Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 8.01 in the section entitled "Issuance of
Subordinated Notes" is incorporated by reference into this Item 2.03.
Item 8.01. Other Events.
On August 11, 2021, Lincoln National Corporation (the "Company") completed its
previously announced offers to exchange all validly tendered and accepted 7.00%
Capital Securities due 2066 (the "2066 capital securities") and 6.05% Capital
Securities due 2067 (the "2067 capital securities" and, collectively with the
2066 capital securities, the "capital securities") previously issued by the
Company for newly issued subordinated notes of the Company and the related
solicitations of consents to amend the indentures governing the capital
securities to eliminate various terms and conditions and other provisions (such
offers to exchange, together with such consent solicitations, the "exchange
offers" and such amendments the "proposed amendments"). Pursuant to the exchange
offers, the aggregate principal amount of the capital securities set forth below
were validly tendered, accepted and cancelled:
• $562,034,000 aggregate principal amount of 2066 capital securities
• $432,743,000 aggregate principal amount of 2067 capital securities
Following such cancellations, $160,493,000 aggregate principal amount of 2066
capital securities and $57,967,000 aggregate principal amount of 2067 capital
securities remain outstanding.
Upon receipt of the requisite number of consents to adopt the proposed
amendments, on August 11, 2021, the Company and The Bank of New York Mellon
Trust Company, N.A., as trustee to the indentures governing the capital
securities, executed supplemental indentures pursuant to which the proposed
amendments became effective on August 11, 2021 with respect to each series of
capital securities. Copies of the Sixth Supplemental Junior Subordinated
Indenture (with respect to the 2066 capital securities) and the Seventh
Supplemental Junior Subordinated Indenture (with respect to the 2067 capital
securities) are filed as Exhibit 4.1 and Exhibit 4.2, respectively, hereto and
incorporated by reference into this Item 8.01.
Filed as Exhibit 99.1 and incorporated herein by reference is a copy of the
Company's press release dated August 9, 2021 announcing the expiration and
results of the exchange offers.
Issuance of Subordinated Notes
On August 11, 2021, in connection with the settlement of the exchange offers,
the Company issued $562,034,000 aggregate principal amount of Floating Rate
Subordinated Notes due 2066 (the "2066 subordinated notes") and $432,743,000
aggregate principal amount of Floating Rate Subordinated Notes due 2067 (the
"2067 subordinated notes" and, collectively with the 2066 subordinated notes,
the "subordinated notes"). The exchange offers were registered under the
Securities Act of 1933, as amended (the "Act") pursuant to a Registration
Statement on Form S-4 (No. 333-257743), which was filed with the Securities and
Exchange Commission (the "SEC") on July 7, 2021 and became effective on
August 5, 2021. The terms of the subordinated notes are further described in the
Company's prospectus, dated as of August 5, 2021, as filed with the SEC under
Rule 424(b)(3) of the Act on August 6, 2021.
The subordinated notes are governed by a Subordinated Indenture, dated
August 11, 2021 (the "Base Indenture") between the Company and The Bank of New
York Mellon, as trustee (the "Trustee"), as supplemented by the First
Supplemental Subordinated Indenture, dated August 11, 2021 (the "First
Supplemental Indenture"), between the Company and the Trustee, and the Second
Supplemental Subordinated Indenture, dated August 11, 2021 (the "Second
Supplemental Indenture," and, together with the Base Indenture and the First
Supplemental Indenture, the "Indentures"), between the Company and the Trustee.
The subordinated notes are unsecured subordinated obligations of the Company,
rank senior to all of the capital securities, will rank pari passu, or equally,
with all of the Company's future unsecured subordinated debt the terms
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of which provide that such indebtedness ranks equally with the subordinated
notes and certain other obligations and rank, or will rank, junior to all of the
Company's existing and future senior debt. The subordinated notes are
structurally subordinated to all existing and future liabilities of the
Company's subsidiaries and effectively subordinated to the Company's secured
indebtedness to the extent of the value of the collateral securing such
indebtedness.
The 2066 subordinated notes will accrue interest at an annual rate of the
benchmark, as defined in the Indentures, which will initially be 3-month LIBOR,
plus a margin equal to 2.3575%, payable quarterly in arrears on February 17,
May 17, August 17 and November 17 of each year, beginning on August 17, 2021.
The 2067 subordinated notes will accrue interest at an annual rate of the
benchmark, which will initially be 3-month LIBOR, plus a margin equal to
2.0400%, payable quarterly in arrears on January 20, April 20, July 20 and
October 20 of each year, beginning on October 20, 2021. In each case, the
interest rate will be determined by reference to a different reference rate than
3-month LIBOR if the Company or its designee determines that a benchmark
transition event and its related benchmark replacement date, each as defined in
the Indentures, have occurred with respect to 3-month LIBOR. Upon the occurrence
of a benchmark transition event and its related benchmark replacement date, the
interest rate for each interest payment period will be an annual rate equal to
the sum of (i) the benchmark replacement, as defined in the Indentures, and
(ii) the applicable margin of 2.3575% with respect to the 2066 subordinated
notes and 2.0400% with respect to the 2067 subordinated notes. The initial
benchmark replacement will be the sum of (i) the ISDA fallback rate, which is
the rate that would apply for derivatives transactions referencing the
International Swaps and Derivatives Association, Inc. ("ISDA") definitions
effective upon the occurrence of an index cessation date with respect to 3-month
LIBOR excluding the ISDA fallback adjustment, as defined in the Indentures, and
(ii) the ISDA fallback adjustment. On March 5, 2021, ISDA issued a statement
that the fallback spread adjustment for all U.S. dollar LIBOR settings is fixed
as of March 5, 2021; accordingly, the ISDA fallback adjustment for 3-month U.S.
dollar LIBOR is equal to 0.26161%. Additional details regarding the interest
provisions for the subordinated notes are set forth in the Indentures.
The 2066 subordinated notes will mature on May 17, 2066. The 2067 subordinated
notes will mature on April 20, 2067. The subordinated notes are redeemable, in
whole but not in part, at the Company's option, at any time or from time to time
prior to August 11, 2026, within 90 days after the occurrence of certain events,
at a redemption price equal to (i) in the case of a "tax event" or a "regulatory
capital event", in each case as defined in the Indentures, their principal
amount or (ii) in the case of a "rating agency event", as defined in the
Indentures, at a redemption price equal to 102% of their principal amount, and
in the case of clause (i) and (ii), plus accrued and unpaid interest to but
excluding the date of redemption. At any time and from time to time on or after
August 11, 2026, the subordinated notes are redeemable at the Company's option,
in whole or in part, at a redemption price equal to 100% of the principal amount
of the subordinated notes to be redeemed plus accrued and unpaid interest to but
excluding the date of redemption; provided that if the subordinated notes are
not redeemed in whole, at least $25 million aggregate principal amount of the
applicable series of subordinated notes, excluding any subordinated notes held
by the Company or any of its affiliates, must remain outstanding after giving
effect to such redemption and all accrued and unpaid interest, including
deferred interest, must be paid in full on all outstanding subordinated notes
for all interest periods ending on or before the date of redemption.
The Indentures provide that an event of default with respect to the subordinated
notes shall occur only upon certain events of bankruptcy, insolvency or
receivership involving the Company. If an event of default exists occurs and
continues under the Indentures, the principal amount of the subordinated notes
will automatically become due and payable without any declaration or other
action on the part of the Trustee or any holder of the subordinated notes.
So long as no event of default with respect to the subordinated notes has
occurred and is continuing, the Company may elect at one or more times to defer
payment of interest on a series of the subordinated notes for one or more
consecutive interest periods that do not exceed five years for a single deferral
period, as defined in the Indentures. The Company may not defer interest beyond
the applicable maturity date of the subordinated notes, any earlier accelerated
maturity date arising from an event of default or any other earlier redemption
of the subordinated notes. During a deferral period, interest will continue to
accrue on the subordinated notes, and deferred interest will bear additional
interest at the then-applicable interest rate, compounded on each interest
payment date, subject to applicable law. At the end of five years following the
commencement of a deferral period, the Company must pay all accrued and unpaid
deferred interest, including compounded interest and if all deferred interest
(including compounded interest thereon) has been paid on a series of
subordinated notes, the Company may again defer interest
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payments on that series of subordinated notes. If the Company has given notice
of its election to defer interest payments on a series of the subordinated notes
but the related deferral period has not yet commenced or a deferral period is
continuing, the Company and its subsidiaries will generally be restricted from
making payments on or redeeming or purchasing any shares of capital stock or
debt securities or guarantees that rank, upon liquidation, on a parity with or
junior to the subordinated notes, subject to certain limited exceptions set
forth in the Indentures.
The foregoing summary of the subordinated notes does not purport to be complete
and is qualified in its entirety by reference to the full text of (i) the Base
Indenture attached as Exhibit 4.3 hereto; (ii) the First Supplemental Indenture
attached as Exhibit 4.4 hereto; (iii) the Second Supplemental Indenture attached
as Exhibit 4.5 hereto; and (iv) the forms of the subordinated notes attached as
Exhibits 4.6 and 4.7 hereto, the terms of which are in each case incorporated by
reference into this Item 8.01 and Item 2.03.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit
Number Description
4.1 Sixth Supplemental Junior Subordinated Indenture, dated August 11,
2021, to Junior Subordinated Indenture, dated May 1, 1996.
4.2 Seventh Supplemental Junior Subordinated Indenture, dated August 11,
2021, to Junior Subordinated Indenture, dated May 1, 1996.
4.3 Subordinated Indenture, dated August 11, 2021, between Lincoln
National Corporation and The Bank of New York Mellon, as trustee.
4.4 First Supplemental Subordinated Indenture, dated August 11, 2021, to
Subordinated Indenture.
4.5 Second Supplemental Subordinated Indenture, dated August 11, 2021,
to Subordinated Indenture.
4.6 Form of Floating Rate Subordinated Note due 2066.
4.7 Form of Floating Rate Subordinated Note due 2067.
99.1 Press Release, dated August 10, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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LINCOLN NATIONAL CORPORATION 
