
*
 

 
 
Share Adjustments:
 
Method of Adjustment:
 
Calculation Agent Adjustment
 
Notwithstanding anything to the contrary in the Equity Definitions, the
declaration of an Extraordinary Dividend by Party B shall not constitute a
Potential Adjustment Event for purposes of Section 11.2(e) of the Equity
Definitions.
 
Extraordinary Events:
 
Announcement Date:
The definition of “Announcement Date” in Section 12.1 of the Equity Definitions
will be amended by replacing the words “voting shares” in the fifth line thereof
with the word “Shares”.
 
Consequences of Merger Events:
 
Share-for-Share:
 
Modified Calculation Agent Adjustment
 
Share-for-Other:
 
Cancellation and Payment
 
Share-for-Combined:
 
Component Adjustment
 
 
Tender Offer:
 
 
Applicable
 
The definition of “Tender Offer” in Section 12.1 of the Equity Definitions will
be amended by replacing the phrase “greater than 10% and less than 100% of the
outstanding voting shares of the Issuer” in the third and fourth line thereof
with “greater than 10% and less than 100% of the outstanding Shares of the
Issuer”.
 
The definition of “Tender Offer Date” in Section 12.1 of the Equity Definitions
will be amended by replacing the words “voting shares” in the first line thereof
with the word “Shares”.
 
Consequences of Tender Offers:
 
Share-for-Share:
 
Modified Calculation Agent Adjustment
 
Share-for-Other:
 
Cancellation and Payment
 

 
An [*] represents confidential information that has been omitted and filed
separately with the Securities and Exchange Commission

Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
5

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Share-for-Combined:
 
Component Adjustment
New Shares:
 
The definition of “New Shares” in Section 12.1 of the Equity Definitions shall
be amended by deleting subsection (i) in its entirety and replacing it with the
following: “(i) publicly quoted, traded or listed on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market (or their
respective successors) and”.
 
Modified Calculation Agent Adjustment:
 
For greater certainty, the definition of “Modified Calculation Adjustment” in
Sections 12.2 and 12.3 of the Equity Definitions shall be amended by adding the
following italicized language after the stipulated parenthetical provision:
“(including adjustments to account for changes in volatility, expected
dividends, stock loan rate or liquidity relevant to the Shares or to the
Transaction) from the Announcement Date to the Merger Date (Section 12.2) or
Tender Offer Date (Section 12.3).”
 
Announcement Event:
 
If an Announcement Event occurs, the Calculation Agent will determine the
economic effect of the Announcement Date on the theoretical value of the
Transaction (including without limitation any change in volatility, expected
dividends, stock loan rate or liquidity relevant to the Shares or to the
Transaction) from the Announcement Date to the Valuation Date. If such economic
effect is material, the Calculation Agent will adjust the terms of the
Transaction to reflect such economic effect. “Announcement Event” shall mean the
occurrence of the Announcement Date of a Merger Event or Tender Offer and will
constitute a Potential Adjustment Event, if the Merger Date or Closing Date does
not, or is not anticipated to, occur on or prior to the Valuation Date for, or
any earlier termination of, the Transaction.
 
Composition of Combined Consideration:
 
Not Applicable
 
Nationalization, Insolvency or Delisting:
 
Cancellation and Payment 
 
Delisting:
 
The definition of “Delisting” in Section 12.6 of the Equity Definitions shall be
deleted in its entirety and replaced with the following: ‘“Delisting” means that
the Exchange announces that pursuant to the rules of such Exchange, the Shares
cease (or will cease) to be listed, traded or publicly quoted on the Exchange
for any reason (other than a Merger Event or Tender Offer) and are not
immediately re-listed, re-traded or re-quoted on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market (or their respective
successors)”
 

 
An [*] represents confidential information that has been omitted and filed
separately with the Securities and Exchange Commission

Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
6

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Additional Disruption Events:
 
Change in Law:
Applicable
 
Insolvency Filing:
 
Applicable
 
Section 12.9(b)(i) of the Equity Definitions is hereby amended by adding the
following sentence at the end: “If neither party elects to terminate the
Transaction, the Calculation Agent may adjust the terms of the Transaction upon
the occurrence of such an event pursuant to Calculation Agent Adjustment (as if
such event were a Tender Offer).”
 
Hedging Disruption:
 
Not Applicable
 
Increased Cost of Hedging:
 
Not Applicable
 
Loss of Stock Borrow:
 
*
 
Minimum Stock Loan Rate:
 
FED-FUNDS minus * basis points
 
Increased Cost of Stock Borrow:
 
Not Applicable
 
FED-FUNDS:
 
For any day, the rate set forth for such day opposite the caption “Federal
funds”, as such rate is displayed on the page “FedsOpen <Index> <GO>“ on the
BLOOMBERG Professional Service, or any successor page; provided that if no rate
appears for any day on such page, the rate for the immediately preceding day for
which a rate does so appear shall be used for such day.
 
Hedging Party:
 
Party A shall be the Hedging Party in connection with all Extraordinary Events
 
Determining Party:
 
Calculation Agent shall be the Determining Party in connection with all
Extraordinary Events
 
Acknowledgments:
 
 
Non-Reliance:
 
Applicable
 
Agreements and Acknowledgments Regarding Hedging Activities:
 
Applicable
 
Additional Acknowledgments:
 
Applicable
 

 
An [*] represents confidential information that has been omitted and filed
separately with the Securities and Exchange Commission

Risk ID: []/ Effort ID: [] / Global Deal ID: []
7

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Miscellaneous:
 
Bankruptcy Code:
 
Without limiting any other protections under the Bankruptcy Code (Title 11 of
the United States Code) (the “Bankruptcy Code”), the parties hereto intend for:
 
(a) This Transaction and the Agreement to be a "swap agreement" as defined in
the Bankruptcy Code, and the parties hereto to be entitled to the protections
afforded by, among other Sections, Sections 560, 561 and 562 of the Bankruptcy
Code.
 
(b) A party's right to liquidate this Transaction, to offset or net termination
values, payment amounts or other transfer obligations and to exercise any other
remedies upon the occurrence of any Event of Default or Termination Event under
the Agreement or this Transaction to constitute a “contractual right” as
described in Sections 560 and 561 of the Bankruptcy Code.
 
(c) Any cash, securities or other property provided as performance assurance,
credit support or collateral with respect to this Transaction or the Agreement
to constitute “transfers” under a “swap agreement” as defined in the Bankruptcy
Code.
 
(d) All payments for, under or in connection with this Transaction or the
Agreement, all payments for any securities or other assets and the transfer of
such securities or other assets to constitute “transfers” under a “swap
agreement” as defined in the Bankruptcy Code.
 
Additional Representations, Warranties
and Agreements of Party B:
 
In addition to the representations, warranties and agreements set forth in the
Agreement and elsewhere in this Confirmation, Party B further represents,
warrants and agrees that:
 
(a) (i) It is not entering into this Transaction on behalf of or for the account
of any other person or entity, and will not transfer or assign its obligations
under this Transaction or any portion of such obligations to any other person or
entity except in compliance with applicable laws and the terms of this
Transaction; (ii) it has provided to LBI, as agent for Party A, financial and
other information concerning its investment objectives and risk tolerance, which
information is contained in its LBI account documentation, and has not been
rendered misleading or obsolete; (iii) it understands that this Transaction is
subject to complex risks which may arise without warning, may at times be
volatile, and that losses may occur quickly and in unanticipated magnitude; (iv)
it is authorized to enter into this Transaction and such action does not violate
any laws of its jurisdiction of organization or residence (including, but not
limited to, any applicable position or exercise limits set by any
self-regulatory organization, either acting alone or in concert with others) or
the terms of any agreement to which it is a party; (v) it has consulted with its
legal advisor(s) and has reached its own conclusions about this Transaction, and
any legal, regulatory, tax, accounting or economic consequences arising from
this Transaction; and (vi) it has concluded that this Transaction is suitable in
light of its own investment objectives, financial capabilities and expertise.
 

 
 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
8

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(b) At all times until termination of the Transaction, Party B is an “eligible
contract participant” as the term is defined in Section 1a(12) of the Commodity
Exchange Act, as amended.
 
(c) Neither Party A nor any of its affiliates has advised Party B with respect
to any legal, regulatory, tax, accounting or economic consequences arising from
this Transaction, and neither Party A nor any of its affiliates is acting as
agent (other than LBI as dual agent if specified above), or advisor for Party B
in connection with this Transaction.
 
(d) At the time of entering into this Transaction, Party B is not in possession
of any material non-public information concerning the business, operations or
prospects of the Issuer and was not in possession of any such information at the
time of placing any order with respect to the Transaction.
 
“Material” information for these purposes is any information to which there is a
substantial likelihood that a reasonable investor would attach importance in
reaching a decision to buy, sell or hold any securities of the Issuer(s) because
the information would significantly alter the total mix of information
available.
 
(e) Party B is in compliance with its reporting obligations under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and its most recent
Annual Report on Form 10-K, together with all reports subsequently filed by it
pursuant to the Exchange Act, taken together and as amended and supplemented to
the date of this representation, do not, as of their respective filing dates,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
 
(f) Party B is not entering into this Transaction to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable
for Shares), to manipulate the price of the Shares (or any security convertible
into or exchangeable for Shares) or to facilitate a distribution of Shares (or
any security convertible into or exchangeable for Shares).

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
9

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(g) Party B has not entered into any obligation that would contractually limit
it from effecting Cash Settlement or Net Share Settlement under this Transaction
and it agrees not to enter into any such obligation during the term of this
Transaction.
 
(h) Party B agrees that any registration statement (“Registration Statement”) it
files pursuant to Rule 415 under the Securities Act of 1933, as amended, for
purposes of Net Share Settlement, at the time the same becomes effective, will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein to make the statements therein not
misleading. Party B represents that any prospectus delivered to Party A in
connection with sales made under the Registration Statement (as such prospectus
may be supplemented from time to time) will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
 
(i) If Party B purchases any Shares pursuant to this Transaction, such
purchase(s) will comply with (i) all laws and regulations applicable to it and
(ii) all material contractual obligations of Party B.
 
(j) It is not, and, after giving effect to the transactions contemplated hereby
will not be, an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.
 
Additional Termination Events:
 
Notwithstanding any other provision hereof, an “Additional Termination Event”
shall occur and Party B shall be the sole Affected Party pursuant to such
Additional Termination Event if on any day occurring after the Trade Date Party
B declares a distribution, issue or dividend to existing holders of the Shares
with a record date on or prior to the Valuation Date of (a) an extraordinary
cash dividend, (b) a regular quarterly dividend (A) in an amount greater than
USD 0.38 or (B) with an ex-dividend date prior to October 5, 2006, (c)
securities or share capital of another issuer acquired or owned (directly or
indirectly) by Party B as a result of a spin-off or other similar transaction or
(d) any other type of securities (other than Shares, which may constitute a
Potential Adjustment Event), rights or warrants or other assets, in any case for
payment (cash or other consideration) at less than the prevailing market price
as determined by the Calculation Agent in good faith and commercially reasonable
manner.
 

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
10

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Additional Provisions:
 
Party B may net-share settle this Transaction with Free Shares only if the
following conditions have been satisfied (the “Registration Provisions”):
 
(i) A registration statement (which may be a shelf registration statement filed
pursuant to Rule 415 under the Securities Act of 1933) covering public resale of
any Shares (including any Make-Whole Shares) delivered by Party B under a Net
Share Settlement election (“Settlement Shares”) by Party A shall have been filed
with, and declared effective by, the Securities and Exchange Commission (“SEC”)
no later than one Exchange Business Day prior to the Valuation Date and such
Registration Statement continues to be in effect at all times to and including
the date that Party A or it’s affiliate(s) has fully and finally sold any
Settlement Shares hereunder.
 
(ii) The contents of such registration statement and of any prospectus
supplement to the prospectus included therein (including, without limitation,
any sections describing the plan of distribution) shall be reasonably
satisfactory to Party A.
 
(iii) Party A shall have been afforded a reasonable opportunity to conduct a due
diligence investigation with respect to Party B customary in scope for
transactions pursuant to which Party A acts as an underwriter of equity
securities and the results of such investigation are satisfactory to Party A, in
its discretion.
 
(iv) If in the reasonable judgment of counsel to Party A an Underwriting
Agreement will be necessary in order to enable Party A to promptly dispose of
the Net Settlement Shares and the Make-Whole Shares, if any, as of the Valuation
Date, an Underwriting Agreement shall have been entered into with Party A in
connection with the public resale of the Settlement Shares by Party A.
 
Notwithstanding the foregoing, if Party B elects to net-share settle this
Transaction with Restricted Shares, Party A shall attempt to sell the Settlement
Shares, if any, pursuant to an exemption from registration under the Securities
Act by soliciting bids from interested parties in a manner exempt from
registration and, in such case, the Settlement Price shall be equal to the price
determined by Party A in a commercially reasonable manner. Also, Party B
acknowledges and agrees that if it issues Settlement Shares to Party A which are
Restricted Shares, the number of Shares to be delivered shall be greater than
the number of Free Shares that would need to be delivered.
 

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
11

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Company Purchases:
 
Without the prior written consent of Party A, which shall not be unreasonably
delayed or denied, and except for purchases which are not solicited by or behalf
of Party B, its affiliates or affiliated purchasers (each as defined in Rule
10b-18), Party B shall not purchase, and shall cause its affiliates or
affiliated purchasers not to directly or indirectly purchase any Shares (or any
security convertible into or exchangeable for Shares) during the Trading Period
and thereafter until all payments or deliveries hereunder have been made.

 
No Collateral:
 
Notwithstanding any provision of the Agreement, or any other agreement between
the parties, to the contrary, the obligations of Party B hereunder are not
secured by any collateral.
 
Rule 10b-18:
 
During the Net Share Settlement Period, Party A agrees to use its good faith and
commercially reasonable efforts to make all purchases of Shares in a manner that
would comply with the limitations set forth in clauses (b)(2), (b)(3), (b)(4)
and (c) of Rule10b-18 under the Securities Exchange Act of 1934 (“Rule 10b-18”),
as if such rule was applicable to such purchases in connection with any offer to
purchase and any purchase of Shares during the Net Share Settlement Period in
connection with this Transaction.
 
Party B shall, at least one day prior to the first day of the Net Share
Settlement Period, notify Party A in writing of the total number of Shares
purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block
exception set forth in clause (b)(4) of Rule 10b-18 by Party B or any of its
affiliates during each of the four calendar weeks preceding such day and during
the calendar week in which such day occurs (“Rule 10b-18 purchase” and “blocks”
each as defined in Rule 10b-18).
 
Rule 10b5-1:
 
Party B represents, warrants and covenants to Party A that:
 
(i) it is entering into this Confirmation in good faith and not as part of a
plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act
(“Rule 10b5-1”). It is the intent of the parties that the transaction entered
into under this Confirmation complies with the requirements of Rule
10b5-1(c)(1)(i)(A) and (B) and such transaction entered into under this
Confirmation shall be interpreted to comply with the requirements of Rule
10b5-1(c).
 

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
12

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(ii) Party B will not seek to control or influence Party A or LBI to make
"purchases or sales" (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under
any transaction entered into under this Confirmation, including, without
limitation, Party A’s or LBI’s decision to enter into any hedging transactions.
 
(iii) Party B acknowledges that any amendment, modification, waiver or
termination of this Transaction must be effected in accordance with the
requirements for the amendment or termination of a “plan” as defined in Rule
10b5-1(c).
 
Certain Payments and Deliveries:
 
Notwithstanding anything to the contrary herein, or in the Equity Definitions,
if at any time (i) an Early Termination Date occurs and Party B would be
required to make a payment pursuant to Sections 6(d) and 6(e) of the Agreement,
(ii) a Tender Offer occurs and Party B would be required to make a payment
pursuant to Sections 12.3 and 12.7 of the Equity Definitions, (iii) a Merger
Event occurs and Party B would be required to make a payment pursuant to
Sections 12.2 and 12.7 of the Equity Definitions or (iv) an Additional
Disruption Event occurs and Party B would be required to make a payment pursuant
to Sections 12.8 and 12.9 of the Equity Definitions, then in lieu of such
payment, Party B shall have the right to deliver to Party A, at the time such
payment would have been due and in the manner provided under “Physical
Settlement” in the Equity Definitions, a number of Shares (or, in the case of a
Merger Event, common equity securities of the surviving entity) equal to the
quotient obtained by dividing (A) the amount that would have been so payable by
(B) the fair market value per Share (or per unit of such common equity security)
of the Shares (or units) so delivered at the time of such delivery, as
determined by the Calculation Agent in a commercially reasonable manner.
 
In the event that (i) an Early Termination Date (whether as a result of an Event
of Default or a Termination Event) occurs or is designated with respect to any
Transaction or (ii) an Extraordinary Event occurs that results in the
cancellation or termination of any Transaction pursuant to Article 12 of the
Equity Definitions (except, in the case of clause (ii), a Merger Event in which
the consideration or proceeds to be paid to holders of Shares consists
 

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
13

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solely of cash), if Party A would owe any amount to Party B pursuant to Section
6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of
the Equity Definitions (in each case, calculated as if the Transactions being
terminated or cancelled on such Early Termination Date or as a result of such
Extraordinary Event were the sole Transactions under the Agreement) (any such
amount, a “Party A Amount”), then, in lieu of any payment of such Party A
Amount, Party B may, no later than the Early Termination Date or the date on
which such Transaction is cancelled or terminated, as the case may be, elect for
Party A to deliver to Party B a number of Shares (or, in the case of a Merger
Event, a number of units, each comprising the number or amount of the securities
or property that a hypothetical holder of one Share would receive in such Merger
Event (each such unit, an “Alternative Delivery Unit” and, the securities or
property comprising such unit, “Alternative Delivery Property”)) with a value
equal to the Party A Amount, as determined by the Calculation Agent (and the
parties agree that, in making such determination of value, the Calculation Agent
may take into account a number of factors, including the market price of the
Shares or Alternative Delivery Property on the date of early termination and the
prices at which Party A purchases Shares or Alternative Delivery Property to
fulfill its delivery obligations under this Section 13); provided that in
determining the composition of any Alternative Delivery Unit, if the relevant
Merger Event involves a choice of consideration to be received by holders, such
holder shall be deemed to have elected to receive the maximum possible amount of
cash.
 
Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement,
all amounts calculated as being due in respect of an Early Termination Date
under Section 6(e) of the Agreement will be payable on the day that notice of
the amount payable is effective; provided that if Party B elects to receive
Shares or Alternative Delivery Property in accordance with the immediately
foregoing paragraph, such Shares or Alternative Delivery Property shall be
delivered on a date selected by Party A which date shall be no later than 10
days after the day that notice of the amount payable is effective.
 

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
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Limitation on Set-off:
 
Notwithstanding anything to the contrary in the Agreement or the Equity
Definitions, the calculation of any Settlement Amounts, Unpaid Amounts and
amounts owed in respect of cancelled Transactions under Article 12 of the Equity
Definitions shall be calculated separately for (A) all Terminated Transactions
(it being understood that such term for purposes of this paragraph includes
Transactions cancelled pursuant to Article 12 of the Equity Definitions) in the
Shares of the Issuer that qualify as equity under applicable accounting rules
(collectively, the “Equity Shares”) as determined by the Calculation Agent and
(B) all other Terminated Transactions under the Agreement including, without
limitation, Transactions in Shares other than those of the Issuer (collectively,
the “Other Shares”) and the netting and set-off provisions of the Agreement
shall only operate to provide netting and set-off (i) among Terminated
Transactions in the Equity Shares and (ii) among Terminated Transactions in the
Other Shares. In no event shall the netting and set-off provisions of the
Agreement operate to permit netting and set-off between Terminated Transactions
in the Equity Shares and Terminated Transactions in the Other Shares.
 
Calculation Agent:
 
As specified in the Agreement. All determinations by the Calculation Agent shall
be made in good faith and in a commercially reasonable manner and are subject to
agreement by Party A and Party B. If the parties are unable to agree on a
particular calculation then the Calculation Agent will seek four actual
quotations from leading dealers (that are not Affiliates of either party) in the
relevant market (Party A and Party B shall each select two of the four leading
dealers), taking the arithmetic average of those quotations obtained; provided
that if four quotations are not available for a particular Transaction, then
fewer than four quotations may be used for that Transaction; and if no
quotations are available for a particular Transaction, then another mutually
acceptable leading dealer in the relevant market (the “Mutually Acceptable
Calculation Agent”) will be appointed to make such calculation or determination
in dispute. If the parties cannot agree on a mutually acceptable leading dealer,
the parties will each appoint a leading dealer (that is not an Affiliate of
either party) who shall together appoint a third leading dealer (that is not an
Affiliate of either party) (also a “Mutually Acceptable Calculation Agent”). The
Mutually Acceptable Calculation Agent’s determination will be binding on Party A
and Party B. The fees and expenses of the leading dealers or Mutually Acceptable
Calculation Agent shall be borne equally by the parties.
 

Risk ID: []/ Effort ID: [] / Global Deal ID: []
 

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Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
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Please confirm your agreement with the foregoing by executing this Confirmation
and returning such Confirmation, in its entirety, to us at facsimile number
646-885-9546 (United States of America), Attention: Documentation.
 

 
Yours sincerely,
Accepted and agreed to:
   
Lehman Brothers Finance S.A.
Lincoln National Corporation
 
 
 
By: /s/ Barbara Grob
Name: Barbara Grob
Title: Authorised Signatory
 
 
 
By: /s/ Frederick J. Crawford
Name: Frederick J. Crawford
Title: Senior Vice President & Chief Financial
Officer
By: /s/ Nadia Casanova
Name: Nadia Casanova
Title: Authorised Signatory
     

Execution time will be furnished upon Counterparty's written request.
 

 
Risk ID: []/ Effort ID: [] / Global Deal ID: []
 
 
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