-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wi+yWJeK7V+LC5K2FWjoDnh7xi7mNfwovqA/eMGY0e47JvhIKj7BCSb3bssWhz83 zmd3s6HEGUV9BFwD6xI7/Q== 0000059558-96-000019.txt : 19960328 0000059558-96-000019.hdr.sgml : 19960328 ACCESSION NUMBER: 0000059558-96-000019 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN NATIONAL CORP CENTRAL INDEX KEY: 0000059558 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 351140070 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-06028 FILM NUMBER: 96538954 BUSINESS ADDRESS: STREET 1: 200 EAST BERRY STREET STREET 2: PO BOX 1110 CITY: FORT WAYNE STATE: IN ZIP: 46802 BUSINESS PHONE: 2194552000 10-K405 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended DECEMBER 31, 1995 Commission File Number 1-6028 LINCOLN NATIONAL CORPORATION (Exact name of registrant as specified in its charter) Indiana 35-1140070 (State of incorporation) (I.R.S. Employer Identification No.) 200 East Berry Street, Fort Wayne, Indiana 46802-2706 (Address of principal executive offices) Registrant's telephone number (219) 455-2000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange on Title of each class which registered Common Stock (Without Par Value) New York, Chicago, Pacific, London and Tokyo Stock Exchanges Common Share Purchase Rights New York, Chicago and Pacific Stock Exchanges $3.00 Cumulative Convertible Preferred New York and Chicago Stock Stock, Series A (Without Par Value) Exchanges SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ x ] As of March 1, 1996, 104,233,132 shares of common stock were outstanding. The aggregate market value of such shares (based upon the closing price of these shares on the New York Stock Exchange) held by nonaffiliates was approximately $5,719,800,000. Select materials from the Proxy statement for the Annual meeting of Shareholders, scheduled for May 9, 1996, have been incorporated by reference into Part III of this Form 10-K. The exhibit index to this report is located on page 80. Page 1 of 446 -2- PART I Item 1. Business Lincoln National Corporation ("LNC") is a holding company. Through subsidiary companies, LNC operates multiple insurance and investment management businesses. LNC is the 48th largest (based on assets) U.S. Corporation (1994 Fortune 500 rankings). Operations have been divided into four business segments, 1) Life Insurance and Annuities, 2) Reinsurance 3) Property-Casualty and 4) Investment Management. The Investment Management segment was added in April of 1995 following the acquisition of Delaware Management Holdings, Inc. (see note 11 to the consolidated financial statements on page 65). Prior to the sale of 71% of its direct writer of employee life-health coverages in the first quarter of 1994, LNC conducted business in a business segment entitled Employee Life-Health Benefits. After the sale, the earnings from the 29% minority interest retained were included in "Other Operations" as described below. Although one of the subsidiaries held by LNC was formed as early as 1905, LNC itself was formed in 1968. LNC is an Indiana corporation with its principal office at 200 East Berry Street, Fort Wayne, Indiana 46802-2706. As of December 31, 1995, there were 225 persons on the staff of LNC. Total employment of Lincoln National Corporation at December 31, 1995 on a consolidated basis was 10,250. Although acquisition and disposition activity has occurred, there has been no activity of this nature during the past five years involving all or predominately all of a business segment except as described above. Numeric presentations showing revenues, pre-tax income, and assets for LNC's major business segments and other operations in which LNC engages through its subsidiaries are included in this report as part of the consolidated financial statements (see note 9 to the consolidated financial statements on page 62). The LNC "Other Operations" category includes the financial data for an unconsolidated affiliate (subsequent to the first quarter of 1994 and prior to the sale of this holding in October of 1995) engaged in the employee life- health benefits business, certain other operations that are not directly related to the business segments and unallocated corporate items (i.e., corporate investment income, interest expense on short-term and long-term borrowings, and unallocated corporate overhead expenses). Following is a brief description of the four business segments: 1. Life Insurance and Annuities The primary companies within this business segment are The Lincoln National Life Insurance Company ("Lincoln Life") and Lincoln National (UK) plc. Other companies within this business segment include, First Penn-Pacific Life Insurance Company ("First Penn")and American States Life Insurance Company ("American States Life"). Lincoln Life, which is among the 10 largest U.S. stockholder-owned life insurance companies based on revenues (1994 Fortune Rankings of 50 Largest Life Insurance Companies by Revenues) and the 11th largest based on assets (Best's Review Life-Health Edition, October 1995), is an Indiana corporation headquartered in Fort Wayne, Indiana. A network of 38 life insurance agencies, independent life insurance brokers, insurance agencies located within financial institutions and specifically trained employees sells fixed annuities, variable annuities, pension products, universal life, variable universal life, long-term care insurance, disability income and other individual insurance coverages in most states of the United States. The distribution network includes approximately 1,900 career agents, 18,500 brokers and access to 52,000 stockbrokers and financial planners. During 1995, LNC announced that it would stop selling disability income coverage on a direct basis and that the runoff of the existing business would be moved to its Reinsurance segment. Lincoln National (UK) is a United Kingdom company headquartered in Uxbridge, England, that is licensed to do business throughout the United Kingdom. The principal products produced by this operation, unit-linked life and pension products, are similar to U.S. produced variable life products. The distribution network includes approximately 1,800 sales representatives. Lincoln National (UK) is the 12th largest writer of unit-linked new business -3- premiums in the UK as measured in 1994 (Money Management Survey-New Business Trends, published in June 1995). After adding the unit-linked business from the acquisitions completed in the first half of 1995 (see note 11 to the consolidated financial statements on page 65), to its existing business, Lincoln National (UK) advanced to the 10th largest writer of unit-linked new business premiums. First Penn is an Indiana Corporation headquartered in Oakbrook Terrace, Illinois. Its products include universal life products distributed through independent marketing companies, term insurance distributed through brokers and the sale of Lincoln Life's deferred annuities through insurance agencies located within financial institutions. These products are marketed in most states of the United States. American States Life is an Indiana corporation headquartered in Indianapolis, Indiana. Its products, principally universal life and term insurance, are marketed through independent agencies (which also offer property-casualty insurance) in most states of the United States. Approximately 4,875 employees are involved in this business segment. 2. Reinsurance This segment offers a broad range of risk management products and services to insurance companies, HMOs, self-funded employers and other primary market risk accepting organizations throughout the United States and economically attractive international markets. Marketing efforts are conducted primarily through the efforts of a reinsurance sales staff. Some business is presented by reinsurance intermediaries and brokers. The reinsurance organization is the leading life-health reinsurer worldwide measured on gross premiums, net of ceded (Swiss Re, Economics Studies, June 1995). The primary companies within this business segment are Lincoln National Reassurance Company ("LNRAC"), Lincoln National Health & Casualty Insurance Company ("LNH&C"), Lincoln Life, Lincoln National Reinsurance Company Ltd (Bermuda) and Lincoln National Reinsurance Company Ltd (Barbados). LNRAC and Lincoln Life offer reinsurance programs for individual life, group life, group medical, disability income, personal accident and annuity products to U.S. and international clients. LNH&C offers group medical products and services on both a direct and reinsurance basis. The insurance companies in Bermuda and Barbados offer specialized reinsurance programs for life, health and annuity business, and offer funded cover programs to property-casualty carriers in the U.S. and select international markets. Other companies in this business segment include various general business corporations which are used to support the segment's sales, service and administration efforts. Approximately 610 employees are involved in this business segment. 3. Property-Casualty Property-Casualty insurance includes both personal lines (auto, homeowners, multi-peril and other) and commercial lines (business owners policies, auto, multi-peril, workers' compensation, general liability and other). Most of LNC's property-casualty business is conducted through American States Insurance Company and its property-casualty subsidiaries ("American States"), headquartered in Indianapolis, Indiana. These companies operate a multi-line property-casualty insurance business in most states of the United States through 20 semi-autonomous division offices with broad authority for underwriting, agency contracting, marketing and claims settlement for most lines of business. The distribution network involves approximately 5,000 independent agencies. In November 1995, American States announced it would be consolidating the activities of its divisional offices into four regional offices. A company within this business segment not owned by American States is Linsco Reinsurance Company which is licensed to write property-casualty reinsurance. This company is involved in servicing a closed block of business. Approximately 3,630 employees are involved in this business segment. -4- 4. Investment Management The companies within this business segment include Lincoln National Investment Companies, Inc. ("LNIC"), Delaware Management Holdings, Inc. ("Delaware"), Lincoln Investment Management, Inc. ("Lincoln Investment"), Lynch & Mayer, Inc. ("L&M") and Vantage Global Advisors, Inc. ("Vantage"). LNIC is a second- tier holding company that owns the operating companies within this segment. The operating companies provide a variety of asset management services to institutional and retail customers including other insurance companies, pension plans, college endowment funds, individuals and trusts. These companies serve as investment advisor to approximately 500 pension funds and other institutional accounts; act as investment manager/national distributor and shareholder services agent for 38 registered, open-end funds; and serve as investment manager for 4 registered, closed-end funds. Approximately 910 employees are involved in this business segment. LNC's insurance subsidiaries protect themselves against losses greater than the amount they are willing to retain on any one risk or event, by purchasing reinsurance from unaffiliated insurance companies (see note 7 to the consolidated financial statements on page 57). All the areas of business activity in which LNC is involved are highly competitive because of the market structure and the large number of competing companies. At the end of 1994, the latest year for which data is available, there were more than 1,800 life insurance companies in the United States and Lincoln Life was among the 20 largest stock and mutual life insurance companies in the United States based on revenues (1994 Fortune Ranking of 50 Largest U.S. Life Insurance Companies by Revenues). At the end of 1994, the latest year for which data is available, there were approximately 1,200 groups and unaffiliated individual companies selling property and casualty insurance. LNC's group of companies writing property-casualty insurance ranked 30th in net written premiums for 1994 (A.M. Best Aggregates and Averages) among all such groups and companies. The business of LNC's life insurance and annuities, reinsurance and property- casualty business segments, in common with those of other insurance companies, is subject to regulation and supervision by the states, territories and foreign countries in which they are admitted to do business. The laws of these jurisdictions generally establish supervisory agencies with broad administrative powers relative to granting and revoking licenses to transact business, regulating trade practices, licensing agents, prescribing and approving policy forms, regulating premium rates for some lines of business, establishing reserve requirements, regulating competitive matters, prescribing the form and content of financial statements and reports, regulating the type and amount of investments permitted, and prescribing minimum levels of capital. The ability to continue an insurance business is dependent upon the maintenance of the licenses in the various jurisdictions. LNC's investment management companies in common with other investment advisors are subject to regulation and supervision by the Securities and Exchange Commission, National Association of Securities Dealers and the jurisdictions of the states, territories and foreign countries in which they are admitted to do business. Because of the nature of the insurance and investment management businesses, there is no single customer or group of customers upon whom the business is dependent. Factors such as backlog, raw materials, patents (including trademarks, licenses, franchises, and any other concessions held), seasonality, or environmental impact do not have a material effect upon such businesses. However, within LNC's Reinsurance segment, Lincoln National Risk Management, Inc. does hold a patent for "The Method and Apparatus for Evaluating a Potentially Insurable Risk" and markets multiple knowledge based underwriting products which rely on this product. LNC does not have a separate unit that conducts market research. Research activities related to new products or services or the improvement of existing products or services -5- is completed by persons within the business segments. Expenses related to such activities are not material. Also, sales are not dependent upon select geographic areas. LNC has foreign operations which are significant in relationship to the consolidated group (see note 9 to the consolidated financial statements on page 63). Liabilities for claims and claim expenses for the property-casualty business segment are estimated at the end of each accounting period using case-basis evaluations and statistical projections. These liabilities include estimates for the ultimate cost of claims 1) which have been reported but not settled and 2) which have been incurred but not yet reported. A provision for inflation is implicitly considered in the estimated liability as the development of the estimated liability is based on historical data which reflects past inflation and on other factors which are judged to be appropriate modifiers of past experience. Adjustments to previously established estimates are reflected in current operating results along with initial estimates for claims arising within the current accounting period. A reconciliation of the beginning of year and end of year liability for claims and claim expenses is included in this report as part of the financial statements (see note 5 to the consolidated financial statements on page 50). The liability for claims and claim expenses included in this report is shown on a basis prescribed by generally accepted accounting principles ("GAAP"). Such liabilities differ from that reported to state insurance regulators. A reconciliation of the GAAP liability and the corresponding liability reported to state insurance regulators is as follows:
December 31 (in millions) 1995 1994 Liability reported to state insurance regulators --- $2,443.4 $2,532.1 Increase (decrease) related to: Estimated salvage and subrogation recoveries ------- (37.1) (37.3) Amount recoverable from reinsurers ----------------- 189.0 203.1 Other ---------------------------------------------- -- 4.6 Liability reported on a GAAP basis --------------- $2,595.3 $2,702.5
The table on page 6 shows the development of the estimated liability for claim and claim expenses for the ten year period prior to 1995. Each column shows the liability as originally estimated and cumulative data on payments and re- estimated liabilities for that accident year and all prior accident years, making up that calendar year-end liability; and all amounts are reflected net of reinsurance recoverable for all years. The resulting redundancy (deficiency) is also a cumulative amount for that year and all prior years. Conditions and trends that have affected the development of these liabilities in the past may not necessarily recur in the future; therefore, it would not be appropriate to use this cumulative history in the projection of future performance. -6- Analysis of Combined Property-Casualty Claims and Claim Expense Development. December 31 (in millions)
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Liability for unpaid claims and claim expenses, net of reinsurance recoverable: $1,370 $1,730 $2,020 $2,372 $2,669 $2,246 $2,502 $2,673 $2,585 $2,499 $2,406
Liability re-estimated as of: (First column represents number of years later) 1 1,410 1,692 1,984 2,347 2,690 2,258 2,549 2,634 2,506 2,474 -- 2 1,439 1,753 1,990 2,382 2,718 2,303 2,571 2,607 2,553 3 1,566 1,790 2,026 2,403 2,767 2,384 2,563 2,686 4 1,595 1,833 2,054 2,443 2,847 2,403 2,673 5 1,636 1,863 2,104 2,538 2,869 2,522 6 1,672 1,910 2,199 2,551 2,986 7 1,713 2,003 2,210 2,604 8 1,805 2,012 2,311 9 1,813 2,113 10 1,907
Cumulative redundancy (deficiency) (537) (383) (291) (232) (317) (276) (171) (13) 32 25 --
Change in cumulative amount 154 92 59 (85) 41 105 158 45 (7) (25)
Cumulative amount of liability paid through: (First column represents number of years later) 1 531 571 649 750 1,430* 809 839 849 728 689 -- 2 842 935 1,012 1,650* 1,862 1,253 1,325 1,294 1,156 3 1,036 1,160 1,568* 1,875 2,088 1,542 1,596 1,581 4 1,177 1,508* 1,700 1,996 2,255 1,709 1,796 5 1,390* 1,593 1,776 2,095 2,355 1,839 6 1,450 1,647 1,840 2,154 2,439 7 1,488 1,694 1,877 2,157 8 1,525 1,721 1,914 9 1,546 1,751 10 1,571 *Includes the release of reserves for National Reinsurance Corporation due to the sale of that company during April 1990. The reserves released for LNC's period of ownership of National Re were $139 million, $241 million, $386 million, $526 million and $665 million in 1985, 1986, 1987, 1988 and 1989, respectively.
Item 2. Properties LNC and the various Fort Wayne operating businesses owned or leased approximately 1.4 million square feet of office space in the Fort Wayne area. The operating businesses in Indianapolis, Indiana; Oakbrook Terrace, Illinois; Philadelphia, Pennsylvania; and Uxbridge and Gloster, England owned or leased another 1.3 million square feet of office space. In addition, branch offices owned or leased for all of the operating businesses referenced above as well as the space for some smaller operations total approximately 1.8 million square feet. The square feet of office space utilized for this third group will be reduced by approximately 750,000 square feet over the next few years due to the consolidation of operating offices within the Property-Casualty segment (see note 11 to the consolidated financial statements on page 65). As shown in the notes to the consolidated financial statements (see note 7 to the consolidated financial statements on page 57), the rental expense on operating leases for office space and equipment for continuing operations totaled $65.6 million for 1995 of which $57.3 million was for office space. This discussion regarding properties does not include information on investment properties. -7- Item 3. Legal Proceedings LNC and its subsidiaries are involved in various pending or threatened legal proceedings arising from the conduct of their business. In some instances, these proceedings include claims for punitive damages and similar types of relief in unspecified or substantial amounts in addition to amounts for alleged contractual liability or requests for equitable relief. After consultation with counsel and a review of available facts, it is management's opinion that these proceedings ultimately will be resolved without materially affecting the consolidated financial statements of LNC. Item 4. Submission of Matters to a Vote of Security Holders During the fourth quarter of 1995, no matters were submitted to security holders for a vote. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Stock Market and Dividend Information
Common Stock Data: (per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1995 Data: High -------------------------------- $41.375 $46.250 $47.250 $53.750 Low --------------------------------- 34.625 39.875 38.750 42.625 Dividend declared ------------------- $.43 $.43 $.43 $.46 1994 Data: High -------------------------------- $44.375 $43.875 $43.750 $39.250 Low --------------------------------- 38.375 36.750 35.500 34.625 Dividend declared ------------------- $.41 $.41 $.41 $.43 Notes: 1. At December 31, 1995, the number of shareholders of record of LNC's common stock was 13,810. 2. The payment of dividends to shareholders is subject to the restrictions described in notes 5, Supplemental Financial Data, and 7, Restrictions, Commitments and Contingencies to the consolidated financial statements (see pages 51 and 56, respectively) and is discussed in the Management's Discussion and Analysis of Financial Condition (see page 32). Exchanges: New York, Chicago, Pacific, London and Tokyo. Stock Exchange Symbol: LNC
Dividend Guideline: The dividend on LNC's common stock is determined each quarter by the Corporation's Board of Directors. The Board takes into consideration the financial condition of the Corporation, including current and expected earnings, projected cash flows and anticipated financing needs. The Board also considers the ability to maintain the dividend through bad times as well as good so that the dividend would need to be reduced only under unusual circumstances. One guideline that the Board has found useful is to consider a dividend approximately equal to five percent of the book value per share with such book value computed excluding the impact of marking its securities available-for-sale to fair value. -8- Item 6. Selected Financial Data
(Millions of dollars, except per share data) Year Ended December 31 1995 1994 1993 1992 1991 Total revenue (1) -------------- 6,633.3 6,179.9 7,392.8 7,267.7 8,181.8 Income before cumulative effect of accounting change (2) ------ 482.2 349.9 415.3 359.2 201.9 Net income (2) ----------------- 482.2 349.9 318.9 359.2 201.9 Per Share Information: Income before cumulative effect of accounting change (2) ------------------ $4.63 $3.37 $4.06 $3.86 $2.23 Net income (2) --------------- $4.63 $3.37 $3.12 $3.86 $2.23 Common stock dividend (2) ---- $1.75 $1.66 $1.55 $1.475 $1.385 December 31 1995 1994 1993 1992 1991 Assets (1) and (2) ------------ 63,257.7 48,864.8 47,825.1 39,042.2 33,660.3 Long-term debt ---------------- 659.3 474.2 422.2 489.8 284.7 Shareholders' equity (2) ------ 4,378.1 3,042.1 4,072.3 2,826.9 2,655.8 Market value of common stock (2) ------------- $53.75 $35.00 $43.50 $37.00 $27.37 Notes to Select Financial Data: (1) Total revenue and assets for the years 1991-1994 includes reclassifications to conform to the 1995 presentation (see note 2 to the consolidated financial statements on page 44). (2) Factors affecting the comparability of income before cumulative effect of accounting change and net income for the 1991-1995 period are shown below (see "Supplemental Data"). Assets and shareholders' equity as of December 31, 1995, 1994 and 1993 include the effect of carrying securities available-for-sale at their fair values (see Consolidated Statements of Shareholders' Equity on page 37). Per share amounts were affected by the issuance in May 1991 and February 1993 of 2,216,454 shares of Series F preferred stock and 9,200,000 shares of common stock, respectively, and the retirement of 500,000 shares of common stock in November 1994. (3) For other factors affecting comparability see the review of operations for each segment.
Supplemental Data
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991 Income from operations* -------------- $306.5 $389.8 $343.5 $240.6 $177.7 Realized gain (loss) on investments, net of related amortization and taxes --------------------------- 136.4 (88.7) 170.3 118.6 113.3 Gain (loss) on sale of affiliates/ operating property, net of taxes ---- 39.3 48.8 (98.5) -- (89.1) Cumulative effect of accounting change (postretirement benefits) ---- -- -- (96.4) -- -- Net Income ------------------------ $482.2 $349.9 $318.9 $359.2 $201.9 *Income from operations is defined as "Net Income" less realized gain (loss) on investments, gain (loss) on sale of affiliates/operating property and cumulative effect of accounting change, all net of taxes.
-9- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The pages to follow review LNC's results of operations and financial condi- tion. Historical financial information is presented and analyzed. Where appropriate, factors that may affect future financial performance are identified and discussed. Actual results could differ materially from those indicated in forward-looking statements due to, among other specific changes currently not known, subsequent significant changes in: the company (e.g. acquisitions and divestitures), financial markets (e.g. interest rates and securities markets), legislation (e.g. taxes and product taxation), regulations (e.g. insurance and securities regulations), acts of God (e.g. hurricanes, earthquakes and storms), other insurance risks (e.g. policyholder mortality and morbidity) and competition. On pages 10 through 19, the financial results of LNC's four business segments and other operations are presented and discussed. Within these business segment discussions, reference is made to "Income from Operations" (see definition in Item 6 above). Pages 20 through 32 discuss factors that have affected specific elements of the consolidated financial statements as well as information pertaining to LNC as a whole. This "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the audited financial statements, including the notes thereto, presented on pages 34 through 66. -10- Review of Operations: Life Insurance and Annuities
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991 Financial Results by Source Lincoln Life/First Penn - Annuities - $149.3 $120.0 $ 96.5 $ 73.9 $ 45.5 Lincoln Life - Pensions ------------- 22.1 22.4 30.6 15.5 12.8 Lincoln Life/First Penn - Insurance - 31.1 34.2 37.8 46.8 31.5 Lincoln Life - Disability Income ---- (18.3) (14.9) 3.5 (19.6) (1.6) Lincoln National (UK) --------------- 45.9 17.2 11.8 9.2 14.3 American States Life ---------------- 13.0 12.4 12.1 11.1 10.2 Security-Connecticut Life ----------- -- -- 16.6 21.4 16.7 Other ------------------------------- 8.5 (5.5) (33.6) (7.4) (11.4) Income from Operations* ----------- 251.6 185.8 175.3 150.9 118.0 Realized Gain (Loss) on Investments** 83.1 (91.7) 59.3 -- -- Gain (Loss) on Sale of Affiliates/ Operating Property ----------------- (.6) -- -- -- -- Net Income* ----------------------- $334.1 $ 94.1 $234.6 $150.9 $118.0
December 31 (in billions) 1995 1994 1993 1992 1991 Account Values: Lincoln Life/First Penn - Annuities -$30.316 $24.604 $20.923 $16.327 $12.362 Reinsurance Ceded - Annuities ------- (1.778) (1.536) (.690) (.207) -- Lincoln Life - Pensions ------------- 8.011 7.409 6.972 6.267 5.510 Lincoln Life/First Penn - Universal and Variable Life Insurance -------- 2.629 2.392 2.207 1.988 1.791 American States Life ---------------- .317 .286 .255 .217 .178 Total U.S. Account Values --------- 39.495 33.155 29.667 24.592 19.841 Lincoln National (UK) - Unit-Linked-- 4.307 1.320 1.235 .652 .669 Total Account Values --------------$43.802 $34.475 $30.902 $25.244 $20.510 *Income from operations and net income of the annuities and pension sub- segments for 1993 include the impact of a change in estimate of net investment income (see note 2 to the consolidated financial statements on page 43). **Prior to 1993, all realized gain (loss) on investments was included in Other Operations. Realized gain (loss) on investments for 1993 includes the effect of a change in accounting for the impairment of mortgage loans (see note 2 to the consolidated financial statements on page 43).
The Life Insurance and Annuities segment reported its sixth consecutive year of record earnings in 1995. Income from operations increased 35% to $251.6 million, compared with $185.8 million in 1994. This growth was produced through a combination of expanded annuity business in the United States and acquisitions in the United Kingdom. Profile The Life Insurance and Annuities segment is composed of the direct operations of Lincoln National Life ("Lincoln Life"), Lincoln National (UK) plc, First Penn-Pacific ("First Penn") and American States Life. Lincoln Life is the 11th largest life insurer in the United States as measured by assets (Best's Review, Life-Health Edition, October 1995). Lincoln Life is in the midst of a transformation process to better serve four target markets: small-to-medium-sized businesses; not-for-profit organizations; retirees with investable assets; and individuals with high net worth. The transformation process, expected to be completed by the end of 1997, is designed to create major improvements in service, products and expense levels. Lincoln National (UK) is the 12th largest unit-linked life insurer in the United Kingdom as measured by 1994 premiums of those companies writing predominantly unit-linked life and pension business (Money Management, June 1995). Unit-linked business is comparable to variable life policies in the United States. First Penn is a mid-sized insurance company with specialized skills in customizing interest-sensitive products. It also has expertise in term life insurance. First Penn complements Lincoln Life's operations by meeting needs -11 in niche financial services markets. American States Life serves the income protection needs of individuals who are clients of independent agencies associated with American States Insurance Company, LNC's property-casualty affiliate. Varied Distribution Breadth of distribution sets the Life Insurance and Annuities segment apart from the competition. Many life insurers rely largely upon a single distribution channel. However, the four companies in the Life Insurance and Annuities segment offer products through a varied distribution system that includes career agents, independent agencies, insurance brokers, banks, stockbrokers and financial planners in the U.S. and, in the U.K., a direct sales force and tied agents. Lincoln Life's broad range of asset accumulation and income protection products are sold in 49 states through approximately 1,900 career agents, 18,500 insurance brokers and more than 52,000 stockbrokers and financial planners. The product portfolio includes: fixed and variable annuities; term, universal and variable universal life insurance; long-term care coverage; and 401(k) plans. Lincoln Life is strongly committed to growing its career agent system, Lincoln Financial Group. The career agent system is supported by 38 regional offices housing market specialists easily accessible to the career agent sales force. Each office is essentially a "home office in the field." A good measure of Lincoln Life's reputation as a "career shop" is its attractiveness to seasoned agents. More than 50% of the agents recruited by Lincoln Life each year have prior experience as agents. First Penn sells universal life, universal life with long-term care riders, term life and fixed annuities through banks, savings and loans, broker/dealers, stockbrokers and financial planners. Five thousand independent property-casualty agencies offer the universal and term life coverage and annuity products of American States Life. Lincoln National (UK) sells life, investment, income protection and retirement planning products through approximately 1,800 direct sales representatives and tied agents. Its sales force is the sixth largest among life insurers in the United Kingdom (Money Management, July 1995). Annuities The combined annuity earnings of Lincoln Life and First Penn grew 24% to a record $149.3 million in 1995. At the heart of this growth was a 23% increase in annuity account values, which reached more than $30 billion at the end of the year. Lincoln Life and First Penn amassed $3.7 billion in new annuity deposits in 1995, a 16% decrease from 1994. The decrease is attributable to intense competition in the financial institutions sector. Lincoln Life's career agents produced 45% of its new annuity deposits in 1995. Stockbrokers and financial planners generated 41% and continue to be the company's dominant distributors of variable annuities. Deposits through stockbrokers hit new highs, with substantial increases in the fourth quarter, as the stock market thrived in 1995. Distribution through banks and other financial institutions produced 14% of annuity deposits. According to the most recent statistics available, Lincoln Life was the nation's leading writer of individual fixed annuities and the third largest writer of individual variable annuities in 1994 (Best's Policy Reports, July 1995). Pensions Lincoln Life's 401(k) sales continued a dramatic series of strong annual increases. 401(k) account values grew 35% annually from 1990 to 1994 and were up another 30% in 1995. Total 401(k) deposits were up 37% over the previous year. This marked increase in volume has put extreme pressure on service capacity. The need to rapidly build more service capacity has put temporary pressure on 401(k) profits. The remainder of Lincoln Life's pension operations in 1995 consisted of guaranteed interest contracts (GICs) and group pension annuities (GPAs). Lincoln Life announced in the third quarter of 1995 that it would cease writing GICs and GPAs because neither fit its sharper focus in the retirement planning market. U.S. Life Insurance Income from life insurance operations of Lincoln Life and First Penn was $31.1 million, a slight decrease from 1994. Lincoln Life's and First Penn's combined universal and variable universal life account values increased 10% in -12- 1995 to $2.6 billion. Variable universal life continues to represent an increasing portion of new sales. First Penn introduced a new term life product in July 1995. In the first quarter of 1996, Lincoln Life introduced a term life product administered by First Penn. Term life is expected to produce a growing share of new sales. American States Life reported earnings of $13.0 million on life insurance and annuity operations in 1995, a slight increase from 1994 earnings. Account values were up 11% to $317 million. Lincoln National (UK) Income from operations for Lincoln National (UK) advanced to $45.9 million in 1995, from $17.2 million in 1994. This growth was generated by the acquisitions of Liberty Life Assurance Co. Ltd. and Laurentian Financial Group plc and the successful initial steps to integrate these two companies with existing operations. A primary goal in 1996 is to complete the integration. Operating efficiencies are already apparent. The three separate companies budgeted a total of $210 million for operating expenses in 1995. The merged companies have budgeted $120 million for 1996, a reduction of 43%. A substantial portion of these savings were realized in 1995. Disability Income In 1995, Lincoln Life reached a decision to stop writing disability income coverage on a direct basis effective March 31, 1996. Lincoln Life has entered into an agreement with Provident Life and Accident Insurance Company ("Provident") to make Provident's disability income insurance products available to Lincoln Life agents and brokers. Provident is a recognized leader among individual disability income insurers. LNC's reinsurance operation will be administering the disability income business previously written on a direct basis. Outlook In the first quarter of 1996, Lincoln Life announced an agreement to acquire the group tax-sheltered annuity business of two UNUM Corporation affiliates. The acquisition will boost Lincoln Life's total annuity account values by approximately $3 billion, or about 10%. The transaction, subject to regulatory approval, is expected to be completed by late summer. Lincoln Life looks forward to continued sales growth in 401(k) plans, variable life insurance and fixed and variable annuities in 1996. Lincoln Life anticipates earnings growth in 1996, despite higher expenses in the short-term related to its transformation process. Lincoln National (UK) is well-positioned for long-term earnings growth in what, by U.S. standards, is an underserved life insurance and pension market. Review of Operations: Reinsurance
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991 Financial Results by Source Individual and Group Markets ------- $54.8 $50.2 $44.2 $44.4 $22.7 International Markets -------------- 13.8 12.8 9.9 4.5 5.6 Financial Reinsurance -------------- 10.2 15.5 20.5 16.3 14.4 Other ------------------------------ .7 (1.9) (1.7) .4 (1.5) Income from Operations, excluding Disability Income ----- 79.5 76.6 72.9 65.6 41.2 Disability Income* ----------------- (132.2) (10.0) (54.0) (7.3) (8.2) Income from Operations* ---------- (52.7) 66.6 18.9 58.3 33.0 Realized Gain (Loss) on Investments** 10.7 .5 (1.6) -- -- Net Income (Loss)* --------------- $(42.0) $67.1 $17.3 $58.3 $33.0 Sales and In-Force Individual Life Sales (in billions) $22.7 $19.9 $17.3 $14.0 $17.0 December 31 (in billions) 1995 1994 1993 1992 1991 Life Insurance In-Force ------------ $142.8 125.6 $118.0 $113.6 $102.2 *Income from operations and net income for 1995 and 1993 include the impact of a change in estimate of the reserve level needed for LNC's disability income business (see note 2 to the consolidated financial statements on page 44). **Prior to 1993, all realized gain (loss) on investments was included in Other Operations.
-13- The Reinsurance segment is conducted through Lincoln National Reinsurance Companies ("LNRC"). LNRC's reported income from operations, absent a fourth quarter charge against earnings related to LNC's direct and reinsurance disability income business, increased 3.5% to $68.9 million in 1995. Including the disability income reserve strengthening of $121.6 million, after-tax, LNRC reported a loss from operations of $52.7 million in 1995. Profile LNRC is the leading life-health reinsurer worldwide, based on net premium income (Swiss Re, Economic Studies, June 1995). In 1995, LNRC reported to regulatory authorities consolidated, worldwide net premium income of $2.9 billion, a 21% increase over 1994. However, a full appreciation of the segment's standing among reinsurers cannot be gleaned from financial reports alone. LNRC does not compete on the basis of price. Nor does it peg its stature on its position as the net premium income leader. Rather, LNRC seeks to understand the unique risk management needs of each of its customers. It designs plans for risk transfer and capital management that build long-term partnerships with client companies. LNRC has the depth of expertise necessary to deal with complexities and craft creative solutions that assist clients in meeting their business goals. Simply stated, LNRC delivers value. Strengths in knowledge management and product development, as well as a sharp customer focus and innovative alliances with service providers, combine to provide value. Disability Income LNC took a series of decisive actions related to its disability income insurance business in 1995. In August, LNC announced Lincoln Life's withdrawal from the difficult direct market for disability income coverages. The withdrawal took effect in early 1996. In November, LNC announced that: 1) the block of disability income business written on a direct basis would be consolidated within LNRC's disability income operations to take advantage of the Reinsurance segment's expertise in both risk and claims management; and 2) it would take a charge against earnings of $121.6 million, after-tax, in the fourth quarter to strengthen reserves related to its direct and reinsurance individual disability income business. Although it is extremely selective in its underwriting, LNRC remains in the disability income reinsurance marketplace. Moreover, LNRC is a source for "best practices" to help client companies improve their disability income results. In this way, LNRC's research capability is leveraging knowledge throughout the insurance industry. Knowledge Management Another prominent instance of such leveraging is the wide utilization of underwriting manuals developed by LNRC. In a very real sense, LNRC "wrote the book" on life and health risk selection. These manuals assist underwriting decisions at approximately 500 U.S. and Canadian life and health insurers. Additionally, LNRC's patented Life Underwriting System ("LUS") was licensed to 5 more life insurance carriers in 1995, bringing the number of LUS licensees to 49. LUS, a state-of-the-art risk management technology, provides decision support to underwriters. Carriers licensed on LUS issue one-quarter of the normally underwritten life insurance policies in the United States and one- half of all such life policies in Canada. Virtually every case underwritten by LNRC in 1995 was processed on LUS, significantly speeding the turnaround time for those policies that required individual reinsurance underwriting. -14- Individual and Group Markets Superior customer service, particularly the information flow provided by LUS, differentiates LNRC in the increasingly competitive individual and group markets. LNRC enjoyed especially strong operating results of $54.8 million in these markets in 1995, the fourth consecutive year of favorable mortality and morbidity. Individual life sales volume, as measured by face amount of new business, grew 14% to $22.7 billion. LNRC's annualized premium in the group market remained essentially flat in 1995. International Markets International markets have been an area of recent growth for LNRC. Income from operations increased 8% in 1995 to $13.8 million, and several steps were taken to position LNRC for future growth worldwide. LNRC signed a memorandum of understanding with an Indonesian reinsurer and entered into an agreement to be represented by an individual life underwriting office in Tel Aviv. A London office was opened to provide personal accident underwriting and administrative services worldwide. LNRC pursues a niche marketing strategy globally, developing partnerships and alliances as new opportunities are identified. Financial Reinsurance Financial reinsurance continues to contribute strong earnings to LNRC, generating $10.2 million in 1995. LNRC's largest financial reinsurance agreement in 1995 involved transfer of more than $500 million of assets and reserves to LNRC. The agreement exposes LNRC to limited underwriting risk while offering an opportunity for a significant profit on investment results. Financial reinsurance opportunities are evolving as the direct marketplace shifts its emphasis to asset accumulation products. A notable synergy has developed between LNRC and LNC's newly formed Investment Management segment. LNRC is well-positioned, in cooperation with Lincoln Investment Management, to provide comprehensive solutions to annuity writers seeking assistance in managing investments, risk and capital. Service-Provider Alliances LNRC has alliances with nearly three dozen entities that are not life or health insurers, such as medical equipment suppliers, direct marketing organizations, electronic information providers and specialty vendors servicing variable life and annuity business. These service-provider alliances, unique among reinsurers, enable LNRC to fashion creative solutions for its traditional client base of insurance companies in the U.S. and select international markets, health maintenance organizations and self-funded employer groups. Distribution Account executives and sales specialists acting in a consultative role are the key distributors of LNRC products. LNRC also accepts business from reinsurance intermediaries in select specialty markets. Outlook LNRC will concentrate on revenue growth in 1996 through a multiplicity of strategies in all of its markets. General strategies include: alliances for new products in individual markets; an emphasis on increased market share and the promotion of non-medical products in group markets; revenue growth through target marketing internationally; and continued attention to opportunities related to the popularity of asset accumulation products in the direct marketplace. -15- Review of Operations: Property-Casualty
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991 Financial Results by Source Underwriting Loss: Personal Insurance -------------- $(21.2) $(30.2) $(13.5) $(31.8) $(56.7) Commercial Insurance ------------ (26.9) (19.5) (68.2) (133.3) (102.1) Reinsurance --------------------- -- -- -- -- (12.8) Investment Income ----------------- 200.7 208.5 217.0 242.4 229.6 Other ----------------------------- -- -- (1.4) .3 1.2 Income from Operations ---------- 152.6 158.8 133.9 77.6 59.2 Realized Gain on Investments* ----- 32.1 12.8 91.8 -- -- Loss on Sale of Affiliates/ Operating Property --------------- (18.4) -- -- -- -- Net Income ---------------------- $166.3 $171.6 $225.7 $ 77.6 $ 59.2 Catastrophe Losses $80.3 $71.9 $ 58.3 $106.9 $ 61.8 Combined Loss and Expense Ratios** Personal Insurance --------------- 104.8% 107.8% 103.0% 105.5% 111.8% Commercial Insurance ------------- 105.0% 104.4% 110.3% 116.5% 111.0% Reinsurance ---------------------- -- -- -- -- 124.3% Consolidated Combined Ratio ------ 104.9% 105.7% 107.5% 112.7% 111.9% Consolidated Combined Ratio Excluding Catastrophe Losses --- 100.1% 101.5% 104.3% 107.6% 109.1% *Prior to 1993, all realized gain (loss) on investments was included in Other Operations. **The combined loss and expense ratio is the ratio of losses and loss expenses to earned premiums plus the ratio of underwriting expense to premiums written.
LNC's Property-Casualty segment consists primarily of American States Insurance Company ("American States"). Absent a special charge for the realignment of American States' field structure, the Property-Casualty segment reported income from operations of $166.3 million in 1995. This was a 5% increase over the previous year's strong earnings. The results were particularly impressive considering the frequency and severity of U.S. insured property losses in 1995, the third costliest year on record in terms of weather-related property damage. American States' incurred loss for Hurricane Opal, the single most destructive weather event of 1995, was limited to $15.0 million of Opal's estimated $2.1 billion total insured property damage. The Property-Casualty segment's total net written premium was essentially flat in 1995, following decreases in the years from 1991 to 1994. Net investment income contributed $200.7 million to the segment's income from operations, a slight decline from 1994. Profile American States offers a broad spectrum of personal and commercial lines property-casualty insurance throughout the United States. The company's market focus is on providing commercial insurance to small-to-medium-sized businesses and preferred personal lines coverages to individuals. Its greatest concentration of business and market share is in the Midwest and Northwest. Headquartered in Indianapolis, American States is the 30th largest property-casualty insurer in the U.S. (A.M. Best Aggregates & Averages, 1995). Distribution American States has strong, long-term relationships with nearly 5,000 independent local agencies. On average, these agencies have maintained relationships with the company for more than 10 years. American States views its policyholders as "shared customers" with the agencies. Realignment In November 1995, American States announced a realignment of its field structure designed to reduce expenses and enhance growth. Under the realignment, American States will continue to provide sales, claims and -16- technology support services from approximately 225 locations. However, over the next two years, management of those functions and most of the underwriting will be moved from 20 division offices to four regional offices. Additionally, American States has created 24 field executive positions to maintain and enhance its working relationships with its agencies. LNC's income from operations for 1995 includes a one-time special charge of $13.7 million, after-tax, related to the realignment of American States' division offices. Combined Ratio The Property-Casualty segment's combined ratio improved for the third straight year to 104.9%, compared with 105.7% in 1994. Absent the special charge, the combined ratio for 1995 was 103.6%. Catastrophes contributed 4.8 points to the combined ratio in 1995, compared with 4.2 points in 1994. Personal Lines Personal lines business represented 41% of the Property-Casualty segment's total net written premiums for 1995. The personal lines underwriting loss was $21.2 million in 1995, with a $9.0 million improvement in underwriting income over 1994. The combined ratio in personal lines improved 3 points for the year to 104.8%. Catastrophe losses for personal lines business were somewhat lower in 1995 than in 1994. Preferred private passenger automobile and homeowners' coverage comprise 80% of American State's personal lines business. Private passenger auto insurance results continued to improve. Homeowners' earnings showed some improvement due to better pricing, but this business remains unprofitable. American States will focus on writing more private passenger auto business, but will take a cautious and conservative approach to homeowners coverage. Commercial Lines Commercial lines business represented 59% of the Property-Casualty segment's total net written premiums for 1995. The commercial lines combined ratio increased to 105.0% in 1995, up from 104.4% in 1994. However, the combined ratio excluding catastrophes was nearly a full point better than 1994. Commercial lines had a $26.9 million after-tax underwriting loss in 1995, compared with a $19.5 million loss in 1994. American States targets small-to-medium-sized businesses engaged in retail, wholesale, service, contracting and other trades. American States' commercial lines business includes a relatively low concentration of manufacturing and industrial operations. Profit Improvement Program Since embarking on a profit improvement program in 1991, American States has repositioned its premium base to emphasize lines and geographic areas that have greater potential for profitability. American States' premium volume decreased 16% from 1991 to 1995, with a positive impact on the segment's combined ratio and underwriting income. The Property-Casualty segment's combined ratio has improved 7 points since 1991, while underwriting income has improved by nearly $124 million. Automation Edge American States is one of the few property-casualty insurers to fully automate policy production in both personal and commercial lines. The result: It's easier and more economical for an agent to do business with American States. The company uses knowledge-based systems in its claims operation and is implementing knowledge-based underwriting systems in its personal lines business. American States also is developing knowledge-based applications for selected commercial lines business. The company's strides in automation are enabling it to consolidate offices and more effectively facilitate decision-making. Outlook American States is prepared to broaden its position in commercial and personal lines in 1996. It will focus on the Midwest and Northwest, where its business is most profitable. Additionally, American States will target marketing efforts in other states where the company's presence and a favorable environment give it potential for additional profitable growth. Finally, American States will continue to pursue reductions in operating expenses as its primary strategy to lower its combined ratio. -17- Review of Operations: Investment Management*
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991 Financial Results by Source Investment Advisory Fees-External -- $139.6 $ -- $ -- $ -- $ -- Investment Advisory Fees-Internal -- 42.8 -- -- -- -- Income from Operations ------------- $14.7 $ -- $ -- $ -- $ -- Realized Gain on Investments ------- 4.3 -- -- -- -- Net Income ----------------------- $19.0 $ -- $ -- $ -- $ --
Year Ended December 31 (in billions) 1995 1994 1993 1992 1991 Assets Managed Assets Managed-Internal ----------- $56.278 $42.315 $42.873 $34.909 $29.737 Assets Managed-External: Institutional-Fixed ------------- 7.720 6.284 3.485 2.657 3.015 Institutional-Equity ------------ 20.996 17.880 18.487 17.093 17.322 Mutual Funds-Fixed -------------- 4.995 4.877 5.309 4.587 3.897 Mutual Funds-Equity ------------- 4.906 3.957 4.370 3.670 3.489 Total Assets Managed ---------- 94.895 75.313 74.524 62.916 57.460 Assets Managed by Non-LNC Affiliates ----------------------- (12.961) (9.447) (9.875) (6.711) (4.501) Assets Managed by Lincoln National (UK) -------------------- (5.375) (1.571) (1.503) (.783) (.808) Total Assets Under Management - Investment Management Segment $76,559 $64,295 $63.146 $55,422 $52.151 *This segment was added in April 1995 following the acquisition of Delaware Management Holdings, Inc. (see note 11 to the consolidated financial statements on page 65). Prior to April 1995, LNC's Investment Management results, which were not material to LNC's consolidated operations, were included in Other Operations. Assets managed shown above includes data for Delaware Management Holdings, Inc. prior to the April 1995 acquisition.
Investment Management, conducted through Lincoln National Investment Companies ("LNIC"), reported income from operations of $14.7 million in 1995. LNC has reported Investment Management as a separate business segment since April 1995. Profile Although newly established as a distinct business segment, investment management has long been an expertise within LNC. Widely respected as an insurance risk manager, LNC has made a long-term commitment to expand its role in the financial services industry. The establishment of Investment Management as LNC's fourth business segment is a strategic milestone in meeting LNC's objective to become a top-tier company in the financial services business. LNIC is the holding company for the four companies that comprise the Investment Management segment. These companies are: Lincoln Investment Management, Inc.; Delaware Management Holdings, Inc. ("Delaware"); Lynch & Mayer, Inc. and Vantage Global Advisors, Inc. Lincoln Investment Management is a fixed-income specialist, while the others focus primarily on equities. Complementary Approaches All four companies operate autonomously and are encouraged to preserve their distinctive investment styles and strengths. Their diversity of skills, styles and cultures serves to balance the segment's investment performance and operating results. The breadth of complementary investment styles employed by our investment companies is a prudent way to diversify risks, especially in today's sometimes uncertain and volatile investment markets. Lincoln Investment Management, based in Fort Wayne, Ind., is the investment advisor for LNC's insurance operations and is best known as a manager of fixed-income assets for insurance and pension clients. Lincoln Investment Management specializes in fixed-income investments including public and private debt, real estate debt and equity and asset/liability management. Delaware, headquartered in Philadelphia, is best known for a conservative value investment style that focuses on stocks with above-average dividend yields. Delaware is also recognized for its small-cap and mid-cap growth -18- investment styles and expertise in municipal and high-yield bonds. Delaware's London operation, which reported asset growth of 36% in 1995, adds to the international expertise of LNIC. Lynch & Mayer, based in New York City, pursues a growth investment style. Vantage Global Advisors, also based in New York, employs a proprietary quantitative model. Assets Under Management Seen as a whole, LNC's new segment already holds a significant presence in the investment management industry, especially in the institutional sector. Combined assets under management exceed $76 billion, placing LNIC among the largest investment managers in the United States. Domestic institutional assets represent 83% of the total. Domestic retail mutual fund assets account for 13%. International equity and global bond assets managed by Delaware in London represent 4%. Distribution Multiple distribution channels enable LNIC to deliver a broad range of products to an expanding community of retail and institutional investors. Retail mutual funds are marketed through insurance agents, regional and national broker/dealers, financial planners and banks. Institutional products are sold primarily through pension consultants and directly to defined benefit and defined contribution plan sponsors, endowments, foundations and insurance companies. Expanding and selectively integrating the Investment Management segment's distribution networks is viewed as vital to achieving benchmark growth and service. Investment Performance The complementary blend of styles contributed to LNIC's solid investment performance in its debut year. The composite returns of Vantage Global Advisors and Delaware scored in the top quartile of their peer groups of equity managers. The Delaware mutual funds experienced several ranking upgrades in 1995. They now include five retail funds with a ranking of four or five stars from Morningstar, Inc., a service that assigns rankings from one star at the lowest to five stars at the highest to mutual funds. Lincoln Investment Management, LNIC's fixed-income advisor, had a composite return of 21.1% in 1995. This return outpaced the 20.4% return for a comparative index of corporate bonds and mortgage-backed securities. Delaware's value style produced strong results in the core equity category -- a composite return of 37.3% that qualified as top-quartile performance as measured by the Callan Value Universe. Delaware's international equity composite return was 13.8%, which exceeded the 11.2% return for its comparative MSCI EAFE Index. Vantage Global Advisors' growth and income equity style delivered a 37.0% return, exceeding the 34.6% top quartile performance of the Morningstar Growth and Income Index. This performance earned Vantage Global Advisors a 10th-place ranking among 303 funds in the Morningstar growth and income sector for 1995. Total Return Philosophy As the investment manager for the LNC family of insurance companies, Lincoln Investment Management follows a "total return" investment philosophy. This approach significantly differs from the "buy-and-hold" approach followed by many insurance companies. A buy-and-hold investor seeks to maximize current income by selecting assets with high nominal yields. As a total return investor Lincoln Investment Management actively manages a broad range of asset classes with an eye to optimizing total return on assets in conjunction with a highly disciplined asset/liability management process. This approach also creates a value-added advantage for LNC. Outlook Lincoln National Investment Companies will pursue three clear strategies to achieve growth and long-term success: development of new products to meet the needs of institutional and retail clients; capturing larger portions of current target markets; and active exploration of synergies among LNIC's autonomous entities and synergies with other LNC affiliates. Growth in the retail mutual fund market is a priority. New product introductions, consolidation of the Lincoln Advisor Funds with Delaware's family of mutual funds, enhancing and expanding distribution relationships and improving client service are just a few of the steps to achieve this growth. -19- Review of Other Operations:
Year Ended December 31 (in millions) 1995 1994 1993 1992 1991 Financial Results by Source Earnings from Unconsolidated Affiliate $ 13.7 $ 14.8 $ -- $ -- $ -- Investment Management* --------------- .3 7.1 6.1 4.7 2.3 LNC Financing ------------------------ (52.7) (31.7) (26.7) (33.8) (34.2) LNC Operations ----------------------- (19.5) (21.8) (22.3) (18.2) (16.3) Other Corporate ---------------------- (1.5) (3.9) 4.0 (3.1) 11.8 Corporate Equity Investments --------- -- -- -- (36.6) (39.6) Loss from Operations --------------- (59.7) (35.5) (38.9) (87.0) (76.0) Realized Gain (Loss) on Investments** -------------------- 6.2 (10.6) 19.8 118.6 113.3 Gain (Loss) on Sale of Affiliates/ Operating Property ------------------ 58.3 48.8 (98.5) -- (89.1) Cumulative Effect of Accounting Change (Postretirement Benefits) ---- -- -- (96.4) -- -- Net Income (Loss) ----------------- $ 4.8 $ 2.7 $(214.0) $ 31.6 $(51.8) *Includes results through March 31, 1995. Activity subsequent to that date was recorded within the "Investment Management" segment of business. **Prior to 1993, all realized gain (loss) on investments was included in Other Operations.
The loss from operations shown above includes the earnings from LNC's investment in an unconsolidated affiliate engaged in the employee life-health benefits business (prior to the sale of this holding in October 1995, as described in note 11 to the consolidated financial statements on page 65), certain other operations that are not directly related to the business segments and unallocated corporate revenues and expenses (i.e., corporate investment income, interest expense on short-term and long-term borrowings, and corporate overhead expenses). Corporate interest expense included within the LNC financing line above was more for 1995 than 1994 as the result of additions to long-term debt (see liquidity and cash flow discussion on page 31). Net income (loss) shown above for "Other Operations" includes the items described above under loss from operations plus the cumulative effect of the 1993 accounting change for the consolidated group of companies related to postretirement benefits, the gain (loss) on sale of affiliates/operating property (see note 11 to the consolidated financial statements on page 65) and certain realized gain (loss) on sale of investments. -20- REVIEW OF CONSOLIDATED OPERATIONS AND FINANCIAL CONDITION
Summary Information Increase (Decrease) Year Ended December 31 (in millions) 1995 1994 1993 1995 1994 Insurance premiums: Life and annuity ---------------- $ 764.8 $ 908.9 $ 810.6 (16%) 12% Health -------------------------- 810.2 1,005.2 1,795.4 (19%) (44%) Property-casualty --------------- 1,678.9 1,710.6 1,841.4 (2%) (7%) Insurance fees ------------------ 523.2 449.6 470.4 16% (4%) Investment advisory fees -------- 138.6 -- -- Net investment income ----------- 2,285.7 2,011.3 2,146.5 14% (6%) Equity in earnings of unconsolidated affiliates ------ 12.4 14.7 -- (16%) Realized gain (loss) on investments ----------------- 215.6 (130.8) 268.4 Gain (loss) on sale of affiliates/ operating property ------------- 54.2 48.8 (98.5) Other revenue ------------------- 149.7 161.5 158.6 (7%) 2% Insurance benefits and expenses: Life and annuity ---------------- 2,081.7 2,174.0 2,179.6 (4%) Health -------------------------- 822.0 758.7 1,395.0 8% (46%) Property-casualty --------------- 1,209.5 1,262.5 1,406.8 (4%) (10%) Expenses: Operating expenses -------------- 1,821.0 1,558.8 1,779.3 17% (12%) Interest ------------------------ 72.5 49.5 44.3 47% 12% Federal income taxes ------------ 144.4 26.4 172.5
REVIEW OF CONSOLIDATED OPERATIONS As indicated in the "Notes to Consolidated Financial Statements" (see note 11 to the consolidated financial statements on page 65), LNC completed the sale of a life insurance subsidiary and the sale of 71% of its direct writer of employee life-health coverages in 1994. As noted in the following "Review of Consolidated Operations," these sales have affected the comparability of select line items within the Consolidated Statements of Income. Insurance Premiums Life and annuity premiums decreased $144.1 million or 16% in 1995 compared with 1994. This decrease is the net result of an increase in business volume from the Reinsurance segment (9% increase) being more than offset by a decrease in volume from the U.S. portion of the Life Insurance and Annuities segment (10% decrease) and a decrease from the United Kingdom component of the Life Insurance and Annuities segment (51% decrease). This decrease in the United Kingdom component was the net result of 1) increases from the premiums generated by the newly acquired U.K. companies (see note 11 to the consolidated financial statements on page 65) and 2) decreases due to modifying, on a prospective basis, the classification of premiums associated with unit-linked transactions within Lincoln National (UK) to more closely conform to the classification used for universal life transactions within the U.S. operations. As noted below, there is a corresponding decrease in life and annuity benefits. Prior period data was not reclassified because the amounts involved are not material to consolidated revenue. Excluding the impact of the subsidiaries sold in 1994 (see note 11 to the consolidated financial statements on page 65), life and annuity premiums increased 22% in 1994. This increase was the result of increases in the volume of transactions in the Life Insurance and Annuities segment and Reinsurance segment. Barring the passage of unfavorable tax legislation that would eliminate the tax-advan- tages for some of LNC's life and annuity products, LNC expects life and annuity premium growth for its domestic operations in 1996. The UK operations should also experience growth in 1996 due to the results of companies acquired in 1995 being included for the entire year. -21- Excluding the impact of the subsidiary sold in 1994 (see note 11 to the consolidated financial statements on page 65), LNC's health premiums increased $97.5 million or 14% in 1995 and $126.4 million or 22% in 1994 as the result of increased volumes of business in the Reinsurance segment. Property-casualty premiums decreased 2% in 1995 and 7% in 1994. These decreases were the result of reevaluating underwriting actions, focusing on account selection, risk evaluation and the establishment of appropriate premiums. The volume of premium that this segment will produce in 1996 is dependent upon whether the pricing within the property-casualty insurance market place allows price increases that are necessary to maintain and improve profitability. Insurance Fees Insurance fees from universal life, other interest-sensitive life insurance contracts and variable life insurance contracts increased $73.6 million or 16% in 1995. Excluding the impact of a life subsidiary sold in 1994 (see note 11 to the consolidated financial statements on page 65), insurance fees increased $83.4 million or 22% in 1994. The growth in fees from this business is expected to continue in 1996. Investment Advisory Fees This line was added to the statements of income in the second quarter of 1995 following LNC's purchase of Delaware Management Holdings, Inc. (see note 11 to the consolidated financial statements on page 65). Net Investment Income Net investment income increased $274.4 million or 14% in 1995 as the net result of a 14% increase in mean invested assets and a decrease in the yield on investments from 7.14% to 7.05% (all calculations on a cost basis). Net investment income decreased $135.2 million or 6% in 1994. This is the net result of a 4% increase in mean invested assets less the impact of the overall yield on investments dropping from 7.93% to 7.14%. The increase in mean invested assets for both years was the net result of increased volumes of business in the Life Insurance and Annuities segment being partially offset by reduced volumes of business in the Property-Casualty segment. In addition, the net investment income for 1994 from the proceeds from subsidiaries sold was less than the net investment income previously earned on the invested assets held by the subsidiaries that were sold (see note 11 to the consolidated financial statements on page 65). Equity in Earnings of Unconsolidated Affiliates This line was added to the statements of income in 1994 to report the earnings from the remaining 29% ownership following LNC's sale of 71% of the ownership of its primary writer of employee life-health benefit coverages (see note 11 to the consolidated financial statements on page 65). Due to the October 1995 sale of the 29% ownership in this company, the future activity in this account will be minimal, as this holding represented the bulk of LNC's unconsolidated affiliates (see note 11 to the consolidated financial statements on page 65). Realized Gain (Loss) on Investments Realized gain (loss) on investments in 1995 and 1994 was $215.6 million and $(130.8) million, respectively. The gain (loss) in 1995 and 1994 was $136.4 million and $(88.7) million, net of related amortization and taxes, respectively. These gains and losses were the result of the sale of investments, write-downs and provisions for losses. The losses in 1994 were the result of net realized investment gains being more than offset by 1) realized investment losses and 2) writedowns of security investments and provisions for losses for mortgage loans and real estate. The investment losses in 1994, primarily in the second and third quarters, were the result of realizing investment losses to recover capital gains taxes paid in prior years. The write-downs of fixed maturity and equity securities in 1995 and 1994 were recorded when the securities were deemed to have declines in value that were other than temporary. The fixed maturity securities to which these write- downs apply were generally of investment grade quality at the time of purchase but, with the exception of interest only mortgage-backed securities, were classified as "below investment grade" at the time of the write-downs. Allowance for losses on mortgage loans on real estate, real estate and other -22- investments in 1995 and 1994 were established when the underlying value of the property was deemed to be less than the carrying value. The amount of these write-downs and provisions for losses is disclosed within the notes to the accompanying financial statements (see note 3 to the consolidated financial statements on page 45). Gain (Loss) on Sale of Affiliates/Operating Property In 1995, LNC recorded the gain on sale of the remaining 29% of the employee life-health benefits company. Also in 1995, LNC recorded a provision for the expected loss related to its decision to sell certain of its operating properties used in its Property-Casualty segment. Finally, LNC recorded a provision for the expected loss on the sale of an operating property used in its Lincoln National (UK) operations. In 1994, LNC recorded a gain on the sale of 71% of its interest in its primary writer of employee life-health benefits. In 1993, LNC recorded a provision for loss on the sale of a life insurance subsidiary. See note 11 to the consolidated financial statements on page 65 for additional information. Other Revenue Other revenue decreased $11.8 million or 7% in 1995. This is the net result of increases in the volume of transactions in the Life Insurance and Annuities segment being more than offset by the absence of revenues from the investment management companies that were recorded in this account until the start of the new segment in the second quarter of 1995. Excluding the impact of the subsidiaries sold in 1994, other revenue increased 16% in 1994, when compared to 1993, as a result of increases in the volume of transactions in the Life Insurance and Annuities segment. Insurance Benefits and Expenses Life and annuity benefit and settlement expenses in 1995 decreased $92.3 million or 4% when compared to 1994. This decrease is the net result of an increase of 6% from the U.S. portion of the Life Insurance and Annuity segment and decreases of 2% from the Reinsurance segment and 60% from the United Kingdom component of the Life Insurance and Annuities segment. The decrease in the United Kingdom component relates to the change in classification of life and annuity premiums noted above. Excluding the impact of the life subsidiary sold in 1994 (see note 11 to the consolidated financial statements on page 65), life and annuity benefits and settlement expenses increased $168.2 million or 8% in 1994 when compared to 1993. This increase was the result of increased volumes of business in the Life Insurance and Annuities segment. The increase in life and annuity benefits expense in 1996 is expected to parallel the growth in life and annuity premiums. Excluding the impact of the subsidiary sold in 1994 (see note 11 to the consolidated financial statements on page 65), and the special addition to the disability income reserves in 1995 (see note 2 to the consolidated financial statements on page 44), health benefits increased $92.7 million or 17% in 1995 as the result of increased volumes of business in the Reinsurance segment and Life Insurance and Annuities segment. Excluding the impact of the subsidiary sold in 1994 (see note 11 to the consolidated financial statements on page 65), health benefits increased $57.8 million or 12% in 1994. This increase was the result of increased volumes of business in the Reinsurance segment. Property-casualty benefits decreased by $53.0 million or 4% in 1995 compared to 1994. This decrease was the net result of moderate decreases in the volume of business being partially offset by increases in catastrophe and storm losses. Property-casualty benefits decreased by $144.3 million or 10% in 1994 compared to 1993. This decrease is the net result of reduced volumes of insurance being partially offset by an increase in catastrophe and storm losses. Assuming an average catastrophe and storm loss year in 1996, the increase in property-casualty benefits is expected to parallel the change in property-casualty premiums. Underwriting, Acquisition, Insurance and Other Expenses Excluding the impact of the subsidiary sold in 1994 (see note 11 to the consolidated financial statements on page 65), these expenses increased $349.8 million or 23.5% in 1995. The primary driver behind this increase beyond the general inflation rate was 1) the write-off of deferred acquisition costs associated with the special additions to the disability reserves and 2) the higher expenses in the Reinsurance segment and Life Insurance and Annuities segment due to the increase in business volumes. Also, the expenses for the -23- Property-Casualty segment for 1995 included $21.0 million related to the expected expenses, primarily severance compensation, to consolidate 20 divisional operations into four regional operations. Other than this special expense item, the expenses for the Property-Casualty segment were essentially flat with a year ago as staff levels were adjusted to the current level of business. Excluding the impact of the various subsidiaries sold, these expenses decreased $35.4 million or 2% in 1994 when compared to 1993. This decrease was the net result of lower expenses in the Property-Casualty segment and lower volume related expenses in the Reinsurance segment being partially offset by increases in the Life Insurance and Annuities segment. In 1996, all business segments will continue to adjust staff levels as appropriate to match business volumes. Interest Expense Interest expense increased $23.0 million or 47% in 1995. This was the result of increases in the average debt outstanding less the impact of changes in the composition of debt outstanding. The higher outstanding debt relates to the acquisitions of additional companies (see note 11 to the consolidated financial statements on page 65). The additional leverage created by these acquisitions resulted in a one step downgrade in LNC's debt ratings. Standard and Poor's changed its rating from A+ ("Exceptional or Superior") to A ("Excellent") and Moody's changed its rating from A1 to A2 (both "Very Good, Strong or High"). Interest expense increased $5.2 million or 12% in 1994. This increase was the net result of higher average debt outstanding and higher interest rates on debt outstanding being partially offset by the reduction in interest expense which resulted from the calling of the 8% notes (due in 1997) in March 1994. Although partially dependent on the level of short-term interest rates, interest expense is expected to be higher in 1996 than in 1995 due to a full year of interest on debt issued or assumed in April 1995 in connection with the acquisition of additional companies. Federal Income Taxes Federal income taxes increased $118.0 million in 1995. This increase was the result of higher pre-tax earnings and the fact that 1994 taxes were lower because no tax expense was recorded on the 1994 gain on sale of 71% of its direct writer of employee life-health benefit coverages (see note 11 to the consolidated financial statements on page 65). LNC's Federal income taxes decreased $146.1 million in 1994 compared to 1993. This decrease was primarily the result of lower pre-tax earnings in 1994 and the lack of tax expense on the gain on sale of 71% of its direct writer of employee life- health benefit coverages in 1994. An additional item affecting this comparison is the fact that LNC did not receive a tax benefit from the loss on sale of a life insurance subsidiary in 1993. The reduction in pre-tax earnings in 1994 is the result of the absence of earnings from subsidiaries sold (see note 11 to the consolidated financial statements on page 65) and the realization of losses on the sale of investments during 1994 versus the realization of gains on investments in 1993. The tax benefits from the realized losses result from the carryback of such losses to realized gains recognized in prior years. Summary Net income for 1995 was $482.2 million compared with $349.9 million in 1994. Excluding realized gain (loss) on investments and gain on sale of affiliates/operating property, LNC earned $306.5 million for 1995 compared to $389.8 million in 1994. This decrease is the net result of increased earnings in the Life Insurance and Annuities segment and Investment Management segment being more than offset by decreases within the Reinsurance and Property- Casualty segments. Excluding the special additions to the disability income reserves (see note 2 to the consolidated financial statements on page 44) and the after-tax impact of expenses associated with realignment of division offices in the Property-Casualty segment, LNC earned $441.8 million for 1995. Net income for 1994 was $349.9 million compared with $318.9 million in 1993. Excluding realized gain (loss) on investments, gain (loss) on sale of affiliates/operating property and the cumulative effect of implementing the postretirement accounting change in 1993, all net of taxes, LNC earned $389.8 million for 1994 compared to $343.5 million in 1993. All the business segments contributed to this increase. -24- REVIEW OF CONSOLIDATED FINANCIAL CONDITION Investments The investment portfolio, excluding cash and invested cash, is comprised of fixed maturity securities; equities; mortgage loans on real estate; real estate, either wholly owned or joint ventures; and other long-term investments. LNC purchases investments for its segmented portfolios which have yield, duration and other characteristics that take into account the liabilities of the products being supported. The total investment portfolio increased $5.0 billion in 1995. This increase was the result of increases in the fair value of securities available-for-sale, the addition of the investment portfolios of the companies acquired in 1995 (see note 11 to the consolidated financial statements on page 65) and by new purchases of investments from cash flow generated by the business units. LNC maintains a high-quality fixed maturity securities portfolio. As of December 31, 1995, $11.5 billion or 45.7% of its fixed maturity securities portfolio had ratings of AA or better and only $1.6 billion or 6.1% had ratings below investment grade (BB or less) (see note 3 to the consolidated financial statements on page 46). The below investment grade fixed maturity securities represent only 4.9% of LNC's total investment portfolio. The interest rates available on these below investment grade securities are significantly higher than are available on other corporate debt securities. Also, the risk of loss due to default by the borrower is significantly greater with respect to such below investment grade securities because these securities are generally unsecured, often subordinated to other creditors of the issuer and issued by companies that usually have high levels of indebtedness. LNC attempts to minimize the risks associated with these below investment grade securities by limiting the exposure to any one issuer and by closely monitoring the credit worthiness of such issuers. For the year ended December 31, 1995, the aggregate cost of such investments purchased was $1.0 billion. Aggregate proceeds from such investments sold were $768.8 million, resulting in a realized pre-tax gain (loss) at the time of sale of ($14.9) million. LNC's entire fixed maturity and equity securities portfolio is classified as "available-for-sale" and is carried at fair value. Changes in fair values, net of related deferred acquisition costs, amounts required to satisfy policyholder commitments and taxes, are charged or credited directly to shareholders' equity. Note 3 to the consolidated financial statements (see page 45) shows the gross unrealized gains and losses as of December 31, 1995. LNC's fixed maturity securities available-for-sale include mortgage-backed securities. The mortgage-backed securities included in LNC's investment portfolio are subject to risks associated with variable prepayments or delayed repayments. This may result in these securities having a different actual cash flow and maturity than planned at the time of purchase. Securities that have an amortized cost greater than par which are backed by mortgages that prepay faster than expected will incur a reduction in yield or a loss. Those securities that have an amortized cost lower than par that prepay faster than expected will generate an increase in yield or a gain. Repayments occurring slower than expected have the opposite impact. The degree to which a security is susceptible to either gains or losses is influenced by the difference between its amortized cost and par, the relative sensitivity of the underlying mortgages backing the assets to prepayment or delayed repayments in a changing interest rate environment and the repayment priority of the securities in the overall securitization structure. LNC limits the extent of its risk on mortgage-backed securities by generally avoiding securities whose cost significantly exceeds par, by purchasing securities which are backed by stable collateral, and by concentrating on securities with enhanced priority in their trust structure. Such securities with reduced risk typically have a lower yield (but higher liquidity) than higher-risk mortgage-backed securities. At selected times, higher-risk securities may be purchased if they do not compromise the safety of the general portfolio. At December 31, 1995, LNC did not have a significant amount of higher-risk mortgage-backed securities. There are negligible default risks in the mortgage-backed securities portfolio as a whole as the vast majority of the assets are either guaranteed by U.S. government-sponsored entities or are supported in the securitization structure by junior securities enabling the assets to achieve high investment grade status. See note 3 to the consolidated financial statements on page 46 for additional detail about the underlying collateral. -25- As of December 31, 1995, mortgage loans on real estate and investments in real estate represented 10.0% and 2.4% of the total investment portfolio. As of December 31, 1995, the underlying properties supporting the mortgage loans on real estate consisted of 21.2% in commercial office buildings, 28.6% in retail stores, 21.0% in apartments, 14.2% in industrial buildings, 5.0% in hotels/motels and 10.0% in other. In addition to the dispersion by type of property, the mortgage loan portfolio is geographically diversified throughout the United States. Investment in Unconsolidated Affiliates This line was added to the balance sheet in 1994 following LNC's sale of 71% of the ownership of its primary writer of employee life-health coverages. The decrease in this balance at December 31, 1995 is due to the October 1995 sale of the remaining 29% ownership in this company. See note 11 to the consolidated financial statements on page 65. Cash and Invested Cash Cash and invested cash increased by $531.3 million in 1995. This increase is the result of a portion of the operating cash flow being invested temporarily in short-term investments pending the placement of funds in longer term investments. Assets Held in Separate Accounts This asset account, as well as the corresponding liability account, increased by $8.5 billion, reflecting the acquisition of a United Kingdom company (see note 11 to the consolidated financial statements on page 65) and a continued increase in annuity and pension funds under management for all existing companies. Federal Income Taxes Federal income taxes payable at December 31, 1995 of $128.4 million compares to Federal income taxes recoverable of $396.9 million at December 31, 1994. This change is the net result of 1) a decrease in the recoverable deferred taxes applicable to the increase in unrealized gains on available-for-sale securities and 2) the receipt of a tax refund of $147.4 million in the first quarter of 1995, which resulted from the realization of capital losses in 1994 to recover capital gains taxes paid in prior years, being partially offset by increases related to recoverable deferred taxes from life insurance reserve differences, discounting of unpaid losses, additions to the investment reserves and the absence of a valuation allowance at December 31, 1995. Federal income taxes recoverable at December 31, 1994 of $396.9 million represents a change of $547.9 million compared to the Federal income taxes payable at December 31, 1993. This is primarily the result of recoverable deferred taxes applicable to LNC's available-for-sale securities which were in an unrealized loss position at December 31, 1994 compared to an unrealized gain position at December 31, 1993. Other factors affecting this change relate to deferred taxes from life insurance reserve differences, discounting of unpaid losses, changes in investment reserves and postretirement obligations, and the current taxes recoverable related to the realization of losses on securities during 1994. A significant portion of the deferred tax benefits related to the December 31, 1994, unrealized loss on securities was not recognized due to the establishment of a valuation allowance (see note 4 to the consolidated financial statements on page 49). Amounts Recoverable from Reinsurers The increase in amounts recoverable from reinsurers was the result of an increased volume of business ceded in the Life Insurance and Annuities segment. Goodwill The increase in goodwill in 1995 relates to LNC's acquisition of additional operating businesses in 1995. Goodwill decreased $82.8 million in 1994 primarily as a result of the sale of subsidiaries during 1994. See note 11 to the consolidated financial statements on page 65. Other Intangible Assets The increase in this balance sheet account in 1995 relates to LNC's acquisition of additional operating businesses (see note 11 to the consolidated financial statements on page 65). -26- Other Assets The increase in other assets of $315.0 million is the result of having a higher receivable related to investment securities sold in the last few days of 1995 versus the end of 1994. Total Liabilities Total liabilities increased by $13.1 billion in 1995. This increase reflects 1) an increase in business activity as evidenced by an increase in policy liabilities and accruals of $2.4 billion, an increase of $1.5 billion in contractholder funds and an increase of $8.5 billion in the liabilities related to separate accounts, 2) an increase in debt of $251.3 million and 3) an increase in all other liabilities of $409.7 million. Policy liabilities at December 31, 1995 and 1994 included liabilities for environmental claims of $256 million and $201 million, respectively. At December 31, 1995 and 1994, these amounts include approximately $127 million and $81 million of reserve for claims that have been incurred but not reported and approximately $43 million and $37 million of related claim expenses, respectively. Because of the limited coverages that have been written by LNC, these environmental claims represent only 10% of LNC's total property-casualty policy liabilities (3% based on claim counts of direct business) and less than 2% of LNC's total policy liabilities. Paid environmental claims and claim expenses totalled approximately $15.5 million in 1995 compared with approximately $15.0 million in 1994. The percentages and amounts referenced above are at these levels due to LNC's concentration on writing coverages for small to medium-size companies rather than the larger companies that tend to incur most of the environmental and product liability claims. LNC's management challenges environmental claims in cases of questionable liability and reviews the level of the environmental liabilities on an on-going basis to help insure that the liability maintained is adequate. Nonetheless, establishing liabilities for environmental claims is subject to significant uncertainties because of the long reporting delays, lack of historical data and the unresolved complex legal and regulatory issues that are involved (see note 7 to the consolidated financial statements on page 56). However, based on available information, it is management's judgement that the appropriate level of liabilities have been recorded and that any unrecorded liability would not be material to LNC's future results of operations, liquidity or financial condition. The increase in other liabilities relates to an increase in the expected payouts for security investments purchased in the last few days of 1995 versus a lower volume of such transactions late in 1994. Shareholders' Equity Total shareholders' equity increased $1.3 billion during the year ended December 31, 1995. Excluding the increase of $1.0 billion related to net unrealized gain (loss) on securities available-for-sale, shareholders' equity increased $326.8 million. This increase in shareholders' equity was the net result of increases due to $482.2 million of net income, $24.1 million from the issuance of common stock related to benefit plans, $6.5 million related to an increase in the accumulated foreign exchange gain and a decrease of $186.0 million related to the declaration of dividends to shareholders. Capital adequacy is a primary measure used by insurance regulators to determine the financial stability of an insurance company. In the U.S., risk- based capital guidelines are used by the National Association of Insurance Commissioners to determine the amount of capital that represents minimum acceptable operating amounts related to insurance and investment risks. Regulatory action is triggered when an insurer's statutory-basis capital falls below the formula-produced capital level. At December 31, 1995, statutory- basis capital for each of LNC's U.S. life and property-casualty insurance subsidiaries was substantially in excess of regulatory action levels of risk- based capital required by the jurisdiction of domicile except for one property-casualty company which is involved in servicing a closed block of business. As noted above, shareholders' equity includes net unrealized gain (loss) on securities available-for-sale. At December 31, 1995, the book value of $41.89 per share included $6.68 of unrealized gains on securities and at December 31, 1994 the book value of $29.35 per share included $3.00 of unrealized losses on securities. -27- Gains or losses, whether realized or unrealized, on securities that support long-term life insurance, pension and annuity contracts are expected to be applied to contract benefits. Net income and shareholders' equity now include, respectively, realized and unrealized gains and losses on securities, part of which will be used in determining contract benefits. Current accounting standards do not require or permit adjustment of policyholder reserves to recognize the full effect of these realized and unrealized gains and losses on future benefit payments in the absence of a contractual obligation requiring their attribution to policyholders. Market Risk Exposures of Financial Instruments Asset-Liability Context. LNC analyzes and manages the risks arising from market exposures of financial instruments, as well as other risks, in an integrated asset-liability context, taking diversification into account. By aggregating the potential effect of market and other risks of the entire enterprise, LNC estimates and manages the risk to its earnings and shareholder value. The risks of market exposures of financial instruments, and the related risk management processes, are most important in the Life Insurance and Annuities segment, where most of the invested assets support accumulation and investment oriented insurance products. Additional market exposures exist in LNC's other general account insurance products and in its debt structure and derivatives positions. The primary sources of market risk are substantial, relatively rapid and sustained increases or decreases in interest rates, a period of greater than normal default experience, and a sharp drop in equity market values, as discussed below. Specific market risk exposures as they relate to derivatives is included in the Derivatives section of Management's Discussion and Analysis on page 29. Accumulation and Investment Oriented Insurance Products. General account assets supporting accumulation and investment oriented insurance products total $21 billion or 66% of total invested assets. With respect to these products, LNC seeks to earn a stable and profitable spread between investment income and interest credited to account values. If LNC has adverse experience on investments that cannot be passed through to customers, its spreads are reduced. The interest rate scenarios of concern are those in which there is a substantial, relatively rapid, increase or decrease in interest rates which is then sustained over a long period. Assets of $13 billion supports the biggest category of accumulation and investment oriented insurance products, fixed deferred annuities. For these products, LNC may adjust renewal crediting rates monthly or annually subject to guaranteed minimums ranging from 3.0% to 4.5%. The higher minimums apply to in-force blocks of older products that no longer are sold. LNC has $2.5 billion in assets supporting universal life insurance on which it has the right to adjust renewal crediting rates subject to guaranteed minimums ranging from 4% to 5% at December 31, 1995. Annuity and universal life insurance customers have the right to surrender their policies at account value less a surrender charge that grades to zero over periods ranging from 5 to 10 years from policy issue date or, in some cases, the date of each premium received. LNC also has assets totaling $5.5 billion supporting guaranteed interest contracts, pension buy-out annuities and immediate annuities. Generally, the cash flows expected on these liabilities do not vary with fluctuations in market interest rates and are not adjustable by LNC. Accordingly, if experience on the assets supporting these products is more adverse than the assumptions used in pricing the products, spreads will tend to be below expectations. LNC limits exposure to interest rate risk by managing the duration and maturity structure of each investment portfolio in relation to the liabilities it supports. Other General Account Insurance Products. LNC also has $11 billion of assets supporting general account products, including disability income, property casualty insurance and term life insurance. For these products, the liability cash flows may have actuarial uncertainty but their amounts and timing do not vary significantly with interest rates. LNC limits interest rate risk by analyzing the duration of the projected cash flows and structuring investment portfolios with similar durations. -28- Debt. LNC has short-term and long-term debt of which $768.8 million is at fixed rates and $316.9 million is at floating rates. LNC manages the timing of maturities and the mixture of fixed-rate and floating-rate debt as part of the process of integrated management of interest rate risk for the entire enterprise. Interest Rate Risk--Falling Rates. After rising in 1994, interest rates fell in 1995. For example, the five-year Treasury yield rose from 5.2% to 7.8% in 1994 and fell back to 5.4% in 1995. Under scenarios in which interest rates continue falling and remain at levels significantly lower than those prevailing at December 31, 1995, minimum guarantees on annuity and universal life insurance policies could cause spreads to deteriorate. The earned rate on the annuity and universal life insurance portfolios averaged 7.8% and 7.9%, respectively, at December 31, 1995, providing a cushion for further decline before the earned rates would be insufficient to cover minimum guaranteed rates plus the target spread. The maturity structure and call provisions of the related portfolios are structured to afford protection against erosion of this cushion for a period of time, but spreads would be at risk if interest rates continued to fall and remained lower for a long period. LNC manages these exposures by maintaining a suitable maturity structure and by limiting its exposure to call risk in each respective investment portfolio. Exposure to call risk was reduced in 1995, principally by reducing exposure to mortgage-backed securities ("MBS"). LNC believes that the portfolios supporting its accumulation and investment oriented insurance products have a prudent degree of call protection in the context of each category of liability as well as on a consolidated basis. The MBS portion of the portfolio, including collateralized mortgage obligations ("CMOs"), represents a total of $4.8 billion or 23% of the $21 billion of general account assets supporting such products. LNC's MBS portfolio has better call protection than the MBS pass-through market in general because of its 55% concentration in protected amortization class CMOs. Of $15 billion in corporate obligations, only $.7 billion or 4%, are subject to call. Interest Rate Risk--Rising Rates. For both annuities and universal life insurance, a rapid and sustained rise in interest rates poses risks of deteriorating spreads and high surrenders. The portfolios supporting these products have fixed-rate assets laddered over maturities generally ranging from one to 10 years or more. Accordingly, the earned rate on each portfolio lags behind changes in market yields. As rates rise, the lag may be increased by slowing of MBS prepayments. The greater and faster the rise in interest rates, the more the earned rate will tend to lag behind market rates. If LNC sets renewal crediting rates to earn the desired spread, the gap between its renewal crediting rates and competitors' new money rates may be wide enough to cause increased surrenders. If it credits more competitive renewal rates to limit surrenders, its spreads will narrow. LNC devotes extensive effort to evaluating these risks by simulating asset and liability cash flows for a wide range of interest rate scenarios. Such analysis has led to adjustments in the target maturity structure and to hedging the risk of rising rates by buying out-of-the-money interest rate cap agreements (see Derivatives section of Management's Discussion and Analysis on page 29). With this hedge, the potential adverse impact of a sustained rise in rates is kept within corporate risk tolerances. LNC believes that the risks of rising interest rates are also mitigated by its emphasis on periodic premium products. Default Risk. In assessing the risk that the rate of default losses for each category of asset may be worse than the rates assumed in pricing its products, LNC considers the entire $32 billion portfolio of invested assets, taking diversification into account. Of this total, $15.2 billion are corporate bonds and $3.2 billion are commercial mortgages. LNC manages the risk of adverse default experience on these investments by applying disciplined credit evaluation and underwriting standards, prudently limiting allocations to lower-quality, higher-yielding investments, and diversifying exposures by issuer, industry, region and property type. For each counter-party or borrowing entity and its affiliates, LNC's exposures from all transactions are aggregated and managed in relation to formal limits set by rating quality and industry group. LNC remains exposed to occasional adverse cyclical economic downturns during which default rates may be significantly higher than the long-term historical average used in pricing. -29- Equity Market Exposures. At December 31, 1995, LNC owned equities consisting of $1.2 billion of common stocks, $776 million of real estate, and $100 million of other equity interests. While LNC invests in these categories with the expectation of achieving higher returns than would be available in its core fixed-income investments, the returns on, and values of, these equity investments are subject to somewhat greater market risk than its fixed income investments. The fee revenues of LNC's Investment Management segment and fees earned from variable annuities are exposed to the risk of a decline in the equity market values. Investment advisory fees are generally a fixed percentage of the market value of assets under management. In a severe equity market decline, fee income could be reduced by not only reduced market valuations but also by customer withdrawals. Such withdrawals from equity funds and accounts might be offset, in part, by transfers to LNC's fixed-income accounts and through the transfer of funds to LNC by customers from competitors. Derivatives As indicated in note 7 to the consolidated financial statements (see page 58), LNC has entered into derivative transactions to reduce its exposure to interest rate fluctuations, the widening of bond yield spreads over comparable maturity U.S. Government obligations and foreign exchange risk. A discussion of LNC's five significant programs using derivative agreements and contracts follows. All these programs are used within the Life Insurance and Annuities segment except for the foreign exchange risk on an investment in a foreign subsidiary which is used within Other Operations. 1) LNC uses interest rate cap agreements to hedge against the negative impact of a significant and sustained rise in interest rates. Interest rate caps are contracts that require counterparties to pay LNC at specified future dates the amount, if any, by which a specified market interest rate exceeds the cap rate stated in the agreements, applied to a notional amount. As of December 31, 1995, LNC had agreements with notional amounts of $5.1 billion with cap rates ranging from 138 to 498 basis points above prevailing interest rates. These agreements expire in 1997 - 2003. The cap rates in some contracts increase over time. The revenue that LNC receives from interest rate caps depends on the future levels of interest rates on U.S. Treasury securities with maturities of two, five, seven and 10 years; U.S. dollar swap rates for similar maturities; and the London Interbank Offered Rate ("LIBOR"). The table below analyzes the amount of cap revenue LNC would receive if those rates were 1%, 2%, 3%, or 4% higher than they were at December 31, 1995 and remain at those levels throughout the remaining lives of the caps owned by LNC. In relation to the level of these rates at December 31, 1995, the cap rates were from 1.38% to 4.98% out of the money, i.e., higher. Revenue from interest rate caps under these scenarios is as follows:
Year Ended December 31 (in millions) 1996 1997 1998 1999 2000 Thereafter No change $ -- $ -- $ -- $ -- $ -- $ -- Up 1% -- -- -- -- -- -- Up 2% .1 .1 .1 .1 -- -- Up 3% .8 .3 .3 .3 -- -- Up 4% 18.3 14.9 9.1 1.9 -- --
2) LNC uses spread-lock agreements to hedge a portion of the value of its fixed maturity securities against the risk of widening in the spreads between their yields and the yields of comparable maturity U.S. Government obligations. The actual risk being hedged is the potential widening of bond spreads that would be caused by widening swap spreads. Under each of these agreements, LNC assumes the right and the obligation to enter into an interest rate swap at a future date in which LNC would pay a fixed rate equal to a contractually specified spread over the yield of a specified U.S. Treasury security and receive a floating rate. As of December 31, 1995, LNC had spread-lock agreements with an aggregate notional amount of $600 million with 10 years remaining in the exercise periods. -30- Over the past five years, swap spreads have typically traded within an annual range of 30 basis points, i.e., a range of plus or minus 15 basis points around the mean level. At December 31, 1995, the cash-settlement value of the spread locks would have changed by approximately $5.0 million for each 15 basis point change in swap spreads. 3) LNC uses exchange-traded financial futures contracts and options on financial futures to hedge against interest rate risks and to manage duration of a portion of its fixed maturity securities. Financial futures contracts obligate LNC to buy or sell a financial instrument at a specified future date for a specified price and may be settled in cash or through delivery of the financial instrument. Cash settlements on the change in market values of financial futures contracts are made daily. Put options on a financial futures contract give LNC the right, but not the obligation, to assume a long or short position in the underlying futures contract at a specified price during a specified time period. At December 31, 1995, LNC had long positions in the March 1996 five year note, 10 year note, and bond futures with an aggregate face amount of $106.7 million. As the yields on the underlying Treasury securities rise (fall), the value of these long positions to LNC will decrease (increase) by approximately $.9 million for each 10 basis point parallel shift in the yield curve. 4) LNC uses foreign exchange forward contracts to hedge against foreign exchange risk related to LNC's investment in its foreign subsidiary, Lincoln National (UK). The foreign exchange forward contracts obligate LNC to deliver a specified amount of currency at a future date at a specified exchange rate. The value of the foreign exchange forward contracts at any given point fluctuate according to the underlying level of exchange rate and interest rate differentials. At December 31, 1995, LNC had contracts in place with notional amounts of $398.8 million. Assuming no difference in the underlying interest rates, the value of these contracts will rise (fall) by approximately $4.0 million for each 1% change in the exchange rate. 5) LNC uses a combination of foreign exchange forward contracts, foreign currency options, and foreign currency swaps to hedge some of the foreign exchange risk related to its investments in fixed maturity securities denominated in foreign currencies. The foreign currency forward contracts obligate LNC to deliver a specified amount of currency at a future date at a specified exchange rate. As of December 31, 1995, LNC had a short position in foreign exchange forward contracts with a notional amount of $15.7 million. Foreign currency options give LNC the right, but not the obligation, to buy or sell a foreign currency at a specific exchange rate during a specified time period. At December 31, 1995, LNC had a long position in foreign currency options with a notional amount of $99.2 million. A foreign currency swap is a contractual agreement to exchange the currencies of two different countries pursuant to an agreement to re-exchange the two currencies at the same rate of exchange at a specified future date. As of December 31, 1995, LNC had a foreign currency swap with a notional amount of $15 million. The value of the foreign exchange contracts, foreign currency options and foreign currency swaps, which are used to reduce the risk of reduction of the value in U.S. dollars of investments denominated in foreign currencies that might result from an adverse change in currency exchange rates, fluctuate according to the underlying level of exchange rates. At December 31, 1995, LNC had notional amounts of contracts in place of $129.9 million. If the U.S. dollar were to appreciate (depreciate) 1% in relation to each of the currencies involved in these contracts, the value of these positions would rise (fall) by $1.3 million. -31- The first three programs discussed above are designed to help LNC achieve more stable margins while providing competitive crediting rates to policyholders during periods when interest rates are rising or corporate bond spreads are widening. Failure to maintain competitive crediting rates could result in policyholders withdrawing their funds for placement in more competitive products. The other two programs discussed above are designed to reduce LNC's risk related to changes in foreign currency exchange rates. LNC is depending on the ability of derivative product dealers and their guarantors to honor their obligations to pay the contract amounts under interest rate cap agreements and other over-the-counter derivative products such as spread-lock agreements, foreign currency exchange contracts, foreign currency options and foreign currency swaps. In order to minimize the risk of default losses, LNC diversifies its exposures among several dealers and limits the amount of exposure in accordance with the credit rating of each dealer or its guarantor. With the exception of one cap agreement counterparty, at December 31, 1995, the dealers providing interest rate caps or their guarantors were rated single A or better by Standard & Poors and Moody's. In fact, 84% of the notional amount of caps were from dealers which, giving effect to guarantees, were rated AA or better by those agencies. One counterparty with an aggregate notional amount of $500 million and an aggregate replacement value of approximately $.1 million, had its rating lowered from A3 to Baa1 by one of the major rating agencies during 1995. This counterparty continues to hold an A rating from another major rating agency. In addition to continuing existing programs, LNC may use derivative products in other strategies to limit risk and enhance returns, particularly in the management of investment spread businesses. LNC has established policies, guidelines and internal control procedures for the use of derivatives as tools to enhance management of the overall portfolio of risks assumed in LNC's operations. LIQUIDITY AND CASH FLOW Liquidity refers to the ability of an enterprise to generate adequate amounts of cash from its normal operations to meet cash requirements with a prudent margin of safety. Because of the interval of time from receipt of a deposit or premium until payment of benefits or claims, LNC and other insurers employ investment portfolios as an integral element of operations. By segmenting its investment portfolios along product lines, LNC enhances the focus and discipline it can apply to managing the liquidity as well as the interest rate and credit risk of each portfolio commensurate with the profile of the liabilities. For example, portfolios backing products with less certain cash flows and/or withdrawal provisions are kept more liquid than portfolios backing products with more predictable cash flows. The Consolidated Statements of Cash Flows on page 39 indicate that operating activities provided cash of $1.9 billion, $1.2 billion and $.8 billion in 1995, 1994 and 1993, respectively. This statement also classifies the other sources and uses of cash by investing activities and financing activities and discloses the amount of cash available at the end of the year to meet LNC's obligations. Although LNC generates adequate cash flow to meet the needs of its normal operations, periodically LNC may issue debt or equity securities to fund internal expansion, acquisitions, investment opportunities and the retirement of LNC's debt and equity. In 1995, LNC filed a shelf registration for $600 million with the Securities and Exchange Commission that would allow LNC to issue debt or equity securities. This registration included an aggregate of $100 million of securities which had not been utilized from a 1994 registration. Also, cash funds are available from LNC's revolving credit agreement which provides for borrowing up to $500 million (see note 5 to the consolidated financial statements on page 51). Transactions such as those described in the preceding paragraph that occurred recently included the issuance of $200 million in debt in May 1995. Proceeds from this offering were used to pay down short-term debt that had been incurred in April 1995 related to the acquisition of additional operating businesses (see note 11 to the consolidated financial statements on page 65). -32- In order to maximize the use of available cash, the holding company (Lincoln National Corporation) maintains a facility where subsidiaries can borrow from the holding company to meet their short-term needs and can invest their short-term funds with the holding company. Depending on the overall cash availability or need, the holding company invests excess cash in short-term investments or borrows funds in the external financial markets. In addition to facilitating the management of cash, the holding company receives dividends from its subsidiaries, invests in operating companies, maintains an investment portfolio and pays shareholder dividends and certain corporate expenses. Holding Company Cash Flow
Year Ended December 31 (in millions) 1995 1994 1993 Dividends from subsidiaries: Lincoln Life ----------------------------------- $ 310.0 $ 125.0 $ 12.0 American States -------------------------------- 199.0 215.0 60.0 Other ------------------------------------------ 29.5 4.5 4.0 Net investment income ---------------------------- 2.9 1.2 4.3 Operating expenses ------------------------------- (41.7) (33.7) (19.5) Interest ----------------------------------------- (57.3) (44.3) (39.0) Net sales (purchases) of investments ------------- 16.6 (22.1) 31.6 Increase (decrease) in cash collateral on loaned securities ------------------------------- (4.5) 14.3 9.5 Additional investment in subsidiaries ------------ (697.1) (2.7) (105.8) (Investment in) sale of unconsolidated affiliate - 194.0 (103.5) -- Net increase (decrease) in debt ------------------ 217.1 15.9 (207.2) Increase in receivables from subsidiaries -------- (.3) (3.9) (14.2) Increase (decrease) in loans from subsidiaries --- (42.4) 271.8 (127.6) Decrease (increase) in loans to subsidiaries ----- (107.0) (20.5) 34.7 Federal income taxes received (paid) ------------- (38.3) 65.6 (270.0) Net tax receipts from (payments to) subsidiaries - 61.5 (61.1) 319.8 Dividends paid to shareholders ------------------- (178.8) (172.2) (156.2) Common stock issued for benefit plans ------------ 24.1 30.0 26.2 Public offering of common stock ------------------ -- -- 316.1 Retirement of common stock ----------------------- -- (18.4) -- Other -------------------------------------------- 56.4 20.5 (2.8) Cash and invested cash - December 31 ------------- $ 466.8 $ 523.1 $271.7 Other investments - December 31 ------------------ 20.3 28.7 43.9 Debt - December 31 ------------------------------- 1,402.1 1,227.5 939.8
The table above shows the cash flow activity for the holding company from 1993 through 1995. The line, "net tax receipts from (payments to) subsidiaries", recognizes that the holding company receives tax payments from subsidiaries, pays the consolidated tax liability and reimburses subsidiaries for the tax effect of any taxable operating and capital losses. LNC's insurance subsidiaries are subject to certain insurance department regulatory restrictions as to the transfer of funds and payments of dividends to the holding company (see note 7 to the consolidated financial statements on page 56). However, these restrictions pose no short-term liquidity concerns for the holding company. The financial strength and stability of the subsidiaries permit ready access to short-term or long-term credit sources for the holding company. Effect of Inflation As indicated earlier in this review of consolidated operations, inflation affects LNC's revenues and expenses. LNC's insurance affiliates, as well as other companies in the insurance industry, attempt to minimize the effect of inflation by anticipating inflationary trends in the pricing of their products. Inflation, except for changes in interest rates, does not have a significant effect on LNC's balance sheet due to the minimal amount of dollars invested in property, plant and equipment and the absence of inventories. -33- Item 8. Financial Statements and Supplementary Data
Operating Results by Quarter (in millions, except per share) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1995 Data Premiums and other considerations --- $ 909.6 $1,000.3 $1,032.7 $1,135.2 Net investment income --------------- 530.1 583.6 567.7 604.3 Realized gain on investments -------- 44.1 62.3 68.1 41.1 Gain on sale of affiliates/ operating property ----------------- -- -- -- 54.2 Net income -------------------------- 134.8 117.9 154.3 75.2 Net income per share ---------------- $1.30 $1.13 $1.48 $ .72 1994 Data Premiums and other considerations* -- $1,221.7 $ 921.7 $ 930.7 $1,176.4 Net investment income --------------- 501.8 487.6 510.0 511.9 Realized gain (loss) on investments - 38.1 (66.3) (74.2) (28.4) Gain on sale of affiliates/ operating property ----------------- 44.1 4.7 -- -- Net income -------------------------- 151.0 46.8 58.4 93.7 Net income per share ---------------- $1.46 $.45 $ .56 $ .90 *Premiums and other considerations shown for the 1994 quarters are after reclassification of revenues and expenses to conform to the 1995 presentation (see note 2 to the consolidated financial statements on page 44). This reclassification reduced 1994 revenues and expenses by $201.1 million, $196.7 million, $195.1 million and $211.7 million for the first through fourth quarters, respectively. The fourth quarter of 1995 includes a change in estimate related to LNC's disability income business (see note 2 to the consolidated financial statements on page 44).
Consolidated Financial Statements The consolidated financial statements of Lincoln National Corporation and Subsidiaries follow on pages 34 through 66. -34- LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS
December 31 (000s omitted) 1995 1994 ASSETS Investments: Securities available-for-sale, at fair value: Fixed maturity (cost: 1995-$23,935,527; 1994-$22,194,079) - $25,834,476 $21,644,154 Equity (cost: 1995-$936,124; 1994-$948,135) ------- 1,164,844 1,038,617 Mortgage loans on real estate ---------------- 3,186,872 2,853,083 Real estate ---------------------------------- 775,912 706,854 Policy loans --------------------------------- 602,573 550,672 Other investments ---------------------------- 371,765 175,121 Total Investments -------------------------- 31,936,442 26,968,501 Investment in unconsolidated affiliates -------- 5,562 97,054 Cash and invested cash ------------------------- 1,572,855 1,041,583 Property and equipment ------------------------- 243,763 185,471 Deferred acquisition costs --------------------- 1,436,685 2,069,975 Premiums and fees receivable ------------------- 537,979 551,679 Accrued investment income ---------------------- 462,737 428,959 Assets held in separate accounts --------------- 22,769,068 14,301,684 Federal income taxes --------------------------- -- 396,888 Amounts recoverable from reinsurers ------------ 2,495,189 2,152,327 Goodwill --------------------------------------- 471,465 145,844 Other intangible assets ------------------------ 528,934 42,773 Other assets ----------------------------------- 797,054 482,022 Total Assets ----------------------------- $63,257,733 $48,864,760
See notes to the consolidated financial statements on pages 40 - 65. -35- LINCOLN NATIONAL CORPORATION CONSOLIDATED BALANCE SHEETS -CONTINUED-
December 31 (000s omitted) 1995 1994 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Policy liabilities and accruals: Future policy benefits, claims and claim expenses ------------------------- $12,922,547 $10,536,512 Unearned premiums --------------------------- 813,380 804,987 Total Policy Liabilities and Accruals ----- 13,735,927 11,341,499 Contractholder funds -------------------------- 18,784,508 17,250,423 Liabilities related to separate accounts ------ 22,769,068 14,301,684 Federal income taxes -------------------------- 128,426 -- Short-term debt ------------------------------- 426,848 360,177 Long-term debt -------------------------------- 659,303 474,201 Other liabilities ----------------------------- 2,375,531 2,094,716 Total Liabilities ------------------------- 58,879,611 45,822,700 Shareholders' Equity: Series A preferred stock (1995 liquidation value - $3,252) ------------ 1,335 1,420 Series E preferred stock ---------------------- -- 151,206 Series F preferred stock ---------------------- -- 158,707 Common stock ---------------------------------- 889,476 555,382 Retained earnings------------------------------ 2,775,718 2,479,532 Foreign currency translation adjustment ------- 13,413 6,890 Net unrealized gain (loss) on securities available-for-sale ---------------- 698,180 (311,077) Total Shareholders' Equity ---------------- 4,378,122 3,042,060 Total Liabilities and and Shareholders' Equity ----------------- $63,257,733 $48,864,760
See notes to the consolidated financial statements on pages 40 - 65. -36-
LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31 (000s omitted) 1995 1994 1993 Revenue: Insurance premiums ------------------ $3,253,833 $3,624,648 $4,447,397 Insurance fees ---------------------- 523,237 449,643 470,395 Investment advisory fees ------------ 138,584 -- -- Net investment income --------------- 2,285,681 2,011,351 2,146,519 Equity in earnings of unconsolidated affiliates ---------- 12,361 14,652 -- Realized gain (loss) on investments - 215,623 (130,820) 268,422 Gain (loss) on sale of affiliates/ operating property ----------------- 54,195 48,842 (98,500) Other ------------------------------- 149,742 161,534 158,524 Total Revenue --------------------- 6,633,256 6,179,850 7,392,757 Benefits and Expenses: Benefits and settlement expenses ---- 4,113,143 4,195,243 4,981,379 Underwriting, acquisition, insurance and other expenses ------- 1,821,022 1,558,806 1,779,248 Interest expense -------------------- 72,516 49,520 44,301 Total Benefits and Expenses ------- 6,006,681 5,803,569 6,804,928 Income Before Federal Income Taxes and Cumulative Effect of Accounting Change ------------- 626,575 376,281 587,829 Federal income taxes ------------------ 144,389 26,383 172,546 Income Before Cumulative Effect of Accounting Change ------------- 482,186 349,898 415,283 Cumulative effect of accounting change (postretirement benefits) ----- -- -- (96,431) Net Income ------------------------ $ 482,186 $ 349,898 $ 318,852
Earnings Per Share: Income before cumulative effect of accounting change ---------- $4.63 $3.37 $4.06 Cumulative effect of accounting change (postretirement benefits) ----- -- -- (.94) Net Income ------------------------ $4.63 $3.37 $3.12
See notes to the consolidated financial statements on pages 40 - 65. -37- LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Year Ended December 31 (000s omitted) 1995 1994 1993 Preferred Stock: Series A Preferred Stock: Balance at beginning of year ----------- $ 1,420 $ 1,553 $ 1,896 Conversion into common stock ----------- (85) (133) (343) Balance at End of Year --------------- 1,335 1,420 1,553 Series E Preferred Stock: Balance at beginning of year ----------- 151,206 151,206 151,206 Conversion into common stock ----------- (151,206) -- -- Balance at End of Year --------------- -- 151,206 151,206 Series F Preferred Stock: Balance at beginning of year ----------- 158,707 158,707 158,707 Conversion into common stock ----------- (158,707) -- -- Balance at End of Year --------------- -- 158,707 158,707 Common Stock: Balance at beginning of year ------------ 555,382 543,659 200,986 Conversion of series A preferred stock -- 85 133 343 Conversion of series E and F preferred stock ------------------------ 309,913 -- -- Public offering of common stock --------- -- -- 316,100 Issued for benefit plans ---------------- 26,888 30,616 26,930 Shares forfeited under benefit plans ---- (2,792) (631) (700) Retirement of common stock -------------- -- (18,395) -- Balance at End of Year --------------- 889,476 555,382 543,659 Retained Earnings: Balance at beginning of year ------------ 2,479,532 2,303,731 2,147,691 Net income ------------------------------ 482,186 349,898 318,852 Dividends declared: Series A preferred stock -------------- (123) (134) (146) Series E preferred stock -------------- (4,168) (8,336) (8,336) Series F preferred stock -------------- (4,364) (8,729) (8,729) Common stock -------------------------- (177,345) (156,898) (145,601) Balance at End of Year --------------- 2,775,718 2,479,532 2,303,731 Foreign Currency Translation Adjustment: Accumulated adjustment at beginning of year ---------------------- 6,890 (1,214) 3,643 Change during the year ------------------ 6,523 8,104 (4,857) Balance at End of Year --------------- 13,413 6,890 (1,214) Net Unrealized Gain (Loss) on Securities Available-for-sale: Balance at beginning of year ----------- (311,077) 914,679 162,742 Cumulative effect of accounting change - -- -- 768,419 Other change during the year ---------- 1,009,257 (1,225,756) (16,482) Balance at End of Year --------------- 698,180 (311,077) 914,679 Total Shareholders' Equity at End of Year ----------------------$4,378,122 $3,042,060 $4,072,321
See notes to the consolidated financial statements on pages 40 - 65. -38- LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - continued
Year Ended December 31 (Number of Shares) 1995 1994 1993 Preferred Stock: (10,000,000 shares authorized) Series A Preferred Stock: Balance at beginning of year -------- 43,218 47,289 57,716 Conversion into common stock -------- (2,572) (4,071) (10,427) Balance Issued and Outstanding at End of Year ------------------- 40,646 43,218 47,289 Series E Preferred Stock: Balance at beginning of year ------- 2,201,443 2,201,443 2,201,443 Conversion into common stock ------- (2,201,443) -- -- Balance Issued and Outstanding at End of Year ------------------ -- 2,201,443 2,201,443 Series F Preferred Stock: Balance at beginning of Year ------- 2,216,454 2,216,454 2,216,454 Conversion into common stock ------- (2,216,454) -- -- Balance Issued and Outstanding at End of Year ------------------ -- 2,216,454 2,216,454 Common Stock: (Shares authorized: 1995 and 1994 - 800,000,000; 1993 - 400,000,000) Balance at beginning of year ---------- 94,477,942 94,183,190 84,142,458 Conversion of series A preferred stock- 20,576 32,568 83,416 Conversion of series E and F preferred stock ---------------------- 8,835,794 -- -- Public offering of common stock ------- -- -- 9,200,000 Issued for benefit plans -------------- 905,361 778,587 786,192 Shares forfeited under benefit plans -- (54,556) (16,403) (28,876) Retirement of common stock ------------ -- (500,000) -- Balance Issued and Outstanding at End of Year ---------------------104,185,117 94,477,942 94,183,190 Common Stock (assuming conversion of series A, E and F preferred stock): End of Year --------------------------104,510,285 103,659,480 103,397,296 Average for the Year -----------------104,115,650 103,863,196 102,307,356
Dividends Per Share: Series A preferred stock -------------- $3.00 $3.00 $3.00 Series E preferred stock -------------- 1.89 3.79 3.79 Series F preferred stock -------------- 1.97 3.94 3.94 Common stock -------------------------- 1.75 1.66 1.55
See notes to the consolidated financial statements on pages 40 - 65. -39- LINCOLN NATIONAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31 (000s omitted) 1995 1994 1993 Cash Flows from Operating Activities: Net income ------------------------------ $ 482,186 $ 349,898 $ 318,852 Adjustments to reconcile net income to net cash provided by operating activities: Deferred acquisition costs ----------- (44,990) (199,419) (23,961) Premiums and fees receivable --------- (15,087) (7,777) (62,201) Accrued investment income ------------ (41,268) (44,171) 23,441 Policy liabilities and accruals ------ 147,989 11,487 6,797 Contractholder funds ----------------- 1,631,192 1,674,888 1,369,129 Amounts recoverable from reinsurers--- (435,776) (776,408) (710,038) Federal income taxes ----------------- 268,338 (59,611) (96,469) Equity in undistributed earnings of unconsolidated affiliates ----------- (11,493) (12,408) -- Provisions for depreciation ---------- 59,835 58,689 58,893 Amortization of goodwill and other intangible assets ------------------- 74,229 9,274 8,851 Realized (gain) loss on investments -- (300,840) 212,201 (292,153) (Gain) loss on sale of affiliates/ operating property ------------------ (54,195) (48,842) 98,500 Cumulative effect of accounting change ------------------------------ -- -- 96,431 Other -------------------------------- 160,180 14,365 12,998 Net Adjustments -------------------- 1,438,114 832,268 490,218 Net Cash Provided by Operating Activities -------------- 1,920,300 1,182,166 809,070 Cash Flows from Investing Activities: Securities available-for-sale: Purchases ----------------------------- (15,327,959)(13,383,236) (9,158,159) Sales --------------------------------- 14,253,858 10,352,938 8,834,823 Maturities ---------------------------- 1,051,471 1,106,687 45,937 Fixed maturity securities held for investment: Purchases ----------------------------- -- -- (6,626,937) Sales --------------------------------- -- -- 3,205,203 Maturities ---------------------------- -- -- 1,858,044 Purchase of other investments ----------- (1,770,790) (1,696,570) (1,360,779) Sale or maturity of other investments --- 1,103,380 1,755,113 733,585 Sale of affiliates ---------------------- 186,900 417,367 -- Purchase of affiliates ------------------ (736,966) -- -- Increase (decrease) in cash collateral on loaned securities ---------------------- (39,223) (149,597) 30,906 Other ----------------------------------- (148,029) 94,566 257,943 Net Cash Used in Investing Activities-- (1,427,358) (1,502,732) (2,179,434) Cash Flows from Financing Activities: Principal payments on long-term debt ---- (14,182) (142,065) (2,805) Issuance of long-term debt -------------- 197,785 199,482 35,035 Net increase (decrease) in short-term debt ------------------------ 25,785 (59,698) (112,579) Universal life and investment contract deposits ---------------------- 2,142,043 2,429,113 2,467,540 Universal life and investment contract withdrawals ------------------- (2,158,392) (1,613,780) (1,509,108) Public offering of common stock --------- -- -- 316,100 Common stock issued for benefit plans --- 24,096 29,985 26,230 Retirement of common stock -------------- -- (18,395) -- Dividends paid to shareholders ---------- (178,805) (172,157) (156,235) Net Cash Provided by Financing Activities --------------------------- 38,330 652,485 1,064,178 Net Increase (Decrease) in Cash ------- 531,272 331,919 (306,186) Cash at Beginning of Year --------------- 1,041,583 709,664 1,015,850 Cash at End of Year ------------------- $1,572,855 $1,041,583 $ 709,664
See notes to the consolidated financial statements on pages 40 - 65. -40- LINCOLN NATIONAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Presentation. The accompanying consolidated financial statements include Lincoln National Corporation ("LNC") and its majority-owned subsidiaries. Through subsidiary companies, LNC operates multiple insurance and investment management businesses. Operations are divided into four business segments (see note 9 on page 62). Less than majority-owned entities in which LNC has at least a 20% interest are reported on the equity basis. These consolidated financial statements have been prepared in conformity with generally accepted accounting principles. Use of Estimates. The nature of the insurance and investment management businesses requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Investments. LNC classifies its fixed maturity and equity securities (common and non-redeemable preferred stocks) as available-for-sale and, accordingly, such securities are carried at fair value. The cost of fixed maturity securities is adjusted for amortization of premiums and discounts. The cost of fixed maturity and equity securities is adjusted for declines in value that are other than temporary. For the mortgage-backed securities portion of the fixed maturity securities portfolio, LNC recognizes income using a constant effective yield based on anticipated prepayments and the estimated economic life of the securities. When estimates of prepayments change, the effective yield is recalculated to reflect actual payments to date and anticipated future payments. The net investment in the securities is adjusted to the amount that would have existed had the new effective yield been applied since the acquisition of the securities. This adjustment is reflected in net investment income. Mortgage loans on real estate are carried at the outstanding principal balances less unaccrued discounts and net of reserves for declines that are other than temporary. Investment real estate is carried at cost less allowances for depreciation. Such real estate is carried net of reserves for declines in value that are other than temporary. Real estate acquired through foreclosure proceedings is recorded at fair value on the settlement date which establishes a new cost basis. If a subsequent periodic review of a foreclosed property indicates the fair value, less estimated costs to sell, is lower than the carrying value at the settlement date, the carrying value is adjusted to the lower amount. Policy loans are carried at aggregate unpaid balances. Any changes to the reserves for mortgage loans on real estate and real estate are reported as realized gain (loss) on investments. Cash and invested cash are carried at cost and include all highly liquid debt instruments purchased with a maturity of three months or less. Realized gain (loss) on investments is recognized in net income, net of related amortization of deferred acquisition costs, using the specific identification method. Changes in the fair values of securities carried at fair value are reflected directly in shareholders' equity after deductions for related adjustments for deferred acquisition costs and amounts required to satisfy policyholder commitments that would have been recorded if these securities would have been sold at their fair value, and after deferred taxes or credits to the extent deemed recoverable. Derivatives. LNC hedges certain portions of its exposure to interest rate fluctuations, the widening of bond yield spreads over comparable maturity U.S. Government obligations and foreign exchange risk by entering into derivative transactions. A description of LNC's accounting for its hedge of such risks is discussed in the following two paragraphs. The premium paid for an interest rate cap is deferred and amortized to net investment income on a straight-line basis over the term of the interest rate cap. Any settlement received in accordance with the terms of the interest rate caps is recorded as investment income. Spread-lock agreements, interest rate swaps and financial futures which hedge fixed maturity securities available-for-sale, are carried at fair value with the change in fair value -41- reflected directly in shareholders' equity. Realized gain (loss) from the settlement of such derivatives is deferred and amortized over the life of the hedged assets as an adjustment to the yield. Foreign exchange forward contracts, which hedge LNC's investment in its foreign subsidiary, Lincoln National (UK), are carried at fair value with the change in fair value and realized gain (loss) on such contracts reflected directly in the foreign currency translation adjustment component of shareholders' equity. Foreign exchange forward contracts, foreign currency options and foreign currency swaps, which hedge some of the foreign exchange risk of investments in fixed maturity securities denominated in foreign currencies, are carried at fair value with the change in fair value reflected in earnings. Realized gain (loss) from the settlement of such derivatives is also reflected in earnings. Hedge accounting is applied as indicated above after LNC determines that the items to be hedged expose LNC to interest rate fluctuations, the widening of bond yield spreads over comparable maturity U.S. Government obligations and foreign exchange risk; and the derivatives used are designated as a hedge and reduce the indicated risk by having a high correlation of changes in the value of the derivatives and the items being hedged at both the inception of the hedge and throughout the hedge period. Should such criteria not be met, the change in value of the derivatives is included in net income. Property and Equipment. Property and equipment owned for company use is carried at cost less allowances for depreciation. Premiums and Fees. Revenue for universal life and other interest-sensitive life insurance policies consists of policy charges for the cost of insurance, policy initiation and administration, and surrender charges that have been assessed. Traditional individual life-health and annuity premiums are recognized as revenue over the premium-paying period of the policies. Group health and property-casualty premiums are prorated over the contract term of the policies. As specified in the investment advisory agreements with the mutual funds, fees are determined and recognized as revenues monthly, based on the average daily net assets of the mutual funds managed. Investment advisory contracts generally provide for the determination and payment of advisory fees based on market values of managed portfolios at the end of a calendar month or quarter. Investment management and advisory contracts are renewable annually with cancellation clauses ranging from 30 to 90 days. Assets Held in Separate Accounts/Liabilities Related to Separate Accounts. These assets and liabilities represent segregated funds administered and invested by LNC's insurance subsidiaries for the exclusive benefit of pension and variable life and annuity contractholders. The fees received by LNC's insurance subsidiaries for administrative and contractholder maintenance services performed for these separate accounts are included in LNC's consolidated statements of income. Deferred Acquisition Costs. Commissions and other costs of acquiring universal life insurance, variable universal life insurance, traditional life insurance, annuities, group health insurance and property-casualty insurance which vary with and are primarily related to the production of new business, have been deferred to the extent recoverable. Acquisition costs for universal and variable universal life insurance policies are being amortized over the lives of the policies in relation to the incidence of estimated gross profits from surrender charges and investment, mortality, and expense margins, and actual realized gain (loss) on investments. That amortization is adjusted retrospectively when estimates of current or future gross profits to be realized from a group of products are revised. The traditional life-health and annuity acquisition costs are being amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policy reserves. Deferred acquisition costs for property-casualty policies are amortized over the contract term of the policies; property-ca- sualty acquisition costs that are not recoverable from future premiums and related investment income are expensed. Expenses. Expenses for universal and variable universal life insurance policies include interest credited to policy account balances and benefit claims incurred during the period in excess of policy account balances. Interest crediting rates associated with funds invested in the insurance company's general account during 1993 through 1995 ranged from 6.1% to 8.25%. -42- Goodwill and Other Intangible Assets. The cost of acquired subsidiaries in excess of the fair value of net assets (goodwill) is amortized using the straight-line method over periods that generally correspond with the benefits expected to be derived from the acquisitions. Goodwill recorded subsequent to 1994 is amortized over 20 to 25 years. Goodwill arising prior to 1995 is generally amortized over 40 years. The present value of business in-force is an asset that is recorded in connection with the acquisition of an insurance company or a block of policies. The initial value is determined actuarially by discounting estimated future gross profits as a measure of the value of business in-force purchased. The resulting asset is amortized on a constant yield basis over the expected revenue recognition period of the business acquired, with the accrual of interest added to the unamortized balance at rates ranging from 8% to 9%. Other intangible assets (i.e. institutional customer relationships, covenants not to compete and mutual fund customer relationships) have been recorded in connection with the acquisition of an asset management services company. These assets are amortized on a straight-line basis over 6 to 15 years. The carrying value of goodwill and other intangible assets is reviewed periodically for indicators of impairment in value. Policy Liabilities and Accruals. The liabilities for future policy benefits and expenses for universal and variable universal life insurance policies consist of policy account balances that accrue to the benefit of the policyholders, excluding surrender charges. The liabilities for future policy benefits and expenses for traditional life policies and immediate and deferred paid-up annuities are computed using a net level premium method and assumptions for investment yields, mortality and withdrawals based principally on company experience projected at the time of policy issue, with provision for possible adverse deviations. Interest assumptions for traditional direct individual life reserves for all policies range from 2.3% to 11.7% graded to 5.7% after 30 years depending on time of policy issue. Interest rate assumptions for reinsurance reserves range from 5.0% to 11.0% graded to 8.0% after 20 years. The interest assumptions for immediate and deferred paid-up annuities range from 4.5% to 8.0%. The liability for unpaid property-casualty claims is based on estimates of payments to be made for individual claims reported and unreported claims, reduced by estimated recoveries from salvage and subrogation. With respect to its policy liabilities and accruals, LNC carries on a continuing review of its 1) overall reserve position, 2) reserving techniques and 3) reinsurance arrangements, and as experience develops and new information becomes known, liabilities are adjusted as deemed necessary. The effects of changes in estimates are included in the operating results for the period in which such estimates occur. Reinsurance. LNC's insurance companies enter into reinsurance agreements with other companies in the normal course of their business. LNC's insurance subsidiaries may assume reinsurance from unaffiliated companies and/or cede reinsurance to such companies. Assets/liabilities and premiums/benefits from certain reinsurance contracts which grant statutory surplus to other insurance companies have been netted on the balance sheets and income statements, respectively, since there is a right of offset. All other reinsurance agreements are reported on a gross basis. Depreciation. Provisions for depreciation of investment real estate and property and equipment owned for company use are computed principally on the straight-line method over the estimated useful lives of the assets. Postretirement Medical and Life Insurance Benefits. LNC accounts for its postretirement medical and life insurance benefits using the full accrual method. Stock Options. LNC recognizes compensation expense for its stock option incentive plans using the intrinsic value method of accounting. Under the terms of the intrinsic value method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date, or other measurement date, over the amount an employee must pay to acquire the stock. -43- Foreign Exchange. LNC's foreign subsidiaries' balance sheet accounts and income statement items are translated at the current exchange and average exchange rates for the year, respectively. Resulting translation adjustments are reported as a component of shareholders' equity. Other translation adjustments for foreign currency transactions that affect cash flows are reported in earnings. 2. Changes in Accounting Principles, Changes in Estimates and Reclassifications Postretirement Benefits Other than Pensions. Effective January 1, 1993, LNC changed its method of accounting for postretirement medical and life insurance benefits for its eligible employees and agents from a pay-as-you-go method to a full accrual method in accordance with Financial Accounting Standard No. 106 entitled "Employers' Accounting for Postretirement Benefits Other Than Pensions" ("FAS 106"). This full accrual method recognizes the estimated obligation for retired employees and agents and active employees and agents who are expected to retire in the future. The effect of the change for 1993 was to increase net periodic postretirement benefit cost by $9,200,000 and decrease income before cumulative effect of accounting change by $6,000,000 ($.06 per share). The implementation of FAS 106 resulted in a one-time charge to first quarter 1993 net income of $96,400,000 ($146,100,000 pre-tax) or $.94 per share for the cumulative effect of the accounting change. See note 6 on page 53 for additional disclosures regarding postretirement benefits other than pensions. Accounting by Creditors for Impairment of a Loan. Financial Accounting Standard No. 114 entitled "Accounting by Creditors for Impairment of a Loan" ("FAS 114") issued in May 1993, was adopted by LNC effective January 1, 1993. FAS 114 requires that if an impaired mortgage loan's fair value as described in note 3 on page 46 is less than the recorded investment in the loan, the difference is recorded in the mortgage loan allowance for losses account. The adoption of FAS 114 resulted in additions to the mortgage loan allowance for losses account and reduced first quarter 1993 income before cumulative effect of accounting change and net income by $42,300,000 or $.41 per share ($64,100,000 pre-tax). See note 3 on page 47 for further mortgage loan disclosures. Most of the effect of this change in accounting was within the Life Insurance and Annuities segment. Accounting for Certain Investments in Debt and Equity Securities. Financial Accounting Standard No. 115 entitled "Accounting for Certain Investments in Debt and Equity Securities" ("FAS 115") issued in May 1993, was adopted by LNC as of December 31, 1993. In accordance with the rules, the prior year financial statements have not been restated to reflect the change in accounting principle. Under FAS 115, securities can be classified as available-for-sale, trading or held-to-maturity according to the holder's intent. LNC classified its entire fixed maturity securities portfolio as "available-for-sale." Securities classified as available-for-sale are carried at fair value and unrealized gains and losses on such securities are carried as a separate component of shareholders' equity. The ending balance of shareholders' equity at December 31, 1993 was increased by $768,400,000 (net of $384,600,000 of related adjustments to deferred acquisition costs, $62,900,000 of policyholder commitments and $412,400,000 in deferred income taxes, all of which would have been recognized if those securities would have been sold at their fair value, net of amounts applicable to Security- Connecticut Corporation) to reflect the net unrealized gain on fixed maturity securities classified as available-for-sale previously carried at amortized cost. Prior to the adoption of FAS 115, LNC carried a portion of its fixed maturity securities at fair value with unrealized gains and losses carried as a separate component of shareholders' equity. The remainder of such securities were carried at amortized cost. Change in Estimate for Net Investment Income Related to Mortgage-backed Securities. At December 31, 1993, LNC had $6,062,000,000 invested in mortgage-backed securities. As indicated in note 1 on page 40, LNC recognizes income on these securities using a constant effective yield based on anticipated prepayments. With the implementation of new investment software in December 1993, LNC was able to significantly refine its estimate of the effective yield on such securities to better reflect actual prepayments and estimates of future prepayments. This resulted in an increase in the amortization of purchase discount on these securities of $58,600,000 and, after related amortization of deferred acquisition costs ($18,500,000) and -44- income taxes ($14,100,000), increased 1993's income before cumulative effect of accounting change and net income by $26,000,000 or $0.25 per share. Most of the effect of this change in estimate was within the Life Insurance and Annuities business segment. Change in Estimate for Disability Income Reserves. During the fourth quarter of 1993, income before cumulative effect of accounting change and net income decreased by $32,800,000 or $0.32 per share as the result of strengthening reinsurance disability income reserves by $50,500,000. The need for this reserve increase within the Reinsurance segment was identified as the result of management's assessment of current expectations for morbidity trends and the impact of lower investment income due to lower interest rates. During the fourth quarter of 1995, LNC completed an in-depth review of the experience of its disability income business. As a result of this study, and based on the assumption that recent experience will continue in the future, income before cumulative effect of accounting change and net income decreased by $121,600,000 or $1.17 per share ($187,000,000 pre-tax) as a result of strengthening disability income reserves by $142,700,000 and writing-off deferred acquisition costs of $44,300,000 in the Reinsurance segment. Reclassifications. During the first quarter of 1995, in accordance with management's current judgement of the economic effect of certain reinsurance contracts which provide statutory surplus relief to other insurance companies, changes have been made in the classification of assets, liabilities, revenues, and total benefits and expenses to reflect deposit accounting for such contracts. Amounts for prior periods have been reclassified to conform to the 1995 presentation. Net income and shareholders' equity are not affected by these reclassifications. The reclassifications reduced assets/liabilities and revenues/total benefits and expenses as follows: December 31 (in millions) 1994 1993 Assets/liabilities ----------------------------------- $465.3 $555.3 Year Ended December 31 (in millions) 1994 1993 Revenues/total benefits and expenses ----------------- $804.5 $897.0 3. Investments
The major categories of net investment income are as follows: Year Ended December 31 (in millions) 1995 1994 1993 Fixed maturity securities --------------------- $1,853.6 $1,614.9 $1,757.6 Equity securities ----------------------------- 30.3 29.9 28.9 Mortgage loans on real estate ----------------- 272.0 277.2 297.2 Real estate ----------------------------------- 117.9 104.4 82.3 Policy loans ---------------------------------- 37.9 34.0 37.3 Invested cash --------------------------------- 83.6 55.8 39.6 Other investments ----------------------------- 43.2 54.5 33.4 Investment revenue -------------------------- 2,438.5 2,170.7 2,276.3 Investment expense ---------------------------- 152.8 159.4 129.8 Net investment income ----------------------- $2,285.7 $2,011.3 $2,146.5
The realized gain (loss) on investments is as follows: Year Ended December 31 (in millions) 1995 1994 1993 Fixed maturity securities available-for-sale: Gross gain ----------------------------------- $ 257.7 $ 87.8 $ 142.3 Gross loss ----------------------------------- (95.8) (331.2) (13.3) Equity securities available-for-sale: Gross gain ----------------------------------- 160.6 92.6 225.8 Gross loss ----------------------------------- (60.0) (80.8) (69.1) Fixed maturity securities held for investment: Gross gain ----------------------------------- -- -- 248.9 Gross loss ----------------------------------- -- -- (75.8) Other investments------------------------------ 61.9 19.6 (166.7) Related restoration or amortization of deferred acquisition costs and provision for policy- holder commitments --------------------------- (108.8) 81.2 (23.7) Total -------------------------------------- $ 215.6 $(130.8) $ 268.4
-45- Provisions (credits) for write-downs and net changes in provisions for losses, which are included in the realized gain (loss) on investments shown above, are as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Fixed maturity securities --------------------- $ 19.9 $ 19.5 $ 60.0 Equity securities ----------------------------- 3.7 8.7 1.6 Mortgage loans on real estate ----------------- 14.2 18.2 140.6 Real estate ----------------------------------- (9.2) 14.9 33.4 Other long-term investments ------------------- (4.6) 1.7 4.3 Guarantees ------------------------------------ (2.6) 2.5 1.4 Total --------------------------------------- $ 21.4 $ 65.5 $241.3
The change in unrealized appreciation (depreciation) on investments in fixed maturity and equity securities is as follows: Year Ended December 31 (in millions) 1995 1994 1993 Fixed maturity securities available-for-sale - $2,448.9 $(2,295.1) $1,717.5 Equity securities available-for-sale --------- 138.2 (93.3) (32.7) Fixed maturity securities held for investment -- -- (1,130.3) Total -------------------------------------- $2,587.1 $(2,388.4) $ 554.5
The cost, gross unrealized gain and loss, and fair value of securities available-for-sale are as follows:
Fair December 31 (in millions) Cost Gain Loss Value 1995: Corporate bonds -------------------- $14,011.4 $1,262.3 $ 31.2 $15,242.5 U.S. Government bonds -------------- 1,033.1 115.0 .1 1,148.0 Foreign governments bonds ---------- 1,273.2 98.6 9.7 1,362.1 Mortgage-backed securities: Mortgage pass-through securities - 1,175.0 45.6 3.4 1,217.2 Collateralized mortgage obligations --------------------- 4,089.0 266.9 3.8 4,352.1 Other mortgage-backed securities - 2.7 .4 .1 3.0 State and municipal bonds ---------- 2,238.1 154.0 2.0 2,390.1 Redeemable preferred stocks -------- 113.0 7.0 .5 119.5 Total fixed maturity securities -- 23,935.5 1,949.8 50.8 25,834.5 Equity securities ------------------ 936.1 232.4 3.7 1,164.8 Total ---------------------------- $24,871.6 $2,182.2 $ 54.5 $26,999.3
1994: Corporate bonds -------------------- $12,166.7 $170.8 $ 544.9 $11,792.6 U.S. Government bonds -------------- 1,673.1 7.5 47.8 1,632.8 Foreign governments bonds ---------- 624.3 6.1 18.5 611.9 Mortgage-backed securities: Mortgage pass-through securities - 1,265.0 7.9 46.8 1,226.1 Collateralized mortgage obligations --------------------- 3,944.4 83.3 153.6 3,874.1 Other mortgage-backed securities - 6.1 1.1 1.0 6.2 State and municipal bonds ---------- 2,386.2 46.2 54.7 2,377.7 Redeemable preferred stocks -------- 128.3 -- 5.6 122.7 Total fixed maturity securities -- 22,194.1 322.9 872.9 21,644.1 Equity securities ------------------ 948.1 135.2 44.7 1,038.6 Total ---------------------------- $23,142.2 $458.1 $ 917.6 $22,682.7
-46- Future maturities of fixed maturity securities available-for-sale are as follows:
1995 Fair December 31 (in millions) Cost Value Due in one year or less ------------------------------ $ 501.3 $ 506.3 Due after one year through five years ---------------- 3,987.7 4,197.9 Due after five years through ten years --------------- 6,421.4 6,873.6 Due after ten years ---------------------------------- 7,758.4 8,684.4 Subtotal ------------------------------------------- 18,668.8 20,262.2 Mortgage-backed securities --------------------------- 5,266.7 5,572.3 Total ---------------------------------------------- $23,935.5 $25,834.5
The foregoing data is based on stated maturities. Actual maturities will differ in some cases because borrowers may have the right to call or pre-pay obligations. At December 31, 1995, the current par, amortized cost and estimated fair value of investments in mortgage-backed securities summarized by interest rates of the underlying collateral are as follows:
Current Fair December 31 (in millions) Par Cost Value Below 7% ------------------------------- $ 374.3 $ 356.8 $ 361.1 7% - 8% -------------------------------- 1,547.4 1,473.7 1,517.2 8% - 9% -------------------------------- 1,710.9 1,660.4 1,770.9 Above 9% ------------------------------- 1,829.4 1,775.8 1,923.1 Total -------------------------------- $5,462.0 $5,266.7 $5,572.3
The quality ratings of fixed maturity securities available-for-sale are as follows:
December 31 1995 Treasuries and AAA ----------------------------------- 34.6% AA --------------------------------------------------- 11.1 A ---------------------------------------------------- 26.2 BBB -------------------------------------------------- 22.0 BB --------------------------------------------------- 3.2 Less than BB ----------------------------------------- 2.9 100.0%
Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that LNC will be unable to collect all amounts due according to the contractual terms of the loan agreement. When LNC determines that a loan is impaired, a provision for loss is established for the difference between the carrying value of the mortgage loan and the estimated value. Estimated value is based on either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price or the fair value of the collateral. The provision for losses is reported as realized gain (loss) on investments. Mortgage loans deemed to be uncollectible are charged against the allowance for losses and subsequent recoveries, if any, are credited to the allowance for losses. The allowance for losses is maintained at a level believed adequate by management to absorb estimated probable credit losses. Management's periodic evaluation of the adequacy of the allowance for losses is based on LNC's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay (including the timing of future payments), the estimated value of the underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires estimating the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. -47- Impaired loans along with the related allowance for losses are as follows:
December 31 (in millions) 1995 1994 Impaired loans with allowance for losses --------- $150.9 $275.8 Allowance for losses ----------------------------- (29.6) (62.7) Impaired loans with no allowance for losses ------ 2.2 2.3 Net impaired loans ----------------------------- $123.5 $215.4
Impaired loans with no allowance for losses are a result of 1) direct write- downs or 2) collateral dependent loans where the fair value of the collateral is greater than the recorded investment in loans. A reconciliation of the mortgage loan allowance for losses for these impaired mortgage loans is as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Balance at beginning of year -------------------- $ 62.7 $226.6 $134.5 Provisions for losses --------------------------- 14.2 18.2 76.5 Provision for adoption of FAS 114 --------------- -- -- 64.1 Releases due to write-downs --------------------- (11.9) -- -- Releases due to sales --------------------------- (20.2) (163.2) (12.4) Releases due to foreclosures -------------------- (15.2) (18.9) (36.1) Balance at end of year ------------------------ $ 29.6 $ 62.7 $226.6
The average recorded investment in impaired loans and the interest income recognized on impaired loans were as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Average recorded investment in impaired loans ---- $189.6 $498.1 $734.4 Interest income recognized on impaired loans ----- 16.9 38.3 48.5
All interest income on impaired loans was recognized on the cash basis of income recognition. As of December 31, 1995 and 1994, LNC had restructured loans of $62,500,000 and $36,200,000, respectively. LNC recorded $6,300,000 and $800,000 interest income on these restructured loans in 1995 and 1994, respectively. Interest income in the amount of $6,600,000 and $3,900,000 would have been recorded on these loans according to their original terms in 1995 and 1994, respectively. As of December 31, 1995 and December 31, 1994, LNC had no outstanding commitments to lend funds on restructured loans. As of December 31, 1995, LNC's investment commitments for fixed maturity securities (primarily private placements), mortgage loans on real estate and real estate were $546,900,000. Fixed maturity securities available-for-sale, mortgage loans on real estate and real estate with a combined carrying value at December 31, 1995 of $8,000,000 were non-income producing for the year ended December 31, 1995. The cost information for mortgage loans on real estate, real estate and other long-term investments are net of allowances for losses. The balance sheet account for other liabilities includes a reserve for guarantees of third-party debt. The amount of allowances and reserves for such items is as follows:
December 31 (in millions) 1995 1994 Mortgage loans on real estate ------------------------- $ 29.6 $ 62.7 Real estate ------------------------------------------- 58.0 78.6 Other long-term investments --------------------------- 13.6 23.8 Guarantees -------------------------------------------- 7.1 13.1
-48- 4. Federal Income Taxes The Federal income tax expense (benefit) before cumulative effect of accounting change is as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Current -------------------------------------- $206.8 $(93.9) $308.2 Deferred ------------------------------------- (62.4) 120.3 (135.7) Total -------------------------------------- $144.4 $ 26.4 $172.5
Cash paid for Federal income taxes in 1995, 1994 and 1993 was $38,300,000, $70,900,000 and $279,700,000, respectively. The cash paid in 1995 is net of a $147,400,000 cash refund related to the carryback of 1994 capital losses to prior years. The effective tax rate on pre-tax income before cumulative effect of accounting change is lower than the prevailing corporate Federal income tax rate. A reconciliation of this difference is as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Tax rate times pre-tax income ----------------- $219.3 $131.7 $205.7 Effect of: Tax-exempt investment income ------------------ (70.0) (74.0) (75.8) Loss (gain) on sale of affiliates/ operating property --------------------------- -- (17.1) 34.5 Other items ----------------------------------- ( 4.9) (14.2) 8.1 Provision for income taxes ------------------ $144.4 $ 26.4 $172.5 Effective tax rate -------------------------- 23% 7% 29%
The Federal income tax recoverable (liability) is as follows:
December 31 (in millions) 1995 1994 Current ----------------------------------------------- $ (7.2) $ 94.4 Deferred ---------------------------------------------- (121.2) 302.5 Total ----------------------------------------------- $(128.4) $ 396.9
Significant components of LNC's net deferred tax asset (liability) are as follows:
December 31 (in millions) 1995 1994 Deferred tax assets: Policy liabilities and accruals and contractholder funds --------------------------------- $1,032.2 $ 696.2 Net operating loss ------------------------------------ 120.7 143.9 Loss on investments ----------------------------------- 16.3 30.1 Net unrealized loss on securities available-for-sale -- -- 159.3 Postretirement benefits other than pensions ----------- 56.6 54.6 Other ------------------------------------------------- 91.7 131.3 Total deferred tax assets --------------------------- 1,317.5 1,215.4 Valuation allowance for deferred tax assets ----------- -- (135.6) Net deferred tax assets ----------------------------- 1,317.5 1,079.8 Deferred tax liabilities: Deferred acquisition costs ---------------------------- 415.0 741.3 Premiums and fees receivable -------------------------- 44.6 32.8 Net unrealized gain on securities available-for-sale--- 717.0 -- Present value of business in-force -------------------- 148.7 -- Other ------------------------------------------------- 113.4 3.2 Total deferred tax liabilities ---------------------- 1,438.7 777.3 Net deferred tax asset (liability) ------------------ $ (121.2)$ 302.5
-49 At December 31, 1995, LNC had net operating loss carryforwards of $227,300,000 for income tax purposes related to its foreign life reinsurance companies that expire in years 2005 through 2009. Delaware Management Holdings, Inc. ("Delaware"), acquired in 1995, has net operating loss carryforwards for income tax purposes of $117,500,000 at December 31, 1995, which expire during the periods 2002 through 2010. These carryforwards will only be available to reduce the respective taxable income of the foreign life reinsurance companies and Delaware. LNC is required to establish a "valuation allowance" for any portion of its deferred tax assets which are unlikely to be realized. At December 31, 1994, $159,300,000 of deferred tax assets relating to net unrealized capital losses on fixed maturity and equity securities available-for-sale were available to be recorded in shareholders' equity before considering a valuation allowance. For Federal income tax purposes, capital losses may only be used to offset capital gains in the current year or during a three year carryback and five year carryforward period. Due to these restrictions, and the uncertainty at that time of future capital gains, these deferred tax assets were substantially offset by a valuation allowance of $135,600,000. By December 31, 1995, the fair values of fixed maturity and equity securities available- for-sale were greater than the cost basis resulting in unrealized capital gains. Accordingly, no valuation allowance was established as of December 31, 1995, since management believes it is more likely than not that LNC will realize the benefit of its deferred tax assets. Prior to 1984, a portion of the life companies' current income was not subject to current income tax, but was accumulated for income tax purposes in a memorandum account designated as "policyholders' surplus." The total of the life companies' balances in their respective "policyholders' surplus" accounts at December 31, 1983 of $222,400,000 was "frozen" by the Tax Reform Act of 1984 and, accordingly, there have been no additions to the accounts after that date. That portion of current income on which income taxes have been paid will continue to be accumulated in a memorandum account designated as "shareholders' surplus," and is available for dividends to shareholders without additional payment of tax. The December 31, 1995 total of the life companies' account balances for their "shareholders' surplus" was $1,643,800,000. Should dividends to shareholders for each life company exceed its respective "shareholders' surplus," amounts would need to be transferred from its respective "policyholders' surplus" and would be subject to Federal income tax at that time. In connection with the 1993 sale of a life insurance affiliate (see note 11 on page 65) $8,800,000 was transferred from policyholders' surplus to shareholders' surplus and current income tax of $3,100,000 was paid. Under existing or foreseeable circumstances, LNC neither expects nor intends that distributions will be made from the remaining balance in "policyholders' surplus" of $213,600,000 that will result in any such tax. Accordingly, no provision for deferred income taxes has been provided by LNC on its "policyholders' surplus" account. In the event that such excess distributions were made, it is estimated that income taxes of approximately $74,800,000 would be due. Undistributed earnings of certain LNC foreign subsidiaries that are considered to be indefinitely reinvested amounted to approximately $135,000,000 at December 31, 1995. Accordingly, no provisions for U.S. income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, LNC would be subject to both U.S. income taxes (subject to adjustments for foreign tax credits) and withholding taxes payable to the applicable foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculations. -50- 5. Supplemental Financial Data The balance sheet captions, "Real Estate" and "Property and Equipment," are shown net of allowances for depreciation as follows:
December 31 (in millions) 1995 1994 Real estate ----------------------------------------- $ 58.7 $ 41.9 Property and equipment ------------------------------ 228.5 221.0
At December 31, 1995, property and equipment is also net of a $28,300,000 valuation allowance for operating property held-for-sale. Details underlying the balance sheet caption, "Contractholder Funds," are as follows:
December 31 (in millions) 1995 1994 Premium deposit funds ------------------------------- $18,489.6 $16,982.6 Undistributed earnings on participating business ---- 91.9 63.5 Other ----------------------------------------------- 203.0 204.3 Total --------------------------------------------- $18,784.5 $17,250.4
A reconciliation of the present value of business in-force for LNC's insurance subsidiaries included in other intangible assets is as follows:
December 31 (in millions) 1995 1994 1993 Balance at beginning of year ----------------- $ 38.0 $ 67.7 $ 27.7 Acquisitions of insurance companies ---------- 388.7 -- 49.3 Divestitures of insurance companies ---------- -- (25.5) -- Interest accrued on unamortized balance ------ 30.7 3.6 3.2 Amortization of asset ------------------------ (50.0) (7.8) (12.5) Balance at end of year --------------------- 407.4 38.0 67.7 Other intangible assets (non-insurance) ------ 121.5 4.8 5.8 Total other intangible assets at end of year ---------------------------- $528.9 $ 42.8 $ 73.5
Future estimated amortization of the present value of business in-force for LNC's insurance subsidiaries is as follows (in millions):
1996 - $66.5 1998 - $40.4 2000 - $ 38.2 1997 - 60.1 1999 - 40.1 Thereafter - 162.1
A reconciliation of the beginning of year and end of year liability for property-casualty claims and claim expenses is as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Total liability reported at beginning of year - $2,702.5 $2,810.1 $2,672.5 Reinsurance recoverable following the adoption of FAS 113 in 1993 ------------------ 203.1 225.5 -- Liability for claims and claim expenses at beginning of year, net of reinsurance -- 2,499.4 2,584.6 2,672.5 Plus: Provision for claims and claim expenses arising in the current year, net of reinsurance ------ 1,234.0 1,340.6 1,433.3 Decrease in estimated claims and claim expenses arising in prior years, net of reinsurance --- (24.5) (78.2) (26.5) Total incurred claims and claim expenses, net of reinsurance ------------------------ 1,209.5 1,262.4 1,406.8 Less: Claims and claim expense payments arising in the current year, net of reinsurance ------ 613.2 619.4 633.5 Payments for claims and claim expenses arising in prior years, net of reinsurance --- 689.4 728.2 861.2 Total payments, net of reinsurance ---------- 1,302.6 1,347.6 1,494.7 Total liability for claims and claim expenses at end of year, net of reinsurance --------- 2,406.3 2,499.4 2,584.6 Reinsurance recoverable ------------------------ 189.0 203.1 225.5 Total liability reported at end of year ----- $2,595.3 $2,702.5 $2,810.1
-51- The reconciliation shows a decrease of $24,500,000, $78,200,000, and $26,500,000 to the December 31, 1994, 1993 and 1992 liability for claims and claim expenses, respectively, arising in prior years. Such reserve adjustments, which affected current operations during 1995, 1994 and 1993, respectively, resulted from developed claims for prior years being different than were anticipated when the liabilities for claims and claim expenses were originally estimated. The favorable development trends are reflective of the changes in underwriting practices adopted during the last three years. These development trends have been considered in establishing current year reserves. Details underlying the balance sheet captions, "Short-term and Long-term Debt," are as follows:
December 31 (in millions) 1995 1994 Short-term debt: Commercial paper ------------------------------------ $301.9 $107.2 Other short-term notes ------------------------------ 123.4 152.7 Current portion of long-term debt ------------------- 1.5 100.3 Total short-term debt ----------------------------- $426.8 $360.2 Long-term debt less current portion: 7 1/8% notes payable, due 1999 ---------------------- $ 99.4 $ 99.2 7 5/8% notes payable, due 2002 ---------------------- 99.2 99.1 7 1/4% notes payable, due 2005 ---------------------- 199.0 -- 9 1/8% notes payable, due 2024 ---------------------- 199.1 199.1 Mortgages and other notes payable ------------------- 62.6 76.8 Total long-term debt ------------------------------ $659.3 $474.2
The commercial paper outstanding at December 31, 1995 and 1994, had a weighted average interest rate of approximately 6.00% and 5.90%, respectively. Future maturities of long-term debt are as follows (in millions): 1996 - $ 1.5 1998 - $ 18.8 2000 - $ .4 1997 - 21.1 1999 - 100.5 Thereafter - 523.0 LNC maintains a revolving credit agreement with a group of domestic and foreign banks in the aggregate amount of $500,000,000. At December 31, 1995, this agreement, which expires in September 2000, provides for interest on borrowings based on various money market indices. Under the terms of this agreement, LNC must maintain a prescribed level of adjusted consolidated net worth. In addition, debt levels must remain below 45% of adjusted consolidated net worth. At December 31, 1995, LNC had no outstanding borrowings under this agreement. During 1995, 1994 and 1993, fees paid for maintaining revolving credit agreements amounted to $649,000, $1,000,000, and $1,300,000, respectively. Cash paid for interest for 1995, 1994 and 1993 was $73,200,000, $47,900,000, and $44,200,000, respectively. Reinsurance transactions included in the income statement caption, "Insurance Premiums," are as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Insurance assumed --------------------------- $1,297.6 $1,159.9 $986.1 Insurance ceded ----------------------------- 448.7 482.9 291.1 Net reinsurance premiums ------------------ $ 848.9 $ 677.0 $695.0
The income statement caption, "Benefits and Settlement Expenses," is net of reinsurance recoveries of $422,600,000, $284,700,000 and $174,000,000 for the years ended December 31, 1995, 1994 and 1993, respectively. The income statement caption, "Underwriting, Acquisition, Insurance and Other Expenses," includes amortization of deferred acquisition costs of $687,300,000, $598,300,000 and $571,800,000 for the years ended December 31, 1995, 1994 and 1993, respectively. An additional $(85,200,000), $81,200,000 and $(23,700,000) of deferred acquisition costs was restored (amortized) and netted against "Realized Gain (Loss) on Investments" for the years ended December 31, 1995, 1994 and 1993, respectively. -52- 6. Employee Benefit Plans Pensions Plans - U.S. LNC maintains funded defined benefit pension plans for most of its U.S. employees and, prior to January 1, 1995, full-time agents. The benefits for employees are based on total years of service and the highest 60 months of compensation during the last 10 years of employment. The benefits for agents were based on a percentage of each agent's yearly earnings. The plans are funded by contributions to tax-exempt trusts. LNC's funding policy is consistent with the funding requirements of Federal law and regulations. Contributions are intended to provide not only the benefits attributed to service to date, but also those expected to be earned in the future. Plan assets consist principally of listed equity securities and corporate obligations and government bonds. All benefits applicable to the funded defined benefit plan for agents were frozen as of December 31, 1994. The curtailment of this plan did not have a significant effect on net pension cost for 1994. Effective January 1, 1995, pension benefits for agents have been provided by a new defined contribution plan. Contributions to this plan are based on 2.3% of an agent's earnings up to the social security wage base and 4.6% of any excess. LNC also sponsors three types of unfunded, nonqualified, defined benefit plans for certain U.S. employees, agents and directors. A supplemental retirement plan provides defined benefit pension benefits in excess of limits imposed by Federal tax law. A salary continuation plan provides certain officers of LNC defined pension benefits based on years of service and final monthly salary upon death or retirement. A retirement plan for outside directors provides benefits based on years of service and the amount of the retainer paid during the last year of service. The status of the funded defined benefit pension plans and the amounts recognized on the balance sheets are as follows:
December 31 (in millions) 1995 1994 Actuarial present value of benefit obligation: Vested benefits ---------------------------------------- $(369.7) $(287.9) Nonvested benefits ------------------------------------- (20.8) (16.1) Accumulated benefit obligation ----------------------- (390.5) (304.0) Effect of projected future compensation increases ------ (99.4) (63.3) Projected benefit obligation ------------------------- (489.9) (367.3) Plan assets at fair value ------------------------------ 449.6 356.1 Projected benefit obligations in excess of plan assets ------------------------------- (40.3) (11.2) Unrecognized net loss ---------------------------------- 43.2 6.8 Unrecognized prior service cost ------------------------ 3.0 3.1 Prepaid (accrued) pension cost included in other liabilities ----------------------------------- $ 5.9 $ (1.3)
The status of the unfunded defined benefit pension plans and the amounts recognized on the balance sheets are as follows:
December 31 (in millions) 1995 1994 Actuarial present value of benefit obligation: Vested benefits --------------------------------------- $(25.4) $(18.1) Nonvested benefits ------------------------------------ (3.3) (3.1) Accumulated benefit obligation ---------------------- (28.7) (21.2) Effect of projected future compensation increases ----- (7.5) (6.7) Projected benefit obligation ------------------------ (36.2) (27.9) Unrecognized transition obligation -------------------- .2 .3 Unrecognized net loss --------------------------------- 7.3 1.7 Unrecognized prior service cost ----------------------- .4 .5 Accrued pension cost included in other liabilities -- $(28.3) $(25.4)
-53- The determination of the projected benefit obligation for the defined benefit plans was based on the following assumptions:
December 31 1995 1994 1993 Weighted-average discount rate ---------------------- 7.0% 8.0% 7.0% Rate of increase in compensation: Salary continuation plan ---------------------------- 6.0 6.5 6.0 All other plans ------------------------------------- 5.0 5.0 5.0 Expected long-term rate of return on plan assets ---- 9.0 9.0 9.0
The components of net pension cost for the defined benefit pension plans are as follows: Year Ended December 31 (in millions) 1995 1994 1993 Service cost-benefits earned during the year -------- $17.0 $22.1 $20.3 Interest cost on projected benefit obligation ------- 32.0 30.0 27.9 Actual return on plan assets ------------------------ (82.4) 9.7 (42.1) Net amortization (deferral)-------------------------- 52.4 (40.2) 11.8 Net pension cost ---------------------------------- $19.0 $21.6 $17.9
Pension Plan - Non U.S. The employees of LNC's primary foreign subsidiary are covered by a defined benefit pension plan. The plan provides death and pension benefits based on final pensionable salary. At December 31, 1995, plan assets exceeded the projected benefit obligations by $9,020,000 and were included in other assets in LNC's balance sheet. At December 31, 1994, the projected benefit obligation exceeded plan assets by $3,631,000 and was included with other liabilities in LNC's balance sheet. Net pension cost for the foreign plans was $1,727,000, $633,000 and $1,112,000, for 1995, 1994 and 1993, respectively. 401(k) Plan. LNC and its subsidiaries also sponsor contributory defined contribution plans for eligible U.S. employees and agents. LNC's contributions to the plans are equal to a participant's pre-tax contribution, not to exceed 6% of base pay, multiplied by a percentage, ranging from 25% to 150%, which varies according to certain incentive criteria as determined by LNC's Board of Directors. Expense for these plans amounted to $20,700,000, $29,400,000 and $26,300,000 in 1995, 1994 and 1993, respectively. Postretirement Medical and Life Insurance Benefit Plans. LNC sponsors unfunded defined benefit plans that provide postretirement medical and life insurance benefits to full-time U.S. employees and agents who, depending on the plan, have worked for LNC 10 to 15 years and attained age 55 to 60. Medical benefits are also available to spouses and other dependents of employees and agents. For medical benefits, limited contributions are required from individuals retired prior to November 1, 1988; contributions for later retirees, which can be adjusted annually, are based on such items as years of service at retirement and age at retirement. The life insurance benefits are noncontributory, although participants can elect supplemental contributory benefits. The status of the postretirement medical and life insurance benefit plans and the amount recognized on the balance sheet is as follows:
December 31 (in millions) 1995 1994 Accumulated postretirement benefit obligation: Retirees -------------------------------------------- $ (88.7) $ (86.6) Fully eligible active plan participants ------------- (24.2) (21.6) Other active plan participants ---------------------- (40.0) (34.0) Accumulated postretirement benefit obligation ----- (152.9) (142.2) Unrecognized gain ----------------------------------- (6.3) (12.6) Accrued plan cost included in other liabilities --- $(159.2) $(154.8)
-54- The components of periodic postretirement benefit cost are as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Service cost ------------------------------------------- $ 3.1 $ 4.3 $ 5.0 Interest cost ------------------------------------------ 9.7 10.4 10.7 Amortized cost (credit) -------------------------------- (2.0) .3 -- Net periodic postretirement benefit cost ------------- $10.8 $15.0 $15.7
The calculation of the accumulated postretirement benefit obligation assumes a weighted-average annual rate of increase in the per capita cost of covered benefits (i.e. health care cost trend rate) of 9.5% for 1996 gradually decreasing to 5.5% by 2004 and remaining at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point each year would increase the accumulated postretirement benefit obligation as of December 1995 and 1994 by $11,100,000 and $10,300,000, respectively, and the aggregate of the estimated service and interest cost components of net periodic postretirement benefit cost for the year ended December 31, 1995 by $1,100,000. The calculation assumes a long-term rate of increase in compensation of 5.0% for both December 31, 1995 and 1994. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.0% and 8.0% for December 31, 1995 and 1994, respectively. Incentive Plans. LNC has various incentive plans for key employees and agents of LNC and its subsidiaries which provide for the issuance of stock options, stock appreciation rights, restricted stock awards and stock incentive awards. These plans are comprised primarily of stock option incentive plans. Stock options granted under the stock option incentive plans are at the market value at the date of grant and, subject to termination of employment, expire 10 years from the date of grant. Such options are not transferable other than on death and are exercisable one year from date of grant for options issued prior to 1992. Options issued subsequent to 1991 are exercisable in 25% increments on the option issuance anniversary in the four years following issuance. Financial Accounting Standard No. 123 entitled "Accounting for Stock-Based Compensation" ("FAS 123") issued in October 1995, was adopted by LNC as of December 31, 1995. The provisions of FAS 123 allow companies to either expense the estimated fair value of stock options or to continue their current practice but disclose the pro forma effects on net income and earnings per share had the fair value of the options been expensed. LNC has elected to continue its practice of recognizing compensation expense for its stock option incentive plans using the intrinsic value based method of accounting (see note 1 on page 42) and to provide the required pro forma information for stock options granted after December 31, 1994. Accordingly, no compensation expense has been recognized for stock option incentive plans. Had compensation expense for LNC's stock option incentive plans for options granted after December 31, 1994 been determined based on the estimated fair value at the grant dates for awards under those plans, LNC's pro forma net income and earnings per share for 1995 would have been $479,786,000 and $4.61, respectively (a decrease of $2,400,000 and $.02, respectively). The effects on 1995 pro forma net income and earnings per share of expensing the estimated fair value of stock options are not necessarily representative of the effects on reported net income for future years due to such things as the vesting period of the stock options and the potential for issuance of additional stock options in future years. The fair value of options granted after December 31, 1994, used as a basis for the above pro forma disclosures, was estimated as of the date of grant using a Black-Scholes option pricing model. The option pricing assumptions include a dividend yield of 4.4%; an expected volatility of 22%; a risk-free interest rate of 6.3%; and an expected life of 5 years. The weighted-average fair value per option granted during 1995 was $7.15. -55- Information with respect to the incentive plans involving stock options is as follows: Options Outstanding Weighted- Shares Average Available Exercise for Grant Shares Price Balance at January 1, 1993 ----- 2,020,096 2,150,834 $25.34 Granted ------------------------ (570,600) 570,600 39.75 Exercised ---------------------- -- (260,756) 24.29 Expired ------------------------ (1,000) -- -- Forfeited ---------------------- 28,276 (18,826) 28.68 Restricted stock awarded ------- (144,154) -- Balance at December 31, 1993 - 1,332,618 2,441,852 28.80 Additional authorized ---------- 7,650,000 Granted ------------------------ (442,100) 442,100 39.49 Exercised ---------------------- -- (122,963) 25.43 Expired ------------------------ (7,000) -- -- Forfeited ---------------------- 105,203 (88,800) 33.76 Restricted stock awarded ------- (215,707) -- Balance at December 31, 1994 - 8,423,014 2,672,189 30.56 Granted ------------------------ (510,150) 510,150 42.57 Exercised ---------------------- -- (313,612) 25.70 Expired ------------------------ (5,273) (275) 19.97 Forfeited ---------------------- 175,446 (36,172) 34.64 Restricted stock awarded ------- (335,126) -- -- Balance at December 31, 1995 - 7,747,911 2,832,280 33.21
Shares under options that were exercisable at year-end are as follows: December 31 1995 1994 1993 Options exercisable ------------- 1,647,872 1,615,839 1,497,502
Information with respect to incentive plan stock options outstanding at December 31, 1995 is as follows:
Options Outstanding Options Exercisable Weighted- Average Weighted- Number Weighted- Range of Number Out- Remaining Average Exercisable Average Exercise standing at Contractual Exercise at Exercise Prices Dec 31, 1995 Life(Years) Price Dec 31, 1995 Price $10-$20 70,330 1.87 $19.25 70,330 $19.25 21- 30 1,325,649 4.30 25.88 1,212,699 25.71 31- 40 940,901 7.14 39.59 357,843 39.66 41- 50 495,400 9.36 42.70 7,000 43.19 $10-$50 2,832,280 1,647,872
7. Restrictions, Commitments and Contingencies Statutory Information and Restrictions Net income as determined in accordance with statutory accounting practices for LNC's insurance subsidiaries was as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Life-health insurance --------------------- $314.0 $411.7 $229.7 Property-casualty insurance --------------- 182.0 167.9 247.6
Life-health insurance statutory net income for 1995, 1994 and 1993, excluding LNC's foreign life reinsurance companies, was $350,400,000, $411,100,000 and $267,200,000, respectively. Shareholders' equity as determined in accordance with statutory accounting practices for LNC's insurance subsidiaries was as follows:
December 31 (in millions) 1995 1994 Life-health insurance --------------------- $1,908.5 $1,966.7 Property-casualty insurance --------------- 1,004.2 955.7
-56- LNC's insurance subsidiaries are subject to certain insurance department regulatory restrictions as to the transfer of funds and payments of dividends to LNC. In 1996, LNC's insurance subsidiaries can transfer up to $518,100,000 without seeking prior approval from the insurance regulators. Environmental Losses Total property-casualty liabilities for unpaid claims and claim expenses were $2,595,000,000 and $2,703,000,000 at December 31, 1995 and 1994, respectively. These liabilities include a liability for environmental losses of $256,000,000 and $201,000,000, respectively. In establishing liabilities for claims and claim expenses related to environmental matters, management considers facts currently known and the current state of the law and coverage litigation. Liabilities are recognized for known claims (including the cost of related litigation) when sufficient information has been developed to indicate the involvement of a specific insurance policy and management can reasonably estimate its liability. In addition, liabilities have been established to cover additional exposures on both known and unasserted claims. Estimates of the liabilities are reviewed and updated continually. Developed case law and adequate claim history do not exist for a portion of LNC's environmental exposure, especially because significant uncertainty exists about the outcome of coverage litigation and whether past claims experience will be representative of future claims experience. Accordingly, although management believes the estimated reserve provided for environmental losses is adequate, it is reasonably possible that a change in estimate of required reserve levels could occur in the near term. It is not possible to provide a meaningful estimate of a range of possible outcomes at this time. Disability Income Claims The liability for disability income claims net of the related asset for amounts recoverable from reinsurers at December 31, 1995 and 1994 is a net liability of $1,541,000,000 and $815,800,000, respectively, excluding deferred acquisition costs. The bulk of the increase to this liability relates to the assumption of a large block of disability claim reserves and related assets during the third quarter of 1995. In addition, as indicated in note 2 on page 44, LNC strengthened its disability income reserves and wrote off certain related deferred acquisition costs in the fourth quarter of 1995. The reserves were established on the assumption that recent experience will continue in the future. If incidence levels or claim termination rates vary significantly from these assumptions, further adjustments to reserves may be required in the future. It is not possible to provide a meaningful estimate of a range of potential outcomes at this time. LNC reviews and updates the level of these reserves on an on-going basis. Compliance of Qualified Annuity Plans Tax authorities continue to focus on compliance of qualified annuity plans marketed by insurance companies. If sponsoring employers cannot demonstrate compliance and the insurance company is held responsible due to its marketing efforts, LNC and other insurers may be subject to potential liability. It is not possible to provide a meaningful estimate of the range of potential liability at this time. Management continues to monitor this matter and to take steps to minimize any potential liability. Group Pension Annuities The liabilities for guaranteed interest and group pension annuity contracts, which are no longer being sold, are supported by a single portfolio of assets which attempts to match the duration of these liabilities. Due to the very long-term nature of group pension annuities and the resulting inability to exactly match cash flows, a risk exists that future cash flows from investments will not be reinvested at rates as high as currently earned by the portfolio. This situation could cause losses which would be recognized at some future time. Leases Certain of LNC's subsidiaries lease their home office properties through sale-leaseback agreements. The agreements provide for a 25 year lease period with options to renew for six additional terms of five years each. The -57- agreements also provide LNC with the right of first refusal to purchase the properties during the term of the lease, including renewal periods, at a price as defined in the agreements. In addition, LNC has the option to purchase the leased properties at fair market value as defined in the agreements on the last day of the initial 25 year lease period ending in 2009 or the last day of any of the renewal periods. Total rental expense on operating leases in 1995, 1994 and 1993 was $65,600,000, $51,400,000 and $55,900,000, respectively. Future minimum rental commitments are as follows (in millions): 1996 - $62.5 1998 - $50.0 2000 - $ 46.2 1997 - 57.0 1999 - 48.3 Thereafter - 402.7
Insurance Ceded and Assumed LNC's insurance companies cede insurance to other companies. The portion of risks exceeding each company's retention limit is reinsured with other insurers. LNC seeks reinsurance coverage within the business segments that sell life insurance that limits its liabilities on an individual insured to $3,000,000. Since 1993, catastrophe reinsurance arrangements for property- casualty coverages provided for a recovery of an average of approximately 93% of losses in excess of $30,000,000 up to $180,000,000 per occurrence. To cover products other than life and property-casualty insurance, LNC acquires other insurance coverages with retentions and limits which management believes are appropriate for the circumstances. The accompanying financial statements reflect premiums, benefits and settlement expenses and deferred acquisition costs, net of insurance ceded (see note 5 on page 51). LNC's insurance companies remain liable if their reinsurers are unable to meet their contractual obligations under the applicable reinsurance agreements. Certain LNC insurance companies assume insurance from other companies. At December 31, 1995, LNC's insurance companies have provided $602,900,000 of statutory surplus relief to other insurance companies under reinsurance transactions. Generally, such amounts are offset by corresponding receivables from the ceding company, which are secured by future profits on the reinsured business. However, LNC's insurance companies are subject to the risk that the ceding company may become insolvent and the right of offset would not be permitted. Associated with these transactions, LNC's foreign insurance companies have obtained letters of credit in favor of various unaffiliated insurance companies from which LNC assumes business. This allows the ceding companies to take statutory reserve credit. The letters of credit issued by the banks represent a guarantee of performance under the reinsurance agreements. At December 31, 1995, there were $417,000,000 of outstanding bank letters of credit. In exchange for the letters of credits, LNC paid the banks approximately $2,100,000 in fees in 1995. Vulnerability from Concentrations At December 31, 1995, LNC did not have a material concentration of financial instruments in a single investee, industry or geographic location. Also at December 31, 1995, LNC did not have a concentration of 1) business transactions with a particular customer, lender or distributor, 2) revenues from a particular product or service, 3) sources of supply of labor or services used in the business or 4) a market or geographic area in which business is conducted that makes it vulnerable to an event that is at least reasonably possible to occur in the near term and which could cause a severe impact to LNC's financial condition, except for the market and geographic concentration described in the following paragraph. LNC writes personal and commercial lines of property and casualty insurance throughout the United States. As a result, LNC is always at risk that there could be significant losses arising in certain geographic areas from catastrophes, such as earthquakes and hurricanes. LNC seeks to protect itself from such events by purchasing catastrophe insurance. LNC's policies in-force providing earthquake, hurricane and related coverage in the midwest, western and southeastern coastal areas of the United States could expose LNC to losses exceeding its reinsurance limits. Although the exposure exists, LNC has not encountered losses in excess of its reinsurance limits during any year. -58- Other Contingency Matters LNC and its subsidiaries are involved in various pending or threatened legal proceedings arising from the conduct of their business. In some instances, these proceedings include claims for punitive damages and similar types of relief in unspecified or substantial amounts, in addition to amounts for alleged contractual liability or requests for equitable relief. After consultation with counsel and a review of available facts, it is management's opinion that these proceedings ultimately will be resolved without materially affecting the consolidated financial statements of LNC. Operations in the U.K. include the sale of pension products to individuals. Regulatory agencies have raised questions as to what constitutes appropriate advice to individuals who bought pension products as an alternative to participation in an employer sponsored plan. In cases of inappropriate advice, LNC may have to do extensive investigation and put the individual in a position similar to what would have been attained if the individual had remained in the employer sponsored plan. A liability has been established for the estimated cost of this issue following regulatory guidance as to activities to be undertaken. Although the provision is based on various estimates which are subject to considerable uncertainty and, accordingly, may prove to be deficient or excessive, it is management's opinion that such future development will not materially affect the consolidated results of operation. The number of insurance companies that are under regulatory supervision has resulted and is expected to continue to result in assessments by state guaranty funds to cover losses to policyholders of insolvent or rehabilitated companies. Mandatory assessments may be partially recovered through a reduction in future premium taxes in some states. LNC has accrued for expected assessments net of estimated future premium tax deductions. Guarantees LNC has guarantees with off-balance-sheet risks whose contractual amounts represent credit exposure. Outstanding guarantees with off-balance-sheet risks, shown in notional or contract amounts along with their carrying value and estimated fair values, are as follows:
Assets (Liabilities) Notional or Carrying Fair Carrying Fair Contract Amounts Value Value Value Value December 31 (in millions) 1995 1994 1995 1995 1994 1994 Industrial revenue bonds ------ $ 63.5 $100.9 $ (7.1)$ (2.3) $(13.1) $(12.5) Real estate partnerships ------ 6.4 20.8 -- -- -- -- Mortgage loan pass-through certificates ----------------- 63.6 78.2 -- -- -- -- Total guarantees ----------- $133.5 $199.9 $ (7.1)$ (2.3) $(13.1) $(12.5)
Certain subsidiaries of LNC have invested in real estate partnerships which use industrial revenue bonds to finance their projects. LNC has guaranteed the repayment of principal and interest on these bonds. Certain subsidiaries of LNC are also involved in other real estate partnerships that use conventional mortgage loans. In some cases, the terms of these arrangements involve guarantees by each of the partners to indemnify the mortgagor in the event a partner is unable to pay its principal and interest payments. In addition, certain subsidiaries of LNC have sold commercial mortgage loans through grantor trusts which issued pass-through certificates. These subsidiaries have agreed to repurchase any mortgage loans which remain delinquent for 90 days at a repurchase price substantially equal to the outstanding principal balance plus accrued interest thereon to the date of repurchase. It is management's opinion that the value of the properties underlying these commitments is sufficient that in the event of default the impact would not be material to LNC. Derivatives LNC has derivatives with off-balance-sheet risks whose notional or contract amounts exceed the credit exposure. LNC has entered into derivative transactions to reduce its exposure to fluctuations in interest rates, the widening of bond yield spreads over comparable maturity U.S. Government obligations and foreign exchange risks. In addition, LNC is subject to the risks associated with changes in the value of its derivatives; however, such changes in the value generally are offset by changes in the value of the items being hedged by such contracts. Outstanding derivatives with off-balance- -59- sheet risks, shown in notional or contract amounts along with their carrying value and estimated fair values, are as follows:
Assets (Liabilities) Notional or Carrying Fair Carrying Fair Contract Amounts Value Value Value Value December 31 (in millions) 1995 1994 1995 1995 1994 1994 Interest rate derivatives: Interest rate cap agreements -- $5,110.0 $4,400.0 $22.7 $5.3 $23.4 $34.5 Spread-lock agreements -------- 600.0 1,300.0 (.9) (.9) 3.2 3.2 Financial futures contracts --- 106.7 382.5 5.1 5.1 (7.5) (7.5) Interest rate swaps ----------- 5.0 5.0 .2 .2 .2 .2 Total interest rate derivatives ---------------- 5,821.7 6,087.5 27.1 9.7 19.3 30.4 Foreign currency derivatives: Forward exchange forward contracts Foreign subsidiary ----------- 398.8 138.3 (5.4) (5.4) (8.7) (8.7) Foreign investments ---------- 15.7 21.2 (.6) (.6) .2 .2 Foreign currency options ------ 99.2 -- 1.9 1.4 -- -- Foreign currency swaps -------- 15.0 -- .4 .4 -- -- Total foreign currency derivatives --------------- 528.7 159.5 (3.7) (4.2) (8.5) (8.5) Total derivatives ---------- $6,350.4 $6,247.0 $23.4 $5.5 $10.8 $ 21.9
A reconciliation and discussion of the notional or contract amounts for the significant programs using derivative agreements and contracts is as follows:
Interest Rate Caps Spread Locks December 31 (in millions) 1995 1994 1995 1994 Balance at beginning of year -------- $4,400.0 $3,800.0 $1,300.0 $1,700.0 New contracts ----------------------- 710.0 600.0 800.0 -- Terminations and maturities --------- -- -- (1,500.0) (400.0) Balance at end of year ------------ $5,110.0 $4,400.0 $ 600.0 $1,300.0
Foreign Exchange Forward Contracts Financial Futures (Foreign Contracts Options Subsidiary) December 31 (in millions) 1995 1994 1995 1994 1995 1994 Balance at beginning of year- $ 382.5 $ 33.1 $ -- $ -- $138.3 $101.3 New contracts --------------- 1,328.2 1,087.7 181.6 308.0 709.2 37.0 Terminations and maturities - (1,604.0) (738.3) (181.6)(308.0) (448.7) -- Balance at end of year ---- $ 106.7 $382.5 $ -- $ -- $398.8 $138.3
Foreign Currency Derivatives (Foreign Investments) Forward Exchange Foreign Foreign Forward Currency Currency Contracts Options Swaps December 31 (in millions) 1995 1994 1995 1994 1995 1994 Balance at beginning of year- $ 21.2 $ -- $ -- $ -- $ -- $ -- New contracts --------------- 131.1 38.5 356.6 -- 15.0 -- Terminations and maturities - (136.6) (17.3) (257.4) -- -- -- Balance at end of year ---- $ 15.7 $ 21.2 $ 99.2 $ -- $ 15.0 $ --
Interest Rate Caps. The interest rate cap agreements, which expire in 1997 through 2003, entitle LNC to receive payments from the counterparties on specified future reset dates, contingent on future interest rates. For each cap, the amount of such quarterly payments, if any, is determined by the excess of a market interest rate over a specified cap rate times the notional amount divided by four. The purpose of LNC's interest rate cap agreement program is to protect its annuity line of business from the effect of fluctuating interest rates. The premium paid for the interest rate caps is included in other assets ($22,700,000 as of December 31, 1995) and is being amortized over the terms of the agreements and is included in net investment income. Spread Locks. Spread-lock agreements in effect at December 31, 1995 all expire in 2005. Spread-lock agreements provide for a lump sum payment to or by LNC depending on whether the spread between the swap rate and a specified -60- U.S. Treasury note is larger or smaller than a contractually specified spread. Cash payments are based on the product of the notional amount, the spread between the swap rate and the yield of an equivalent maturity U.S. Treasury security and the price sensitivity of the swap at that time, expressed in dollars per basis point. The purpose of LNC's spread-lock program is to protect a portion of its fixed maturity securities against widening spreads. Financial Futures. LNC uses exchange-traded financial futures contracts and options on those financial futures to hedge against interest rate risks and to manage duration of a portion of its fixed maturity securities. Financial futures contracts obligate LNC to buy or sell a financial instrument at a specified future date for a specified price and may be settled in cash or through delivery of the financial instrument. Cash settlements on the change in market values of financial futures contracts are made daily. Options on financial futures give LNC the right, but not the obligation, to assume a long or short position in the underlying futures at a specified price during a specified time period. Foreign Exchange Forward Contracts (Foreign Subsidiary). LNC uses foreign exchange forward contracts, which are traded over-the-counter, to hedge the foreign exchange risk assumed with its investment in its U.K. subsidiary, Lincoln National (UK). LNC hedges its exposure to sterling in excess of $100,000,000 of its investment in Lincoln National (UK). The foreign exchange forward contracts obligate LNC to deliver a specified amount of currency at a future date at a specified exchange rate. Foreign Currency Derivatives (Foreign Investments). LNC uses a combination of foreign exchange forward contracts, foreign currency options, and foreign currency swaps, all of which are traded over-the-counter, to hedge some of the foreign exchange risk of investments in fixed maturity securities denominated in foreign currencies. The foreign currency forward contracts obligate LNC to deliver a specified amount of currency at a future date at a specified exchange rate. Foreign currency options give LNC the right, but not the obligation, to buy or sell a foreign currency at a specified exchange rate during a specified time period. A foreign currency swap is a contractual agreement to exchange the currencies of two different countries pursuant to an agreement to reexchange the two currencies at the same rate of exchange at a specified future date. Additional Derivative Information. Expenses for the agreements and contracts described above amounted to $9,100,000 and $7,400,000 in 1995 and 1994, respectively. Deferred losses of $17,900,000 as of December 31, 1995, resulting from 1) terminated and expired spread-lock agreements, 2) financial futures contracts and 3) options on financial futures, are included with the related fixed maturity securities to which the hedge applied and are being amortized over the life of such securities. LNC is exposed to credit loss in the event of nonperformance by counterparties on interest rate cap agreements, spread-lock agreements, interest rate swaps, foreign exchange forward contracts, foreign currency option and foreign currency swaps, but LNC does not anticipate nonperformance by any of the counterparties. The credit risk associated with such agreements is minimized by purchasing such agreements from financial institutions with long-standing, superior performance records. The amount of such exposure is essentially the net replacement cost or market value for such agreements with each counterparty if the net market value is in LNC's favor. At December 31, 1995, the exposure was $7.0 million. 8. Fair Value of Financial Instruments The following discussion outlines the methodologies and assumptions used to determine the estimated fair value of LNC's financial instruments. Considerable judgement is required to develop these fair values and, accordingly, the estimates shown are not necessarily indicative of the amounts that would be realized in a one time, current market exchange of all of LNC's financial instruments. Fixed Maturity and Equity Securities. Fair values for fixed maturity securities are based on quoted market prices, where available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, are estimated by discounting expected future cash flows using a -61- current market rate applicable to the coupon rate, credit quality, and maturity of the investments. The fair values for equity securities are based on quoted market prices. Mortgage Loans on Real Estate. The estimated fair value of mortgage loans on real estate was established using a discounted cash flow method based on credit rating, maturity and future income when compared to the expected yield for mortgages having similar characteristics. The ratings for mortgages in good standing are based on property type, location, market conditions, occupancy, debt service coverage, loan to value, caliber of tenancy, borrower and payment record. Fair values for impaired mortgage loans are measured based either on the present value of expected future cash flows discounted at the loan's effective interest rate, at the loan's market price or the fair value of the collateral if the loan is collateral dependent. Policy Loans. The estimated fair value of investments in policy loans was calculated on a composite discounted cash flow basis using Treasury interest rates consistent with the maturity durations assumed. These durations were based on historical experience. Other Investments, and Cash and Invested Cash. The carrying value for assets classified as other investments, and cash and invested cash in the accompanying balance sheets approximates their fair value. Investment Type Insurance Contracts. The balance sheet captions, "Future Policy Benefits, Claims and Claim Expenses" and "Contractholder Funds," include investment type insurance contracts (i.e. deposit contracts and guaranteed interest contracts). The fair values for the deposit contracts and certain guaranteed interest contracts are based on their approximate surrender values. The fair values for the remaining guaranteed interest and similar contracts are estimated using discounted cash flow calculations based on interest rates currently being offered on similar contracts with maturities consistent with those remaining for the contracts being valued. The remainder of the balance sheet captions, "Future Policy Benefits, Claims and Claim Expenses" and "Contractholder Funds," that do not fit the definition of "investment type insurance contracts" are considered insurance contracts. Fair value disclosures are not required for these insurance contracts and have not been determined by LNC. It is LNC's position that the disclosure of the fair value of these insurance contracts is important in that readers of these financial statements could draw inappropriate conclusions about LNC's shareholders' equity determined on a fair value basis if only the fair value of assets and liabilities defined as financial instruments are disclosed. LNC and other companies in the insurance industry are monitoring the related actions of the various rule-making bodies and attempting to determine an appropriate methodology for estimating and disclosing the "fair value" of their insurance contract liabilities. Short-term and Long-term Debt. Fair values for long-term debt issues are estimated using discounted cash flow analysis based on LNC's current incremental borrowing rate for similar types of borrowing arrangements. For short-term debt, the carrying value approximates fair value. Guarantees. LNC's guarantees include guarantees related to industrial revenue bonds, real estate partnerships and mortgage loan pass-through certificates. Based on historical performance where repurchases have been negligible and the current status, which indicates none of the loans are delinquent, the fair value liability for the guarantees related to the mortgage loan pass-through certificates is insignificant. Fair values for all other guarantees are based on fees that would be charged currently to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties' credit standing. Derivatives. LNC's derivatives include interest rate cap agreements, spread- lock agreements, foreign currency exchange contracts, financial futures contracts, options on financial futures, interest rate swaps, foreign currency options and foreign currency swaps. Fair values for these contracts are based on current settlement values. The current settlement values are based on quoted market prices for the foreign currency exchange contracts, financial futures contracts and options on financial futures, and on brokerage quotes, which utilized pricing models or formulas using current assumptions, for all other swaps and agreements. -62- Investment Commitments. Fair values for commitments to make investments in fixed maturity securities (primarily private placements), mortgage loans on real estate and real estate are based on the difference between the value of the committed investments as of the date of the accompanying balance sheets and the commitment date, which would take into account changes in interest rates, the counterparties' credit standing and the remaining terms of the commitments. The carrying values and estimated fair values of LNC's financial instruments are as follows:
Carrying Fair Carrying Fair Value Value Value Value December 31 (in millions) 1995 1995 1994 1994 Assets (liabilities): Fixed maturities securities -------- $25,834.5 $25,834.5 $21,664.1 $21,664.1 Equity securities ------------------ 1,164.8 1,164.8 1,038.6 1,038.6 Mortgage loans on real estate ------ 3,186.9 3,371.9 2,853.1 2,776.7 Policy loans ----------------------- 602.6 594.7 550.7 529.8 Other investments ------------------ 371.8 371.8 175.1 175.1 Cash and invested cash ------------- 1,572.9 1,572.9 1,041.6 1,041.6 Investment type insurance contracts: Deposit contracts and certain guaranteed interest contracts --- (15,620.2)(15,410.2)(14,294.7)(14,052.5) Remaining guaranteed interest and similar contracts ----------- (3,024.0) (3,125.1) (2,485.5) (2,423.9) Short-term debt -------------------- (426.8) (426.8) (360.2) (360.2) Long-term debt --------------------- (659.3) (713.4) (474.2) (462.1) Guarantees ------------------------- (7.1) (2.3) (13.1) (12.5) Derivatives ------------------------ 23.4 5.5 10.8 21.9 Investment commitments ------------- -- .8 -- (.5)
As of December 31, 1995 and 1994, the carrying value of the deposit contracts and certain guaranteed contracts is net of deferred acquisition costs of $336,000,000 and $399,000,000, respectively, excluding adjustments for deferred acquisition costs applicable to changes in fair value of securities. The carrying values of these contracts are stated net of deferred acquisition costs in order that they be comparable with the fair value basis. 9. Segment Information LNC has four business segments: Life Insurance and Annuities, Reinsurance, Property-Casualty and Investment Management. The Life Insurance and Annuities segment offers universal life, pension products and other individual coverages through a network of career agents, independent general agencies, and insurance agencies located within a variety of financial institutions. These products are sold throughout the United States by LNC's U.S.-based companies and similar products are offered within the United Kingdom by LNC's U.K.-based companies. Reinsurance sells reinsurance products and services to insurance companies, HMOs, self-funded employers and other primary risk accepting organizations in the U.S. and economically attractive international markets. Effective in the fourth quarter of 1995, operating results of the direct disability income business previously included in the Life Insurance and Annuities segment, is now included in the Reinsurance segment. This direct disability income business, which is no longer being sold, is now managed by the Reinsurance segment along with its disability income business. The Property-Casualty segment writes both commercial and personal coverages throughout most of the United States through a network of independent agencies. The Investment Management segment offers a variety of asset management services to institutional and retail customers primarily throughout the United States. Prior to the sale of 71% of the ownership of its primary writer of employee life-health benefit coverages in 1994 (see note 11 on page 65), the Employee Life-Health Benefits segment distributed group life and health insurance, managed health care and other related coverages through career agents and independent general agencies. Activity which is not included in the major business segments is shown as "Other Operations." "Other Operations" includes operations not directly related to the business segments and unallocated corporate items (i.e., corporate investment income, interest expense on corporate debt and unallocated overhead expenses). LNC's other operations also included 1) the equity in the earnings of a 29% owned unconsolidated affiliate engaged in the life-health benefit business prior to -63- the sale of this interest in 1995 and 2) the earnings of its investment management companies prior to the formation of the Investment Management segment in April 1995 as a result of the acquisition of Delaware Management Holdings, Inc. See note 11 on page 65. The revenue, pre-tax income and assets by segment for 1993 through 1995 are as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Revenue: Life Insurance and Annuities ----------- $3,058.6 $2,615.4 $2,858.3 Reinsurance ---------------------------- 1,362.4 1,197.4 1,033.5 Property-Casualty ---------------------- 1,954.9 1,971.4 2,240.6 Investment Management ------------------ 192.7 -- -- Employee Life-Health Benefits ---------- -- 314.9 1,297.3 Other Operations ----------------------- 64.7 80.8 (36.9) Total revenue ------------------------ $6,633.3 $6,179.9 $7,392.8 Income (loss) before income taxes and cumulative effect of accounting change: Life Insurance and Annuities ----------- $472.4 $106.7 $344.3 Reinsurance ---------------------------- (65.6) 102.9 27.5 Property-Casualty ---------------------- 190.4 177.2 257.6 Investment Management ------------------ 36.0 -- -- Employee Life-Health Benefits ---------- -- 22.9 86.0 Other Operations ----------------------- (6.6) (33.4) (127.6) Total income before income taxes and cumulative effect of accounting change ------------------- $626.6 $376.3 $587.8 December 31 (in millions) 1995 1994 1993 Assets: Life Insurance and Annuities ----------- $52,465.8 $40,758.4 $38,711.7 Reinsurance ---------------------------- 5,220.3 2,653.5 2,671.9 Property-Casualty ---------------------- 5,126.0 4,966.6 5,550.5 Investment Management ------------------ 632.4 -- -- Employee Life-Health Benefits ---------- -- -- 679.7 Other Operations ----------------------- (186.8) 486.3 211.3 Total assets ------------------------- $63,257.7 $48,864.8 $47,825.1
Provisions for depreciation and capital additions were not material. Substantially all of LNC's foreign operations are conducted by Lincoln National (UK) plc, a United Kingdom company. Revenue, income before income taxes and cumulative effect of accounting change, and assets disclosed above applicable to LNC's U.K. operations are as follows:
Year Ended December 31 (in millions) 1995 1994 1993 Revenue -------------------------------- $351.5 $409.1 $307.8 Income before income taxes and cumulative effect of accounting change --------------------- 72.5 29.1 19.4 December 31 (in millions) 1995 1994 1993 Assets --------------------------------- $6,114.1 $1,788.4 $1,683.8
All earnings from LNC's U.K. operations have been retained in the U.K. Foreign intracompany revenue is not significant. 10. Shareholders' Equity LNC's common and preferred stock is without par value. All of the issued and outstanding series A preferred stock is $3 Cumulative Convertible and is convertible at any time into shares of common stock at a conversion rate of eight shares of common stock for each share of series A preferred stock, subject to adjustment for certain events. The series A preferred stock is redeemable at the option of LNC at $80 per share plus accrued and unpaid dividends. -64- Outstanding series A preferred stock has full voting rights, subject to adjustment if LNC is in default as to the payment of dividends. If LNC is liquidated or dissolved, holders of series A preferred stock will be entitled to payments of $80.00 per share. The difference between the aggregate preference on liquidation value and the financial statement balance for the series A preferred stock was $1,900,000 at December 31, 1995. On June 30, 1995, the owner of LNC's series E and F preferred stock (Dai-ichi, Mutual Life Insurance Company), which was 5 1/2% cumulative convertible exchangeable, converted its entire holdings of series E and F preferred stock to LNC common stock. Based on a conversion rate of two shares of common stock for each share of series E and F preferred stock, 2,201,443 shares of series E and 2,216,454 shares of series F were converted into 8,835,794 shares of common stock. LNC has outstanding one common share purchase right ("Right") on each outstanding share of LNC's common stock. A Right will also be issued with each share of LNC's common stock that becomes outstanding prior to the time the Rights become exercisable or expire. If a person or group acquires beneficial ownership of 20% or more or announces an offer that would result in beneficial ownership of 30% or more of LNC's outstanding common stock, the Rights become exercisable and each Right will entitle its holder to purchase one share of LNC's common stock for $75. If LNC is acquired in a business combination transaction, each Right will entitle its holder to purchase, for $75, common shares of the acquiring company having a market value of $150. Alternatively, if a 20% holder were to acquire LNC by means of a reverse merger in which LNC and its stock survive or were to engage in certain "self-dealing" transactions, each Right not owned by the 20% holder would entitle its holder to purchase, for $75, common stock of LNC having a market value of $150. LNC can redeem each Right for one cent at any time prior to its becoming exercisable. The Rights expire in November 1996. As of December 31, 1995, there were 104,185,117 Rights outstanding. During February 1993, LNC issued 9,200,000 shares of common stock. The proceeds of this offering, net of issuance costs, were $316,100,000. During November 1994, LNC purchased and retired 500,000 shares of common stock at a total cost of $18,400,000. During May 1994, LNC's Articles of Incorporation were amended to increase the number of authorized shares of common stock from 400,000,000 to 800,000,000. Earnings per share are computed based on the average number of common shares outstanding during each year (1995 - 104,115,650; 1994 - 103,863,196; 1993 - 102,307,356) after assuming conversion of any outstanding series A, E and F preferred stock. The effect of stock options is not dilutive in the computation of earnings per share. Details underlying the balance sheet caption "Net Unrealized Gain (Loss) on Securities Available-for-Sale," are as follows:
December 31 (in millions) 1995 1994 Fair value of securities available-for-sale ------------- $26,999.3 $22,682.7 Cost of securities available-for-sale ------------------- 24,871.6 23,142.2 Unrealized Gain (Loss) -------------------------------- 2,127.7 (459.5) Adjustments to deferred acquisition costs --------------- (515.3) 162.1 Amounts required to satisfy policyholder commitments ---- (555.0) 14.1 Deferred income credits (taxes) ------------------------- (359.2) 107.8 Valuation allowance for deferred tax assets ------------- -- (135.6) Net unrealized gain (loss) on securities available-for-sale ----------------------------------- $ 698.2 $ (311.1)
Adjustments to deferred acquisition costs and amounts required to satisfy policyholder commitments are netted against the Deferred Acquisition Costs asset account and included with the Future Policy Benefits, Claims and Claim Expenses liability account on the balance sheet, respectively. -65- 11. Acquisitions and Sales of Affiliates/Operating Property In December 1993, LNC recorded a provision for loss of $98,500,000 (also $98,500,000 after-tax) in the "Other Operations" segment for the sale of Security-Connecticut Corporation ("Security-Connecticut"). The sale was completed on February 2, 1994 through an initial public offering and LNC received cash and notes, net of related expenses, totaling $237,700,000. The loss on sale and disposal expenses did not differ materially from the estimate recorded in the fourth quarter of 1993. For the year ended December 31, 1993, Security-Connecticut, which operated in the Life Insurance and Annuities segment, had revenues of $274,500,000 and net income of $24,000,000. In 1994, LNC completed the sale of 71% of EMPHESYS (parent company of Employers Health Insurance Company, which comprised LNC's Employee Life-Health Benefit segment) for $244,700,000 of cash, net of related expenses, and a $50,000,000 promissory note. A gain on sale of $48,800,000 (also $48,800,000 after-tax) was recognized in 1994 in "Other Operations". For the year ended December 31, 1993, EMPHESYS had revenues of $1,304,700,000 and net income of $55,300,000. EMPHESYS had revenue and net income of $314,900,000 and $14,400,000, respectively, during the three months of ownership in 1994. In October 1995, LNC completed the sale of its remaining 29% ownership in EMPHESYS. As a result of this transaction, LNC received cash of $186,900,000 and recorded pre-tax gain on sale of $89,700,000 ($58,300,000 after-tax) in the "Other Operations" segment. In April 1995, LNC completed the acquisition of Delaware Management Holdings, Inc. ("Delaware"). Delaware provides a variety of asset management services through its operating companies. The purchase price, including LNC's expenses associated with the acquisition, was $305,000,000. This acquisition also involved the assumption of $25,000,000 in short-term debt and $180,000,000 (face amount) in long-term debt. In May 1995, this debt was repaid from the proceeds of an LNC debt offering of $200,000,000 plus available cash. This acquisition, which was accounted for using purchase accounting, resulted in goodwill of $339,900,000 and other intangible assets of $131,500,000. The results of Delaware's operations are included in LNC's consolidated financial statements from April 3, 1995. The Delaware acquisition agreement included a provision for contingent payments of $22,500,000 based on the levels of future investment management revenues. Any such additional payments would be accounted for as goodwill. In January and April 1995, LNC completed the acquisitions of Liberty Life Assurance Company and Laurentian Financial Group plc, respectively. These companies provide unit-linked life and pension products in the United Kingdom. The combined purchase price was $274,500,000 including the assumption of $44,000,000 in debt. These acquisitions, which were accounted for using purchase accounting, resulted in other intangible assets of $388,700,000. The results of these operations are included in LNC's consolidated financial statements from their respective purchase dates. In October 1995, LNC approved a realignment plan for its Property-Casualty segment, which includes consolidating its field operations from 20 divisional offices to four regional offices. Certain of the locations will remain service offices. Those office buildings owned by LNC that will not be used as regional offices are expected to be sold. Management has estimated that the pre-tax costs of realignment and the loss on sale of the office buildings will approximate $21,100,000 and $28,300,000, respectively ($13,700,000 and $18,400,000 after-tax, respectively). Accordingly, income before cumulative effect of accounting change and net income decreased by $32,100,000 during the fourth quarter of 1995. 12. Subsequent Event. In January 1996, LNC announced that it had signed a definitive agreement to acquire the group tax-sheltered annuity business of UNUM Corporation's affiliates. This purchase is expected to be completed in the form of a reinsurance transaction with an initial ceding commission of approximately $70,000,000. This ceding commission represents the present value of business in-force and, accordingly, will be classified as other intangible assets upon the close of this transaction. This transaction, which is expected to close in the third quarter of 1996, will increase LNC's assets and policy liabilities and accruals by approximately $3,200,000,000. -66- Report of Ernst & Young LLP, Independent Auditors Board of Directors Lincoln National Corporation We have audited the accompanying consolidated balance sheets of Lincoln National Corporation as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lincoln National Corporation at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in note 2 to the consolidated financial statements, in 1993 the Corporation changed its method for accounting for postretirement benefits other than pensions, accounting for impairment of loans, and accounting for certain investments in debt and equity securities. Ernst & Young LLP Fort Wayne, Indiana February 7, 1996 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no disagreements with LNC's independent auditors which are reportable pursuant to Item 304 of Regulation S-K. -67- PART III Item 10. Directors and Executive Officers of the Registrant Information for this item relating to directors of LNC is incorporated by reference to the sections captioned "NOMINEES FOR DIRECTOR", "DIRECTORS CONTINUING IN OFFICE" and "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934", of LNC's Proxy Statement for the Annual Meeting scheduled for May 9, 1996. Executive Officers of the Registrant as of March 1, 1996 were as follows: Name Position with LNC and Business Experience (Age)** During the Past Five Years Ian M. Rolland Chairman and Director, LNC since 1992. (63) President and Director, LNC (1975-1991). Chief Executive Officer, LNC since 1977. Robert A. Anker President, Chief Operating Officer and Director, (54) LNC since 1992. President and Chief Executive Officer, American States* (1990-1991). Jon A. Boscia President, Chief Operating Officer, Lincoln Life* (44) since 1994. Executive Vice President, LNC (1991- 1994). President, Lincoln National Investment Management Company ("LNIC")* (1991-1994). Executive Vice President, LNIC* (1985-1991). George E. Davis Senior Vice President, LNC since 1993. (53) Vice President, Eastman Kodak Co. (1985-1993). Jack D. Hunter Executive Vice President, LNC since 1986. General (59) Counsel since 1971. Barbara S. Kowalczyk Senior Vice President, LNC since 1994. (45) Senior Vice President, LNIC* (1992-1994). Vice President LNIC* (1985-1992). F. Cedric McCurley Chairman and Chief Executive officer, American (61) States* since 1995. President and Chief Executive Officer, American States* (1992-1995). Executive Vice President, American States* (1986-1991). H. Thomas McMeekin Executive Vice President, LNC since 1994. (43) President, LNIC* since 1994. Senior Vice President, LNC (1992-1994). Executive Vice President, LNIC* (February 1992-November 1992). Senior Vice President, LNIC* (1987-1992). Jeffrey J. Nick Managing Director, Lincoln National (UK) PLC* since (43) 1992. Senior Vice President, LNC (1990-1993). Richard S. Robertson Executive Vice President, LNC since 1986. (54) Gabriel L. Shaheen Executive Vice President, Lincoln Life* since 1994. (42) Senior Vice President, Lincoln Life* 1991-1994), Vice President, Lincoln Life* (1987-1991). Donald L. Van Wyngarden Second Vice President & Controller, LNC since 1975. (56) Richard C. Vaughan Executive Vice President and Chief Financial (46) Officer, LNC since 1995. Senior Vice President and Chief Financial Officer, LNC (1992-1994). Senior Vice President, Lincoln Life* (1990-1992). Vice President, EQUICOR, Inc. (1988-1990). * Denotes a subsidiary of LNC ** Age shown is based on nearest birthdate to March 1, 1996. -68- There is no family relationship between any of the foregoing executive officers, all of whom are elected annually. Item 11. Executive Compensation Information for this item is incorporated by reference to the section cap- tioned "EXECUTIVE COMPENSATION" of LNC's Proxy Statement for the Annual Meeting scheduled for May 9, 1996. Item 12. Security Ownership of Certain Beneficial Owners and Management Information for this item is incorporated by reference to the sections captioned "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS" and "SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS" of LNC's Proxy Statement for the Annual Meeting scheduled for May 9, 1996. Item 13. Certain Relationships and Related Transactions Information for this item is incorporated by reference to the section cap- tioned "TERMINATION OF EMPLOYMENT ARRANGEMENT" of LNC's Proxy Statement for the Annual Meeting scheduled for May 9, 1996. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K Item 14(a)(1) Financial Statements The following consolidated financial statements of Lincoln National Corpora- tion and subsidiaries are included in Item 8: Consolidated Balance Sheets - December 31, 1995 and 1994 Consolidated Statements of Income - Years ended December 31, 1995, 1994 and 1993 Consolidated Statements of Shareholders' Equity - Years ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows - Years ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Item 14(a)(2) Financial Statement Schedules The following consolidated financial statement schedules of Lincoln National Corporation and subsidiaries are included in Item 14(d): I - Summary of Investments - Other than Investments in Related Parties II - Condensed Financial Information of Registrant III - Supplementary Insurance Information IV - Reinsurance V - Valuation and Qualifying Accounts VI - Supplementary Information Concerning Property-Casualty Insurance Operations All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the required information is included in the consolidated financial statements, and therefore have been omitted. -69- Item 14(a)(3) Listing of Exhibits The following exhibits of Lincoln National Corporation and subsidiaries are included in Item 14(c) - (Note: The numbers preceding the exhibits correspond to the specific numbers within Item 601 of Regulation S-K.): 3(a) The Articles of Incorporation of LNC as last amended May 12, 1994 are incorporated by reference to LNC's Form S-3/A (File No. 33-55379) filed with the Commission on September 15, 1994. 3(b) The Bylaws of LNC as last amended January 1, 1992 are incorporated by reference to Exhibit 3(b) of LNC's Form 10-K for the year ended December 31, 1991 filed with the Commission on March 27, 1992. 4(a) Indenture of LNC dated as of January 15, 1987 (Commission File No. 33-22658) is incorporated by reference to Exhibit 4(a) of LNC's Form 10-K for the year ended December 31, 1994, filed with the Commission on March 27, 1995. 4(b) First Supplemental Indenture dated as of July 1, 1992, to Indenture of LNC dated as of January 15, 1987, and Specimen Notes for LNC's 7 1/8% Notes due July 15, 1999 (Commission File No. 33-22658) are incorporated by reference to Annex B and Annex C of LNC's Form 8-K filed with the Commission on July 7, 1992. 4(c) First Supplemental Indenture dated as of July 1, 1992, to Indenture of LNC dated as of January 15, 1987, and Specimen Notes for LNC's 7 5/8% Notes due July 15, 2002 (Commission File No. 33-22658) are incorporated by reference to Annex B and Annex D of LNC's Form 8-K filed with the Commission on July 7, 1992. 4(d) Rights Agreement dated November 7, 1986 is incorporated by reference to Exhibit 4(e) of LNC's Form 10-K for the year ended December 31, 1994, filed with the Commission on March 27, 1995. 4(e) Indenture of LNC dated as of September 15, 1994, between LNC and The Bank of New York, as Trustee, is incorporated by reference to Exhibit No. 4(c) of LNC's S-3/A (File No. 33-55379), filed with the Commission on September 15, 1994. 4(f) Form of Note is incorporated by reference to Exhibit No. 4(d) to LNC's Registration Statement on Form S-3/A (File No. 33-55379), filed with the Commission on September 15, 1994. 4(g) Form of Zero Coupon Security is incorporated by reference to Exhibit No. 4(f) of LNC's Registration Statement on Form S-3/A (File No. 33-55379), filed with the Commission on September 15, 1994. 4(h) Specimen of LNC's 9 1/8% Debentures due October 1, 2024 (Commission File No. 33-55379) is incorporated by reference to Schedule I of LNC's Form 8-K filed with the Commission on September 29, 1994. 4(i) Specimen of LNC's 7 1/4% Debenture due May 15, 2005 (Commission File Nos. 33-55379 and 33-59785) is incorporated by reference to Schedule III of LNC's Form 8-K filed with the Commission on May 17, 1995. 10(a)* The Lincoln National Corporation 1986 Stock Option Incentive Plan (Commission File No. 33-13445 and 33-62315) as last amended and restated effective May 12, 1994 is incorporated by reference to Exhibit No.1 of LNC's Proxy filed with the Commission on March 31, 1994. 10(b)* The Lincoln National Corporation 1982 Stock Option Incentive Plan (Commission File No. 2-77599) as last amended May 7, 1987 is incorporated by reference to Exhibit 10(b) of LNC's Form 10-K for the year ended December 31, 1993, filed with the Commission on March 30, 1994. -70- 10(c)* The Lincoln National Corporation Executives' Salary Continuation Plan as last amended January 1, 1992 is incorporated by reference to Exhibit 10(c) of LNC's Form 10-K for the year ended December 31, 1992, filed with the Commission on March 30, 1993. 10(d)* The Lincoln National Corporation Executive Value Sharing Plan is incorporated by reference to Exhibit No. 4 of LNC's Proxy filed with the Commission on March 31, 1994. 10(e)* Lincoln National Corporation Executives' Severance Benefit Plan as last amended and restated effective November 9, 1995. 10(f)* The Lincoln National Corporation Outside Directors Retirement Plan as last amended March 15, 1990. 10(g)* The Lincoln National Corporation Outside Directors Benefits Plan is incorporated by reference to Exhibit 10(h) of LNC's Form 10-K for the year ended December 31, 1992, filed with the Commission on March 30, 1993. 10(h)* Lincoln National Corporation Executive Savings and Profit Sharing Plan as amended January 1, 1992 is incorporated by reference to Exhibit 10(o) of LNC's Form 10-K for the year ended December 31, 1992, filed with the Commission on March 30, 1993. 10(i)* Lincoln National Corporation 1993 Stock Plan for Non-Employee Directors (File No. 33-58113) as last amended and restated effective May 10, 1995. 10(j)* Lincoln National Corporation Executives' Excess Compensation Benefit Plan is incorporated by reference to Exhibit 10(r) of LNC's Form 10-K for the year ended December 31, 1993, filed with the Commission on March 30, 1994. 10(k)* American States Executives Salary Continuation Plan as amended and restated effective May 2, 1995. 10(l) Lease and Agreement dated August 1, 1984, with respect to the American States' Home Office property. 10(m) Lease and Agreement dated August 1, 1984, with respect to LNL's Home Office property located at Magnavox Way, Fort Wayne, Indiana. 10(n) Lease and Agreement dated August 1, 1984, with respect to LNL's Home Office properties located at Clinton Street and Harrison Street, Fort Wayne, Indiana. 10(o) Lease and Agreement dated December 1, 1994 with respect to LNC's Corporate Office located at 200 East Berry Street, Fort Wayne, Indiana are incorporated by reference to Exhibit 10(p) of LNC's Form 10-K for the year ended December 31, 1994, filed with the Commission on March 27, 1995. *This exhibit is a management contract or compensatory plan or arrangement required to be filed as an exhibit to this form pursuant to Item 14(c) of this report. 11 Computation of Per Share Earnings. 21 List of Subsidiaries of LNC. 23 Consent of Ernst & Young LLP, Independent Auditors. 27 Financial Data Schedule. 28 Information from Reports Furnished to State Insurance. Regulatory Authorities. (Data shown on this report is on a "Combined" basis and does not include data for subsidiaries sold.) -71- Item 14(b) During the fourth quarter of the year ended December 31, 1995, no reports on Form 8-K were filed with the Commission. Item 14(c) The exhibits of Lincoln National Corporation and subsidiaries are listed in Item 14(a)(3) above. Item 14(d) The financial statement schedules for Lincoln National Corporation and subsidiaries follow on pages through 72 - 79. -72-
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE I - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES December 31, 1995 (000's omitted) Col. A Col. B Col. C Col. D Amount at Which Shown in the Type of Investment Cost Value Balance Sheet Fixed maturity securities available-for-sale: Bonds: United States Government and government agencies and authorities ------------- $ 1,033,093 $ 1,148,014 $ 1,148,014 States, municipalities and political subdivisions ------ 2,238,122 2,390,061 2,390,061 Mortgage-backed securities --- 5,266,736 5,572,348 5,572,348 Foreign governments ---------- 1,273,242 1,362,130 1,362,130 Public utilities ------------- 2,852,436 3,072,978 3,072,978 Convertibles and bonds with warrants attached ------ 181,431 199,658 199,658 All other corporate bonds ---- 10,977,471 11,969,779 11,969,779 Redeemable preferred stocks ---- 112,996 119,508 119,508 Total ----------------------- 23,935,527 25,834,476 25,834,476 Equity securities available-for-sale: Common stocks: Public utilities ------------- 18,381 22,170 22,170 Banks, trusts and insurance companies --------- 97,406 115,586 115,586 Industrial, miscellaneous and all other --------------- 597,473 771,821 771,821 Nonredeemable preferred stocks - 222,864 255,267 255,267 Total Equity Securities ----- 936,124 1,164,844 1,164,844 Mortgage loans on real estate ---- 3,216,464 3,186,872(A) Real estate: Investment properties ---------- 659,390 659,390 Acquired in satisfaction of debt ---------- 174,551 116,522(A) Policy loans --------------------- 602,573 602,573 Other investments ---------------- 385,409 371,765(A) Total Investments ----------- $29,910,038 $31,936,442 (A) Investments which are deemed to have declines in value that are other than temporary are written down or reserved for to reduce their carrying value to their estimated realizable value.
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LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT BALANCE SHEETS Lincoln National Corporation (Parent Company Only) December 31 (000's omitted) 1995 1994 Assets: Investments in subsidiaries* ------------------ $5,086,708 $3,779,282 Investments ----------------------------------- 20,344 28,726 Investment in unconsolidated affiliate -------- -- 114,345 Cash and invested cash ------------------------ 466,776 523,132 Property and equipment ------------------------ 11,464 9,895 Accrued investment income --------------------- 7,866 211 Receivable from subsidiaries* ----------------- 67,024 66,724 Loans to subsidiaries* ------------------------ 143,462 36,480 Dividends receivable from subsidiaries* ------- -- 45,000 Goodwill -------------------------------------- 338,346 9,355 Other intangible assets ----------------------- 76,052 -- Other assets ---------------------------------- 12,419 10,184 Total Assets -------------------------------- $6,230,461 $4,623,334 Liabilities and Shareholders' Equity Liabilities: Cash collateral on loaned securities ---------- $ 199,000 $ 203,531 Dividends payable ----------------------------- 47,726 40,531 Short-term debt ------------------------------- 248,744 229,444 Long-term debt -------------------------------- 595,490 397,705 Loans from subsidiaries* ---------------------- 557,896 600,308 Federal income taxes (recoverable) payable ---- 69,328 (2,387) Accrued expenses and other liabilities -------- 134,155 112,142 Total Liabilities --------------------------- 1,852,339 1,581,274 Shareholders' Equity: Series A preferred stock ---------------------- 1,335 1,420 Series E preferred stock ---------------------- -- 151,206 Series F preferred stock ---------------------- -- 158,707 Common stock ---------------------------------- 889,476 555,382 Retained earnings ----------------------------- 2,775,718 2,479,532 Foreign currency translation adjustment ------- 13,413 6,890 Net unrealized gain (loss) on securities available-for-sale [including unrealized gain (loss) of subsidiaries: 1995 - $687,904 1994 - $(325,366)] - 698,180 (311,077) Total Shareholders' Equity ----------------- 4,378,122 3,042,060 Total Liabilities and Shareholders' Equity ---------------------- $6,230,461 $4,623,334 *Eliminated in consolidation.
These condensed financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes of Lincoln National Corporation and subsidiaries (see pages 34 through 65). -74-
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) STATEMENTS OF INCOME Lincoln National Corporation (Parent Company Only) Year Ended December 31 (000's omitted) 1995 1994 1993 Revenue: Dividends from subsidiaries* --------------- $538,515 $309,460 $155,980 Interest from subsidiaries* ---------------- 2,018 1,080 1,730 Equity in earnings of unconsolidated affiliate ------------------ 5,075 13,119 -- Net investment income ---------------------- 29,260 20,376 14,634 Realized gain (loss) on investments -------- 30,189 (20,016) 27,106 Gain on sale of affiliate/operating property to subsidiary* ------------------- 74,284 -- -- Other -------------------------------------- 1,292 1,373 (61) Total Revenue ---------------------------- 680,633 325,392 199,389 Expenses: Operating and administrative --------------- 41,884 40,919 21,682 Interest-subsidiaries* --------------------- 32,864 23,815 13,811 Interest-other ----------------------------- 63,624 45,976 41,136 Total Expenses --------------------------- 138,372 110,710 76,629 Income before Federal Income Tax Expense (Benefit), Equity in Income of Subsidiaries, Less Dividends and Cumulative Effect of Accounting Change ---- 542,261 214,682 122,760 Federal income tax expense (benefits) -------- 37,780 (36,574) (6,032) Income Before Equity in Income of Subsidiaries, Less Dividends and Cumulative Effect of Accounting Change ----------------------- 504,481 251,256 128,792 Equity in income of subsidiaries, less dividends ----------------------------------- (22,295) 98,642 286,491 Income Before Cumulative Effect of Accounting Change ----------------------- 482,186 349,898 415,283 Cumulative effect of accounting change: Parent company ------------------------------ -- -- (8,006) Subsidiaries -------------------------------- -- -- (88,425) Total Accounting Change ------------------ -- -- (96,431) Net Income ------------------------------- $482,186 $349,898 $318,852 *Eliminated in consolidation.
These condensed financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes of Lincoln National Corporation and subsidiaries (see pages 34 through 65). -75-
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) STATEMENTS OF CASH FLOWS Lincoln National Corporation (Parent Company Only) Year Ended December 31 (000's omitted) 1995 1994 1993 Cash Flows from Operating Activities: Net income ----------------------------------- $482,186 $349,898 $318,852 Adjustments to reconcile net income to net cash provided by operating activities: Equity in income of subsidiaries less than (greater than) distributions* --------------------------- 86,889 (63,642) (278,065) Equity in undistributed earnings of unconsolidated affiliate ----------------- (5,075) (13,119) -- Realized (gain) loss on investments ------- (30,189) 20,016 (27,106) Gain on sale of affiliate/ operating property ----------------------- (74,284) -- -- Cumulative effect of accounting change ---- -- -- 8,006 Other ------------------------------------- 47,967 (32,757) 23,375 Net Adjustments ------------------------- 25,308 (89,502) (273,790) Net Cash Provided by Operating Activities ------------------- 507,494 260,396 45,062 Cash Flows from Investing Activities: Net sales (purchases) of investments ------- 16,614 (22,106) 31,648 Cash collateral on loaned securities ------- (4,531) 14,275 9,547 Net investment in subsidiaries* ------------ (697,106) (2,744) (105,846) Sale of (Investment in) unconsolidated affiliate --------------------------------- 193,975 (103,470) -- Net (purchase) sale of property and equipment ----------------------------- (3,158) (5,109) (5,563) Other -------------------------------------- 17,675 7,379 3,147 Net Cash Used in Investing Activities ---- (476,531) (111,775) (67,067) Cash Flows from Financing Activities: Principal payments on long-term debt ------- -- (100,717) -- Issuance of long-term debt ----------------- 197,785 200,000 -- Net increase (decrease) in short-term debt - 19,300 (83,423) (207,231) Increase (decrease) in loans from subsidiaries* ----------------------------- (42,413) 271,841 (127,602) Decrease (increase) in loans to subsidiaries* ----------------------------- (106,982) (20,455) 34,725 Increase in receivables from subsidiaries* - (300) (3,889) (14,235) Public offering of common stock ------------ -- -- 316,100 Common stock issued for benefit plans ------ 24,096 29,985 26,230 Retirement of common stock ----------------- -- (18,395) -- Dividends paid to shareholders ------------- (178,805) (172,157) (156,235) Net Cash Provided by (Used in) Financing Activities -------------------- (87,319) 102,790 (128,248) Net Increase (Decrease) in Cash ---------- (56,356) 251,411 (150,253) Cash at beginning of year -------------------- 523,132 271,721 421,974 Cash at End of Year ---------------------- $466,776 $523,132 $271,721 *Eliminated in consolidation.
These condensed financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes of Lincoln National Corporation and subsidiaries (see pages 34 through 65). -76-
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION Column A Column B Column C Column D Column E Column F Column G Future Policy Other Benefits, Policy Deferred Claims and Claims and Net Acquisition Claim Unearned Benefits Premium Investment Segment Costs Expenses Premiums Payable Revenue (A) Income (B) --------------------------------(000's Omitted)--------------------------------- Year Ended December 31, 1995 Life Insurance and Annuities - $ 901,825 $ 7,408,160 $ 1,187 $ $1,288,002 $1,893,759 Reinsurance ------------------ 396,588 3,009,057 93,189 810,158 164,105 Property-Casualty ------------ 138,272 2,595,328 720,262 1,678,910 238,808 Investment Management (C) ---- 584 Other (incl. consol. adj's.) - (89,998) (1,258) (11,575) Total ---------------------- $1,436,685 $12,922,547 $813,380 $ -- $3,777,070 $2,285,681 Year Ended December 31, 1994 Life Insurance and Annuities - $1,600,811 $ 6,357,449 $ 11,201 $ $1,030,010 $1,635,891 Reinsurance (D) -------------- 329,042 1,542,857 63,202 1,034,380 125,447 Property-Casualty ------------ 140,122 2,702,537 732,101 1,710,563 241,096 Employee Life-Health Benefits(E) -- -- -- 299,338 10,838 Other (incl. consol. adj's.) - (66,331) (1,517) (1,921) Total ---------------------- $2,069,975 $10,536,512 $804,987 $ -- $4,074,291 $2,011,351 Year Ended December 31, 1993 Life Insurance and Annuities - $1,176,852 $7,305,262 $ 6,527 $ $ 969,579 $1,717,503 Reinsurance (D) -------------- 299,906 1,491,554 76,606 878,244 124,856 Property-Casualty ------------ 153,073 2,810,037 777,011 1,841,363 250,633 Employee Life-Health Benefits- 320,189 1,228,606 42,931 Other (incl. consol. adj's.) - (124,107) (1,339) 10,596 Total ---------------------- $1,629,831 $11,802,935 $858,805 $ -- $4,917,792 $2,146,519
Column A Column H Column I Column J Column K Amortiza- Benefits, tion of Claims, Deferred and Policy Ac- Other Claim quisition Operating Premiums Segment Expenses Costs Expenses (B) Written ----------------------(000's Omitted)----------------- Year Ended December 31, 1995 Life Insurance and Annuities - $1,815,242 $274,886 $ 499,897 Reinsurance ------------------ 1,088,438 59,910 279,724 Property-Casualty ------------ 1,209,463 352,503 198,758 $1,671,889 Investment Management (C) ---- 156,665 Other (incl. consol. adj's.) - 71,195 Total ---------------------- $4,113,143 $687,299 $1,206,239 Year Ended December 31, 1994 Life Insurance and Annuities - $1,904,352 $ 89,916 $ 514,384 Reinsurance (D) -------------- 809,819 147,226 138,988 Property-Casualty ------------ 1,262,400 361,195 169,049 $1,664,483 Employee Life-Health Benefits(E) 218,672 73,355 Other (incl. consol. adj's.) - 114,213 Total ---------------------- $4,195,243 $598,337 $1,009,989 Year Ended December 31, 1993 Life Insurance and Annuities - $1,883,656 $139,824 $ 371,756 Reinsurance (D) -------------- 774,429 42,549 311,690 Property-Casualty ------------ 1,406,781 384,185 187,654 $1,766,649 Employee Life-Health Benefits- 916,513 294,810 Other (incl. consol. adj's.) - 5,274 85,807 Total ---------------------- $4,981,379 $571,832 $1,251,717 (A) Includes insurance fees on universal life and other interest sensitive products. (B) The allocation of expenses between investments and other operations are based on a number of assumptions and estimates. Results would change if different methods were applied. (C) Includes data from the April 1, 1995 date when Investment Management segment was initiated because of the purchase of Delaware Management Holdings, Inc. (D) Amounts for 1993 and 1994 have been reclassified to conform to the 1995 presentation. (E) Includes data through the March 21, 1994 date of sale of the direct writer of employee life-health coverages.
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LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE IV - REINSURANCE (A) Column A Column B Column C Column D Column E Column F Ceded Assumed Percentage of Gross to Other from Other Net Amount Assumed Amount Companies Companies(B) Amount to Net -------------------------(000's Omitted)----------------------- Year Ended December 31, 1995 Life insurance in force ------------ $109,817,000 $34,292,000 $118,875,000 $194,400,000 61.1% Premiums: Life insurance (C) --------------- $ 934,121 $ 182,519 $ 536,400 $ 1,288,002 41.6% Health insurance ----------------- 308,189 212,472 714,441 810,158 88.2 Property-casualty insurance ------ 1,685,815 53,695 46,790 1,678,910 2.8 Total -------------------------- $2,928,125 $ 448,686 $1,297,631 $ 3,777,070 Year Ended December 31, 1994 Life insurance in force ------------ $93,505,000 $35,366,000 $106,161,000 $164,300,000 64.7% Premiums: Life insurance (C) --------------- $1,040,134 $ 47,022 $ 365,364 $1,358,476 26.9% Health insurance ----------------- 668,091 357,536 694,697 1,005,252 69.1 Property-casualty insurance ------ 1,689,070 78,381 99,874 1,710,563 5.8 Total -------------------------- $3,397,295 $482,939 $1,159,935 $4,074,291 Year Ended December 31, 1993 Life insurance in force ------------ $144,054,000 $46,255,000 $89,712,000 $187,511,000 47.8% Premiums: Life insurance (C) --------------- $1,086,349 $139,013 $ 351,435 $1,298,771 27.1% Health insurance ----------------- 1,376,038 80,731 482,351 1,777,658 27.1 Property-casualty insurance ------ 1,760,560 71,472 152,275 1,841,363 8.3 Total -------------------------- $4,222,947 $291,216 $ 986,061 $4,917,792 (A) Special-purpose bulk reinsurance transactions have been excluded. (B) Life and health insurance premiums assumed from other companies for the years ended December 31, 1993 and 1994 has been reclassified to conform to the 1995 presentation. (C) Includes insurance fees on universal life and other interest sensitive products.
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LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS Col. A Col. B Col. C Col. D Col. E Additions Balance at (1) (2) Balance at Beginning Charged to Costs Charged to Other Deductions- End of Description of Period Expenses(A) Accounts-Describe Describe(B) Period ------------------------------(000's Omitted)-------------------------------- Year Ended December 31, 1995 Deducted from Asset Accounts: Reserve for Mortgage Loans on Real Estate -------------------- $ 62,675 $ 2,288 $(35,371) $ 29,592 Reserve for Real Estate ------------ 78,638 (9,203) (11,406) 58,029 Reserve for Other Long-term Investments ----------------------- 23,776 (2,415) (7,717) 13,644 Reserve for Property and Equipment Held-for-Sale ----------- -- 28,350 -- 28,350 Included in Other Liabilities: Investment Guarantees -------------- 13,076 (2,617) (3,360) 7,099 Year Ended December 31, 1994 Deducted from Asset Accounts: Reserve for Mortgage Loans on Real Estate -------------------- $226,639 $ 18,232 $(182,196) $ 62,675 Reserve for Real Estate ------------ 121,427 14,861 (57,650) 78,638 Reserve for Other Long-term Investments ----------------------- 27,196 1,726 (5,146) 23,776 Included in Other Liabilities: Investment Guarantees -------------- 18,535 2,480 (7,939) 13,076 Year Ended December 31, 1993 Deducted from Asset Accounts: Reserve for Mortgage Loans on Real Estate -------------------- $134,476 $140,568 $(48,405) $226,639 Reserve for Real Estate ------------ 131,060 33,389 (43,022) 121,427 Reserve for Other Long-term Investments ----------------------- 40,307 4,321 (17,432) 27,196 Included in Other Liabilities: Investment Guarantees -------------- 30,033 1,427 (12,925) 18,535 (A) Excludes charges for the direct write-offs of assets. The negative amounts represent improvements in the underlying assets and guarantees for which valuation accounts had previously been established. (B) Deductions reflect sales or foreclosures of the underlying holdings.
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LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES SCHEDULE VI - SUPPLEMENTARY INFORMATION CONCERNING PROPERTY-CASUALTY INSURANCE OPERATIONS Column A Column B Column C Column D Column E Column F Column G Deferred Reserves for Discount, Affiliation Policy Unpaid Claims if any Net with Acquisition and Claim Deducted in Unearned Earned Investment Registrant Costs Expenses Column C Premiums Premium Income ----------------------------(000's Omitted)----------------------------------- Consolidated subsidiaries: Year Ended December 31, 1995 $138,272 $2,595,328 $ -- $720,262 $1,678,910 $238,808 Year Ended December 31, 1994 $140,122 $2,702,537 $ -- $732,101 $1,710,563 $241,096 Year Ended December 31, 1993 $153,073 $2,810,037 $ -- $777,011 $1,841,363 $250,633
Column A Column H Column I Column J Column K Claims and Claim Expenses (Credits) Amortization Incurred Related to of Deferred Paid Affiliation (1) (2) Policy Claims with Current Prior Acquisition and Claim Premium Registrant Year Years Costs Expenses Written ----------------------(000's omitted)-------------------------- Consolidated subsidiaries: Year Ended December 31, 1995 $1,234,000 $(24,500) $352,503 $1,302,600 $1,671,889 Year Ended December 31, 1994 $1,340,600 $(78,200) $361,195 $1,347,600 $1,664,483 Year Ended December 31, 1993 $1,433,270 $(26,489) $384,185 $1,494,764 $1,766,649
-80- LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES EXHIBIT INDEX FOR THE ANNUAL REPORT ON FORM 10-K For the Year Ended December 31, 1995 Exhibit Number 3(a) Articles of Incorporation of LNC as last amended May 12, 1994.* 3(b) Bylaws of LNC as last amended January 1, 1992.* 4(a) Indenture of LNC due January 15, 1987.* 4(b) Indenture for 7 1/8% due July 15, 1999 and Specimen Notes.* 4(c) Indenture for 7 5/8% Notes due July 15, 2002 and Specimen Notes.* 4(d) Rights Agreement dated November 7, 1986.* 4(e) Indenture of LNC dated as of September 15, 1994.* 4(f) Form of Note dated as of September 15, 1994* 4(g) Form of Zero Coupon Security dated as of September 15, 1994* 4(h) Specimen Debenture for 9 1/8% Notes due October 1, 2024.* 4(i) Specimen of 7 1/4% Debenture due May 15, 2005* 10(a) Lincoln National Corporation 1986 Stock Option Incentive Plan.* 10(b) Lincoln National Corporation 1982 Stock Option Incentive Plan.* 10(c) The Lincoln National Corporation Executives' Salary Continuation Plan.* 10(d) The Lincoln National Corporation Executive Value Sharing Plan.* 10(e) Lincoln National Corporation Executives' Severance Benefit Plan as last amended November 9, 1995. 10(f) The Lincoln National Corporation Outside Directors Retirement Plan as last amended March 15, 1990. 10(g) The Lincoln National Corporation Outside Directors Benefits Plan.* 10(h) The Lincoln National Corporation Executive Savings and Profit Sharing Plan as last amended January 1, 1992.* 10(i) Lincoln National Corporation 1993 Stock Plan for Non- Employee Directors as last amended May 10, 1995. 10(j) Lincoln National Corporation Executives' Excess Compensation Benefit Plan.* 10(k) American States Executives' Salary Continuation Plan as last amended May 2, 1995. 10(l) Lease and Agreement dated August 1, 1984, with respect to the American States' home office property. 10(m) Lease and Agreement dated August 1, 1984, with respect to LNL's home office property. 10(n) Lease and Agreement dated August 1, 1984, with respect to additional LNL home office property. 10(o) Lease dated February 14, 1991, with respect to LNC's Corporate Offices.* 11 Computation of Per Share Earnings. 21 List of Subsidiaries of LNC. 23 Consent of Ernst & Young LLP, Independent Auditors. 27 Financial Data Schedule. 28 Information from Reports Furnished to State Insurance Regulatory Authorities. [Data shown on this report is on a "Combined" basis and does not include data for subsidiaries sold.] *Incorporated by Reference -81- Signature Page LINCOLN NATIONAL CORPORATION Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act By /s/ Ian M. Rolland March 14, 1996 of 1934, LNC has duly caused Ian M. Rolland, this report to be signed on (Chairman, Chief Executive Officer and its behalf by the under- Director) signed, thereunto duly authorized. By /s/ Robert A. Anker March 14, 1996 Robert A. Anker, (President, Chief Operating Officer and Director) By /s/ Richard C. Vaughan March 14, 1996 Richard C. Vaughan, (Executive Vice President and Chief Financial Officer) By /s/ Donald L. Van Wyngarden March 14, 1996 Donald L. Van Wyngarden (Second Vice President and Controller) Pursuant to the requirements By /s/ J. Patrick Barrett March 14, 1996 of the Securities Exchange J. Patrick Barrett Act of 1934, this report has been signed below by By /s/ Thomas D. Bell, Jr. March 14, 1996 the following Directors Thomas D. Bell, Jr of LNC on the date indicated. By /s/ Daniel R. Efroymson March 14, 1996 Daniel R. Efroymson By /s/ Harry L. Kavetas March 14, 1996 Harry L. Kavetas By /s/ M. Leanne Lachman March 14, 1996 M. Leanne Lachman By /s/ Earl L. Neal March 14, 1996 Earl L. Neal By /s/ John M. Pietruski March 14, 1996 John M. Pietruski By /s/ Jill S. Ruckelshaus March 14, 1996 Jill S. Ruckelshaus By /s/ Gordon A. Walker March 14, 1996 Gordon A. Walker By /s/ Gilbert R. Whitaker,Jr. March 14, 1996 Gilbert R. Whitaker,Jr. EX-10 2 Exhibit 10(e) LINCOLN NATIONAL CORPORATION Executives' Severance Benefit Plan (As effective November 9, 1995) Section 1. History, Plan Name and Effective Date. Effective August 12, 1982, the Board of Directors (the "Board") of Lincoln National Corporation (the "Corporation") established the Lincoln National Corporation Executives' Severance Benefit Plan (the "Plan"). The following provisions constitute an amendment, restatement and continuation of the Plan, effective as of November 9, 1995. Section 2. Purpose. The Corporation recognizes that the possibility of an unforeseen change of control is unsettling to its executives and the executives of its Affiliates. Therefore, this Plan is established to provide assurance to (i) encourage the attraction and continued employment of the executives, and assure their continuing dedication to their duties notwithstanding the threat or occurrence of a change of control; (ii) enable the executives, should the Corporation receive unsolicited proposals from third parties with respect to its future, to assess and advise the Board what action on those proposals would be in the best interests of the Corporation, its shareholders and the policyholders and other customers of its Affiliates, and to take such action regarding those proposals as the Board might determine appropriate, without being influenced by the uncertainties of their own situation; (iii) demonstrate to the executives of the Corporation and its Affiliates that the Corporation is concerned with the welfare of the executives and intends to assure that loyal executives are treated fairly; and (iv) provide the executives with compensation and benefits arrangements upon a change of control which are designed to ensure that the compensation and benefits expectations of the executives will be satisfied. Section 3. Employees Eligible to Participate. Individuals from a select group of key employees of the Corporation and its Affiliates shall be eligible to participate in the Plan. Members of the Corporation's Senior Management Committee (including any successor committee or other body having substantially similar responsibilities), as it shall be constituted from time to time, shall always be eligible to participate in the Plan. The Compensation Committee of the Board may specify additional employees at any time as eligible. Section 4. Effective Date of Executive's Participation. An employee shall become a participant in the Plan on the date specified in the Joinder Agreement executed by the employee and the Corporation. An employee who participates in the Plan is an "Executive." Section 5.Termination of Participation. If before a Change of Control (as hereinafter defined) of the Corporation occurs, (i) the Executive's employment terminates with the Corporation and its Affiliates, (ii) the Executive is no longer a member of the Corporation's Senior Management Committee (including any successor committee or other body having substantially similar responsibilities), or (iii) the Compensation Committee determines that an Executive otherwise is no longer eligible to participate in the Plan, the Executive shall thereafter not be entitled to any benefits under the Plan and all rights hereunder shall be forfeited; provided, however, that if the Executive can reasonably demonstrate that the change in his status (as described in subsections (i) through (iii) above) (y) was at the request of a third party who had taken steps reasonably calculated to effect a Change of Control, or (z) arose at the request or by action of the Corporation in connection with or anticipation of a Change of Control, then the Executive shall be deemed to have been a participant in the Plan on the date of the Change of Control and entitled to all the benefits provided in this Plan. An Executive whose change in status in the Plan, as described above, occurred within six (6) months before a Change of Control is presumed to have had a change of status in anticipation of a Change of Control. Section 6. Amount of Severance Benefit. The amount of the severance benefit shall be the greater of 200% of the Executive's Annual Compensation (as hereinafter defined) or 299.99% of the Executive's "base amount" as this term is defined in Sections 280G(b)(3)(A), 280G(d)(1) and 280G(d)(2) of the Internal Revenue Code of 1986, as amended (the "Code"). "Annual Compensation" means the highest amount of all consideration paid or payable to the Executive by the Corporation and all Affiliates during (i) either of the two calendar years immediately preceding the year in which the Change of Control occurred, or (ii) the calendar year immediately preceding the year in which his employment was terminated, as reflected on his Form W-2 filed with the Internal Revenue Service for the calendar year so determined and adding thereto compensation deferred at the Executive's election and excluding therefrom any payments he received for purposes of equalizing his after tax income with what he would have received had he been in the United States. Section 7.Change of Control. As used in this Plan, "Change of Control" means: (a) The acquisition by any individual, entity or group (as defined in Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of (A) the then outstanding shares of common stock of the Corporation (the "Outstanding Corporation Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the "Outstanding Corporation Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Corporation other than an acquisition by virtue of the exercise of a conversion privilege, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or any entity controlled by the Corporation, or (D) any acquisition by any entity or corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (A), (B) and (C) of subsection (c) of this Section 7 are satisfied; or (b) Individuals who, as of the beginning of any period of two consecutive years, constitute the Board of Directors of the Corporation (the "Board"), cease for any reason to constitute at least a majority of the directors of the Corporation; provided, however, that any individual becoming a director subsequent to the beginning of such period whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least two-thirds of the Board at the beginning of such period, shall be considered as though such individual were a member of the Board as of the beginning of such period, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Approval by the shareholders of the Corporation of a reorganization, merger or consolidation, unless, following such reorganization, merger or consolidation, (A) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is immediately thereafter then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such reorganization, merger or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (B) no Person (excluding the Corporation, any employee benefit plan or related trust of the Corporation, or such corporation resulting from such reorganization, merger or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation and, directly or indirectly, twenty percent (20%) or more of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Board at the time of the execution of the initial agreement providing for such reorganization, merger or consolidation; or (d) Approval by the shareholders of the Corporation of (A) a complete liquidation or dissolution of the Corporation or (B) the sale or other disposition of all or substantially all of the assets of the Corporation, other than to a corporation, with respect to which following such sale or other disposition (1) more than sixty percent (60%) of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (2) no Person (excluding the Corporation and any employee benefit plan or related trust of the Corporation, or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, twenty percent (20%) or more of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Corporation; or (e) The closing of a transaction, as defined in the documents relating to, or as evidenced by a certificate of any state or federal governmental authority in connection therewith, approval of which by the shareholders of the Corporation would constitute an "acquisition of control" under subsection (c) or (d) of this Section 7 of this Plan. Section 8. Payment of Benefits. (a) If within a three-year period commencing on the date of a Change of Control (the "Benefit Period"), (i) the Corporation or any Affiliate terminates the employment of the Executive for any reason other than Cause, death or total and permanent disability (as defined in Section 18 hereof), or (ii) the Executive terminates his employment for Good Reason (as defined in Section 8(c) hereof), the amount of the severance benefit determined in accordance with Section 6 shall be paid as a cash lump sum within 30 calendar days. An Executive who has a change in status as set forth in Section 5 prior to the Change of Control and who is still a participant in the Plan because of the provisions of Section 5 shall be treated as if the change in status occurred one day after the Benefit Period commenced. (b) The Corporation may terminate an Executive for Cause during the Benefit Period. As used in this Plan, "Cause" means: (i) conviction of a felony, or other fraudulent or willful misconduct materially and demonstrably injurious to the business or reputation of the Corporation by the Executive, or (ii) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Corporation or one of its Affiliates (other than such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Corporation which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed his duties. For purposes of this Section 8(b), no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Corporation or based upon the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Corporation. An Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to him and an opportunity for him, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth above in (i) or (ii) above and specifying the particulars thereof in detail. (c) The Executive's employment may be terminated by the Executive for Good Reason during the Benefit Period. As used in this Plan, "Good Reason" means, without the Executive's written consent: (i) a change in the Executive's status, positions or responsibilities which, in his reasonable judgment, does not represent a promotion from his status, position or responsibilities as in effect prior to such change; (ii) the assignment to the Executive of any duties or responsibilities which, in his reasonable judgment, are inconsistent with the Executive's position (including status, office, titles and reporting requirements) authority, duties or responsibilities; or other action by the Corporation or any Affiliate which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied promptly after receipt of notice thereof given by the Executive; (iii) a reduction in the Executive's base salary as in effect on the date he became a participant in the Plan, or as the same may be increased from time to time during the term of his participation, or the Corporation's or any Affiliate's failure to increase within twelve (12) months of the Executive's last increase in base salary the Executive's base salary in an amount which at least equals, on a percentage basis, the average percentage increase in base salary for all executive and senior officers of the Corporation effected in the preceding twelve (12) months; (iv) the relocation of the principal executive offices of the Corporation or any Affiliate, whichever entity on behalf of which the Executive performs a principal function of that entity as part of his employment services, to a location more than thirty-five (35) miles from where it was, or the Corporation's requiring him to be based at any place other than the location at which he performed his duties before the Change of Control, except for required travel on the Corporation's or any Affiliate's business to an extent substantially consistent with his business travel obligations at the time of the Change of Control; (v) the failure to continue in effect this Plan, or to continue to provide the Executive all incentive, savings and retirement, bonus or other compensation plans, practices, policies or programs applicable generally to other peer executives of the Corporation or any Affiliate, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement opportunities, in each case, less favorable in the aggregate, than the most favorable of those provided by the Corporation and its Affiliates for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Change of Control or if more favorable to the Executive, those provided generally at any time after the Change of Control to other peer executives of the Corporation and its Affiliates; (vi) the failure to continue to provide the Executive and/or the Executive's family, as the case may be, with benefits under welfare benefit plans, practices, policies and programs provided by the Corporation and any of its Affiliates (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident plans and programs) to the extent applicable generally to other peer executives of the Corporations and its Affiliates, but in no event shall such plans, practices, policies and programs provide the Executive and/or the Executive's family, as the case may be, with benefits that are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, those provided generally at any time after the Change of Control to other peer executives of the Corporation and its Affiliates; (vii) the failure to provide or continue in effect benefits, including, without limitation, paid vacations, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, policies and programs of the Corporation and its Affiliates in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Corporation and its Affiliates; (viii) the failure to provide an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Corporation or its Affiliates at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Executive, as provided generally at any time thereafter to other peer executives of the Corporation and its Affiliates; (ix) the failure of any successor or assign of the Corporation to assume and expressly agree to perform the obligations under this Plan in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place; (x) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination (as defined in Section 8(d) hereof) and a resolution satisfying the requirements of Section 8(b) hereof; and for purposes of this Plan, no such purported termination shall be effective; or (xi) any request by the Corporation or any Affiliate that the Executive participate in an unlawful act or take any action constituting a breach of the Executive's professional standard of conduct. For purposes of this Section 8(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. Anything in this Plan to the contrary notwithstanding, a termination of employment by the Chief Executive Officer or the Chief Operating Officer of the Corporation for any reason during the Benefit Period shall be deemed to be a termination for Good Reason for all purposes of this Plan. (d) Any termination by the Corporation for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party to the Joinder Agreement given by hand delivery, registered or certified mail, return receipt requested, postage prepaid, to the last known home address of the Executive or to the address of the principal office of the Corporation, copy to the General Counsel. For purposes of this Plan, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Executive or the Corporation to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Corporation, respectively, hereunder, or preclude the Executive or the Corporation, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Corporation's rights hereunder. Section 9. Other Plans. (a) In the event benefits are payable to an Executive in accordance with Section 8, (i) the Executive shall (A) be paid all amounts due to the Executive under any incentive plan of the Corporation or any Affiliate (or successor plans) in which he participated immediately before the Change of Control, as provided in any such plan, and (B) immediately be paid an additional amount such that when added to amounts due to the Executive under (A), the Executive shall have received the maximum stated benefit for each performance period in progress, pro-rated to the end of the most recently completed calendar quarter; (ii) the Executive's accrued benefits, if any, under the terms of all excess benefit plans (as defined in Section 3(36) of ERISA) and supplemental retirement plans maintained by the Corporation or any Affiliate shall immediately vest and be payable as provided in those plans; (iii) the Executive shall be entitled for the two year period following his termination of employment to participate at no charge and on the same basis (including family coverage) in all employee welfare benefit plans (as defined in Section 3(1) of ERISA) maintained by the Corporation or any Affiliate as of the date of the Change of Control, provided that any benefits to which the Executive may be entitled pursuant to this subsection (iii) shall terminate automatically at any time the Executive secures and begins alternate employment and becomes entitled to substantially equivalent benefits; and, provided further, that the Executive (and his spouse) shall be entitled to retiree medical and dental coverage beginning on the date he attains age 55 and until his death, on the basis provided to similar retirees on the date of the Change of Control and at no additional cost to the Executive, if on the date of the Change of Control, the Executive has twenty-five years of service with the Corporation or any of its Affiliates, or has attained age 50; (iv) the Executive shall immediately be paid a lump sum amount equal to the value of any outstanding stock options which by their terms cannot be exercised the day following the Executive's termination of employment (the value of each option shall be equal to the higher of (y) the average of the high and low price of a share of stock, as quoted on the composite transactions table covering transactions on the New York Stock Exchange on the first date that the stock was traded on that Exchange which next precedes the date the Executive's employment terminated, or (z) if the stock is no longer traded, the price per share paid in the transaction giving rise to the Change of Control minus, in either case, the stock option's exercise price); (v) the Executive shall, upon the tender to the Secretary of the Corporation of any restricted stock awards and dividend equivalents, be paid a lump sum amount equal to the value of any unvested shares of restricted stock as if all restrictions had been removed the day preceding the Change of Control, to the extent that such restricted stock award agreement does not provide for the immediate vesting of the restricted stock awards and dividend equivalents upon the Change of Control; (vi) the Executive shall be entitled, for the two year period beginning the day after termination, to relocation benefits of $75,000.00 less any amounts actually received from another employer as payment of, or reimbursement for, relocation expenses; (vii) the Executive shall be entitled to outplacement services, the scope and provider of which shall be selected by the Executive in his sole discretion, at the sole expense of the Corporation as incurred to a maximum of 15% of the Executive's Annual Compensation; and (viii) the Executive's rights under any other benefit plan maintained by the Corporation or any Affiliate (or successor) shall be governed by the terms of that plan as in effect on the day immediately preceding the Change of Control. (b) In the event the Accounting Firm (as defined in Section 10(b) hereof) shall make a bona fide determination that immediate cash payment to an Executive of any of the benefits provided for in Section 9(a) above would destroy an otherwise bona fide "pooling" transaction for financial reporting and tax purposes, then the Executive shall be paid the maximum in cash he can be paid without destroying pooling and all remaining amounts shall be paid in cash to the Executive as soon as such payments can be made, together with interest at the applicable federal rate (as defined in Section 1274(d) of the Code), without destroying "pooling." Section 10. Certain Additional Payments by the Corporation. (a) Anything in this Plan to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Corporation to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Ernst & Young or such other nationally recognized certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Corporation or the Executive. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control or the Corporation, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Corporation to the Executive within two business days of the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Corporation and the Executive. In the event that the Corporation exhausts its remedies pursuant to Section 10(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly pad by the Corporation to or for the benefit of the Executive. (c) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gave such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim, (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including; without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation, (iii) cooperate with the Corporation in good faith to contest such claim, and (iv) permit the Corporation to participate in any proceedings relating to such claim, provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest, deemed interest with respect to interest-free advances, and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 10(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation's complying with the requirements of Section 10(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 10(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. Section 11. Reimbursement of Legal Fees. The Corporation shall pay directly or reimburse an Executive (at the Executive's option) for any and all legal fees and expenses incurred by such Executive relating to the enforcement or enforceability of any obligations of the Corporation and its Affiliates under the Plan or relating to enjoining the Board from amending the Plan in a manner which is inconsistent with Section 15. Section 12. Confidential Information. Each Executive who receives a severance benefit under this Plan agrees to retain in confidence any secret or confidential information known to him relating to the Corporation, its Affiliates and their respective businesses, which shall have been obtained by the Executive during his employment by the Corporation or any of its Affiliates and shall not be or become public knowledge (other than by acts of the Executive or a representative of the Executive in violation of this Plan). After termination of the Executive's employment with the Corporation or any of its Affiliates, the Executive shall not, without prior written consent of the Corporation or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall a violation or an asserted violation of the provisions of this Section 12 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Plan. Section 13. Right or Title to Funds. In the event of a Change of Control, the Corporation shall immediately set aside, earmark, and contribute sufficient funds in cash to pay for any obligations it may have under this Plan as determined by the Accounting Firm, including no less than $5,000,000.00 to satisfy any obligation of the Corporation under Section 11, in a "Rabbi Trust". An Executive, and any successor in interest to him, shall be and remain a general creditor of the Corporation with respect to any promises to pay under this Plan in the same manner as any other creditor who has a general claim for an unpaid liability, provided, however, that the Executive shall have such rights against assets held in the Rabbi Trust that are provided in such Rabbi Trust agreement. The Corporation shall not make any loans or extend credit to an Executive which will be offset by benefits payable under this Plan. Section 14. Binding Plan. The obligations under this Plan shall be binding upon and inure to the benefit of an Executive, his beneficiary or estate, the Corporation and any successor to the Corporation. Section 15. Amendment, Suspension or Termination of Plan. This Plan may be amended at any time and from time to time by and on behalf of the Corporation by the Board, but no amendment shall operate to give the Executive, either directly or indirectly, any interest whatsoever in any funds or assets of the Corporation, except the right upon fulfillment of all terms and conditions hereof, as such terms and conditions may be amended, to receive the payments herein provided. No amendment, suspension or termination of this Plan shall operate in any way to reduce, diminish, or affect any of the benefits provided to any Executive if such amendment, suspension or termination (i) arose by action of the Corporation in connection with or anticipation of a Change of Control, (ii) occurs coincident with a Change of Control, or (iii) occurs after a Change of Control has occurred. Any such amendment, suspension or termination that occurs within six (6) months before a Change of Control is presumed to have been in anticipation of a Change of Control. Section 16. No Effect on Employment. This Plan shall supplement and shall neither supersede any other contract of employment, whether oral or in writing, between the Executive and the Corporation or any Affiliate, nor affect or impair the rights and obligations of the Executive and the Corporation or any Affiliate, respectively, thereunder; and nothing contained herein shall impose any obligation on the Corporation or Affiliate to continue the employment of the Executive. Section 17. No Waiver. Neither the failure nor the delay on the part of the Executive in exercising any right, power or privilege hereunder shall operate as a waiver of such right, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege hereunder. No remedy conferred hereunder is intended to be exclusive of any other remedy and each shall be cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity. Section 18. Definitions and Rules of Construction. Except where the context clearly indicates to the contrary, the following terms have the meanings specified: (a) "Joinder Agreement" means the document, in substantially the form attached as Exhibit A, agreed to by the Corporation by which the Executive affirmatively requests participation in the Plan according to its terms and conditions. (b) "Affiliate" means any corporation which directly or indirectly controls or is controlled by or is under common control with the Corporation. For purposes of this definition control means the power to direct or cause the direction of the management and policies of a corporation through the ownership of voting securities. (c) "Total and permanent disability" means the inability of the Executive to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which can be expected to last for a continuous period of not less than 12 months. The determination of whether an Executive is totally and permanently disabled shall be made by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative. (d) The pronouns "he," "him," and "his" include the other sex. (e) This Plan may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. (f) The headings in this Plan are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof. LINCOLN NATIONAL CORPORATION Exhibit A LINCOLN NATIONAL CORPORATION Executives' Severance Benefit Plan Joinder Agreement I, ____________________________________, hereby agree to the terms and conditions of Lincoln National Corporation's Executives' Severance Benefit Plan (the "Plan"), as established on [_________________] and as it may be amended, and request participation thereunder effective as of _____________, 199__. I acknowledge that, so long as a Change of Control (as defined in the Plan) has not occurred, the Corporation is under no obligation to continue the Plan or my participation therein and that being a participant thereunder in no way guarantees my employment. My participation in the Plan shall become effective as of the effective date above stated without further notice upon receipt and approval of this document by the Corporation. Date Signature of Executive Lincoln National Corporation agrees to the terms and conditions of the Plan and participation in that Plan by the above named Executive and acknowledges his/her participation this ____ day of __________________, 199__. LINCOLN NATIONAL CORPORATION By Chief Executive Officer APPROVED: Chairman of the Compensation Committee Board of Directors Lincoln National Corporation INDS01 JAS 134710/111029 EX-10 3 Exhibit 10(f) Lincoln National Corporation Outside Directors Retirement Plan Directors, who are not employees of the Corporation or any of its subsidiaries, are eligible for retirement benefits. The annual benefits payable to a director is equal to 10% of the director s retainer paid during the last year he/she was a director multiplied by the number of years of service (with a maximum of 10 years). Individuals who were directors on January 1, 1987, were given credit for all years of past service. The benefit is payable either in a single lump sum or monthly beginning at the later of age 65 or when the director retires from the Corporation s Board. In the event of a director s death prior to the commencement of retirement benefits, a death benefit is paid to a beneficiary. The director must sign an election agreement indicating the form of payment February, 1991. EX-10 4 EXHIBIT 10(i) [Historical note: Effective May 12, 1994, Lincoln National Corporation (the Corporation ) established the 1993 Stock Plan for Non-Employee Directors (the Plan ). The following provisions constitute an amendment, restatement, and continuation of the Plan effective as of May 10, 1995.] LINCOLN NATIONAL CORPORATION 1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS ARTICLE I - PURPOSE OF PLAN 1.1 Purpose of Plan. Lincoln National Corporation (the "Corporation") has adopted the 1993 Stock Plan for Non-Employee Directors (the "Plan") to provide for payment in shares of the Corporation's Common Stock ("Stock") of a portion of the retainer fee payable to members of the Board of Directors of the Corporation who are not employees of the Corporation or any of its affiliates or subsidiaries ("Non-Employee Directors") and to allow Non-Employee Directors to elect to defer receipt of all or a portion of their retainer and/or meeting fees. The Plan also provides a restricted stock bonus in the form of Restricted Stock for Non-Employee Directors. The Plan is intended to provide Non-Employee Directors with a larger equity interest in the Corporation in order to attract and retain well-qualified individuals to serve as Non-Employee Directors and to enhance the identity of interests between Non-Employee Directors and the shareholders of the Corporation. ARTICLE II - ELIGIBILITY AND PARTICIPATION 2.1 Eligibility and Participation. Only Non-Employee Directors of the Corporation and its subsidiaries shall be eligible to participate in the Plan, and participation in the Plan is mandatory for all Non-Employee Directors. Except as specifically provided herein, a Non-Employee Director may not elect to increase or decrease the portion of the retainer fee payable in Stock. ARTICLE III - RETAINER STOCK AWARDS AND DEFERRAL ELECTIONS 3.1 Retainer Stock Awards. (a) Amount of Award. On each July 1 after the Effective Date through and including July 1, 2004 (each such date hereinafter a "Grant Date"), in lieu of the retainer fee payable to a Non-Employee Director with respect to the calendar quarter beginning on the Grant Date determined without regard to the Plan ("Retainer"), and in consideration for services rendered as a Non-Employee Director, the Corporation shall issue to each Non-Employee Director a whole number of shares of Stock (a "Stock Award") equal to the number of shares determined by dividing (a) a sum of (I) twenty-five percent (25%) of the Retainer established by resolution of the Board of Directors of the Corporation and payable for services prior to July 1, 1995, plus (ii) one hundred per cent (100%) of any increase in the Retainer adopted by the Board of Directors of the Corporation for services after July 1, 1995 (provided, however, that this clause (ii) shall take effect with respect to each such increase only upon the effective date of such increase), by (b) the Fair Market Value of the Stock on such Grant Date. For purposes of this Plan, the "Fair Market Value" of Stock on any business day shall be the average of the high and low sales prices of the Stock quoted on the New York Exchange Composite Listing on the next preceding business day on which there were such quotations for the day in question. To the extent that the formula described in this Section 3.1(a) does not result in a whole number of shares of Stock, the result shall be rounded upwards to the next whole number such that no fractional shares of Stock shall be issued under the Plan. Such shares shall be restricted from sale or transfer as provided in Section 3.1(b). (b) Restrictions on Stock Awards. A stock certificate representing the Stock Award shall be registered in each Non-Employee Director's name. The Non-Employee Director shall have all rights and privileges of a shareholder as to such Stock Award, including the right to vote such Restricted Shares, except that the following restrictions shall apply: (I) no dividends shall be payable on the shares, however, a Dividend Equivalent Payment, as defined in Article V, below, shall be credited to an account established under the Plan, invested in Stock Units, as described under Section 3.2(b) and shall have the same restrictions as the relevant restricted shares, (ii) none of the Restricted Shares may be sold, transferred, assigned, pledged, or otherwise encumbered or disposed of during the Restricted Period, and (iii) except as provided in Section 3.1(c), all of the Restricted Shares and Dividend Equivalent Payments shall be forfeited and all rights of the Non-Employee Director to such Restricted Shares shall terminate without further obligation on the part of the Corporation and its subsidiaries upon the Non-Employee Director's ceasing to be a director of the Corporation and its subsidiaries. (c) Termination of Directorship. (I) Vesting of Shares. If a Non-Employee Director ceases to be a director of the Corporation and its subsidiaries by reason of Disability, Death, Retirement or Change of Control, the Restricted Shares granted to and Dividend Equivalent Payments on such shares accumulated for such Non-Employee Director shall immediately vest. If a Non-Employee Director ceases to be a director of the Corporation and its subsidiaries for any other reason, the Non-Employee Director shall immediately forfeit all Restricted Shares, except to the extent that a majority of the Board of Directors of the Corporation other than the Non-Employee Director approves the vesting of such Restricted Shares. Upon vesting, except as provided in Article X, all restrictions applicable to such Restricted Shares shall lapse. (ii) Disability. For purposes of this Section 3.1(c), "Disability" shall mean a permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. (iii) Retirement. For purposes of this Section 3.1(c), "Retirement" shall mean ceasing to be a director of the Company (A) on or after age 70, or (B) on or after age 65 with the consent of a majority of the members of the Board of Directors of the Corporation other than the Non-Employee Director. (iv) Change of Control. For purposes of this Section 3.1(c), "Change of Control" shall have the same meaning as in the Lincoln National Corporation Executives' Severance Benefit Plan on the date that is six (6) months immediately preceding the "Change of Control." 3.2 Deferral of Retainer and/or Fees. (a) Deferral Elections. Commencing on the effective date of the Plan, payment of all or part of the Retainer (excluding Stock Awards pursuant to Section 3.1(a)) and/or fees payable to a Non-Employee Director for meetings of the Board of Directors of the Corporation or Board Committees or for extraordinary services may be deferred by election of the Non-Employee Director. Each such election must be made prior to the start of the calendar year for which the Retainer and/or fees will be paid and must be irrevocable for the affected calendar year, provided, however, that for 1994, each Non-Employee Director shall be permitted to elect deferred payment of all or a portion of the Retainer and/or the fees earned after the effective date of the Plan and before December 31, 1994, provided such Non-Employee Director has made an irrevocable election to this effect prior to stockholder approval of the Plan. In addition, each election to defer payment of any amount of the Retainer and/or fees payable in cash shall be made at least six (6) months in advance of the date such election is to be effective and shall be continuous and irrevocable except upon a subsequent irrevocable election that takes effect at least six (6) months after the date of such subsequent election, to the extent necessary to satisfy the requirements of Rule 16b-3(d) promulgated under the Securities Exchange Act of 1934 ("1934 Act"), as the same may be hereafter amended. (b) Crediting Stock Units to Accounts. Amounts deferred pursuant to Section 3.2(a) shall be credited as of the date of the deferral to a bookkeeping reserve account maintained by the Corporation ("Account") in units which are equivalent in value to shares of Stock ("Stock Units"). The number of Stock Units credited to an Account with respect to any Non-Employee Director shall equal a number of Stock Units equal to any deferred cash amount divided by the Fair Market Value of the Stock on the date on which such cash amount would have been paid but for the deferral election pursuant to Section 3.2(a). (c) Fully Vested Stock Units. All Stock Units credited to a Non-Employee Director's Account pursuant to this Section 3.2 shall be at all times fully vested and nonforfeitable. (d) Payment of Stock Units. Stock Units credited to a Non-Employee Director's Account pursuant to this Article III shall be payable in an equal number of shares of Stock or cash in a single lump sum distribution or annual installment payments made at such time specified by the Non-Employee Director in the applicable deferral election, provided that the designated payment date with respect to any election must be the first day of a subsequent calendar year which is no earlier than twelve (12) months following the establishment of the affected Stock Unit. (e) Payment of Stock Units Upon a Change of Control. Stock Units credited to a Non-Employee Director s Account shall be automatically distributed in a single lump sum amount of shares of Stock, with fractional Stock Units being distributed in cash, upon a Change of Control. ARTICLE IV - RESTRICTED STOCK BONUS 4.1 Restricted Stock Bonus for Non-Employee Directors on July 1, 1994. Each Non-Employee Director serving as such on the date of shareholder approval of the Plan shall be awarded a whole number of restricted Shares of Stock (a "Stock Bonus") equal to $10,000 divided by Fair Market Value of Common Stock in consideration for services rendered as a Non-Employee Director of the Corporation and its subsidiaries. To the extent that the formula described in this Section 4.1 does not result in a whole number of Shares of Stock, the result shall be rounded upwards to the next whole number such that no fractional shares shall be issued under the Plan. The restrictions on the Stock Bonus shall be the same as those restrictions described in Section 3.1(b). 4.2 Restricted Stock Bonus for Non-Employee Directors After July 1, 1994. Each Non-Employee Director who commences serving a new three year term after July 1, 1994 shall be issued an additional Stock Bonus equal to $10,000 divided by the Fair Market Value of Common Stock as of the July 1 on which he or she begins serving a new term as a Non-Employee Director, and thereafter until the Plan is terminated. A new Non- Employee Director who is appointed or elected to an unexpired term, shall receive a partial Stock Bonus on the next succeeding July 1 after his or her appointment or election to such partial term in an amount equal to the Fair Market Value of Stock on such July 1 of $10,000 multiplied by a fraction the numerator being the number of months remaining in the unexpired term since being so appointed or elected and the denominator being 36. To the extent that the formula described in this Section 4.2 does not result in a whole number of Shares of Stock, the result shall be rounded upwards to the next whole number such that no fractional shares shall be issued under the Plan. This Stock Bonus shall contain the same restrictions as specified in Section 3.1(b). ARTICLE V - DIVIDEND EQUIVALENT PAYMENTS 5.1 Dividend Equivalent Payments. As of each dividend payment date with respect to Stock, each Non-Employee Director shall receive additional Stock Units ("Dividend Equivalent Payment") equal to the product of (I) the per-share cash dividend payable with respect to each share of Stock on such date, and (ii) the total number of Restricted Shares issued in his or her name and Stock Units credited to his Account as of the record date corresponding to such dividend payment date, divided by the Fair Market Value. Fractional Stock Units may be awarded. The Dividend Equivalent Payments with respect to Restricted Shares shall contain the same restrictions as specified in Section 3.1(b). ARTICLE VI - DELIVERY OF STOCK CERTIFICATES 6.1 Stock Awards. As soon as practicable following the expiration of the restrictions, but in no event sooner than six (6) months from such Grant Date, the Corporation shall deliver to the Non-Employee Director unrestricted Stock certificate with respect to the shares of Stock issued pursuant to such Stock Award and Stock Bonus. During any six (6) month period after the Grant Date and before delivery of the Stock certificate after the restrictions have lapsed, the Non-Employee Director shall have all the rights of a shareholder with respect to such Stock, except for the right to receive dividend payments and except that such Stock shall not be transferable by the Non-Employee Director other than by will or the laws of descent and distribution. 6.2 Stock Unit Payments. The Corporation shall issue and deliver to the Non-Employee Director cash or a Stock certificate, as elected by the Non-Employee Director for payment of Stock Units as soon as practicable following the date on which Stock Units are payable in accordance with Section 3.2(d). No fractional shares will be distributed. ARTICLE VII - STOCK 7.1 Stock. The aggregate number of shares of Stock that may be issued under the Plan shall not exceed one hundred fifty thousand (150,000) shares, unless such number of shares is adjusted as provided in Article VIII of this Plan. In addition to the foregoing limit, the aggregate number of restricted shares that may be granted during the term of the Plan shall not exceed fifty thousand (50,000) shares, unless such number of shares is adjusted as provided in Article VIII of this Plan. To the extent that an award lapses or the rights of the Non-Employee Director terminate or the award is settled in cash (e.g. cash settlement of Stock Units) any shares of Common Stock subject to such award shall again be available for the grant of an award. ARTICLE VIII - ADJUSTMENT UPON CHANGES IN CAPITALIZATION 8.1 Adjustment Upon Changes in Capitalization. In the event of a stock dividend, stock split or combination, reclassification, recapitalization or other capital adjustment of shares of Stock, the number of shares of Stock that may be issued pursuant to Stock Awards, Stock Bonuses, and Stock Units and the number of Stock Units credited to Accounts shall be appropriately adjusted by the Board of Directors of the Corporation, whose determination shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan on account of any adjustment specified herein. The grant of Stock Awards, Stock Bonuses, or Stock Units pursuant to this Plan shall not affect in any way the right or power of the Corporation to issue additional Stock or other securities, make adjustments, reclassifications, reorganizations or other changes in its corporate, capital or business structure, to participate in a merger, consolidation or share exchange or to transfer its assets or dissolve or liquidate. ARTICLE IX - TERMINATION OR AMENDMENT OF PLAN 9.1 In General. The Board of Directors of the Corporation may at any time terminate, suspend or amend this Plan. However, except as otherwise determined by the Board of Directors of the Corporation, no such amendment shall become effective without the approval of the stockholders of the Corporation to the extent stockholder approval is required in order to comply with Rule 16b-3 under the 1934 Act. 9.2 Amendment No More than Once in Six (6) Months. Those provisions of this Plan that set forth the amounts and the formula for determining the amounts, prices and timing of Stock Awards, Stock Bonuses, and Stock Units, respectively, may not be amended more than once every six (6) months. 9.3 Written Consents. No amendment may adversely affect the right of any Non-Employee Director to receive any Stock previously issued as a Stock Award, Stock Bonus, or to receive any Stock of Dividend Equivalent Payments pursuant to an outstanding Stock Unit without the written consent of such Non-Employee Director. 9.4 Termination of Stock Awards. Unless the Plan is sooner terminated, no Stock Award or Stock Bonus shall be granted after July 1, 2004. The termination of the Plan shall have no effect on outstanding Stock Awards, Stock Bonuses or Stock Units. ARTICLE X - GOVERNMENT REGULATIONS 10.1 Government Regulations. (a) The obligations of the Corporation to issue any Stock granted under this Plan shall be subject to all applicable laws, rules and regulations and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Board of Directors of the Corporation. (b) Except as otherwise provided in Article IX of this Plan, the Board of Directors of the Corporation may make such changes as may be necessary or appropriate to comply with the rules and regulations of any governmental authority. ARTICLE XI - MISCELLANEOUS 11.1 Unfunded Plan. The Plan shall be unfunded with respect to the Corporation's obligation to pay any amounts due pursuant to Stock Units and Dividend Equivalent Payments, and a Non-Employee Director's rights to receive any payment of any Stock Unit or Dividend Equivalent Payment shall be not greater than the rights of an unsecured general creditor of the Corporation. 11.2 Assignment; Encumbrances. The right to receive a Stock Award, Stock Bonus or Stock Unit and the right to receive payment with respect to a Stock Unit under this Plan are not assignable or transferable and shall not be subject to any encumbrances, liens, pledges or charges of the Non-Employee Director or his or her creditors. Any attempt to assign, transfer or hypothecate any Restricted Stock Award, Stock Bonus, or Stock Unit or any right to receive a Stock Award, Stock Bonus or Stock Unit shall be void and of no force and effect whatsoever. 11.3 Designation of Beneficiaries. A Non-Employee Director may designate a beneficiary or beneficiaries to receive any distributions under the Plan upon his or her death. 11.4 Applicable Law. The validity, interpretation and administration of this Plan and any rules, regulations, determinations or decisions made hereunder, and the rights of any and all persons having or claiming to have any interest herein or hereunder, shall be determined exclusively in accordance with the laws of the State of Indiana, without regard to the choice of laws provisions hereof. 11.5 Headings. The headings in this Plan are for reference purposes only and shall not affect the meaning or interpretation of this Plan. 11.6 Notices. All notices or other communications made or given pursuant to this Plan shall be in writing and shall be sufficiently made or given if hand-delivered or mailed by certified mail, addressed to any Non-Employee Director at the address contained in the records of the Corporation or to the Corporation in care of the Corporation s Secretary, 200 East Berry Street, Fort Wayne, IN 46802-2706. ARTICLE XII - EFFECTIVE DATE OF PLAN 12.1 Effective Date of Plan. This Plan shall become effective on the date on which it is approved by the affirmative vote of the holders of a majority of the votes cast by shareholders of the Corporation present, or represented and entitled to vote, at the next annual meeting of the shareholders of the Corporation duly held in accordance with the laws of the State of Indiana. EX-10 5 Exhibit 10(k) AMERICAN STATES Executives' Salary Continuation Plan (As Amended and Restated May 2, 1995) Section 1. Plan Name and Effective Date. The American States Executives' Salary Continuation Plan hereinafter referred to as "Plan", was established by American States Insurance Company, American Economy Insurance Company and American States Life Insurance Company (hereinafter collectively called the "Company") by Board of Directors' Resolutions on September 15, 1978, effective January 1, 1979, and was amended and completely restated on May 3, 1988 and again on May 2, 1995. Section 2. Purpose. The Plan was established because certain highly-compensated employees have been and will be key persons in the successful operation of the Company, and because the Company desires (a) to assure that it will have the benefit of their services until retirement; and (b) after retirement, but prior to age 65, to deter their employment by any competitor of the Company, and to give them an incentive to refrain from entering the employ of a competitor (unless agreed to by the Company). Section 3. Employees Eligible to Participate. Individuals from a select group of highly-compensated employees shall be eligible to participate in the Plan as determined by the Chief Executive Officer. Such an eligible employee who participates in the Plan is hereinafter called the "Executive". Section 4. Effective Date of Executive's Participation. The Plan shall become effective for an Executive on the date specified in the Joinder Agreement signed by the Executive and agreed to by the Company. Section 5. Amount of Salary Continuation Benefit. The amount of salary continuation benefit shall be based on 2% of the Executive's final monthly salary multiplied by the total number of years of participation in the Plan up to a maximum of 10% of the Executive's final monthly salary. An Executive's final monthly salary shall be that monthly rate of salary which is being paid at retirement unless the Executive retires after age 65, in which case, the final monthly salary shall be the monthly rate of salary which is being paid at the time the Executive attains age 65. Effective December 31, 1992, the maximum final monthly salary used to calculate the salary continuation benefit shall be the greater of $16,667.00 and the monthly salary in effect on December 31, 1991. Years of participation shall be counted beginning with the effective date of Executive's participation as described in Section 4. A year of participation shall be a 12 month period beginning with the effective date of Executive's participation and ending with the day preceding the first anniversary of such effective date. Each succeeding 12 month period of participation shall be counted as a year of participation in the Plan. An Executive who does not have five full years of participation in the Plan and who retires while participating will be granted a full year of participation for any final partial year. Section 6. Salary Continuation Benefits upon Retirement at or after Age 65. Upon retirement with the Company at or after age 65, the Company agrees to pay salary continuation benefits to the Executive in the amount calculated in Section 5. Section 7. Salary Continuation Benefits upon Retirement prior to Age 65. Upon retirement prior to age 65 and under circumstances entitling him or her to receive retirement benefits in accordance with the provisions of the Company's employees' retirement plan, the Company agrees to pay salary continuation benefits to the Executive. The amount of such benefit shall be the amount calculated in Section 5, actuarially reduced in accordance with the following table and with such linear interpolations as shall in the sole discretion of the Company be necessary to take into account the exact age (including fractions) of the Executive at the date of retirement: Applicable Factor Applicable Factor Applicable Factor If the Executive has If the Executive has If the Executive has at least 25 Vesting 20 to 25 Vesting fewer than 20 Vesting Years of Service Years of Service Years of Service Under the Company's Under the Company's Under the Company's Retirement Employees' Retirement Employees' Retirement Employees' Retirement Age Plan Plan Plan 65 1.00 1.00 1.00 64 1.00 .92 .91 63 1.00 .85 .83 62 1.00 .79 .75 61 .95 .74 .67 60 .90 .70 .60 59 .85 .66 .55 58 .80 .62 .50 57 .75 .58 .45 56 .69 .54 .40 55 .63 .50 .35
Section 8. Method and Duration of Payment of Benefits. Benefit payments under Sections 6 and 7 shall be made on the first day of the first calendar month following the date of retirement and on the first day of each calendar month thereafter so long as the Executive shall live; provided, however, that in no event shall the Company make less than one hundred twenty (120) such payments, whether to the Executive or to the Beneficiary. Section 9. Death Benefit Before Retirement and Before Age 65. For Executives who signed a Joinder Agreement on or before December 31, 1991, if the Executive dies prior to retiring and prior to attaining age 65, all of the rights of the Executive hereunder shall terminate, except that the beneficiary shall receive a payment equal to 25% of the Executive's final annual rate of salary, immediately upon receipt by the Company of satisfactory proof of death, and an equal amount thereafter on the yearly anniversary of the Executive's death until the Executive, if alive, would have attained age 65, or until a total of at least ten (10) payments have been made. Effective January 1, 1992, the annual salary used to calculate the death benefit shall not exceed the greater of $200,000 and the annual salary in effect as of December 31, 1991. Section 10. Death Before Retirement but After Age 65. If the Executive dies before retiring but after attaining age 65, all rights of the Executive hereunder shall terminate except that the Company shall upon receipt of satisfactory proof of the Executive's death immediately pay to the Beneficiary and thereafter pay on the monthly anniversary of the Executive's death, an amount calculated in accordance with Section 5 for an aggregate of one hundred twenty (120) payments. Section 11. Death After Retirement. If the Executive dies after retiring and prior to receiving one hundred twenty (120) salary continuation benefit payments, the Company shall continue such payment to the Beneficiary, if living, until the combined payments to the Executive and the Beneficiary shall total one hundred twenty (120) payments. Section 12. Payments to an Estate. If the Executive fails to designate a valid Beneficiary in the Joinder Agreement or if there is no designated Beneficiary surviving the Executive, then any remaining payments due shall be commuted and paid to the Executive's estate. If the Beneficiary shall die after receiving one or more payments, but before all payments have been made, any remaining payments shall be commuted and paid to such Beneficiary's estate. Section 13. Voluntary Termination of Service. If the Executive voluntarily terminates employment with the Company (a) prior to attaining age 55, or (b) after attaining age 55, but prior to attaining 65 and completing 5 years of service, neither the Executive nor any Beneficiary shall be entitled to any benefits under this Plan. Section 14. Involuntary Termination of Service. If the Executive involuntarily terminates employment with the Company primarily from circumstances not within the control of the Executive, but other than by death or disability, and if he or she continues to provide exclusive consultative services after such termination of employment, his or her salary continuation benefit shall be paid to the Executive beginning on the first day of the first calendar month following the date the Executive reaches age 65 and on the first day each calendar month thereafter so long as the Executive shall live; provided, however, that after payments begin at age 65, in no event shall the Company make less than one hundred twenty (120) such payments, whether to the Executive or to the Beneficiary. If the terminated Executive dies before age 65, no benefit shall be paid under this Plan. Section 15. Termination of Service After a Change in Control. In the event of a voluntary or involuntary termination of service of the Executive within two years subsequent to a change of control of the Company or its parent, as defined in the LNC Executive Severance Benefit Plan, in effect immediately preceding such change of control, such Executive shall be treated as continuing employment with the Company until age 65, and the conditions for benefits in Section 16, below, shall not apply. Section 16. Conditions for Benefits. In the event of an Executive's involuntary termination of service, all benefits as provided in this Plan shall be forfeited if the Executive fails to act, directly or indirectly, as an exclusive consultant to the Company until age 65; provided, however, that the Company may waive the requirements of this Section 16 in a written document signed by its Chief Executive Officer. Section 17. No Right or Title to Funds. The Company shall have no obligation to set aside, earmark, or entrust any fund, policy, or money with which to pay any obligations under this Plan. The Executive, and any successor in interest to him, shall be and remain simply a general creditor of the Company with respect to any promises to pay under this Plan in the same manner as any other creditor who has a general claim for an unpaid liability. Neither the Executive nor any Beneficiary shall acquire any right in or title to any funds or assets of the Company otherwise than by and through the actual payment of the monthly or annual payments hereunder. The Company shall not make any loans or extend credit to an Executive which will be offset by benefits payable under this Plan. Section 18. Definitions and Rules of Construction. Except where the context clearly indicates to the contrary, the following terms have the meanings specified: (a) "Beneficiary" means the beneficiary or beneficiaries designated in the Joinder Agreement by the Executive. The designation of beneficiary by the Executive in the last Joinder Agreement executed prior to death shall control. Payments under this Plan to the last designated beneficiary or his or her estate shall relieve the Company from all responsibility to any beneficiary designated in a prior Joinder Agreement. (b) "Joinder Agreement" means the document agreed to by the Company by which the Executive affirmatively demonstrates a desire to participate in the Plan according to the terms and conditions herein and designates a Beneficiary. (c) "Affiliate" means any corporation which directly or indirectly controls or is controlled by or is under common control with the Company. For purposes of this definition control means the power to direct or cause the direction of the management and policies of a corporation through the ownership of voting securities. (d) The terms "herein," "hereof," and "hereunder" refer to the Plan in its entirety. (e) This Plan may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) The headings in this Plan are for purposes of reference only and shall not limit or otherwise affect any of the terms hereof. Section 19. No Assignments, etc. Neither the Executive nor a Beneficiary, shall have power to transfer, assign, anticipate, mortgage or otherwise encumber in advance any of the payments provided by this Plan; nor shall said payments be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance, or be transferable by operation of law in event of bankruptcy, insolvency or otherwise. Upon the occurrence of any event in violation or attempted violation of this provision, any payments thereafter payable hereunder shall, in the sole and uncontrolled discretion of the Company, be subject to cancellation; whereupon, the Company may, but need not, make such payments to someone else deemed by it to be a natural object of the bounty of the Executive, and such payments shall relieve the Company of any further or other obligation hereunder. Section 20. Amendment, Suspension or Termination of Plan. This Plan may be amended at any time and from time to time by the Company, but no amendment shall operate to give the Executive, or his or her Beneficiary, either directly or indirectly, any interest whatsoever in any funds or assets of the Company, except the right upon fulfillment of all terms and conditions hereof to receive the payments herein provided. Likewise, no amendment, suspension or termination of this Plan shall, in and of itself, result in the forfeiture of any salary continuation benefit promise accrued to an Executive who is in the active employment of the Company at such time or to an Executive who has been involuntarily terminated as described in Section 14 and no amendment, suspension or termination of this Plan shall operate to reduce or diminish any benefit after payment of such benefit has begun. Section 21. No Effect on Employment. This Plan shall not supersede any other contract of employment, whether oral or in writing, between the Company and the Executive, nor shall it affect or impair the rights and obligations of the Company and the Executive, respectively, thereunder; and nothing contained herein shall impose any obligation on the Company to continue the employment of the Executive. Section 22. Transfer between Affiliates. If an Executive transfers to the Company from an Affiliate which has a similar salary continuation plan in which he or she was participating, total years of participation in this Plan shall include prior years of participation in such a plan. Transfer of employment from the Company to an Affiliate offering a similar plan in which he or she is eligible to participate terminates all benefit rights of the Executive or Beneficiary under this Plan. If an Executive transfers to an Affiliate and is not eligible to participate in a similar plan, the Executive's salary continuation benefit promise accrued shall be established as of the date of transfer and be payable in accordance with this Plan; however, no death benefit will be paid under Section 9 in the event the Executive dies subsequent to the time of transfer. IN WITNESS WHEREOF, the Company has caused its name to be hereunto subscribed, pursuant to due and proper authority granted by its Board of Directors. AMERICAN STATES INSURANCE COMPANY AMERICAN ECONOMY INSURANCE COMPANY AMERICAN STATES LIFE INSURANCE COMPANY By___________________________________ F. Cedric McCurley, Chairman Attest: ______________________________ Thomas M. Ober, Secretary EX-10 6 Exhibit 10(l) LEASE AND AGREEMENT Between CLINTON STREET LIMITED PARTNERSHIP, as Lessor And AMERICAN STATES INSURANCE COMPANY, as Lessee Dated as of August 1, 1984 Location of Leased Premises: 500 North Meridian St. Indianapolis, IN 46204-1275 TABLE OF CONTENTS
Page ---- 1. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Title and Condition. . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Use of Leased Premises; Quiet Enjoyment. . . . . . . . . . . . . . . 2 4. Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . 4 7. Taxes and Assessments; Compliance with Law . . . . . . . . . . . . . 6 8. Liens; Grants of Easements . . . . . . . . . . . . . . . . . . . . . 7 9. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . 10 11. Alterations and Additions. . . . . . . . . . . . . . . . . . . . . . 11 12. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 13. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 14. Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 15. Reimbursement for Alterations and Additions; Purchase of Unimproved Land. . . . . . . . . . . . . . . . . . . . 28 16. Procedure Upon Purchase. . . . . . . . . . . . . . . . . . . . . . . 34 17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . 35 18. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . 36 19. Conditional Limitations; Default Provision . . . . . . . . . . . . . 38 20. Additional Rights of Lessor. . . . . . . . . . . . . . . . . . . . . 43 21. Notices, Demands and Other Instruments . . . . . . . . . . . . . . . 44 22. Estoppel Certificates; Consents and Financial Statements . . . . . . 45 23. No Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 24. Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 25. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 26. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 27. Table of Contents, Headings. . . . . . . . . . . . . . . . . . . . . 48 28. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 29. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 48 30. Lessee's Options; Right of First Refusal . . . . . . . . . . . . . . 50 31. Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SCHEDULE A - Property Description and Permitted Exceptions SCHEDULE B - Basic Rent Payments SCHEDULE C - Computation of Purchase Prices THE LEASE AND AGREEMENT, dated as of August 1, 1984 (this Lease) between CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein, together with its successor and assigns, called Lessor), having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006 and AMERICAN STATES INSURANCE COMPANY, an Indiana corporation (herein, together with any corporation succeeding thereto by consolidation, merger or acquisition of all or substantially all its assets, called Lessee), having an address at 500 North Meridian Street, Indianapolis, Indiana 46207. Certain words or phrases having initial capitals have the meanings set forth in paragraph 29. 1. Demise of Premises. In consideration of the rents and covenants herein stipulated to be paid and performed, Lessor hereby demises and lets to Lessee, and Lessee hereby lets from Lessor, for the terms herein described, the premises (herein called the Leased Premises) consisting of (i) the land described in Schedule A hereto (herein called the Land Parcel), (ii) all buildings, structures and other improvements thereon, including all building equipment and fixtures, if any, owned by Lessor (herein collectively called the Improvements), but excluding trade equipment, fixtures and other personal property owned by Lessee and Lessee's Improvements (as hereinafter defined in paragraph 11(c)), and (iii) all easements, rights and appurtenances relating thereto, all upon the terms and conditions herein specified. 2. Title and Condition. The Leased Premises are demised and let subject to (a) the rights of any parties in possession and the existing state of the title as of the commencement of the term of this Lease, (b) any state of facts which an accurate survey or physical inspection thereof might show, (c) all zoning regulations, restrictions, rules and ordinances, building restrictions and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction, and (d) the condition of any buildings, structures and other improvements located thereon, as of the commencement of the term of this Lease, without representation or warranty by Lessor. Lessee represents that it has examined the title to and the condition of the Leased Premises and has found the same to be satisfactory. 3. Use of Leased Premises; Quiet Enjoyment. (a) Lessee may occupy and use the Leased Premises for any lawful purpose. (b) If and so long as Lessee shall observe and perform all covenants, agreements and obligations required to be observed and performed by it hereunder, Lessor covenants that it will not and will not permit any party claiming by, through or under Lessor, to interfere with the peaceful and quiet possession and enjoyment of the Leased Premises by Lessee; provided, that Lessor and its agents may, upon prior notice to Lessee (unless Lessor has reason to believe a default or Event of Default hereunder has occurred, in which case no such notice shall be necessary), enter upon and examine the Leased Premises at reasonable times. Lessee shall have the right to accompany Lessor and its agents during any such examination of the Leased Premises. Any failure by Lessor to comply with the foregoing warranties shall not give Lessee any right to cancel or terminate this Lease, or to abate, reduce or make deduction from or offset against any Basic Rent, as hereinafter defined, or additional rent or other sum payable under this Lease, or to fail to perform or observe any other covenant, agreement or obligation hereunder. 4. Terms. Subject to the terms and conditions hereof, Lessee shall have and hold the Leased Premises for (a) an interim term (herein called the Interim Term) commencing on August 30, 1984 and ending at midnight on August 31, 1984; and (b) a primary term (herein called the Primary Term) commencing on September 1, 1984, and ending at midnight on August 31. 2009. Thereafter, 2 Lessee shall have the rights and options to extend this Lease for 6 consecutive extended terms of 5 years each (herein called Extended Terms, and together with the Interim Term and the Primary Term, called the Term) unless this Lease shall be sooner terminated pursuant to the provisions hereof. Each such Extended Term shall commence on the day immediately succeeding the expiration date of the preceding Primary Term or Extended Term, as the case may be, and shall end at midnight on the day immediately preceding the fifth anniversary of the first day of such Extended Term. Each such option to extend this Lease shall conclusively be deemed to have been exercised by Lessee unless Lessee shall give written notice to the contrary to Lessor at least three hundred sixty-five days prior to the end of the then Term of this Lease. No instrument of renewal need be executed, provided that no Extended Term shall take effect unless this Lease is in full force and effect and no default or Event of Default exists and is continuing immediately prior to the commencement thereof. If Lessee gives notice of its intention not to extend this Lease, the term of this Lease shall terminate at the end of the then Term of this Lease and Lessee shall have no further option to extend this Lease. If Lessee gives such notice not to extend this Lease, then Lessor shall have the right during the remainder of the Term of this Lease to advertise the availability of the Leased Premises for sale or reletting and to erect upon the Leased Premises signs appropriate for the purpose of indicating such availability, provided that such signs do not unreasonably interfere with the use of the Leased Premises by Lessee. The phrase "Term of this Lease" or "Term hereof" means the Interim Term and the Primary Term, plus any Extended Term with respect to which the right to extend has been exercised. 5. Rent. (a) Lessee covenants to pay to Lessor, as instalments of rent for the Leased Premises during the Term of this Lease, the amounts set 3 forth in Schedule B hereto (herein called the Basic Rent) on the dates set forth in said Schedule (herein called the Basic Rent Payment Dates), and to pay in immediately available funds the same at Lessor's address set forth above or at such other place within the continental United States and/or to such other person as Lessor from time to time may designate to Lessee in writing, in lawful money of the United States of America. (b) Lessee covenants that all other amounts, liabilities and obligations which Lessee assumes or agrees to pay or discharge pursuant to this Lease (except amounts payable as the purchase price for the Leased Premises or any part thereof pursuant to any provision of this Lease and amounts payable as liquidated damages pursuant to paragraph 19(j) or paragraph 19(g)), together with every fine, penalty, interest and cost which may be added for nonpayment or late payment thereof, shall constitute additional rent hereunder. In the event of any failure by Lessee to pay or discharge any of the foregoing, Lessor shall have all rights, powers and remedies provided herein or by law in the case of nonpayment of Basic Rent. Lessee also covenants to pay to Lessor on demand as such additional rent (A) interest at the rate of 18.00% per annum (or the maximum not prohibited by law, whichever is less), calculated on the basis of a 360-day year of twelve equal months, on all overdue instalments of Basic Rent from the due date thereof (without regard to any grace period) until paid in full and (B) interest at the rate of 16.00% per annum (calculated as set forth in clause (A) above) on all overdue amounts relating to any other aspects of additional rent arising out of obligations which Lessor shall have paid on behalf of Lessee from the date of such payment by Lessor until paid in full. 6. Net Lease; Non-Terminability. (a) This is an absolutely net lease and the Basic Rent, additional rent and all other sums payable hereunder 4 by Lessee, whether as the purchase price for the Leased Premises or otherwise, shall be paid without notice (except as expressly provided herein), demand, set-off, counterclaim, abatement, suspension, deduction or defense. (b) Any present or future law to the contrary notwithstanding, this Lease shall not terminate, nor shall Lessee have any right to terminate this Lease (except as otherwise expressly provided herein), nor shall Lessee be entitled to any abatement or reduction of rent hereunder (except as otherwise expressly provided herein), nor shall the obligations of Lessee under this Lease be affected, by reason of (i) any damage to or destruction of all or any part of the Leased Premises from whatever cause, (ii) the taking of the Leased Premises or any portion thereof by condemnation, requisition or otherwise, (iii) the prohibition, limitation or restriction of Lessee's use of all or any part of the Leased Premises, or any interference with such use, (iv) any eviction by paramount title or otherwise, (v) Lessee's acquisition or ownership of all or any part of the Leased Premises otherwise than as expressly provided in paragraphs 12(b), 14(c) or 15 herein, (vi) any default on the part of Lessor under this Lease, or under any other agreement to which Lessor and Lessee may be parties, (vii) the failure of Lessor to deliver possession of the Leased Premises on the commencement of the Term hereof or (viii) any other cause whether similar or dissimilar to the foregoing. It is the intention of the parties hereto that the obligations of Lessee hereunder shall be separate and independent covenants and agreements, that the Basic Rent, additional rent and all other sums payable by Lessee hereunder shall continue to be payable in all events and that the obligations of Lessee hereunder shall continue unaffected, unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this Lease. 5 (c) Lessee agrees that it will remain obligated under this Lease in accordance with its terms, and that it will not take any action to terminate, rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, or winding-up or other proceeding affecting Lessor or its successor in interest, (ii) any action with respect to this Lease which may be taken by any trustee or receiver of Lessor or its successor in interest or by any court in any such proceeding. (d) Lessee waives all rights which may now or hereafter be conferred law (i) to quit, terminate or surrender this Lease or the Leased Premises or any part thereof, or (ii) to abate, suspend, defer or reduce the Basic Rent, additional rent or any other sums payable under this Lease, except as otherwise expressly provided herein. 7. Taxes and Assessments; Compliance with Law. (a) Lessee shall pay or discharge each of the following items on or prior to the last day on which such items may be paid without interest or penalty: (i) all Impositions; (ii) all transfer taxes, recording fees and similar charges payable in connection with a conveyance hereunder to Lessee; (iii) all gross receipts or similar taxes imposed or levied upon, assessed against or measured by the Basic Rent, additional rent or any other sums payable by Lessee hereunder or levied upon or assessed against the Leased Premises, to the extent that such tax, assessment or other charge would be payable if the Leased Premises were the only property of Lessor subject thereto, and (iv) any tax, assessment, charge or levy of any nature whatsoever imposed or levied upon or assessed against Lessor or the Leased Premises in substitution for or in place of an Imposition. Lessee shall not be required to pay any franchise, corporate, estate, inheritance, succession, transfer, income, excess profits, or revenue 6 taxes of Lessor which are not described in the preceding sentence. Lessee agrees to furnish to Lessor, within thirty days after written demand therefor, evidence of all payments due under this paragraph 7(a). In the event that any Imposition levied or assessed against the Leased Premises and payable by Lessee becomes due and payable during the Term hereof and may legally be paid in instalments, Lessee may pay such Imposition in instalments and shall be liable only for those installments which become due and payable during the Term hereof. (b) Lessee shall, at its expense, comply with and shall cause the Leased Premises to comply with, in all material respects, all governmental statutes, laws, rules, orders, regulations and ordinances the failure to comply with which at any time would affect the Leased Premises or any part thereof,or the use thereof, including those which require the making of any structural, unforeseen or extraordinary changes, whether or not any of the same involve a change of policy on the part of the body enacting the same (collectively, the Legal Requirements). Lessee shall, at its expense, comply with all Required Insurance (as defined in paragraph 13), and with the provisions of all contracts, agreements, instruments and restrictions existing at the commencement of the Term of this Lease or thereafter suffered or permitted by Lessee affecting the Leased Premises or any part thereof or the ownership, occupancy or use thereof. 8. Liens; Grants of Easements. (a) Lessee will not, directly or indirectly, create or permit to be created or to remain, and will promptly remove and discharge, at its expense, any mortgage, lien, encumbrance or charge on, pledge of, or conditional sale or other title retention agreement with respect to, the Leased Premises or any part thereof or Lessee's interest therein or the Basic Rent, additional rent or other sums payable by Lessee 7 under this Lease, other than (1) any encumbrances permitted by the Senior Permitted Mortgage described in Paragraph 29(j), (2) any mortgage, lien, encumbrance or other charge, pledge, conditional sale or other title retention agreement created by or resulting from any act or failure to act of Lessor or any agent or assignee of Lessor without the agreement of Lessee and (3) any encumbrance or charge permitted in subparagraph (b) below. Nothing contained in this Lease shall be construed as constituting the consent or request, expressed or implied, by Lessor to the performance of any labor or services or the furnishing of any materials for any construction, alteration, addition, repair or demolition of all of the Leased Premises or any part thereof by any contractor, subcontractor, laborer, materialman or vendor. Notice is hereby given that Lessor will not be liable for any labor, services or materials furnished or to be furnished to Lessee, or to anyone holding the Leased Premises or any part thereof, and that no mechanic's or other liens for any such labor, services or materials shall attach to or affect the interest of Lessor in and to the Leased Premises. (b) Lessor hereby appoints Lessee its agent and attorney-in-fact and authorizes Lessee (i) to grant easements, licenses, rights-of-way and other rights and privileges in the nature of easements, (ii) to release existing easements and appurtenances which are for the benefit of the Leased Premises, (iii) to grant party wall rights for the benefit of any land adjoining the Land Parcel and (iv) to execute and deliver any instrument necessary or appropriate to confirm such grants, releases or consents to any person, with or without consideration (in each case, however, only upon compliance with the provisions of the Senior Permitted Mortgage), provided, that (x) such grant, release or consent shall not materially impair the use of the Leased Premises or materially reduce their value, and (y) the consideration, if any, received 8 by Lessee for such grant, release or consent shall be paid to Lessor and applied pursuant to paragraph 12(c), as if such consideration were a Net Award from an event of Condemnation. Lessee agrees that Lessee will remain obligated under the terms of this Lease to the same extent as if such action had not been taken, and that Lessee will perform all obligations of the grantor, releasor or transferor under any such instrument. 9. Indemnification. Lessee shall defend all actions or claims against Lessor, or any partner of Lessor, or any assignee of Lessor, or any partner, officer, director or shareholder of any assignee of Lessor (collectively, the Indemnified Parties) with respect to, and shall pay, protect, indemnify and save harmless the Indemnified Parties from and against any and all liabilities, losses, damages, costs, expenses (including all reasonable attorney's fees and expenses of the Indemnified Parties), causes of action, suits, claims, demands or judgments of any nature whatsoever (i) arising from any injury to, or the death of, any person or any damage to property on the Leased Premises or upon adjoining sidewalks, streets or ways, in any manner growing out of or connected with the use, non-use, condition or occupation of the Leased Premises or any part thereof or resulting from the condition thereof or of adjoining sidewalks, streets or ways, so long as not occasioned by the affirmative act of Lessor, its agents, servants, employees or assigns, and/or (ii) arising from violation by Lessee of any agreement or condition of this Lease, or any contract or agreement to which Lessee is a party or any restriction, law, ordinance or regulation, in each case affecting the Leased Premises or any part thereof or the ownership, occupancy or use thereof, so long as not occasioned by the intentional fault of Lessor, its agents, servants, employees or assigns. If Lessor or any other Indemnified Party shall be made a party to any such litigation commenced against Lessee, 9 and if Lessee, at its expense, shall fail to provide Lessor or any other such Indemnified Party with counsel (upon Lessor's or such Indemnified Party's request) approved by Lessor or such Indemnified Party, as the case may be, which approval shall not be unreasonably withheld, Lessee shall pay all costs and reasonable attorneys' fees and expenses incurred or paid by Lessor or any other such Indemnified Party in connection with such litigation. Lessor shall give prompt written notice to Lessee of any claim asserted against Lessor, but to Lessor's knowledge not also asserted against Lessee, which, if sustained, may result in liability of Lessee hereunder, but failure on the part of Lessor to give such notice shall not relieve Lessee from Lessee's obligation to exonerate, protect, defend, indemnify and save harmless the Indemnified Parties as aforesaid. 10. Maintenance and Repair. (a) Lessee acknowledges that it has received the Leased Premises in good condition, repair and appearance. Lessee agrees that, at its expense, it will keep and maintain the Leased Premises and any Lessee's Improvements, including any altered, rebuilt, additional or substituted buildings, structures and other improvements thereto, in good condition, repair and appearance, except for ordinary wear and tear, and it will promptly make all structural and nonstructural, foreseen and unforeseen, and ordinary and extraordinary changes and repairs of every kind which may be required to be made to keep and maintain the Leased Premises and any Lessee's Improvements in such good condition, repair and appearance and it will keep the Leased Premises and any Lessee's Improvements orderly and free and clear of rubbish. Lessor shall not be required to maintain, repair or rebuild, or to make any alterations, replacements or renewals of any nature to the Leased Premises, or any part thereof, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to maintain the Leased Premises 10 or any part thereof in any way. Lessee hereby expressly waives the right to make repairs at the expense of Lessor which may be provided for in any law in effect at the time of the commencement of the Term of this Lease or which may thereafter be enacted. If Lessee shall abandon the Leased Premises, it shall give Lessor and any Permitted Mortgagee immediate notice thereof. (b) If any Improvements situated on the Leased Premises at any time during the Term of this Lease shall encroach upon any property, street or right-of-way adjoining or adjacent to the Leased Premises, or shall violate the agreements or conditions contained in any restrictive covenant affecting the Leased Premises or any part thereof, or shall impair the rights of others under or hinder or obstruct any easement or right-of-way to which the Leased Premises are subject, then, promptly after the written request of Lessor or any person affected by any such encroachment, violation, impairment, hindrance or obstruction, Lessee shall, at its expense, either (i) obtain effective waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, impairment, hindrance or obstruction whether the same shall affect Lessor, Lessee or both, or (ii) make such changes in the Improvements on the Leased Premises and take such other action as shall be necessary to remove such encroachments, hindrances or obstructions and to end such violations or impairments, including, if necessary, the alteration or removal of any Improvement on the Leased Premises. Any such alteration or removal shall be made in conformity with the requirements of paragraph 11(a) to the same extent as if such alteration or removal were an alteration under the provisions of paragraph 11(a). 11. Alterations and Additions. (a) Lessee may, at its expense, (x) after not less than forty-five days written notice to Lessor of its plans (provided, however, that no such notice shall be required as to plans for work 11 the estimated cost of which is less than $500,000), make non-structural additions to and alterations of the Improvements to the Leased Premises, and make non-structural substitutions and replacements therefor, provided, that (i) the use, structural integrity and market value of the Leased Premises shall not thereby be materially lessened as certified in writing by an appropriate officer of Lessee, and (ii) such actions shall be performed in a good and workmanlike manner; and (y) after not less than forty-five days written notice to Lessor of its plans, make structural additions to and alterations of the Improvements to the Leased Premises, and make structural substitutions and replacements therefor, provided that (i) such actions shall be performed in a good and workmanlike manner under the supervision of a licensed architect or engineer in accordance with plans and specifications as approved by Lessor and accepted by Lessee, (ii) no such structural change or alteration shall be made unless Lessor's prior written consent shall have been obtained, (iii) none of the buildings or structures constituting the Leased Premises shall be demolished unless Lessee shall have first furnished Lessor with such surety bonds or other assurances acceptable to Lessor as shall be necessary to assure rebuilding of the Leased Premises and unless Lessor's prior written consent shall have been obtained, and (iv) such additions, alterations, substitutions and replacements shall be expeditiously completed in compliance with all Legal Requirements (as defined in paragraph 7(b)) and Required Insurance (as defined in paragraph 13(a)); provided that Lessor shall not withhold its written consent to Lessee's plans, including plans and specifications, under this clause (y) if and so long as the use, structural integrity and market value of the Leased Premises shall not be materially lessened by such plans as certified in writing by an appropriate officer of Lessee. Lessee shall promptly pay all costs and expenses of each such 12 addition, alteration, substitution or replacement, discharge all liens arising therefrom and procure and pay for all permits and licenses required in connection therewith. Failure by Lessor to give written approval or disapproval within forty-five days of receipt of such notice from Lessee under clause (y) shall be deemed Lessor's consent to such plans. All such alterations and additions to the Improvements shall be and remain part of the realty and the property of Lessor and subject to this Lease. (b) Lessee may, at its expense, install, assemble or place any items of trade fixtures, machinery, equipment or other personal property upon the Leased Premises. Such trade fixtures, machinery, equipment or other personal property shall be and remain the property of Lessee and Lessee may remove the same from the Leased Premises at any time prior to the termination of this Lease, provided that (i) Lessee shall repair any damage to the Leased Premises resulting from such removal, and (ii) such removal shall not materially impair the value and use of the Leased Premises. (c) Lessee may, at its expense, upon 45 days prior notice to Lessor, construct improvements on any portion of the Land Parcel on which there is not already a permanent structure for which improvements it has not and will not obtain reimbursement pursuant to paragraph 15 hereof (Lessee's Improvements), provided that upon completion thereof, the use and market value of the remaining Leased Premises shall not thereby be materially lessened. The Lessee's Improvements shall be and remain the property of Lessee and Lessee may make additions and alterations to Lessee's Improvements and substitutions and replacements thereof which are otherwise in compliance with the provisions of this subparagraph (c). 12. Condemnation. (a) Subject to the rights of Lessee set forth in this paragraph 12, Lessee hereby irrevocably assigns to Lessor any award or 13 compensation payment to which Lessee may become entitled by reason of Lessee's interest in the Leased Premises if the use, occupancy or title of the Leased Premises or any part thereof is taken, requisitioned or sold in, by or on account of any actual or threatened eminent domain proceeding or other action by any person having the power of eminent domain, provided, however, that Lessee may retain any award or compensation payment relating to Lessee's Improvements. Lessee shall appear in any such proceeding or action to negotiate, prosecute and adjust any claim for any award or compensation on account of any such taking, requisition or sale; and Lessor shall collect any such award or compensation. The Net Award (as defined in paragraph 12(f)) shall be applied pursuant to this paragraph 12. Lessee shall pay all reasonable costs and expenses (including any legal fees of any Permitted Mortgagee required by any Permitted Mortgage to be paid by Lessor) in connection with each such proceeding, action, negotiation and prosecution, for which costs and expenses Lessee shall be reimbursed out of any award or compensation received. Lessor shall be entitled to participate in any such proceeding, action, negotiation or prosecution and the reasonable expenses thereof (including counsel fees and expenses) shall be paid by Lessee. (b) If an occurrence of the character referred to in paragraph 12(a) shall affect all or a substantial portion of the Leased Premises and shall, in the good faith judgment of Lessee, render the Leased Premises unsuitable for restoration for continued use and occupancy in Lessee's business during the Primary Term or any Extended Term, then Lessee shall, not later than 30 days after such occurrence, deliver to Lessor (i) notice of its intention to terminate this Lease on the next Basic Rent Payment Date (the Termination Date) which occurs not less than 210 days nor more than 360 days after the delivery of such notice and (ii) a certificate by the President or any Vice 14 President of Lessee describing the event giving rise to such termination and stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased Premises unsuitable for restoration for continued use and occupancy in Lessee's business. If the Termination Date occurs during the Interim or Primary Term, such notice to Lessor shall be accompanied by an irrevocable offer by Lessee to purchase the Leased Premises on the Termination Date at a price determined in accordance with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such Purchase Offer by notice given to Lessee not later than the 30th day prior to the Termination Date or (2) the Termination Date occurs during an Extended Term, this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee hereunder, actual or contingent, which have arisen on or prior to the Termination Date, upon payment by Lessee of all Basic Rent, additional rent and other sums then due and payable hereunder to and including the Termination Date, and the Net Award shall belong to Lessor; provided that the amount of such Net Award, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof) shall be paid to Lessee, as determined by the Appraisal Procedure. Unless Lessor shall have rejected such Purchase Offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and, on the Termination Date, shall convey the remaining portion of the Leased Premises, if any, to Lessee or its designee and shall assign to Lessee or its designee all of its interest in the Net Award, pursuant to and upon compliance with paragraph 16. (c) If during any Term (i) a portion of the Leased Premises shall be taken by condemnation or other eminent domain proceedings, which taking is not 15 sufficient to require that Lessee give a Purchase Offer or (ii) the use or occupancy of the Leased Premises or any part thereof shall be temporarily taken by any governmental authority, then this Lease shall continue in full effect without abatement or reduction of Basic Rent, additional rent or other sums payable by Lessee hereunder notwithstanding such partial or temporary taking. Except as hereinafter set forth, Lessee shall (whether or not it has received any portion of the Net Award), promptly after any such temporary taking ceases, at its expense, repair any damage caused thereby in conformity with the requirements of paragraph 11(a), so that, thereafter, the Leased Premises shall be, as nearly as possible, in a condition and have a market value as good as the condition and market value thereof immediately prior to such taking. Lessee shall not be required to repair any damage to Lessee's Improvements so long as such failure shall not materially lessen the use or value of the remaining Leased Premises; provided, however, that if, in Lessee's good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee's Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 12(a), any Net Award payable in connection with such occurrence shall be paid to the Proceeds Trustee (as defined in paragraph 12(e), provided, that if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of the Net Award, such Net Award shall be paid to the Senior Permitted Mortgagee (as defined in paragraph 29(m)), and if there is no Senior Permitted Mortgagee then to Lessor, in all events for application pursuant to this paragraph 12(c). Lessee shall be entitled to receive the Net Award but only against certificates by the President or any Vice President of Lessee delivered to Lessor and the Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate 16 describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive any Net Award in an aggregate amount of up to $100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Award remaining after such repairs have been made is less than $250,000, such remaining Net Award shall be paid to Lessee. If such remaining Net Award equals or exceeds $250,000, all of the remaining Net Award shall be retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Senior Permitted Mortgage then outstanding. To the extent that any Net Award is not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Award not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the 17 corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). In the event of any temporary requisition, this Lease shall remain in full effect and Lessee shall be entitled to receive the Net Award allocable to such temporary requisition; except that such portion of the Net Award allocable to the period after the expiration of the Term of this Lease shall be paid to Lessor. If the cost of any repairs required to be made by Lessee pursuant to this paragraph 12(c) shall exceed the amount of such Net Award, the deficiency shall be paid by Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c) for so long as any default shall have happened and shall be continuing under this Lease. (d) Notwithstanding the foregoing, Lessee, at its cost and expense, shall be entitled to claim separately, in any condemnation proceeding, any damages payable for moveable trade fixtures paid for and installed by Lessee (or any persons claiming under Lessee) without any contribution or reimbursement therefor by Lessor, and for Lessee's loss of business, and for Lessee's relocation costs, provided Lessor's award is not reduced or otherwise adversely affected thereby. (e) The trustee (the Proceeds Trustee) of the Net Award and Net Casualty Proceeds (as defined in paragraph 14(a)) shall be The Connecticut Bank and Trust Company, National Association, or its successor under the Collateral Trust Indenture, dated as of the date hereof (the Indenture) from Clinton Holding Corporation to The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as trustees, or if such Indenture shall 18 be terminated, the holder of the first mortgage lien on the Leased Premises, who shall be an institutional lender, or if there shall not be such a lien, or if such lien shall be held by a person other than an institutional lender, then () or a bank or trust company, designated by Lessee and acceptable to Lessor, having an office in the State of Indiana. The Proceeds Trustee shall have a combined capital and surplus of at least $100,000,000 and shall be duly authorized to act as such trustee. All charges and fees of the Proceeds Trustee shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and Net Casualty Proceeds (as hereinafter defined) pursuant to such mutual agreement as may be made between Lessor and Lessee. (f) For the purposes of this Lease the term "Net Award" shall mean: (i) all amounts payable as a result of any condemnation or other eminent domain proceeding, less all expenses of such proceeding and the collection of such amounts not otherwise paid by Lessee and (ii) all amounts payable pursuant to any agreement with any condemning authority (which agreement shall be deemed to be a taking) which has been made in settlement of or under threat of any condemnation or other eminent domain proceeding affecting the Leased Premises (except Lessee's Improvements), less all expenses incurred (including any reasonable costs incurred by Lessor in connection therewith) as a result thereof or in connection with the collection of such amounts and not otherwise paid by Lessee. (g) Any minor condemnation or taking of the Leased Premises for the construction or maintenance of streets or highways shall not be considered a condemnation or taking for purposes of this paragraph 12 so long as the Leased Premises shall not be materially adversely affected, ingress and egress for the remainder of the Leased Premises shall be adequate for the business of Lessee thereon and compliance is made with the provisions of any Permitted Mortgage relating thereto. 19 13. Insurance. (a) Lessee shall maintain, or cause to be maintained, at its sole expense, the following insurance on the Leased Premises (herein called the Required Insurance): (i) Insurance against loss or damage by fire, lightning and other risks from time to time included under "extended coverage" policies, including, without limitation, vandalism and malicious mischief coverage, in amounts sufficient to prevent Lessor or Lessee from becoming a co-insurer of any loss under the applicable policies but in any event in amounts not less than the full insurable value of the Leased Premises. The term "full insurable value", as used herein, means actual replacement value less uninsurable items. (ii) General public liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Leased Premises and the adjoining streets, sidewalks and passageways, such insurance to afford protection to Lessor of not less than $1,000,000 with respect to bodily injury or death to any one person, not less than $5,000,000 with respect to any one accident, and not less than $1,000,000 with respect to property damage. (iii) Worker's compensation insurance covering all persons employed in connection with any work done on or about the Leased Premises with respect to which claims for death or bodily injury could be asserted against Lessor, Lessee or the Leased Premises, complying with the laws of the State of Indiana. (iv) Boiler and pressure vessel insurance on all equipment, parts thereof and appurtenances attached or connected to the Leased Premises, if any, which by reason of their use or existence are capable of bursting, erupting, collapsing or exploding, in the minimum amount of $1,000,000 for damage to property resulting from such perils. Such insurance may, at the option of Lessee and as permitted by applicable law, be included within the coverage of insurance policies referred to in clause (i) above. (v) Such other insurance on the Leased Premises in such amounts and against such other hazards which at the time are commonly obtained in the case of property similar to the Leased Premises in the state in which the Leased Premises are located, including war risk insurance (at and during such times as war risk insurance is commonly obtained in the case of property similar to the Leased Premises), when and to the 20 extent obtainable from the United States Government or any agency thereof. (vi) Flood insurance in an amount equal to the full insurable value (as defined in clause (i) above) of the Leased Premises or the maximum amount available, whichever is less, if the area in which the Leased Premises are located has been designated by the Secretary of Housing and Urban Development as having special flood hazards, and if flood insurance is available under the National Flood Insurance Act. (b) The Required Insurance shall be written by companies having an A.M. Best rating of at least A:XV which are authorized to do an insurance business in the State of Indiana and shall name as the insured parties thereunder Lessor, Lessee and any Permitted Mortgagee, as their respective interests may appear, provided, however, that so long as Lessee maintains a net worth determined in accordance with generally accepted accounting principles of not less than $267,542,000, Lessee may self-insure as to the types of insurance referred to in clauses (i) through (v) of this paragraph. Neither Lessor nor any Permitted Mortgagee shall be required to prosecute any claim against, or to contest any settlement proposed by, an insurer. Lessee may, at its expense, prosecute any such claim or contest any such settlement in the name of Lessor, Lessee or both, and Lessor will join therein at Lessee's written request upon the receipt by Lessor of an indemnity from Lessee against all costs, liabilities and expenses in connection therewith. (c) Insurance claims by reason of damage to or destruction of any portion of the Leased Premises shall be adjusted by Lessee, but Lessor and any Permitted Mortgagee shall have the right to join with Lessee in adjusting any such loss. (d) Every policy referred to in clauses (i), (iv) and (v) of paragraph 13(a) shall bear a first mortgagee endorsement in favor of the then 21 Senior Permitted Mortgagee (if any); and any loss under any such policy shall be made payable to the Proceeds Trustee, provided that any recovery for damage or destruction under any such policy shall be applied by the Proceeds Trustee in the manner provided in paragraph 14. Every policy of Required Insurance shall contain an agreement that the insurer will not cancel such policy except after thirty days' written notice to Lessor and any Permitted Mortgagee and that any loss otherwise payable thereunder shall be payable notwithstanding any act or negligence of Lessor or Lessee which might, absent such agreement, result in a forfeiture of all or a part of such insurance payment and notwithstanding (i) any foreclosure or other action taken by a Permitted Mortgagee pursuant to any provision of any Permitted Mortgage upon the happening of a default or an event of default thereunder, or (ii) any change in ownership of the Leased Premises. (e) Lessee shall deliver to Lessor promptly after the delivery of this Lease the original or duplicate policies or certificates of insurers, reasonably satisfactory to any Senior Permitted Mortgagee, evidencing all of the Required Insurance. Lessee shall, within thirty days prior to the expiration of any such policy, deliver to Lessor other original or duplicate policies or such certificates evidencing the renewal of any such policy. If Lessee fails to maintain or renew any Required Insurance, or to pay the premium therefor, or to so deliver any such policy or certificate, then Lessor, at its option, but without obligation to do so, may, upon five days' notice to Lessee, procure such insurance. Any sums so expended by Lessor shall be additional rent hereunder and shall be repaid by Lessee within five days after notice to Lessee of such expenditure and the amount thereof. (f) Neither Lessee nor Lessor shall obtain or carry separate insurance covering the same risks as any Required Insurance unless Lessee, 22 Lessor and any Permitted Mortgagee are included therein as named insureds, with loss payable as provided in this Lease. Lessee and Lessor shall immediately notify each other whenever any such separate insurance is obtained and shall deliver to each other the policies or certificates evidencing the same. (g) Anything contained in this paragraph 13 to the contrary notwithstanding, all Required Insurance may be carried under (1) a "blanket" or "umbrella" policy or policies covering other properties or liabilities of Lessee, its parent company, or any of its parent company's subsidiaries, provided, that such policies otherwise comply with the provisions of this Lease and specify the coverage and amounts thereof with respect to the Leased Premises, and (2) a policy or policies providing for self-insurance of deductible amount of up to $1,000,000. 14. Casualty. (a) Lessee hereby irrevocably assigns to Lessor any compensation or insurance proceeds to which Lessee may become entitled by reason of Lessee's interest in the Leased Premises if the Leased Premises or any part thereof are damaged or destroyed by fire or other casualty, provided, however, that Lessee may retain any insurance proceeds or compensation relating to Lessee's Improvements. If the Leased Premises or any part thereof shall be damaged or destroyed by fire or other casualty, and if the estimated cost of rebuilding, replacing or repairing the same shall exceed $100,000, Lessee promptly shall notify Lessor thereof. Lessee shall negotiate, prosecute and adjust any claim for any compensation or insurance payment on account of any such damage or destruction; and Lessor shall collect any such compensation or insurance payment. All amounts paid in connection with any such damage or destruction shall be applied pursuant to this paragraph 14, and 23 all such amounts (except such amounts with respect to Lessee's Improvements) paid or payable in connection therewith (minus the expenses of collecting such amounts) are herein called the Net Casualty Proceeds. Lessee shall pay all reasonable costs and expenses (including any legal fees of any Permitted Mortgagee required to be paid by Lessor pursuant to any Permitted Mortgage) in connection with each such negotiation, prosecution and adjustment, for which costs and expenses Lessee shall be reimbursed out of any compensation or insurance payment received. Lessor shall be entitled to participate in any such negotiation, prosecution and adjustment, and the reasonable expenses thereof (including counsel fees and expenses) shall be paid by Lessee. (b) After an occurrence of the character referred to in paragraph 14(a), except as hereinafter set forth, Lessee shall (whether or not it has received any Net Casualty Proceeds), at its expense, rebuild, replace or repair any damage to the Leased Premises caused by such event in conformity with the requirements of paragraph 11 (a) so as to restore the Leased Premises (as nearly as practicable) to the condition and market value thereof immediately prior to such occurrence. Lessee shall not be required to rebuild or replace any damage to Lessee's Improvements so long as such failure shall not materially lessen the value or use of the remaining Leased Premises; provided, however, that if, in Lessee's good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee's improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection with such occurrence shall be paid to Proceeds Trustee, and this Lease shall continue in full effect, provided, that if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of 24 Net Casualty Proceeds, such Net Casualty Proceeds shall be paid to the Senior Permitted Mortgagee, and if there is no Senior Permitted Mortgagee then to Lessor, in all events for application pursuant to this paragraph 14(b). Lessee shall be entitled to receive the Net Casualty Proceeds, but only against certificates of the President or any Vice President of Lessee delivered to Lessor and Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive the Net Casualty Proceeds in an aggregate amount of up to $100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Casualty Proceeds remaining after such repairs have been made are less than $250,000 they shall be paid to Lessee. If such remaining Net Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Senior Permitted Mortgage then outstanding. To the extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the First Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of which shall be the 25 applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which each such installment of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Senior Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). If the cost of any repairs required to be made by Lessee pursuant to this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the deficiency shall be paid by Lessee. (c) If the Leased Premises shall be substantially damaged or destroyed in any single casualty so that, in Lessee's good faith judgment, the Leased Premises shall be unsuitable for restoration for continued use and occupancy in Lessee's business, then at Lessee's option in lieu of rebuilding, replacing and repairing the Leased Premises, Lessee may give notice to Lessor, within 30 days after the occurrence of such damage or destruction, of Lessee's intention to terminate this Lease on the next Basic Rent Payment Date which occurs not less than 210 days after the delivery of such notice (the Termination Date), provided that, if the Termination Date occurs during the Primary Term, such notice shall be accompanied by (i) an irrevocable offer of Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the Termination Date at a price determined in accordance with Schedule C hereof 26 (the Purchase Offer), and (ii) a certificate signed by the President or any Vice President of Lessee stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased Premises unsuitable for restoration, replacement and rebuilding for Lessee's continued use and occupancy and that the Leased Premises will not be restored. If Lessor shall reject such offer by notice to Lessee not later than the 30th day prior to the Termination Date, the Net Casualty Proceeds and the right thereto shall be assigned to and shall belong to Lessor and this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee under this Lease, actual or contingent, which have arisen on or prior to the Termination Date, but only upon payment by Lessee of all Basic Rent, additional rent, and other sums due and payable by it under this Lease to and including the Termination Date; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure. Unless Lessor shall have rejected such offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and on the Termination Date, Lessor shall convey the remaining portion of the Leased Premises, if any, and all its interest in the Net Casualty Proceeds in accordance with paragraph 16. If the Termination Date shall occur during an Extended Term, Lessee shall not be required to offer to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall belong to Lessor and this Lease shall terminate; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 27 15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure. If the conditions set forth in the first sentence of this paragraph 14(c) are fulfilled and Lessee fails to commence to rebuild, replace or repair the Leased Premises within 30 days after final adjustment of all insurance claims made in connection therewith (but in no event later than one hundred eighty days after the occurrence of such damage or destruction), Lessee conclusively shall be deemed to have made such Purchase Offer and in the absence of a written Purchase Offer by Lessee the Termination Date shall be deemed to be the next Basic Rent Payment Date which occurs not less than 210 days after such Purchase Offer is presumed to have been made; but nothing in this sentence shall relieve Lessee of its obligation actually to deliver such Purchase Offer. 15. Reimbursement for Alterations and Additions; Purchase of Unimproved Land. (a) On any one or more dates during the Primary Term, Lessee may request in writing (herein called a Lessee's Request) that Lessor pay to Lessee the amount of Lessee's theretofore unreimbursed expenses (herein called Reimbursable Expenses), which have been incurred by Lessee in connection with the construction of additional structures on a portion or portions of the Leased Premises upon which there are no major structures then existing and/or additions, alterations to, or remodeling of, structures then existing on the Leased Premises and the acquisition of land adjacent to the Leased Premises (herein collectively called the Additions), which Additions are permitted by paragraph 11(a) but are in addition to, and do not constitute, alterations, additions or remodeling which Lessee is required to make upon the Leased Premises pursuant to any provision of this Lease, and which Additions conform to the character and quality of the then existing improvements on the Leased Premises. Lessee shall have the right to make a Lessee's Request only if (i) 28 the construction of any Additions with respect to which such Reimbursable Expenses have been incurred shall have been completed not more than two years prior to the date of the Lessee's Request, (ii) the amount of such Reimbursable Expenses is not less than $500,000, (iii) the value or use of the Leased Premises shall not be materially impaired by such Additions and (iv) the sum of such requested Reimbursable Expenses and all Reimbursable Expenses previously paid to Lessee pursuant to this paragraph 15(a) shall not exceed $10,000,000. Each Lessee's Request shall be accompanied by architect's drawings and specifications as previously approved by Lessor pursuant to paragraph ll(a) hereof and accepted by Lessee, relating to the Additions with respect to which such Request is made, and a Lessee's Certificate setting forth in reasonable detail the amount and character of the Reimbursable Expenses with respect to which such Request is made and a description of such Additions, stating that the construction of such Additions has been completed in compliance with the requirements of this paragraph 15, specifying the dates on which the construction of such Additions were commenced and completed, and stating that such Reimbursable Expenses are reimbursable in the amount requested under the terms of this paragraph 15. Upon receipt of such Lessee's Request, Lessor agrees to use its best efforts to arrange for the financing of such Reimbursable Expenses on terms and conditions satisfactory to Lessor and Lessee and consistent with the provisions of any Senior Permitted Mortgage. Lessor and Lessee shall negotiate in good faith to enable Lessor to finance such Reimbursable Expenses, having regard to then existing economic, financial and money market conditions. Within ninety days after the receipt of such Lessee's Request, drawings, specifications and Certificate, Lessor agrees to pay to Lessee an amount equal to such Reimbursable Expenses so certified, but 29 only if the following further conditions shall have been fulfilled within such 90-day period: (i) Lessor shall have issued and sold evidence of indebtedness (herein called the Additional Indebtedness) pursuant to a Senior Permitted Mortgage, for the purposes of obtaining funds to pay such Reimbursable Expenses to Lessee; (ii) The proceeds of the sale of the Additional Indebtedness actually received by Lessor shall have been not less than the amount of such Reimbursable Expenses; (iii) Lessor and Lessee shall have authorized, executed and delivered a supplement to this Lease, which supplement (herein called the Lease Supplement) shall: (A) increase the Basic Rent payments required to be made thereafter during the Primary Term by an amount which shall be at least sufficient to make each payment, when due, of principal of, and interest on, the Additional Indebtedness, (B) increase each Basic Rent payment to be made during the Extended Terms by an amount which shall be at least sufficient to make each payment, when due, of principal of, and interest on, the Additional Indebtedness during the portion of such Extended Terms that such Additional Indebtedness is outstanding, and Lessee shall not, and is obligated not to, cancel its option to extend the term hereof to a date not earlier than the maturity of the Additional Indebtedness, (C) increase the purchase prices set forth in Schedule C hereto that would be payable upon a purchase of the Leased Premises by Lessee pursuant to paragraph 12(b) or 14(c), in each case by amounts which shall at all times thereafter be at least sufficient to pay or prepay the principal amount of the Additional Indebtedness to be then outstanding (without adjustments for any prepayments made by Lessor), and (D) make such other changes, if any, as shall be necessary or appropriate, in the opinion of counsel for holders of the Additional Indebtedness, by reason of the transactions contemplated by this paragraph; and (iv) Lessor shall have received from Lessee such other Lessee's Certificates, opinions of counsel for Lessee, surveys of the Leased Premises, title insurance policies, consents to the assignment and reassignment of this Lease (as supplemented) and other instruments as Lessor may reasonably request in order to enable Lessor to finance the cost of such Reimbursable Expenses by the issuance and sale of the Additional Indebtedness. 30 (b) As long as Lessor has used its best efforts to arrange financing as set forth in subparagraph (a) above, Lessor shall incur no liability to Lessee by reason of the fact that Lessor does not pay Reimbursable Expenses, and if Lessor does not pay such Reimbursable Expenses, except as expressly provided in subparagraph (c) below, this Lease shall continue in full effect, without modification. All expenses incurred in connection with the issuance by Lessor of Additional Indebtedness shall be borne by Lessee. (c) If, after the conditions specified above have been satisfied within 180 days of such Lessee's Request, Lessor shall not have paid to Lessee an amount equal to such Reimbursable Expenses and if such Additions are either contiguous to the Improvements or free standing (or subject to a party wall pursuant to an agreement satisfactory in form and substance to Lessor and any Senior Permitted Mortgagee) upon unimproved land constituting part of the Leased Premises, then Lessee shall have the option, to be exercised by giving 90 days' notice to Lessor, to purchase such portion of the unimproved land (together with any requisite easements) as is necessary for the construction of such Additions, provided that such land (together with any land purchased pursuant to paragraph 15(d) hereof, called the Unimproved Land) shall not be improved by any permanent structure included in the Improvements and provided further that the remainder of the Leased Premises, after excluding the Unimproved Land, would (1) constitute an integrated economic unit including sufficient parking and all necessary utility easements, (2) be a continuous parcel of land, without gap or hiatus and be separately assessed for tax purposes, (3) have adequate access to and from public highways, (4) not be in violation of any Legal Requirement or Required Insurance, and (5) would have a market value at least equal to the outstanding amount of the Senior Permitted 3l Mortgage as of such date. The purchase price for the Unimproved Land shall be the greater of (x) fair market value attributable to such Unimproved Land, as unencumbered by this Lease and without regard to any of Lessee's continuing rights and obligations under this Lease, assuming Lessee shall have extended the Lease for all Extended Terms, as determined by Lessor and Lessee, and in the event of their failure to agree, as determined by the Appraisal Procedure or (y) Lessor's original cost attributable to such Unimproved Land as set forth in Schedule A hereto. Lessee agrees that it shall bear the costs of the Appraisal Procedure. On the date for purchase specified in Lessee's notice, Lessor shall convey such Unimproved Land to Lessee or its designee pursuant to and in compliance with paragraph 16. In the event of such purchase by Lessee, Lessee agrees that (x) no improvements will be undertaken upon such Unimproved Land which would materially reduce the value of the remainder of the Leased Premises and (y) Lessee will grant such easements to Lessor or enter into such cross-easement agreements with Lessor relating to the Unimproved Land as are reasonably necessary to operate the remainder of the Leased Premises as an integrated economic unit with no material reduction in the value thereof. (d) In addition to the option contained in 15(c), Lessee shall have the option to purchase all or any portion of the land described in Part 2 of Schedule A, and structure or Improvements thereon,* in the manner, at the price and in accordance with the terms of subparagraph 15(c), provided that such purchase shall not materially impair the value or use of the remainder of the Leased Premises. Lessee shall have such option only if (i) Lessee shall have undertaken in writing to construct improvements on such property for its - ----------------- * See Schedule A, Part 2, for particulars. 32 own use, and (ii) such improvements are not eligible for financing by Lessor pursuant to the provisions of subparagraph 15(a). (e) To the extent of the cash price paid to Lessor for Unimproved Land purchased pursuant to paragraphs 15(c) or (d), (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after such purchase (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be such purchase price paid to Lessor, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Senior Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in the case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitations shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised provided therein). (f) In lieu of paying cash for the purchase of Unimproved Land pursuant to paragraph 15(c) or (d), Lessee may convey to Lessor a substitute parcel of land (Substitute Land) provided that the following conditions shall be satisfied: the fair market value of the Substitute Land shall equal or exceed the cash purchase price which would have been paid for the Unimproved 33 Land being purchased by Lessee (such fair market value of the Substitute Land being determined by agreement of Lessor and Lessee, or failing such agreement, by the Appraisal Procedure), (ii) all of the conditions set forth in paragraph 15(c) shall be satisfied as to the remaining portion of the Leased Premises taken together with the Substitute Land, and (iii) Lessor and any Permitted Mortgagee shall have approved any exceptions to title to the Substitute Land. All costs and expenses of Lessor and any Permitted Mortgagee incident to the conveyance to Lessor of Substitute Land shall be borne by Lessee. In the event that Unimproved Land is purchased pursuant to paragraph 15(c) or (d) in exchange for Substitute Land rather than the payment of a cash purchase price, the provisions of paragraph 15(e) shall not apply, and this Lease shall continue in full effect without modification of Basic Rent or the amounts set forth in Schedule C hereunder. 16. Procedure Upon Purchase. (a) If Lessee shall purchase the Leased Premises pursuant to this Lease, Lessor need not convey any better title thereto than existed on the date of the commencement of the Term hereof and Lessee or its designee shall accept such title, subject, however, to the state of title to the Leased Premises on the date of the commencement of the Term hereof, the condition of the Leased Premises on the date of purchase and all charges, liens, security interests and encumbrances on the Leased Premises and all applicable Legal Requirements, but free of the lien of all Permitted Mortgages and charges, liens, security interests and encumbrances resulting from acts or failures to act of Lessor taken without the consent of Lessee. (b) Upon the date fixed for any purchase of the Leased Premises hereunder, Lessee shall pay to Lessor in immediately available funds the purchase price therefor specified herein together with all Basic Rent, 34 additional rent and other sums then due and payable hereunder to and including such date of purchase, and Lessor shall deliver to Lessee a special warranty deed to the Leased Premises and any other instruments necessary to assign any other property then required to be assigned by Lessor pursuant hereto. Lessee shall pay all charges incident to such conveyance and assignment, including reasonable counsel fees, escrow fees, recording fees, title insurance premiums and all applicable taxes (other than any income, capital gains or franchise taxes of Lessor) which may be imposed by reason of such conveyance and assignment and the delivery of said deeds and other instruments. Upon the completion of such purchase, but not prior thereto (whether or not any delay or failure in the completion of such purchase shall be the fault of Lessor), this Lease and all obligations hereunder shall terminate, except with respect to obligations and liabilities of Lessee hereunder, actual or contingent, which have arisen on or prior to such date of purchase. 17. Assignment and Subletting. During the Primary Term only, Lessee may sublet all or any part of the Leased Premises without the consent of Lessor (provided, that each such sublease shall expressly be made subject to the provisions of this Lease) and, may assign all its rights and interests under this Lease. If Lessee assigns all its rights and interests under this Lease, the assignee under such assignment shall expressly assume all the obligations of Lessee hereunder in an instrument, approved by Lessor as to form and substance (which approval will not be unreasonably withheld or delayed), delivered to Lessor at the time of such assignment. No assignment or sublease shall affect or reduce any of the obligations of Lessee hereunder, and all such obligations shall continue in full effect as obligations of a principal and not as obligations of a guarantor or surety, to the same extent as though no assignment or subletting had been made, provided that performance 35 by any such assignee or sublessee of any of the obligations of Lessee under this Lease shall be deemed to be performance by Lessee. No sublease or assignment shall impose any obligations on Lessor or otherwise affect any of the rights of Lessor under this Lease. Neither this Lease nor the Term hereby demised shall be mortgaged by Lessee, nor shall Lessee mortgage or pledge the interest of Lessee in and to any sublease of the Leased Premises or the rentals payable thereunder. Any mortgage, pledge, sublease or assignment made in violation of this paragraph 17 shall be void. Lessee shall, within ten days after the execution and delivery of any such assignment or the sublease of all or substantially all of the Leased Premises, deliver a conformed copy thereof to Lessor. Within ten days after the execution and delivery of any sublease of all or any portion of the Leased Premises, Lessee shall give notice to Lessor of the existence and term thereof, and of the name and address of the sublessee thereunder. 18. Permitted Contests. Lessee shall not be required to (i) pay any Imposition, (ii) comply with any statute, law, rule, order, regulation or ordinance, (iii) discharge or remove any lien, encumbrance or charge or (iv) obtain any waivers or settlements or make any changes or take any action with respect to any encroachment, hindrance, obstruction, violation or impairment referred to in paragraph 10(b), so long as Lessee shall contest, in good faith and at its expense, the existence, the amount or the validity thereof, the amount of the damages caused thereby, or the extent of its liability therefor, by appropriate proceedings during the pendency of which there is prevented (A) the collection of, or other realization upon, the tax, assessment, levy, fee, rent or charge or lien, encumbrance or charge so contested, (B) the sale, forfeiture or loss of the Leased Premises, or any part thereof, or the Basic Rent or any additional rent, or any portion thereof, (C) any interference with 36 the use or occupancy of the Leased Premises or any part thereof, and (D) any interference with the payment or collection of the Basic Rent or any additional rent, or any portion thereof. While any such proceedings are pending, Lessor shall not have the right to pay, remove or cause to be discharged the tax, assessment, levy, fee, rent or charge or lien, encumbrance or charge thereby being contested. Lessee further agrees that each such contest shall be promptly prosecuted to a final conclusion. Lessee shall pay, and save Lessor harmless against, any and all losses, judgments, decrees and costs (including all reasonable attorneys' fees and expenses) in connection with any such contest and shall, promptly after the final settlement, compromise or determination (including any appeals) of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interests, costs and expenses thereof or in connection therewith, and perform all acts, the performance of which shall be ordered or decreed as a result thereof; provided, however, that nothing herein contained shall be construed to require Lessee to pay or discharge any lien, encumbrance or other charge created by any act or failure to act of Lessor or the payment of which by Lessee is not otherwise required hereunder, or to perform any act which Lessee is not otherwise required to perform hereunder. No such contest shall subject Lessor or any Permitted Mortgagee to the risk of any criminal liability. Lessee shall give such reasonable security to Lessor or the Senior Permitted Mortgagee as may be demmanded by Lessor or such Senior permitted Mortgagee to insure compliance with the foregoing provisions of this paragraph 18. 37 19. Conditional Limitations; Default Provision. (a) Any of the following occurrences or acts shall constitute an event of default (herein called an Event of Default) under this Lease: (i) If Lessee, at any time during the continuance of this Lease (and regardless of the pendency of any bankruptcy, reorganization, receivership, insolvency or other proceedings, at law, in equity, or before any administrative tribunal, which have or might have the effect of preventing Lessee from complying with the terms of this Lease), shall (1) fail to make any payment when due of Basic Rent, additional rent or other sum herein required to be paid by Lessee hereunder and such failure continues for 5 days, or (2) fail to observe or perform any other provision hereof or any provision of the Assignment of Lease and Guaranty, dated as of the date hereof (the Assignment), from Lessor to Clinton Holding Corporation (the Company), and consented to therein by Lessee and by Lincoln National Corporation (Guarantor) or the Reassignment of Lease and Guaranty, dated as of the date hereof (the Reassignment), from the Company to The Connecticut Bank and Trust Company, National Association and F. W. Kawam (the Trustees), and consented to therein by Lessee and Guarantor, for thirty days after notice to Lessee of such failure has been given (provided, that in the case of any default referred to in this clause (2) which cannot with diligence be cured within such 30-day period, if Lessee shall proceed promptly to cure the same and thereafter shall prosecute the curing of such default with diligence, then upon receipt by Lessor of a Lessee's Certificate stating the reason such default cannot be cured within thirty days and stating that Lessee is proceeding with diligence to cure such default, the time within which such failure may be cured shall be extended for such period as may be necessary to complete the curing of the same with diligence but not to exceed 120 days without Lessor's written consent which consent shall not be unreasonably withheld); or (ii) if any representation or warranty of Lessee or Guarantor set forth in any notice, certificate, demand, request or other instrument delivered pursuant to, or in connection with, this Lease, the Assignment, or the Reassignment shall either prove to be false or misleading in any material respect as of the time when the same shall have been made, or with respect to any such representation or warranty Lessee or Guarantor shall fail to include in such representation or warranty any fact or statement necessary in light of 38 the circumstances in which such representation or warranty was made to make such representation or warranty not misleading in any material respect as of the time when the same shall have been made; or (iii) if Lessee or Guarantor shall file a petition commencing a voluntary case under the Federal Bankruptcy Code or any other federal or state law (as now or hereafter in effect) relating to bankruptcy, insolvency, reorganization, winding-up or adjustment of debts (hereinafter collectively called Bankruptcy Laws), or if Lessee or Guarantor shall (A) apply for or consent to the appointment of, or the taking of possession by, any receiver, custodian, trustee, United States Trustee or liquidator (or other similar official) of the Leased Premises or any part thereof or of any substantial portion of Lessee's property, or (B) generally not pay their respective debts as they become due, or if either Lessee or Guarantor admits in writing its inability to pay its respective debts generally as they become due or (C) makes a general assignment for the benefit of its respective creditors, or (D) files a petition commencing a voluntary case under or seeking to take advantage of any Bankruptcy Law, or (E) fails to controvert in timely and appropriate manner, or in writing acquiesces to, any petition commencing an involuntary case against Lessee or Guarantor or otherwise filed against Lessee or Guarantor pursuant to any Bankruptcy Law, or (F) takes any corporate action in furtherance of any of the foregoing, or (iv) if an order for relief against Lessee or Guarantor shall be entered in any involuntary case under the Federal Bankruptcy Code or any similar order against Lessee or Guarantor shall be entered pursuant to any other Bankruptcy Law, or if a petition commencing an involuntary case against Lessee or Guarantor or proposing the reorganization of Lessee or Guarantor under any Bankruptcy Law shall be filed and not be discharged or denied within 60 days after such filing, or if a proceeding or case shall be commenced in any court of competent jurisdiction seeking (A) the liquidation, reorganization, dissolution, winding-up or adjustment of debts of Lessee or Guarantor, or (B) the appointment of a receiver, custodian, trustee, United States Trustee or liquidator (or any similar official) of the Leased Premises or any part thereof or of Lessee or Guarantor or of any substantial portion of Lessee's or Guarantor's property, or (C) any similar relief as to Lessee or Guarantor pursuant to any Bankruptcy Law, and any such proceeding or case shall continue undismissed or an order, judgment or decree approving or ordering any of the foregoing 39 shall be entered and continue unstayed and in effect for 60 days; or (v) if (a) a final judgment for the payment of money in an amount greater than $50,000 or (b) final judgments for the payment of money aggregating in an amount greater than $300,000 shall be rendered against Lessee or Guarantor and Lessee or Guarantor shall not discharge the same or cause it to be discharged within 60 days from the entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and secure a stay of execution or an appeal bond in the amount of said judgment pending such appeal; or (vi) if the Leased Premises shall be left both unattended and without maintenance as provided herein, for a period of thirty days; or (vii) if Guarantor shall fail to observe or perform any provision of the Guaranty or of the Other Guaranties, or pursuant to the terms thereof shall be deemed to be in default thereunder, and such failure or default shall continue for thirty days after notice to Guarantor, provided, however, that the foregoing shall not be construed as extending the period of time during which the Guarantor is required to pay or perform any obligation of Lessee hereunder or under the Assignment or Reassignment. (b) If an Event of Default shall have happened and be continuing, Lessor shall have the right at its election to give Lessee written notice of Lessor's intention to terminate the term of this Lease on a date specified in such notice. Thereupon, the term of this Lease and the estate hereby granted shall terminate on such date as completely and with the same effect as if such date were the date fixed herein for the expiration of the term of this Lease, and all rights of Lessee hereunder shall terminate, but Lessee shall remain liable as hereinafter provided. (c) If an Event of Default shall have happened and be continuing, Lessor shall have the immediate right, whether or not the term of this Lease shall have been terminated pursuant to paragraph l9(b), to (i) re-enter and repossess the Leased Premises or any part thereof by force, summary proceedings, ejectment or otherwise and (ii) remove all persons and property 40 therefrom. Lessor shall be under no liability by reason of any such re-entry, repossession or removal. No such re-entry or taking of possession of the Leased Premises by Lessor shall be construed as an election on Lessor's part to terminate the Term of this Lease unless a written notice of such intention be given to Lessee pursuant to paragraph l9(b), or unless the termination of this Lease be decreed by a court of competent jurisdiction. (d) At any time or from time to time after the repossession of the Leased Premises or any part thereof pursuant to paragraph l9(c), whether or not the term of this Lease shall have been terminated pursuant to paragraph l9(b), Lessor may (but shall be under no obligation to) relet the Leased Premises or any part thereof for the account of Lessee, in the name of Lessee or Lessor or otherwise, without notice to Lessee, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions and for such uses as Lessor, in its absolute discretion, may determine, and Lessor may collect and receive any rents payable by reason of such reletting. Lessor shall not be responsible or liable for any failure to relet the Leased Premises or any part thereof or for any failure to collect any rent due upon any such reletting. (e) No termination of the term of this Lease pursuant to paragraph 19(b), by operation of law or otherwise, and no repossession of the Leased Premises or any part thereof pursuant to paragraph l9(c) or otherwise, and no reletting of the Leased Premises or any part thereof pursuant to paragraph 19(d), shall relieve Lessee of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, repossession or reletting. (f) In the event of any such termination or repossession, Lessee will pay to Lessor the Basic Rent, additional rent and other sums required to 41 be paid by Lessee to and including the date of such termination or repossession; and, thereafter, Lessee shall, until the end of what would have been the term of this Lease in the absence of such termination or repossession, and whether or not the Leased Premises or any part thereof shall have been relet, be liable to Lessor for, and shall pay to Lessor, as liquidated and agreed current damages: (i) the Basic Rent, additional rent and other sums which would be payable under this Lease by Lessee in the absence of such termination or repossession, less (ii) the net proceeds, if any, of any reletting effected for the account of Lessee pursuant to paragraph 19(d), after deducting from such proceeds all Lessor's expenses incurred in connection with such reletting (including, without limitation, all repossession costs, brokerage commissions, legal expenses, reasonable attorneys' fees, employees' expenses, alteration costs and expenses of preparation for such reletting). Lessee will pay such current damages on the days on which the Basic Rent would have been payable under this Lease in the absence of such termination or repossession, and Lessor shall be entitled to recover the same from Lessee on each such day. (g) At any time after any such termination or repossession by reason of the occurrence of an Event of Default, whether or not Lessor shall have collected any current damages pursuant to paragraph l9(f), Lessor shall be entitled to recover from Lessee, and Lessee will pay to Lessor on demand, as and for liquidated and agreed final damages for Lessee's default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount by which (a) the Basic Rent, additional rent and other sums which would be payable under this Lease from the date of such demand (or, if it be earlier, the date to which Lessee shall have satisfied in full its obligations 42 under paragraph l9(f) to pay current damages) for what would be the then unexpired Term of this Lease in the absence of such termination or repossession, discounted at the rate of 8% per annum over (b) the then fair net rental value of the Leased Premises for the same period discounted at the rate of 8% per annum. If any statute or rule of law shall validly limit the amount of such liquidated final damages to less than the amount above agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law. (h) Notwithstanding anything to the contrary stated herein, if an Event of Default shall have happened and be continuing, whether or not Lessee shall have abandoned the Leased Premises, Lessor may elect to continue this Lease in effect for so long as Lessor does not terminate Lessee's rights to possession of the Leased Premises and Lessor may enforce all of its rights and remedies hereunder including without limitation the right to recover all Basic Rent, additional rent and other sums payable hereunder as the same become due. 20. Additional Rights of Lessor. (a) No right or remedy herein conferred upon or reserved to Lessor is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. The failure of Lessor to insist at any time upon the strict performance of any covenant or agreement or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future. A receipt by Lessor of any Basic Rent, any additional rent or any other sum payable hereunder with knowledge of the breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach, and no waiver by Lessor of any provision of this Lease shall be deemed to have been 43 made unless expressed in writing and signed by Lessor. In addition to other remedies provided in this Lease, Lessor shall be entitled, to the extent permitted by applicable law, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, conditions or provision of this Lease, or to decree compelling performance of any of the covenants, agreements, conditions or provisions of this Lease, or to any other remedy allowed to Lessor at law or in equity. (b) To the extent it may lawfully do so, Lessee hereby waives and surrenders for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future constitution, statute or rule of law to redeem the Leased Premises or to have a continuance of this Lease for the term hereby demised after termination of Lessee's right of occupancy by order or judgment of any court or by any legal process or writ, or under the terms of this Lease or after the termination of the term of this Lease as herein provided, and (ii) the benefits of any present or future constitution, statute or rule of law which exempts property from liability for debt or for distress for rent. (c) In the event an action shall be brought for the enforcement of any right hereunder, the party cast in judgment shall pay to the prevailing party all the expenses incurred in connection therewith including reasonable attorneys' fees. 21. Notices, Demands and Other Instruments. All notices, demands, requests, consents, approvals and other instruments required or permitted to be given pursuant to the terms of this Lease shall be in writing and shall be deemed to have been properly given if (a) with respect to Lessee, sent by certified or registered mail, postage prepaid, or sent by telegram or delivered by hand, in each case addressed to Lessee at its address first above 44 set forth, and (b) with respect to Lessor, sent by certified or registered mail, postage prepaid, or sent by telegram or delivered by hand in each case, addressed to Lessor at its address first above set forth. Lessor and Lessee shall each have the right from time to time to specify as its address for purposes of this Lease any other address in the United States of America upon giving 15 days' notice thereof, similarly given, to the other party. 22. Estoppel Certificates; Consents and Financial Statements. (a) Lessee and Lessor will, at any time and from time to time, upon not less than twenty days' prior request by the other party, execute, acknowledge and deliver to the other party a Certificate, certifying that this Lease is unmodified and in full effect (or setting forth any modifications and that this Lease is in full effect as modified) and the dates to which the Basic Rent, additional rent and other sums payable hereunder have been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer may have knowledge; it being intended, inter alia, that any such certificate may be relied upon by any mortgagee or prospective purchaser or prospective mortgagee of the Leased Premises. (b) From time to time during the term of this Lease, Lessor expects to secure financings of its interest in the Leased Premises by assigning Lessor's interest in this Lease and the sums payable hereunder. In the event of any such assignment to a Permitted Mortgagee, Lessee will, upon not less than ten days' prior request by Lessor, execute, acknowledge and deliver to Lessor a consent to such assignment addressed to such Permitted Mortgagee in a form satisfactory to such Permitted Mortgagee; and Lessee will produce, at Lessee's expense (but only with respect to the initial financing involving the 45 interest in this Lease or in such leasehold estate as well as the fee estate in the Leased Premises or any portion thereof. 24. Surrender. Upon the termination of this Lease, Lessee shall peaceably surrender the Leased Premises to Lessor in the same condition in which they were received from Lessor at the commencement of this Lease, except as altered as permitted or required by this Lease and except for ordinary wear and tear. Provided that Lessee is not in default hereunder, Lessee shall remove from the Leased Premises prior to or within a reasonable time after (not to exceed thirty days) such termination all property not owned by Lessor, and, at Lessee's expense, shall, at such time of removal, repair any damage caused by such removal. Property not so removed shall become the property of Lessor. Lessor may thereafter cause such property to be removed from the Leased Premises and disposed of. The cost of any such removal and disposition and the cost of repairing any damage caused by such removal shall be borne by Lessee. 25. Separability. Each and every covenant and agreement contained in this Lease is separate and independent, and the breach of any thereof by Lessor shall not discharge or relieve Lessee from any obligation hereunder. If any term or provision of this Lease or the application thereof to any person or circumstances or at any time shall to any extent be invalid and unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances or at any time other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and shall be enforced to the extent permitted by law. 26. Binding Effect. All of the covenants, conditions and obligations contained in this Lease shall be binding upon and inure to the 47 benefit of the respective successors and assigns of Lessor and Lessee to the same extent as if each such successor and assign were in each case named as a party to this Lease. This Lease may not be changed, modified or discharged except by a writing signed by Lessor and Lessee. 27. Table of Contents, Headings. The table of contents and headings used in this Lease are for convenient reference only and shall not to any extent have the effect of modifying, amending or changing the provisions of this Lease. 28. Governing Law. This Lease shall be governed by and interpreted under the laws of the State of Indiana. 29. Certain Definitions. (a) The term "Appraisal Procedure" means: Lessee and Lessor shall each select an MAI appraiser. Such value shall be determined by agreement of the full appraisals of such two appraisers pursuant to the terms of this Lease; and if no agreement can be reached by such two appraisers, such value shall be determined by the full appraisal of a third MAI appraiser, who shall be selected by the original two appraisers. All reasonable and necessary costs of the appraisals shall be paid by Lessee. (b) The term "Guarantor" means: Lincoln National Corporation, an Indiana corporation. (c) The term "Guaranty" means: The Guaranty, dated the date hereof, from Guarantor to Lessor, guaranteeing performance of Lessee's obligations under this Lease. (d) The term "Impositions" means: (i) all taxes, assessments (including assessments for benefits from public works or improvements, whether or not begun or completed prior to the commencement of the Term of this Lease and whether or not to be completed within said Term), levies, fees, water and sewer rents and charges, and all other governmental charges of every kind, general and special, ordinary and extraordinary, whether or not the same shall have 48 been within the express contemplation of the parties hereto, together with any interest and penalties thereon, which are, at any time, imposed or levied upon or assessed against (A) the Leased Premises or any part thereof, (B) any Basic Rent, any additional rent reserved or payable hereunder or any other sums payable by Lessee hereunder, (C) this Lease or the leasehold estate hereby created or which arise in respect of the operation, possession, occupancy or use of the Leased Premises: (ii) any gross receipts or similar taxes imposed or levied upon, assessed against or measured by the Basic Rent, additional rent or any other sums payable by Lessee hereunder or levied upon or assessed against the Leased Premises; including without limitation [reference to Indiana gross receipts tax]; (iii) all sales and use taxes which may be levied or assessed against or payable by Lessor or Lessee on account of the acquisition, leasing or use of the Leased Premises or any portion thereof; and (iv) all charges for water, gas, light, heat, telephone, electricity, power and other utilities and communications services rendered or used on or about the Leased Premises. (e) The term "Junior Permitted Mortgagees" means American States Insurance Company, as mortgagee under a mortgage, dated as of the date hereof, from Lessor, as mortgagor, and its assigns; and Dean Witter Realty Inc., as mortgagee under a mortgage dated as of the date hereof, from Lessor, as mortgagor, and its assigns. (f) The term "this Lease" means: this Lease and Agreement as amended and modified from time to time, together with any memorandum or short form of lease entered into for the purpose of recording. (g) The term "Lessee's Certificate" means: a written certificate signed by the Chairman of the Board, the President or any Vice President of Lessee. (h) The term "Lessor's Cost" means Lessor's Cost from time to time as set forth in Schedule C. 49 (i) The term "Other Guaranties" means: the Guaranties, dated as of the date hereof, from Guarantor to Lessor guaranteeing performance of the obligations of Lincoln National Pension Insurance Company, as lessee, under a Lease and Agreement, dated as of the date hereof, and the Guaranty, dated as of the date hereof, from Guarantor to Lessor guaranteeing performance of the obligations of American States Insurance Company, as lessee, under a Lease and Agreement, dated as of the date hereof. (j) The term "Permitted Mortgage" means: any mortgage, deed of trust, security agreement, assignment of lease or other security instrument relating to the Leased Premises and this Lease, subject to the rights of lessee under this Lease, and securing the borrowing by Lessor from Clinton Holding Corporation, a Delaware corporation (the Senior Permitted Mortgage), made at the time of execution of this Lease, or any refinancing thereof, or the mortgages to the Junior Permitted Mortgagees (the Subordinated Permitted Mortgage). (k) The term "Permitted Mortgagee" means the Senior Permitted Mortgagee and the Junior Permitted Mortgagees. (l) The term "Purchase Offer" means: an offer delivered by Lessee to Lessor, executed by the president or any vice president of Lessee, irrevocably offering to purchase the Leased Premises pursuant to the provisions of paragraphs 12 or 14 on any Termination Date specified in such Offer at a price determined in accordance with Schedule C. (m) The term "Senior Permitted Mortgagee" means The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as trustees, as assignees of Clinton Holding Corporation, and their successors and assigns. (n) The term "Termination Date" means: any Basic Rent Payment Date. 30. Lessee's Options; Right of First Refusal. (a) If no event of default hereunder has occurred and is continuing, Lessee shall have the option to purchase the Leased Premises either (x) on the last day of the Primary Term 50 or (y) on the last day of the first, second, third, fourth, fifth and sixth Extended Terms if the Lease has been extended to any such date (any of such dates for purchase being referred to as the Purchase Date), upon not less than 360 days prior written notice to Lessor of its intention to exercise such option. The purchase price payable upon the exercise of such option shall be the fair market value of the Leased Premises as of the Purchase Date, taking into consideration Lessee's continuing rights and obligations under this Lease assuming Lessee shall have extended the Lease for all Extended Terms, minus the enhancement of the fair market value of the Leased Premises due to the existence of Lessee's Improvements and that portion of the Improvements, if any, constructed by Lessee at its own expense and for which Lessee has not been reimbursed pursuant to paragraph 15. If Lessee and Lessor cannot agree as to such fair market value, such fair market value shall be determined in accordance with the Appraisal Procedure. Such Appraisal Procedure shall be completed within 150 days after Lessee's notice as set forth above. Lessee's option shall be exercisable by giving notice of such exercise to Lessor not less than 360 days prior to the Purchase Date. On the Purchase Date, Lessor shall convey the Leased Premises to Lessee pursuant to and upon compliance with paragraph 16. The foregoing option is personal to Lessee, and such option is not assignable (except by Lessee to any of its affiliates) notwithstanding any assignment of the Lease to any other person. (b) If, at any time during the Primary Term or any Extended Term of this Lease, Lessor shall receive and be willing to accept a bona fide offer from a third party to purchase Lessor's interest in the Leased Premises, other than an offer to purchase such interest at any sale incidental to foreclosure or other similar proceedings, or if Lessor shall offer to sell its interest in the Leased Premises to any third party, Lessor shall promptly transmit to 51 Lessee its written offer to sell such interest to Lessee upon the same terms and conditions as are set forth in the third party offer or its offer to a third party, as the case may be, together with a true copy of such offer (containing the name and address of such third party); provided, however, that Lessor's offer to Lessee shall be reduced by the enhancement of the fair market value of the Leased Premises due to the existence of Lessee's Improvements and that portion of the Improvements, if any, constructed by Lessee at its own expense and for which Lessee has not been reimbursed pursuant to paragraph 15, as determined by the Appraisal Procedure. Lessee shall have 30 business days within which to accept such offer. If Lessee shall accept such offer by written notice to Lessor within such time, such offer and acceptance shall constitute a contract between them for the sale by Lessor and the purchase by Lessee of the Leased Premises, and shall not thereafter be subject to rejection by either party. On the date of such purchase, Lessor shall convey and assign the Leased Premises to Lessee, provided that such conveyance and assignment shall be made subject to the Permitted Exceptions listed in Schedule A hereto, to this Lease, and to such liens, encumbrances, charges, exceptions and restrictions affecting the Leased Premises as such third party is willing to accept in such offer, and provided further that this Lease and any Permitted Mortgage shall continue in full force and effect. If the offer to sell is not so accepted by Lessee, then Lessor may sell the Leased Premises to such third party purchaser upon the terms contained in such original offer by or to such third party and such sale and transfer must be consummated within 180 days following the expiration of the time hereinabove provided for the acceptance by Lessee. If the Leased Premises is sold to a third party, the sale shall be subject to this Lease and 52 all of the provisions hereof, including, without limitation, all options granted to Lessee. 31. Schedules. The following are Schedules A, B and C referred to in this Lease, which are hereby made a part hereof. 53 SCHEDULE A TO LEASE Part 1: Property Description Part 2: Property subject to the option set forth in paragraph 15(d). The Lease will include a legal description of certain specific portions of the Leased Premises which are to be subject to the paragraph 15(d) option. The amount of indebtedness to be prepaid pursuant to the Senior Permitted Mortgage in connection with the exercise of such option will be the greater of (a) the amount herein set forth as the cost attributable to such portion of the Leased Premises or (b) the fair market value of such portion as determined pursuant to paragraph 15(c). Such property and amounts will be as follows: Indianapolis: unimproved land - $1,000,000 Exhibit A Indianapolis, Indiana American States Insurance Company Parcel I: Lots Numbered 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 20 and 21 in Isaac Coe's Subdivision of Square Six (6) of the Donation Lands of the City of Indianapolis, as per plat thereof recorded in Plat Book 1, page 121, in the Office of the Recorder of Marion County, Indiana. Also, vacated Superior Street from the North line of Michigan Street to the South line of North Street, being adjacent to said Lots 1 thru 8, 9 and 21. Also, vacated Pierson Street from the North line of Michigan Street to the South line of the First East-West alley North of Michigan Street, being adjacent to said Lots 10 and 11 thru 15. Also, part of the first alley, heretofore vacated, North of Michigan Street from the West line of Meridian Street to the East line of Pierson Street, being adjacent to said Lots 4, 5, 9, 10, 20 and 21. Parcel II: Lots Numbered 5, 6 and 7 in George W. Miller's Resubdivision of Coe's Subdivision of Square Seven (7) of the Donation Lands of the City of Indianapolis, as per plat thereof recorded in Plat Book 2, page 50, in the Office of the Recorder of Marion County, Indiana. Also, Lots Numbered 1, 2, 3, 4 and 20 in Isaac Coe's Subdivision of Square Seven (7) of the Donation Lands of the City of Indianapolis, as per plat thereof recorded in Plat Book 1, page 139, in the Office of the Recorder of Marion County, Indiana. Also, part of the first alley, heretofore vacated, North of Michigan Street from the West line of Illinois Street to the East line of Muskingham Street, being between and adjacent to said Lots 3 and 4. Parcel III: Part of Illinois Street in the City of Indianapolis, Marion County, Indiana, vacated by Declaratory Resolution 80-VAC-33 on December 10, 1980 and recorded January 6, 1981 as Instrument No. 81-637 in the Office of the Recorder of Marion County, Indiana, to-wit: That portion of Illinois Street extending upward from approximately Seventeen (17) feet above the pavement surface a distance of approximately Thirteen (13) feet, the horizontal location being described as follows: Beginning at a point on the West right-of-way line of North Illinois Street 222.0 feet South from the South right-of-way line of West North Street; thence South along said West right-of-way line of North Illinois Street nine (9.0) feet; thence East at right angles to said West line 90.00 feet to a point on the East right-of-way line of North Illinois Street; thence North along said East line nine (9.0) feet; thence West 90.00 feet to the place of beginning. SCHEDULE B TO LEASE Basic Rent Payments 1. The instalments of Basic Rent payable for the Leased Premises during the Interim Term shall be: $13,336.50 per diem (based on a 360-day year of 12 30-day months), payable on August 31, 1984. 2. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term ending on and including August 31, 1989 shall be $1,382,818 and shall be payable semi-annually in arrears commencing on February 28, 1985 and thereafter on the last day of each August and February thereafter to and including August 31, 1989. 3. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1989 and ending on and including August 31, 1994 shall be $3,143,607 and shall be payable semi-annually in arrears commencing on February 28, 1990 and thereafter on the last day of each August and February thereafter to and including August 31, 1994. 4. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1994 and ending on and including August 31, 1999 shall be $3,198,376 and shall be payable semi-annually in arrears commencing on February 28, 1995 and thereafter on the last day of each August and February thereafter, to and including August 31, 1999. 5. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1999 and ending on and including August 31, 2004 shall be $4,881,238 and shall be payable semi-annually in arrears commencing on February 29, 2000 and thereafter on the last day of each August and February thereafter, to and including August 31, 2004. 6. Each instalment of Basic Rent payable for the Lease to Premises during that portion of the Primary Term commencing on September 1, 2004 and ending on and including August 31, 2009 shall be $5,171,650 and should be payable semi-annually in arrears commencing on February 28, 2005 and thereafter on the last day of each August and February thereafter to and including August 31, 2009. 7. Each instalment of Basic Rent for the Leased Premises during the Extended Terms shall be $2,350,000, and shall be payable semi-annually in arrears commencing on February 28, 2010 and thereafter on the last day of each August and February thereafter occurring during the Extended Terms. If any instalment of Basic Rent shall be payable on a date which shall not be a business day, then such instalment shall be payable on the first business day thereafter. SCHEDULE C TO LEASE COMPUTATION OF PURCHASE PRICES Upon the purchase of the Leased Premises during the Interim or Primary Terms pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall be an amount equal to the amount set forth in column 2 below opposite the period in which such purchase occurs (the first such amount being called "Lessor's Cost") (period 1 being the period beginning on the first day of the Interim Term and ending on and including February 28, 1985, period 2 being the period beginning on March 1, 1985 and ending on and including August 31, 1985, and each succeeding period being the following semiannual period to and including period 50).
Column 1 Column 2 -------- -------- Purchase Period Applicable Amount --------------- ----------------- 1 $49,842,674 2 52,242,603 3 54,132,640 4 56,175,241 5 58,060,719 6 60,046,898 7 61,029,393 8 63,853,382 9 65,734,720 10 67,641,003 11 68,854,073 12 69,027,568 13 69,126,865 14 69,155,036 15 69,185,815 16 69,238,321 17 69,313,908 18 69,414,030 19 69,540,256 20 69,694,271 21 69,823,124 22 69,973,826 23 70,147,359
24 70,344,760 25 70,567,123 26 70,815,600 27 71,091,410 28 71,395,839 29 71,730,247 30 72,096,071 31 70,692,776 32 69,215,218 33 67,657,828 34 66,014,617 35 64,279,150 36 62,444,507 37 60,503,251 38 58,447,384 39 56,268,312 40 53,956,793 41 51,114,613 42 48,104,718 43 44,915,074 44 41,532,767 45 37,943,935 46 34,133,700 47 30,086,089 48 25,783,956 49 21,208,894 50 16,341,141
Upon a partial prepayment of the indebtedness secured by the Senior Permitted Mortgage referred to in paragraph 12(c), 14(b) or l5(e) of this Lease, the amounts set forth above shall be reduced by an amount equal to the amount of the reduction of the principal amount of such indebtedness scheduled to be outstanding during each purchase period, after giving effect to the revised amortization thereof resulting from such partial prepayment in accordance with the terms thereof. (In case such indebtedness is prepaid or otherwise refinanced, the amounts so determined shall be reduced as if such indebtedness had remained outstanding.) IN WITNESS WHEREOF, the parties hereto have caused this Lease to be signed as of the date first above written. CLINTON STREET LIMITED PARTNERSHIP, as Lessor By: Liberty Street Limited Partnership - 84, A General Partner By: E. DAVISSON HARDMAN, JR., --------------------------- E. Davisson Hardman, Jr., A General Partner AMERICAN STATES INSURANCE COMPANY, as Lessee By: P. ERNEST BARTHEL --------------------- NAME: P. Ernest Barthel TITLE: Treasurer This document prepared by: CSAPLAR & BOK One Winthrop Square Boston, Massachusetts 02110 Property Location: Indianapolis, Indiana ASSIGNMENT OF LEASE AND GUARANTY From CLINTON STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 ASSIGNMENT OF LEASES AND GUARANTY, dated as of August 1, 1984, (herein, together with all supplements and amendments hereto, called this Agreement), from CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein called Owner), having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, to CLINTON HOLDING CORPORATION, a Delaware corporation, herein, together with its respective successors and assigns, called Assignee) having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006. To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule A hereto (the Land Parcel) and in the improvements located (the Land Parcel, together with the improvements located thereon being collectively called the Schedule A Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $33,102,310, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $1,320,132 (herein, together with any notes issued in exchange or replacement thereof, called the Series A Owner's Note), (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $12,376,237 (herein, together with any notes issued in exchange or replacement therefor, called the Series B Owner's Note), (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $11,485,149 (herein, together with any notes issued in exchange or replacement thereof, called the Series C Note), (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $5,610,561 (herein, together with any notes issued in exchange or replacement therefor, called the Series D Owner's Note), and (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $2,310,231 (herein, together with any notes issued in exchange or replacement therefor, called the Series E 0wner's Note; the Series E Owner's Note, together with the Series A Owner's Note, the Series B Owner's Note, the Series C Owner's Note and the Series D Owner's Note, are herein collectively called the Owner's Notes). To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule B hereto and in the improvements located thereon (the Schedule B Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $16,551,155, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $660,066, (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $6,188,119, (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $5,742,574, (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $2,805,280 and (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $1,155,116. To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule C hereto and in the improvements located (the Schedule C Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $50,646,535, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September l, 1989, in the original principal amount of $2,019,802, (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $18,935,644, (iii) Series C 14.60% Secured Note Due September l, 1999, in the original principal amount of $17,572,277, (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $8,584,159 and 2 (v) Series E 15.00% Secured Note Due September l, 1999 in the original principal amount of $3,534,653. The Secured Notes of the Owner relating to the Schedule B Property and Schedule C Property are collectively called the Other Owner's Notes, and the Schedule A Property together with the Schedule B Property and the Schedule C Property are collectively called the Properties and individually called a Property. The Owner's Notes and the Other Owner's Notes are secured by three separate Mortgages, each dated as of the date hereof (the Mortgage relating to the Schedule A Property called the Mortgage and all three Mortgages collectively called the Mortgages), from Owner, as mortgagor, to Assignee, as mortgagee, which each creates a lien on a Property. As additional security for the Owner's Notes and the Other Owner's Notes, Owner is entering into the undertakings herein set forth. The Schedule A Property has been leased by Owner to The American States Insurance Company (the Lessee) under a Lease and Agreement, dated as of the date hereof (herein, together with all supplements and amendments thereto, and any memorandum or short form thereof entered into for the purpose of recording, called the Lease), between Owner, as lessor, and the Lessee, as lessee. The obligations of the Lessee under the Lease and hereunder has been guaranteed by Lincoln National Corporation (the Guarantor) pursuant to a Guaranty dated as of the date hereof (the Guaranty). In order to induce Assignee to purchase the Owner's Notes and the Other Owner s Notes and accept the Mortgages, Owner is entering into the undertakings herein set forth with Assignee and is assigning the Lease and the Guaranty to Assignee. NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner agrees as follows: 3 1. Owner, in furtherance of the covenants of the Mortgages and as security for the payment of the principal of, premium, if any, and interest and all other sums payable on the Owner's Notes and the Other Owner's Notes, and of all other sums payable under the Mortgages, and the performance and observance of the provisions thereof, has assigned, transferred, conveyed and set over, and by these presents does assign, transfer, convey and set over to Assignee, all of Owner's estate, right, title and interest in, to and under the Lease, and the Guaranty together with all rights, powers, privileges, options and other benefits of Owner as lessor under the Lease and as beneficiary under the Guaranty including, but not by way of limitation, (i) the immediate and continuing right to receive and collect all rents, income, revenues, issues, profits, insurance proceeds, condemnation awards, moneys and security payable or receivable under the Lease or the Guaranty pursuant to any of the provisions of either thereof, whether as rents or as the purchase price of the Schedule A Property or otherwise (except sums payable directly to any person other than the lessor under the Lease), (ii) the right to accept any offer by Lessee to purchase the Schedule A Property, or part thereof, or any award payable in connection with a taking thereof (provided that such acceptance shall be permitted by the terms of Section 3.1(a) of the Mortgages), (iii) the right and power (which right and power are coupled with an interest) to execute and deliver, as agent and attorney-in-fact of Owner, an appropriate deed or other instrument necessary to convey the Schedule A Property, any part thereof or any award payable in connection with a taking thereof to Lessee if Lessee becomes obligated to purchase the Schedule A Property, any part thereof or any award payable in connection with a taking thereof, (iv) the right to perform all other necessary or appropriate acts as said agent and attorney-in-fact with respect to any purchase and conveyance 4 referred to in clause (iii) above, (v) the right to make all waivers and agreements, (vi) the right to give all notices, consents and releases, (vii) the right to take any legal action upon the happening of a default under the Lease or the Guaranty including the commencement, conduct and consummation of proceedings at law or in equity as shall be permitted under any provision of the Lease or the Guaranty or by law or in equity and (viii) the right to do any and all other things whatsoever which Owner or any lessor is or may be entitled to do under the Lease or the Guaranty. 2. The assignment made hereby is executed as collateral security, and the execution and delivery hereof shall not in any way impair or diminish the obligations of Owner under the provisions of the Lease nor shall any of the obligations contained in the Lease be imposed upon Assignee. Upon a release of the Schedule A Property or part thereof from the lien of the Mortgage, pursuant to the provisions of the Mortgage, said assignment, and all rights herein assigned to Assignee shall cease and terminate and all the estate, right, title and interest of Owner in and to the above-described assigned property shall revert to Owner, and Assignee shall, at the request of Owner, deliver to Owner an instrument in recordable form cancelling this Agreement and reassigning to Owner the above-described assigned property. Upon the payment of the principal of and premium, if any, and all accrued interest on the Owner's Notes and the Other Owner's Notes and of all other sums payable under the Mortgages, or upon a release of all of the Property from the lien of the Mortgage pursuant to the provisions of the Mortgage, said assignment and all rights herein assigned to Assignee shall cease and terminate and all the estate, right, title and interest of Owner in and to the above-described assigned property shall revert to Owner, and Assignee shall, at the request of Owner, deliver to Owner an instrument in recordable form 5 cancelling this Agreement and reassigning to Owner the above-described assigned property. 3. Owner hereby designates Assignee to receive all payments of Basic Rent, purchase prices and other sums payable to the lessor under the Lease and all payments receivable by Owner under the Guaranty and to receive duplicate original copies of all notices, undertakings, demands, statements, documents and other communications which the Guarantor is required or permitted to give, make, deliver to or serve upon assignor under the Guaranty and which the Lessee is required or permitted to give, make, deliver to or serve upon the lessor under the Lease. Owner hereby directs the Lessee to deliver to Assignee, at its address set forth above or at such other address as Assignee shall designate, duplicate original copies of all such notices, undertakings, demands, statements, documents and other communications and no delivery thereof by the Lessee shall be of any force or effect unless made to Owner and also made to Assignee as herein provided. 4. Owner represents to Assignee that Owner has not executed any other assignment of the subject matter of this Assignment other than the Mortgage and that the Lease is in full effect and are not in default. 5. Owner agrees that said assignment and the designation and direction to the Lessee hereinabove set forth are irrevocable, and that it will not take any action as lessor under the Lease or as the beneficiary under the Guaranty which is inconsistent with said assignment, or make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. Owner will, from time to time upon the request of Assignee execute all instruments of further assurance and all such supplemental instruments with respect to this Agreement as the Assignee may specify. 6 6. Owner hereby agrees, and hereby undertakes to obtain the agreements of the Lessee to the following matters: (a) The Lessee consents to the provisions of this Agreement, and agrees to pay and deliver to Assignee all rentals and other sums assigned to Assignee pursuant to this Agreement, without offset, deduction, defense, deferment, abatement or diminution, subject to the provisions of the Lease and will not, for any reason whatsoever, seek to recover from Assignee any moneys duly owed and paid to the Assignee by virtue of this Agreement. The Lessee agrees (i) that all sums payable to Assignee pursuant to the preceding sentence shall be paid in such manner that Assignee shall have "collected funds" on each date on which such sums are due and payable, and addressed to Assignee at its address set forth above or to such other address or manner as may be specified by Assignee by written notice to the Lessee and (ii) to deliver to Assignee duplicate original copies of all notices and other instruments which each may deliver pursuant to the Lease. No such payment or delivery made by a Lessee shall be of any force or effect (i) unless paid to Assignee or delivered to Assignee and Owner as provided above and (ii) until actually received by the Assignee. (b) Owner and the Lessee will not enter into any agreement subordinating, amending, modifying or terminating (except as provided in the Lease) the Lease without the consent thereto in writing of Assignee and any such attempted subordination, amendment, modification or termination without such consent shall be void. In the event that the Lease shall be amended as herein permitted, the Lease as so amended shall continue to be subject to the provisions of this Agreement without the necessity of any further act by any of the parties hereto. The Lessee will remain obligated under the Lease in accordance with its terms, and will not take any action to terminate (except 7 as expressly permitted by the Lease), rescind or avoid the Lease, notwithstanding any action with respect to the Lease which may be taken by an assignee or receiver of Owner or of any such assignee or by any court in any such proceeding. (c) If, pursuant to the Lease, Lessee shall offer to purchase the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof), notice of acceptance of any such offer shall be deemed validly given for all purposes if given by Assignee as permitted by paragraph 1(ii) hereof and notice by Owner of rejection of any such offer shall be void unless accompanied by the written consent of Assignee and no such offer shall be deemed rejected by Owner without the written consent of Assignee. If Lessee shall become obligated to purchase the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof) pursuant to any provision of the Lease, Lessee will accept a deed and other instruments conveying and transferring the Schedule A Property (or any part thereof) which are executed and delivered by Assignee as being in compliance with the provisions of the Lease, provided that said deed and other instruments shall otherwise be in compliance with the provisions of the Lease. If it should become necessary for Assignee or any other party to institute any foreclosure or other judicial proceeding in order that title to the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof) may be conveyed to Lessee, the time within which delivery of the deed or other instruments relating to such conveyance may be made shall be extended to the extent necessary to permit Assignee or such other party to institute and conclude such foreclosure or other judicial proceeding, and the Lease shall not terminate, but shall continue in full effect until the expiration of such period of extension. 8 7. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Agreement may be executed in two or more counterparts and shall be deemed to have become effective when and only when one or more of such counterparts shall have been signed by or on behalf of each of the parties hereto, although it shall not be necessary that any single counterpart be signed by or on behalf of each of the parties hereto, and all such counterparts shall be deemed to constitute but one and the same instrument. This Agreement shall be governed by the laws of the State of Indiana. 8. The following are Schedules A, Schedule B and Schedule C referred to in this Agreement. 9 IN WITNESS WHEREOF, Owner has caused this Agreement to be executed and delivered as of the date first above written. CLINTON STREET LIMITED PARTNERSHIP By: Liberty Street Limited Partnership-84, General Partner, Witness: ALEXANDER J. JORDAN, JR. By: E. DAVISSON HARDMAN --------------------- E. Davisson Hardman, a General Partner AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. AMERICAN STATES INSURANCE COMPANY (SEAL) Attest: By: F. ERNEST BARTHEL --------------------- By: THOMAS M. OBER NAME: F. Ernest Barthel --------------------- NAME: Thomas M. Ober TITLE: Treasurer TITLE: Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. LINCOLN NATIONAL CORPORATION (SEAL) By: Attest: ----------------------- NAME: By: -------------------- TITLE: NAME: TITLE: This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. AMERICAN STATES INSURANCE COMPANY (SEAL) Attest: By: ------------------------------ By: NAME: -------------------------- NAME: TITLE: TITLE: LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. LINCOLN NATIONAL CORPORATION (SEAL) By: MAC A. ROESLER Attest: ------------------------- NAME: Max A. Roesler By: PATRICIA A. ADAMS TITLE: Vice President ------------------------ NAME: Patricia A. Adams TITLE: Assistant Secretary This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this ___ day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. CAROL ANN JOHNSTON --------------------------------- (SEAL) Carol Ann Johnston, Notary Public My commission expires: CAROL A. JOHNSTON Notary Public Resident of Allen County, Indiana My Commission Expires May 15, 1988 STATE OF INDIANA) ) SS: COUNTY OF MARION) Before me, the undersigned, a Notary Public in and for said County and State, this ________ day of August, 1984, personally appeared F. Ernest Barthel and Thomas M. Ober, each of whom acknowledged the execution of the foregoing instrument. (SEAL) My commission expires: VERA IONE KINNEY MY COMMISSION EXPIRES APRIL 19, 1987 (HENDRICKS COUNTY) VERA IONE KINNEY NOTARY PUBLIC COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN ------------------------ Printed JOAN E. HOGAN ------------------------ NOTARY PUBLIC My commission expires: 10-31-86 - ---------------------- Property Location: Indianapolis, Indiana REASSIGMMENT OF LEASE AND GUARANTY From CLINTON HOLDING CORPORATION To THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION and F. W. KAWAM, as Trustees Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 REASSIGNMENT OF LEASE AND GUARANTY, dated as of August 1, 1984, from CLINTON HOLDING CORPORATION, a Delaware corporation (herein, together with its successors and assigns, called the Company) having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, to THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an address at One Constitution Plaza, Hartford, Connecticut 06115, as trustees (the Trustees) under the Collateral Trust Indenture (the Indenture), dated as of August 1, 1984, from the Company, as grantor, to the Trustees, as trustees (the Trustees, together with their successors and assigns, are herein called the Assignee). PRELIMINARY STATEMENT CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (Owner), has entered into a Lease and Agreement, dated as of August 1, 1984 (herein, together with all amendments and supplements thereto and any short form thereof entered into for purposes of recording, called the Lease), with American States Insurance Company, an Indiana corporation, as lessee (Lessee). The obligations of Lessee under the Lease has been guaranteed by Lincoln National Corporation (Guarantor) pursuant to a guaranty, dated as of August 1, 1984, from Guarantor to Owner (the Guaranty). The premises leased pursuant to the Lease consist of the land parcel described in Schedule A hereto (the Land Parcel), all buildings and other improvements located thereon, and all easements, rights and appurtenances relating respectively thereto (collectively, the Property). All right, title and interest of Owner in and to the Lease and the Guaranty have been assigned to the Company pursuant to (i) the mortgage, dated as of the date hereof, relating to the Property (the Mortgage), from Owner, as mortgagor, to the Company, as mortgagee, and (ii) an Assignment of Lease and Guaranty, dated as of the date hereof, relating to the Lease and the Guaranty (herein, together with all supplements and amendments thereto, collectively called the Assignment), from Owner, as assignor, to the Company, as assignee, as security for the (i) Series A 13.90% Secured Notes Due September 1, 1989, in the original principal amount of $4,000,000, (ii) Series B 14.30% Secured Notes Due September 1, 1994, in the original principal amount of $37,500,000, (iii) Series C 14.60% Secured Notes Due September l, 1999, in the original principal amount of $34,800,000, (iv) Series D 14.70% Secured Notes Due September l, 1999, in the original principal amount of $17,000,000, and (v) Series E 15.00% Secured Notes Due September 1, 1999, in the original principal amount of $7,000,000 of Owner. NOW, THEREFORE, in consideration of the premises and the sum of One Dollar ($1) and other valuable consideration, receipt whereof is hereby acknowledged, and in order to secure (i) the due and punctual payment of the Series A 13.90% Collateral Trust Notes Due September l, 1999, the Series B 14.30% Collateral Trust Notes Due September l, 1994, the Series C 14.60% Collateral Trust Notes Due September 1, 1999, the Series D 14.70% Collateral Trust Notes Due September 1, l999 and the Series E 15.00% Collateral Trust Notes Due September 1, 1999 of the Company, issued by the Company under and secured by the Indenture and (ii) the performance of the Company's obligations under the Indenture, the Company has assigned, transferred, conveyed and set over, and by these presents does hereby assign, transfer, convey and set over, to the Assignee, all of its rights, title and interest in and to the Lease, the Guaranty and the Assignment; all without recourse to the Company. The following is the Schedule A referred to in this Reassignment of Lease and Guaranty, which Schedule is hereby incorporated by reference herein. 2 IN WITNESS WHEREOF, the Company has caused this Reassignment of Lease and Guaranty to be executed and its corporate seal to be hereunto affixed and attested by its officers thereunto duly authorized, as of the date first above written. CLINTON HOLDING CORPORATION By: E. DAVISSON HARDMAN, JR. ------------------------------- NAME: E. Davisson Hardman, Jr. (SEAL) TITLE: President Attest: By: ALEXANDER J. JORDAN, JR. -------------------------------- NAME: Alexander J. Jordan, Jr. TITLE: Secretary AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing Reassignment of Lease and Guaranty. AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ------------------------- NAME: F. Ernest Barthel (SEAL) TITLE: Treasurer Attest: By: THOMAS M. OBER ------------------------- NAME: Thomas M. Ober TITLE: Secretary LINCOLN NATIONAL CORPORATION, hereby consents to the foregoing Reassignment of Lease and Guaranty. LINCOLN NATIONAL CORPORATION By: MAX A. ROESLER -------------------------- Name: Max A. Roesler Title: Vice President (SEAL) Attest By: PATRICIA A. ADAMS ------------------------------- Name: Patricia A. Adams Title: Assistant Secretary This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 STATE OF INDIANA) ) SS : COUNTY OF MARION) Before me, the undersigned, a Notary Public in and for said County and State, this ___________ day of August, 1984, personally appeared F. Ernest Barthel and Thomas M. Ober, each of whom acknowledged the execution of the foregoing instrument. (SEAL) VERA IONE KINNEY --------------------- NOTARY PUBLIC My commission expires: VERA IONE KINNEY MY COMMISSION EXPIRES APRIL 19, 1987 (HENDRICKS COUNTY) STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. (SEAL) CAROL ANN JOHNSTON, --------------------------------- Carol Ann Johnston, Notary Public My Commission Expires: CAROL A. JOHNSTON Notary Public Resident of Allen County, Indiana My Commission Expires May 15, 1988 COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan Jr., the President and Secretary, respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN ----------------- Printed Joan E. Hogan ----------------- NOTARY PUBLIC My commission expires: 10-31-86 - --------------------- Re: Assignment of Lease and Guaranty Second Assignment of Lease and Guaranty ("Indianapolis" site) 850105433 CORRECTION AGREEMENT THIS AGREEMENT, made this 7th day of November, 1985, by and between: CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York, 10006, and CLINTON HOLDING CORPORATION, a Delaware corporation, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, WITNESSETH: WHEREAS, the parties to this agreement are parties to one or more instruments, all dated as of August 1, 1984, relating to the leasing by American States Insurance Company of a certain parcel of land located in Indianapolis, Marion County, Indiana ("Indianapolis" site) which aforementioned instruments are as follows: 1. Assignment of Lease and Guaranty Recorded as Instrument No. 840068010 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: American States Insurance Company and Lincoln National Corporation 2. Second Assignment of Lease and Guaranty Recorded as Instrument No. 8400680l5 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: American States Insurance Company and Lincoln National Corporation WHEREAS, the aforesaid instruments, in addition to the legal description of the Indianapolis site, make reference by Schedules B and C, in connection with certain financings, to land located in Fort Wayne, Indiana, commonly known as the "Harrison" site, and the "Lincoln West" site, and CROSS REFERENCE DEC 2 10:27 AM '85 RECEIVED FOR RECORD BETH O'LAUGHLIN RECORDER MARION CO. -2- WHEREAS, the legal description of the "Lincoln West" site which is set forth in Schedule B to each of the foregoing instruments has been determined to be incomplete and, therefore, incorrect, and WHEREAS, it is the mutual desire of the parties hereto that the foregoing instruments be corrected by having appended to each instrument a complete and correct Schedule B legal description, and that such instruments be corrected of record. NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid by each of the parties hereto to each of the other parties hereto, and other valuable considerations each to the other in hand paid, the receipt and sufficiency of which is hereby acknowledged, the parties do mutually covenant and agree: 1. That Schedule B to this agreement be and it hereby is substituted for Schedule B to all of the foregoing instruments. 2. That all other terms, conditions and covenants of the aforesaid instruments are and shall remain in full force and effect except as hereby corrected. 3. That this agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same agreement. 4. That the parties hereto are authorized and directed to attach this Correction Agreement to each of the foresaid instruments, as a part and portion thereof, and to record same among the public records in the Office of the Recorder of Marion County, Indiana, and elsewhere as they shall deem appropriate. -3- This Agreement shall bind and shall inure to the benefit of the respective heirs, successors and assigns of the parties hereto. IN WITNESS HEREOF, the parties have caused this instrument to be executed as of the day and year first above written. CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ---------------------------------- (SEAL) Name: E. Davisson Hardman, Jr. Title: President By: ALEXANDER J. JORDAN, JR. -------------------------------- Name: Alexander J. Jordan, Jr. Title: Assistant Secretary CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. ----------------------------------- E. Davisson Hardman, Jr. A General Partner -4- AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing Correction Agreement. AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ------------------------------ Name: F. Ernest Barthel Title: Vice President (SEAL) Attest: BY: THOMAS M. OBER --------------------------- Name: Thomas M. Ober Title: Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Correction Agreement. LINCOLN NATIONAL CORPORATION BY: MAX ROESLER ----------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ---------------------------- Name: Dolores Prange Title: Assistant Secretary -5- COMMONWEALTH OF MASSACHUSETTS ) ) SS: ) COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985 Signature DOLORES M. ANTONINO ------------------------ Printed Dolores M. Antonino ------------------------ NOTARY PUBLIC My commission expires: July 25, 1991 ------------------------------ -6- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO ------------------------ Printed Dolores M. Antonino ------------------------- NOTARY PUBLIC (SEAL) My commission expires: July 25, 1991 ------------------------------ -7- STATE OF INDIANA ) ) SS: COUNTY OF MARION ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER --------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 ------------------------------ Resident of DeKalb County, lndiana -8- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me Donald F. Butler , a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange as Vice President and Assistant Secretary respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER --------------------------- Donald F. Butler - NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 ------------------------------ Resident of DeKalb County, lndiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. Schedule B PARCEL 1 Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, together with a part of the Northeast Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana, both said parts being more particularly described as follows, to wit: Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'-27" E, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet to the true point of beginning, located on the South right-of-way line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N 89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot-wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence S 00 degrees-03'-32" E, on and along the West line of said easement, a distance of 275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W, a distance of 484.96 feet to an existing line fence; thence S 88 degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line of Interstate Highway #69; thence Northeasterly, on and along said Easterly right-of-way line on the following courses and distances: Northeasterly, on and along the arc of a regular curve to the left having a radius of 4046.53 feet, and being situated 140.0 feet (measured radially) Southeasterly of and concentric to the centerline of I-69, an arc distance of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04 feet to a point situated 100.0 feet (measured radially), Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the left having a radius of 4006.53 feet, and being situated 100.0 feet (measured radially) Southeasterly of and concentric to said I-69 centerline, an arc distance of 410.24 feet (the chord of which bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23 degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 18 degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 14 degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet (measured radially) Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 884.93 feet and being situated 70.0 feet (measured radially) Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined by the Southeasterly edge of pavement of an existing 18 foot-wide concrete ramp, an arc distance of 327.39 feet (the chord of which bears N 26 degrees-38'-02" E, (or a length of 325.53 feet); thence N 35 degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet (measured at right angles) Southeasterly of said line "S-E-C"; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 666.20 feet and being situated 50.0 feet (measured radially) Southeasterly of and concentric to said line "S-E-C", an arc distance of 355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length of 351.75 feet) to the true point of beginning. PARCEL 2 An easement for the purpose of ingress and egress and utilities for the benefit of Parcel 1 created in a deed recorded November 7, 1963 in Deed Record 716, pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781 and 80-16836 over the following real estate. A strip of land 60 feet in width lying 30 feet on either side of the line described as follows: Beginning at the North Quarter Corner of said Section 7, running thence South 89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way line of Frontage Road No. 1, the true point of beginning of this description; thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a tangent curve to the right having a central angle of 25 degrees and a length of 250.00 feet; thence South 24 degrees 38' 27" West of 46.88 feet; thence on a tangent curve to the left having a central angle of 24 degrees 41' 59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more or less to the North line of the South Half of the South Half of the Southeast Quarter of the Northwest Quarter of Section 7, Township 30' North, Range 12 East, the South line of Inverness Investors, Inc. Property. PARCEL 3 An easement for the purpose of ingress and egress for the benefit of Parcel 1 created in an Easement recorded November 7, 1963 in Deed Record 716, pages 153-157 and modified by Agreement recorded as Document Numbers 70-9781 and 80-16836 over the following described real estate. Part of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in Allen County, Indiana, more particularly described as follows, to wit; Beginning at the Northeast corner of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, on the center line of Getz Road; thence West along the North line of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7, a distance of 1323.13 feet to a stone marking the Northwest corner of the South Half of the South Half of the Southeast Quarter of the fractional NW Quarter of said Section 7;thence South along the West line of the East Half of the said fractional Northwest Quarter of Section 7, a distance of 50.00 feet; thence East and parallel to the North line of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the center line of Getz Road, 50 feet South of the place of beginning, thence North on the center line of the Getz Road a distance of 50.0 feet to the place of beginning; and for the installation and perpetual maintenance of sewer and water line within the Northern Half of the above described real estate. CROSS REFERENCE Re: Assignment of Lease and Guaranty Second Assignment of Lease and Guaranty ("Indianapolis" site) PARTIAL RELEASE 850105434 In consideration of the sum of Ten Dollars ($10.00) and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, as parties to one or more of the following-described instruments, to-wit: 1. Assignment of Lease and Guaranty Recorded as Instrument No. 840068010 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: American States Insurance Company and Lincoln National Corporation 2. Second Assignment of Lease and Guaranty Recorded as Instrument No. 840068015 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: American States Insurance Company and Lincoln National Corporation hereby release and discharge the real estate more particularly bounded and described in Exhibit A hereto from the incumbrance and effect of the above-described instruments, which instruments were corrected by that certain Correction Agreement by and among the parties hereto dated November 7, 1985, and recorded December 2, 1985, in the Office of the Recorder of Marion County, Indiana, as Instrument No. 85-105433. The parties hereto agree that this Partial Release may be executed in any number of counterparts an each counterpart shall for all purposes be deemed to be an original; and such counterparts shall together constitute but one and the same instrument. Dated this 7th day of November, 1985. RECEIVED FOR RECORD BETH SHAUGHLIN RECORDER MARION CO. DEC 2 10 27 AM '85 -2- CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ------------------------------ Name: E. Davisson Hardman, Jr. Title: President [SEAL] Attest: BY: ALEXANDER J. JORDAN JR. -------------------------------- Name: Alexander J. Jordan Jr. Title: Assistant Secretary CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. ---------------------------------- E. Davisson Hardman, Jr. A General Partner -3- AMERICAN STATES INSURANCE COMPANY hereby consents to the foregoing Partial Release. AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ----------------------------- Name: F. Ernest Barthel Title: Vice President (SEAL) Attest: BY: THOMAS M. OBER ---------------------------- Name: Thomas M. Ober Title: Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Partial Release. LINCOLN NATIONAL CORPORATION BY: MAX ROESLER ------------------------------ Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ---------------------------- Name: Dolores Prange Title: Assistant Secretary -4- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO --------------------------- Printed Dolores M. Antonino --------------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - ------------------------- -5- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 A Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO --------------------------------- Printed Dolores M. Antonino ----------------------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - --------------------------- -6- STATE OF INDIANA ) ) SS: COUNTY OF MARION ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice President and Secretary, respectively, of AMERICAN STATES INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ---------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ------------------------- Resident of Dekalb County, Indiana -7- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ---------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ------------------------- Resident of Dekalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. Exhibit A A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, being more particularly described as follows: Commencing at the Northwest corner of said Section 7: thence North 89 deg. 56 min. 27 sec. East, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a distance of 145.0 feet to the South right of way line of Road #14 (Illinois Road); thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0 feet; thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet; thence South 25 deg. 15 min. 36 sec. West, a distance of 147.78 feet; thence South 13 deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28 deg. 49 min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07 min. 55 sec. East, a distance of 116.43 feet; thence South 67 degrees 37 min. 33 sec. East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec. East, a distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at a Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence North 89 deg. 56 min. 19 sec. East, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence South 00 deg. 03 min. 32 sec. East, on and along the West line of said easement, a distance of 200.0 feet to the point of beginning; thence continuing South 00 deg. 03 min. 32 sec. East 75.00 feet; thence South 66 deg. 10 min. 20 sec. West, a distance of 1122.16 feet; thence South 89 deg. 56 min. 27 sec. West, a distance of 18.20 feet; thence North 15 deg. 16 min. 15 sec. East, a distance of 549.10 feet; thence South 89 deg. 54 min. 52 sec. East, a distance of 900.00 feet to the point of beginning, containing 6.471 acres and subject to Easements and Rights of Way of Record. EX-10 7 Exhibit (m) LEASE AND AGREEMENT Between CLINTON STREET LIMITED PARTNERSHIP, as Lessor And LINCOLN NATIONAL PENSION INSURANCE COMPANY, as Lessee Dated as of August 1, 1984 Location of Leased Premises: 1700 Magnavox Way Fort Wayne, IN 46804 TABLE OF CONTENTS
Page ---- l. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Title and Condition . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Use of Leased Premises; Quiet Enjoyment . . . . . . . . . . . . . . 2 4. Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6. Net Lease; Non-Terminability. . . . . . . . . . . . . . . . . . . . 4 7. Taxes and Assessments; Compliance with Law. . . . . . . . . . . . . 6 8. Liens; Grants of Easements. . . . . . . . . . . . . . . . . . . . . 7 9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10. Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . 10 11. Alterations and Additions . . . . . . . . . . . . . . . . . . . . . 11 12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 14. Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 15. Reimbursement for Alterations and Additions; Purchase of Unimproved Land . . . . . . . . . . . . . . . . . . . 28 16. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . 34 17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . 35 18. Permitted Contests. . . . . . . . . . . . . . . . . . . . . . . . . 36 19. Conditional Limitations; Default Provision. . . . . . . . . . . . . 37 20. Additional Rights of Lessor . . . . . . . . . . . . . . . . . . . . 43 21. Notices, Demands and Other Instruments. . . . . . . . . . . . . . . 44 22. Estoppel Certificates; Consents and Financial Statements. . . . . . 45 23. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 24. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 25. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 26. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 47 27. Table of Contents, Headings . . . . . . . . . . . . . . . . . . . . 47 28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 29. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 48 30. Lessee's Options; Right of First Refusal . . . . . . . . . . . . . 50 31. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SCHEDULE A - Property Description and Permitted Exceptions SCHEDULE B - Basic Rent Payments SCHEDULE C - Computation of Purchase Prices LEASE AND AGREEMENT, dated as of August 1, 1984 (this Lease) between CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein, together with its successor and assigns, called Lessor), having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006 and LINCOLN NATIONAL PENSION INSURANCE COMPANY, an Indiana corporation (herein, together with any corporation succeeding thereto by consolidation, merger or acquisition of all or substantially all its assets, called Lessee), having an address 1300 South Clinton Street, Fort Wayne, Indiana 46801. Certain words or phrases having initial capitals have the meanings set forth in paragraph 29. 1. Demise of Premises. In consideration of the rents and covenants herein stipulated to be paid and performed, Lessor hereby demises and lets to Lessee, and Lessee hereby lets from Lessor, for the terms herein described, the premises (herein called the Leased Premises) consisting of (i) the land described in Schedule A hereto (herein called the Land Parcel), (ii) all buildings, structures and other improvements thereon, including all building equipment and fixtures, if any, owned by Lessor (herein collectively called the Improvements), but excluding trade equipment, fixtures and other personal property owned by Lessee and Lessee's Improvements (as hereinafter defined in paragraph ll(c)), and (iii) all easements, rights and appurtenances relating thereto, all upon the terms and conditions herein specified. 2. Title and Condition. The Leased Premises are demised and let subject to (a) the rights of any parties in possession and the existing state of the title as of the commencement of the term of this Lease, (b) any state of facts which an accurate survey or physical inspection thereof might show, (c) all zoning regulations, restrictions, rules and ordinances, building restrictions and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction, and (d) the condition of any buildings, structures and other improvements located thereon, as of the commencement of the term of this Lease, without representation or warranty by Lessor. Lessee represents that it has examined the title to and the condition of the Leased Premises and has found the same to be satisfactory. 3. Use of Leased Premises; Quiet Enjoyment. (a) Lessee may occupy and use the Leased Premises for any lawful purpose. (b) If and so long as Lessee shall observe and perform all covenants, agreements and obligations required to be observed and performed by it hereunder, Lessor covenants that it will not and will not permit any party claiming by, through or under Lessor, to interfere with the peaceful and quiet possession and enjoyment of the Leased Premises by Lessee; provided, that Lessor and its agents may, upon prior notice to Lessee (unless Lessor has reason to believe a default or Event of Default hereunder has occurred, in which case no such notice shall be necessary), enter upon and examine the Leased Premises at reasonable times. Lessee shall have the right to accompany Lessor and its agents during any such examination of the Leased Premises. Any failure by Lessor to comply with the foregoing warranties shall not give Lessee any right to cancel or terminate this Lease, or to abate, reduce or make deduction from or offset against any Basic Rent, as hereinafter defined, or additional rent or other sum payable under this Lease, or to fail to perform or observe any other covenant, agreement or obligation hereunder. 4. Terms. Subject to the terms and conditions hereof, Lessee shall have and hold the Leased Premises for (a) an interim term (herein called the Interim Term) commencing on August 30, 1984 and ending at midnight on August 31, 1984; and (b) a primary term (herein called the Primary Term) commencing on September 1, 1984, and ending at midnight on August 31, 2009. Thereafter, 2 Lessee shall have the rights and options to extend this Lease for 6 consecutive extended terms of 5 years each (herein called Extended Terms, and together with the Interim Term and the Primary Term, called the Term) unless this Lease shall be sooner terminated pursuant to the provisions hereof. Each such Extended Term shall commence on the day immediately succeeding the expiration date of the preceding Primary Term or Extended Term, as the case may be, and shall end at midnight on the day immediately preceding the fifth anniversary of the first day of such Extended Term. Each such option to extend this Lease shall conclusively be deemed to have been exercised by Lessee unless Lessee shall give written notice to the contrary to Lessor at least three hundred sixty-five days prior to the end of the then Term of this Lease. No instrument of renewal need be executed, provided that no Extended Term shall take effect unless this Lease is in full force and effect and no default or Event of Default exists and is continuing immediately prior to the commencement thereof. If Lessee gives notice of its intention not to extend this Lease, the term of this Lease shall terminate at the end of the then Term of this Lease and Lessee shall have no further option to extend this Lease. If Lessee gives such notice not to extend this Lease, then Lessor shall have the right during the remainder of the Term of this Lease to advertise the availability of the Leased Premises for sale or reletting and to erect upon the Leased Premises signs appropriate for the purpose of indicating such availability, provided that such signs do not unreasonably interfere with the use of the Leased Premises by Lessee. The phrase "Term of this Lease" or "Term hereof" means the Interim Term and the Primary Term, plus any Extended Term with respect to which the right to extend has been exercised. 5. Rent. (a) Lessee covenants to pay to Lessor, as instalments of rent for the Leased Premises during the Term of this Lease, the amounts set 3 forth in Schedule B hereto (herein called the Basic Rent) on the dates set forth in said Schedule (herein called the Basic Rent Payment Dates), and to pay in immediately available funds the same at Lessor's address set forth above or at such other place within the continental United States and/or to such other person as Lessor from time to time may designate to Lessee in writing, in lawful money of the United States of America. (b) Lessee covenants that all other amounts, liabilities and obligations which Lessee assumes or agrees to pay or discharge pursuant to this Lease (except amounts payable as the purchase price for the Leased Premises or any part thereof pursuant to any provision of this Lease and amounts payable as liquidated damages pursuant to paragraph l9(j) or paragraph l9(g)), together with every fine, penalty, interest and cost which may be added for nonpayment or late payment thereof, shall constitute additional rent hereunder. In the event of any failure by Lessee to pay or discharge any of the foregoing, Lessor shall have all rights, powers and remedies provided herein or by law in the case of nonpayment of Basic Rent. Lessee also covenants to pay to Lessor on demand as such additional rent (A) interest at the rate of 18.00% per annum (or the maximum not prohibited by law, whichever is less), calculated on the basis of a 360-day year of twelve equal months, on all overdue instalments of Basic Rent from the due date thereof (without regard to any grace period) until paid in full and (B) interest at the rate of 16.00% per annum (calculated as set forth in clause (A) above) on all overdue amounts relating to any other aspects of additional rent arising out of obligations which Lessor shall have paid on behalf of Lessee from the date of such payment by Lessor until paid in full. 6. Net Lease; Non-Terminability. (a) This is an absolutely net lease and the Basic Rent, additional rent and all other sums payable hereunder 4 by Lessee, whether as the purchase price for the Leased Premises or otherwise, shall be paid without notice (except as expressly provided herein), demand, set-off, counterclaim, abatement, suspension, deduction or defense. (b) Any present or future law to the contrary notwithstanding, this Lease shall not terminate, nor shall Lessee have any right to terminate this Lease (except as otherwise expressly provided herein), nor shall Lessee be entitled to any abatement or reduction of rent hereunder (except as otherwise expressly provided herein), nor shall the obligations of Lessee under this Lease be affected, by reason of (i) any damage to or destruction of all or any part of the Leased Premises from whatever cause, (ii) the taking of the Leased Premises or any portion thereof by condemnation, requisition or otherwise, (iii) the prohibition, limitation or restriction of Lessee's use of all or any part of the Leased Premises, or any interference with such use, (iv) any eviction by paramount title or otherwise, (v) Lessee's acquisition or ownership of all or any part of the Leased Premises otherwise than as expressly provided in paragraphs 12(b), 14(c) or 15 herein, (vi) any default on the part of Lessor under this Lease, or under any other agreement to which Lessor and Lessee may be parties, (vii) the failure of Lessor to deliver possession of the Leased Premises on the commencement of the Term hereof or (viii) any other cause whether similar or dissimilar to the foregoing. It is the intention of the parties hereto that the obligations of Lessee hereunder shall be separate and independent covenants and agreements, that the Basic Rent, additional rent and all other sums payable by Lessee hereunder shall continue to be payable in all events and that the obligations of Lessee hereunder shall continue unaffected, unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this Lease. 5 (c) Lessee agrees that it will remain obligated under this Lease in accordance with its terms, and that it will not take any action to terminate, rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, or winding-up or other proceeding affecting Lessor or its successor in interest, (ii) any action with respect to this Lease which may be taken by any trustee or receiver of Lessor or its successor in interest or by any court in any such proceeding. (d) Lessee waives all rights which may now or hereafter be conferred by law (i) to quit, terminate or surrender this Lease or the Leased Premises or any part thereof, or (ii) to abate, suspend, defer or reduce the Basic Rent, additional rent or any other sums payable under this Lease, except as otherwise expressly provided herein. 7. Taxes and Assessments; Compliance with Law. (a) Lessee shall pay or discharge each of the following items on or prior to the last day on which such items may be paid without interest or penalty: (i) all Impositions; (ii) all transfer taxes, recording fees and similar charges payable in connection with a conveyance hereunder to Lessee; (iii) all gross receipts or similar taxes imposed or levied upon, assessed against or measured by the Basic Rent, additional rent or any other sums payable by Lessee hereunder or levied upon or assessed against the Leased Premises, to the extent that such tax, assessment or other charge would be payable if the Leased Premises were the only property of Lessor subject thereto, and (iv) any tax, assessment, charge or levy of any nature whatsoever imposed or levied upon or assessed against Lessor or the Leased Premises in substitution for or in place of an Imposition. Lessee shall not be required to pay any franchise, corporate, estate, inheritance, succession, transfer, income, excess profits, or revenue 6 taxes of Lessor which are not described in the preceding sentence. Lessee agrees to furnish to Lessor, within thirty days after written demand therefor, evidence of all payments due under this paragraph 7(a). In the event that any Imposition levied or assessed against the Leased Premises and payable by Lessee becomes due and payable during the Term hereof and may legally be paid in instalments, Lessee may pay such Imposition in instalments and shall be liable only for those instalments which become due and payable during the Term hereof. (b) Lessee shall, at its expense, comply with and shall cause the Leased Premises to comply with, in all material respects, all governmental statutes, laws, rules, orders, regulations and ordinances the failure to comply with which at any time would affect the Leased Premises or any part thereof, or the use thereof, including those which require the making of any structural, unforeseen or extraordinary changes, whether or not any of the same involve a change of policy on the part of the body enacting the same (collectively, the Legal Requirements). Lessee shall, at its expense, comply with all Required Insurance (as defined in paragraph 13), and with the provisions of all contracts, agreements, instruments and restrictions existing at the commencement of the Term of this Lease or thereafter suffered or permitted by Lessee affecting the Leased Premises or any part thereof or the ownership, occupancy or use thereof. 8. Liens; Grants of Easements. (a) Lessee will not, directly or indirectly, create or permit to be created or to remain, and will promptly remove and discharge, at its expense, any mortgage, lien, encumbrance or charge on, pledge of, or conditional sale or other title retention agreement with respect to, the Leased Premises or any part thereof or Lessee's interest therein or the Basic Rent, additional rent or other sums payable by Lessee 7 under this Lease, other than (1) any encumbrances permitted by the Senior Permitted Mortgage described in Paragraph 29(j), (2) any mortgage, lien, encumbrance or other charge, pledge, conditional sale or other title retention agreement created by or resulting from any act or failure to act of Lessor or any agent or assignee of Lessor without the agreement of Lessee and (3) any encumbrance or charge permitted in subparagraph (b) below. Nothing contained in this Lease shall be construed as constituting the consent or request, expressed or implied, by Lessor to the performance of any labor or services or the furnishing of any materials for any construction, alteration, addition, repair or demolition of all of the Leased Premises or any part thereof by any contractor, subcontractor, laborer, materialman or vendor. Notice is hereby given that Lessor will not be liable for any labor, services or materials furnished or to be furnished to Lessee, or to anyone holding the Leased Premises or any part thereof, and that no mechanic's or other liens for any such labor, services or materials shall attach to or affect the interest of Lessor in and to the Leased Premises. (b) Lessor hereby appoints Lessee its agent and attorney-in-fact and authorizes Lessee (i) to grant easements, licenses, rights-of-way and other rights and privileges in the nature of easements, (ii) to release existing easements and appurtenances which are for the benefit of the Leased Premises, (iii) to grant party wall rights for the benefit of any land adjoining the Land Parcel and (iv) to execute and deliver any instrument necessary or appropriate to confirm such grants, releases or consents to any person, with or without consideration (in each case, however, only upon compliance with the provisions of the Senior Permitted Mortgage), provided, that (x) such grant, release or consent shall not materially impair the use of the Leased Premises or materially reduce their value, and (y) the consideration, if any, received 8 by Lessee for such grant, release or consent shall be paid to Lessor and applied pursuant to paragraph 12(c), as if such consideration were a Net Award from an event of Condemnation. Lessee agrees that Lessee will remain obligated under the terms of this Lease to the same extent as if such action had not been taken, and that Lessee will perform all obligations of the grantor, releasor or transferor under any such instrument. 9. Indemnification. Lessee shall defend all actions or claims against Lessor, or any partner of Lessor, or any assignee of Lessor, or any partner, officer, director or shareholder of any assignee of Lessor (collectively, the Indemnified Parties) with respect to, and shall pay, protect, indemnify and save harmless the Indemnified Parties from and against any and all liabilities, losses, damages, costs, expenses (including all reasonable attorney's fees and expenses of the Indemnified Parties), causes of action, suits, claims, demands or judgments of any nature whatsoever (i) arising from any injury to, or the death of, any person or any damage to property on the Leased Premises or upon adjoining sidewalks, streets or ways, in any manner growing out of or connected with the use, non-use, condition or occupation of the Leased Premises or any part thereof or resulting from the condition thereof or of adjoining sidewalks, streets or ways, so long as not occasioned by the affirmative act of Lessor, its agents, servants, employees or assigns, and/or (ii) arising from violation by Lessee of any agreement or condition of this Lease, or any contract or agreement to which Lessee is a party or any restriction, law, ordinance or regulation, in each case affecting the Leased Premises or any part thereof or the ownership, occupancy or use thereof, so long as not occasioned by the intentional fault of Lessor, its agents, servants, employees or assigns. If Lessor or any other Indemnified Party shall be made a party to any such litigation commenced against Lessee, 9 and if Lessee, at its expense, shall fail to provide Lessor or any other such Indemnified Party with counsel (upon Lessor's or such Indemnified Party's request) approved by Lessor or such Indemnified Party, as the case may be, which approval shall not be unreasonably withheld, Lessee shall pay all costs and reasonable attorneys' fees and expenses incurred or paid by Lessor or any other such Indemnified Party in connection with such litigation. Lessor shall give prompt written notice to Lessee of any claim asserted against Lessor, but to Lessor's knowledge not also asserted against Lessee, which, if sustained, may result in liability of Lessee hereunder, but failure on the part of Lessor to give such notice shall not relieve Lessee from Lessee's obligation to exonerate, protect, defend, indemnify and save harmless the Indemnified Parties as aforesaid. 10. Maintenance and Repair. (a) Lessee acknowledges that it has received the Leased Premises in good condition, repair and appearance. Lessee agrees that, at its expense, it will keep and maintain the Leased Premises and any Lessee's Improvements, including any altered, rebuilt, additional or substituted buildings, structures and other improvements thereto, in good condition, repair and appearance, except for ordinary wear and tear, and it will promptly make all structural and nonstructural, foreseen and unforeseen, and ordinary and extraordinary changes and repairs of every kind which may be required to be made to keep and maintain the Leased Premises and any Lessee's Improvements in such good condition, repair and appearance and it will keep the Leased Premises and any Lessee's Improvements orderly and free and clear of rubbish. Lessor shall not be required to maintain, repair or rebuild, or to make any alterations, replacements or renewals of any nature to the Leased Premises, or any part thereof, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to maintain the Leased Premises 10 or any part thereof in any way. Lessee hereby expressly waives the right to make repairs at the expense of Lessor which may be provided for in any law in effect at the time of the commencement of the Term of this Lease or which may thereafter be enacted. If Lessee shall abandon the Leased Premises, it shall give Lessor and any Permitted Mortgagee immediate notice thereof. (b) If any Improvements situated on the Leased Premises at any time during the Term of this Lease shall encroach upon any property, street or right-of-way adjoining or adjacent to the Leased Premises, or shall violate the agreements or conditions contained in any restrictive covenant affecting the Leased Premises or any part thereof, or shall impair the rights of others under or hinder or obstruct any easement or right-of-way to which the Leased Premises are subject, then, promptly after the written request of Lessor or any person affected by any such encroachment, violation, impairment, hindrance or obstruction, Lessee shall, at its expense, either (i) obtain effective waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, impairment, hindrance or obstruction whether the same shall affect Lessor, Lessee or both, or (ii) make such changes in the Improvements on the Leased Premises and take such other action as shall be necessary to remove such encroachments, hindrances or obstructions and to end such violations or impairments, including, if necessary, the alteration or removal of any Improvement on the Leased Premises. Any such alteration or removal shall be made in conformity with the requirements of paragraph ll(a) to the same extent as if such alteration or removal were an alteration under the provisions of paragraph ll(a). 11. Alterations and Additions. (a) Lessee may, at its expense, (x) after not less than forty-five days written notice to Lessor of its plans (provided, however, that no such notice shall be required as to plans for work 11 the estimated cost of which is less than $500,000), make non-structural additions to and alterations of the Improvements to the Leased Premises, and make non-structural substitutions and replacements therefor, provided, that (i) the use, structural integrity and market value of the Leased Premises shall not thereby be materially lessened as certified in writing by an appropriate officer of Lessee, and (ii) such actions shall be performed in a good and workmanlike manner; and (y) after not less than forty-five days written notice to Lessor of its plans, make structural additions to and alterations of the Improvements to the Leased Premises, and make structural substitutions and replacements therefor, provided that (i) such actions shall be performed in a good and workmanlike manner under the supervision of a licensed architect or engineer in accordance with plans and specifications as approved by Lessor and accepted by Lessee, (ii) no such structural change or alteration shall be made unless Lessor's prior written consent shall have been obtained, (iii) none of the buildings or structures constituting the Leased Premises shall be demolished unless Lessee shall have first furnished Lessor with such surety bonds or other assurances acceptable to Lessor as shall be necessary to assure rebuilding of the Leased Premises and unless Lessor's prior written consent shall have been obtained, and (iv) such additions, alterations, substitutions and replacements shall be expeditiously completed in compliance with all Legal Requirements (as defined in paragraph 7(b)) and Required Insurance (as defined in paragraph 13(a)); provided that Lessor shall not withhold its written consent to Lessee's plans, including plans and specifications, under this clause (y) if and so long as the use, structural integrity and market value of the Leased Premises shall not be materially lessened by such plans as certified in writing by an appropriate officer of Lessee. Lessee shall promptly pay all costs and expenses of each such 12 addition, alteration, substitution or replacement, discharge all liens arising therefrom and procure and pay for all permits and licenses required in connection therewith. Failure by Lessor to give written approval or disapproval within forty-five days of receipt of such notice from Lessee under clause (y) shall be deemed Lessor's consent to such plans. All such alterations and additions to the Improvements shall be and remain part of the realty and the property of Lessor and subject to this Lease. (b) Lessee may, at its expense, install, assemble or place any items of trade fixtures, machinery, equipment or other personal property upon the Leased Premises. Such trade fixtures, machinery, equipment or other personal property shall be and remain the property of Lessee and Lessee may remove the same from the Leased Premises at any time prior to the termination of this Lease, provided that (i) Lessee shall repair any damage to the Leased Premises resulting from such removal, and (ii) such removal shall not materially impair the value and use of the Leased Premises. (c) Lessee may, at its expense, upon 45 days prior notice to Lessor, construct improvements on any portion of the Land Parcel on which there is not already a permanent structure for which improvements it has not and will not obtain reimbursement pursuant to paragraph 15 hereof (Lessee's Improvements), provided that upon completion thereof, the use and market value of the remaining Leased Premises shall not thereby be materially lessened. The Lessee's Improvements shall be and remain the property of Lessee and Lessee may make additions and alterations to Lessee's Improvements and substitutions and replacements thereof which are otherwise in compliance with the provisions of this subparagraph (c). 12. Condemnation. (a) Subject to the rights of Lessee set forth in this paragraph 12, Lessee hereby irrevocably assigns to Lessor any award or 13 compensation payment to which Lessee may become entitled by reason of Lessee's interest in the Leased Premises if the use, occupancy or title of the Leased Premises or any part thereof is taken, requisitioned or sold in, by or on account of any actual or threatened eminent domain proceeding or other action by any person having the power of eminent domain, provided, however, that Lessee may retain any award or compensation payment relating to Lessee's Improvements. Lessee shall appear in any such proceeding or action to negotiate, prosecute and adjust any claim for any award or compensation on account of any such taking, requisition or sale; and Lessor shall collect any such award or compensation. The Net Award (as defined in paragraph 12(f)) shall be applied pursuant to this paragraph 12. Lessee shall pay all reasonable costs and expenses (including any legal fees of any Permitted Mortgagee required by any Permitted Mortgage to be paid by Lessor) in connection with each such proceeding, action, negotiation and prosecution, for which costs and expenses Lessee shall be reimbursed out of any award or compensation received. Lessor shall be entitled to participate in any such proceeding, action, negotiation or prosecution and the reasonable expenses thereof (including counsel fees and expenses) shall be paid by Lessee. (b) If an occurrence of the character referred to in paragraph 12(a) shall affect all or a substantial portion of the Leased Premises and shall, in the good faith judgment of Lessee, render the Leased Premises unsuitable for restoration for continued use and occupancy in Lessee's business during the Primary Term or any Extended Term, then Lessee shall, not later than 30 days after such occurrence, deliver to Lessor (i) notice of its intention to terminate this Lease on the next Basic Rent Payment Date (the Termination Date) which occurs not less than 210 days nor more than 360 days after the delivery of such notice and (ii) a certificate by the President or any Vice 14 President of Lessee describing the event giving rise to such termination and stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased Premises unsuitable for restoration for continued use and occupancy in Lessee's business. If the Termination Date occurs during the Interim or Primary Term, such notice to Lessor shall be accompanied by an irrevocable offer by Lessee to purchase the Leased Premises on the Termination Date at a price determined in accordance with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such Purchase Offer by notice given to Lessee not later than the 30th day prior to the Termination Date or (2) the Termination Date occurs during an Extended Term, this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee hereunder, actual or contingent, which have arisen on or prior to the Termination Date, upon payment by Lessee of all Basic Rent, additional rent and other sums then due and payable hereunder to and including the Termination Date, and the Net Award shall belong to Lessor; provided that the amount of such Net Award, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof) shall be paid to Lessee, as determined by the Appraisal Procedure. Unless Lessor shall have rejected such Purchase Offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and, on the Termination Date, shall convey the remaining portion of the Leased Premises, if any, to Lessee or its designee and shall assign to Lessee or its designee all of its interest in the Net Award, pursuant to and upon compliance with paragraph 16. (c) If during any Term (i) a portion of the Leased Premises shall be taken by condemnation or other eminent domain proceedings, which taking is not 15 sufficient to require that Lessee give a Purchase Offer or (ii) the use or occupancy of the Leased Premises or any part thereof shall be temporarily taken by any governmental authority, then this Lease shall continue in full effect without abatement or reduction of Basic Rent, additional rent or other sums payable by Lessee hereunder notwithstanding such partial or temporary taking. Except as hereinafter set forth, Lessee shall (whether or not it has received any portion of the Net Award), promptly after any such temporary taking ceases, at its expense, repair any damage caused thereby in conformity with the requirements of paragraph ll(a), so that, thereafter, the Leased Premises shall be, as nearly as possible, in a condition and have a market value as good as the condition and market value thereof immediately prior to such taking. Lessee shall not be required to repair any damage to Lessee's Improvements so long as such failure shall not materially lessen the use or value of the remaining Leased Premises; provided, however, that if, in Lessee's good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee's Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 12(a), any Net Award payable in connection with such occurrence shall be paid to the Proceeds Trustee (as defined in paragraph 12(e), provided, that if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of the Net Award, such Net Award shall be paid to the Senior Permitted Mortgagee (as defined in paragraph 29(m)), and if there is no Senior Permitted Mortgagee then to Lessor, in all events for application pursuant to this paragraph 12(c). Lessee shall be entitled to receive the Net Award but only against certificates by the President or any Vice President of Lessee delivered to Lessor and the Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate 16 describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive any Net Award in an aggregate amount of up to $100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Award remaining after such repairs have been made is less than $250,000, such remaining Net Award shall be paid to Lessee. If such remaining Net Award equals or exceeds $250,000, all of the remaining Net Award shall be retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Senior Permitted Mortgage then outstanding. To the extent that any Net Award is not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Award not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the 17 corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). In the event of any temporary requisition, this Lease shall remain in full effect and Lessee shall be entitled to receive the Net Award allocable to such temporary requisition; except that such portion of the Net Award allocable to the period after the expiration of the Term of this Lease shall be paid to Lessor. If the cost of any repairs required to be made by Lessee pursuant to this paragraph 12(c) shall exceed the amount of such Net Award, the deficlency shall be paid by Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c) for so long as any default shall have happened and shall be continuing under this Lease. (d) Notwithstanding the foregoing, Lessee, at its cost and expense, shall be entitled to claim separately, in any condemnation proceeding, any damages payable for moveable trade fixtures paid for and installed by Lessee (or any persons claiming under Lessee) without any contribution or reimbursement therefor by Lessor, and for Lessee's loss of business, and for Lessee's relocation costs, provided Lessor's award is not reduced or otherwise adversely affected thereby. (e) The trustee (the Proceeds Trustee) of the Net Award and Net Casualty Proceeds (as defined in paragraph 14(a)) shall be The Connecticut Bank and Trust Company, National Association, or its successor under the Collateral Trust Indenture, dated as of the date hereof (the Indenture) from Clinton Holding Corporation to The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as trustees, or if such Indenture shall 18 be terminated, the holder of the first mortgage lien on the Leased Premises, who shall be an institutional lender, or if there shall not be such a lien, or if such lien shall be held by a person other than an institutional lender, then <> or a bank or trust company, designated by Lessee and acceptable to Lessor, having an office in the State of Indiana. The Proceeds Trustee shall have a combined capital and surplus of at least $100,000,000 and shall be duly authorized to act as such trustee. All charges and fees of the Proceeds Trustee shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and Net Casualty Proceeds (as hereinafter defined) pursuant to such Mutual agreement as may be made between Lessor and Lessee. (f) For the purposes of this Lease the term "Net Award" shall mean: (i) all amounts payable as a result of any condemnation or other eminent domain proceeding, less all expenses of such proceeding and the collection of such amounts not otherwise paid by Lessee and (ii) all amounts payable pursuant to any agreement with any condemning authority (which agreement shall be deemed to be a taking) which has been made in settlement of or under threat of any condemnation or other eminent domain proceeding affecting the Leased Premises (except Lessee's Improvements), less all expenses incurred (including any reasonable costs incurred by Lessor in connection therewith) as a result thereof or in connection with the collection of such amounts and not otherwise paid by Lessee. (g) Any minor condemnation or taking of the Leased Premises for the construction or maintenance of streets or highways shall not be considered a condemnation or taking for purposes of this paragraph 12 so long as the Leased Prelllises shall not be materially adversely affected, ingress and egress for the remainder of the Leased Premises shall be adequate for the business of Lessee thereon and compliance is made with the provisions of any Permitted Mortgage relating thereto. 19 13. Insurance. (a) Lessee shall maintain, or cause to be maintained, at its sole expense, the following insurance on the Leased Premises (herein called the Required Insurance): (i) Insurance against loss or damage by fire, lightning and other risks from time to time included under "extended coverage" policies, including, without limitation, vandalism and malicious mischief coverage, in amounts sufficient to prevent Lessor or Lessee from becoming a co-insurer of any loss under the applicable policies but in any event in amounts not less than the full insurable value of the Leased Premises. The term "full insurable value", as used herein, means actual replacement value less uninsurable items. (ii) General public liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Leased Premises and the adjoining streets, sidewalks and passageways, such insurance to afford protection to Lessor of not less than $1,000,000 with respect to bodily injury or death to any one person, not less than $5,000,000 with respect to any one accident, and not less than $1,000,000 with respect to property damage. (iii) Worker's compensation insurance covering all persons employed in connection with any work done on or about the Leased Premises with respect to which claims for death or bodily injury could be asserted against Lessor, Lessee or the Leased Premises, complying with the laws of the State of Indiana. (iv) Boiler and pressure vessel insurance on all equipment, parts thereof and appurtenances attached or connected to the Leased Premises, if any, which by reason of their use or existence are capable of bursting, erupting, collapsing or exploding, in the minimum amount of $1,000,000 for damage to property resulting from such perils. Such insurance may, at the option of Lessee and as permitted by applicable law, be included within the coverage of insurance policies referred to in clause (i) above. (v) Such other insurance on the Leased Premises in such amounts and against such other hazards which at the time are commonly obtained in the case of property similar to the Leased Premises in the state in which the Leased Premises are located, including war risk insurance (at and during such times as war risk insurance is commonly obtained in the case of property similar to the Leased Premises), when and to the 20 extent obtainable from the United States Government or any agency thereof. (vi) Flood insurance in an amount equal to the full insurable value (as defined in clause (i) above) of the Leased Premises or the maximum amount available, whichever is less, if the area in which the Leased Premises are located has been designated by the Secretary of Housing and Urban Development as having special flood hazards, and if flood insurance is available under the National Flood Insurance Act. (b) The Required Insurance shall be written by companies having an A.M. Best rating of at least A:XV which are authorized to do an insurance business in the State of Indiana and shall name as the insured parties thereunder Lessor, Lessee and any Permitted Mortgagee, as their respective interests may appear, provided, however, that so long as Lessee maintains a net worth determined in accordance with generally accepted accounting principles of not less than $85,381,600, Lessee may self-insure as to the types of insurance referred to in clauses (i) through (v) of this paragraph. Neither Lessor nor any Permitted Mortgagee shall be required to prosecute any claim against, or to contest any settlement proposed by, an insurer. Lessee may, at its expense, prosecute any such claim or contest any such settlement in the name of Lessor, Lessee or both, and Lessor will join therein at Lessee's written request upon the receipt by Lessor of an indemnity from Lessee against all costs, liabilities and expenses in connection therewith. (c) Insurance claims by reason of damage to or destruction of any portion of the Leased Premises shall be adjusted by Lessee, but Lessor and any Permitted Mortgagee shall have the right to join with Lessee in adjusting any such loss. (d) Every policy referred to in clauses (i), (iv) and (v) of paragraph 13(a) shall bear a first mortgagee endorsement in favor of the then Senior Permitted Mortgagee (if any); and any loss under any such policy shall 21 be made payable to the Proceeds Trustee, provided that any recovery for damage or destruction under any such policy shall be applied by the Proceeds Trustee in the manner provided in paragraph 14. Every policy of Required Insurance shall contain an agreement that the insurer will not cancel such policy except after thirty days' written notice to Lessor and any Permitted Mortgagee and that any loss otherwise payable thereunder shall be payable notwithstanding any act or negligence of Lessor or Lessee which might, absent such agreement, result in a forfeiture of all or a part of such insurance payment and notwithstanding (i) any foreclosure or other action taken by a Permitted Mortgagee pursuant to any provision of any Permitted Mortgage upon the happening of a default or an event of default thereunder, or (ii) any change in ownership of the Leased Premises. (e) Lessee shall deliver to Lessor promptly after the delivery of this Lease the original or duplicate policies or certificates of insurers, reasonably satisfactory to any Senior Permitted Mortgagee, evidencing all of the Required Insurance. Lessee shall, within thirty days prior to the expiration of any such policy, deliver to Lessor other original or duplicate policies or such certificates evidencing the renewal of any such policy. If Lessee fails to maintain or renew any Required Insurance, or to pay the premium therefor, or to so deliver any such policy or certificate, then Lessor, at its option, but without obligation to do so, may, upon five days' notice to Lessee, procure such insurance. Any sums so expended by Lessor shall be additional rent hereunder and shall be repaid by Lessee within five days after notice to Lessee of such expenditure and the amount thereof. (f) Neither Lessee nor Lessor shall obtain or carry separate insurance covering the same risks as any Required Insurance unless Lessee, Lessor and any Permitted Mortgagee are included therein as named insureds, 22 with loss payable as provided in this Lease. Lessee and Lessor shall immediately notify each other whenever any such separate insurance is obtained and shall deliver to each other the policies or certificates evidencing the same. (g) Anything contained in this paragraph 13 to the contrary notwithstanding, all Required Insurance may be carried under (1) a "blanket" or "umbrella" policy or policies covering other properties or liabilities of Lessee, its parent company, or any of its parent company's subsidiaries, provided, that such policies otherwise comply with the provisions of this Lease and specify the coverage and amounts thereof with respect to the Leased premises, and (2) a policy or policies providing for self-insurance of deductible amount of up to $1,000,000. 14. Casualty. (a) Lessee hereby irrevocably assigns to Lessor any compensation or insurance proceeds to which Lessee may become entitled by reason of Lessee's interest in the Leased Premises if the Leased Premises or any part thereof are damaged or destroyed by fire or other casualty, provided, however, that Lessee may retain any insurance proceeds or compensation relating to Lessee's Improvements. If the Leased Premises or any part thereof shall be damaged or destroyed by fire or other casualty, and if the estimated cost of rebuilding, replacing or repairing the same shall exceed $100,000, Lessee promptly shall notify Lessor thereof. Lessee shall negotiate, prosecute and adjust any claim for any compensation or insurance payment on account of any such damage or destruction; and Lessor shall collect any such compensation or insurance payment. All amounts paid in connection with any such damage or destruction shall be applied pursuant to this paragraph 14, and all such amounts (except such amounts with respect to Lessee's Improvements) paid or payable in connection therewith (minus the expenses of collecting such 23 amounts) are herein called the Net Casualty Proceeds. Lessee shall pay all reasonable costs and expenses (including any legal fees of any Permitted Mortgagee required to be paid by Lessor pursuant to any Permitted Mortgage) in connection with each such negotiation, prosecution and adjustment, for which costs and expenses Lessee shall be reimbursed out of any compensation or insurance payment received. Lessor shall be entitled to participate in any such negotiation, prosecution and adjustment, and the reasonable expenses thereof (including counsel fees and expenses) shall be paid by Lessee. (b) After an occurrence of the character referred to in paragraph 14(a), except as hereinafter set forth, Lessee shall (whether or not it has received any Net Casualty Proceeds), at its expense, rebuild, replace or repair any damage to the Leased Premises caused by such event in conformity with the requirements of paragraph 11(a) so as to restore the Leased Premises (as nearly as practicable) to the condition and market value thereof immediately prior to such occurrence. Lessee shall not be required to rebuild or replace any damage to Lessee's Improvements so long as such failure shall not materially lessen the value or use of the remaining Leased Premises; provided, however, that if, in Lessee's good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee's Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection with such occurrence shall be paid to Proceeds Trustee, and this Lease shall continue in full effect, provided, that if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of Net Casualty Proceeds, such Net Casualty Proceeds shall be paid to the Senior Permitted Mortgagee, and if there is no Senior Permitted Mortgagee then to Lessor, in all events for application pursuant to this paragraph 14(b). 24 Lessee shall be entitled to receive the Net Casualty Proceeds, but only against certificates of the President or any Vice President of Lessee delivered to Lessor and Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive the Net Casualty Proceeds in an aggregate amount of up to $100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Casualty Proceeds remaining after such repairs have been made are less than $250,000 they shall be paid to Lessee. If such remaining Net Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Senior Permitted Mortgage then outstanding. To the extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the First Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and 25 (ii) during the Primary Term the amount by which each such installment of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Senior Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). If the cost of any repairs required to be made by Lessee pursuant to this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the deficiency shall be paid by Lessee. (c) If the Leased Premises shall be substantially damaged or destroyed in any single casualty so that, in Lessee's good faith judgment, the Leased Premises shall be unsuitable for restoration for continued use and occupancy in Lessee's business, then at Lessee's option in lieu of rebuilding, replacing and repairing the Leased Premises, Lessee may give notice to Lessor, within 30 days after the occurrence of such damage or destruction, of Lessee's intention to terminate this Lease on the next Basic Rent Payment Date which occurs not less than 210 days after the delivery of such notice (the Termination Date), provided that, if the Termination Date occurs during the Primary Term, such notice shall be accompanied by (i) an irrevocable offer of Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the Termination Date at a price determined in accordance with Schedule C hereof (the Purchase Offer), and (ii) a certificate signed by the President or any Vice President of Lessee stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased 26 Premises unsuitable for restoration, replacement and rebuilding for Lessee's continued use and occupancy and that the Leased Premises will not be restored. If Lessor shall reject such offer by notice to Lessee not later than the 30th day prior to the Termination Date, the Net Casualty Proceeds and the right thereto shall be assigned to and shall belong to Lessor and this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee under this Lease, actual or contingent, which have arisen on or prior to the Termination Date, but only upon payment by Lessee of all Basic Rent, additional rent, and other sums due and payable by it under this Lease to and including the Termination Date; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure. Unless Lessor shall have rejected such offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and on the Termination Date, Lessor shall convey the remaining portion of the Leased Premises, if any, and all its interest in the Net Casualty Proceeds in accordance with paragraph 16. If the Termination Date shall occur during an Extended Term, Lessee shall not be required to offer to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall belong to Lessor and this Lease shall terminate; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure. If the conditions set forth in the first sentence of this paragraph 14(c) are fulfilled and Lessee fails to commence to rebuild, replace or repair the 27 Leased Premises within 30 days after final adjustment of all insurance claims made in connection therewith (but in no event later than one hundred eighty days after the occurrence of such damage or destruction), Lessee conclusively shall be deemed to have made such Purchase Offer and in the absence of a written Purchase Offer by Lessee the Termination Date shall be deemed to be the next Basic Rent Payment Date which occurs not less than 210 days after such Purchase Offer is presumed to have been made; but nothing in this sentence shall relieve Lessee of its obligation actually to deliver such Purchase Offer. 15. Reimbursement for Alterations and Additions; Purchase of Unimproved Land. (a) On any one or more dates during the Primary Term, Lessee may request in writing (herein called a Lessee's Request) that Lessor pay to Lessee the amount of Lessee's theretofore unreimbursed expenses (herein called Reimbursable Expenses), which have been incurred by Lessee in connection with the construction of additional structures on a portion or portions of the Leased Premises upon which there are no major structures then existing and/or additions, alterations to, or remodeling of, structures then existing on the Leased Premises and the acquisition of land adjacent to the Leased Premises (herein collectively called the Additions), which Additions are permitted by paragraph ll(a) but are in addition to, and do not constitute, alterations, additions or remodeling which Lessee is required to make upon the Leased Premises pursuant to any provision of this Lease, and which Additions conform to the character and quality of the then existing improvements on the Leased Premises. Lessee shall have the right to make a Lessee's Request only if (i) the construction of any Additions with respect to which such Reimbursable Expenses have been incurred shall have been completed not more than two years prior to the date of the Lessee's Request, (ii) the amount of such 28 Reimbursable Expenses is not less than $500,000, (iii) the value or use of the Leased Premises shall not be materially impaired by such Additions and (iv) the sum of such requested Reimbursable Expenses and all Reimbursable Expenses previously paid to Lessee pursuant to this paragraph 15(a) shall not exceed $5,000,000. Each Lessee's Request shall be accompanied by architect's drawings and specifications as previously approved by Lessor pursuant to paragraph ll(a) hereof and accepted by Lessee, relating to the Additions with respect to which such Request is made, and a Lessee's Certificate setting forth in reasonable detail the amount and character of the Reimbursable Expenses with respect to which such Request is made and a description of such Additions, stating that the construction of such Additions has been completed in compliance with the requirements of this paragraph 15, specifying the dates on which the construction of such Additions were commenced and completed, and stating that such Reimbursable Expenses are reimbursable in the amount requested under the terms of this paragraph 15. Upon receipt of such Lessee's Request, Lessor agrees to use its best efforts to arrange for the financing of such Reimbursable Expenses on terms and conditions satisfactory to Lessor and Lessee and consistent with the provisions of any Senior Permitted Mortgage. Lessor and Lessee shall negotiate in good faith to enable Lessor to finance such Reimbursable Expenses, having regard to then existing economic, financial and money market conditions. Within ninety days after the receipt of such Lessee's Request, drawings, specifications and Certificate, Lessor agrees to pay to Lessee an amount equal to such Reimbursable Expenses so certified, but only if the following further conditions shall have been fulfilled within such 90-day period: (i) Lessor shall have issued and sold evidence of indebtedness (herein called the Additional Indebtedness) pursuant to a Senior Permitted Mortgage, 29 for the purposes of obtaining funds to pay such Reimbursable Expenses to Lessee; (ii) The proceeds of the sale of the Additional Indebtedness actually received by Lessor shall have been not less than the amount of such Reimbursable Expenses; (iii) Lessor and Lessee shall have authorized, executed and delivered a supplement to this Lease, which supplement (herein called the Lease Supplement) shall: (A) increase the Basic Rent payments required to be made thereafter during the Primary Term by an amount which shall be at least sufficient to make each payment, when due, of principal of, and interest on, the Additional Indebtedness, (B) increase each Basic Rent payment to be made during the Extended Terms by an amount which shall be at least sufficient to make each payment, when due, of principal of, and interest on, the Additional Indebtedness during the portion of such Extended Terms that such Additional Indebtedness is outstanding, and Lessee shall not, and is obligated not to, cancel its option to extend the term hereof to a date not earlier than the maturity of the Additional Indebtedness, (C) increase the purchase prices set forth in Schedule C hereto that would be payable upon a purchase of the Leased Premises by Lessee pursuant to paragraph 12(b) or 14(c), in each case by amounts which shall at all times thereafter be at least sufficient to pay or prepay the principal amount of the Additional Indebtedness to be then outstanding (without adjustments for any prepayments made by Lessor), and (D) make such other changes, if any, as shall be necessary or appropriate, in the opinion of counsel for holders of the Additional Indebtedness, by reason of the transactions contemplated by this paragraph; and (iv) Lessor shall have received from Lessee such other Lessee's Certificates, opinions of counsel for Lessee, surveys of the Leased Premises, title insurance policies, consents to the assignment and reassignment of this Lease (as supplemented) and other instruments as Lessor may reasonably request in order to enable Lessor to finance the cost of such Reimbursable Expenses by the issuance and sale of the Additional (b) As long as Lessor has used its best efforts to arrange financing as set forth in subparagraph (a) above, Lessor shall incur no liability to Lessee by reason of the fact that Lessor does not pay Reimbursable Expenses, 30 and if Lessor does not pay such Reimbursable Expenses, except as expressly provided in subparagraph (c) below, this Lease shall continue in full effect, without modification. All expenses incurred in connection with the issuance by Lessor of Additional Indebtedness shall be borne by Lessee. (c) If, after the conditions specified above have been satisfied within 180 days of such Lessee's Request, Lessor shall not have paid to Lessee an amount equal to such Reimbursable Expenses and if such Additions are either contiguous to the Improvements or free standing (or subject to a party wall pursuant to an agreement satisfactory in form and substance to Lessor and any Senior Permitted Mortgagee) upon unimproved land constituting part of the Leased Premises, then Lessee shall have the option, to be exercised by giving 90 days' notice to Lessor, to purchase such portion of the unimproved land (together with any requisite easements) as is necessary for the construction of such Additions, provided that such land (together with any land purchased pursuant to paragraph 15(d) hereof, called the Unimproved Land) shall not be improved by any permanent structure included in the Improvements and provided further that the remainder of the Leased Premises, after excluding the Unimproved Land, would (1) constitute an integrated economic unit including sufficient parking and all necessary utility easements, (2) be a continuous parcel of land, without gap or hiatus and be separately assessed for tax purposes, (3) have adequate access to and from public highways, (4) not be in violation of any Legal Requirement or Required Insurance, and (5) would have a market value at least equal to the outstanding amount of the Senior Permitted Mortgage as of such date. The purchase price for the Unimproved Land shall be the greater of (x) fair market value attributable to such Unimproved Land, as unencumbered by this Lease and without regard to any of Lessee's continuing rights and obligations under this Lease, assuming Lessee shall have extended 31 the Lease for all Extended Terms, as determined by Lessor and Lessee, and in the event of their failure to agree, as determined by the Appraisal Procedure or (y) Lessor's original cost attributable to such Unimproved Land as set forth in Schedule A hereto. Lessee agrees that it shall bear the costs of the Appraisal Procedure. On the date for purchase specified in Lessee's notice, Lessor shall convey such Unimproved Land to Lessee or its designee pursuant to and in compliance with paragraph 16. In the event of such purchase by Lessee, Lessee agrees that (x) no improvements will be undertaken upon such Unimproved Land which would materially reduce the value of the remainder of the Leased Premises and (y) Lessee will grant such easements to Lessor or enter into such cross-easement agreements with Lessor relating to the Unimproved Land as are reasonably necessary to operate the remainder of the Leased Premises as an integrated economic unit with no material reduction in the value thereof. (d) In addition to the option contained in 15(c), Lessee shall have the option to purchase all or any portion of the land described in Part 2 of Schedule A and structure or Improvements thereon,* in the manner, at the price and in accordance with the terms of subparagraph 15(c), provided that such purchase shall not materially impair the value or use of the remainder of the Leased Premises. Lessee shall have such option only if (i) Lessee shall have undertaken in writing to construct improvements on such property for its own use, and (ii) such improvements are not eligible for financing by Lessor pursuant to the provisions of subparagraph 15(a). (e) To the extent of the cash price paid to Lessor for Unimproved Land purchased pursuant to paragraphs 15(c) or (d), (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each - ---------------- * See Schedule A, Part 2, for particulars. 32 installment of Basic Rent payable on or after the first Payment Date occurring two months or more after such purchase (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be such purchase price paid to Lessor, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Senior Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in the case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitations shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised provided therein). (f) In lieu of paying cash for the purchase of Unimproved Land pursuant to paragraph 15(c) or (d), Lessee may convey to Lessor a substitute parcel of land (Substitute Land) provided that the following conditions shall be satisfied: the fair market value of the Substitute Land shall equal or exceed the cash purchase price which would have been paid for the Unimproved Land being purchased by Lessee (such fair market value of the Substitute Land being determined by agreement of Lessor and Lessee, or failing such agreement, by the Appraisal Procedure) (ii) all of the conditions set forth in paragraph 15(c) shall be satisfied as to the remaining portion of the Leased Premises taken together with the Substitute Land, and (iii) Lessor and any Permitted 33 Mortgagee shall have approved any exceptions to title to the Substitute Land. All costs and expenses of Lessor and any Permitted Mortgagee incident to the conveyance to Lessor of Substitute Land shall be borne by Lessee. In the event that Unimproved Land is purchased pursuant to paragraph 15(c) or (d) in exchange for Substitute Land rather than the payment of a cash purchase price, the provisions of paragraph 15(e) shall not apply, and this Lease shall continue in full effect without modification of Basic Rent or the amounts set forth in Schedule C hereunder. 16. Procedure Upon Purchase. (a) If Lessee shall purchase the Leased Premises pursuant to this Lease, Lessor need not convey any better title thereto than existed on the date of the commencement of the Term hereof and Lessee or its designee shall accept such title, subject, however, to the state of title to the Leased Premises on the date of the commencement of the Term hereof, the condition of the Leased Premises on the date of purchase and all charges, liens, security interests and encumbrances on the Leased Premises and all applicable Legal Requirements, but free of the lien of all Permitted Mortgages and charges, liens, security interests and encumbrances resulting from acts or failures to act of Lessor taken without the consent of Lessee. (b) Upon the date fixed for any purchase of the Leased Premises hereunder, Lessee shall pay to Lessor in immediately available funds the purchase price therefor specified herein together with all Basic Rent, additional rent and other sums then due and payable hereunder to and including such date of purchase, and Lessor shall deliver to Lessee a special warranty deed to the Leased Premises and any other instruments necessary to assign any other property then required to be assigned by Lessor pursuant hereto. Lessee shall pay all charges incident to such conveyance and assignment, including 34 reasonable counsel fees, escrow fees, recording fees, title insurance premiums and all applicable taxes (other than any income, capital gains or franchise taxes of Lessor) which may be imposed by reason of such conveyance and assignment and the delivery of said deeds and other instruments. Upon the completion of such purchase, but not prior thereto (whether or not any delay or failure in the completion of such purchase shall be the fault of Lessor), this Lease and all obligations hereunder shall terminate, except with respect to obligations and liabilities of Lessee hereunder, actual or contingent, which have arisen on or prior to such date of purchase. 17. Assignment and Subletting. During the Primary Term only, Lessee may sublet all or any part of the Leased Premises without the consent of Lessor (provided, that each such sublease shall expressly be made subject to the provisions of this Lease) and, may assign all its rights and interests under this Lease. If Lessee assigns all its rights and interests under this Lease, the assignee under such assignment shall expressly assume all the obligations of Lessee hereunder in an instrument, approved by Lessor as to form and substance (which approval will not be unreasonably withheld or delayed), delivered to Lessor at the time of such assignment. No assignment or sublease shall affect or reduce any of the obligations of Lessee hereunder, and all such obligations shall continue in full effect as obligations of a principal and not as obligations of a guarantor or surety, to the same extent as though no assignment or subletting had been made, provided that performance by any such assignee or sublessee of any of the obligations of Lessee under this Lease shall be deemed to be performance by Lessee. No sublease or assignment shall impose any obligations on Lessor or otherwise affect any of the rights of Lessor under this Lease. Neither this Lease nor the Term hereby demised shall be mortgaged by Lessee, nor shall Lessee mortgage or pledge the 35 interest of Lessee in and to any sublease of the Leased Premises or the rentals payable thereunder. Any mortgage, pledge, sublease or assignment made in violation of this paragraph 17 shall be void. Lessee shall, within ten days after the execution and delivery of any such assignment or the sublease of all or substantially all of the Leased Premises, deliver a conformed copy thereof to Lessor. Within ten days after the execution and delivery of any sublease of all or any portion of the Leased Premises, Lessee shall give notice to Lessor of the existence and term thereof, and of the name and address of the sublessee thereunder. 18. Permitted Contests. Lessee shall not be required to (i) pay any Imposition, (ii) comply with any statute, law, rule, order, regulation or ordinance, (iii) discharge or remove any lien, encumbrance or charge or (iv) obtain any waivers or settlements or make any changes or take any action with respect to any encroachment, hindrance, obstruction, violation or impairment referred to in paragraph 10(b), so long as Lessee shall contest, in good faith and at its expense, the existence, the amount or the validity thereof, the amount of the damages caused thereby, or the extent of its liability therefor, by appropriate proceedings during the pendency of which there is prevented (A) the collection of, or other realization upon, the tax, assessment, levy, fee, rent or charge or lien, encumbrance or charge so contested, (B) the sale, forfeiture or loss of the Leased Premises, or any part thereof, or the Basic Rent or any additional rent, or any portion thereof, (C) any interference with the use or occupancy of the Leased Premises or any part thereof, and (D) any interference with the payment or collection of the Basic Rent or any additional rent, or any portion thereof. While any such proceedings are pending, Lessor shall not have the right to pay, remove or cause to be discharged the tax, assessment, levy, fee, rent or charge or lien, encumbrance 36 or charge thereby being contested. Lessee further agrees that each such contest shall be promptly prosecuted to a final conclusion. Lessee shall pay, and save Lessor harmless against, any and all losses, judgments, decrees and costs (including all reasonable attorneys' fees and expenses) in connection with any such contest and shall, promptly after the final settlement, compromise or determination (including any appeals) of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interests, costs and expenses thereof or in connection therewith, and perform all acts, the performance of which shall be ordered or decreed as a result thereof; provided, however, that nothing herein contained shall be construed to require Lessee to pay or discharge any lien, encumbrance or other charge created by any act or failure to act of Lessor or the payment of which by Lessee is not otherwise required hereunder, or to perform any act which Lessee is not otherwise required to perform hereunder. No such contest shall subject Lessor or any Permitted Mortgagee to the risk of any criminal liability. Lessee shall give such reasonable security to Lessor or the Senior Permitted Mortgagee as may be demanded by Lessor or such Senior Permitted Mortgagee to insure compliance with the foregoing provisions of this paragraph 18. 19. Conditional Limitations; Default Provision. (a) Any of the following occurrences or acts shall constitute an event of default (herein called an Event of Default) under this Lease: (i) If Lessee, at any time during the continuance of this Lease (and regardless of the pendency of any bankruptcy, reorganization, receivership, insolvency or other proceedings, at law, in equity, or before any administrative tribunal, which have or might have the effect of preventing Lessee from complying with the terms of this Lease), shall (1) fail to make any payment when due of Basic Rent, additional rent or 37 other sum herein required to be paid by Lessee hereunder and such failure continues for 5 days, or (2) fail to observe or perform any other provision hereof or any provision of the Assignment of Lease and Guaranty, dated as of the date hereof (the Assignment), from Lessor to Clinton Holding Corporation (the Company), and consented to therein by Lessee and by Lincoln National Corporation (Guarantor) or the Reassignment of Lease and Guaranty, dated as of the date hereof (the Reassignment), from the Company to The Connecticut Bank and Trust Company, National Association and F. W. Kawam (the Trustees), and consented to therein by Lessee and Guarantor, for thirty days after notice to Lessee of such failure has been given (provided, that in the case of any default referred to in this clause (2) which cannot with diligence be cured within such 30-day period, if Lessee shall proceed promptly to cure the same and thereafter shall prosecute the curing of such default with diligence, then upon receipt by Lessor of a Lessee's Certificate stating the reason such default cannot be cured within thirty days and stating that Lessee is proceeding with diligence to cure such default, the time within which such failure may be cured shall be extended for such period as may be necessary to complete the curing of the same with diligence but not to exceed 120 days without Lessor's written consent which consent shall not be unreasonably withheld); or (ii) if any representation or warranty of Lessee or Guarantor set forth in any notice, certificate, demand, request or other instrument delivered pursuant to, or in connection with, this Lease, the Assignment, or the Reassignment shall either prove to be false or misleading in any material respect as of the time when the same shall have been made, or with respect to any such representation or warranty Lessee or Guarantor shall fail to include in such representation or warranty any fact or statement necessary in light of the circumstances in which such representation or warranty was made to make such representation or warranty not misleading in any material respect as of the time when the same shall have been made; or (iii) if Lessee or Guarantor shall file a petition commencing a voluntary case under the Federal Bankruptcy Code or any other federal or state law (as now or hereafter in effect) relating to bankruptcy, insolvency, reorganization, winding-up or adjustment of debts (hereinafter collectively called Bankruptcy Laws), or if Lessee or Guarantor shall (A) apply for or consent to the appointment of, or the taking of possession by, any receiver, custodian, trustee, 38 United States Trustee or liquidator (or other similar official) of the Leased Premises or any part thereof or of any substantial portion of Lessee's property, or (B) generally not pay their respective debts as they become due, or if either Lessee or Guarantor admits in writing its inability to pay its respective debts generally as they become due or (C) makes a general assignment for the benefit of its respective creditors, or (D) files a petition commencing a voluntary case under or seeking to take advantage of any Bankruptcy Law, or (E) fails to controvert in timely and appropriate manner, or in writing acquiesces to, any petition commencing an involuntary case against Lessee or Guarantor or otherwise filed against Lessee or Guarantor pursuant to any Bankruptcy Law, or (F) takes any corporate action in furtherance of any of the foregoing, or (iv) if an order for relief against Lessee or Guarantor shall be entered in any involuntary case under the Federal Bankruptcy Code or any similar order against Lessee or Guarantor shall be entered pursuant to any other Bankruptcy Law, or if a petition commencing an involuntary case against Lessee or Guarantor or proposing the reorganization of Lessee or Guarantor under any Bankruptcy Law shall be filed and not be discharged or denied within 60 days after such filing, or if a proceeding or case shall be commenced in any court of competent jurisdiction seeking (A) the liquidation, reorganization, dissolution, winding-up or adjustment of debts of Lessee or Guarantor, or (B) the appointment of a receiver, custodian, trustee, United States Trustee or liquidator (or any similar official) of the Leased Premises or any part thereof or of Lessee or Guarantor or of any substantial portion of Lessee's or Guarantor's property, or (C) any similar relief as to Lessee or Guarantor pursuant to any Bankruptcy Law, and any such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect for 60 days; or (v) if (a) a final judgment for the payment of money in an amount greater than $50,000 or (b) final judgments for the payment of money aggregating in an amount greater than $300,000 shall be rendered against Lessee or Guarantor and Lessee or Guarantor shall not discharge the same or cause it to be discharged within 60 days from the entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and secure a stay of execution or an appeal 39 bond in the amount of said judgment pending such appeal; or (vi) if the Leased Premises shall be left both unattended and without maintenance as provided herein, for a period of thirty days; or (vii) if Guarantor shall fail to observe or perform any provision of the Guaranty or of the Other Guaranties, or pursuant to the terms thereof shall be deemed to be in default thereunder, and such failure or default shall continue for thirty days after notice to Guarantor, provided, however, that the foregoing shall not be construed as extending the period of time during which the Guarantor is required to pay or perform any obligation of Lessee hereunder or under the Assignment or Reassignment. (b) If an Event of Default shall have happened and be continuing, Lessor shall have the right at its election to give Lessee written notice of Lessor's intention to terminate the term of this Lease on a date specified in such notice. Thereupon, the term of this Lease and the estate hereby granted shall terminate on such date as completely and with the same effect as if such date were the date fixed herein for the expiration of the term of this Lease, and all rights of Lessee hereunder shall terminate, but Lessee shall remain liable as hereinafter provided. (c) If an Event of Default shall have happened and be continuing, Lessor shall have the immediate right, whether or not the term of this Lease shall have been terminated pursuant to paragraph 19(b), to (i) re-enter and repossess the Leased Premises or any part thereof by force, summary proceedings, ejectment or otherwise and (ii) remove all persons and property therefrom. Lessor shall be under no liability by reason of any such re-entry, repossession or removal. No such re-entry or taking of possession of the Leased Premises by Lessor shall be construed as an election on Lessor's part to terminate the Term of this Lease unless a written notice of such intention 40 be given to Lessee pursuant to paragraph 19(b), or unless the termination of this Lease be decreed by a court of competent jurisdiction. (d) At any time or from time to time after the repossession of the Leased Premises or any part thereof pursuant to paragraph 19(c), whether or not the term of this Lease shall have been terminated pursuant to paragraph 19(b), Lessor may (but shall be under no obligation to) relet the Leased Premises or any part thereof for the account of Lessee, in the name of Lessee or Lessor or otherwise, without notice to Lessee, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions and for such uses as Lessor, in its absolute discretion, may determine, and Lessor may collect and receive any rents payable by reason of such reletting. Lessor shall not be responsible or liable for any failure to relet the Leased Premises or any part thereof or for any failure to collect any rent due upon any such reletting. (e) No termination of the term of this Lease pursuant to paragraph 19(b), by operation of law or otherwise, and no repossession of the Leased Premises or any part thereof pursuant to paragraph 19(c) or otherwise, and no reletting of the Leased Premises or any part thereof pursuant to paragraph 19(d), shall relieve Lessee of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, repossession or reletting. (f) In the event of any such termination or repossession, Lessee will pay to Lessor the Basic Rent, additional rent and other sums required to be paid by Lessee to and including the date of such termination or repossession; and, thereafter, Lessee shall, until the end of what would have been the term of this Lease in the absence of such termination or repossession, and whether or not the Leased Premises or any part thereof shall 41 have been relet, be liable to Lessor for, and shall pay to Lessor, as liquidated and agreed current damages: (i) the Basic Rent, additional rent and other sums which would be payable under this Lease by Lessee in the absence of such termination or repossession, less (ii) the net proceeds, if any, of any reletting effected for the account of Lessee pursuant to paragraph 19(d), after deducting from such proceeds all Lessor's expenses incurred in connection with such reletting (including, without limitation, all repossession costs, brokerage commissions, legal expenses, reasonable attorneys' fees, employees' expenses, alteration costs and expenses of preparation for such reletting). Lessee will pay such current damages on the days on which the Basic Rent would have been payable under this Lease in the absence of such termination or repossession, and Lessor shall be entitled to recover the same from Lessee on each such day. (g) At any time after any such termination or repossession by reason of the occurrence of an Event of Default, whether or not Lessor shall have collected any current damages pursuant to paragraph 19(f), Lessor shall be entitled to recover from Lessee, and Lessee will pay to Lessor on demand, as and for liquidated and agreed final damages for Lessee's default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount by which (a) the Basic Rent, additional rent and other sums which would be payable under this Lease from the date of such demand (or, if it be earlier, the date to which Lessee shall have satisfied in full its obligations under paragraph 19(f) to pay current damages) for what would be the then unexpired Term of this Lease in the absence of such termination or repossession, discounted at the rate of 8% per annum over (b) the then fair net rental value of the Leased Premises for the same period discounted at the 42 rate of 8% per annum. If any statute or rule of law shall validly limit the amount of such liquidated final damages to less than the amount above agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law. (h) Notwithstanding anything to the contrary stated herein, if an Event of Default shall have happened and be continuing, whether or not Lessee shall have abandoned the Leased Premises, Lessor may elect to continue this Lease in effect for so long as Lessor does not terminate Lessee's rights to possession of the Leased Premises and Lessor may enforce all of its rights and remedies hereunder including without limitation the right to recover all Basic Rent, additional rent and other sums payable hereunder as the same become due. 20. Additional Rights of Lessor. (a) No right or remedy herein conferred upon or reserved to Lessor is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. The failure of Lessor to insist at any time upon the strict performance of any covenant or agreement or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future. A receipt by Lessor of any Basic Rent, any additional rent or any other sum payable hereunder with knowledge of the breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach, and no waiver by Lessor of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Lessor. In addition to other remedies provided in this Lease, Lessor shall be entitled, to the extent permitted by applicable law, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, 43 conditions or provision of this Lease, or to decree compelling performance of any of the covenants, agreement, conditions or provisions of this Lease, or to any other remedy allowed to Lessor at law or in equity. (b) To the extent it may lawfully do so, Lessee hereby waives and surrenders for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future constitution, statute or rule of law to redeem the Leased Premises or to have a continuance of this Lease for the term hereby demised after termination of Lessee's right of occupancy by order or judgment of any court or by any legal process or writ, or under the terms of this Lease or after the termination of the term of this Lease as herein provided, and (ii) the benefits of any present or future constitution, statute or rule of law which exempts property from liability for debt or for distress for rent. (c) In the event an action shall be brought for the enforcement of any right hereunder, the party cast in judgment shall pay to the prevailing party all the expenses incurred in connection therewith including reasonable attorneys' fees. 21. Notices, Demands and Other Instruments. All notices, demands, requests, consents, approvals and other instruments required or permitted to be given pursuant to the terms of this Lease shall be in writing and shall be deemed to have been properly given if (a) with respect to Lessee, sent by certified or registered mail, postage prepaid, or sent by telegram or delivered by hand, in each case addressed to Lessee at its address first above set forth, and (b) with respect to Lessor, sent by certified or registered mail, postage prepaid, or sent by telegram or delivered by hand in each case, addressed to Lessor at its address first above set forth. Lessor and Lessee shall each have the right from time to time to specify as its address for 44 purposes of this Lease any other address in the United States of America upon giving 15 days' notice thereof, similarly given, to the other party. 22. Estoppel Certificates; Consents and Financial Statements. (a) Lessee and Lessor will, at any time and from time to time, upon not less than twenty days' prior request by the other party, execute, acknowledge and deliver to the other party a Certificate, certifying that this Lease is unmodified and in full effect (or setting forth any modifications and that this Lease is in full effect as modified) and the dates to which the Basic Rent, additional rent and other sums payable hereunder have been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer may have knowledge; it being intended, inter alia, that any such certificate may be relied upon by any mortgagee or prospective purchaser or prospective mortgagee of the Leased Premises. (b) From time to time during the term of this Lease, Lessor expects to secure financings of its interest in the Leased Premises by assigning Lessor's interest in this Lease and the sums payable hereunder. In the event of any such assignment to a Permitted Mortgagee, Lessee will, upon not less than ten days' prior request by Lessor, execute, acknowledge and deliver to Lessor a consent to such assignment addressed to such Permitted Mortgagee in a form satisfactory to such Permitted Mortgagee; and Lessee will produce, at Lessee's expense (but only with respect to the initial financing involving the Permitted Mortgagee), such certificates, opinions of counsel and other documents as may be reasonably requested by such Permitted Mortgagee. (c) Lessee will furnish the following statements to Lessor: (i) within 120 days after the end of each of Lessee's fiscal years, the annual audited report of Lessee, including a balance sheet and an income and surplus statement and statement of changes in financial 45 position for the fiscal year covered thereby, setting forth in comparative form, the figures for the previous fiscal year, all on a fully consolidated basis and in reasonable detail and duly certified by the independent certified public accountants regularly employed by Lessee, (ii) within 120 days after the end of each of Lessee's fiscal years, and together with the annual audited report furnished in accordance with clause (i), an Officer's Certificate stating that to the best of the signer's knowledge and belief after making due inquiry, Lessee is not in default in the performance or observance of any of the terms of this Lease, or if Lessee shall be in Default to its knowledge, specifying all such defaults, the nature thereof, and the steps being taken to remedy the same, (iii) with reasonable promptness, copies of all financial statements and reports, if any, which Lessee shall send to its respective stockholders, and copies of any Form 10-K, Form 10-Q, Form 8-K, proxy statement and registration statement (other than Form S-8 registration statements), or copies of any successor forms or statements substituted therefor, which Lessee shall file with the Securities and Exchange Commission or any governmental agency substituted therefor, and (iv) with reasonable promptness, such other information, consistent with the disclosure requirements of the federal securities laws, respecting the financial condition and affairs of Lessee, as Lessor may request from time to time. 23. No Merger. There shall be no merger of this Lease or the leasehold estate hereby created with the fee estate in the Leased Premises or any part thereof by reason of the same person acquiring or holding, directly or indirectly, this Lease or the leasehold estate hereby created or any interest in this Lease or in such leasehold estate as well as the fee estate in the Leased Premises or any portion thereof. 24. Surrender. Upon the termination of this Lease, Lessee shall peaceably surrender the Leased Premises to Lessor in the same condition in which they were received from Lessor at the commencement of this Lease, except as altered as permitted or required by this Lease and except for ordinary wear 46 and tear. Provided that Lessee is not in default hereunder, Lessee shall remove from the Leased Premises prior to or within a reasonable time after (not to exceed thirty days) such termination all property not owned by Lessor, and, at Lessee's expense, shall, at such time of removal, repair any damage caused by such removal. Property not so removed shall become the property of Lessor. Lessor may thereafter cause such property to be removed from the Leased Premises and disposed of. The cost of any such removal and disposition and the cost of repairing any damage caused by such removal shall be borne by Lessee. 25. Separability. Each and every covenant and agreement contained in this Lease is separate and independent, and the breach of any thereof by Lessor shall not discharge or relieve Lessee from any obligation hereunder. If any term or provision of this Lease or the application thereof to any person or circumstances or at any time shall to any extent be invalid and unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances or at any time other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and shall be enforced to the extent permitted by law. 26. Binding Effect. All of the covenants, conditions and obligations contained in this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of Lessor and Lessee to the same extent as if each such successor and assign were in each case named as a party to this Lease. This Lease may not be changed, modified or discharged except by a writing signed by Lessor and Lessee. 27. Table of Contents, Headings. The table of contents and headings used in this Lease are for convenient reference only and shall not to any 47 extent have the effect of modifying, amending or changing the provisions of this Lease. 28. Governing Law. This Lease shall be governed by and interpreted under the laws of the State of Indiana. 29. Certain Definitions. (a) The term "Appraisal Procedure" means: Lessee and Lessor shall each select an MAI appraiser. Such value shall be determined by agreement of the full appraisals of such two appraisers pursuant to the terms of this Lease; and if no agreement can be reached by such two appraisers, such value shall be determined by the full appraisal of a third MAI appraiser, who shall be selected by the original two appraisers. All reasonable and necessary costs of the appraisals shall be paid by Lessee. (b) The term "Guarantor" means: Lincoln National Corporation, an Indiana corporation. (c) The term "Guaranty" means: The Guaranty, dated the date hereof, from Guarantor to Lessor, guaranteeing performance of Lessee's obligations under this Lease. (d) The term "Impositions" means: (i) all taxes, assessments (including assessments for benefits from public works or improvements, whether or not begun or completed prior to the commencement of the Term of this Lease and whether or not to be completed within said Term), levies, fees, water and sewer rents and charges, and all other governmental charges of every kind, general and special, ordinary and extraordinary, whether or not the same shall have been within the express contemplation of the parties hereto, together with any interest and penalties thereon, which are, at any time, imposed or levied upon or assessed against (A) the Leased Premises or any part thereof, (B) any Basic Rent, any additional rent reserved or payable hereunder or any other sums payable by Lessee hereunder, (C) this Lease or the leasehold estate hereby created or which arise in respect of the operation, possession, occupancy or use of the Leased Premises; 48 (ii) any gross receipts or similar taxes imposed or levied upon, assessed against or measured by the Basic Rent, additional rent or any other sums payable by Lessee hereunder or levied upon or assessed against the Leased Premises; including without limitation [reference to Indiana gross receipts tax]; (iii) all sales and use taxes which may be levied or assessed against or payable by Lessor or Lessee on account of the acquisition, leasing or use of the Leased Premises or any portion thereof; and (iv) all charges for water, gas, light, heat, telephone, electricity, power and other utilities and communications services rendered or used on or about the Leased Premises. (e) The term "Junior Permitted Mortgagees" means American States Insurance Company, as mortgagee under a mortgage, dated as of the date hereof, from Lessor, as mortgagor, and its assigns; and Dean Witter Realty Inc., as mortgagee under a mortgage dated as of the date hereof, from Lessor, as mortgagor, and its assigns. (f) The term "this Lease" means: this Lease and Agreement as amended and modified from time to time, together with any memorandum or short form of lease entered into for the purpose of recording. (g) The term "Lessee's Certificate" means: a written certificate signed by the Chairman of the Board, the President or any Vice President of Lessee. (h) The term "Lessor's Cost" means Lessor's Cost from time to time as set forth in Schedule C. (i) The term "Other Guaranties" means: the Guaranties, dated as of the date hereof, from Guarantor to Lessor guaranteeing performance of the obligations of Lincoln National Pension Insurance Company, as lessee, under a Lease and Agreement, dated as of the date hereof, and the Guaranty, dated as of the date hereof, from Guarantor to Lessor guaranteeing performance of the obligations of American States Insurance Company, as lessee, under a Lease and Agreement, dated as of the date hereof. 49 (j) The term "Permitted Mortgage" means: any mortgage, deed of trust, security agreement, assignment of lease or other security instrument relating to the Leased Premises and this Lease, subject to the rights of lessee under this Lease, and securing the borrowing by Lessor from Clinton Holding Corporation, a Delaware corporation (the Senior Permitted Mortgage), made at the time of execution of this Lease, or any refinancing thereof, or the mortgages to the Junior Permitted Mortgagees (the Subordinated Permitted Mortgage). (k) The term "Permitted Mortgagee" means the Senior Permitted Mortgagee and the Junior Permitted Mortgagees. (l) The term "Purchase Offer" means: an offer delivered by Lessee to Lessor, executed by the president or any vice president of Lessee, irrevocably offering to purchase the Leased Premises pursuant to the provisions of paragraphs 12 or 14 on any Termination Date specified in such Offer at a price determined in accordance with Schedule C. (m) The term "Senior Permitted Mortgagee" means The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as trustees, as assignees of Clinton Holding Corporation, and their successors and assigns. (n) The term "Termination Date" means: any Basic Rent Payment Date. 30. Lessee's Options; Right of First Refusal. (a) If no event of default hereunder has occurred and is continuing, Lessee shall have the option to purchase the Leased Premises either (x) on the last day of the Primary Term or (y) on the last day of the first, second, third, fourth, fifth and sixth Extended Terms if the Lease has been extended to any such date (any of such dates for purchase being referred to as the Purchase Date), upon not less than 360 days prior written notice to Lessor of its intention to exercise such option. The purchase price payable upon the exercise of such option shall be the fair market value of the Leased Premises as of the Purchase Date, taking 50 into consideration Lessee's continuing rights and obligations under this Lease assuming Lessee shall have extended the Lease for all Extended Terms, minus the enhancement of the fair market value of the Leased Premises due to the existence of Lessee's Improvements and that portion of the Improvements, if any, constructed by Lessee at its own expense and for which Lessee has not been reimbursed pursuant to paragraph 15. If Lessee and Lessor cannot agree as to such fair market value, such fair market value shall be determined in accordance with the Appraisal Procedure. Such Appraisal Procedure shall be completed within 150 days after Lessee's notice as set forth above. Lessee's option shall be exercisable by giving notice of such exercise to Lessor not less than 360 days prior to the Purchase Date. On the Purchase Date, Lessor shall convey the Leased Premises to Lessee pursuant to and upon compliance with paragraph 16. The foregoing option is personal to Lessee, and such option is not assignable (except by Lessee to any of its affiliates) notwithstanding any assignment of the Lease to any other person. (b) If, at any time during the Primary Term or any Extended Term of this Lease, Lessor shall receive and be willing to accept a bona fide offer from a third party to purchase Lessor's interest in the Leased Premises, other than an offer to purchase such interest at any sale incidental to foreclosure or other similar proceedings, or if Lessor shall offer to sell its interest in the Leased Premises to any third party, Lessor shall promptly transmit to Lessee its written offer to sell such interest to Lessee upon the same terms and conditions as are set forth in the third party offer or its offer to a third party, as the case may be, together with a true copy of such offer (containing the name and address of such third party); provided, however, that Lessor's offer to Lessee shall be reduced by the enhancement of the fair market value of the Leased Premises due to the existence of Lessee's 51 Improvements and that portion of the Improvements, if any, constructed by Lessee at its own expense and for which Lessee has not been reimbursed pursuant to paragraph 15, as determined by the Appraisal Procedure. Lessee shall have 30 business days within which to accept such offer. If Lessee shall accept such offer by written notice to Lessor within such time, such offer and acceptance shall constitute a contract between them for the sale by Lessor and the purchase by Lessee of the Leased Premises, and shall not thereafter be subject to rejection by either party. On the date of such purchase, Lessor shall convey and assign the Leased Premises to Lessee, provided that such conveyance and assignment shall be made subject to the Permitted Exceptions listed in Schedule A hereto, to this Lease, and to such liens, encumbrances, charges, exceptions and restrictions affecting the Leased Premises as such third party is willing to accept in such offer, and provided further that this Lease and any Permitted Mortgage shall continue in full force and effect. If the offer to sell is not so accepted by Lessee, then Lessor may sell the Leased Premises to such third party purchaser upon the terms contained in such original offer by or to such third party and such sale and transfer must be consummated within 180 days following the expiration of the time hereinabove provided for the acceptance by Lessee. If the Leased Premises is sold to a third party, the sale shall be subject to this Lease and all of the provisions hereof, including, without limitation, all options granted to Lessee. 31. Schedules. The following are Schedules A, B and C referred to in this Lease, which are hereby made a part hereof. 52 SCHEDULE A TO LEASE Part 1: Property Description Part 2: Property subject to the option set forth in paragraph 15(d). The Lease will include a legal description of certain specific portions of the Leased Premises which are to be subject to the paragraph 15(d) option. The amount of indebtedness to be prepaid pursuant to the Senior Permitted Mortgage in connection with the exercise of such option will be the greater of (a) the amount herein set forth as the cost attributable to such portion of the Leased Premises or (b) the fair market value of such portion as determined pursuant to paragraph 15(c). Such property and amounts will be as follows: West Fort Worth: unimproved land - $100,000 SCHEDULE B TO LEASE Basic Rent Payments 1. The instalments of Basic Rent payable for the Leased Premises during the Interim Term shall be: $6,668 per diem (based on a 360-day year of 12 30-day months), payable on August 31, 1984. 2. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term ending on and including August 31, 1989 shall be $691,409 and shall be payable semi-annually in arrears commencing on February 28, 1985 and thereafter on the last day of each August and February thereafter to and including August 31, 1989. 3. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1989 and ending on and including August 31, 1994 shall be $1,571,803 and shall be payable semi-annually in arrears commencing on February 28, 1990 and thereafter on the last day of each August and February thereafter to and including August 31, 1994. 4. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1994 and ending on and including August 31, 1999 shall be $1,599,188 and shall be payable semi-annually in arrears commencing on February 28, 1995 and thereafter on the last day of each August and February thereafter, to and including August 31, 1999. 5. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1999 and ending on and including August 31, 2004 shall be $2,440,619 and shall be payable semi-annually in arrears commencing on February 29, 2000 and thereafter on the last day of each August and February thereafter, to and including August 31, 2004. 6. Each instalment of Basic Rent payable for the Lease to Premises during that portion of the Primary Term commencing on September 1, 2004 and ending on and including August 31, 2009 shall be $2,585,825 and should be payable semi-annually in arrears commencing on February 28, 2005 and thereafter on the last day of each August and February thereafter to and including August 31, 2009. 7. Each instalment of Basic Rent for the Leased Premises during the Extended Terms shall be $1,175,000, and shall be payable semi-annually in arrears commencing on February 28, 2010 and thereafter on the last day of each August and February thereafter occurring during the Extended Terms. If any instalment of Basic Rent shall be payable on a date which shall not be a business day, then such instalment shall be payable on the first business day thereafter. SCHEDULE C TO LEASE COMPUTATION OF PURCHASE PRICES Upon the purchase of the Leased Premises during the Interim or Primary Terms pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall be an amount equal to the amount set forth in column 2 below opposite the period in which such purchase occurs (the first such amount being called "Lessor's Cost") (period 1 being the period beginning on the first day of the Interim Term and ending on and including February 28, 1985, period 2 being the period beginning on March 1, 1985 and ending on and including August 31, 1985, and each succeeding period being the following semiannual period to and including period 50).
Column 1 Column 2 -------- -------- Purchase Period Applicable Amount --------------- ----------------- 1 $26,405,296 2 27,661,280 3 28,664,433 4 29,746,062 5 30,751,407 6 31,809,467 7 32,818,136 8 33,850,098 9 34,863,375 10 35,891,867 11 36,576,595 12 36,744,483 13 36,878,346 14 38,979,820 15 37,085,896 16 37,206,250 17 37,341,716 18 37,493,127 19 37,661,416 20 37,847,563 21 38,025,262 22 38,218,155 23 38,426,981
24 38,652,186 25 38,894,730 26 39,155,290 27 39,434,663 28 39,733,686 29 40,053,240 30 40,394,253 31 39,692,606 32 38,953,827 33 38,175,132 34 37,353,526 35 36,485,793 36 35,568,471 37 34,597,843 38 33,569,910 39 32,480,373 40 31,324,614 41 29,822,990 42 28,234,468 43 26,552,917 44 24,771,760 45 22,883,943 46 20,881,899 47 18,757,508 48 16,502,058 49 14,106,204 50 11,559,914
Upon a partial prepayment of the indebtedness secured by the Senior Permitted Mortgage referred to in paragraph 12(c), 14(b) or 15(e) of this Lease, the amounts set forth above shall be reduced by an amount equal to the amount of the reduction of the principal amount of such indebtedness scheduled to be outstanding during each purchase period, after giving effect to the revised amortization thereof resulting from such partial prepayment in accordance with the terms thereof. (In case such indebtedness is prepaid or other wise refinanced, the amounts so determined shall be reduced as if such indebtedness had remained outstanding.) IN WITNESS WHEREOF, the parties hereto have caused this Lease to be signed as of the date first above written. CLINTON STREET LIMITED PARTNERSHIP, as Lessor By: Liberty Street Limited Partnership - 84, A General Partner By: /s/ E. DAVISSON HARDMAN, JR., ----------------------------- E. Davisson Hardman, Jr., A General Partner LINCOLN NATIONAL PENSION INSURANCE COMPANY, as Lessee By: /s/ MAX A. ROESLER ----------------------------- Name: Max A. Roesler Title: Vice President This document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 Exhibit A Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) Parcel 1 A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, together with a part of the Northeast Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana, both said parts being more particularly described as follows, to-wit: Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'- 27" E, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet to the true point of beginning, located on the South right-of-way line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E a distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40"E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N 89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot-wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence S 00 degrees-03'-32" E, on and along the West line of said easement, a distance of 275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W, a distance of 484.96 feet to an existing line fence; thence S 88 degrees-03'-10" W a distance of 345.52 feet to the Easterly right-of-way line of Interstate Highway #69; thence Northeasterly, on and along said Easterly right-of-way line on the following courses and distances: PARCEL 2 (Magnavox Way) An easement for the purpose of ingress and egress and utilities for the benefit of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716, pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781 and 80-16836 over the following real estate. A strip of land 60 feet in width lying 30 feet on either side of the line described as follows: Beginning at the North Quarter Corner of said Section 7, running thence South 89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way line of Frontage Road No. 1, the true point of beginning of this description; thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a tangent curve to the right having a central angle of 23 degrees and a length of 250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a tangent curve to the left having a central angle of 24 degrees 41' 59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more or less to the North line of the South Half of the South Half of the Southeast Quarter of the Northwest Quarter of Section 7, Township 30 degrees North, Range 12 East, the South line of Inverness Investors, Inc. Property. PARCEL 3 An easement for the purpose of ingress and egress for the benefit of Parcel 1 created in an Easement recorded November 7, 1963 in Deed Record 716, pages 153-157 and modified by Agreement recorded as Document Numbers 70-9781 and 80-16836 over the following described real estate. Part of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in Allen County, Indiana, more particularly described as follows, to wit: Beginning at the Northeast corner of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, on the center line of Getz Road; thence West along the North line of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7, a distance of 1323.13 feet to a stone marking the Northwest corner of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7; thence South along the West line of the East Half of the said fractional Northwest Quarter of Section 7, a distance of 50.00 feet; thence East and parallel to the North line of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the center line of Getz Road, 50 feet South of the place of beginning, thence North on the center line of the Getz Road a distance of 50.0 feet to the place of beginning; and for the installation and perpetual maintenance of sewer and water line within the Northern Half of the above described real estate. Re: Lease I Agreement Guaranty Memorandum of Lease and Agreement Assignment of Lease and Guaranty Reassignment of Lease and Guaranty Second Assignment of Lease and Guaranty Second Reassignment of Lease and Guaranty ("Lincoln West" site) CORRECTION AGREEMENT THIS AGREEMENT, made this 7th day of November, 1985, by and between: CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York, 10006; LINCOLN NATIONAL PENSION INSURANCE COMPANY, an Indiana corporation, having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46801; CLINTON HOLDING CORPORATION, a Delaware corporation, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006; THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an address at One Constitution Plaza, Hartford Connecticut 06115; LINCOLN NATIONAL CORPORATION, having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46801 and AMERICAN STATES INSURANCE COMPANY, having an address at 500 North Meridian Street, Indianapolis, Indiana 46207. WITNESSETH: WHEREAS, the parties to this agreement are parties to one or more instruments, all dated as of August 1, 1984, in connection with the leasing by Lincoln National Pension Insurance Company of a certain parcel of land located in Allen County, Indiana, commonly known as the "Lincoln West" site, the legal description of which is set forth on Schedule A hereto, which aforementioned instruments were recorded on August 29, 1984, (unless otherwise noted below) in 85-034289 THREE RIVERS TITLE COMPANY, INC. ALLEN COUNTY RECORDER VIRGINIA L. YOUNG the Office of the Recorder of Allen County, Indiana, and which instruments are as follows: 1. Lease and Agreement (Not recorded) The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 2. Guaranty (Not recorded) From: Lincoln National Corporation, as "Guarantor" To: Clinton Street Limited Partnership, as "Owner" 3. Memorandum of Lease and Agreement Recorded as Instrument No. 84-021076 The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 4. Assignment of Lease and Guaranty Recorded as Instrument No. 84-021078 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 5. Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021080 From: Clinton Holding Corporation, as "Company" To: The Connecticut Bank and Trust Company, National Association and F. W. Kawan, as "Trustees" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 6. Second Assignment of Lease and Guaranty Recorded as Instrument No. 84-021084 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 7. Second Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021082 From: Clinton Holding Corporation, as "Company" To: American States Insurance Company, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation -3- WHEREAS, the legal description of the "Lincoln West" site which is set forth in Schedule A to each of the foregoing instruments has been determined to be incomplete and, therefore, incorrect, and WHEREAS, it is the mutual desire of the parties hereto that the foregoing instruments be corrected by having appended to each instrument a complete and correct Schedule A legal description, and, in the event any such instrument has been recorded, that such instrument be corrected of record, NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid by each of the parties hereto to each of the other parties hereto, and other valuable considerations each to the other in hand paid, the receipt and sufficiency of which are hereby acknowledged, the parties do mutually covenant and agree: 1. That Schedule A to this agreement be and it hereby is substituted for Schedule A to all of the foregoing instruments. 2. That all other terms, conditions, and covenants of the aforesaid instruments are and shall remain in full force and effect except as hereby corrected. 3. That by inadvertence the aforesaid Second Reassignment of Lease and Guaranty (recorded as Instrument No. 84-021082) was recorded prior in time to the aforesaid Second Assignment of Lease and Guaranty (recorded as Instrument No. 84-021084) and such order of recording to the contrary notwithstanding, all parties hereto agree that such Second Reassignment of Lease and Guaranty shall be subject and subordinate to the aforesaid Second Assignment of Lease and Guaranty and said Second Assignment of Lease and Guaranty shall be considered for all purposes as if and treated as though it had been signed, sealed, delivered and recorded prior in time to the aforesaid Second Reassignment of Lease and Guaranty. -4- 4. That subparagraph (iv) appearing at lines twenty-three through twenty-six of the first page of ASSIGNMENT OF LEASE AND GUARANTY From CLINTON STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION with respect to Property Location: West Fort Wayne, Indiana, is corrected to read as follows: "(iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $2,805,280 (herein, together with any notes issued in exchange or replacement therefor, called the Series D Owner's Note)." 5. That this agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same agreement. 6. That the parties hereto are authorized and directed to attach this Correction Agreement to each of the aforesaid instruments, as a part and portion thereof, and to record same among the public records in the Office of the Recorder of Allen County, Indiana, and elsewhere as they shall deem appropriate. This Agreement shall bind and shall inure to the benefit of the respective heirs, successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have caused this instrument to be executed as of the day and year first above written. -5- CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. --------------------------------- E. Davisson Hardman, Jr. A General Partner LINCOLN NATIONAL PENSION INSURANCE COMPANY, BY: MAX ROESLER -------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE --------------------------- Name: Dolores Prange Title: Assistant Secretary CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. -------------------------------- Name: E. Davisson Hardman, Jr. Title: President (SEAL) Attest: BY: ALEXANDER J. JORDAN JR. ------------------------------- Name: Alexander J. Jordan Jr. Title: Assistant Secretary -6- THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION BY: MASON M. LEMONT ---------------------------- Name: MASON M. LEMONT Title: Asst. Vice President (SEAL) Attest: BY: V. KREUSCHER ------------------------ Name: V. Kreuscher Title: Assistant Vice President F.W. KAWAM ----------------------- F. W. Kawan LINCOLN NATIONAL CORPORATION BY: MAX ROESLER ----------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ----------------------- Name: Dolores Prange Title: Assistant Secretary AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ----------------------------- Name: F. Ernest Barthel Title: Vice President (SEAL) Attest: By: THOMAS M. OBER ------------------------ Name: Thomas M. Ober Title: Secretary -7- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO ---------------------- Printed Dolores M. Antonino ---------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - --------------------- -8- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN: ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant. Secretary, respectively, of LINCOLN NATIONAL PENSION INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------ Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - --------------------- Resident of DeKalb County, Indiana -9- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledge the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985 Signature DOLORES M. ANTONINO ------------------------ Printed Dolores M. Antonino ------------------------ NOTARY PUBLIC (SEAL) My commission expires: July 25, 1991 - -------------------- -10- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared Mason M. Lemont and V. Kreuscher, the ASSISTANT VICE PRESIDENT and ASSISTANT VICE PRESIDENT, respectively of THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. RUTH A. SMITH ----------------------- NOTARY PUBLIC (SEAL) My Commission Expires: 3/3/89 - --------------------- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared F. W. Kawam who acknowledged execution of the foregoing instrument as his free and voluntary act and deed, and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. RUTH A. SMITH ----------------------- NOTARY PUBLIC My Commission Expires: 3/3/89 - --------------------- -11- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER (SEAL) --------------------------------- Donald F. Butler NOTARY PUBLIC My Commission Expires: May 25, 1987 - ---------------------- Resident of DeKalb County, Indiana -12- STATE OF INDIANA ) ) SS: COUNTY OF MARION ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER (SEAL) --------------------------------- Donald F. Butler NOTARY PUBLIC My Commission Expires: May 25, 1987 - ---------------------- Resident of DeKalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. SCHEDULE A PARCEL 1 Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, together with a part of the Northeast Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana, both said parts being more particularly described as follows, to wit: Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'-27" E, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet to the true point of beginning, located on the South right-of-way line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N 89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot-wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence S 00 degrees-03'-32" E, on and along the West line of said easement, a distance of 275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W, a distance of 484.96 feet to an existing line fence; thence S 88 degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line of Interstate Highway #69; thence Northeasterly, on and along said Easterly right-of-way line on the following courses and distances: Northeasterly, on and along the arc of a regular curve to the left having a radius of 4046.53 feet, and being situated 140.0 feet (measured radially) Southeasterly of and concentric to the centerline of I-69, an arc distance of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04 feet to a point situated 100.0 feet (measured radially), Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the left having a radius of 4006.53 feet, and being situated 100.0 feet (measured radially) Southeasterly of and concentric to said I-69 centerline, an arc distance of 410.24 feet (the chord of which bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23 degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 18 degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 14 degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet (measured radially) Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 884.93 feet and being situated 70.0 feet (measured radially) Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined by the Southeasterly edge of pavement of an existing 18 foot-wide concrete ramp, an arc distance of 327.39 feet (the chord of which bears N 26 degrees-38'-02" E, (for a length of 325.53 feet); thence N 35 degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet (measured at right angles) Southeasterly of said line "S-E-C"; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 666.20 feet and being situated 50.0 feet (measured radially) Southeasterly of and concentric to said line "S-E-C", an arc distance of 355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length of 351.75 feet) to the true point of beginning. SCHEDULE A Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) PARCEL 2 An easement for the purpose of ingress and egress and utilities for the benefit of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716, pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781 and 80-16836 over the following real estate. A strip of land 60 feet in width lying 30 feet on either side of the line described as follows: Beginning at the North Quarter Corner of said Section 7, running thence South 89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way line of Frontage Road No. 1, the true point of beginning of this description; thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a tangent curve to the right having a central angle of 25 degrees and a length of 250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a tangent curve to the left having a central angle of 24 degrees 41' 59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more or less to the North line of the South Half of the South Half of the Southeast Quarter of the Northwest Quarter of Section 7, Township 30' North, Range 12 East, the South line of Inverness Investors, Inc. Property. PARCEL 3 An easement for the purpose of ingress and egress for the benefit of Parcel 1 created in an Easement recorded November 7, 1968 in Deed Record 716, pages 153-157 and modified by Agreement recorded as Document Numbers 70-9781 and 80-16836 over the following described real estate. Part of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in Allen County, Indiana, more particularly described as follows, to wit: Beginning at the Northeast corner of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, on the center line of Getz Road; thence West along the North line of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7, a distance of 1323.13 feet to a stone marking the Northwest corner of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7; thence South along the West line of the East Half of the said fractional Northwest Quarter of Section 7, a distance of 50.00 feet; thence East and parallel to the North line of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the center line of Getz Road, 50 feet South of the place of beginning, thence North on the center line of the Getz Road a distance of 50.0 feet to the place of beginning; and for the installation and perpetual maintenance of sewer and water line within the Northern Half of the above described real estate. Re: Lease and Agreement Guaranty Memorandum of Lease and Agreement Assignment of Lease and Guaranty Reassignment of Lease and Guaranty Second Assignment of Lease and Guaranty Second Reassignment of Lease and Guaranty ("Lincoln West" site) PARTIAL RELEASE In consideration of the sum of Ten Dollars ($10.00) and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, as parties to one or more of the following-described instruments, to-wit: 1. Lease and Agreement - (Not recorded) The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 2. Guaranty (Not recorded) From: Lincoln National Corporation, as "Guarantor" To: Clinton Street Limited Partnership, as "Owner" 3. Memorandum of Lease and Agreement Recorded as Instrument No. 84-021076 The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 4. Assignment of Lease and Guaranty Recorded as Instrument No. 84-021078 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 5. Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021080 From: Clinton Holding Corporation, as "Company" To: The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as "Trustees" THREE RIVERS TITLE COMPANY, INC. 1985 NOV 19 AM 3:55 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG -2- Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 6. Second Assignment of Lease and Guaranty Recorded as Instrument No. 84-021084 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 7. Second Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021082 From: Clinton Holding Corporation, as "Company" To: American States Insurance Company, as "Assignee" Consent to be: Lincoln National Pension Insurance Company and Lincoln National Corporation hereby release and discharge the real estate more particularly bounded and described in Exhibit A hereto from the incumbrance and effect the above-described instruments, which instruments were corrected by that certain Correction Agreement by and among the parties hereto dated November 7, 1985, and recorded November 19, 1985, in the Office of the Recorder of Allen County, Indiana, as Instrument No. 85-34289. The parties hereto agree that this Partial Release may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and such counterparts shall together constitute but one and the same instrument. Dated this 7th day of November, 1985. -3- CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. --------------------------------- E. Davisson Hardman, Jr. A General Partner LINCOLN NATIONAL PENSION INSURANCE COMPANY BY: MAX ROESLER --------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ------------------------- Name: Dolores Prange Title: Assistant Secretary CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ---------------------------------- Name: E. Davisson Hardman, Jr. Title: President (SEAL) Attest: BY: ALEXANDER J. JORDAN, JR. -------------------------- Name: Alexander J. Jordan, Jr. Title: Assistant Secretary -4- THE CONNECTICUT BANK AND TRUST COMPANY NATIONAL ASSOCIATION BY: MASON M. LEMONT --------------------------------- Name: MASON M. LEMONT Title: Asst. Vice President (SEAL) Attest: BY: V. KREUSCHER ------------------------- Name: V. Kreuscher Title: ASSISTANT VICE PRESIDENT F. W. KAWAM --------------------------------- F. W. Kawam LINCOLN NATIONAL CORPORATION BY: MAX ROESLER ---------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ------------------------- Name: Dolores Prange Title: Assistant Secretary AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ---------------------------------- Name: F. Ernest Barthel Title: Vice President (SEAL) Attest: BY: THOMAS M. OBER -------------------------- Name: Thomas M. Ober Title: Secretary -5- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7 day of November, 1985. Signature DOLORES M. ANTONINO ------------------- Printed Dolores M. Antonino -------------------- NOTARY PUBLIC My commission expires: (SEAL) July 25, 1991 - ------------------------ -6- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. /s/ DONALD F. BUTLER ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ------------------------ Resident of DeKalb County, Indiana -7- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985 (SEAL) Signature DOLORES M. ANTONINO ------------------- Printed Dolores M. Antonino NOTARY PUBLIC My commission expires: July 25, 1991 - ------------------------ -8- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared Mason M. Lemont and V. Kreuscher, the ASSISTANT VICE PRESIDENT and ASSISTANT VICE PRESIDENT, respectively of THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. (SEAL) RUTH A. SMITH ------------------------ NOTARY PUBLIC My Commission Expires: March 3, 1989 - ------------------------ STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared F. W. Kawam who acknowledged execution of the foregoing instrument as his free and voluntary act and deed, and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. (SEAL) RUTH A. SMITH -------------------------- NOTARY PUBLIC My Commission Expires: March 3, 1989 - ------------------------ -9- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ---------------------- Resident of DeKalb County, Indiana STATE OF INDIANA ) ) SS: COUNTY OF MARION ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ------------------------- Resident of DeKalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. Exhibit A A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, being more particularly described as follows: Commencing at the Northwest corner of said Section 7: thence North 89 deg. 56 min. 27 sec. East, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a distance of 145.0 feet to the South right of way line of Road #14 (Illinois Road); thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0 feet; thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet; thence South 25 deg. 06 min. 36 sec. West, a distance of 147.78 feet; thence South 13 deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28 deg. 49 min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07 min. 55 sec. East, a distance of 116.43 feet; thence South 67 degrees 37 min. 33 sec. East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec. East, a distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at a Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence North 89 deg. 56 min. 19 sec. East, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence South 00 deg. 03 min. 32 sec. East, on and along the West line of said easement, a distance of 200.0 feet to the point of beginning; thence continuing South 00 deg. 03 min. 32 sec. East 75.00 feet; thence South 66 deg. 10 min. 20 sec. West, a distance of 1122.16 feet; thence South 89 deg. 56 min. 27 sec. West, a distance of 18.20 feet; thence North 15 deg. 16 min. 15 sec. East, a distance of 549.10 feet; thence South 89 deg. 54 min. 52 sec. East, a distance of 900.00 feet to the point of beginning, containing 6.471 acres and subject to Easements and Rights of Way of Record. Property Location: West Fort Wayne, Indiana 84-021078 ASSIGNMENT OF LEASE AND GUARANTY From CLINTON STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 THREE RIVERS TITLE COMPANY, INC. 1984 AUG 29 PM 4:57 ALLEN COUNTY RECORDER Virginia L. Young ASSIGNMENT OF LEASES AND GUARANTY, dated as of August 1, 1984, (herein, together with all supplements and amendments hereto, called this Agreement), from CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein called Owner), having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, to CLINTON HOLDING CORPORATION, a Delaware corporation, herein, together with its respective successors and assigns, called Assignee) having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006. To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule A hereto (the Land Parcel) and in the improvements located (the Land Parcel, together with the improvements located thereon being collectively called the Schedule A Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $16,551,155, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $660,066 (herein, together with any notes issued in exchange or replacement thereof, called the Series A Owner's Note), (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $6,188,119 (herein, together with any notes issued in exchange or replacement therefor, called the Series B Owner's Note), (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $5,742,574 (herein, together with any notes issued in exchange or replacement thereof, called the Series C Note), (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $8,584,159 (herein, together with any notes issued in exchange or replacement therefor, called the Series D Owner's Note), and (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $1,155,116 (herein, together with any notes issued in exchange or replacement therefor, called the Series E Owner's Note; the Series E Owner's Note, together with the Series A Owner's Note, the Series B Owner's Note, the Series C Owner's Note and the Series D Owner's Note, are herein collectively called the Owner's Notes). To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule B hereto and in the improvements located thereon (the Schedule B Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $50,646,535, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $2,019,802, (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $18,935,644, (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $17,572,277, (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $8,584,159 and (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $3,534,653. To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule C hereto and in the improvements located (the Schedule C Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $33,102,310, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $1,320,132, (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $12,376,237, (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $11,485,149, (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $5,610,561 and 2 (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $2,310,231. The Secured Notes of the Owner relating to the Schedule B Property and Schedule C Property are collectively called the Other Owner's Notes, and the Schedule A Property together with the Schedule B Property and the Schedule C Property are collectively called the Properties and individually called a Property. The Owner's Notes and the Other Owner's Notes are secured by three separate Mortgages, each dated as of the date hereof (the Mortgage relating to the Schedule A Property called the Mortgage and all three Mortgages collectively called the Mortgages), from Owner, as mortgagor, to Assignee, as mortgagee, which each creates a lien on a Property. As additional security for the Owner's Notes and the Other Owner's Notes, Owner is entering into the undertakings herein set forth. The Schedule A Property has been leased by Owner to Lincoln National Pension Insurance Company (the Lessee) under a Lease and Agreement, dated as of the date hereof (herein, together with all supplements and amendments thereto, and any memorandum or short form thereof entered into for the purpose of recording, called the Lease), between Owner, as lessor, and the Lessee, as lessee. The obligations of the Lessee under the Lease and hereunder has been guaranteed by Lincoln National Corporation (the Guarantor) pursuant to a Guaranty dated as of the date hereof (the Guaranty). In order to induce Assignee to purchase the Owner's Notes and the Other Owner's Notes and accept the Mortgages, Owner is entering into the undertakings herein set forth with Assignee and is assigning the Lease and the Guaranty to Assignee. 3 NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner agrees as follows: 1. Owner, in furtherance of the covenants of the Mortgages and as security for the payment of the principal of, premium, if any, and interest and all other sums payable on the Owner's Notes and the Other Owner's Notes, and of all other sums payable under the Mortgages, and the performance and observance of the provisions thereof, has assigned, transferred, conveyed and set over, and by these presents does assign, transfer, convey and set over to Assignee, all of Owner's estate, right, title and interest in, to and under the Lease, and the Guaranty together with all rights, powers, privileges, options and other benefits of Owner as lessor under the Lease and as beneficiary under the Guaranty including, but not by way of limitation, (i) the immediate and continuing right to receive and collect all rents, income, revenues, issues, profits, insurance proceeds, condemnation awards, moneys and security payable or receivable under the Lease or the Guaranty pursuant to any of the provisions of either thereof, whether as rents or as the purchase price of the Schedule A Property or otherwise (except sums payable directly to any person other than the lessor under the Lease), (ii) the right to accept any offer by Lessee to purchase the Schedule A Property, or part thereof, or any award payable in connection with a taking thereof (provided that such acceptance shall be permitted by the terms of Section 3.1(a) of the Mortgages), (iii) the right and power (which right and power are coupled with an interest) to execute and deliver, as agent and attorney-in-fact of Owner, an appropriate deed or other instrument necessary to convey the Schedule A Property, any part thereof or any award payable in connection with a taking thereof to Lessee if Lessee becomes obligated to purchase the Schedule A 4 Property, any part thereof or any award payable in connection with a taking thereof, (iv) the right to perform all other necessary or appropriate acts as said agent and attorney-in-fact with respect to any purchase and conveyance referred to in clause (iii) above, (v) the right to make all waivers and agreements, (vi) the right to give all notices, consents and releases, (vii) the right to take any legal action upon the happening of a default under the Lease or the Guaranty including the commencement, conduct and consummation of proceedings at law or in equity as shall be permitted under any provision of the Lease or the Guaranty or by law or in equity and (viii) the right to do any and all other things whatsoever which Owner or any lessor is or may be entitled to do under the Lease or the Guaranty. 2. The assignment made hereby is executed as collateral security, and the execution and delivery hereof shall not in any way impair or diminish the obligations of Owner under the provisions of the Lease nor shall any of the obligations contained in the Lease be imposed upon Assignee. Upon a release of the Schedule A Property or part thereof from the lien of the Mortgage, pursuant to the provisions of the Mortgage, said assignment, and all rights herein assigned to Assignee shall cease and terminate and all the estate, right, title and interest of owner in and to the above-described assigned property shall revert to owner, and Assignee shall, at the request of Owner, deliver to Owner an instrument in recordable form cancelling this Agreement and reassigning to Owner the above-described assigned property. Upon the payment of the principal of and premium, if any, and all accrued interest on the Owner's Notes and the Other owner's Notes and of all other sums payable under the Mortgages, or upon a release of all of the Property from the lien of the Mortgage pursuant to the provisions of the Mortgage, said assignment and all rights herein assigned to Assignee shall cease and 5 terminate and all the estate, right, title and interest of Owner in and to the above-described assigned property shall revert to Owner, and Assignee shall, at the request of Owner, deliver to Owner an instrument in recordable form cancelling this Agreement and reassigning to Owner the above-described assigned property. 3. Owner hereby designates Assignee to receive all payments of Basic Rent, purchase prices and other sums payable to the lessor under the Lease and all payments receivable by Owner under the Guaranty and to receive duplicate original copies of all notices, undertakings, demands, statements, documents and other communications which the Guarantor is required or permitted to give, make, deliver to or serve upon assignor under the Guaranty and which the Lessee is required or permitted to give, make, deliver to or serve upon the lessor under the Lease. Owner hereby directs the Lessee to deliver to Assignee, at its address set forth above or at such other address as Assignee shall designate, duplicate original copies of all such notices, undertakings, demands, statements, documents and other communications and no delivery thereof by the Lessee shall be of any force or effect unless made to Owner and also made to Assignee as herein provided. 4. Owner represents to Assignee that Owner has not executed any other assignment of the subject matter of this Assignment other than the Mortgage and that the Lease is in full effect and are not in default. 5. Owner agrees that said assignment and the designation and direction to the Lessee hereinabove set forth are irrevocable, and that it will not take any action as lessor under the Lease or as the beneficiary under the Guaranty which is inconsistent with said assignment, or make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. 6 Owner will, from time to time upon the request of Assignee execute all instruments of further assurance and all such supplemental instruments with respect to this Agreement as the Assignee may specify. 6. Owner hereby agrees, and hereby undertakes to obtain the agreements of the Lessee to the following matters: (a) The Lessee consents to the provisions of this Agreement, and agrees to pay and deliver to Assignee all rentals and other sums assigned to Assignee pursuant to this Agreement, without offset, deduction, defense, deferment, abatement or diminution, subject to the provisions of the Lease and will not, for any reason whatsoever, seek to recover from Assignee any moneys duly owed and paid to the Assignee by virtue of this Agreement. The Lessee agrees (i) that all sums payable to Assignee pursuant to the preceding sentence shall be paid in such manner that Assignee shall have "collected funds" on each date on which such sums are due and payable, and addressed to Assignee at its address set forth above or to such other address or manner as may be specified by Assignee by written notice to the Lessee and (ii) to deliver to Assignee duplicate original copies of all notices and other instruments which each may deliver pursuant to the Lease. No such payment or delivery made by a Lessee shall be of any force or effect (i) unless paid to Assignee or delivered to Assignee and Owner as provided above and (ii) until actually received by the Assignee. (b) Owner and the Lessee will not enter into any agreement subordinating, amending, modifying or terminating (except as provided in the Lease) the Lease without the consent thereto in writing of Assignee and any such attempted subordination, amendment, modification or termination without such consent shall be void. In the event that the Lease shall be amended as herein permitted, the Lease as so amended shall continue to be subject to the 7 provisions of this Agreement without the necessity of any further act by any of the parties hereto. The Lessee will remain obligated under the Lease in accordance with its terms, and will not take any action to terminate (except as expressly permitted by the Lease), rescind or avoid the Lease, notwithstanding any action with respect to the Lease which may be taken by an assignee or receiver of Owner or of any such assignee or by any court in any such proceeding. (c) If, pursuant to the Lease, Lessee shall offer to purchase the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof), notice of acceptance of any such offer shall be deemed validly given for all purposes if given by Assignee as permitted by paragraph 1(ii) hereof and notice by Owner of rejection of any such offer shall be void unless accompanied by the written consent of Assignee and no such offer shall be deemed rejected by Owner without the written consent of Assignee. If Lessee shall become obligated to purchase the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof) pursuant to any provision of the Lease, Lessee will accept a deed and other instruments conveying and transferring the Schedule A Property (or any part thereof) which are executed and delivered by Assignee as being in compliance with the provisions of the Lease, provided that said deed and other instruments shall otherwise be in compliance with the provisions of the Lease. If it should become necessary for Assignee or any other party to institute any foreclosure or other judicial proceeding in order that title to the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof) may be conveyed to Lessee, the time within which delivery of the deed or other instruments relating to such conveyance may be made shall be extended to the extent necessary to permit Assignee or such other party to institute and 8 conclude such foreclosure or other judicial proceeding, and the Lease shall not terminate, but shall continue in full effect until the expiration of such period of extension. 7. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Agreement may be executed in two or more counterparts and shall be deemed to have become effective when and only when one or more of such counterparts shall have been signed by or on behalf of each of the parties hereto, although it shall not be necessary that any single counterpart be signed by or on behalf of each of the parties hereto, and all such counterparts shall be deemed to constitute but one and the same instrument. This Agreement shall be governed by the laws of the State of Indiana. 8. The following are Schedules A, Schedule B and Schedule C referred to in this Agreement. 9 COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN ----------------------------- Printed Joan E. Hogan ----------------------------- NOTARY PUBLIC My commission expires: 10-31-86 - ------------------------- 10 STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this ___ day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. CAROL ANN JOHNSTON ----------------------------- Carol Ann Johnston, Notary Public (SEAL) Carol A. Johnston Notary Public Resident of Allen County, Indiana My Commission Expires May 15, 1988 - ---------------------------------- LINCOLN NATIONAL PENSION INSURANCE COMPANY hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. LINCOLN NATIONAL PENSION INSURANCE COMPANY (SEAL) Attest: By:MAX A. ROESLER -------------------------------- Name: Max A. Roesler Title: Vice President By: PATRICIA A. ADAMS -------------------------------- NAME: PATRICIA A. ADAMS Title: Assistant Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. LINCOLN NATIONAL CORPORATION (SEAL) Attest: By: MAX A. ROESLER -------------------------------- Name: Max A. Roesler Title: Vice President By: PATRICIA A. ADAMS -------------------------------- Name: Patricia A. Adams Title: Assistant Secretary This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 IN WITNESS WHEREOF, Owner has caused this Agreement to be executed and delivered as of the date first above written. CLINTON STREET LIMITED PARTNERSHIP By: Liberty Street Limited Partnership-84, General Partner, Witness: By: E. DAVISSON HARDMAN ------------------------------ E. Davisson Hardman, a General Partner Property Location: West Fort Wayne, Indiana 84-021080 REASSIGNMENT OF LEASE AND GUARANTY From CLINTON HOLDING CORPORATION To THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION and F. W. KAWAM, as Trustees Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 THREE RIVERS TITLE COMPANY, INC. 1984 AUG 29 PM 5:00 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG Property Location: West Fort Wayne, Indiana 84-021080 REASSIGNMENT OF LEASE AND GUARANTY From CLINTON HOLDING CORPORATION To THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION and F. W. KAWAM, as Trustees Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 THREE RIVERS TITLE COMPANY, INC. 1984 AUG 29 PM 5:00 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG Property Location: West Fort Wayne, Indiana REASSIGNMENT OF LEASE AND GUARANTY From CLINTON HOLDING CORPORATION To THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION and F. W. KAWAM, as Trustees Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 REASSIGNMENT OF LEASE AND GUARANTY, dated as of August l, 1984, from CLINTON HOLDING CORPORATION, a Delaware corporation (herein, together with its successors and assigns, called the Company) having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, to THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an address at One Constitution Plaza, Hartford, Connecticut 06115, as trustees (the Trustees) under the Collateral Trust Indenture (the Indenture), dated as of August 1, 1984, from the Company, as grantor, to the Trustees, as trustees (the Trustees, together with their successors and assigns, are herein called the Assignee). PRELIMINARY STATEMENT CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (Owner), has entered into a Lease and Agreement, dated as of August l, 1984 (herein, together with all amendments and supplements thereto and any short form thereof entered into for purposes of recording, called the Lease), with Lincoln National Pension Insurance Company, an Indiana corporation, as lessee (Lessee). The obligations of Lessee under the Lease has been guaranteed by Lincoln National Corporation (Guarantor) pursuant to a guaranty, dated as of August l, 1984, from Guarantor to Owner (the Guaranty). The premises leased pursuant to the Lease consist of the land parcel described in Schedule A hereto (the Land Parcel), all buildings and other improvements located thereon, and all easements, rights and appurtenances relating respectively thereto (collectively, the Property). All right, title and interest of Owner in and to the Lease and the Guaranty have been assigned to the Company pursuant to (i) the mortgage, dated as of the date hereof, relating to the Property (the Mortgage), from Owner, as mortgagor, to the Company, as mortgagee, and (ii) an Assignment of Lease and Guaranty, dated as of the date hereof, relating to the Lease and the Guaranty (herein, together with all supplements and amendments thereto, collectively called the Assignment), from Owner, as assignor, to the Company, as assignee, as security for the (i) Series A 13.90% Secured Notes Due September 1, 1989, in the original principal amount of $4,000,000, (ii) Series B 14.30% Secured Notes Due September 1, 1994, in the original principal amount of $37,500,000, (iii) Series C 14.60% Secured Notes Due September 1, 1999, in the original principal amount of $34,800,000, (iv) Series D 14.70% Secured Notes Due September 1, 1999, in the original principal amount of $17,000,000, and (v) Series E 15.00% Secured Notes Due September 1, 1999, in the original principal amount of $7,000,000 of Owner. NOW, THEREFORE, in consideration of the premises and the sum of One Dollar ($1) and other valuable consideration, receipt whereof is hereby acknowledged, and in order to secure (i) the due and punctual payment of the Series A 13.90% Collateral Trust Notes Due September 1, 1999, the Series B 14.30% Collateral Trust Notes Due September 1, 1994, the Series C 14.60% Collateral Trust Notes Due September 1, 1999, the Series D 14.70% Collateral Trust Notes Due September 1, 1999 and the Series E 15.00% Collateral Trust Notes Due September 1, 1999 of the Company, issued by the Company under and secured by the Indenture and (ii) the performance of the Company's obligations under the Indenture, the Company has assigned, transferred, conveyed and set over, and by these presents does hereby assign, transfer, convey and set over, to the Assignee, all of its rights, title and interest in and to the Lease, the Guaranty and the Assignment; all without recourse to the Company. The following is the Schedule A referred to in this Reassignment of Lease and Guaranty, which Schedule is hereby incorporated by reference herein. 2 IN WITNESS WHEREOF, the Company has caused this Reassignment of Lease and Guaranty to be executed and its corporate seal to be hereunto affixed and attested by its officers thereunto duly authorized, as of the date first above written. CLINTON HOLDING CORPORATION By: E. DAVISSON HARDMAN, JR. ------------------------ Name: Title: (SEAL) Attest: By: ALEXANDER J. JORDAN JR. ------------------------ Name: Title: LINCOLN NATIONAL PENSION INSURANCE COMPANY hereby consents to the foregoing Reassignment of Lease and Guaranty. LINCOLN NATIONAL PENSION INSURANCE COMPANY By: MAX A. ROESLER ------------------------ Name: Max A. Roesler Title: Vice President (SEAL) Attest: By: PATRICIA A. ADAMS ------------------------------- Name: Patricia A. Adams Title: Assistant Secretary LINCOLN NATIONAL CORPORATION, hereby consents to the foregoing Reassignment of Lease and Guaranty. LINCOLN NATIONAL CORPORATION By: MAX A. ROESLER ------------------------ Name: Max A. Roesler Title: Vice President (Seal) Attest: By: PATRICIA A. ADAMS -------------------------- Name: Patricia A. Adams Title: Assistant Secretary This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN --------------------------- Printed Joan E. Hogan ------------------------- NOTARY PUBLIC My commission expires: 10-31-86 - ----------------------- COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan Jr., the President and Secretary, respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN ---------------------------- Printed Joan E. Hogan ---------------------------- NOTARY PUBLIC My commission expires: 10-31-86 - -------------------------- STATE OF INDIANA ) ) SS. COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this _______ day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purpose therein mentioned. CAROL ANN JOHNSTON --------------------------------- Carol Ann Johnston, Notary Public (SEAL) My Commission Expires: CAROL A. JOHNSTON Notary Public Resident of Allen County, Indiana My Commission Expires May 15, 1988 - ------------------------------------ PARCEL 2 (Magnavox Way) An easement for the purpose of ingress and egress and utilities for the benefit of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716, pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781 and 80-16836 over the following real estate. A strip of land 60 feet in width lying 30 feet on either side of the line described as follows: Beginning at the North Quarter Corner of said Section 7, running thence South 89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way line of Frontage Road No. 1, the true point of beginning of this description; thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a tangent curve to the right having a central angle of 25 degrees and a length of 250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a tangent curve to the left having a central angle of 24 degrees 41' 59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more or less to the North line of the South Half of the South Half of the Southeast Quarter of the Northeast Quarter of Section 7, Township 30' North, Range 12 East, the South line of Inverness Investors, Inc. Property. PARCEL 3 An easement for the purpose of ingress and egress for the benefit of Parcel 1 created in a Easement recorded November 7, 1963 in Deed Record 716, pages 153-157 and modified by Agreement recorded as Document Numbers 70-9781 and 80-16836 over the following described real estate. Part of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in Allen County, Indiana, more particularly described as follows, to wit: Beginning at the Northeast corner of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, on the center line of Getz Road; thence West along the North line of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7, a distance of 1323.13 feet to a stone marking the Northwest corner of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7; thence South along the West line of the East Half of the said fractional Northwest Quarter of Section 7, a distance of 50.00 feet; thence East and parallel to the North line of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the center line of Getz Road, 50 feet South of the place of beginning, thence North on the center line of the Getz Road a distance of 50.0 feet to the place of beginning; and for the installation and perpetual maintenance of sewer and water line within the Northern Half of the above described real estate. SCHEDULE A Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) Parcel 1 A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, together with a part of the Northeast Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana, both said parts being more particularly described as follows, to wit: Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'-27" E, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet to the true point of beginning, located on the South right-of-way line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E a distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N 89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot-wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence S 00 degrees-03'-32" E, on and along the West line of said easement, a distance of 275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W, a distance of 484.96 feet to an existing line fence; thence S 88 degrees-03'-10" W a distance of 345.52 feet to the Easterly right-of-way line of Interstate Highway #69; thence Northeasterly, on and along said Easterly right-of-way line on the following courses and distances: Re: Lease and Agreement Guaranty Memorandum of Lease and Agreement Assignment of Lease and Guaranty Reassignment of Lease and Guaranty Second Assignment of Lease and Guaranty Second Reassignment of Lease and Guaranty ("Lincoln West" site) CORRECTION AGREEMENT 85-034289 THIS AGREEMENT, made this 7th day of November, 1985, by and between: CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York, 10006; LINCOLN NATIONAL PENSION INSURANCE COMPANY, an Indiana corporation, having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46801; CLINTON HOLDING CORPORATION, a Delaware corporation, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006; THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an address at One Constitution Plaza, Hartford Connecticut 06115; LINCOLN NATIONAL CORPORATION, having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46 and AMERICAN STATES INSURANCE COMPANY, having an address at 500 North Meridian Street, Indianapolis, Indiana 46207. WITNESSETH: WHEREAS, the parties to this agreement are parties to one or more instruments, all dated as of August 1, 1984, in connection with the leasing by Lincoln National Pension Insurance Company of a certain parcel of land located in Allen County, Indiana, commonly known as the "Lincoln West" site, the legal description of which is set forth on Schedule A hereto, which aforementioned instruments were recorded on August 29, 1984, (unless otherwise noted below) in THREE RIVERS COMPANY, INC. 1985 NOV 18 PM 1:33 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG -2- the Office of the Recorder of Allen County, Indiana, and which instruments are as follows: 1. Lease and Agreement (Not recorded) The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 2. Guaranty (Not recorded) From: Lincoln National Corporation, as "Guarantor" To: Clinton Street Limited Partnership, as "Owner" 3. Memorandum of Lease and Agreement Recorded as Instrument No. 84-021076 The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 4. Assignment of Lease and Guaranty Recorded as Instrument No. 84-021078 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 5. Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021080 From: Clinton Holding Corporation, as "Company" To: The Connecticut Bank and Trust Company, National Association and F. W. Kawan, as "Trustees" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 6. Second Assignment of Lease and Guaranty Recorded as Instrument No. 84-021084 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 7. Second Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021082 From: Clinton Holding Corporation, as "Company" To: American States Insurance Company, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation -3- WHEREAS, the legal description of the "Lincoln West" site which is set forth in Schedule A to each of the foregoing instruments has been determined to be incomplete and, therefore, incorrect, and WHEREAS, it is the mutual desire of the parties hereto that the foregoing instruments be corrected by having appended to each instrument a complete and correct Schedule A legal description, and, in the event any such instrument has been recorded, that such instrument be corrected of record, NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid by each of the parties hereto to each of the other parties hereto, and other valuable considerations each to the other in hand paid, the receipt and sufficiency of which are hereby acknowledged, the parties do mutually covenant and agree: 1. That Schedule A to this agreement be and it hereby is substituted for Schedule A to all of the foregoing instruments. 2. That all other terms, conditions, and covenants of the aforesaid instruments are and shall remain in full force and effect except as hereby corrected. 3. That by inadvertence the aforesaid Second Reassignment of Lease and Guaranty (recorded as Instrument No. 84-021082) was recorded prior in time to the aforesaid Second Assignment of Lease and Guaranty (recorded as Instrument No . 84-021084) and such order of recording to the contrary notwithstanding, all parties hereto agree that such Second Reassignment of Lease and Guaranty shall be subject and subordinate to the aforesaid Second Assignment of Lease and Guaranty and said Second Assignment of Lease and Guaranty shall be considered for all purposes as if and treated as though it had been signed, sealed, delivered and recorded prior in time to the aforesaid Second Reassignment of Lease and Guaranty. -4- 4. That subparagraph (iv) appearing at lines twenty-three through twenty-six of the first page of ASSIGNMENT OF LEASE AND GUARANTY From CLINTON STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION with respect to Property Location: West Fort Wayne, Indiana, is corrected to read as follows: "(iv) Series D 14.70 Secured Note Due September 1, 1999 in the original principal amount of $2,805,280 (herein, together with any notes issued in exchange or replacement therefor, called the Series D Owner's Note)." 5. That this agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same agreement. 6. That the parties hereto are authorized and directed to attach this Correction Agreement to each of the aforesaid instruments, as a part and portion thereof, and to record same among the public records in the Office of the Recorder of Allen County, Indiana, and elsewhere as they shall deem appropriate. This Agreement shall bind and shall inure to the benefit of the respective heirs, successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have caused this instrument to be executed as of the day and year first above written. -5- CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. --------------------------------- E. Davisson Hardman, Jr. A General Partner LINCOLN NATIONAL PENSION INSURANCE COMPANY BY: MAX ROESLER --------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ------------------------- Name: Dolores Prange Title: Assistant Secretary CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ---------------------------------- Name: E. Davisson Hardman, Jr. Title: President (SEAL) Attest: BY: ALEXANDER J. JORDAN, JR. -------------------------- Name: Alexander J. Jordan, Jr. Title: Assistant Secretary -6- THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION BY: MASON M. LEMONT --------------------------------- Name: Mason M. LeMont Title: Asst. Vice President (SEAL) Attest: BY: V. KREUSCHER ------------------------- Name: V. Kreuscher Title: ASSISTANT VICE PRESIDENT F. W. KAWAM --------------------------------- F. W. Kawam LINCOLN NATIONAL CORPORATION BY: MAX ROESLER ---------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ------------------------- Name: Dolores Prange Title: Assistant Secretary AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ---------------------------------- Name: F. Ernest Barthel Title: Vice President (SEAL) Attest: BY: THOMAS M. OBER -------------------------- Name: Thomas M. Ober Title: Secretary -7- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO ------------------- Printed Dolores M. Antonino ------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - --------------------- -8- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ---------------------- Resident of DeKalb County, Indiana -9- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November 198_ Signature DOLORES M. ANTONINO ---------------------- Printed Dolores M. Antonino ---------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - ---------------------- -10- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared Mason M. Lemont and V. Kreuscher, the Assistant Vice President and Assistant Vice President respectively of THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. RUTH A. SMITH ---------------------------------- NOTARY PUBLIC (SEAL) My Commission Expires: 3/31/84 - ---------------------- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared F. W. Kawam who acknowledged execution of the foregoing instrument as his free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. RUTH A. SMITH ---------------------------------- NOTARY PUBLIC (SEAL) My Commission Expires: 3/31/84 - ---------------------- -11- STATE OF INDIANA ) )SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- (SEAL) Donald F. Butler NOTARY PUBLIC My Commission Expires: May 25, 1987 - ---------------------- Resident of DeKalb County, Indiana -12- STATE OF INDIANA ) ) SS: COUNTY OF MARION ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ----------------------- Resident of DeKalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. SCHEDULE A PARCEL 1 Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, together with a part of the Northeast Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana, both said parts being more particularly described as follows, to wit: Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'-27" E, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet to the true point of beginning, located on the South right-of-way line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N 89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot-wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence S 00 degrees-03'-32" E, on and along the West line of said easement, a distance of 275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W, a distance of 484.96 feet to an existing line fence; thence S 88 degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line of Interstate Highway #69; thence Northeasterly on and along said Easterly right-of-way line on the following courses and distances: Northeasterly, on and along the arc of a regular curve to the left having a radius of 4046.53 feet, and being situated 140.0 feet (measured radially) Southeasterly of and concentric to the centerline of I-69, an arc distance of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04 feet to a point situated 100.0 feet (measured radially), Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the left having a radius of 4006.53 feet, and being situated 100.0 feet (measured radially) Southeasterly of and concentric to said I-69 centerline, an arc distance of 410.24 feet (the chord of which bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23 degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 18 degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 14 degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet (measured radially) Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 884.93 feet and being situated 70.0 feet (measured radially) Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined by the Southeasterly edge of pavement of an existing 18 foot-wide concrete ramp, an arc distance of 327.39 feet (the chord of which bears N 26 degrees-38'-02" E, for a length of 325.53 feet); thence N 35 degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet (measured at right angles) Southeasterly of said line "S-E-C"; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 666.20 feet and being situated 50.0 feet (measured radially) Southeasterly of and concentric to said line "S-E-C", an arc distance of 355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length of 351.75 feet) to the true point of beginning. PARCEL 2 An easement for the purpose of ingross and egress and utilities for the benefit of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716, pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781 and 80-16836 over the following real estate. A strip of land 60 feet in width lying 30 feet on either side of the line described as follows: Beginning at the North Quarter Corner of said Section 7, running thence South 89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way line of Frontage Road No. 1, the true point of beginning of this description; thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a tangent curve to the right having a central angle of 25 degrees and a length of 250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a tangent curve to the left having a central angle of 24 degrees 41' 59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more or less to the North line of the South Half of the South Half of the Southeast Quarter of Section 7, Township 30' North, Range 12 East, the South line of Inverness Investors, Inc. Property. PARCEL 3 An easement for the purpose of ingress and egress for the benefit of Parcel 1 created in an Easement recorded November 7, 1968 in Deed Record 716, pages 153-157 and modified by Agreement recorded as Document Numbers 70-9781 and 80-16836 over the following described real estate. Part of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in Allen County, Indiana, more particularly described as follows, to wit: Beginning at the Northeast corner of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, on the center line of Cetz Road; thence West along the North line of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7, a distance of 1323.13 feet to a stone marking the Northwest corner of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7; thence South along the West line of the East Half of the said fractional Northwest Quarter of Section 7, a distance of 50.00 feet; thence East and parallel to the North line of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the center line of Getz Road, 50 feet South of the place of beginning, thence North on the center line of the Getz Road a distance of 50.0 feet to the place of beginning; and for the installation and perpetual maintenance of sewer and water line within the Northern Half of the above described real estate. Re: Lease and Agreement Guaranty Memorandum of Lease and Agreement Assignment of Lease and Guaranty Reassignment of Lease and Guaranty Second Assignment of Lease and Guaranty Second Reassignment of Lease and Guaranty ("Lincoln West" site) PARTIAL RELEASE In consideration of the sum of Ten Dollars ($10.00) and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, as parties to one or more of the following-described instruments, to-wit: 1. Lease and Agreement (Not recorded) The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 2. Guaranty (Not recorded) From: Lincoln National Corporation, as "Guarantor" To: Clinton Street Limited Partnership, as "Owner" 3 Memorandum of Lease and Agreement Recorded as Instrument No. 84-021076 The parties to which are: Clinton Street Limited Partnership, as "Lessor" and Lincoln National Pension Insurance Company, as "Lessee" 4. Assignment of Lease and Guaranty Recorded as Instrument No. 84-021078 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 5. Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021080 From: Clinton Holding Corporation, as "Company" To: The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as "Trustees" THREE RIVERS TITLE COMPANY, INC. 1985 NOV 19 PM 3:55 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG -2- Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 6. Second Assignment of Lease and Guaranty Recorded as Instrument No. 84-021084 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: Lincoln National Pension Insurance Company and Lincoln National Corporation 7. Second Reassignment of Lease and Guaranty Recorded as Instrument No. 84-021082 From: Clinton Holding Corporation, as "Company" To: American States Insurance Company, as "Assignee" Consent to be: Lincoln National Pension Insurance Company and Lincoln National Corporation hereby release and discharge the real estate more particularly bounded and described in Exhibit A hereto from the incumbrance and effect the above-described instruments, which instruments were corrected by that certain Correction Agreement by and among the parties hereto dated November 7, 1985, and recorded November 19, 1985, in the Office of the Recorder of Allen County, Indiana, as Instrument No. 85-34289. The parties hereto agree that this Partial Release may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and such counterparts shall together constitute but one and the same instrument. Dated this 7th day of November, 1985. -3- CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. --------------------------------- E. Davisson Hardman, Jr. A General Partner LINCOLN NATIONAL PENSION INSURANCE COMPANY BY: MAX ROESLER --------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ------------------------- Name: Dolores Prange Title: Assistant Secretary CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ---------------------------------- Name: E. Davisson Hardman, Jr. Title: President (SEAL) Attest: BY: ALEXANDER J. JORDAN, JR. -------------------------- Name: Alexander J. Jordan, Jr. Title: Assistant Secretary -4- THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION BY: MASON M. LEMONT --------------------------------- Name: MASON M. LEMONT Title: Asst. Vice President (SEAL) Attest: BY: V. KREUSCHER ------------------------- Name: V. Kreuscher Title: Assistant Vice President F. W. KAWAM --------------------------------- F. W. Kawam LINCOLN NATIONAL CORPORATION BY: MAX ROESLER ---------------------------------- Name: Max Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ------------------------- Name: Dolores Prange Title: Assistant Secretary AMERICAN STATES INSURANCE COMPANY BY: F. ERNEST BARTHEL ---------------------------------- Name: F. Ernest Barthel Title: Vice President (SEAL) Attest: BY: THOMAS M. OBER -------------------------- Name: Thomas M. Ober Title: Secretary -5- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO ------------------- Printed Dolores M. Antonino ------------------- NOTARY PUBLIC (SEAL) My commission expires: July 25, 1991 - ----------------------- -6- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL PENSION INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned. DONALD F. BUTLER -------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - -------------------------- Resident of DeKalb County, Indiana -7- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO ------------------------ Printed Dolores M. Antonino ------------------------ NOTARY PUBLIC (SEAL) My commission expires: July 25, 1991 - ---------------------- -8- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared Mason M. Lemont and V. Kreuscher, the ASSISTANT VICE PRESIDENT and ASSISTANT VICE PRESIDENT respectively, of THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, who acknowledged execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. RUTH A. SMITH --------------------- NOTARY PUBLIC (SEAL) My Commission Expires: 3/3/89 - ---------------------- STATE OF CONNECTICUT ) ) SS: COUNTY OF HARTFORD ) Before me, Ruth A. Smith, a Notary Public, this 7th day of November, 1985, personally appeared F. W. Kawam who acknowledged execution of the foregoing instrument as his free and voluntary act and deed, and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. RUTH A. SMITH --------------------- NOTARY PUBLIC My Commission Expires: July 25, 1987 - ----------------------- -9- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. Donald F. Butler -------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - ------------------------ Resident of DeKalb County, Indiana STATE OF INDIANA ) ) SS: COUNTY OF MARION ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared F. Ernest Barthel and Thomas M. Ober, as Vice President and Secretary respectively, of AMERICAN STATES INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER --------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - -------------------------- Resident of DeKalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801 EXHIBIT A A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, being more particularly described as follows: Commencing at the Northwest corner of said Section 7; thence North 89 deg. 56 min. 27 sec. East, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a distance of 145.0 feet to the South right of way line of State Road #14 (Illinois Road): thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0 feet; thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet; thence South 25 deg. 06 min. 36 sec. West, a distance of 147.78 feet; thence South 13 deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28 deg. 49 min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07 min. 55 sec. East, a distance of 116.43 feet; thence South 67 deg. 37 min. 33 sec. East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec. East, a distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at a Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence North 89 deg. 56 min. 19 sec. East, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence South 00 deg. 03 min. 32 sec. East, on and along the West line of said easement, a distance of 200.0 feet to the point of beginning; thence continuing South 00 deg. 03 min. 32 sec. East 75.00 feet; thence South 66 deg. 10 min. 20 sec. West, a distance of 1122.16 feet; thence South 89 deg. 56 min. 27 sec. West, a distance of 18.20 feet; thence North 15 deg. 16 min. 19 sec. East, a distance of 549.10 feet; thence South 89 deg. 54 min. 52 sec. East, a distance of 900.00 feet to the point of beginning, containing 6.471 acres and subject to Easements and Rights of Way of Record. EX-10 8 Exhibit (n) LEASE AND AGREEMENT Between CLINTON STREET LIMITED PARTNERSHIP, as Lessor And THE LINCOLN NATIONAL LIFE as Lessee Dated as of August 1, 1984 Location of Leased Premises: 1300 S. Clinton St. Fort Wayne, IN 46802 (Downtown locations except Renaissance Square) TABLE OF CONTENTS
Page ---- 1. Demise of Premises . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Title and Condition. . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Use of Leased Premises; Quiet Enjoyment. . . . . . . . . . . . . . . 2 4. Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . 4 7. Taxes and Assessments; Compliance with Law . . . . . . . . . . . . . 6 8. Liens; Grants of Easements . . . . . . . . . . . . . . . . . . . . . 7 9. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 9 10. Maintenance and Repair. . . . . . . . . . . . . . . . . . . . . . . 10 11. Alterations and Additions . . . . . . . . . . . . . . . . . . . . . 12 12. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 14. Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 15. Reimbursement for Alterations and Additions; Purchase of Unimproved Land . . . . . . . . . . . . . . . . . . . 28 16. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . 34 17. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . 35 18. Permitted Contests. . . . . . . . . . . . . . . . . . . . . . . . . 36 19. Conditional Limitations; Default Provision. . . . . . . . . . . . . 37 20. Additional Rights of Lessor . . . . . . . . . . . . . . . . . . . . 43 21. Notices, Demands and Other Instruments. . . . . . . . . . . . . . . 44 22. Estoppel Certificates; Consents and Financial Statements. . . . . . 45 23. No Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 24. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 25. Separability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 26. Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 47 27. Table of Contents, Headings . . . . . . . . . . . . . . . . . . . . 47 28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 29. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . 48 30. Lessee's Options; Right of First Refusal. . . . . . . . . . . . . . 49 31. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SCHEDULE A - Property Description and Permitted Exceptions SCHEDULE B - Basic Rent Payments SCHEDULE C - Computation of Purchase Prices LEASE AND AGREEMENT, dated as of August 1, 1984 (this Lease) between CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein, together with its successor and assigns, called Lessor), having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006 and THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, an Indiana corporation (herein, together with any corporation succeeding thereto by consolidation, merger or acquisition of all or substantially all its assets, called Lessee), having an address at 1300 South Clinton Street, Fort Wayne, Indiana 46801. Certain words or phrases having initial capitals have the meanings set forth in paragraph 29. 1. Demise of Premises. In consideration of the rents and covenants herein stipulated to be paid and performed, Lessor hereby demises and lets to Lessee, and Lessee hereby lets from Lessor, for the terms herein described, the premises (herein called the Leased Premises) consisting of (i) the land described in Schedule A hereto (herein called the Land Parcel), (ii) all buildings, structures and other improvements thereon, including all building equipment and fixtures, if any, owned by Lessor (herein collectively called the Improvements), but excluding trade equipment, fixtures and other personal property owned by Lessee and Lessee's Improvements (as hereinafter defined in paragraph 11(c)), and (iii) all easements, rights and appurtenances relating thereto, all upon the terms and conditions herein specified. 2. Title and Condition. The Leased Premises are demised and let subject to (a) the rights of any parties in possession and the existing state of the title as of the commencement of the term of this Lease, (b) any state of facts which an accurate survey or physical inspection thereof might show, (c) all zoning regulations, restrictions, rules and ordinances, building restrictions and other laws and regulations now in effect or hereafter adopted by any governmental authority having jurisdiction, and (d) the condition of any buildings, structures and other improvements located thereon, as of the commencement of the term of this Lease, without representation or warranty by Lessor. Lessee represents that it has examined the title to and the condition of the Leased Premises and has found the same to be satisfactory. 3. Use of Leased Premises; Quiet Enjoyment. (a) Lessee may occupy and use the Leased Premises for any lawful purpose. (b) If and so long as Lessee shall observe and perform all covenants, agreements and obligations required to be observed and performed by it hereunder, Lessor covenants that it will not and will not permit any party claiming by, through or under Lessor, to interfere with the peaceful and quiet possession and enjoyment of the Leased Premises by Lessee; provided, that Lessor and its agents may, upon prior notice to Lessee (unless Lessor has reason to believe a default or Event of Default hereunder has occurred, in which case no such notice shall be necessary), enter upon and examine the Leased Premises at reasonable times. Lessee shall have the right to accompany Lessor and its agents during any such examination of the Leased Premises. Any failure by Lessor to comply with the foregoing warranties shall not give Lessee any right to cancel or terminate this Lease, or to abate, reduce or make deduction from or offset against any Basic Rent, as hereinafter defined, or additional rent or other sum payable under this Lease, or to fail to perform or observe any other covenant, agreement or obligation hereunder. 4. Terms. Subject to the terms and conditions hereof, Lessee shall have and hold the Leased Premises for (a) an interim term (herein called the Interim Term) commencing on August 30, 1984 and ending at midnight on August 31, 1984; and (b) a primary term (herein called the Primary Term) commencing on September 1, 1984, and ending at midnight on August 31, 2009. Thereafter, 2 Lessee shall have the rights and options to extend this Lease for 6 consecutive extended terms of 5 years each (herein called Extended Terms, and together with the Interim Term and the Primary Term, called the Term) unless this Lease shall be sooner terminated pursuant to the provisions hereof. Each such Extended Term shall commence on the day immediately succeeding the expiration date of the preceding Primary Term or Extended Term, as the case may be, and shall end at midnight on the day immediately preceding the fifth anniversary of the first day of such Extended Term. Each such option to extend this Lease shall conclusively be deemed to have been exercised by Lessee unless Lessee shall give written notice to the contrary to Lessor at least three hundred sixty-five days prior to the end of the then Term of this Lease. No instrument of renewal need be executed, provided that no Extended Term shall take effect unless this Lease is in full force and effect and no default or Event of Default exists and is continuing immediately prior to the commencement thereof. If Lessee gives notice of its intention not to extend this Lease, the term of this Lease shall terminate at the end of the then Term of this Lease and Lessee shall have no further option to extend this Lease. If Lessee gives such notice not to extend this Lease, then Lessor shall have the right during the remainder of the Term of this Lease to advertise the availability of the Leased Premises for sale or reletting and to erect upon the Leased Premises signs appropriate for the purpose of indicating such availability, provided that such signs do not unreasonably interfere with the use of the Leased Premises by Lessee. The phrase "Term of this Lease" or "Term hereof" means the Interim Term and the Primary Term, plus any Extended Term with respect to which the right to extend has been exercised. 5. Rent. (a) Lessee covenants to pay to Lessor, as instalments of rent for the Leased Premises during the Term of this Lease, the amounts set 3 forth in Schedule B hereto (herein called the Basic Rent) on the dates set forth in said Schedule (herein called the Basic Rent Payment Dates), and to pay in immediately available funds the same at Lessor's address set forth above or at such other place within the continental United States and/or to such other person as Lessor from time to time may designate to Lessee in writing, in lawful money of the United States of America. (b) Lessee covenants that all other amounts, liabilities and obligations which Lessee assumes or agrees to pay or discharge pursuant to this Lease (except amounts payable as the purchase price for the Leased Premises or any part thereof pursuant to any provision of this Lease and amounts payable as liquidated damages pursuant to paragraph 19(j) or paragraph 19(g)), together with every fine, penalty, interest and cost which may be added for nonpayment or late payment thereof, shall constitute additional rent hereunder. In the event of any failure by Lessee to pay or discharge any of the foregoing, Lessor shall have all rights, powers and remedies provided herein or by law in the case of nonpayment of Basic Rent. Lessee also covenants to pay to Lessor on demand as such additional rent (A) interest at the rate of 18.00 per annum (or the maximum not prohibited by law, whichever is less), calculated on the basis of a 360-day year of twelve equal months, on all overdue instalments of Basic Rent from the due date thereof (without regard to any grace period) until paid in full and (B) interest at the rate of 16.00 per annum (calculated as set forth in clause (A) above) on all overdue amounts relating to any other aspects of additional rent arising out of obligations which Lessor shall have paid on behalf of Lessee from the date of such payment by Lessor until paid in full. 6. Net Lease; Non-Terminability. (a) This is an absolutely net lease and the Basic Rent, additional rent and all other sums payable hereunder 4 by Lessee, whether as the purchase price for the Leased Premises or otherwise, shall be paid without notice (except as expressly provided herein), demand, set-off, counterclaim, abatement, suspension, deduction or defense. (b) Any present or future law to the contrary notwithstanding, this Lease shall not terminate, nor shall Lessee have any right to terminate this Lease (except as otherwise expressly provided herein), nor shall Lessee be entitled to any abatement or reduction of rent hereunder (except as otherwise expressly provided herein), nor shall the obligations of Lessee under this Lease be affected, by reason of (i) any damage to or destruction of all or any part of the Leased Premises from whatever cause, (ii) the taking of the Leased Premises or any portion thereof by condemnation, requisition or otherwise, (iii) the prohibition, limitation or restriction of Lessee's use of all or any part of the Leased Premises, or any interference with such use, (iv) any eviction by paramount title or otherwise, (v) Lessee's acquisition or ownership of all or any part of the Leased Premises otherwise than as expressly provided in paragraphs 12(b), 14(c) or 15 herein, (vi) any default on the part of Lessor under this Lease, or under any other agreement to which Lessor and Lessee may be parties, (vii) the failure of Lessor to deliver possession of the Leased Premises on the commencement of the Term hereof or (viii) any other cause whether similar or dissimilar to the foregoing. It is the intention of the parties hereto that the obligations of Lessee hereunder shall be separate and independent covenants and agreements, that the Basic Rent, additional rent and all other sums payable by Lessee hereunder shall continue to be payable in all events and that the obligations of Lessee hereunder shall continue unaffected, unless the requirement to pay or perform the same shall have been terminated pursuant to an express provision of this Lessee 5 (c) Lessee agrees that it will remain obligated under this Lease in accordance with its terms, and that it will not take any action to terminate, rescind or avoid this Lease, notwithstanding (i) the bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, or winding-up or other proceeding affecting Lessor or its successor in interest, (ii) any action with respect to this Lease which may be taken by any trustee or receiver of Lessor or its successor in interest or by any court in any such proceeding. (d) Lessee waives all rights which may now or hereafter be conferred by law (i) to quit, terminate or surrender this Lease or the Leased Premises or any part thereof, or (ii) to abate, suspend, defer or reduce the Basic Rent, additional rent or any other sums payable under this Lease, except as otherwise expressly provided herein. 7. Taxes and Assessments; Compliance with Law. (a) Lessee shall pay or discharge each of the following items on or prior to the last day on which such items may be paid without interest or penalty: (i) all Impositions; (ii) all transfer taxes, recording fees and similar charges payable in connection with a conveyance hereunder to Lessee; (iii) all gross receipts or similar taxes imposed or levied upon, assessed against or measured by the Basic Rent, additional rent or any other sums payable by Lessee hereunder or levied upon or assessed against the Leased Premises, to the extent that such tax, assessment or other charge would be payable if the Leased Premises were the only property of Lessor subject thereto, and (iv) any tax, assessment, charge or levy of any nature whatsoever imposed or levied upon or assessed against Lessor or the Leased Premises in substitution for or in place of an Imposition. Lessee shall not be required to pay any franchise, corporate, estate, inheritance, succession, transfer, income, excess profits, or revenue 6 taxes of Lessor which are not described in the preceding sentence. Lessee agrees to furnish to Lessor, within thirty days after written demand therefor, evidence of all payments due under this paragraph 7(a). In the event that any Imposition levied or assessed against the Leased Premises and payable by Lessee becomes due and payable during the Term hereof and may legally be paid in instalments, Lessee may pay such Imposition in instalments and shall be liable only for those instalments which become due and payable during the Term hereof. (b) Lessee shall, at its expense, comply with and shall cause the Leased Premises to comply with, in all material respects, all governmental statutes, laws, rules, orders, regulations and ordinances the failure to comply with which at any time would affect the Leased Premises or any part thereof, or the use thereof, including those which require the making of any structural, unforeseen or extraordinary changes, whether or not any of the same involve a change of policy on the part of the body enacting the same (collectively, the Legal Requirements). Lessee shall, at its expense, comply with all Required Insurance (as defined in paragraph 13), and with the provisions of all contracts, agreements, instruments and restrictions existing at the commencement of the Term of this Lease or thereafter suffered or permitted by Lessee affecting the Leased Premises or any part thereof or the ownership, occupancy or use thereof. 8. Liens; Grants of Easements. (a) Lessee will not, directly or indirectly, create or permit to be created or to remain, and will promptly remove and discharge, at its expense, any mortgage, lien, encumbrance or charge on, pledge of, or conditional sale or other title retention agreement with respect to, the Leased Premises or any part thereof or Lessee's interest therein or the Basic Rent, additional rent or other sums payable by Lessee 7 under this Lease, other than (1) any encumbrances permitted by the Senior Permitted Mortgage described in Paragraph 29(j), (2) any mortgage, lien, encumbrance or other charge, pledge, conditional sale or other title retention agreement created by or resulting from any act or failure to act of Lessor or any agent or assignee of Lessor without the agreement of Lessee and (3) any encumbrance or charge permitted in subparagraph (b) below. Nothing contained in this Lease shall be construed as constituting the consent or request, expressed or implied, by Lessor to the performance of any labor or services or the furnishing of any materials for any construction, alteration, addition, repair or demolition of all of the Leased Premises or any part thereof by any contractor, subcontractor, laborer, materialman or vendor. Notice is hereby given that Lessor will not be liable for any labor, services or materials furnished or to be furnished to Lessee, or to anyone holding the Leased Premises or any part thereof, and that no mechanic's or other liens for any such labor, services or materials shall attach to or affect the interest of Lessor in and to the Leased Premises. (b) Lessor hereby appoints Lessee its agent and attorney-in-fact and authorizes Lessee (i) to grant easements, licenses, rights-of-way and other rights and privileges in the nature of easements, (ii) to release existing easements and appurtenances which are for the benefit of the Leased Premises, (iii) to grant party wall rights for the benefit of any land adjoining the Land Parcel and (iv) to execute and deliver any instrument necessary or appropriate to confirm such grants, releases or consents to any person, with or without consideration (in each case, however, only upon compliance with the provisions of the Senior Permitted Mortgage), provided, that (x) such grant, release or consent shall not materially impair the use of the Leased Premises or materially reduce their value, and (y) the consideration, if any, received 8 by Lessee for such grant, release or consent shall be paid to Lessor and applied pursuant to paragraph 12(c), as if such consideration were a Net Award from an event of Condemnation. Lessee agrees that Lessee will remain obligated under the terms of this Lease to the same extent as if such action had not been taken, and that Lessee will perform all obligations of the grantor, releasor or transferor under any such instrument. 9. Indemnification. Lessee shall defend all actions or claims against Lessor, or any partner of Lessor, or any assignee of Lessor, or any partner, officer, director or shareholder of any assignee of Lessor (collectively, the Indemnified Parties) with respect to, and shall pay, protect, indemnify and save harmless the Indemnified Parties from and against any and all liabilities, losses, damages, costs, expenses (including all reasonable attorney's fees and expenses of the Indemnified Parties), causes of action, suits, claims, demands or judgments of any nature whatsoever (i) arising from any injury to, or the death of, any person or any damage to property on the Leased Premises or upon adjoining sidewalks, streets or ways, in any manner growing out of or connected with the use, non-use, condition or occupation of the Leased Premises or any part thereof or resulting from the condition thereof or of adjoining sidewalks, streets or ways, so long as not occasioned by the affirmative act of Lessor, its agents, servants, employees or assigns, and/or (ii) arising from violation by Lessee of any agreement or condition of this Lease, or any contract or agreement to which Lessee is a party or any restriction, law, ordinance or regulation, in each case affecting the Leased Premises or any part thereof or the ownership, occupancy or use thereof, so long as not occasioned by the intentional fault of Lessor, its agents, servants, employees or assigns. If Lessor or any other Indemnified Party shall be made a party to any such litigation commence against Lessee, 9 and if Lessee, at its expense, shall fail to provide Lessor or any other such Indemnified Party with counsel (upon Lessor's or such Indemnified Party's request) approved by Lessor or such Indemnified Party, as the case may be, which approval shall not be unreasonably withheld, Lessee shall pay all costs and reasonable attorneys' fees and expenses incurred or paid by Lessor or any other such Indemnified Party in connection with such litigation. Lessor shall give prompt written notice to Lessee of any claim asserted against Lessor, but to Lessor's knowledge not also asserted against Lessee, which, if sustained, may result in liability of Lessee hereunder, but failure on the part of Lessor to give such notice shall not relieve Lessee from Lessee's obligation to exonerate, protect, defend, indemnify and save harmless the Indemnified Parties as aforesaid. 10. Maintenance and Repair. (a) Lessee acknowledges that it has received the Leased Premises in good condition, repair and appearance. Lessee agrees that, at its expense, it will keep and maintain the Leased Premises and any Lessee's Improvements, including any altered, rebuilt, additional or substituted buildings, structures and other improvements thereto, in good condition, repair and appearance, except for ordinary wear and tear, and it will promptly make all structural and nonstructural, foreseen and unforeseen, and ordinary and extraordinary changes and repairs of every kind which may be required to be made to keep and maintain the Leased Premises and any Lessee's Improvements in such good condition, repair and appearance and it will keep the Leased Premises and any Lessee's Improvements orderly and free and clear of rubbish. Lessor shall not be required to maintain, repair or rebuild, or to make any alterations, replacements or renewals of any nature to the Leased Premises, or any part thereof, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to maintain the Leased Premises 10 or any part thereof in any way. Lessee hereby expressly waives the right to make repairs at the expense of Lessor which may be provided for in any law in effect at the time of the commencement of the Term of this Lease or which may thereafter be enacted. If Lessee shall abandon the Leased Premises, it shall give Lessor and any Permitted Mortgagee immediate notice thereof. (b) If any Improvements situated on the Leased Premises at any time during the Term of this Lease shall encroach upon any property, street or right-of-way adjoining or adjacent to the Leased Premises, or shall violate the agreements or conditions contained in any restrictive covenant affecting the Leased Premises or any part thereof, or shall impair the rights of others under or hinder or obstruct any easement or right-of-way to which the Leased Premises are subject, then, promptly after the written request of Lessor or any person affected by any such encroachment, violation, impairment, hindrance or obstruction, Lessee shall, at its expense, either (i) obtain effective waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, impairment, hindrance or obstruction whether the same shall affect Lessor, Lessee or both, or (ii) make such changes in the Improvements on the Leased Premises and take such other action as shall be necessary to remove such encroachments, hindrances or obstructions and to end such violations or impairments, including, if necessary, the alteration or removal of any Improvement on the Leased Premises. Any such alteration or removal shall be made in conformity with the requirements of paragraph 11(a) to the same extent as if such alteration or removal were an alteration under the provisions of paragraph 11(a). 11. Alterations and Additions. (a) Lessee may, at its expense, (x) after not less than forty-five days written notice to Lessor of its plans (provided, however, that no such notice shall be required as to plans for work 11 the estimated cost of which is less than $500,000), make non-structural additions to and alterations of the Improvements to the Leased Premises, and make non-structural substitutions and replacements therefor, provided, that (i) the use, structural integrity and market value of the Leased Premises shall not thereby be materially lessened as certified in writing by an appropriate officer of Lessee, and (ii) such actions shall be performed in a good and workmanlike manner; and (y) after not less than forty-five days written notice to Lessor of its plans, make structural additions to and alterations of the Improvements to the Leased Premises, and make structural substitutions and replacements therefor, provided that (i) such actions shall be performed in a good and workmanlike manner under the supervision of a licensed architect or engineer in accordance with plans and specifications as approved by Lessor and accepted by Lessee, (ii) no such structural change or alteration shall be made unless Lessor's prior written consent shall have been obtained, (iii) none of the buildings or structures constituting the Leased Premises shall be demolished unless Lessee shall have first furnished Lessor with such surety bonds or other assurances acceptable to Lessor as shall be necessary to assure rebuilding of the Leased Premises and unless Lessor's prior written consent shall have been obtained, and (iv) such additions, alterations, substitutions and replacements shall be expeditiously completed in compliance with all Legal Requirements (as defined in paragraph 7(b)) and Required Insurance (as defined in paragraph 13(a)); provided that Lessor shall not withhold its written consent to Lessee's plans, including plans and specifications, under this clause (y) if and so long as the use, structural integrity and market value of the Leased Premises shall not be materially lessened by such plans as certified in writing by an appropriate officer of Lessee. Lessee shall promptly pay all costs and expenses of each such addition, alteration, substitution or replacement, discharge all liens arising 12 therefrom and procure and pay for all permits and licenses required in connection therewith. Failure by Lessor to give written approval or disapproval within forty-five days of receipt of such notice from Lessee under clause (y) shall be deemed Lessor's consent to such plans. All such alterations and additions to the Improvements shall be and remain part of the realty and the property of Lessor and subject to this Lease. (b) Lessee may, at its expense, install, assemble or place any items of trade fixtures, machinery, equipment or other personal property upon the Leased Premises. Such trade fixtures, machinery, equipment or other personal property shall be and remain the property of Lessee and Lessee may remove the same from the Leased Premises at any time prior to the termination of this Lease, provided that (i) Lessee shall repair any damage to the Leased Premises resulting from such removal, and (ii) such removal shall not materially impair the value and use of the Leased Premises. (c) Lessee may, at its expense, upon 45 days prior notice to Lessor, construct improvements on any portion of the Land Parcel on which there is not already a permanent structure for which improvements it has not and will not obtain reimbursement pursuant to paragraph 15 hereof (Lessee's Improvements), provided that upon completion thereof, the use and market value of the remaining Leased Premises shall not thereby be materially lessened. The Lessee's Improvements shall be and remain the property of Lessee and Lessee may make additions and alterations to Lessee's Improvements and substitutions and replacements thereof which are otherwise in compliance with the provisions of this subparagraph (c). 12. Condemnation. (a) Subject to the rights of Lessee set forth in this paragraph 12, Lessee hereby irrevocably assigns to Lessor any award or compensation payment to which Lessee may become entitled by reason of Lessee's interest in the Leased Premises if the use, occupancy or title of the Leased 13 Premises or any part thereof is taken, requisitioned or sold in, by or on account of any actual or threatened eminent domain proceeding or other action by any person having the power of eminent domain, provided, however, that Lessee may retain any award or compensation payment relating to Lessee's Improvements. Lessee shall appear in any such proceeding or action to negotiate, prosecute and adjust any claim for any award or compensation on account of any such taking, requisition or sale; and Lessor shall collect any such award or compensation. The Net Award (as defined in paragraph 12(f)) shall be applied pursuant to this paragraph 12. Lessee shall pay all reasonable costs and expenses (including any legal fees of any Permitted Mortgagee required by any Permitted Mortgage to be paid by Lessor) in connection with each such proceeding, action, negotiation and prosecution, for which costs and expenses Lessee shall be reimbursed out of any award or compensation received. Lessor shall be entitled to participate in any such proceeding, action, negotiation or prosecution and the reasonable expenses thereof (including counsel fees and expenses) shall be paid by Lessee. (b) If an occurrence of the character referred to in paragraph 12(a) shall affect all or a substantial portion of the Leased Premises and shall, in the good faith judgment of Lessee, render the Leased Premises unsuitable for restoration for continued use and occupancy in Lessee's business during the Primary Term or any Extended Term, then Lessee shall, not later than 30 days after such occurrence, deliver to Lessor (i) notice of its intention to terminate this Lease on the next Basic Rent Payment Date (the Termination Date) which occurs not less than 210 days nor more than 360 days after the delivery of such notice and (ii) a certificate by the President or any Vice President of Lessee describing the event giving rise to such termination and stating that its board of directors (or an executive committee thereof) has 14 determined that such event has rendered the Leased Premises unsuitable for restoration for continued use and occupancy in Lessee's business. If the Termination Date occurs during the Interim or Primary Term, such notice to Lessor shall be accompanied by an irrevocable offer by Lessee to purchase the Leased Premises on the Termination Date at a price determined in accordance with Schedule C (the Purchase Offer). If either (1) Lessor shall reject such Purchase Offer by notice given to Lessee not later than the 30th day prior to the Termination Date or (2) the Termination Date occurs during an Extended Term, this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee hereunder, actual or contingent, which have arisen on or prior to the Termination Date, upon payment by Lessee of all Basic Rent, additional rent and other sums then due and payable hereunder to and including the Termination Date, and the Net Award shall belong to Lessor; provided that the amount of such Net Award, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof) shall be paid to Lessee, as determined by the Appraisal Procedure. Unless Lessor shall have rejected such Purchase Offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and, on the Termination Date, shall convey the remaining portion of the Leased Premises, if any, to Lessee or its designee and shall assign to Lessee or its designee all of its interest in the Net Award, pursuant to and upon compliance with paragraph 16. (c) If during any Term (i) a portion of the Leased Premises shall be taken by condemnation or other eminent domain proceedings, which taking is not sufficient to require that Lessee give a Purchase Offer or (ii) the use or occupancy of the Leased Premises or any part thereof shall be temporarily 15 taken by any governmental authority, then this Lease shall continue in full effect without abatement or reduction of Basic Rent, additional rent or other sums payable by Lessee hereunder notwithstanding such partial or temporary taking. Except as hereinafter set forth, Lessee shall (whether or not it has received any portion of the Net Award), promptly after any such temporary taking ceases, at its expense, repair any damage caused thereby in conformity with the requirements of paragraph 11(a), so that, thereafter, the Leased Premises shall be, as nearly as possible, in a condition and have a market value as good as the condition and market value thereof immediately prior to such taking. Lessee shall not be required to repair any damage to Lessee's Improvements so long as such failure shall not materially lessen the use or value of the remaining Leased Premises; provided, however, that if, in Lessee's good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee's Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 12(a), any Net Award payable in connection with such occurrence shall be paid to the Proceeds Trustee (as defined in paragraph 12(e), provided, that if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of the Net Award, such Net Award shall be paid to the Senior Permitted Mortgagee (as defined in paragraph 29(m)), and if there is no Senior Permitted Mortgagee then to Lessor, in all events for application pursuant to this paragraph 12(c). Lessee shall be entitled to receive the Net Award but only against certificates by the President or any Vice President of Lessee delivered to Lessor and the Proceeds Trustee from time to time as such work for rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not 16 theretofore received payment for such work, provided that Lessee shall be entitled to receive any Net Award in an aggregate amount of up to $100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Award remaining after such repairs have been made is less than $250,000, such remaining Net Award shall be paid to Lessee. If such remaining Net Award equals or exceeds $250,000, all of the remaining Net Award shall be retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Senior Permitted Mortgage then outstanding. To the extent that any Net Award is not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Award not paid to Lessee, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Senior Permitted Mortgage is retired or otherwise refinanced 17 prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). In the event of any temporary requisition, this Lease shall remain in full effect and Lessee shall be entitled to receive the Net Award allocable to such temporary requisition; except that such portion of the Net Award allocable to the period after the expiration of the Term of this Lease shall be paid to Lessor. If the cost of any repairs required to be made by Lessee pursuant to this paragraph 12(c) shall exceed the amount of such Net Award, the deficiency shall be paid by Lessee. No payments shall be made to Lessee pursuant to this paragraph 12(c) for so long as any default shall have happened and shall be continuing under this Lease. (d) Notwithstanding the foregoing, Lessee, at its cost and expense, shall be entitled to claim separately, in any condemnation proceeding, any damages payable for moveable trade fixtures paid for and installed by Lessee (or any persons claiming under Lessee) without any contribution or reimbursement therefor by Lessor, and for Lessee's loss of business, and for Lessee's relocation costs, provided Lessor's award is not reduced or otherwise adversely affected thereby. (e) The trustee (the Proceeds Trustee) of the Net Award and Net Casualty Proceeds (as defined in paragraph 14(a)) shall be The Connecticut Bank and Trust Company, National Association, or its successor under the Collateral Trust Indenture, dated as of the date hereof (the Indenture) from Clinton Holding Corporation to The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as trustees, or if such Indenture shall be terminated, the holder of the first mortgage lien on the Leased Premises, who shall be an institutional lender, or if there shall not be such a lien, or 18 if such lien shall be held by a person other than an institutional lender, then <> or a bank or trust company, designated by Lessee and acceptable to Lessor, having an office in the State of Indiana. The Proceeds Trustee shall have a combined capital and surplus of at least $100,000,000 and shall be duly authorized to act as such trustee. All charges and fees of the Proceeds Trustee shall be paid by Lessee. The Proceeds Trustee shall invest such Net Award and Net Casualty Proceeds (as hereinafter defined) pursuant to such mutual agreement as may be made between Lessor and Lessee. (f) For the purposes of this Lease the term "Net Award" shall mean: (i) all amounts payable as a result of any condemnation or other eminent domain proceeding, less all expenses of such proceeding and the collection of such amounts not otherwise paid by Lessee and (ii) all amounts payable pursuant to any agreement with any condemning authority (which agreement shall be deemed to be a taking) which has been made in settlement of or under threat of any condemnation or other eminent domain proceeding affecting the Leased Premises (except Lessee's Improvements), less all expenses incurred (including any reasonable costs incurred by Lessor in connection therewith) as a result thereof or in connection with the collection of such amounts and not otherwise paid by Lessee. (g) Any minor condemnation or taking of the Leased Premises for the construction or maintenance of streets or highways shall not be considered a condemnation or taking for purposes of this paragraph 12 so long as the Leased Premises shall not be materially adversely affected, ingress and egress for the remainder of the Leased Premises shall be adequate for the business of Lessee thereon and compliance is made with the provisions of any Permitted Mortgage relating thereto. 19 13. Insurance. (a) Lessee shall maintain, or cause to be maintained, at its sole expense, the following insurance on the Leased Premises (herein called the Required Insurance): (i) Insurance against loss or damage by fire, lightning and other risks from time to time included under "extended coverage" policies, including, without limitation, vandalism and malicious mischief coverage, in amounts sufficient to prevent Lessor or Lessee from becoming a co-insurer of any loss under the applicable policies but in any event in amounts not less than the full insurable value of the Leased Premises. The term "full insurable value", as used herein, means actual replacement value less uninsurable items. (ii) General public liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Leased Premises and the adjoining streets, sidewalks and passageways, such insurance to afford protection to Lessor of not less than $1,000,000 with respect to bodily injury or death to any one person, not less than $5,000,000 with respect to any one accident, and not less than $1,000,000 with respect to property damage. (iii) Worker's compensation insurance covering all persons employed in connection with any work done on or about the Leased Premises with respect to which claims for death or bodily injury could be asserted against Lessor, Lessee or the Leased Premises, complying with the laws of the State of Indiana. (iv) Boiler and pressure vessel insurance on all equipment, parts thereof and appurtenances attached or connected to the Leased Premises, if any, which by reason of their use or existence are capable of bursting, erupting, collapsing or exploding, in the minimum amount of $1,000,000 for damage to property resulting from such perils. Such insurance may, at the option of Lessee and as permitted by applicable law, be included within the coverage of insurance policies referred to in clause (i) above. (v) Such other insurance on the Leased Premises in such amounts and against such other hazards which at the time are commonly obtained in the case of property similar to the Leased Premises in the state in which the Leased Premises are located, including war risk insurance (at and during such times as war risk insurance is commonly obtained in the case of property similar to the Leased Premises), when and to the 20 extent obtainable from the United States Government or any agency thereof. (vi) Flood insurance in an amount equal to the full insurable value (as defined in clause (i) above) of the Leased Premises or the maximum amount available, whichever is less, if the area in which the Leased Premises are located has been designated by the Secretary of Housing and Urban Development as having special flood hazards, and if flood insurance is available under the National Flood Insurance Act. (b) The Required Insurance shall be written by companies having an A.M. Best rating of at least A:XV which are authorized to do an insurance business in the State of Indiana and shall name as the insured parties thereunder Lessor, Lessee and any Permitted Mortgagee, as their respective interests may appear, provided, however, that so long as Lessee maintains a net worth determined in accordance with generally accepted accounting principles of not less than $598,820,000, Lessee may self-insure as to the types of insurance referred to in clauses (i) through (v) of this paragraph.* Neither Lessor nor any Permitted Mortgagee shall be required to prosecute any claim against, or to contest any settlement proposed by, an insurer. Lessee may, at its expense, prosecute any such claim or contest any such settlement in the name of Lessor, Lessee or both, and Lessor will join therein at Lessee's written request upon the receipt by Lessor of an indemnity from Lessee against all costs, liabilities and expenses in connection therewith. (c) Insurance claims by reason of damage to or destruction of any portion of the Leased Premises shall be adjusted by Lessee, but Lessor and any Permitted Mortgagee shall have the right to join with Lessee in adjusting any such loss. - -------------- * $85,381,600 for Lincoln National Pension Insurance Company; $267,542,400 for American States Insurance Company. These amounts are 80% of said companies' Capital and Surplus as of December 31, 1983. 21 (d) Every policy referred to in clauses (i), (iv) and (v) of paragraph 13(a) shall bear a first mortgagee endorsement in favor of the then Senior Permitted Mortgagee (if any); and any loss under any such policy shall be made payable to the Proceeds Trustee, provided that any recovery for damage or destruction under any such policy shall be applied by the Proceeds Trustee in the manner provided in paragraph 14. Every policy of Required Insurance shall contain an agreement that the insurer will not cancel such policy except after thirty days' written notice to Lessor and any Permitted Mortgagee and that any loss otherwise payable thereunder shall be payable notwithstanding any act or negligence of Lessor or Lessee which might, absent such agreement, result in a forfeiture of all or a part of such insurance payment and notwithstanding (i) any foreclosure or other action taken by a Permitted Mortgagee pursuant to any provision of any Permitted Mortgage upon the happening of a default or an event of default thereunder, or (ii) any change in ownership of the Leased Premises. (e) Lessee shall deliver to Lessor promptly after the delivery of this Lease the original or duplicate policies or certificates of insurers, reasonably satisfactory to any Senior Permitted Mortgagee, evidencing all of the Required Insurance. Lessee shall, within thirty days prior to the expiration of any such policy, deliver to Lessor other original or duplicate policies or such certificates evidencing the renewal of any such policy. If Lessee fails to maintain or renew any Required Insurance, or to pay the premium therefor, or to so deliver any such policy or certificate, then Lessor, at its option, but without obligation to do so, may, upon five days' notice to Lessee, procure such insurance. Any sums so expended by Lessor shall be additional rent hereunder and shall be repaid by Lessee within five days after notice to Lessee of such expenditure and the amount thereof. 22 (f) Neither Lessee nor Lessor shall obtain or carry separate insurance covering the same risks as any Required Insurance unless Lessee, Lessor and any Permitted Mortgagee are included therein as named insureds, with loss payable as provided in this Lease. Lessee and Lessor shall immediately notify each other whenever any such separate insurance is obtained and shall deliver to each other the policies or certificates evidencing the same. (g) Anything contained in this paragraph 13 to the contrary notwithstanding, all Required Insurance may be carried under (1) a "blanket" or "umbrella" policy or policies covering other properties or liabilities of Lessee, its parent company, or any of its parent company's subsidiaries, provided, that such policies otherwise comply with the provisions of this Lease and specify the coverage and amounts thereof with respect to the Leased Premises, and (2) a policy or policies providing for self-insurance of deductible amount of up to $1,000,000. 14. Casualty. (a) Lessee hereby irrevocably assigns to Lessor any compensation or insurance proceeds to which Lessee may become entitled by reason of Lessee's interest in the Leased Premises if the Leased Premises or any part thereof are damaged or destroyed by fire or other casualty, provided, however, that Lessee may retain any insurance proceeds or compensation relating to Lessee's Improvements. If the Leased Premises or any part thereof shall be damaged or destroyed by fire or other casualty, and if the estimated cost of rebuilding, replacing or repairing the same shall exceed $100,000, Lessee promptly shall notify Lessor thereof. Lessee shall negotiate, prosecute and adjust any claim for any compensation or insurance payment on account of any such damage or destruction; and Lessor shall collect any such compensation or insurance payment. All amounts paid in connection with any 23 such damage or destruction shall be applied pursuant to this paragraph 14, and all such amounts (except such amounts with respect to Lessee's Improvements) paid or payable in connection therewith (minus the expenses of collecting such amounts) are herein called the Net Casualty Proceeds. Lessee shall pay all reasonable costs and expenses (including any legal fees of any Permitted Mortgagee required to be paid by Lessor pursuant to any Permitted Mortgage) in connection with each such negotiation, prosecution and adjustment, for which costs and expenses Lessee shall be reimbursed out of any compensation or insurance payment received. Lessor shall be entitled to participate in any such negotiation, prosecution and adjustment, and the reasonable expenses thereof (including counsel fees and expenses) shall be paid by Lessee. (b) After an occurrence of the character referred to in paragraph 14(a), except as hereinafter set forth, Lessee shall (whether or not it has received any Net Casualty Proceeds), at its expense, rebuild, replace or repair any damage to the Leased Premises caused by such event in conformity with the requirements of paragraph 11(a) so as to restore the Leased Premises (as nearly as practicable) to the condition and market value thereof immediately prior to such occurrence. Lessee shall not be required to rebuild or replace any damage to Lessee's Improvements so long as such failure shall not materially lessen the value or use of the remaining Leased Premises; provided, however, that if, in Lessee's good faith judgment, such damage is substantial, then Lessee shall demolish those affected portions of Lessee's Improvements if Lessee shall not have repaired the same. After an occurrence of the character referred to in paragraph 14(a), all Net Casualty Proceeds payable in connection with such occurrence shall be paid to Proceeds Trustee, and this Lease shall continue in full effect, provided, that if no Proceeds Trustee has been named pursuant to paragraph 12(e) at the time of payment of 24 Net Casualty Proceeds, such Net Casualty Proceeds shall be paid to the Senior Permitted Mortgagee, and if there is no Senior Permitted Mortgagee then to Lessor, in all events for application pursuant to this paragraph 14(b). Lessee shall be entitled to receive the Net Casualty Proceeds, but only against certificates of the President or any Vice President of Lessee delivered to Lessor and Proceeds Trustee from time to time as such work of rebuilding, replacement and repair progresses, each such certificate describing the work for which Lessee is requesting payment and the cost incurred by Lessee in connection therewith and stating that Lessee has not theretofore received payment for such work, provided that Lessee shall be entitled to receive the Net Casualty Proceeds in an aggregate amount of up to $100,000 in connection with any one occurrence without providing Lessor with such certificates. To the extent that any Net Casualty Proceeds remaining after such repairs have been made are less than $250,000 they shall be paid to Lessee. If such remaining Net Casualty Proceeds equal or exceed $250,000, such Net Casualty Proceeds shall be retained by the Proceeds Trustee, the Senior Permitted Mortgagee or by Lessor, as applicable, and shall be applied in reduction of the principal amount of the indebtedness secured by any Senior Permitted Mortgage then outstanding. To the extent that any Net Casualty Proceeds are not paid to Lessee pursuant to the preceding sentence, (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the First Payment Date occurring two months or more after the final payment to Lessee for such restoration (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be an amount equal to the remaining Net Casualty Proceeds not paid to Lessee, and the denominator of which shall be the 25 applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which each such installment of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Senior Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitation shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised as provided therein). If the cost of any repairs required to be made by Lessee pursuant to this paragraph 14(b) shall exceed the amount of such Net Casualty Proceeds, the deficiency shall be paid by Lessee. (c) If the Leased Premises shall be substantially damaged or destroyed in any single casualty so that, in Lessee's good faith judgment, the Leased Premises shall be unsuitable for restoration for continued use and occupancy in Lessee's business, then at Lessee's option in lieu of rebuilding, replacing and repairing the Leased Premises, Lessee may give notice to Lessor, within 30 days after the occurrence of such damage or destruction, of Lessee's intention to terminate this Lease on the next Basic Rent Payment Date which occurs not less than 210 days after the delivery of such notice (the Termination Date), provided that, if the Termination Date occurs during the Primary Term, such notice shall be accompanied by (i) an irrevocable offer of Lessee to purchase the Leased Premises and the Net Casualty Proceeds on the Termination Date at a price determined in accordance with Schedule C hereof 26 (the Purchase Offer), and (ii) a certificate signed by the President or any Vice President of Lessee stating that its board of directors (or an executive committee thereof) has determined that such event has rendered the Leased Premises unsuitable for restoration, replacement and rebuilding for Lessee's continued use and occupancy and that the Leased Premises will not be restored. If Lessor shall reject such offer by notice to Lessee not later than the 30th day prior to the Termination Date, the Net Casualty Proceeds and the right thereto shall be assigned to and shall belong to Lessor and this Lease shall terminate on the Termination Date, except with respect to obligations and liabilities of Lessee under this Lease, actual or contingent, which have arisen on or prior to the Termination Date, but only upon payment by Lessee of all Basic Rent, additional rent, and other sums due and payable by it under this Lease to and including the Termination Date; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure. Unless Lessor shall have rejected such offer in accordance with this paragraph, Lessor shall be conclusively presumed to have accepted such offer, and on the Termination Date, Lessor shall convey the remaining portion of the Leased Premises, if any, and all its interest in the Net Casualty Proceeds in accordance with paragraph 16. If the Termination Date shall occur during an Extended Term, Lessee shall not be required to offer to purchase the Leased Premises; in such case, the Net Casualty Proceeds shall belong to Lessor and this Lease shall terminate; provided that the amount of such Net Casualty Proceeds, if any, related to any portion of the Improvements constructed by Lessee at its expense (and for which it has not obtained reimbursement pursuant to paragraph 27 15 hereof), shall be paid to Lessee as determined by the Appraisal Procedure. If the conditions set forth in the first sentence of this paragraph 14(c) are fulfilled and Lessee fails to commence to rebuild, replace or repair the Leased Premises within 30 days after final adjustment of all insurance claims made in connection therewith (but in no event later than one hundred eighty days after the occurrence of such damage or destruction), Lessee conclusively shall be deemed to have made such Purchase Offer and in the absence of a written Purchase Offer by Lessee the Termination Date shall be deemed to be the next Basic Rent Payment Date which occurs not less than 210 days after such Purchase Offer is presumed to have been made; but nothing in this sentence shall relieve Lessee of its obligation actually to deliver such Purchase Offer. 15. Reimbursement for Alterations and Additions; Purchase of Unimproved Land. (a) On any one or more dates during the Primary Term, Lessee may request in writing (herein called a Lessee's Request) that Lessor pay to Lessee the amount of Lessee's theretofore unreimbursed expenses (herein called Reimbursable Expenses), which have been incurred by Lessee in connection with the construction of additional structures on a portion or portions of the Leased Premises upon which there are no major structures then existing and/or additions, alterations to, or remodeling of, structures then existing on the Leased Premises and the acquisition of land adjacent to the Leased Premises (herein collectively called the Additions), which Additions are permitted by paragraph 11(a) but are in addition to, and do not constitute, alterations, additions or remodeling which Lessee is required to make upon the Leased Premises pursuant to any provision of this Lease, and which Additions conform to the character and quality of the then existing improvements on the Leased Premises. Lessee shall have the right to make a Lessee's Request only if (i) 28 the construction of any Additions with respect to which such Reimbursable Expenses have been incurred shall have been completed not more than two years prior to the date of the Lessee's Request, (ii) the amount of such Reimbursable Expenses is not less than $500,000, (iii) the value or use of the Leased Premises shall not be materially impaired by such Additions and (iv) the sum of such requested Reimbursable Expenses and all Reimbursable Expenses previously paid to Lessee pursuant to this paragraph 15(a) shall not exceed $5,000,000. Each Lessee's Request shall be accompanied by architect's drawings and specifications as previously approved by Lessor pursuant to paragraph 11(a) hereof and accepted by Lessee, relating to the Additions with respect to which such Request is made, and a Lessee's Certificate setting forth in reasonable detail the amount and character of the Reimbursable Expenses with respect to which such Request is made and a description of such Additions, stating that the construction of such Additions has been completed in compliance with the requirements of this paragraph 15, specifying the dates on which the construction of such Additions were commenced and completed, and stating that such Reimbursable Expenses are reimbursable in the amount requested under the terms of this paragraph 15. Upon receipt of such Lessee's Request, Lessor agrees to use its best efforts to arrange for the financing of such Reimbursable Expenses on terms and conditions satisfactory to Lessor and Lessee and consistent with the provisions of any Senior Permitted Mortgage. Lessor and Lessee shall negotiate in good faith to enable Lessor to finance such Reimbursable Expenses, having regard to then existing economic, financial and money market conditions. Within ninety days after the receipt of such Lessee's Request, drawings, specifications and Certificate, Lessor agrees to pay to Lessee an amount equal to such Reimbursable Expenses so certified, but 29 only if the following further conditions shall have been fulfilled within such 90-day period: (i) Lessor shall have issued and sold evidence of indebtedness (herein called the Additional Indebtedness) pursuant to a Senior Permitted Mortgage, for the purposes of obtaining funds to pay such Reimbursable Expenses to Lessee; (ii) The proceeds of the sale of the Additional Indebtedness actually received by Lessor shall have been not less than the amount of such Reimbursable Expenses; (iii) Lessor and Lessee shall have authorized, executed and delivered a supplement to this Lease, which supplement (herein called the Lease Supplement) shall: (A) increase the Basic Rent payments required to be made thereafter during the Primary Term by an amount which shall be at least sufficient to make each payment, when due, of principal of, and interest on, the Additional Indebtedness, (B) increase each Basic Rent payment to be made during the Extended Terms by an amount which shall be at least sufficient to make each payment, when due, of principal of, and interest on, the Additional Indebtedness during the portion of such Extended Terms that such Additional Indebtedness is outstanding, and Lessee shall not, and is obligated not to, cancel its option to extend the term hereof to a date not earlier than the maturity of the Additional Indebtedness, (C) increase the purchase prices set forth in Schedule C hereto that would be payable upon a purchase of the Leased Premises by Lessee pursuant to paragraph 12(b) or 14(c), in each case by amounts which shall at all times thereafter be at least sufficient to pay or prepay the principal amount of the Additional Indebtedness to be then outstanding (without adjustments for any prepayments made by Lessor), and (D) make such other changes, if any, as shall be necessary or appropriate, in the opinion of counsel for holders of the Additional Indebtedness, by reason of the transactions contemplated by this paragraph; and (iv) Lessor shall have received from Lessee such other Lessee's Certificates, opinions of counsel for Lessee, surveys of the Leased Premises, title insurance policies, consents to the assignment and reassignment of this Lease (as supplemented) and other instruments as Lessor may reasonably request in order to enable Lessor to finance the cost of such Reimbursable Expenses by the issuance and sale of the Additional Indebtedness. 30 (b) As long as Lessor has used its best efforts to arrange financing as set forth in subparagraph (a) above, Lessor shall incur no liability to Lessee by reason of the fact that Lessor does not pay Reimbursable Expenses, and if Lessor does not pay such Reimbursable Expenses, except as expressly provided in subparagraph (c) below, this Lease shall continue in full effect, without modification. All expenses incurred in connection with the issuance by Lessor of Additional Indebtedness shall be borne by Lessee. (c) If, after the conditions specified above have been satisfied within 180 days of such Lessee's Request, Lessor shall not have paid to Lessee an amount equal to such Reimbursable Expenses and if such Additions are either contiguous to the Improvements or free standing (or subject to a party wall pursuant to an agreement satisfactory in form and substance to Lessor and any Senior Permitted Mortgagee) upon unimproved land constituting part of the Leased Premises, then Lessee shall have the option, to be exercised by giving 90 days' notice to Lessor, to purchase such portion of the unimproved land (together with any requisite easements) as is necessary for the construction of such Additions, provided that such land (together with any land purchased pursuant to paragraph 15(d) hereof, called the Unimproved Land) shall not be improved by any permanent structure included in the Improvements and provided further that the remainder of the Leased Premises, after excluding the Unimproved Land, would (1) constitute an integrated economic unit including sufficient parking and all necessary utility easements, (2) be a continuous parcel of land, without gap or hiatus and be separately assessed for tax purposes, (3) have adequate access to and from public highways, (4) not be in violation of any Legal Requirement or Required Insurance, and (5) would have a market value at least equal to the outstanding amount of the Senior Permitted Mortgage as of such date. The purchase price for the Unimproved Land shall be 31 the greater of (x) fair market value attributable to such Unimproved Land, as unencumbered by this Lease and without regard to any of Lessee's continuing rights and obligations under this Lease, as determined by Lessor and Lessee, and in the event of their failure to agree, as determined by the Appraisal Procedure or (y) Lessor's original cost attributable to such Unimproved Land as set forth in Schedule A hereto. Lessee agrees that it shall bear the costs of the Appraisal Procedure. On the date for purchase specified in Lessee's notice, Lessor shall convey such Unimproved Land to Lessee or its designee pursuant to and in compliance with paragraph 16. In the event of such purchase by Lessee, Lessee agrees that (x) no improvements will be undertaken upon such Unimproved Land which would materially reduce the value of the remainder of the Leased Premises and (y) Lessee will grant such easements to Lessor or enter into such cross-easement agreements with Lessor relating to the Unimproved Land as are reasonably necessary to operate the remainder of the Leased Premises as an integrated economic unit with no material reduction in the value thereof. (d) In addition to the option contained in 15(c), Lessee shall have the option to purchase all or any portion of the land described in Part 2 of Schedule A, and structure or Improvements thereon,* in the manner, at the price and in accordance with the terms of subparagraph 15(c), provided that such purchase shall not materially impair the value or use of the remainder of the Leased Premises. Lessee shall have such option only if (i) Lessee shall have undertaken in writing to construct improvements on such property for its own use, and (ii) such improvements are not eligible for financing by Lessor pursuant to the provisions of subparagraph 15(a). - --------------- * See Schedule A, Part 2, for particulars. 32 (e) To the extent of the cash price paid to Lessor for Unimproved Land purchased pursuant to paragraphs 15(c) or (d), (i) the amounts set forth in Schedule C shall be reduced in accordance with Schedule C, and (ii) each installment of Basic Rent payable on or after the first Payment Date occurring two months or more after such purchase (including Extended Terms thereafter) shall be reduced by an amount equal to the amount of such installment multiplied by a fraction, the numerator of which shall be such purchase price paid to Lessor, and the denominator of which shall be the applicable amount set forth in Schedule C prior to its reduction pursuant to clause (i) above, provided that (i) the Basic Rent shall not be reduced to an amount of less than $4.00 per square foot of remaining rentable space, and (ii) during the Primary Term the amount by which such installments of Basic Rent shall be so reduced shall not exceed the amount by which the amount scheduled to be due on or about such date on any indebtedness of Lessor secured by the Senior Permitted Mortgage is reduced to reflect the revised amortization thereof after giving effect to the corresponding prepayment of such indebtedness by Lessor (it being understood that in the case the Senior Permitted Mortgage is retired or otherwise refinanced prior to such prepayment, such limitations shall be calculated as if such mortgage indebtedness had remained outstanding, was so prepaid and the amortization thereof revised provided therein). (f) In lieu of paying cash for the purchase of Unimproved Land pursuant to paragraph 15(c) or (d), Lessee may convey to Lessor a substitute parcel of land (Substitute Land) provided that the following conditions shall be satisfied: the fair market value of the Substitute Land shall equal or exceed the cash purchase price which would have been paid for the Unimproved Land being purchased by Lessee (such fair market value of the Substitute Land being determined by agreement of Lessor and Lessee, or failing such agreement, 33 by the Appraisal Procedure), (ii) all of the conditions set forth in paragraph 15(c) shall be satisfied as to the remaining portion of the Leased Premises taken together with the Substitute Land, and (iii) Lessor and any Permitted Mortgagee shall have approved any exceptions to title to the Substitute Land. All costs and expenses of Lessor and any Permitted Mortgagee incident to the conveyance to Lessor of Substitute Land shall be borne by Lessee. In the event that Unimproved Land is purchased pursuant to paragraph 15(c) or (d) in exchange for Substitute Land rather than the payment of a cash purchase price, the provisions of paragraph 15(e) shall not apply, and this Lease shall continue in full effect without modification of Basic Rent or the amounts set forth in Schedule C hereunder. 16. Procedure Upon Purchase. (a) If Lessee shall purchase the Leased Premises pursuant to this Lease, Lessor need not convey any better title thereto than existed on the date of the commencement of the Term hereof and Lessee or its designee shall accept such title, subject, however, to the state of title to the Leased Premises on the date of the commencement of the Term hereof, the condition of the Leased Premises on the date of purchase and all charges, liens, security interests and encumbrances on the Leased Premises and all applicable Legal Requirements, but free of the lien of all Permitted Mortgages and charges, liens, security interests and encumbrances resulting from acts or failures to act of Lessor taken without the consent of Lessee. (b) Upon the date fixed for any purchase of the Leased Premises hereunder, Lessee shall pay to Lessor in immediately available funds the purchase price therefor specified herein together with all Basic Rent, additional rent and other sums then due and payable hereunder to and including such date of purchase, and Lessor shall deliver to Lessee a special warranty 34 deed to the Leased Premises and any other instruments necessary to assign any other property then required to be assigned by Lessor pursuant hereto. Lessee shall pay all charges incident to such conveyance and assignment, including reasonable counsel fees, escrow fees, recording fees, title insurance premiums and all applicable taxes (other than any income, capital gains or franchise taxes of Lessor) which may be imposed by reason of such conveyance and assignment and the delivery of said deeds and other instruments. Upon the completion of such purchase, but not prior thereto (whether or not any delay or failure in the completion of such purchase shall be the fault of Lessor), this Lease and all obligations hereunder shall terminate, except with respect to obligations and liabilities of Lessee hereunder, actual or contingent, which have arisen on or prior to such date of purchase. 17. Assignment and Subletting. During the Primary Term only, Lessee may sublet all or any part of the Leased Premises without the consent of Lessor (provided, that each such sublease shall expressly be made subject to the provisions of this Lease) and, may assign all its rights and interests under this Lease. If Lessee assigns all its rights and interests under this Lease, the assignee under such assignment shall expressly assume all the obligations of Lessee hereunder in an instrument, approved by Lessor as to form and substance (which approval will not be unreasonably withheld or delayed), delivered to Lessor at the time of such assignment. No assignment or sublease shall affect or reduce any of the obligations of Lessee hereunder, and all such obligations shall continue in full effect as obligations of a principal and not as obligations of a guarantor or surety, to the same extent as though no assignment or subletting had been made, provided that performance by any such assignee or sublessee of any of the obligations of Lessee under this Lease shall be deemed to be performance by Lessee. No sublease or 35 assignment shall impose any obligations on Lessor or otherwise affect any of the rights of Lessor under this Lease. Neither this Lease nor the Term hereby demised shall be mortgaged by Lessee, nor shall Lessee mortgage or pledge the interest of Lessee in and to any sublease of the Leased Premises or the rentals payable thereunder. Any mortgage, pledge, sublease or assignment made in violation of this paragraph 17 shall be void. Lessee shall, within ten days after the execution and delivery of any such assignment or the sublease of all or substantially all of the Leased Premises, deliver a conformed copy thereof to Lessor. Within ten days after the execution and delivery of any sublease of all or any portion of the Leased Premises, Lessee shall give notice to Lessor of the existence and term thereof, and of the name and address of the sublessee thereunder. 18. Permitted Contests. Lessee shall not be required to (i) pay any Imposition, (ii) comply with any statute, law, rule, order, regulation or ordinance, (iii) discharge or remove any lien, encumbrance or charge or (iv) obtain any waivers or settlements or make any changes or take any action with respect to any encroachment, hindrance, obstruction, violation or impairment referred to in paragraph 10(b), so long as Lessee shall contest, in good faith and at its expense, the existence, the amount or the validity thereof, the amount of the damages caused thereby, or the extent of its liability therefor, by appropriate proceedings during the pendency of which there is prevented (A) the collection of, or other realization upon, the tax, assessment, levy, fee, rent or charge or lien, encumbrance or charge so contested, (B) the sale, forfeiture or loss of the Leased Premises, or any part thereof, or the Basic Rent or any additional rent, or any portion thereof, (C) any interference with the use or occupancy of the Leased Premises or any part thereof, and (D) any interference with the payment or collection of the Basic Rent or any 36 additional rent, or any portion thereof. While any such proceedings are pending, Lessor shall not have the right to pay, remove or cause to be discharged the tax, assessment, levy, fee, rent or charge or lien, encumbrance or charge thereby being contested. Lessee further agrees that each such contest shall be promptly prosecuted to a final conclusion. Lessee shall pay, and save Lessor harmless against, any and all losses, judgments, decrees and costs (including all reasonable attorneys' fees and expenses) in connection with any such contest and shall, promptly after the final settlement, compromise or determination (including any appeals) of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interests, costs and expenses thereof or in connection therewith, and perform all acts, the performance of which shall be ordered or decreed as a result thereof; provided, however, that nothing herein contained shall be construed to require Lessee to pay or discharge any lien, encumbrance or other charge created by any act or failure to act of Lessor or the payment of which by Lessee is not otherwise required hereunder, or to perform any act which Lessee is not otherwise required to perform hereunder. No such contest shall subject Lessor or any Permitted Mortgagee to the risk of any criminal liability. Lessee shall give such reasonable security to Lessor or the Senior Permitted Mortgagee as may be demanded by Lessor or such Senior Permitted Mortgagee to insure compliance with the foregoing provisions of this paragraph 18. 19. Conditional Limitations; Default Provision. (a) Any of the following occurrences or acts shall constitute an event of default (herein called an Event of Default) under this Lease: (i) If Lessee, at any time during the continuance of this Lease (and regardless of the pendency of any 37 bankruptcy, reorganization, receivership, insolvency or other proceedings, at law, in equity, or before any administrative tribunal, which have or might have the effect of preventing Lessee from complying with the terms of this Lease), shall (l) fail to make any payment when due of Basic Rent, additional rent or other sum herein required to be paid by Lessee hereunder and such failure continues for 5 days, or (2) fail to observe or perform any other provision hereof or any provision of the Assignment of Lease and Guaranty, dated as of the date hereof (the Assignment), from Lessor to Clinton Holding Corporation (the Company), and consented to therein by Lessee and by Lincoln National Corporation (Guarantor) or the Reassignment of Lease and Guaranty, dated as of the date hereof (the Reassignment), from the Company to The Connecticut Bank and Trust Company, National Association and F. W. Kawam (the Trustees), and consented to therein by Lessee and Guarantor, for thirty days after notice to Lessee of such failure has been given (provided, that in the case of any default referred to in this clause (2) which cannot with diligence be cured within such 30-day period, if Lessee shall proceed promptly to cure the same and thereafter shall prosecute the curing of such default with diligence, then upon receipt by Lessor of a Lessee's Certificate stating the reason such default cannot be cured within thirty days and stating that Lessee is proceeding with diligence to cure such default, the time within which such failure may be cured shall be extended for such period as may be necessary to complete the curing of the same with diligence but not to exceed 120 days without Lessor's written consent which consent shall not be unreasonably withheld); or (ii) if any representation or warranty of Lessee or Guarantor set forth in any notice, certificate, demand, request or other instrument delivered pursuant to, or in connection with, this Lease, the Assignment, or the Reassignment shall either prove to be false or misleading in any material respect as of the time when the same shall have been made, or with respect to any such representation or warranty Lessee or Guarantor shall fail to include in such representation or warranty any fact or statement necessary in light of the circumstances in which such representation or warranty was made to make such representation or warranty not misleading in any material respect as of the time when the same shall have been made; or (iii) if Lessee or Guarantor shall file a petition commencing a voluntary case under the Federal Bankruptcy Code or any other federal or state law (as 38 now or hereafter in effect) relating to bankruptcy, insolvency, reorganization, winding-up or adjustment of debts (hereinafter collectively called Bankruptcy Laws), or if Lessee or Guarantor shall (A) apply for or consent to the appointment of, or the taking of possession by, any receiver, custodian, trustee, United States Trustee or liquidator (or other similar official) of the Leased Premises or any part thereof or of any substantial portion of Lessee's property, or (B) generally not pay their respective debts as they become due, or if either Lessee or Guarantor admits in writing its inability to pay its respective debts generally as they become due or (C) makes a general assignment for the benefit of its respective creditors, or (D) files a petition commencing a voluntary case under or seeking to take advantage of any Bankruptcy Law, or (E) fails to controvert in timely and appropriate manner, or in writing acquiesces to, any petition commencing an involuntary case against Lessee or Guarantor or otherwise filed against Lessee or Guarantor pursuant to any Bankruptcy Law, or (F) takes any corporate action in furtherance of any of the foregoing, or (iv) if an order for relief against Lessee or Guarantor shall be entered in any involuntary case under the Federal Bankruptcy Code or any similar order against Lessee or Guarantor shall be entered pursuant to any other Bankruptcy Law, or if a petition commencing an involuntary case against Lessee or Guarantor or proposing the reorganization of Lessee or Guarantor under any Bankruptcy Law shall be filed and not be discharged or denied within 60 days after such filing, or if a proceeding or case shall be commenced in any court of competent jurisdiction seeking (A) the liquidation, reorganization, dissolution, winding-up or adjustment of debts of Lessee or Guarantor, or (B) the appointment of a receiver, custodian, trustee, United States Trustee or liquidator (or any similar official) of the Leased Premises or any part thereof or of Lessee or Guarantor or of any substantial portion of Lessee's or Guarantor's property, or (C) any similar relief as to Lessee or Guarantor pursuant to any Bankruptcy Law, and any such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect for 60 days; or (v) if (a) a final judgment for the payment of money in an amount greater than $50,000 or (b) final judgments for the payment of money aggregating in an amount greater than $300,000 shall be rendered against Lessee or Guarantor and Lessee or Guarantor shall not discharge 39 the same or cause it to be discharged within 60 days from the entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and secure a stay of execution or an appeal bond in the amount of said judgment pending such appeal; or (vi) If the Leased Premises shall be left both unattended and without maintenance as provided herein, for a period of thirty days; or (vii) if Guarantor shall fail to observe or perform any provision of the Guaranty or of the Other Guaranties, or pursuant to the terms thereof shall be deemed to be in default thereunder, and such failure or default shall continue for thirty days after notice to Guarantor, provided, however, that the foregoing shall not be construed as extending the period of time during which the Guarantor is required to pay or perform any obligation of Lessee hereunder or under the Assignment or Reassignment. (b) If an Event of Default shall have happened and be continuing, Lessor shall have the right at its election to give Lessee written notice of Lessor's intention to terminate the term of this Lease on a date specified in such notice. Thereupon, the term of this Lease and the estate hereby granted shall terminate on such date as completely and with the same effect as if such date were the date fixed herein for the expiration of the term of this Lease, and all rights of Lessee hereunder shall terminate, but Lessee shall remain liable as hereinafter provided. (c) If an Event of Default shall have happened and be continuing, Lessor shall have the immediate right, whether or not the term of this Lease shall have been terminated pursuant to paragraph 19(b), to (i) re-enter and repossess the Leased Premises or any part thereof by force, summary proceedings, ejectment or otherwise and (ii) remove all persons and property therefrom. Lessor shall be under no liability by reason of any such re-entry, repossession or removal. No such re-entry or taking of possession of the Leased Premises by Lessor shall be construed as an election on Lessor's part 40 to terminate the Term of this Lease unless a written notice of such intention be given to Lessee pursuant to paragraph 19(b), or unless the termination of this Lease be decreed by a court of competent jurisdiction. (d) At any time or from time to time after the repossession of the Leased Premises or any part thereof pursuant to paragraph 19(c), whether or not the term of this Lease shall have been terminated pursuant to paragraph 19(b), Lessor may (but shall be under no obligation to) relet the Leased Premises or any part thereof for the account of Lessee, in the name of Lessee or Lessor or otherwise, without notice to Lessee, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions and for such uses as Lessor, in its absolute discretion, may determine, and Lessor may collect and receive any rents payable by reason of such reletting. Lessor shall not be responsible or liable for any failure to relet the Leased Premises or any part thereof or for any failure to collect any rent due upon any such reletting. (e) No termination of the term of this Lease pursuant to paragraph 19(b), by operation of law or otherwise, and no repossession of the Leased Premises or any part thereof pursuant to paragraph 19(c) or otherwise, and no reletting of the Leased Premises or any part thereof pursuant to paragraph 19(d), shall relieve Lessee of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, repossession or reletting. (f) In the event of any such termination or repossession, Lessee will pay to Lessor the Basic Rent, additional rent and other sums required to be paid by Lessee to and including the date of such termination or repossession; and, thereafter, Lessee shall, until the end of what would have been the term of this Lease in the absence of such termination or 41 repossession, and whether or not the Leased Premises or any part thereof shall have been relet, be liable to Lessor for, and shall pay to Lessor, as liquidated and agreed current damages: (i) the Basic Rent, additional rent and other sums which would be payable under this Lease by Lessee in the absence of such termination or repossession, less (ii) the net proceeds, if any, of any reletting effected for the account of Lessee pursuant to paragraph 19(d), after deducting from such proceeds all Lessor's expenses incurred in connection with such reletting (including, without limitation, all repossession costs, brokerage commissions, legal expenses, reasonable attorneys' fees, employees' expenses, alteration costs and expenses of preparation for such reletting). Lessee will pay such current damages on the days on which the Basic Rent would have been payable under this Lease in the absence of such termination or repossession, and Lessor shall be entitled to recover the same from Lessee on each such day. (g) At any time after any such termination or repossession by reason of the occurrence of an Event of Default, whether or not Lessor shall have collected any current damages pursuant to paragraph 19(f), Lessor shall be entitled to recover from Lessee, and Lessee will pay to Lessor on demand, as and for liquidated and agreed final damages for Lessee's default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount by which (a) the Basic Rent, additional rent and other sums which would be payable under this Lease from the date of such demand (or, if it be earlier, the date to which Lessee shall have satisfied in full its obligations under paragraph 19(f) to pay current damages) for what would be the then unexpired Term of this Lease in the absence of such termination or repossession, discounted at the rate of 8% per annum over (b) the then fair 42 net rental value of the Leased Premises for the same period discounted at the rate of 8% per annum. If any statute or rule of law shall validly limit the amount of such liquidated final damages to less than the amount above agreed upon, Lessor shall be entitled to the maximum amount allowable under such statute or rule of law. (h) Notwithstanding anything to the contrary stated herein, if an Event of Default shall have happened and be continuing, whether or not Lessee shall have abandoned the Leased Premises, Lessor may elect to continue this Lease in effect for so long as Lessor does not terminate Lessee's rights to possession of the Leased Premises and Lessor may enforce all of its rights and remedies hereunder including without limitation the right to recover all Basic Rent, additional rent and other sums payable hereunder as the same become due. 20. Additional Rights of Lessor. (a) No right or remedy herein conferred upon or reserved to Lessor is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. The failure of Lessor to insist at any time upon the strict performance of any covenant or agreement or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future. A receipt by Lessor of any Basic Rent, any additional rent or any other sum payable hereunder with knowledge of the breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach, and no waiver by Lessor of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Lessor. In addition to other remedies provided in this Lease, Lessor shall be entitled, to the extent permitted by applicable law, to injunctive relief in case of the violation, or 43 attempted or threatened violation, of any of the covenants, agreements, conditions or provision of this Lease, or to decree compelling performance of any of the covenants, agreement, conditions or provisions of this Lease, or to any other remedy allowed to Lessor at law or in equity. (b) To the extent it may lawfully do so, Lessee hereby waives and surrenders for itself and all those claiming under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future constitution, statute or rule of law to redeem the Leased Premises or to have a continuance of this Lease for the term hereby demised after termination of Lessee's right of occupancy by order or judgment of any court or by any legal process or writ, or under the terms of this Lease or after the termination of the term of this Lease as herein provided, and (ii) the benefits of any present or future constitution, statute or rule of law which exempts property from liability for debt or for distress for rent. (c) In the event an action shall be brought for the enforcement of any right hereunder, the party cast in judgment shall pay to the prevailing party all the expenses incurred in connection therewith including reasonable attorneys' fees. 21. Notices, Demands and Other Instruments. All notices, demands, requests, consents, approvals and other instruments required or permitted to be given pursuant to the terms of this Lease shall be in writing and shall be deemed to have been properly given if (a) with respect to Lessee, sent by certified or registered mail, postage prepaid, or sent by telegram or delivered by hand, in each case addressed to Lessee at its address first above set forth, and (b) with respect to Lessor, sent by certified or registered mail, postage prepaid, or sent by telegram or delivered by hand in each case, addressed to Lessor at its address first above set forth. Lessor and Lessee 44 shall each have the right from time to time to specify as its address for purposes of this Lease any other address in the United States of America upon giving 15 days' notice thereof, similarly given, to the other party. 22. Estoppel Certificates; Consents and Financial Statements. (a) Lessee and Lessor will, at any time and from time to time, upon not less than twenty days' prior request by the other party, execute, acknowledge and deliver to the other party a Certificate, certifying that this Lease is unmodified and in full effect (or setting forth any modifications and that this Lease is in full effect as modified) and the dates to which the Basic Rent, additional rent and other sums payable hereunder have been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer may have knowledge; it being intended, inter alia, that any such certificate may be relied upon by any mortgagee or prospective purchaser or prospective mortgagee of the Leased Premises. (b) From time to time during the term of this Lease, Lessor expects to secure financings of its interest in the Leased Premises by assigning Lessor's interest in this Lease and the sums payable hereunder. In the event of any such assignment to a Permitted Mortgagee, Lessee will, upon not less than ten days' prior request by Lessor, execute, acknowledge and deliver to Lessor a consent to such assignment addressed to such Permitted Mortgagee in form satisfactory to such Permitted Mortgagee; and Lessee will produce, at Lessee's expense (but only with respect to the initial financing involving the Permitted Mortgagee), such certificates, opinions of counsel and other documents as may be reasonably requested by such Permitted Mortgagee. (c) Lessee will furnish the following statements to Lessor: (i) within 120 days after the end of each of Lessee's fiscal years, the annual audited report of Lessee, 45 including a balance sheet and an income and surplus statement and statement of changes in financial position for the fiscal year covered thereby, setting forth in comparative form, the figures for the previous fiscal year, all on a fully consolidated basis and in reasonable detail and duly certified by the independent certified public accountants regularly employed by Lessee, (ii) within 120 days after the end of each of Lessee's fiscal years, and together with the annual audited report furnished in accordance with clause (i), an Officer's Certificate stating that to the best of the signer's knowledge and belief after making due inquiry, Lessee is not in default in the performance or observance of any of the terms of this Lease, or if Lessee shall be in Default to its knowledge, specifying all such defaults, the nature thereof, and the steps being taken to remedy the same, (iii) with reasonable promptness, copies of all financial statements and reports, if any, which Lessee shall send to its respective stockholders, and copies of any Form 10-K, Form 10-Q, Form 8-K, proxy statement and registration statement (other than Form S-8 registration statements), or copies of any successor forms or statements substituted therefor, which Lessee shall file with the Securities and Exchange Commission or any governmental agency substituted therefor, and (iv) with reasonable promptness, such other information, consistent with the disclosure requirements of the federal securities laws, respecting the financial condition and affairs of Lessee, as Lessor may request from time to time. 23. No Merger. There shall be no merger of this Lease or the leasehold estate hereby created with the fee estate in the Leased Premises or any part thereof by reason of the same person acquiring or holding, directly or indirectly, this Lease or the leasehold estate hereby created or any interest in this Lease or in such leasehold estate as well as the fee estate in the Leased Premises or any portion thereof. 24. Surrender. Upon the termination of this Lease, Lessee shall peaceably surrender the Leased Premises to Lessor in the same condition in which they were received from Lessor at the commencement of this Lease, except 46 as altered as permitted or required by this Lease and except for ordinary wear and tear. Provided that Lessee is not in default hereunder, Lessee shall remove from the Leased Premises prior to or within a reasonable time after (not to exceed thirty days) such termination all property not owned by Lessor, and, at Lessee's expense, shall, at such time of removal, repair any damage caused by such removal. Property not so removed shall become the property of Lessor. Lessor may thereafter cause such property to be removed from the Leased Premises and disposed of. The cost of any such removal and disposition and the cost of repairing any damage caused by such removal shall be borne by Lessee. 25. Separability. Each and every covenant and agreement contained in this Lease is separate and independent, and the breach of any thereof by Lessor shall not discharge or relieve Lessee from any obligation hereunder. If any term or provision of this Lease or the application thereof to any person or circumstances or at any time shall to any extent be invalid and unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances or at any time other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and shall be enforced to the extent permitted by law. 26. Binding Effect. All of the covenants, conditions and obligations contained in this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of Lessor and Lessee to the same extent as if each such successor and assign were in each case named as a party to this Lease. This Lease may not be changed, modified or discharged except by a writing signed by Lessor and Lessee. 47 27. Table of Contents, Headings. The table of contents and headings used in this Lease are for convenient reference only and shall not to any extent have the effect of modifying, amending or changing the provisions of this Lease. 28. Governing Law. This Lease shall be governed by and interpreted under the laws of the State of Indiana. 29. Certain Definitions. (a) The term "Appraisal Procedure" means: Lessee and Lessor shall each select an MAI appraiser. Such value shall be determined by agreement of the full appraisals of such two appraisers pursuant to the terms of this Lease; and if no agreement can be reached by such two appraisers, such value shall be determined by the full appraisal of a third MAI appraiser, who shall be selected by the original two appraisers. All reasonable and necessary costs of the appraisals shall be paid by Lessee. (b) The term "Guarantor" means: Lincoln National Corporation, an Indiana corporation. (c) The term "Guaranty" means: The Guaranty, dated the date hereof, from Guarantor to Lessor, guaranteeing performance of Lessee's obligations under this Lease. (d) The term "Impositions" means: (i) all taxes, assessments (including assessments for benefits from public works or improvements, whether or not begun or completed prior to the commencement of the Term of this Lease and whether or not to be completed within said Term), levies, fees, water and sewer rents and charges, and all other governmental charges of every kind, general and special, ordinary and extraordinary, whether or not the same shall have been within the express contemplation of the parties hereto, together with any interest and penalties thereon, which are, at any time, imposed or levied upon or assessed against (A) the Leased Premises or any part thereof, (B) any Basic Rent, any additional rent reserved or payable hereunder or any other sums payable by Lessee hereunder, (C) this Lease or the leasehold estate hereby created or which arise in 48 respect of the operation, possession, occupancy or use of the Leased Premises: (ii) any gross receipts or similar taxes imposed or levied upon, assessed against or measured by the Basic Rent, additional rent or any other sums payable by Lessee hereunder or levied upon or assessed against the Leased Premises; including without limitation [reference to Indiana gross receipts tax]; (iii) all sales and use taxes which may be levied or assessed against or payable by Lessor or Lessee on account of the acquisition, leasing or use of the Leased Premises or any portion thereof; and (iv) all charges for water, gas, light, heat, telephone, electricity, power and other utilities and communications services rendered or used on or about the Leased Premises. (e) The term "Junior Permitted Mortgagees" means American States Insurance Company, as mortgagee under a mortgage, dated as of the date hereof, from Lessor, as mortgagor, and its assigns; and Dean Witter Realty Inc., as mortgagee under a mortgage dated as of the date hereof, from Lessor, as mortgagor, and its assigns. (f) The term "this Lease" means: this Lease and Agreement as amended and modified from time to time, together with any memorandum or short form of lease entered into for the purpose of recording. (g) The term "Lessee's Certificate" means: a written certificate signed by the Chairman of the Board, the President or any Vice President of Lessee. (h) The term "Lessor's Cost" means Lessor's Cost from time to time as set forth in Schedule C. (i) The term "Other Guaranties" means: the Guaranties, dated as of the date hereof, from Guarantor to Lessor guaranteeing performance of the obligations of Lincoln National Pension Insurance Company, as lessee, under a Lease and Agreement, dated as of the date hereof, and the Guaranty, dated as of the date hereof, from Guarantor to Lessor guaranteeing 49 performance of the obligations of American States Insurance Company, as lessee, under a Lease and Agreement, dated as of the date hereof. (j) The term "Permitted Mortgage" means: any mortgage, deed of trust, security agreement, assignment of lease or other security instrument relating to the Leased Premises and this Lease, subject to the rights of lessee under this Lease, and securing the borrowing by Lessor from Clinton Holding Corporation, a Delaware corporation (the Senior Permitted Mortgage), made at the time of execution of this Lease, or any refinancing thereof, or the mortgages to the Junior Permitted Mortgagees (the Subordinated Permitted Mortgage). (k) The term "Permitted Mortgagee" means the Senior Permitted Mortgagee and the Junior Permitted Mortgagees. (l) The term "Purchase Offer" means: an offer delivered by Lessee to Lessor, executed by the president or any vice president of Lessee, irrevocably offering to purchase the Leased Premises pursuant to the provisions of paragraphs 12 or 14 on any Termination Date specified in such Offer at a price determined in accordance with Schedule C. (m) The term "Senior Permitted Mortgagee" means The Connecticut Bank and Trust Company, National Association and F. W. Kawam, as trustees, as assignees of Clinton Holding Corporation, and their successors and assigns. (n) The term "Termination Date" means: any Basic Rent Payment Date. 30. Lessee's Options; Right of First Refusal. (a) If no event of default hereunder has occurred and is continuing, Lessee shall have the option to purchase the Leased Premises either (x) on the last day of the Primary Term or (y) on the last day of the first, second, third, fourth, fifth and sixth Extended Terms if the Lease has been extended to any such date (any of such dates for purchase being referred to as the Purchase Date), upon not less than 360 days prior written notice to Lessor of its intention to exercise such 50 option. The purchase price payable upon the exercise of such option shall be the fair market value of the Leased Premises as of the Purchase Date, taking into consideration Lessee's continuing rights and obligations under this Lease assuming Lessee shall have extended the Lease for all Extended Terms, minus the enhancement of the fair market value of the Leased Premises due to the existence of Lessee's Improvements and that portion of the Improvements, if any, constructed by Lessee at its own expense and for which Lessee has not been reimbursed pursuant to paragraph 15. If Lessee and Lessor cannot agree as to such fair market value, such fair market value shall be determined in accordance with the Appraisal Procedure. Such Appraisal Procedure shall be completed within 150 days after Lessee's notice as set forth above. Lessee's option shall be exercisable by giving notice of such exercise to Lessor not less than 360 days prior to the Purchase Date. On the Purchase Date, Lessor shall convey the Leased Premises to Lessee pursuant to and upon compliance with paragraph 16. The foregoing option is personal to Lessee, and such option is not assignable (except by Lessee to any of its affiliates) notwithstanding any assignment of the Lease to any other person. (b) If, at any time during the Primary Term or any Extended Term of this Lease, Lessor shall receive and be willing to accept a bona fide offer from a third party to purchase Lessor's interest in the Leased Premises, other than an offer to purchase such interest at any sale incidental to foreclosure or other similar proceedings, or if Lessor shall offer to sell its interest in the Leased Premises to any third party, Lessor shall promptly transmit to Lessee its written offer to sell such interest to Lessee upon the same terms and conditions as are set forth in the third party offer or its offer to a third party, as the case may be, together with a true copy of such offer (containing the name and address of such third party); provided, however, that 51 Lessor's offer to Lessee shall be reduced by the enhancement of the fair market value of the Leased Premises due to the existence of Lessee's Improvements and that portion of the Improvements, if any, constructed by Lessee at its own expense and for which Lessee has not been reimbursed pursuant to paragraph 15, as determined by the Appraisal Procedure. Lessee shall have 30 business days within which to accept such offer. If Lessee shall accept such offer by written notice to Lessor within such time, such offer and acceptance shall constitute a contract between them for the sale by Lessor and the purchase by Lessee of the Leased Premises, and shall not thereafter be subject to rejection by either party. On the date of such purchase, Lessor shall convey and assign the Leased Premises to Lessee, provided that such conveyance and assignment shall be made subject to the Permitted Exceptions listed in Schedule A hereto, to this Lease, and to such liens, encumbrances, charges, exceptions and restrictions affecting the Leased Premises as such third party is willing to accept in such offer, and provided further that this Lease and any Permitted Mortgage shall continue in full force and effect. If the offer to sell is not so accepted by Lessee, then Lessor may sell the Leased Premises to such third party purchaser upon the terms contained in such original offer by or to such third party and such sale and transfer must be consummated within 180 days following the expiration of the time hereinabove provided for the acceptance by Lessee. If the Leased Premises is sold to a third party, the sale shall be subject to this Lease and all of the provisions hereof, including, without limitation, all options granted to Lessee. 31. Schedules. The following are Schedules A, B and C referred to in this Lease, which are hereby made a part hereof. 52 SCHEDULE A TO LEASE Part 1: Property Description Part 2: Property subject to the option set forth in paragraph 15(d). [Each Lease will include a legal description of certain specific portions of the Leased Premises which are to be subject to the paragraph 15(d) option. The amount of indebtedness to be prepaid pursuant to the Senior Permitted Mortgage in connection with the exercise of such option will be the greater of (a) the amount herein set forth as the cost attributable to such portion of the Leased Premises, or (b) the fair market value of such portion as determined pursuant to paragraph 15(c). Such property and amounts will be as follows: Downtown, Fort Wayne: 1 parcel presently improved by a low-rise structure -- $1,500,000 SCHEDULE B TO LEASE Basic Rent Payments 1. The instalments of Basic Rent payable for the Leased Premises during the Interim Term shall be: $20,407 per diem (based on a 360-day year of 12 30-day months), payable on August 31, 1984. 2. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term ending on and including August 31, 1989 shall be $2,115,713 and shall be payable semi-annually in arrears commencing on February 28, 1985 and thereafter on the last day of each August and February thereafter to and including August 31, 1989. 3. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1989 and ending on and including August 31, 1994 shall be $4,809,718 and shall be payable semi-annually in arrears commencing on February 28, 1990 and thereafter on the last day of each August and February thereafter to and including August 31, 1994. 4. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1994 and ending on and including August 31, 1999 shall be $4,893,516 and shall be semi-annually in arrears commencing on February 28, 1995 and thereafter on the last day of each August and February thereafter, to and including August 31, 1999. 5. Each instalment of Basic Rent payable for the Leased Premises during that portion of the Primary Term commencing on September 1, 1999 and ending on and including August 31, 2004 shall be $7,468,295 and shall be payable semi-annually in arrears commencing on February 29, 2000 and thereafter on the last day of each August and February thereafter, to and including August 31, 2004. 6. Each instalment of Basic Rent payable for the Lease to Premises during that portion of the Primary Term commencing on September 1, 2004 and ending on and including August 31, 2009 shall be $7,912,625 and should be payable semi-annually in arrears commencing on February 28, 2005 and thereafter on the last day of each August and February thereafter to and including August 31, 2009. 7. Each instalment of Basic Rent for the Leased Premises during the Extended Terms shall be $3,595,500, and shall be payable semi-annually in arrears commencing on February 28, 2010 and thereafter on the last day of each August and February thereafter occurring during the Extended Terms. If any instalment of Basic Rent shall be payable on a date which shall not be a business day, then such instalment shall be payable on the first business day thereafter. 45 SCHEDULE C TO LEASE COMPUTATION OF PURCHASE PRICES Upon the purchase of the Leased Premises during the Interim or Primary Terms pursuant to paragraphs 12(b) or 14(c), the purchase price payable shall be an amount equal to the amount set forth in column 2 below opposite the period in which such purchase occurs (the first such amount being called "Lessor's Cost") (period 1 being the period beginning on the first day of the Interim Term and ending on and including February 28, 1985, period 2 being the period beginning on March 1, 1985 and ending on and including August 31, 1985, and each succeeding period being the following semiannual period to and including period 50).
Column 1 Column 2 -------- -------- Purchase Price Applicable Amount -------------- ----------------- 1 $69,016,257 2 72,414,723 3 75,022,734 4 77,853,455 5 88,432,664 6 83,154,489 7 85,705,546 8 88,307,746 9 90,831,799 10 93,380,640 11 94,854,980 12 94,724,364 13 94,465,273 14 94,281,844 15 93,686,304 16 93,307,297 17 92,946,262 18 92,604,773 19 92,284,548 20 91,987,462 21 91,631,767 22 91,288,630 23 90,958,768
24 90,642,950 25 90,341,999 26 90,856,799 27 69,768,300 28 89,537,523 29 83,305,563 30 83,093,599 31 86,946,558 32 84,685,834 33 82,303,087 34 79,788,975 35 77,133,710 36 74,326,706 37 71,356,584 38 68,211,108 39 64,877,127 40 61,340,504 41 57,395,047 42 53,187,823 43 48,730,963 44 43,395,350 45 33,960,317 46 33,603,745 47 27,901,849 48 21,829,066 49 15,357,935 50 8,459,945
Upon a partial prepayment of the indebtedness secured by the Senior Permitted Mortgage referred to in paragraph 12(c), 14(b) or 15(e) of this Lease, the amounts set forth above shall be reduced by an amount equal to the amount of the reduction of the principal amount of such indebtedness scheduled to be outstanding during each purchase period, after giving effect to the revised amortization thereof resulting from such partial prepayment in accordance with the terms thereof. (In case such indebtedness is prepaid or other wise refinanced, the amounts so determined shall be reduced as if such indebtedness had remained outstanding.) IN WITNESS WHEREOF, the parties hereto have caused this Lease to be signed as of the date first above written. CLINTON STREET LIMITED PARTNERSHIP, as Lessor By: Liberty Street Limited Partnership - 84, A General Partner By: E. DAVISSON HARDMAN, JR. ------------------------------- E. Davisson Hardman, Jr., A General Partner THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, as Lessee By: MAX A. ROESLER ------------------------------- Max A. Roesler Vice President This document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 021l0 Schedule A Fort Wayne, Indiana Lincoln National Life Insurance comapny ("Harrison" site) PARCEL 1 (1-A-A) Lots Numbered 52, 53, and 54, together with the vacated alley lying west of and adjacent thereto, all being in Breckenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 38, page 170 in the Office of the Recorder of Allen County, Indiana. Together with an overhand walkway as described in Declaratory Resolution No. 1402-75 adopted August 14, 1975 and confirmed October 9, 1975 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 2 (1-A-A) Lots Numbered 84, 85, 86, 87, 88, and 89 together with the vacated alley lying West of and adjacent thereto, also together with the vacated alley lying North of and adjacent to said Lot Number 89, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plot thereof, recorded in Deed Record 75, page 465 in the Office of Recorder of Allen County, Indiana. PARCEL 3 (1-A-A) A parcel of land situated in the City of Fort Wayne, Allen County, Indiana bounded by a line commencing at the point where the North boundary line of Brackenridge Street in said City intersects the East boundary line of Harrison Street in said City and running thence East on the North boundary line of said Brackenridge Street, a distance of 231.5 feet, more or less, to the West boundary line of the alley running North from said Breckenridge Street to Douglas Avenue, between Harrison and Calhoun Streets; thence North, along the West boundary line of said alley, a distance of 131 feet, more or less, to the South boundary line of an alley running West to Harrison Street between Breckenbridge Street and Douglas Avenue; thence West on the South boundary line of the alley last above described, a distance of 231.5 feet, more or less to the East boundary line of said Harrison Street; thence South, on the East boundary line of said Harrison Street, a distance of 131 feet, more or less, to the point of beginning. PARCEL 4 (1-A-A) That part of the Northwest Quarter of the Northeast Quarter of Section 11, Township 0 North, Range 12 East, in the City of Fort Wayne, Allen County, Indiana, beginning at a point where the East line of Harrison Street intersects with and crosses the South Line of Douglas Avenue; thence running South along the East line of Harrison Street, a distance of 134 feet to an alley; thence East, along the alley a distance of 231.5 feet to an alley: thence North and parallel with said Harrison Street to the South line of Douglas Avenue; thence West along the South line of Douglas Avenue to the point of beginning. PARCEL 5 (1-A-A) The vacated alley lying between PARCEL 3 and PARCEL 4 1PARCEL 6 (1-A-B) The East 46 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana. PARCEL 7 (1-A-B) Part of the West 84 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana, being more particularly described as follows to wit: Beginning at the Northwest corner of said Lot 93; thence East, on and along the North line of said Lot 93, a distance of 84 feet; thence South, a distance of 60 feet to the South line of said Lot 91; thence Northwesterly, on the arc of a regular curve to the right having a radius of 172 feet, a distance of 105.34 feet to the point of beginning; PARCEL 8 (1-A-B) Lots 94, 95, 96, 97, 98, 99, 100 and 101, and all that part of Lot 103 South of the centerline of the brick wall along the South line of said Lot; Lots 104, 105, 106, 107 and the North 19.5 feet of Lot 103 all in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana; Together with an overhead walkway as described in Declaratory Resolution No. 1402-75 adopted August 14, 1975 and confirmed October 9, 1975 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 9 (1-A-B) Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 13 East, more particularly described as follows to-wit: Commencing at the intersection of the South line of Montgomery Street, now Douglas Avenue, in the City of Fort Wayne, with the East line of an alley next East of and parallel with Calhoun Street in said City; thence South on the East line of said Alley, 160.71 feet, more or less to the center of a vacated alley lying South of Montgomery Street, now Douglas Avenue, and extending from clinton Street west to the first alley east of Calhoun Street, said alley having been vacated by the Board of Public Works of the City of Fort Wayne, by Declaratory Resoulution No. 401, adopted April 22, 1920, and confirmed May 13, 1920, running thence East along the centerline of said vacated alley 70 feet to a point; thence North and parallel to the East line of the first alley east of Calhoun street 160.71 feet, more or less, to the South line of Montgomery Street, now Douglas Avenue in said City of Fort Wayne; thence West 70 feet to the place of beginning; (CONTINUED) -5- PARCEL 11 (1-A-B) (Continued) The tract of land in the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, described as follows to-wit: Commencing at the intersection of the south property line of Montgomery Street Now Douglas Street) and the West property line of Clinton Street, as said lines existed in 1925; thence West on said south property line of Montgomery Street (Now Douglas Street) one hundred and fifty nine (159) feet, more or less, to the east line of the tract conveyed to Chester J. Nathan and S. Louis Wolf by deed recorded in Deed Record 290, at page 210 of the Deed Records of Allen County, State of Indiana; thence South along said east property line one hundred sixty and 71/100 (160.71) feet to the centerline of the vacated fourteen (14) Foot alley between Montgomery (now Douglas) and Holman (now Brackenridge) Streets; thence east along said centerline of said vacated alley, one hundred and fifty nine (159) feet, more or less, to the west property line of Clinton Street as it existed in 1925; thence north along the said west property line of Clinton Street to the place of beginning. PARCEL 12 (1-A-B) The vacated alley lying East of and adjacent to Lots Numbered 91 to 101, inclusive, and Lots Numbered 103 to 107 inclusive, in Hamilton's Third Addition to the city of Fort Wayne, Allen County, Indiana, said alley having been vacated under Declaratory Resolution No. 1401-1975. PARCEL 13 (1-B-5) Lots Numbered 62, 63 and 64, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Plat Book 0, page 82, in the Office of the Recorder of Allen County, Indiana Together with an overhead walkway as described on Declaratory Resolution No. 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 14 (1-Z) Lot 7 and the East one-half of Lot B in Baker's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed record 31, page 20, in the Office of the Recorder of Allen County, Indiana. PARCEL 15 (3-J) Lots Numbered 4, 5 and 6, together with the South Half of the vacated alley lying North of and adjacent to said Lot 6, all being in Baker's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 31, page 20, in the Office of the Recorder of Allen County, Indiana. PARCEL 16 (3-J) Lots Numbered 55, 56, 57, 58, 59, 60 and 61, together with the North Half of the vacated alley lying South of and adjacent to said Lot 61, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Plat Book O, page 82, in the Office of the Recorder of Allen County, Indiana. Together with an overhead walkway as described in Declaratory Resolution No. 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 17 (3-L) The East Half of Lot Numbered 57 and all of Lots Numbered 58, 59, 60, and 61, and the vacated alley between said Lots Numbered 57 and 58, all in Hamilton's Second Addition to the City of Fort Wayne, in Allen County, Indiana, according to the plat thereof, recorded in Deed Record 31, page 176 in the Office of the Recorder of Allen County, Indiana, and the vacated Railroad Street under Declaratory Resolution No. 1251-1969 adjacent to said Lots. PARCEL 18 (3-L) Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, Fort Wayne, Allen County, Indiana, described as follows: Beginning at a point on the North line of vacated Railroad Street, 131.44 feet East of the East line of Calhoun Street; thence East along the North line of vacated Railroad Street, a distance of 237.56 feet to the West line of Clinton Street; thence South along the West line of Clinton Street, 144.65 feet; thence Westerly, at right angles to the last described course, 20.0 feet; thence Southerly, at right angles to the last described course, 10.5 feet (recorded as 12 feet) to the Northerly face of a concrete retaining wall; thence Westward along the North face of said retaining wall, following a curved course to the right to a point 133.03 feet East of the East line of Calhoun Street, measured along the North face of said retaining wall; thence North 128.4 feet to the point of beginning. PARCEL 19 (3-Q) The West 1/2 of Lot Numbered 8 in Baker's Addition to the City of Fort Wayne, Allen County, Indiana, according to the plat thereof, recorded in Deed Record 31, page 20 in the Office of the Recorder of Allen County, Indiana. PARCEL 20 (4-C) Lots Numbered 65 and 66 in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 28, page 93 in the Office of the Recorder of Allen County, Indiana. PARCEL 21 (4-D) That part of Lot 11 in Baker's Addition to the City of Fort Wayne, Allen County, Indiana, described as follows: Beginning at the Northwest corner of said Lot 11, thence East along the North end of said lot to the East side thereof; thence South along the East side of said lot to the South end thereof; thence in a straight line in a Northwesterly direction to the point of beginning. PARCEL 22 (4-D) Lots 9 and 10 Baker's Addition to the City of Fort Wayne. PARCEL 23 (3-S) Lots 62 and 63 in the continuation of Hamilton's Second Addition to the City of Fort Wayne, according to the plat thereof, recorded in Deed Record 31, page 176 in the records in the Office of the Recorder of Allan County, Indiana. PARCEL 24 The portion of that certain 10-foot North-South alley which is bounded on the West by Lot 62 of Brackenridge Addition to the City of Fort Wayne, by Lot 7 of Baker's Addition to the City of Fort Wayne, and which said alley is bounded on the East by Lots 55 through 61, inclusive, of Brackenridge Addition to the City of Fort Wayne, by Lots 4 through 6, inclusive, in Baker's Addition to the City of Fort Wayne (hereinafter referred to as North-South Alley): and The portion of that certain 10-foot East-West alley which is bounded on the North by Lots 62 through 66, inclusive, of Brackenridge Addition to the City of Fort Wayne, and which is bounded on the South by Lots 7 through 11, inclusive, of Baker's Addition to the City of Fort Wayne thereinafter referred to as East-West Alley). Property Location: Downtown Fort Wayne, Indiana ASSIGNMENT OF LEASE AND GUARANTY From CLINTON STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 ASSIGNMENT OF LEASES AND GUARANTY, dated as of August 1, 1984, (herein, together with all supplements and amendments hereto, called this Agreement), from CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (herein called Owner), having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, to CLINTON HOLDING CORPORATION, a Delaware corporation, herein, together with its respective successors and assigns, called Assignee) having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006. To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule A hereto (the Land Parcel) and in the improvements located (the Land Parcel, together with the improvements located thereon being collectively called the Schedule A Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $50,646,535, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $2,019,802 (herein, together with any notes issued in exchange or replacement thereof, called the Series A Owner's Note), (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $18,935,644 (herein, together with any notes issued in exchange or replacement therefor, called the Series B Owner's Note), (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $17,572,277 (herein, together with any notes issued in exchange or replacement thereof, called the Series C Note), (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $8,584,159 (herein, together with any notes issued in exchange or replacement therefor, called the Series D Owner's Note), and (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $3,534,653 (herein, together with any notes issued in exchange or replacement therefor, called the Series E Owner's Note; the Series E Owner's Note, together with the Series A Owner's Note, the Series B Owner's Note, the Series C Owner's Note and the Series D Owner's Note, are herein collectively called the Owner's Notes). To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule B hereto and in the improvements located thereon (the Schedule B Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $16,551,155, such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September 1, 1989, in the original principal amount of $660,066, (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $6,188,119, (iii) Series C 14.60% Secured Note Due September 1, 1999, in the original principal amount of $5,742,574, (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $2,805,280 and (v) Series E 15.00% Secured Note Due September 1, 1999 in the original principal amount of $1,155,116. To finance a portion of the cost to Owner of acquiring a fee interest in the parcel of land described in Schedule C hereto and in the improvements located (the Schedule C Property), Assignor, simultaneously with the execution and delivery hereof, is borrowing from Assignee the amount of $33,102,310 such borrowing being evidenced by its (i) Series A 13.90% Secured Note Due September l, 1989, in the original principal amount of $1,320,132, (ii) Series B 14.30% Secured Note Due September 1, 1994, in the original principal amount of $12,376,237, (iii) Series C 14.60% Secured Note Due September l, 1999, in the original principal amount of $11,485,149 (iv) Series D 14.70% Secured Note Due September 1, 1999 in the original principal amount of $5,610,561 and 2 (v) Series E 15.00% Secured Note Due September l, 1999 in the original principal amount of $2,310,231. The Secured Notes of the Owner relating to the Schedule B Property and Schedule C Property are collectively called the Other Owner's Notes, and the Schedule A Property together with the Schedule B Property and the Schedule C Property are collectively called the Properties and individually called a Property. The Owner's Notes and the Other Owner's Notes are secured by three separate Mortgages, each dated as of the date hereof (the Mortgage relating to the Schedule A Property called the Mortgage and all three Mortgages collectively called the Mortgages), from Owner, as mortgagor, to Assignee, as mortgagee, which each creates a lien on a Property. As additional security for the Owner's Notes and the Other Owner's Notes, Owner is entering into the undertakings herein set forth. The Schedule A Property has been leased by Owner to The Lincoln National Life Insurance Company (the Lessee) under a Lease and Agreement, dated as of the date hereof (herein, together with all supplements and amendments thereto, and any memorandum or short form thereof entered into for the purpose of recording, called the Lease), between Owner, as lessor, and the Lessee, as lessee. The obligations of the Lessee under the Lease and hereunder has been guaranteed by Lincoln National Corporation (the Guarantor) pursuant to a Guaranty dated as of the date hereof (the Guaranty). In order to induce Assignee to purchase the Owner's Notes and the Other Owner's Notes and accept the Mortgages, Owner is entering into the undertakings herein set forth with Assignee and is assigning the Lease and the Guaranty to Assignee. 3 NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, Owner agrees as follows: 1. Owner, in furtherance of the covenants of the Mortgages and as security for the payment of the principal of, premium, if any, and interest and all other sums payable on the Owner's Notes and the Other Owner's Notes, and of all other sums payable under the Mortgages, and the performance and observance of the provisions thereof, has assigned, transferred, conveyed and set over, and by these presents does assign, transfer, convey and set over to Assignee, all of Owner's estate, right, title and interest in, to and under the Lease, and the Guaranty together with all rights, powers, privileges, options and other benefits of Owner as lessor under the Lease and as beneficiary under the Guaranty including, but not by way of limitation, (i) the immediate and continuing right to receive and collect all rents, income, revenues, issues, profits, insurance proceeds, condemnation awards, moneys and security payable or receivable under the Lease or the Guaranty pursuant to any of the provisions of either thereof, whether as rents or as the purchase price of the Schedule A Property or otherwise (except sums payable directly to any person other than the lessor under the Lease), (ii) the right to accept any offer by Lessee to purchase the Schedule A Property, or part thereof, or any award payable in connection with a taking thereof (provided that such acceptance shall be permitted by the terms of Section 3.1(a) of the Mortgages), (iii) the right and power (which right and power are coupled with an interest) to execute and deliver, as agent and attorney-in-fact of Owner, an appropriate deed or other instrument necessary to convey the Schedule A Property, any part thereof or any award payable in connection with a taking thereof to Lessee if Lessee becomes obligated to purchase the Schedule A 4 Property, any part thereof or any award payable in connecticn with a taking thereof, (iv) the right to perform all other necessary or appropriate acts as said agent and attorney-in-fact with respect to any purchase and conveyance referred to in clause (iii) above, (v) the right to make all waivers and agreements, (vi) the right to give all notices, consents and releases, (vii) the right to take any legal action upon the happening of a default under the Lease or the Guaranty including the commencement, conduct and consummation of proceedings at law or in equity as shall be permitted under any provision of the Lease or the Guaranty or by law or in equity and (viii) the right to do any and all other things whatsoever which Owner or any lessor is or may be entitled to do under the Lease or the Guaranty. 2. The assignment made hereby is executed as collateral security, and the execution and delivery hereof shall not in any way impair or diminish the obligations of Owner under the provisions of the Lease nor shall any of the obligations contained in the Lease be imposed upon Assignee. Upon a release of the Schedule A Property or part thereof from the lien of the Mortgage, pursuant to the provisions of the Mortgage, said assignment, and all rights herein assigned to Assignee shall cease and terminate and all the estate, right, title and interest of Owner in and to the above-described assigned property shall revert to Owner, and Assignee shall, at the request of Owner, deliver to Owner an instrument in recordable form cancelling this Agreement and reassigning to Owner the above-described assigned property. Upon the payment of the principal of and premium, if any, and all accrued interest on the Owner's Notes and the Other Owner's Notes and of all other sums payable under the Mortgages, or upon a release of all of the Property from the lien of the Mortgage pursuant to the provisions of the Mortgage, said assignment and all rights herein assigned to Assignee shall cease and 5 terminate and all the estate, right, title and interest of Owner in and to the above-described assigned property shall revert to Owner, and Assignee shall, at the request of Owner, deliver to Owner an instrument in recordable form cancelling this Agreement and reassigning to Owner the above-described assigned property. 3. Owner hereby designates Assignee to receive all payments of Basic Rent, purchase prices and other sums payable to the lessor under the Lease and all payments receivable by Owner under the Guaranty and to receive duplicate original copies of all notices, undertakings, demands, statements, documents and other communications which the Guarantor is required or permitted to give, make, deliver to or serve upon assignor under the Guaranty and which the Lessee is required or permitted to give, make, deliver to or serve upon the lessor under the Lease. Owner hereby directs the Lessee to deliver to Assignee, at its address set forth above or at such other address as Assignee shall designate, duplicate original copies of all such notices, undertakings, demands, statements, documents and other communications and no delivery thereof by the Lessee shall be of any force or effect unless made to Owner and also made to Assignee as herein provided. 4. Owner represents to Assignee that Owner has not executed any other assignment of the subject matter of this Assignment other than the Mortgage and that the Lease is in full effect and are not in default. 5. Owner agrees that said assignment and the designation and direction to the Lessee hereinabove set forth are irrevocable, and that it will not take any action as lessor under the Lease or as the beneficiary under the Guaranty which is inconsistent with said assignment, or make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. 6 Owner will, from time to time upon the request of Assignee execute all instruments of further assurance and all such supplemental instruments with respect to this Agreement as the Assignee may specify. 6. Owner hereby agrees, and hereby undertakes to obtain the agreements of the Lessee to the following matters: (a) The Lessee consents to the provisions of this Agreement, and agrees to pay and deliver to Assignee all rentals and other sums assigned to Assignee pursuant to this Agreement, without offset, deduction, defense, deferment, abatement or diminution, subject to the provisions of the Lease and will not, for any reason whatsoever, seek to recover from Assignee any moneys duly owed and paid to the Assignee by virtue of this Agreement. The Lessee agrees (i) that all sums payable to Assignee pursuant to the preceding sentence shall be paid in such manner that Assignee shall have "collected funds" on each date on which such sums are due and payable, and addressed to Assignee at its address set forth above or to such other address or manner as may be specified by Assignee by written notice to the Lessee and (ii) to deliver to Assignee duplicate original copies of all notices and other instruments which each may deliver pursuant to the Lease. No such payment or delivery made by a Lessee shall be of any force or effect (i) unless paid to Assignee or delivered to Assignee and Owner as provided above and (ii) until actually received by the Assignee. (b) Owner and the Lessee will not enter into any agreement subordinating, amending, modifying or terminating (except as provided in the Lease) the Lease without the consent thereto in writing of Assignee and any such attempted subordination, amendment, modification or termination without such consent shall be void. In the event that the Lease shall be amended as herein permitted, the Lease as so amended shall continue to be subject to the 7 provisions of this Agreement without the necessity of any further act by any of the parties hereto. The Lessee will remain obligated under the Lease in accordance with its terms, and will not take any action to terminate (except as expressly permitted by the Lease), rescind or avoid the Lease, notwithstanding any action with respect to the Lease which may be taken by an assignee or receiver of Owner or of any such assignee or by any court in any such proceeding. (c) If, pursuant to the Lease, Lessee shall offer to purchase the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof), notice of acceptance of any such offer shall be deemed validly given for all purposes if given by Assignee as permitted by paragraph l(ii) hereof and notice by Owner of rejection of any such offer shall be void unless accompanied by the written consent of Assignee and no such offer shall be deemed rejected by Owner without the written consent of Assignee. If Lessee shall become obligated to purchase the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof) pursuant to any provision of the Lease, Lessee will accept a deed and other instruments conveying and transferring the Schedule A Property (or any part thereof) which are executed and delivered by Assignee as being in compliance with the provisions of the Lease, provided that said deed and other instruments shall otherwise be in compliance with the provisions of the Lease. If it should become necessary for Assignee or any other party to institute any foreclosure or other judicial proceeding in order that title to the Schedule A Property (or any part thereof or any award payable in connection with a taking thereof) may be conveyed to Lessee, the time within which delivery of the deed or other instruments relating to such conveyance may be made shall be extended to the extent necessary to permit Assignee or such other party to institute and 8 conclude such foreclosure or other judicial proceeding, and the Lease shall not terminate, but shall continue in full effect until the expiration of such period of extension. 7. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Agreement may be executed in two or more counterparts and shall be deemed to have become effective when and only when one or more of such counterparts shall have been signed by or on behalf of each of the parties hereto, although it shall not be necessary that any single counterpart be signed by or on behalf of each of the parties hereto, and all such counterparts shall be deemed to constitute but one and the same instrument. This Agreement shall be governed by the laws of the State of Indiana. 8. The following are Schedules A, Schedule B and Schedule C referred to in this Agreement. 9 IN WITNESS WHEREOF, Owner has caused this Agreement to be executed and delivered as of the date first above written. CLINTON STREET LIMITED PARTNERSHIP By: Liberty Street Limited Partnership-84, General Partner, Witness: By: E. DAVISSON HARDMAN, -------------------------- E. Davisson Hardman, a General Partner 10 THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY (SEAL) Attest: By: MAX A. ROESLER ----------------------- NAME: Max A. Roesler TITLE: Vice President By: PATRICIA A. ADAMS -------------------------- NAME: Patricia A. Adams TITLE: Assistant Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Assignment of Lease and Guaranty and hereby accepts and agrees to each of the provisions set forth in paragraph 6 thereof. LINCOLN NATIONAL CORPORATION (SEAL) Attest: By: MAX A. ROESLER ----------------------- NAME: Max A. Roesler TITLE: Vice President By: PATRICIA A. ADAMS -------------------------- NAME: Patricia A. Adams TITLE: Assistant Secretary This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this ___ day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. CAROL ANN JOHNSTON --------------------------------- Carol Ann Johnston, Notary Public (SEAL) My Commission Expires: CAROL A. JOHNSTON Notary Public Resident of Allen County, Indiana My Commission Expires May 15, 1988 - ------------------------------------ COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN ----------------- Printed JOAN E. HOGAN ----------------- NOTARY PUBLIC My commission expires: 10-31-86 - --------------------- 84-021067 Property Location: Downtown Fort Wayne, Indiana ASSIGNMENT OF LEASE AND GUARANTY From CLINTON STREET LIMITED PARTNERSHIP To CLINTON HOLDING CORPORATION Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 Thomas H. Trimarco THREE RIVERS TITLE COMPANY, INC. 1984 AUG 29 PM 4:39 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG 84-021069 Property Location: Downtown Fort Wayne, Indiana REASSIGNMENT OF LEASE AND GUARANTY From CLINTON HOLDING CORPORATION To THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION and F. W. KAWAM, as Trustees Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 Thomas H. Trimarco, Esq. THREE RIVERS TITLE COMPANY, INC. 1984 AUG 29 PM 4:43 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG Property Location: Downtown Fort Wayne, Indiana REASSIGNMENT OF LEASE AND GUARANTY From CLINTON HOLDING CORPORATION To THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION and F. W. KAWAM, as Trustees Dated as of August 1, 1984 This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 REASSIGNMENT OF LEASE AND GUARANTY, dated as of August l, 1984, from CLINTON HOLDING CORPORATION, a Delaware corporation (herein, together with its successors and assigns, called the Company) having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006, to THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, and F. W. KAWAM, both having an address at One Constitution Plaza, Hartford, Connecticut 06115, as trustees (the Trustees) under the Collateral Trust Indenture (the Indenture), dated as of August 1, 1984, from the Company, as grantor, to the Trustees, as trustees (the Trustees, together with their successors and assigns, are herein called the Assignee). PRELIMINARY STATEMENT CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership (Owner), has entered into a Lease and Agreement, dated as of August l, 1984 (herein, together with all amendments and supplements thereto and any short form thereof entered into for purposes of recording, called the Lease), with The Lincoln National Life Insurance Company, an Indiana corporation, as lessee (Lessee). The obligations of Lessee under the Lease has been guaranteed by Lincoln National Corporation (Guarantor) pursuant to a guaranty, dated as of August l, 1984, from Guarantor to Owner (the Guaranty). The premises leased pursuant to the Lease consist of the land parcel described in Schedule A hereto (the Land Parcel), all buildings and other improvements located thereon, and all easements, rights and appurtenances relating respectively thereto (collectively, the Property). All right, title and interest of Owner in and to the Lease and the Guaranty have been assigned to the Company pursuant to (i) the mortgage, dated as of the date hereof, relating to the Property (the Mortgage), from Owner, as mortgagor, to the Company, as mortgagee, and (ii) an Assignment of Lease and Guaranty, dated as of the date hereof, relating to the Lease and the Guaranty (herein, together with all supplements and amendments thereto, collectively called the Assignment), from Owner, as assignor, to the Company, as assignee, as security for the (i) Series A 13.90% Secured Notes Due September 1, 1989, in the original principal amount of $4,000,000, (ii) Series B 14.30% Secured Notes Due September 1, 1994, in the original principal amount of $37,500,000, (iii) Series C 14.60% Secured Notes Due September 1, 1999, in the original principal amount of $34,800,000, (iv) Series D 14.70% Secured Notes Due September 1, 1999, in the original principal amount of $17,000,000, and (v) Series E 15.00% Secured Notes Due September 1, 1999, in the original principal amount of $7,000,000 of Owner. NOW, THEREFORE, in consideration of the premises and the sum of One Dollar ($1) and other valuable consideration, receipt whereof is hereby acknowledged, and in order to secure (i) the due and punctual payment of the Series A 13.90% Collateral Trust Notes Due September 1, 1999, the Series B 14.30% Collateral Trust Notes Due September 1, 1994, the Series C 14.60% Collateral Trust Notes Due September 1, 1999, the Series D 14.70% Collateral Trust Notes Due September 1, 1999 and the Series E 15.00% Collateral Trust Notes Due September 1, 1999 of the Company, issued by the Company under and secured by the Indenture and (ii) the performance of the Company's obligations under the Indenture, the Company has assigned, transferred, conveyed and set over, and by these presents does hereby assign, transfer, convey and set over, to the Assignee, all of its rights, title and interest in and to the Lease, the Guaranty and the Assignment; all without recourse to the Company. The following is the Schedule A referred to in this Reassignment of Lease and Guaranty, which Schedule is hereby incorporated by reference herein. IN WITNESS WHEREOF, the Company has caused this Reassignment of Lease and Guaranty to be executed and its corporate seal to be hereunto affixed and attested by its officers thereunto duly authorized, as of the date first above written. CLINTON HOLDING CORPORATION By: E. DAVISSON HARDMAN JR. ------------------------ Name: Title: (Seal) Attest: By: ALEXANDER J. JORDAN JR. -------------------------- Name: Title: THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the foregoing Reassignment of Lease and Guaranty. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: MAX A. ROESLER ------------------------ Name: Max A. Roesler Title: Vice President (Seal) Attest: By: PATRICIA A. ADAMS -------------------------- Name: Patricia A. Adams Title: Assistant Secretary LINCOLN NATIONAL CORPORATION, hereby consents to the foregoing Reassignment of Lease and Guaranty. LINCOLN NATIONAL CORPORATION By: MAX A. ROESLER ------------------------- Name: Max A. Roesler Title: Vice President (SEAL) Attest: By: PATRICIA A. ADAMS ------------------------ Name: Patricia A. Adams Title: Assistant Secretary This Document prepared by: Csaplar & Bok One Winthrop Square Boston, Massachusetts 02110 STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this _______ day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of THE LINCOLN NATIONAL LIFE INSURANCE COMPANY a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. CAROL ANN JOHNSTON --------------------------------- Carol Ann Johnston, Notary Public (SEAL) My Commission Expires: CAROL A. JOHNSTON Notary Public Resident of Allen County, Indiana My Commission Expires May 15, 1988 - ----------------------------------- STATE OF INDIANA ) ) ss: COUNTY OF ALLEN ) Before me, Carol Ann Johnston, a Notary Public, this _______ day of August, A.D., 1984, personally appeared Max A. Roesler and Patricia A. Adams, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. CAROL ANN JOHNSTON --------------------------------- Carol Ann Johnston, Notary Public (SEAL) My Commission Expires: CAROL A. JOHNSTON, Notary Public Resident of Allen County, Indiana My Commission Expires May 15, l988 - ----------------------------------- COMMONWEALTH OF MASSACHUSETTS) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan Jr., the President and Secretary, respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 28th day of August, 1984. Signature JOAN E. HOGAN --------------------- Printed Joan E. Hogan --------------------- NOTARY PUBLIC My commission expires: 10-31-86 - --------------------- Schedule A Fort Wayne, Indiana Lincoln National Life Insurance Company ("Harrison" site) PARCEL 1 (1-A-A) Lots Numbered 52, 53, and 54, together with the vacated alley lying west of and adjacent hereto, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 18, page 170 in the Office of the Recorder of Allen County, Indiana. Together with an overhead walkway as described in Declaratory Resolution No. 1402-75 adopted August 14, 1975 and confirmed October 9, 1975 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 2 (1-A-A) Lots Numbered 84, 85, 86, 87, 88, and 89 together with the vacated alley lying West of and adjacent thereto, also together with the vacated alley lying North of and adjacent to said Lot Number 89, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 75, page 465 in the Office of the Recorder of Allen County, Indiana. PARCEL 3 (1-A-A) A parcel of land situated in the City of Fort Wayne, Allen County, Indiana bounded by a line commencing at the point where the North boundary line of Brackenridge Street in said City interests the East boundary line of Harrison Street in said City and running thence East on the North boundary line of said Brackenridge Street, a distance of 231.5 feet, more or less, to the West boundary line of the alley running North from said Brackenridge Street to Douglas Avenue, between Harrison and Calhoun Streets; thence North, along the West boundary line of said alley, a distance of 131 feet, more or less, to the South boundary line of an alley running West to Harrison Street between Brackenridge Street and Douglas Avenue; thence West on the South boundary line of the alley last above described, a distance of 231.5 feet, more or less to the East boundary line of said Harrison Street; thence South, on the East boundary line of said Harrison Street, a distance of 131 feet, more or less, to the point of beginning. PARCEL 4 (1-A-A) That part of the Northwest Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, Allen County, Indiana, beginning at a point where the East line of Harrison Street intersects with and crosses the South line of Douglas Avenue; thence running South along the East line of Harrison Street, a distance of 134 feet to an alley; thence East, along the alley a distance of 231.5 feet to an alley; thence North and parallel with said Harrison Street to the South line of Douglas Avenue; thence West along the South line of Douglas Avenue to the point of beginning. PARCEL 5 (1-A-A) The vacated alley lying between PARCEL 3 and PARCEL 4 PARCEL 6 (1-A-B) The East 46 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana. PARCEL 7 (1-A-B) Part of the West 84 feet of Lots 91, 92 and 93 in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana, being more particularly described as follows to-wit: Beginning at the Northwest corner of said Lot 93; thence East, on and along the North line of said Lot 93, a distance of 84 feet; thence South, a distance of 60 feet to the South line of said Lot 91; thence Northwesterly, on the arc of a regular curve to the right having a radius of 172 feet, a distance of 105.34 feet to the point of beginning; PARCEL 8 (1-A-B) Lots 94, 95, 96, 97, 98, 99, 100 and 101, and all that part of Lot 103 South of the centerline of the brick wall along the South line of said Lot; Lots 104, 105, 106, 107 and the North 19.5 feet of Lot 103 all in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana; Together with an overhead walkway as described in Declaratory Resolution No. 1402-75 adopted August 14, 1975 and confirmed October 9, 1975 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 9 (1-A-B) Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 13 East, more particularly described as follows to-wit: Commencing at the intersection of the South line of Montgomery Street, now Douglas Avenue, in the City of Fort Wayne, with the East line of an alley next East of and parallel with Calhoun Street in said City; thence South on the East line of said Alley, 160.71 feet, more or less to the center of a vacated alley lying South of Montgomery Street, now Douglas Avenue, and extending from Clinton Street West to the first alley east of Calhoun Street, said alley having been vacated by the Board of Public Works of the City of Fort Wayne, by Declaratory Resolution No. 401, adopted April 22, 1920, and confirmed May 13, 1930 running thence East along the centerline of said vacated alley 70 feet to a point; thence North and parallel to the East line of the first alley east of Calhoun Street 160.71 feet, more or less, to the South line of Montgomery Street, now Douglas Avenue in said City of Fort Wayne; thence West 70 feet to the place of beginning; (CONTINUED) PARCEL 11 (1-A-B) (Continued) The tract of land in the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, in the City of Fort Wayne, described as follows to-wit: Commencing at the intersection of the south property line of Montgomery Street (Now Douglas Street) and the West property line of Clinton Street, as said lines existed in 1925; thence West on said south property line of Montgomery Street (Now Douglas Street) one hundred and fifty nine (159) feet, more or less to the east line of the tract conveyed to Chester J. Nathan and S. Louis Wolf by deed recorded in Deed Record 290, at page 210 of the Deed Records of Allen County, State of Indiana; thence South along said east property line one hundred sixty and 71/100 (160.71) feet to the centerline of the vacated fourteen (14) Foot alley between Montgomery (now Douglas) and Holman (now Brackenridge Streets; thence east along said centerline of said vacated alley, one hundred and fifty nine (159) feet, more or less, to the west property line of Clinton Street as it existed in 1925; thence north along the said west property line of Clinton Street to the place of beginning. PARCEL 12 (1-A-B) The vacated alley lying East of and adjacent to Lots Numbered 91 to 101, inclusive, and Lots Numbered 103 to 107 inclusive, in Hamilton's Third Addition to the City of Fort Wayne, Allen County, Indiana, said alley having been vacated under Declaratory Resolution No. 1401-1975. PARCEL 13 (1-B-5) Lots Numbered 62, 63 and 64, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Plat Book 0, page 82, in the Office of the Recorder of Allen County, Indiana. Together with an overhead walkway as described on Declaratory Resolution No. 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 14 (1-Z) Lot 7 and the East one-half of Lot a in Baker's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 31, page 20, in the Office of the Recorder of Allen County, Indiana. PARCEL 15 (3-J) Lots Numbered 4, 5 and 6, together with the South Half of the vacated alley lying North of and adjacent to said Lot 6, all being in Baker's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 31, page 20, in the Office of the Recorder of Allen County, Indiana. PARCEL 16 (3-J) Lots Numbered 55, 56, 57, 58, 59, 60 and 61, together with the North Half of the vacated alley lying South of and adjacent to said Lot 61, all being in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Plat Book O, page 82, in the Office of the Recorder of Allen County, Indiana. Together with an overhead walkway as described in Declaratory Resolution No. 1423-76 adopted June 7, 1976 and confirmed July 29, 1976 by the Board of Public Works of the City of Fort Wayne, Indiana. PARCEL 17 (3-L) The East Half of Lot Numbered 57 and all of Lots Numbered 58, 59, 60, and 61, and the vacated alley between said Lots Numbered 57 and 58, all in Hamilton's Second Addition to the City of Fort Wayne, in Allen County, Indiana, according to the plat thereof, recorded in Deed Record 31, page 176 in the Office of the Recorder of Allen County, Indiana, and the vacated Railroad Street under Declaratory Resolution No. 1251-1969 adjacent to said Lots. PARCEL 18 (3-L) Part of the Northeast Quarter of the Northeast Quarter of Section 11, Township 30 North, Range 12 East, Fort Wayne, Allen County, Indiana, described as follows: Beginning at a point on the North line of vacated Railroad Street, 131.44 feet East of the East line of Calhoun Street; thence East along the North line of vacated Railroad Street, a distance of 237.56 feet to the West line of Clinton Street; thence South along the West line of Clinton Street, 144.65 feet; thence Westerly, at right angles to the last described course, 20.0 feet; thence Southerly, at right angles to the last described course, 10.5 feet (recorded as 12 feet) to the Northerly face of a concrete retaining wall; thence Westward along the North face of said retaining wall, following a curved course to the right to a point 133.03 feet East of the East line of Calhoun Street, measured along the North face of said retaining wall; thence North 128.4 feet to the point of beginning. PARCEL 19 (3-Q) The West 1/2 of Lot Numbered 8 in Baker's Addition to the City of Fort Wayne, Allen County, Indiana, according to the plat thereof, recorded in Deed Record 31, page 20 in the Office of the Recorder of Allen County, Indiana. PARCEL 20 (4-C) Lots Numbered 65 and 66 in Brackenridge's Addition to the City of Fort Wayne, Indiana, according to the plat thereof, recorded in Deed Record 28, page 93 in the Office of the Recorder of Allen County, Indiana. PARCEL 21 (4-D) That part of Lot 11 in Baker's Addition to the City of Fort Wayne, Allen County, Indiana, described as follows: Beginning at the Northwest corner of said Lot 11; thence East along the North end of said lot to the East side thereof; thence South along the East side of said lot to the South end thereof; thence in a straight line in a Northwesterly direction to the point of beginning. PARCEL 22 (4-D) Lots 9 and 10 Baker's Addition to the City of Fort Wayne. PARCEL 23 (3-S) Lots 62 and 63 in the continuation of Hamilton's Second Addition to the City of Fort Wayne, according to the plat thereof, recorded in Deed Record 31, page 176 in the records in the Office of the Recorder of Allen County, Indiana. PARCEL 24 The portion of that certain 10-foot North-South alley which is bounded on the West by Lot 62 of Brackenridge Addition to the City of Fort Wayne, by Lot 7 of Baker's Addition to the City of Fort Wayne, and which said alley is bounded on the East by Lots 55 through 61, inclusive, of Brackenridge Addition to the City of Fort Wayne, by Lots 4 through 6, inclusive, in Baker's Addition to the City of Fort Wayne (hereinafter referred to as North-South Alley); and The portion of that certain 10-foot East-West alley which is bounded on the North by Lots 62 through 66, inclusive, of Brackenridge Addition to the City of Fort Wayne, and which is bounded on the South by Lots 7 through 11, inclusive, of Baker's Addition to the City of Fort Wayne (hereinafter referred to as East-West Alley). Re: Assignment of Lease and Guaranty Second Assignment of Lease and Guaranty ("Harrison" site) 85-034293 CORRECTION AGREEMENT THIS AGREEMENT, made this 7th day of November, 1985, by and between: CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006; and CLINTON HOLDING CORPORATION, a Delaware corporation, having an address c/o Dean Witter Realty Inc., 130 Liberty Street, New York, New York 10006; WITNESSETH: WHEREAS, the parties to this agreement are parties to one or more instruments, all dated as of August 1, 1984, relating to the leasing by The Lincoln National Life Insurance Company of a certain parcel of land located in Allen County, Indiana, commonly known as the Harrison" site, which aforementioned instruments were recorded on August 29, 1984, (unless otherwise noted below) in the Office of the Recorder of Allen County, Indiana, and which instruments are as follows: 1. Assignment of Lease and Guaranty Recorded as Instrument No. 84-021067 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: The Lincoln National Life Insurance Company and Lincoln National Corporation 2. Second Assignment of Lease and Guaranty Recorded as Instrument No. 84-021071 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: The Lincoln National Life Insurance Company and Lincoln National Corporation THREE RIVERS TITLE COMPANY, INC. 1985 NOV 19 PM 1:43 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG -2- WHEREAS, the aforesaid instruments, in addition to the legal description of the Harrison site make reference by Schedule B and C, respectively, in connection with certain financings, to land located in Fort Wayne, Indiana, commonly known as the "Lincoln West" site, and to land located in Indianapolis, Indiana, and WHEREAS, the legal description of the "Lincoln West" site which is set forth in Schedule B to each of the foregoing instruments has been determined to be incomplete and, therefore, incorrect, and WHEREAS, it is the mutual desire of the parties hereto that the foregoing instruments be corrected by having appended to each instrument a complete and correct Schedule B legal description, and that such instruments be corrected of record. NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid by each of the parties hereto to each of the other parties hereto, and other valuable considerations each to the other in hand paid, the receipt and sufficiency of which are hereby acknowledged, the parties do mutually covenant and agree: 1. That Schedule B to this agreement be and it hereby is substituted for Schedule B to all of the foregoing instruments. 2. That all other terms, conditions, and covenants of the aforesaid instruments are and shall remain in full force and effect except as hereby corrected. 3. That this agreement may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and all such counterparts shall together -3- constitute but one and the same agreement. 4. That the parties hereto are authorized and directed to attach this Correction Agreement to each of the aforesaid instruments, as a part and portion thereof, and to record same among the public records in the Office of the Recorder of Allen County, Indiana, and elsewhere as they shall deem appropriate. This Agreement shall bind and shall inure to the benefit of the respective heirs, successors and assigns of the parties hereto. IN WITNESS WHEREOF, the parties have caused this instrument to be executed as of the day and year first above written. CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ------------------------------ Name: E. Davisson Hardman, Jr. Title: President (SEAL) Attest: BY: ALEXANDER J. JORDAN, JR. ------------------------------- Name: Alexander J. Jordan, Jr. Title: Assistant Secretary CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. ---------------------------------- E. Davisson Hardman, Jr. A General Partner -4- THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the foregoing Correction Agreement. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY BY: MAX A. ROESLER ----------------------------- Name: Max A. Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE -------------------------------- Name: Dolores Prange Title: Assistant Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Correction Agreement. LINCOLN NATIONAL CORPORATION BY: MAX A. ROESLER ----------------------------- Name: Max A. Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE -------------------------------- Name: Dolores Prange Title: Assistant Secretary -5- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr. and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO --------------------------- Printed DOLORES M. ANTONINO --------------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - ------------------------- -6- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO --------------------------- Printed DOLORES M. ANTONINO --------------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - ------------------------ -7- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max A. Roesler and Dolores Prange, the Vice President and Assistant Secretary, respectively of THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, who acknowledged execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - --------------------------- Resident of DeKalb County, Indiana STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max A. Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. Donald F. Butler ------------------------------- Donald F. Butler NOTARY PUBLIC (SEAL) My Commission Expires: May 25, 1987 - --------------------------- Resident of DeKalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. SCHEDULE A PARCEL 1 Fort Wayne, Indiana Lincoln National Pension Insurance Company ("Lincoln West" site) A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, together with a part of the Northeast Quarter of Section 12, Township 30 North, Range 11 East, Allen County, Indiana, both said parts being more particularly described as follows, to wit: Commencing at the Northwest corner of said Section 7; thence N 89 degrees-56'-27" E, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence S 00 degrees-03'-33" E, by deed, a distance of 145.0 feet to the true point of beginning, located on the South right-of-way line of State Road #14 (Illinois Road); thence S 00 degrees-03'-33" E, a distance of 355.0 feet; thence N 89 degrees-56'-27" E, a distance of 441.41 feet; thence S 25 degrees-06'-36" W, a distance of 147.78 feet; thence S 13 degrees-27'-48" W, a distance of 97.28 feet; thence S 28 degrees-49'-50" E, a distance of 89.15 feet; thence S 23 degrees-07'-55" E, a distance of 116.43 feet; thence S 67 degrees-37'-33" E, a distance of 175.26 feet; thence S 24 degrees-31'-40" E, a distance of 294.38 feet; thence S 17 degrees-47'-02" E, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence S 02 degrees-04'-49" E, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence N 89 degrees-56'-19" E, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot-wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence S 00 degrees-03'-32" E, on and along the West line of said easement, a distance of 275.0 feet; thence S 66 degrees-10'-20" W, a distance of 1122.16 feet; thence S 89 degrees-56'-27" W, a distance of 765.0 feet; thence S 18 degrees-39'-00" W, a distance of 484.96 feet to an existing line fence; thence S 88 degrees-03'-10" W, a distance of 345.54 feet to the Easterly right-of-way line of Interstate Highway #69; thence Northeasterly, on and along said Easterly right-of-way line on the following courses and distances: Northeasterly, on and along the arc of a regular curve to the left having a radius of 4046.53 feet, and being situated 140.0 feet (measured radially) Southeasterly of and concentric to the centerline of I-69, an arc distance of 12.83 feet (the chord of which bears N 30 degrees-21'-38" E, for a length of 12.83 feet); thence N 21 degrees-50'-12" E, a distance of 414.04 feet to a point situated 100.0 feet (measured radially), Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the left having a radius of 4006.53 feet, and being situated 100.0 feet (measured radially) Southeasterly of and concentric to said I-69 centerline, an arc distance of 410.24 feet (the chord of which bears N 21 degrees-30'-24" E, for a length of 410.06 feet); thence N 23 degrees-24'-07" E, a distance of 103.17 feet to a point situated 110.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 18 degrees-36'-20" E, a distance of 307.75 feet to a point situated 130.0 feet (measured radially) Southeasterly of said I-69 centerline; thence N 14 degrees-46'-15" E, a distance of 173.94 feet to a point situated 140.0 feet (measured radially) Southeasterly of said I-69 centerline; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 884.93 feet and being situated 70.0 feet (measured radially) Southeasterly of an concentric to Line "S-E-C" as said "S-E-C" is defined by the Southeasterly edge of pavement of an existing 18 foot-wide concrete ramp, an arc distance of 327.39 feet (the chord of which bears N 26 degrees-38'-02" E, (for a length of 325.53 feet); thence N 35 degrees-55'-21" E, a distance of 804.13 feet to a point situated 50.0 feet (measured at right angles) Southeasterly of said line "S-E-C"; thence Northeasterly, on and along the arc of a regular curve to the right having a radius of 666.20 feet and being situated 50.0 feet (measured radially) Southeasterly of and concentric to said line "S-E-C", an arc distance of 355.97 feet (the chord of which bears N 52 degrees-07'-50" E, for a length of 351.75 feet) to the true point of beginning. PARCEL 2 An easement for the purpose of ingress and egress and utilities for the benefit of Parcel 1 created in a deed recorded November 7, 1968 in Deed Record 716, pages 150-152 and modified by Agreements recorded as Document Numbers 70-9781 and 80-16836 over the following real estate. A strip of land 60 feet in width lying 30 feet on either side of the line described as follows: Beginning at the North Quarter Corner of said Section 7, running thence South 89 degrees 56' 27" West along the North line of Section 7, 549.00 feet; thence South 00 degrees 08' 33" East 167.5 feet more or less to the South Right-of-Way line of Frontage Road No. 1, the true point of beginning of this description; thence continuing South 00 degrees 08' 33" East 185.48 feet; thence on a tangent curve to the right having a central angle of 25 degrees and a length of 250.00 feet; thence South 24 degrees 38' 27" West 46.88 feet; thence on a tangent curve to the left having a central angle of 24 degrees 41' 59" and a length of 247.00 feet; thence South 00 degrees 03' 32" East 1500.00 feet more or less to the North line of the South Half of the South Half of the Southeast Quarter of the Northwest Quarter of Section 7, Township 30' North, Range 12 East, the South line of Inverness Investors, Inc. Property. PARCEL 3 An easement for the purpose of ingress and egress for the benefit of Parcel 1 created in an Easement recorded November 7, 1968 in Deed Record 716, pages 153-157 and modified by Agreement recorded as Document Numbers 70-9781 and 80-16836 over the following described real estate. Part of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, in Allen County, Indiana, more particularly described as follows, to wit: Beginning at the Northeast corner of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, on the center line of Getz Road; thence West along the North line of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7, a distance of 1323.13 feet to a stone marking the Northwest corner of the South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of said Section 7; thence South along the West line of the East Half of the said fractional Northwest Quarter of Section 7, a distance of 50.00 feet; thence East and parallel to the North line of said South Half of the South Half of the Southeast Quarter of the fractional Northwest Quarter of Section 7, a distance of 1323.13 feet to a point, on the center line of Getz Road, 50 feet South of the place of beginning, thence North on the center line of the Getz Road a distance of 50.0 feet to the place of beginning; and for the installation and perpetual maintenance of sewer and water line within the Northern Half of the above described real estate. Re: Assignment of Lease and Guaranty Second Assignment of Lease and Guaranty ("Harrison") sit 85-034353 PARTIAL RELEASE In consideration of the sum of Ten Dollars ($10.00) and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, as parties to one or more of the following-described instruments, to-wit: 1. Assignment of Lease and Guaranty Recorded as Instrument No. 84-021067 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: The Lincoln National Life Insurance Company and Lincoln National Corporation 2. Second Assignment of Lease and Guaranty Recorded as Instrument No. 84-021071 From: Clinton Street Limited Partnership, as "Owner" To: Clinton Holding Corporation, as "Assignee" Consented to by: The Lincoln National Life Insurance Company and Lincoln National Corporation hereby release and discharge the real estate more particularly bounded and described in Exhibit A hereto from the incumbrance and effect of the above-described instruments, which instruments were corrected by that certain Correction Agreement by and among the parties hereto dated November 7, 1985, and recorded November 19, 1985, in the Office of the Recorder of Allen County, Indiana, as Instrument No. 85-34293. The parties hereto agree that this Partial Release may be executed in any number of counterparts and each counterpart shall for all purposes be deemed to be an original; and all such counter- parts shall together constitute but one and the same instrument. Dated this 7th day of November, 1985. THREE RIVERS TITLE COMPANY, INC 1985 NOV 19 PM 3:57 ALLEN COUNTY RECORDER VIRGINIA L. YOUNG -2- CLINTON HOLDING CORPORATION BY: E. DAVISSON HARDMAN, JR. ---------------------------- Name:E. Davisson Hardman, Jr. Title: President (SEAL) Attest: BY: ALEXANDER J. JORDAN, JR. ------------------------------- Name: Alexander J. Jordan, Jr. Title: Assistant Secretary CLINTON STREET LIMITED PARTNERSHIP BY: Liberty Street Limited Partnership -84, A General Partner BY: E. DAVISSON HARDMAN, JR. ------------------------------ E. Davisson Hardman, Jr. A Genera1 Partner -3- THE LINCOLN NATIONAL LIFE INSURANCE COMPANY hereby consents to the foregoing Partial Release. THE LINCOLN NATIONAL LIFE INSURANCE COMPANY BY: MAX A. ROESLER ----------------------- Name: Max A. Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE -------------------------- Name: Dolores Prange Title: Assistant Secretary LINCOLN NATIONAL CORPORATION hereby consents to the foregoing Partial Release. LINCOLN NATIONAL CORPORATION BY: MAX A. ROESLER ------------------------ Name: Max A. Roesler Title: Vice President (SEAL) Attest: BY: DOLORES PRANGE ---------------------------- Name: Dolores Prange Title: Assistant Secretary -4- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., and Alexander J. Jordan, Jr., the President and Asst. Secretary respectively, of CLINTON HOLDING CORPORATION, a corporation organized and existing under the laws of the State of Delaware, and acknowledged the execution of the foregoing instrument as such officers acting for and on behalf of said corporation. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO ------------------- Printed Dolores M. Antonino ------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - --------------------- -5- COMMONWEALTH OF MASSACHUSETTS ) ) SS: COUNTY OF SUFFOLK ) Before me, a Notary Public in and for said County and State, personally appeared E. Davisson Hardman, Jr., a general partner of LIBERTY STREET LIMITED PARTNERSHIP-84 a Massachusetts limited partnership, which is the general partner of CLINTON STREET LIMITED PARTNERSHIP, an Indiana limited partnership and acknowledged the execution of the foregoing instrument as such partner to be his free and voluntary act as such partner of LIBERTY STREET LIMITED PARTNERSHIP-84, and it as a general partner acting on behalf of CLINTON STREET LIMITED PARTNERSHIP. Witness my hand and Notarial Seal this 7th day of November, 1985. Signature DOLORES M. ANTONINO --------------------- Printed Dolores M. Antonino --------------------- NOTARY PUBLIC My commission expires: July 25, 1991 - --------------------- -6- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max A. Roesler and Dolores Prange, the Vice President and Assistant Secretary, respectively of THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, who acknowledged execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- (SEAL) Donald F. Butler NOTARY PUBLIC My Commission Expires: May 25, 1987 - --------------------- Resident of DeKalb County, Indiana -7- STATE OF INDIANA ) ) SS: COUNTY OF ALLEN ) Before me, Donald F. Butler, a Notary Public, this 7th day of November, 1985, personally appeared Max A. Roesler and Dolores Prange, as Vice President and Assistant Secretary, respectively, of LINCOLN NATIONAL CORPORATION, a corporation, and acknowledged the execution of the foregoing instrument as their free and voluntary act and deed and as the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned. DONALD F. BUTLER ------------------------------- (SEAL) Donald F. Butler NOTARY PUBLIC My Commission Expires: May 25, 1987 - --------------------- Resident of DeKalb County, Indiana This instrument prepared by Donald F. Butler, Attorney, for Lincoln National Corporation, 1300 S. Clinton St., Fort Wayne, IN 46801. Exhibit A A part of the Fractional Northwest Quarter of Section 7, Township 30 North, Range 12 East, Allen County, Indiana, being more particularly described as follows: Commencing at the Northwest corner of said Section 7; thence North 89 deg. 56 min. 27 sec. East, on and along the North line of said Section 7, by deed, a distance of 422.70 feet; thence South 00 deg. 03 min. 33 sec. East by deed, a distance of 145.0 feet to the South right of way line of State Road #14 (Illinois Road); thence South 00 deg. 03 min. 33 sec. East, a distance of 355.0 feet; thence North 89 deg. 56 min. 27 sec. East, a distance of 441.41 feet; thence South 25 deg. 06 min. 36 sec. West, a distance of 147.78 feet; thence South 13 deg. 27 min. 48 sec. West, a distance of 97.28 feet; thence South 28 deg. 49 min. 50 sec. East, a distance of 89.15 feet; thence South 23 deg. 07 min. 55 sec. East, a distance of 116.43 feet; thence South 67 deg. 37 min. 33 sec. East, a distance of 175.26 feet; thence South 24 deg. 31 min. 40 sec. East, a distance of 294.38 feet; thence South 17 deg. 47 min. 02 sec. East, a distance of 117.18 feet to the Northwest corner of a 0.228 acre tract of land conveyed to Professional Building Corporation of Fort Wayne in a deed appearing at a Document #74-22292 in the Office of the Recorder of Allen County, Indiana; thence South 02 deg. 04 min. 49 sec. East, on and along the Westerly line of said 0.228 acre tract, a distance of 75.15 feet to the Southwest corner thereof; thence North 89 deg. 56 min. 19 sec. East, on and along the South line of said 0.228 acre tract, a distance of 133.98 feet to the Southeast corner thereof, said Southeast corner being a point situated on the West line of a 60 foot wide roadway and utility easement granted in Deed Record 716, pages 150-152 in the Office of the Recorder of Allen County, Indiana, said easement being known as Magnavox Way as said name was established in an instrument appearing at Document #70-9781 in the Office of the Recorder of Allen County, Indiana; thence South 00 deg. 03 min. 32 sec. East, on and along the West line of said easement, a distance of 200.0 feet to the point of beginning; thence continuing South 00 deg. 03 min. 32 sec. East 75.00 feet; thence South 66 deg. 10 min. 20 sec. West, a distance of 1122.16 feet; thence South 89 deg. 56 min. 27 sec. West, a distance of 18.20 feet; thence North 15 deg. 16 min. 19 sec. East, a distance of 549.10 feet; thence South 89 deg. 54 min. 52 sec. East, a distance of 900.00 feet to the point of beginning, containing 6.471 acres and subject to Easements and Rights of Way of Record. EX-11 9 LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS Year Ended December 31 1995 1994 1993 PRIMARY Average shares outstanding (assuming conversion of series A, E and F preferred stock) -------------------- 104,115,650 103,863,196 102,307,356 Net effect of dilutive stock options (based on the treasury stock method using average market price) -- 701,494 506,601 777,468 Total shares outstanding ---------- 104,817,144 104,369,797 103,084,824
FULLY DILUTED Average shares outstanding (assuming conversion of Series A, E and F preferred stock) ----------------------104,115,650 103,863,196 102,307,356 Net effect of dilutive stock options (based on the treasury stock method using the year-end market price, if higher than average market price) -- 1,115,139 506,764 876,936 Total shares outstanding ------------105,230,789 104,369,960 103,184,292
DOLLAR INFORMATION (000's Omitted) Income before cumulative effect of accounting change ------------------ 482,186 349,898 415,283 Cumulative effect of accounting change - -- -- (96,431) Net Income -------------------------- 482,186 349,898 318,852
PER SHARE INFORMATION Primary: Income before cumulative effect of accounting change --------- $4.60 $3.35 $4.03 Cumulative effect of accounting change ------------------- -- -- (.94) Net Income ------------------------ $4.60 $3.35 $3.09 Fully Diluted: Income before cumulative effect of accounting change --------- $4.58 $3.35 $4.03 Cumulative effect of accounting change ------------------- -- -- (.94) Net Income ------------------------ $4.58 $3.35 $3.09 Notes: 1. Earnings per share are computed based on the average number of common shares outstanding during each year after assuming conversion of the series A, E and F preferred stock. 2. LNC did not include the dilutive impact of the stock option program in the computation of the earnings per share information appearing in the consolidated financial statements since it was immaterial.
EX-21 10 Exhibit 21 EXHIBIT A ORGANIZATIONAL CHART OF THE LINCOLN NATIONAL INSURANCE HOLDING COMPANY SYSTEM All the members of the holding company system are corporations, with the exception of American States Lloyds Insurance Company, Delaware Distributors, L.P., Founders CBO, L.P., and Lincoln National Mezzanine Fund, L.P. Lincoln National Corporation Indiana - Holding Company | |--American States Insurance Company | 100% - Indiana - Property/Casualty | | | |--American Economy Insurance Company | | 100% - Indiana - Property/Casualty | | | | | |--American States Insurance Company of Texas | | 100% - Texas - Property/Casualty | | | |--American States Life Insurance Company | | 100% - Indiana - Life/Health | | | |--American States Lloyds Insurance Company | | Lloyds Plan - * - Texas - Property/Casualty | | | |--American States Preferred Insurance Company | | 100% - Indiana - Property/Casualty | | | |--City Insurance Agency, Inc. | | 100% - Indiana | | | |--Insurance Company of Illinois | 100% - Illinois - Fire & Casualty Insurance | |--Aseguradora InverLincoln, S.A. Compania de Seguros y | Reaseguros, Grupo Financiero InverMexico | 49% - Mexico - Life, Property and Casualty Insurance | | |--The Insurers Fund, Inc. # | 100% - Maryland - Inactive | |--LNC Administrative Services Corporation | 100% - Indiana - Third Party Administrator | |--The Richard Leahy Corporation | 100% - Indiana - Insurance Agency | | | |--The Financial Alternative, Inc. | | 100% - Utah - Insurance Agency | | | |--Financial Alternative Resources, Inc. | | 100% - Kansas - Insurance Agency | | | |--Financial Choices, Inc. | | 100% - Pennsylvania - Insurance Agency | | | |--Financial Investment Services, Inc. | | (formerly Financial Services Department, Inc.) | | 100% - Indiana - Insurance Agency | | | |--Financial Investments, Inc. | | (formerly Insurance Alternatives, Inc.) | | 100% - Indiana - Insurance Agency | | | |--The Financial Resources Department, Inc. | | 100% - Michigan - Insurance Agency | | | |--Investment Alternatives, Inc. | | 100% - Pennsylvania - Insurance Agency | | | |--The Investment Center, Inc. | | 100% - Tennessee - Insurance Agency | | | |--The Investment Group, Inc. | | 100% - New Jersey - Insurance Agency | | | |--Personal Financial Resources, Inc. | | 100% - Arizona - Insurance Agency | | | |--Personal Investment Services, Inc. | | 100% - Pennsylvania - Insurance Agency | |--LincAm Properties, Inc. | 50% - Delaware - Real Estate Investment | | | | |--Lincoln Financial Group, Inc. | (formerly Lincoln National Sales Corporation) | 100% - Indiana - Insurance Agency | | | |--LNC Equity Sales Corporation | | 100% - Indiana - Broker-Dealer | | | |--Corporate agencies: Lincoln Financial Group, Inc. (LFG) | | has been subsidiaries of which LFG owns from 80%-100% of the | | common stock (see Attachment #1). These subsidiaries serve as | | the corporate agency offices for the marketing and servicing of | | products of The Lincoln National Life Insurance Company. Each | | subsidiary s assets are less than 1% of the total assets of the | | ultimate controlling person. | | | |--Professional Financial Planning, Inc. | | 100% - Indiana - Financial Planning Services | |--Lincoln Life Improved Housing, Inc. | 100% - Indiana | |--Lincoln National (China) Inc. | 100% - Indiana - China Representative Office | |--Lincoln National Intermediaries, Inc. | 100% - Indiana - Reinsurance Intermediary | |--Lincoln National Investment Companies, Inc. | 100% - Indiana - Holding Company | | | |--Delaware Management Holdings, Inc. | | 100% - Delaware - Holding Company | | | | | |--DMH Corp. | | 100% - Delaware - Holding Company | | | | | |--Delaware Distributors, Inc. | | | 100% - Delaware - General Partner | | | | | | | |--Delaware Distributors, L.P. | | | 100% - Delaware - Mutual Fund | | | Distributor & Broker/Dealer | | | | | |--Delaware International Advisers Ltd. | | | 81.1% - England - Investment Advisor | | | | | |--Delaware International Holdings Ltd. | | | 100% - Bermuda - Marketing Services | | | | | | | |--Delaware International Advisers Ltd. | | | 18.9% - England - Investment Advisor | | | | | |--Delaware Investment Counselors, Inc. | | | 100% - Delaware - Investment Advisor | | | | | |--Delaware Investment & Retirement Services, Inc. | | | 100% - Delaware - Registered Transfer Agent | | | | | |--Delaware Management Company, Inc. | | | 100% - Delaware - Investment Advisor | | | | | | | |--Founders Holdings, Inc. | | | 100% - Delaware - General Partner | | | | | | | |--Founders CBO, L.P. | | | 100% - Delaware - Investment Partnership | | | | | | | |--Founders CBO Corporation | | | 100% - Delaware - Co-Issuer with Founders CBO | | | | | |--Delaware Management Trust Company | | | 100% - Pennsylvania - Trust Service | | | | | |--Delaware Service Company, Inc. | | 100% - Delaware - Shareholder Services & Transfer Agent | | | |--Lincoln Investment Management, Inc. | | (formerly Lincoln National Investment Management Company) | | 100% - Illinois - Mutual Fund Manager and | | Registered Investment Adviser | | | | | |--Lincoln National Mezzanine Corporation | | 100% - Indiana - General Partner for Mezzanine Financing | | Limited Partnership | | | | | |--Lincoln National Mezzanine Fund, L.P. | | 50% - Delaware - Mezzanine Financing Limited Partnership | |--Lincoln National Investment Companies, Inc. | 100% - Indiana - Holding Company | | | |--Lynch & Mayer, Inc. | | 100% - Indiana - Investment Adviser | | | | | |--Lynch & Mayer Asia, Inc. | | | 100% - Delaware - Investment Management | | | | | |--Lynch & Mayer Securities Corp. | | 100% - Delaware - Securities Broker | | | |--Vantage Global Advisors, Inc. | (formerly Modern Portfolio Theory Associates, Inc.) | 100% - Delaware - Investment Adviser | |--The Lincoln National Life Insurance Company | 100% - Indiana | | | |--First Penn-Pacific Life Insurance Company | | 100% - Indiana | | | |--Lincoln National Aggressive Growth Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Bond Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Capital Appreciation Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Equity-Income Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Global Asset Allocation Fund, Inc. | | (formerly Lincoln NationalPutnam Master Fund, Inc.) | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Growth and Income Fund, Inc. | | (formerly Lincoln National Growth Fund, Inc.) | | 100% - Maryland - Mutual Fund | | | |--The Lincoln National Life Insurance Company | 100% - Indiana | | | |--Lincoln National Health & Casualty Insurance Company | | 100% - Indiana | | | |--Lincoln National International Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Managed Fund, Inc. | | 100% - Maryland - Mutual Fund. | | | |--Lincoln National Money Market Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Social Awareness Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Special Opportunities Fund, Inc. | | 100% - Maryland - Mutual Fund | | | |--Lincoln National Reassurance Company | 100% - Indiana - Life Insurance | | | |--Special Pooled Risk Administrators, Inc. | 100% - New Jersey - Catastrophe Reinsurance | Pool Administrator | |--Lincoln National Management Services, Inc. | 100% - Indiana - Underwriting and Management Services | |--Lincoln National Realty Corporation | 100% - Indiana - Real Estate | |--Lincoln National Reinsurance Company (Barbados) Limited | 100% - Barbados | |--Lincoln National Reinsurance Company Limited | (formerly Heritage Reinsurance, Ltd.) | 100% ** - Bermuda | | | |--Lincoln European Reinsurance Company | | 100% - Belgium | | | |--Lincoln National Underwriting Services, Ltd. | | 90% - England/Wales - Life/Accident/Health Underwriter | | (Remaining 10% owned by Old Fort Ins. Co. Ltd.) | | | |--Servicios de Evaluacion de Riesgos, S.deR.L. de C.V. | | 51% - Mexico - Reinsurance Underwriter | (Remaining 49% owned by Lincoln National Corp.) | |--Lincoln National Risk Management, Inc. | 100% - Indiana - Risk Management Services | |--Lincoln National Structured Settlement, Inc. | 100% - New Jersey | |--Lincoln National (UK) PLC | (formerly Cannon Lincoln PLC) | 100% - England/Wales - Holding Company | | | |--Allied Westminster & Company Limited | | (formerly One Olympic Way Financial Services Limited) | | 100% - England/Wales - Sales Services | | | |--Cannon Fund Managers Limited | | 100% - England/Wales - Inactive | | | |--Culverin Property Services Limited | | 100% - England/Wales - Property Development Services | | | |--HUTM Limited (formerly Hansard Unit Trust Managers Limited) | | 100% - England/Wales - Unit Trust Management | | | |--ILI Supplies Limited | | 100% - England/Wales - Computer Leasing | | | |--Laurentian Financial Group PLC | | 100% - England/Wales - Holding Company | | | | | |--Laurentian Financial Advisers Limited | | | 100% - England/Wales - Sales Company | | | | | |--Laurentian Fund Management Limited | | | 100% - England/Wales - Investment Management | | | | | |--Laurentian Independent Financial Planning Limited | | | 100% - England/Wales - Independent Financial Adviser | | | (formerly Cannon Lincoln PLC) | | 100% - England/Wales - Holding Company | | | |--Laurentian Financial Group PLC | | 100% - England/Wales - Holding Company | | | | | |--Laurentian Life PLC | | | 100% - England/Wales - Life Insurance | | | | | | | |--Barnwood Property Group Limited | | | | 100% - England/Wales - Holding Company | | | | | | | | | |--Barnwood Developments Limited | | | | | 100% - England/Wales - Property Development | | | | | | | | | |--Barnwood Properties Limited | | | | 100% - England/Wales - Property Investment | | | | | | | |--IMPCO Properties Limited | | | 100% - England/Wales - Property Investment (Inactive) | | | | | |--Laurentian Management Services Limited | | | 100% - England/Wales - Management Services | | | | | | | |--Jobprofit Limited | | | | 100% - England/Wales - Dormant | | | | | | | |--Laurit Limited | | | 100% - England/Wales - Data Processing Systems | | | | | |--Laurentian Milldon Limited | | | 100% - England/Wales - Sales Company | | | | | |--Laurentian Unit Trust Management Limited | | | 100% - England/Wales - Unit Trust Management | | | | | | | |--LUTM Nominees Limited | | | 100% - England/Wales - Nominee Service | | | | | |--Laurtrust Limited | | 100% - England/Wales - Pension Scheme Trustee (Inactive) | | | | | |--The Money Club Direct Company Limited | | 100% - Dormant | | | |--Liberty Life Assurance Company Limited | | 100% - England/Wales - Life Assurance | | | |--Liberty Life Pension Trustee Company Limited | | 100% - England/Wales - Corporate Pension Fund | | | |--Liberty Press Limited | | 100% - England/Wales - Printing Services | |--Lincoln National (UK) PLC | (formerly Cannon Lincoln PLC) | 100% - England/Wales - Holding Company | | | |--Lincoln Assurance Limited | | (formerly Cannon Assurance Limited) | | 100% ** - England/Wales - Life Assurance | | | |--Lincoln Fund Managers Limited | | (formerly Cannon Lincoln Fund Managers Limited) | | 100% - England/Wales - Unit Trust Management | | | |--Lincoln Insurance Services Ltd. | | (formerly: Cannon Lincoln Insurance Services Ltd.) | | 100% - Holding Company | | | | | |--British National Life Sales Ltd. | | | 100% - Inactive | | | | | |--BNL Trustees Limited | | | 100% - England/Wales - Corporate Pension Fund | | | | | |--Chapel Ash Financial Services Ltd. | | | 100% - Direct Insurance Sales | | | | | |--Lincoln General Insurance Co. Ltd. | | | (formerly: Cannon General Insurance Co. Ltd.) | | | 100% - Accident & Health Insurance | | | | | |--P.N. Kemp-Gee & Co. Ltd. | | 100% - Inactive | | | |--Lincoln Investment Management Limited | | (formerly Cannon Lincoln Investment Management Ltd.) | | 100% - England/Wales - Investment Management Services | | | | | |--CL CR Management Ltd. | | 50% - England/Wales - Administrative Services | | | |--Lincoln National Training Services Limited | | (formerly Cannon Lincoln Training Services Ltd.) | | 100% - England/Wales - Training Company | | | |--Lincoln Pension Trustees Limited | | (formerly Cannon Pension Trustees Limited) | | 100% - England/Wales - Corporate Pension Fund | | | |--LN Management Limited | | (formerly: Cannon Lincoln Management Limited) | | 100% - England/Wales - Administrative Services | | | | | |--UK Mortgage Securities Limited | | 100% - England/Wales - Inactive | |--Lincoln National (UK) PLC | (formerly Cannon Lincoln PLC) | 100% - England/Wales - Holding Company | | | |--LN Securities Limited | | (formerly Cannon Securities Limited) | | 100% - England/Wales - Nominee Company | | | |--Niloda Limited | | 100% - England/Wales - Investment Company | |--Linsco Reinsurance Company | (formerly Lincoln National Reinsurance Company) | 100% - Indiana - Property/Casualty | |--Old Fort Insurance Company,Ltd. | 100% ** - Bermuda | | | |--Lincoln National Underwriting Services, Ltd. | 10% - England/Wales - Life/Accident/Health Underwriter | (Remaining 90% owned by Lincoln Natl. Reinsurance Co.) | |--Servicios de Evaluacion de Riesgos, S.de R.L. de C.V. | 49% - Mexico - Reinsurance Underwriter | (Remaining 51% owned by Lincoln Natl. Reinsurance Co.) | |--Underwriters & Management Services, Inc. 100% - Indiana - Underwriting Services Footnotes: * The funds contributed by the Underwriters were, and continue to be subject to trust agreements between American States Insurance Company, the grantor,and each Underwriter, as trustee. ** Except for director-qualifying shares # Lincoln National Corporation has subscribed for and paid for 100 shares of Common Stock (with a par value of $1.00 per share) at a price of $10 per share, as part of the organizing of the fund. As such stock is further sold, the ownership of voting securities by Lincoln National Corporation will decline and fluctuate. ATTACHMENT #1 LINCOLN FINANCIAL GROUP, INC. CORPORATE AGENCY SUBSIDIARIES 1) Lincoln Financial Group, Inc. (AL) 2) Lincoln Southwest Financial Group, Inc. (Phoenix, AZ) 3) Lincoln Financial and Insurance Services Corporation (Walnut Creek, CA) 3a California Fringe Benefit and Insurance Marketing Corporation DBA/California Fringe Benefit Company (Walnut Creek, CA) 4) Colorado-Lincoln Financial Group, Inc. (Denver, CO) 5) Lincoln National Sales Corporation of Connecticut (formerly: The Lincoln Financial Group, Inc.) (Norwalk, CT) 6) Lincoln National Financial Services, Inc. (Lake Worth, FL) 7) CMP Financial Services, Inc. (Chicago, IL) 8) Lincoln National Sales Corporation of Indiana, Inc. (Indianapolis, IN) 9) Lincoln Financial Group of Northern Indiana, Inc. (Fort Wayne, IN) 10) The Financial Group, Inc. (Mission, KS) 10a Financial Planning Partners, Ltd.(Mission, KS) 11) The Lincoln National Financial Group of Louisiana, Inc. (Shreveport, LA) 12) Benefits Marketing Group, Inc. (D.C. & Chevy Chase, MD) 13) Morgan Financial Group, Inc. (Baltimore, MD) 14) Lincoln Financial Services and Insurance Brokerage of New England, Inc.(formerly: Lincoln National of New England Insurance Agency, Inc.)(Worcester, MA) 15) Lincoln Financial Group of Michigan, Inc. (Troy, MI) 15a Financial Consultants of Michigan, Inc. (Troy, MI) 16) Lincoln Financial Group of Missouri, Inc. (formerly: John J. Moore & Associates,Inc.) (St. Louis, MO) 17) Financial Associates, Inc. (Omaha, NE) 18) Beardslee & Associates, Inc. (Clifton, NJ) 19) Lincoln Financial Group, Inc. (formerly: Resources/ Financial, Inc.)(Albuquerque, NM) 20) Lincoln Financial Group/Carolinas, Inc. (Charlotte, NC) 21) Lincoln Cascades, Inc. (Portland, OR) 22) Lincoln Financial Services, Inc. (Pittsburgh, PA) 23) Lincoln National Financial Group of Philadelphia, Inc. (Philadelphia, PA) 23a Cavalier Financial Planners, Inc. (Philadelphia, PA) 24) Lincoln Financial Group, Inc. (Salt Lake City, UT) 25) Lincoln Financial Services of Virginia, Inc. (Norfolk, VA) (DBA/Group Concepts Unlimited) LNCHOLD.ASC EX-23 11 LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES EXHIBIT 23 - CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements on Forms S-3 and S-8 (Securities and Exchange Commission Registration Numbers 33-51415, 33-51721, 33-58113, 33-52667, 33-55379, 33-59785, 33-4711, 33-13445, 33-62315, 2-77594, and 2-77599) of Lincoln National Corporation and in the related Prospectuses of our report dated February 7, 1996, with respect to the consolidated financial statements and schedules of Lincoln National Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 1995. ERNST & YOUNG LLP Fort Wayne, Indiana March 22, 1996 EX-27 12 EXHIBIT
7 0000059558 LINCOLN NATIONAL CORPORATION YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 25,834,476,000 0 0 1,164,844,000 3,186,872,000 775,912,000 31,936,442,000 1,572,855,000 2,495,189,000 1,436,685,000 63,257,733,000 12,922,547,000 813,380,000 0 18,784,508,000 1,086,151,000 0 1,335,000 889,476,000 3,487,311,000 63,257,733,000 3,777,070,000 2,285,681,000 269,818,000 162,103,000 4,113,143,000 687,299,000 1,133,723,000 626,575,000 144,389,000 482,186,000 0 0 0 482,186,000 4.63 4.63 2,499,400,000 1,234,000,000 (24,500,000) 613,200,000 689,400,000 2,406,300,000 25,000,000
EX-28 13 Form 2: [From Annual Statement for the Year 1995 of the Combined Company] SCHEDULE P - ANALYSIS OF LOSSES AND LOSS EXPENSES NOTES TO SCHEDULE P 1. The Parts of Schedule P: Part 1 - detailed information on losses and loss expenses. Part 2 - history of incurred losses and allocated expenses. Part 3 - history of loss and allocated expense payments. Part 4 - history of bulk and incurred but not reported reserves. Part 5 - history of claims. Part 6 - history of premiums earned. Part 7 - history of loss sensitive contracts. Schedule P Interrogatories. 2. Line of business A thorugh M, R and S are groupings of the lines of business used on the state page. 3. Reinsurance A, B, C, and D (Lines N to Q) are: Reinsurance A = nonproportional property (1988 and subsequent). Reinsurance B = nonporportional liability (1988 and subsequent). Reinsurance C = financial lines (1988 and subsequent). Reinsurance D = old Schedule O Line 30 (1987 and prior). SCHEDULE P - PART 1 SUMMARY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 26896 8314 5540 483 372 1522 25161 0 1986 1437420 138904 1298516 807724 65887 55478 839 25067 54003 850479 0 1987 1837984 350718 1487266 946053 146721 64230 9565 26768 56596 910593 0 1988 2064554 247166 1817388 1129095 36840 80109 3763 33565 72982 1241583 0 1989 1991101 54624 1936477 1315830 46734 88973 2876 35339 78433 1433626 0 1990 2181300 67507 2113793 1465392 107029 93747 7857 35568 80529 1524782 0 1991 2228837 79752 2149085 1353130 55582 76123 1585 34060 90613 1462699 0 1992 2154109 102238 2051871 1218485 72338 56272 1123 28948 89110 1290406 0 1993 1978243 80319 1897924 972481 15192 36304 196 24006 90048 1083445 0 1994 1872396 92874 1779522 833818 24339 19666 59 21941 90531 919617 0 1995 1826446 68449 1757997 558058 10576 6359 0 12478 78373 632214 0 TOTAL 0 0 0 10626962 589552 582801 28346 278112 782740 11374605 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 218254 58496 148843 10540 26194 4056 5176 0 0 11125 336500 0 1986 17832 5708 7781 4 3224 178 1338 0 0 1049 25334 0 1987 19046 1734 9731 52 4860 155 1616 0 0 1359 34671 0 1988 35165 10066 15844 1699 8156 1051 2306 0 0 2156 50811 0 1989 49635 6114 33332 1065 14550 257 6249 0 0 4186 100516 0 1990 72734 9339 43790 1963 18680 689 8234 78 0 5940 137309 0 1991 100030 8220 57444 3263 29072 1265 13742 21 0 8498 196017 0 1992 118092 6090 72430 2240 27849 370 13740 7 0 9802 233206 0 1993 175010 4797 72882 2898 31895 873 12830 1 0 13405 297453 0 1994 223254 8589 124709 5242 32365 804 18435 11 0 18640 402757 0 1995 346633 7408 250610 7628 30569 216 29429 4 0 33644 675629 0 TOTAL 1375685 126561 837396 36594 227414 9914 113095 122 0 109804 2490203 0
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 298061 38439 1986 948430 72616 875814 66.0 52.3 67.4 0 0 0.0 19901 5433 1987 1103489 158228 945261 60.0 45.1 63.6 0 0 0.0 26991 7680 1988 1345813 53417 1292396 65.2 21.6 71.1 0 0 0.0 39244 11567 1989 1591186 57047 1534139 79.9 104.4 79.2 0 0 0.0 75788 24728 1990 1789045 126955 1662090 82.0 188.1 78.6 0 0 0.0 105222 32087 1991 1728651 69935 1658716 77.6 87.7 77.2 0 0 0.0 145991 50026 1992 1605778 82166 1523612 74.5 80.4 74.3 0 0 0.0 182192 51014 1993 1404854 23957 1380897 71.0 29.8 72.8 0 0 0.0 240197 57256 1994 1361418 39046 1322372 72.7 42.0 74.3 0 0 0.0 334132 68625 1995 1333675 25836 1307839 73.0 37.7 74.4 0 0 0.0 582207 93422 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 2049926 440277
SCHEDULE P - PART 2 SUMMARY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 553586 619588 646231 654839 678855 716069 754781 841178 848206 939068 90862 97890 1986 900747 793011 800430 811200 811366 808529 813487 813730 814995 820762 5767 7032 1987 0 1012021 931308 884029 882419 880283 884101 885633 887552 887306 -246 1673 1988 0 0 1255850 1215709 1223884 1223729 1214740 1212888 1215158 1217258 2100 4370 1989 0 0 0 1462442 1444448 1444062 1450409 1429271 1438241 1451523 13282 22252 1990 0 0 0 0 1609320 1591118 1587918 1578082 1573455 1575623 2168 -2459 1991 0 0 0 0 0 1664771 1639354 1593562 1571542 1559605 -11937 -33957 1992 0 0 0 0 0 0 1556085 1486128 1452016 1424699 -27317 -61429 1993 0 0 0 0 0 0 0 1390700 1318274 1277445 -40829 -113255 1994 0 0 0 0 0 0 0 0 1305237 1213201 -92036 0 1995 0 0 0 0 0 0 0 0 0 1195822 0 0 TOTAL -58186 -77883
SCHEDULE P - PART 3 SUMMARY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 215235 343554 408915 480887 531073 543767 571200 590052 613692 0 0 1986 362770 569214 646813 709918 742164 764366 777823 785282 792190 796477 0 0 1987 0 391524 577311 694014 760818 804449 823652 837382 846803 853995 0 0 1988 0 0 531430 828523 973881 1061892 1103499 1132467 1153186 1168602 0 0 1989 0 0 0 616604 976080 1135986 1230150 1285179 1325139 1355194 0 0 1990 0 0 0 0 660190 1060666 1232367 1334786 1400709 1444253 0 0 1991 0 0 0 0 0 671258 1035286 1198342 1303295 1372086 0 0 1992 0 0 0 0 0 0 611508 949286 1113032 1201296 0 0 1993 0 0 0 0 0 0 0 577527 861057 993397 0 0 1994 0 0 0 0 0 0 0 0 567547 829086 0 0 1995 0 0 0 0 0 0 0 0 0 553842 0 0 TOTAL
SCHEDULE P - PART 4 SUMMARY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 81049 52660 40837 21392 16270 27968 43438 85116 74912 143480 1986 314338 48448 15182 11210 12363 5200 8088 6319 7281 9116 1987 0 350270 102590 40115 26827 16839 15213 11005 11788 11293 1988 0 0 381478 118488 63064 36970 27002 22881 17939 16452 1989 0 0 0 438884 168430 90298 67289 38887 32614 38516 1990 0 0 0 0 489662 194704 105544 76526 55447 49982 1991 0 0 0 0 0 541097 228581 124203 90371 67902 1992 0 0 0 0 0 0 515529 180942 121442 83923 1993 0 0 0 0 0 0 0 414845 171309 82813 1994 0 0 0 0 0 0 0 0 351764 137891 1995 0 0 0 0 0 0 0 0 0 272404 TOTAL
SCHEDULE P - PART 1A HOMEOWNERS/FARMOWNERS
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 666 22 97 0 5 33 774 0 1986 148207 10296 137911 85735 2690 2968 26 889 6193 92180 50707 1987 179365 31872 147493 97437 10514 3371 810 983 6371 95855 60597 1988 202488 24754 177734 120422 1202 4099 28 1241 8770 132061 66329 1989 186277 2778 183499 142556 883 3677 -86 1439 9463 154899 76379 1990 199302 4117 195185 159993 5243 4482 172 1416 10952 170012 89496 1991 211353 3969 207384 167928 1106 5548 39 1147 12816 185147 84416 1992 212355 3183 209172 159883 976 4350 6 905 13332 176583 66370 1993 209900 6878 203022 157074 25 3264 1 894 14722 175034 67261 1994 206789 8475 198314 156359 0 2214 0 715 15410 173983 60124 1995 206451 8541 197910 107681 0 789 0 182 12897 121367 62905 TOTAL 0 0 0 1355734 22661 34859 996 9816 110959 1477895 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 241 0 21 0 16 0 1 0 0 21 300 11 1986 403 200 10 0 32 13 0 0 0 21 253 6 1987 95 0 5 0 6 0 0 0 0 7 113 9 1988 916 18 12 0 72 1 1 0 0 72 1054 16 1989 784 200 18 0 54 13 1 0 0 53 697 14 1990 1553 200 60 0 104 13 4 0 0 117 1625 22 1991 2427 0 164 0 449 0 30 0 0 206 3276 67 1992 4119 208 280 0 1122 51 78 0 0 334 5674 121 1993 6025 0 543 0 1462 0 133 0 0 517 8680 200 1994 8903 1289 3694 0 1122 0 503 0 0 998 13931 414 1995 28675 0 10960 0 2034 0 527 0 0 2834 45030 5747 TOTAL 54141 2115 15767 0 6473 91 1278 0 0 5180 80633 6627
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 262 38 1986 95362 2929 92433 64.3 28.4 67.0 0 0 0.0 213 40 1987 107292 11324 95968 59.8 35.5 65.1 0 0 0.0 100 13 1988 134365 1251 133114 66.4 5.1 74.9 0 0 0.0 910 144 1989 156605 1010 155595 84.1 36.4 84.8 0 0 0.0 602 95 1990 177264 5627 171637 88.9 136.7 87.9 0 0 0.0 1413 212 1991 189568 1147 188421 89.7 28.9 90.9 0 0 0.0 2591 685 1992 183499 1241 182258 86.4 39.0 87.1 0 0 0.0 4191 1483 1993 183740 27 183713 87.5 0.4 90.5 0 0 0.0 6568 2112 1994 189202 1289 187913 91.5 15.2 94.8 0 0 0.0 11308 2623 1995 166397 0 166397 80.6 0.0 84.1 0 0 0.0 39635 5395 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 67793 12840
SCHEDULE P - PART 1B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 796 967 31 5 133 -11 -156 0 1986 181252 7162 174090 146590 2018 6129 92 3155 10003 160612 55393 1987 252408 56837 195571 201900 43535 9142 3790 4073 10359 174076 77966 1988 261214 18944 242270 218589 2439 9156 96 4619 15014 240224 84159 1989 251280 3395 247885 227962 1941 9579 78 4955 15153 250675 85166 1990 272473 4731 267742 258255 9407 11066 641 5417 14785 274058 82094 1991 296004 7593 288411 232392 2296 8905 19 5055 15313 254295 68048 1992 293313 7733 285580 200572 1061 7477 0 4373 15455 222443 60926 1993 295028 6302 288726 179891 702 5872 0 3554 18119 203180 59500 1994 284933 6008 278925 140409 1144 3360 0 2827 18747 161372 57178 1995 285987 4257 281730 74772 257 940 0 1315 14881 90336 56191 TOTAL 0 0 0 1882128 65767 71657 4721 39476 147818 2031115 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 19373 7115 16 0 500 324 1 0 0 241 12692 36 1986 281 0 3 0 18 0 0 0 0 16 318 12 1987 515 205 15 0 31 13 1 0 0 21 365 13 1988 1884 312 29 0 119 19 2 0 0 94 1797 29 1989 4381 1170 22 0 276 74 1 0 0 197 3633 41 1990 4525 910 35 0 285 57 2 0 0 215 4095 73 1991 7651 313 88 0 1369 130 17 0 0 410 9092 157 1992 12636 49 406 0 1834 9 60 0 0 709 15587 384 1993 29276 86 1909 0 3419 24 224 0 0 1701 36419 1015 1994 54623 1078 9885 0 4961 132 901 0 0 3485 72645 2827 1995 99001 566 30619 0 6236 34 1928 0 0 7056 144240 12669 TOTAL 234146 11804 43027 0 19048 816 3137 0 0 14145 300883 17256
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12274 418 1986 163042 2109 160933 90.0 29.4 92.4 0 0 0.0 284 34 1987 221984 47545 174439 87.9 83.7 89.2 0 0 0.0 325 40 1988 244886 2867 242019 93.7 15.1 99.9 0 0 0.0 1601 196 1989 257572 3262 254310 102.5 96.1 102.6 0 0 0.0 3233 400 1990 289170 11015 278155 106.1 232.8 103.9 0 0 0.0 3650 445 1991 266145 2759 263386 89.9 36.3 91.3 0 0 0.0 7426 1666 1992 239150 1119 238031 81.5 14.5 83.4 0 0 0.0 12993 2594 1993 240411 812 239599 81.5 12.9 83.0 0 0 0.0 31099 5320 1994 236374 2356 234018 83.0 39.2 83.9 0 0 0.0 63430 9215 1995 235433 858 234575 82.3 20.2 83.3 0 0 0.0 129054 15186 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 265369 35514
SCHEDULE P - PART 1C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 1960 219 151 0 1 82 1974 0 1986 152762 5699 147063 97901 4931 8149 90 1076 5902 106931 27725 1987 211249 31536 179713 117560 7708 8179 464 1167 6618 124185 32581 1988 243931 35502 208429 138580 2221 9733 115 1090 6329 152306 39110 1989 231779 2843 228936 168919 6627 11648 417 1301 7704 181227 42303 1990 268927 9688 259239 190397 18815 13632 1432 1352 7444 191226 40875 1991 278804 21243 257561 169783 14364 11051 765 1690 8304 174009 37485 1992 259991 13759 246232 134564 8542 7216 493 1258 7783 140528 28726 1993 221041 6964 214077 102490 2102 5167 134 888 7912 113333 26412 1994 196567 3874 192693 70858 900 2455 8 890 9045 81450 25308 1995 185841 3307 182534 32526 483 649 0 432 6846 39538 23720 TOTAL 0 0 0 1225538 66912 78030 3918 11145 73969 1306707 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 882 106 131 0 57 9 8 0 0 53 1016 79 1986 851 261 49 0 53 15 3 0 0 40 720 19 1987 400 0 115 11 25 0 6 0 0 25 560 20 1988 719 188 711 382 49 16 13 0 0 41 947 28 1989 3992 610 1015 239 254 41 44 0 0 228 4643 125 1990 6031 265 1454 442 341 5 80 26 0 334 7502 980 1991 12690 1263 3725 588 1596 5 686 19 0 855 17677 377 1992 16098 1725 10979 404 1807 25 1446 7 0 1302 29471 299 1993 35438 522 10427 522 3596 39 780 1 0 2310 51467 540 1994 45931 1139 20207 945 3578 73 1380 10 0 3331 72260 1334 1995 60895 394 39660 1317 3836 25 2466 4 0 5380 110497 4564 TOTAL 183927 6473 88473 4850 15192 253 6912 67 0 13899 296760 8365
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 907 109 1986 112946 5298 107648 73.9 93.0 73.2 0 0 0.0 639 81 1987 132930 8184 124746 62.9 26.0 69.4 0 0 0.0 504 56 1988 156175 2923 153252 64.0 8.2 73.5 0 0 0.0 860 87 1989 193805 7936 185869 83.6 279.1 81.2 0 0 0.0 4158 485 1990 219714 20986 198728 81.7 216.6 76.7 0 0 0.0 6778 724 1991 208687 17004 191683 74.9 80.0 74.4 0 0 0.0 14564 3113 1992 181193 11194 169999 69.7 81.4 69.0 0 0 0.0 24948 4523 1993 168120 3320 164800 76.1 47.7 77.0 0 0 0.0 44821 6646 1994 156784 3075 153709 79.8 79.4 79.8 0 0 0.0 64054 8206 1995 152258 2222 150036 81.9 67.2 82.2 0 0 0.0 98844 11653 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 261077 35683
SCHEDULE P - PART 1D WORKERS' COMPENSATION
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 4873 1993 269 53 16 109 3205 0 1986 148620 16543 132077 119815 19423 4074 -807 2468 7699 112972 40636 1987 188202 24841 163361 127927 9206 5876 549 1978 7912 131960 52085 1988 232751 26962 205789 159157 1435 6969 79 2249 9097 173709 63697 1989 248591 1424 247167 174525 2413 7460 110 2329 9146 188608 66672 1990 273705 1939 271766 191728 5304 8136 489 2650 9501 203572 59034 1991 277049 2356 274693 168117 519 6572 7 1930 9995 184158 49607 1992 241105 2438 238667 112375 285 4239 6 910 8183 124506 36115 1993 225021 1856 223165 92677 278 2913 5 719 7199 102506 27600 1994 205194 1321 203873 60921 600 1698 1 216 7321 69339 25082 1995 204085 -3269 207354 24925 0 434 0 31 4934 30293 22719 TOTAL 0 0 0 1237040 41456 48640 492 15496 81096 1324828 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 52064 28628 5775 0 2753 1673 63 0 0 1509 31863 416 1986 10730 4460 1962 0 336 73 9 0 0 270 8774 91 1987 10066 731 3089 0 434 44 16 0 0 382 13212 89 1988 12038 260 4276 0 506 17 18 0 0 467 17028 138 1989 18238 1554 6413 0 803 101 25 0 0 691 24515 182 1990 26469 3600 7780 0 1322 233 43 0 0 1096 32877 316 1991 27543 1191 8157 0 1927 225 106 0 0 1234 37551 482 1992 23741 75 8645 0 1476 15 166 0 0 1084 35022 556 1993 30079 425 10627 0 1930 80 244 0 0 1424 43799 764 1994 38744 1214 17994 0 2415 215 651 0 0 2074 60449 1553 1995 51123 1982 40864 0 3001 128 1287 0 0 3825 97990 5380 TOTAL 300835 44120 115582 0 16903 2804 2628 0 0 14056 403080 9967
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 29211 2652 1986 144895 23148 121747 97.5 139.9 92.2 0 0 0.0 8232 542 1987 155700 10532 145168 82.7 42.4 88.9 0 0 0.0 12424 788 1988 192527 1791 190736 82.7 6.6 92.7 0 0 0.0 16054 974 1989 217299 4179 213120 87.4 293.5 86.2 0 0 0.0 23097 1418 1990 246072 9627 236445 89.9 496.5 87.0 0 0 0.0 30649 2228 1991 223651 1941 221710 80.7 82.4 80.7 0 0 0.0 34509 3042 1992 159908 379 159529 66.3 15.5 66.8 0 0 0.0 32311 2711 1993 147094 787 146307 65.4 42.4 65.6 0 0 0.0 40281 3518 1994 131816 2028 129788 64.2 153.5 63.7 0 0 0.0 55524 4925 1995 130396 2111 128285 63.9 -64.6 61.9 0 0 0.0 90005 7985 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 372297 30783
SCHEDULE P - PART 1E COMMERCIAL MULTIPLE PERIL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 1316 40 1378 1 25 67 2720 0 1986 261480 11158 250322 102976 6658 16386 344 3082 7470 119830 34591 1987 335256 39993 295263 119362 9968 20028 1703 3226 8010 135729 40850 1988 386997 38626 348371 155370 8256 28761 2337 3994 10748 184286 49845 1989 380232 4816 375416 211859 6262 35830 1245 3952 13609 253791 61102 1990 425673 4827 420846 218010 5888 33294 1224 3774 13719 257911 62691 1991 449288 6717 442571 214296 3662 28518 90 3462 16257 255319 59602 1992 430889 10051 420838 233646 13922 20914 105 2679 17435 257968 50386 1993 406047 13207 392840 164710 44 12044 1 2175 15179 191888 46944 1994 383725 15810 367915 146357 1831 5613 44 1628 18171 168266 45008 1995 370775 12359 358416 103108 0 1641 0 972 15395 120144 46979 TOTAL 0 0 0 1671010 56531 204407 7094 28969 136060 1947852 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 6695 641 6936 0 4525 175 1894 0 0 934 20168 190 1986 1954 0 3618 0 1528 0 988 0 0 394 8482 97 1987 4946 534 4534 0 3121 97 1236 0 0 627 13833 125 1988 7427 2847 6580 0 4641 290 1797 0 0 891 18199 197 1989 11993 0 19514 0 10203 0 5327 0 0 2231 49268 330 1990 17831 0 25026 0 12380 0 6831 0 0 3034 65102 401 1991 25226 311 28377 98 16081 302 9959 0 0 3740 82672 494 1992 30841 66 27182 67 14375 0 8800 0 0 4024 85089 672 1993 40931 77 23667 87 14523 0 7109 0 0 4389 90455 1146 1994 44682 106 30486 158 14156 0 9170 0 0 5255 103485 2012 1995 53303 307 54553 9 11119 24 14567 0 0 7798 141000 7926 TOTAL 245829 4889 230473 419 106652 888 67678 0 0 33317 677753 13590
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12990 7178 1986 135313 7002 128311 51.7 62.8 51.3 0 0 0.0 5572 2910 1987 161867 12301 149566 48.3 30.8 50.7 0 0 0.0 8946 4887 1988 216215 13730 202485 55.9 35.5 58.1 0 0 0.0 11160 7039 1989 310567 7506 303061 81.7 155.9 80.7 0 0 0.0 31507 17761 1990 330130 7112 323018 77.6 147.3 76.8 0 0 0.0 42857 22245 1991 342455 4462 337993 76.2 66.4 76.4 0 0 0.0 53194 29478 1992 357216 14160 343056 82.9 140.9 81.5 0 0 0.0 57890 27199 1993 282555 209 282346 69.6 1.6 71.9 0 0 0.0 64434 26021 1994 273890 2142 271748 71.4 13.5 73.9 0 0 0.0 74904 28581 1995 261484 340 261144 70.5 2.8 72.9 0 0 0.0 107540 33460 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 470994 206759
SCHEDULE P - PART 1F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 0 0 0 0 0 0 0 0 1986 111 5 106 199 3 24 1 0 8 227 10 1987 161 64 97 -6 0 -1 0 0 8 1 1 1988 103 37 66 2 3 9 1 0 -4 3 3 1989 59 0 59 167 11 91 3 0 -2 242 6 1990 75 0 75 0 0 0 0 0 0 0 5 1991 86 0 86 0 0 0 0 0 4 4 3 1992 79 0 79 104 0 35 0 0 6 145 12 1993 79 0 79 9 0 12 0 0 10 31 7 1994 75 0 75 0 0 0 0 0 8 8 0 1995 59 0 59 0 0 0 0 0 5 5 0 TOTAL 0 0 0 475 17 170 5 0 43 666 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 25 0 26 0 8 0 8 0 0 4 71 3 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 25 0 26 0 8 0 8 0 0 4 71 3
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1986 232 4 228 209.0 80.0 215.1 0 0 0.0 0 0 1987 1 0 1 0.6 0.0 1.0 0 0 0.0 0 0 1988 81 4 77 78.6 10.8 116.7 0 0 0.0 51 20 1989 256 15 241 433.9 0.0 408.5 0 0 0.0 0 0 1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1991 4 0 4 4.7 0.0 4.7 0 0 0.0 0 0 1992 147 0 147 186.1 0.0 186.1 0 0 0.0 0 0 1993 32 0 32 40.5 0.0 40.5 0 0 0.0 0 0 1994 8 0 8 10.7 0.0 10.7 0 0 0.0 0 0 1995 5 0 5 8.5 0.0 8.5 0 0 0.0 0 0 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 51 20
SCHEDULE P - PART 1G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 59 0 0 0 0 0 59 0 1986 4267 1131 3136 862 278 88 83 0 98 687 0 1987 4991 1230 3761 536 113 71 73 3 122 543 0 1988 4585 511 4074 801 151 95 96 3 177 826 0 1989 4417 23 4394 894 283 63 54 0 190 810 0 1990 4729 38 4691 733 64 58 51 0 207 883 0 1991 4596 39 4557 824 238 22 20 0 201 789 0 1992 4585 41 4544 636 0 4 0 0 203 843 0 1993 5157 79 5078 809 0 0 0 0 244 1053 0 1994 5509 92 5417 1470 0 11 0 18 417 1898 0 1995 6064 111 5953 478 0 0 0 0 244 722 0 TOTAL 0 0 0 8102 1127 412 377 24 2103 9113 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 29 0 0 0 9 0 0 0 0 3 41 4 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 15 0 0 0 5 0 0 0 0 1 21 4 1995 94 0 133 0 30 0 43 0 0 19 319 28 TOTAL 138 0 133 0 44 0 43 0 0 23 381 36
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1986 1049 361 688 24.6 31.9 21.9 0 0 0.0 0 0 1987 728 185 543 14.6 15.0 14.4 0 0 0.0 0 0 1988 1073 247 826 23.4 48.3 20.3 0 0 0.0 0 0 1989 1146 336 810 25.9 1460.9 18.4 0 0 0.0 0 0 1990 998 116 882 21.1 305.3 18.8 0 0 0.0 0 0 1991 1050 258 792 22.8 661.5 17.4 0 0 0.0 0 0 1992 885 0 885 19.3 0.0 19.5 0 0 0.0 29 12 1993 1054 0 1054 20.4 0.0 20.8 0 0 0.0 0 0 1994 1919 0 1919 34.8 0.0 35.4 0 0 0.0 15 6 1995 1041 0 1041 17.2 0.0 17.5 0 0 0.0 227 92 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 271 110
SCHEDULE P - PART 1H SECTION 1 OTHER LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 13959 457 3093 384 53 756 16967 0 1986 130554 21616 108938 52447 9294 12533 -91 354 3366 59143 11852 1987 172142 35043 137099 56380 12252 13246 459 341 3405 60320 13601 1988 198081 40870 157211 66733 12281 16408 695 404 3431 73596 14410 1989 159938 11275 148663 69097 13955 15571 976 260 2771 72508 13637 1990 156925 11824 145101 87553 28841 17649 3626 529 1951 74686 17524 1991 153783 14294 139489 63391 13673 10762 478 581 2671 62673 17376 1992 151722 28323 123399 53074 15297 7019 454 61 2678 47020 8441 1993 140350 15173 125177 37459 2774 3714 38 80 2868 41229 7454 1994 128473 21747 106726 16685 1624 1425 4 60 3718 20200 6632 1995 104994 11733 93261 5109 12 278 0 14 3165 8540 5477 TOTAL 0 0 0 521887 110460 101698 7023 2737 30780 536882 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 16503 3727 14095 0 10173 1483 3101 0 0 2267 40929 697 1986 2367 351 1402 0 1089 78 308 0 0 285 5022 76 1987 2032 0 1531 20 1108 0 331 0 0 276 5258 91 1988 7032 3109 2981 662 2260 684 462 0 0 533 8813 128 1989 5840 224 3962 416 2128 26 749 0 0 709 12722 166 1990 9056 903 5941 765 3280 379 1108 26 0 991 18303 289 1991 14783 1693 11874 392 5779 601 2773 0 0 1860 34383 594 1992 18696 1263 14349 269 6091 270 2980 0 0 2176 42490 489 1993 24518 3061 20460 348 6206 728 4173 0 0 2754 53974 435 1994 18672 1925 26868 629 5167 384 5528 0 0 3081 56378 570 1995 10525 2 34360 178 3238 0 7520 0 0 3613 59076 1152 TOTAL 130024 16258 137823 3679 46519 4633 29033 26 0 18545 337348 4687
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 26871 14058 1986 73796 9630 64166 56.5 44.6 58.9 0 0 0.0 3418 1604 1987 78310 12731 65579 45.5 36.3 47.8 0 0 0.0 3543 1715 1988 99839 17431 82408 50.4 42.6 52.4 0 0 0.0 6242 2571 1989 100831 15596 85235 63.0 138.3 57.3 0 0 0.0 9162 3560 1990 127527 34538 92989 81.3 292.1 64.1 0 0 0.0 13329 4974 1991 113892 16838 97054 74.1 117.8 69.6 0 0 0.0 24572 9811 1992 107065 17552 89513 70.6 62.0 72.5 0 0 0.0 31513 10977 1993 102149 6948 95201 72.8 45.8 76.1 0 0 0.0 41569 12405 1994 81144 4567 76577 63.2 21.0 71.8 0 0 0.0 42986 13392 1995 67811 192 67619 64.6 1.6 72.5 0 0 0.0 44705 14371 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 247910 89438
SCHEDULE P - PART 1H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 6 0 0 0 0 0 6 0 1986 2215 2215 0 1709 1714 4 3 0 0 -4 151 1987 2018 1965 53 3093 3092 5 5 0 0 1 178 1988 3328 3274 54 3552 3371 -1 14 0 17 183 175 1989 4362 4303 59 3190 3205 -11 0 0 0 -26 149 1990 4400 4316 84 7158 7149 -8 0 0 2 3 190 1991 7991 7985 6 12056 553 -132 0 0 285 11656 173 1992 17116 6466 10650 5132 0 -131 0 0 56 5057 190 1993 6124 -976 7100 2139 0 0 0 0 34 2173 174 1994 2778 -747 3525 1431 0 5 0 0 89 1525 154 1995 12970 -546 13516 92 0 0 0 0 1 93 147 TOTAL 0 0 0 39558 19084 -269 22 0 484 20667 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 631 579 212 0 206 139 46 0 0 35 412 8 1986 0 0 74 0 19 0 16 0 0 6 115 4 1987 75 75 0 0 0 0 0 0 0 0 0 4 1988 3 3 0 0 0 0 0 0 0 0 0 0 1989 209 209 0 0 0 0 0 0 0 0 0 5 1990 436 436 0 0 0 0 0 0 0 0 0 4 1991 2234 0 0 0 0 0 0 0 0 0 2234 8 1992 1747 0 16 0 21 0 5 0 0 6 1795 14 1993 2354 0 0 0 0 0 0 0 0 0 2354 29 1994 2221 0 0 0 0 0 0 0 0 0 2221 42 1995 5573 0 17 0 7 0 3 0 0 4 5604 113 TOTAL 15483 1302 319 0 253 139 70 0 0 51 14735 231
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 264 148 1986 1829 1717 112 82.6 77.5 0.0 0 0 0.0 74 41 1987 3173 3172 1 157.2 161.4 1.9 0 0 0.0 0 0 1988 3570 3388 182 107.3 103.5 337.0 0 0 0.0 0 0 1989 3390 3416 -26 77.7 79.4 -44.1 0 0 0.0 0 0 1990 7588 7585 3 172.5 175.7 3.6 0 0 0.0 0 0 1991 14446 553 13893 180.8 6.9 231550.0 0 0 0.0 2234 0 1992 6852 0 6852 40.0 0.0 64.3 0 0 0.0 1763 32 1993 4527 0 4527 73.9 0.0 63.8 0 0 0.0 2354 0 1994 3747 0 3747 134.9 0.0 106.3 0 0 0.0 2221 0 1995 5698 0 5698 43.9 0.0 42.2 0 0 0.0 5590 14 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 14500 235
SCHEDULE P - PART 1I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY & THEFT)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 2896 53 617 1 160 144 3603 0 1994 85868 5693 80175 39860 504 659 0 513 3478 43493 0 1995 82527 5481 77046 35680 484 366 0 264 3792 39354 0 TOTAL 0 0 0 78436 1041 1642 1 937 7414 86450 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 1482 2 2 0 41 0 20 1 0 107 1649 39 1994 1781 0 9 0 241 0 4 0 0 133 2168 39 1995 7647 43 1300 0 202 1 45 0 0 664 9814 1260 TOTAL 10910 45 1311 0 484 1 69 1 0 904 13631 1338
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1482 167 1994 46164 503 45661 53.8 8.8 57.0 0 0 0.0 1790 378 1995 49694 528 49166 60.2 9.6 63.8 0 0 0.0 8904 910 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 12176 1455
SCHEDULE P - PART 1J AUTO PHYSICAL DAMAGE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 -846 6 82 3 1717 -51 -824 0 1994 244146 1127 243019 138432 685 1160 0 14879 13084 151991 142267 1995 242900 826 242074 143314 378 827 0 9240 15257 159020 145232 TOTAL 0 0 0 280900 1069 2069 3 25836 28290 310187 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 138 0 1147 245 4 0 31 1 0 18 1092 42 1994 502 0 456 0 13 0 8 1 0 64 1042 106 1995 14187 41 2718 0 369 1 74 0 0 2136 19442 6452 TOTAL 14827 41 4321 245 386 1 113 2 0 2218 21576 6600
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1040 52 1994 153718 686 153032 63.0 60.9 63.0 0 0 0.0 958 84 1995 178884 420 178464 73.6 50.8 73.7 0 0 0.0 16864 2578 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 18862 2714
SCHEDULE P - PART 1K FIDELITY / SURETY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 -88 -13 175 6 654 -92 2 0 1994 11597 630 10967 1097 0 153 1 144 164 1413 0 1995 10954 869 10085 254 0 51 0 25 81 386 0 TOTAL 0 0 0 1263 -13 379 7 823 153 1801 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 1195 156 0 0 384 49 0 0 0 88 1462 82 1994 570 0 0 0 183 0 0 0 0 46 799 59 1995 931 0 797 0 299 0 256 0 0 120 2403 91 TOTAL 2696 156 797 0 866 49 256 0 0 254 4664 232
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 1039 423 1994 2212 1 2211 19.1 0.2 20.2 0 0 0.0 570 229 1995 2790 0 2790 25.5 0.0 27.7 0 0 0.0 1728 675 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 3337 1327
SCHEDULE P - PART 1L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 7713 4075 139 10 81 61 3828 0 1994 111231 28348 82883 60664 17050 857 0 51 741 45212 0 1995 108042 24737 83305 30017 8962 379 0 3 650 22084 0 TOTAL 0 0 0 98394 30087 1375 10 135 1452 71124 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 33673 29755 16102 7833 4 0 43 26 0 117 12325 293 1994 5665 1841 12615 3510 0 0 62 0 0 44 13035 1000 1995 14386 4076 33381 6124 0 0 436 0 0 70 38073 719 TOTAL 53724 35672 62098 17467 4 0 541 26 0 231 63433 2012
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 12187 138 1994 80649 22401 58248 72.5 79.0 70.3 0 0 0.0 12929 106 1995 79318 19163 60155 73.4 77.5 72.2 0 0 0.0 37567 506 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 62683 750
SCHEDULE P - PART 1M INTERNATIONAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 1992 146 0 146 -6 0 0 0 0 0 -6 0 1993 113 0 113 0 0 0 0 0 -2 -2 0 1994 2 0 2 0 0 0 0 0 -2 -2 0 1995 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 -6 0 0 0 0 -4 -10 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1986 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1987 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1992 -5 0 -5 -3.4 0.0 -3.4 0 0 0.0 0 0 1993 -2 0 -2 -1.8 0.0 -1.8 0 0 0.0 0 0 1994 -2 0 -2 -100.0 0.0 -100.0 0 0 0.0 0 0 1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
SCHEDULE P - PART 1N REINSURANCE A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 1989 1745 118 1627 635 -427 0 0 0 -5 1057 0 1990 779 127 652 -547 -36 -20 1 0 -9 -541 0 1991 550 151 399 -724 393 -8 34 0 -31 -1190 0 1992 24677 9643 15034 42715 22025 66 4 0 108 20860 0 1993 6386 2109 4277 3619 407 30 2 0 3 3243 0 1994 -258 426 -684 -168 0 0 0 0 0 -168 0 1995 -579 9 -588 0 0 0 0 0 0 0 0 TOTAL 0 0 0 45441 22371 57 41 0 64 23150 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 1989 384 156 34 0 31 0 0 0 0 0 293 0 1990 209 6 56 0 10 0 0 0 0 0 269 0 1991 682 141 85 0 57 0 0 0 0 0 683 0 1992 1806 295 64 0 113 1 0 0 0 0 1687 0 1993 578 72 0 0 28 0 0 0 0 0 534 0 1994 30 0 0 0 0 0 0 0 0 0 30 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 3751 674 269 0 248 1 0 0 0 0 3593 0
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 1989 1081 -270 1351 61.9 -228.8 83.0 0 0 0.0 262 31 1990 -301 -28 -273 -38.6 -22.0 -41.9 0 0 0.0 259 10 1991 59 570 -511 10.7 377.5 -128.1 0 0 0.0 626 57 1992 44871 22325 22546 181.8 231.5 150.0 0 0 0.0 1575 112 1993 4259 481 3778 66.7 22.8 88.3 0 0 0.0 506 28 1994 -136 0 -136 52.7 0.0 19.9 0 0 0.0 30 0 1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 3346 247
SCHEDULE P - PART 1O REINSURANCE B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 1989 127 0 127 -1840 -187 -174 0 0 -25 -1852 0 1990 4366 0 4366 -2089 -244 -287 0 0 -39 -2171 0 1991 39 0 39 -4299 -729 -789 -2 0 -99 -4456 0 1992 4000 44 3956 -890 -38 134 2 0 20 -700 0 1993 5914 -27 5941 1 54 68 7 0 3 11 0 1994 1109 46 1063 -741 0 0 0 0 -21 -762 0 1995 562 6 556 0 0 0 0 0 0 0 0 TOTAL 0 0 0 -11597 -1301 -1178 7 0 -180 -11661 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 1989 943 22 1351 0 194 0 0 0 0 0 2466 0 1990 1968 5 1803 0 234 0 0 0 0 0 4000 0 1991 1562 11 1306 0 230 0 0 0 0 0 3087 0 1992 4065 20 2570 0 335 0 0 0 0 0 6950 0 1993 1756 13 805 0 111 0 0 0 0 0 2659 0 1994 261 0 1576 0 78 0 0 0 0 0 1915 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 10956 71 9706 0 1263 0 0 0 0 0 21854 0
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 1989 447 -165 612 352.0 0.0 481.9 0 0 0.0 2272 194 1990 1589 -239 1828 36.4 0.0 41.9 0 0 0.0 3766 234 1991 -2086 -719 -1367 -5348.7 0.0 -3505.1 0 0 0.0 2857 230 1992 6234 -16 6250 155.9 -36.4 158.0 0 0 0.0 6615 335 1993 2743 75 2668 46.4 -277.8 44.9 0 0 0.0 2548 111 1994 1153 0 1153 104.0 0.0 108.5 0 0 0.0 1837 78 1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 20591 1263
SCHEDULE P - PART 1P REINSURANCE C
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 1989 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 0 0 0 0 0 0 0 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 0 0 0 0 0 0 0 0 0
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 1989 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1990 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1991 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1992 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1993 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1994 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 1995 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0
SCHEDULE P - PART 1Q REINSURANCE D
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 2590 4427 386 27 0 455 -1023 0 1986 35133 10388 24745 -540 106 -94 0 0 0 -740 0 1987 11444 126 11318 -656 -63 -91 0 0 2 -682 0 1988 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 1394 4470 201 27 0 457 -2445 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 119805 16396 121636 10540 7459 192 57 0 0 6000 227829 0 1986 525 5 604 4 41 0 0 0 0 0 1161 0 1987 614 6 304 2 49 0 0 0 0 0 959 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 120944 16407 122544 10546 7549 192 57 0 0 6000 229949 0
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 214505 13324 1986 536 114 422 1.5 1.1 1.7 0 0 0.0 1120 41 1987 222 -55 277 1.9 -43.7 2.4 0 0 0.0 910 49 1988 0 0 0 0.0 0.0 0.0 0 0 0.0 0 0 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 216535 13414
SCHEDULE P - PART 1R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 PRIOR 0 0 0 25 0 54 0 0 3 82 0 1986 8392 520 7872 1444 -929 1310 27 20 945 4601 92 1987 11517 3003 8514 846 -1185 746 82 15 1190 3885 136 1988 12241 2498 9743 2555 -529 1383 145 17 1704 6026 329 1989 18433 7590 10843 1973 113 1167 0 3 1129 4156 826 1990 15587 5646 9941 1706 166 752 0 12 1098 3390 563 1991 9588 60 9528 1519 0 1179 0 12 1395 4093 438 1992 4969 21 4948 1320 0 631 0 -1 830 2781 192 1993 4587 19 4568 267 0 215 0 4 536 1018 194 1994 4660 24 4636 179 0 57 0 0 160 396 171 1995 4819 25 4794 102 0 3 0 0 225 330 164 TOTAL 0 0 0 11936 -2364 7497 254 82 9215 30758 0
COL 13 COL 14 COL 15 COL 16 COL 17 COL 18 COL 19 COL 20 COL 21 COL 22 COL 23 COL 24 PRIOR 685 70 21 0 456 34 4 0 0 54 1116 8 1986 282 0 59 0 106 0 13 0 0 18 478 6 1987 42 0 111 0 82 0 24 0 0 12 271 7 1988 580 0 31 0 374 0 6 0 0 49 1040 5 1989 218 0 457 0 562 0 100 0 0 54 1391 20 1990 644 0 628 0 646 0 138 0 0 103 2159 14 1991 1344 0 567 0 1560 0 147 0 0 154 3772 28 1992 772 0 662 0 641 0 169 0 0 116 2360 22 1993 1343 0 636 0 441 0 162 0 0 160 2742 25 1994 654 0 922 0 447 0 228 0 0 127 2378 29 1995 292 0 1249 0 196 0 275 0 0 125 2137 42 TOTAL 6856 70 5343 0 5511 34 1266 0 0 972 19844 206
COL 25 COL 26 COL 27 COL 28 COL 29 COL 30 COL 31 COL 32 COL 33 COL 34 COL 35 PRIOR 0 0 0 0.0 0.0 0.0 0 0 0.0 636 480 1986 4176 -902 5078 49.8 -173.5 64.5 0 0 0.0 341 137 1987 3055 -1103 4158 26.5 -36.7 48.8 0 0 0.0 153 118 1988 6685 -384 7069 54.6 -15.4 72.6 0 0 0.0 611 429 1989 5660 113 5547 30.7 1.5 51.2 0 0 0.0 675 716 1990 5715 166 5549 36.7 2.9 55.8 0 0 0.0 1272 887 1991 7867 0 7867 82.1 0.0 82.6 0 0 0.0 1911 1861 1992 5140 0 5140 103.4 0.0 103.9 0 0 0.0 1434 926 1993 3760 0 3760 82.0 0.0 82.3 0 0 0.0 1979 763 1994 2776 0 2776 59.6 0.0 59.9 0 0 0.0 1576 802 1995 2466 0 2466 51.2 0.0 51.4 0 0 0.0 1541 596 TOTAL 0 0 0 0.0 0.0 0.0 0 0 0.0 12129 7715
SCHEDULE P - PART 2A HOMEOWNERS/FARMOWNERS
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 20297 15697 15327 15297 15205 15406 15335 18234 16474 16436 -38 -1798 1986 92150 87204 86457 86354 86012 85981 86110 86138 86200 86220 20 82 1987 0 105090 92399 90727 90034 89598 89323 89625 89635 89592 -43 -33 1988 0 0 134914 123490 122927 124523 123419 123530 123830 124272 442 742 1989 0 0 0 166199 150780 148215 146940 146684 146220 146080 -140 -604 1990 0 0 0 0 180535 164754 161466 161527 160894 160567 -327 -960 1991 0 0 0 0 0 187912 178533 175867 175457 175400 -57 -467 1992 0 0 0 0 0 0 175222 169922 169461 168592 -869 -1330 1993 0 0 0 0 0 0 0 168925 169154 168473 -681 -452 1994 0 0 0 0 0 0 0 0 174703 171504 -3199 0 1995 0 0 0 0 0 0 0 0 0 150667 0 0 TOTAL -4892 -4820
SCHEDULE P - PART 2B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 76962 84820 84404 82631 82795 82234 82306 85179 94287 94190 -97 9011 1986 168621 150306 148696 151102 151806 151453 151275 151010 150995 150912 -83 -98 1987 0 189794 164839 164199 164949 164858 164458 164754 164094 164059 -35 -695 1988 0 0 237184 228667 229838 226859 226698 226073 226785 226911 126 838 1989 0 0 0 243886 243308 241785 239085 238170 239364 238959 -405 789 1990 0 0 0 0 273715 275730 269069 266510 264748 263157 -1591 -3353 1991 0 0 0 0 0 269236 262149 251857 248041 247663 -378 -4194 1992 0 0 0 0 0 0 241094 233331 226213 221867 -4346 -11464 1993 0 0 0 0 0 0 0 233747 221430 219779 -1651 -13968 1994 0 0 0 0 0 0 0 0 220299 211785 -8514 0 1995 0 0 0 0 0 0 0 0 0 212640 0 0 TOTAL -16974 -23134
SCHEDULE P - PART 2C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 66272 72564 71989 71562 70194 69652 69605 72098 70949 71076 127 -1022 1986 99692 96705 100830 102174 101018 101429 101707 102254 101852 101707 -145 -547 1987 0 119611 122148 120680 121965 120818 119552 119238 118243 118101 -142 -1137 1988 0 0 147179 148230 152239 151934 149297 150088 147547 146882 -665 -3206 1989 0 0 0 174084 179222 181272 180186 176273 178995 177935 -1060 1662 1990 0 0 0 0 199225 197296 198887 196453 192356 190949 -1407 -5504 1991 0 0 0 0 0 206143 205380 197417 186022 182525 -3497 -14892 1992 0 0 0 0 0 0 192760 181893 164955 160913 -4042 -20980 1993 0 0 0 0 0 0 0 173217 166487 154577 -11910 -18640 1994 0 0 0 0 0 0 0 0 155433 141334 -14099 0 1995 0 0 0 0 0 0 0 0 0 137810 0 0 TOTAL -36840 -64266
SCHEDULE P - PART 2D WORKERS' COMPENSATION
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 114650 122431 129267 130597 132060 134226 136299 139530 137668 137889 221 -1641 1986 113214 100646 105526 109078 109723 113016 113323 113286 113071 113778 707 492 1987 0 133171 128384 125935 130810 133061 136571 137988 138022 136875 -1147 -1113 1988 0 0 155717 171291 173074 179700 180178 181077 182131 181174 -957 97 1989 0 0 0 182943 194205 200163 203591 201780 204361 203285 -1076 1505 1990 0 0 0 0 211282 222814 225752 226718 227583 225850 -1733 -868 1991 0 0 0 0 0 214236 221652 219670 214943 210480 -4463 -9190 1992 0 0 0 0 0 0 178837 168465 159744 150263 -9481 -18202 1993 0 0 0 0 0 0 0 161936 146338 137683 -8655 -24253 1994 0 0 0 0 0 0 0 0 131446 120393 -11053 0 1995 0 0 0 0 0 0 0 0 0 119523 0 0 TOTAL -37637 -53173
SCHEDULE P - PART 2E COMMERCIAL MULTIPLE PERIL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 70278 81045 92462 92289 92010 96470 105402 111487 103446 108972 5526 -2515 1986 135473 113681 108698 115672 117065 114053 117309 117132 118458 120447 1989 3315 1987 0 174843 144688 136248 133604 131961 137012 137994 141017 140927 -90 2933 1988 0 0 210338 187694 190070 185748 184810 185290 188346 190847 2501 5557 1989 0 0 0 272659 265599 262111 274361 265797 271680 287221 15541 21424 1990 0 0 0 0 300511 293531 296552 293564 292532 306262 13730 12698 1991 0 0 0 0 0 344073 345090 333933 327880 317993 -9887 -15940 1992 0 0 0 0 0 0 345631 332688 333081 321598 -11483 -11090 1993 0 0 0 0 0 0 0 300195 279806 262777 -17029 -37418 1994 0 0 0 0 0 0 0 0 275443 248323 -27120 0 1995 0 0 0 0 0 0 0 0 0 237949 0 0 TOTAL -26322 -21036
SCHEDULE P - PART 2F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 2284 1430 1160 815 693 767 646 643 544 544 0 -99 1986 216 4 4 100 86 219 219 219 219 219 0 0 1987 0 -1 -1 -1 -1 -1 2 -7 -7 -7 0 0 1988 0 0 0 0 67 67 69 72 74 76 2 4 1989 0 0 0 66 253 502 265 244 244 244 0 0 1990 0 0 0 0 0 64 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 191 -7 373 139 -234 146 1993 0 0 0 0 0 0 0 0 20 22 2 22 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL -230 73
SCHEDULE P - PART 2F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0
SCHEDULE P - PART 2G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 77 104 29 27 27 27 36 56 4 4 0 -52 1986 578 551 554 554 554 554 592 590 590 590 0 0 1987 0 561 436 425 425 426 421 422 421 421 0 -1 1988 0 0 851 826 760 759 673 636 649 649 0 13 1989 0 0 0 730 630 621 632 634 620 620 0 -14 1990 0 0 0 0 883 706 683 677 675 675 0 -2 1991 0 0 0 0 0 742 589 594 589 589 0 -5 1992 0 0 0 0 0 0 942 699 677 678 1 -21 1993 0 0 0 0 0 0 0 870 825 809 -16 -61 1994 0 0 0 0 0 0 0 0 1346 1501 155 0 1995 0 0 0 0 0 0 0 0 0 778 0 0 TOTAL 140 -143
SCHEDULE P - PART 2H SECTION 1 OTHER LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 121041 137461 141138 137637 139259 149577 161970 163204 175102 187821 12719 24617 1986 80230 55575 61838 62522 59688 57649 58758 58057 58551 60513 1962 2456 1987 0 70080 78626 67513 61784 63160 61470 60576 61070 61896 826 1320 1988 0 0 86073 86471 79797 83850 82165 77542 77753 78445 692 903 1989 0 0 0 89389 79267 90559 89821 86159 82785 81754 -1031 -4405 1990 0 0 0 0 90887 92487 94717 95369 97895 90048 -7847 -5321 1991 0 0 0 0 0 103393 92007 90177 90235 92524 2289 2347 1992 0 0 0 0 0 0 73933 85472 84980 84660 -320 -812 1993 0 0 0 0 0 0 0 88813 87198 89579 2381 766 1994 0 0 0 0 0 0 0 0 84012 69778 -14234 0 1995 0 0 0 0 0 0 0 0 0 60840 0 0 TOTAL -2563 21871
SCHEDULE P - PART 2H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 190 0 0 0 0 1504 1738 1380 795 -585 -943 1986 954 305 0 0 97 -10 8 -4 -4 105 109 109 1987 0 1785 12 12 12 12 1 1 1 1 0 0 1988 0 0 0 11 34 -4 167 167 167 165 -2 -2 1989 0 0 0 0 14 -1 147 -27 -27 -27 0 0 1990 0 0 0 0 126 -4 330 176 151 0 -151 -176 1991 0 0 0 0 0 0 12883 7327 7693 13606 5913 6279 1992 0 0 0 0 0 0 10763 6499 5701 6790 1089 291 1993 0 0 0 0 0 0 0 5377 4078 4493 415 -884 1994 0 0 0 0 0 0 0 0 4099 3659 -440 0 1995 0 0 0 0 0 0 0 0 0 5694 0 0 TOTAL 6348 4674
SCHEDULE P - PART 2I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY & THEFT)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 22232 17078 17276 198 -4956 1994 0 0 0 0 0 0 0 0 41405 42050 645 0 1995 0 0 0 0 0 0 0 0 0 44710 0 0 TOTAL 843 -4956
SCHEDULE P - PART 2J AUTO PHYSICAL DAMAGE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 20819 9986 7938 -2048 -12881 1994 0 0 0 0 0 0 0 0 148499 139885 -8614 0 1995 0 0 0 0 0 0 0 0 0 161071 0 0 TOTAL -10662 -12881
SCHEDULE P - PART 2K FIDELITY / SURETY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 6057 3293 2251 -1042 -3806 1994 0 0 0 0 0 0 0 0 2834 2001 -833 0 1995 0 0 0 0 0 0 0 0 0 2588 0 0 TOTAL -1875 -3806
SCHEDULE P - PART 2L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 66937 51561 46145 -5416 -20792 1994 0 0 0 0 0 0 0 0 63879 57465 -6414 0 1995 0 0 0 0 0 0 0 0 0 59434 0 0 TOTAL -11830 -20792
SCHEDULE P - PART 2M INTERNATIONAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 116 -6 -6 -6 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0
SCHEDULE P - PART 2N REINSURANCE A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 1989 0 0 0 929 1093 1036 1140 1153 1384 1356 -28 203 1990 0 0 0 0 0 0 -133 -489 -307 -264 43 225 1991 0 0 0 0 0 0 -602 -1074 -789 -478 311 596 1992 0 0 0 0 0 0 27601 20506 22820 22439 -381 1933 1993 0 0 0 0 0 0 0 2749 4051 3776 -275 1027 1994 0 0 0 0 0 0 0 0 0 -136 -136 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL -518 3992
SCHEDULE P - PART 2O REINSURANCE B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 1989 0 0 0 0 0 0 873 -1478 224 637 413 2115 1990 0 0 0 0 6172 0 1403 -2185 940 1868 928 4053 1991 0 0 0 0 0 0 -537 -4529 -1872 -1268 604 3261 1992 0 0 0 0 0 0 9867 1585 4413 6229 1816 4644 1993 0 0 0 0 0 0 0 262 1551 2667 1116 2405 1994 0 0 0 0 0 0 0 0 0 1174 1174 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 4967 16804
SCHEDULE P - PART 2P REINSURANCE C
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0
SCHEDULE P - PART 2Q REINSURANCE D
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 68206 89582 97875 112132 130041 154503 169796 232878 237235 310159 72924 77281 1986 5214 4203 4010 0 0 0 -287 -101 -107 421 528 522 1987 0 0 0 0 0 0 -186 -321 -20 276 296 597 1988 0 0 0 0 0 0 0 0 0 0 73748 78400 TOTAL 73748 78400
SCHEDULE P - PART 2R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 3582 3154 4351 5001 9397 4800 3416 3359 3399 3631 232 272 1986 1491 1665 2601 2646 4324 3064 2795 3393 3430 4113 683 720 1987 0 2230 2746 3684 6367 3775 2753 2654 2863 2956 93 302 1988 0 0 2567 4426 9739 6438 4353 4500 4629 5315 686 815 1989 0 0 0 3192 6654 5408 3337 3740 3414 4364 950 624 1990 0 0 0 0 3642 4190 3544 4293 3250 4348 1098 55 1991 0 0 0 0 0 4507 3338 5109 5263 6318 1055 1209 1992 0 0 0 0 0 0 1928 3170 3759 4194 435 1024 1993 0 0 0 0 0 0 0 2778 2841 3065 224 287 1994 0 0 0 0 0 0 0 0 1840 2488 648 0 1995 0 0 0 0 0 0 0 0 0 2116 0 0 TOTAL 6104 5308
SCHEDULE P - PART 2R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0
SCHEDULE P - PART 2S FINANCIAL GUARANTY / MORTGAGE GUARANTY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0
SCHEDULE P - PART 3A HOMEOWNERS/FARMOWNERS
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 5768 9440 12172 12687 13903 14226 15128 15416 16157 10927 257 1986 61725 79506 81732 83858 84807 85180 85522 85629 85841 85988 48482 2341 1987 0 66392 82966 85855 87230 88116 88559 89001 89323 89486 57938 3064 1988 0 0 89234 113947 116302 118940 120430 122194 122852 123291 62766 3632 1989 0 0 0 106859 137398 141267 143360 144236 144969 145436 73171 5252 1990 0 0 0 0 113400 148002 153492 156059 157586 159059 81957 7623 1991 0 0 0 0 0 125957 159931 167329 170483 172330 77239 7050 1992 0 0 0 0 0 0 118115 151094 159731 163250 60768 5661 1993 0 0 0 0 0 0 0 124303 154978 160309 62290 4777 1994 0 0 0 0 0 0 0 0 125964 158573 53696 6015 1995 0 0 0 0 0 0 0 0 0 108470 43119 14038
SCHEDULE P - PART 3B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 46105 61335 72546 75910 78626 80371 84641 81884 81741 5847 690 1986 58028 110077 127078 140861 145397 148560 149719 149949 150410 150609 47371 8525 1987 0 65172 103615 135821 150938 158408 161160 163038 163556 163715 64746 12714 1988 0 0 85573 159413 195726 213152 219524 222724 223986 225211 68192 14829 1989 0 0 0 90971 167497 204054 220367 228126 232691 235523 71442 15209 1990 0 0 0 0 97913 186523 227719 247450 255891 259274 69127 14786 1991 0 0 0 0 0 90118 172244 211454 230632 238983 60072 12900 1992 0 0 0 0 0 0 82707 157035 191321 206988 53512 11765 1993 0 0 0 0 0 0 0 81601 149324 185060 53378 11585 1994 0 0 0 0 0 0 0 0 77916 142625 43017 11334 1995 0 0 0 0 0 0 0 0 0 75454 31638 11884
SCHEDULE P - PART 3C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 33710 49889 57610 63291 65953 67113 67700 68220 70111 6771 688 1986 24372 51899 70242 84871 91278 96190 98563 99799 100938 101029 23817 4068 1987 0 29315 60999 88069 104592 112367 115160 116360 117233 117567 27797 5102 1988 0 0 37192 75777 109876 128506 138192 142993 145439 145976 33018 6243 1989 0 0 0 42107 92119 126602 150989 162769 169911 173522 35864 6859 1990 0 0 0 0 48312 107231 141941 164882 177433 183782 33322 6609 1991 0 0 0 0 0 41264 97238 135960 157116 165704 30780 6395 1992 0 0 0 0 0 0 39023 83864 116895 132745 23575 5025 1993 0 0 0 0 0 0 0 35849 74689 105420 21408 4443 1994 0 0 0 0 0 0 0 0 36092 72404 19425 4547 1995 0 0 0 0 0 0 0 0 0 32694 14296 4863
SCHEDULE P - PART 3D WORKERS' COMPENSATION
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 38645 60410 75396 84145 92067 96972 99849 104441 107537 5588 776 1986 26377 63984 81819 91113 95278 99309 101411 102646 104130 105273 38106 3162 1987 0 29150 74319 96066 106184 113960 119096 120988 123008 124048 48591 4439 1988 0 0 36058 97062 126153 143666 153460 158294 162278 164612 58209 6037 1989 0 0 0 44020 103658 140081 160439 169739 176157 179463 61511 6281 1990 0 0 0 0 52140 119287 157200 174542 186435 194071 53447 5352 1991 0 0 0 0 0 50477 115234 144926 163582 174162 44418 4873 1992 0 0 0 0 0 0 40039 80234 104254 116321 32444 3449 1993 0 0 0 0 0 0 0 33989 76013 95307 24444 2394 1994 0 0 0 0 0 0 0 0 26401 62018 21068 2462 1995 0 0 0 0 0 0 0 0 0 25360 13734 3604
SCHEDULE P - PART 3E COMMERCIAL MULTIPLE PERIL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 24471 44943 62858 70047 76364 81026 84333 87087 89737 4261 477 1986 49028 72414 77792 90045 97340 102487 107451 109710 111142 112360 29235 5415 1987 0 53980 73770 87146 99355 110626 116857 121128 125033 127719 34163 6961 1988 0 0 73177 107791 125827 143425 150500 158453 165627 173538 40377 9321 1989 0 0 0 96368 147864 174270 194985 213394 226023 240183 49191 12478 1990 0 0 0 0 94314 151256 180507 208200 228889 244192 49343 13023 1991 0 0 0 0 0 118238 172345 195557 219705 239062 46247 12997 1992 0 0 0 0 0 0 119425 176833 214538 240534 38939 11080 1993 0 0 0 0 0 0 0 104766 151005 176708 36138 9660 1994 0 0 0 0 0 0 0 0 103435 150093 32466 10533 1995 0 0 0 0 0 0 0 0 0 104748 25435 13619
SCHEDULE P - PART 3F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 335 303 468 567 576 539 542 544 544 22 34 1986 4 4 4 7 21 219 219 219 219 219 3 7 1987 0 -1 -1 -1 -1 -1 -7 -7 -7 -7 1 0 1988 0 0 0 0 3 3 5 4 7 8 0 0 1989 0 0 0 0 15 57 243 244 244 244 7 0 1990 0 0 0 0 0 0 0 0 0 0 0 4 1991 0 0 0 0 0 0 0 0 0 0 0 3 1992 0 0 0 0 0 0 0 -7 7 139 12 5 1993 0 0 0 0 0 0 0 0 20 22 3 3 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 26 26 27 27 27 -53 -57 -55 4 0 0 1986 327 551 554 554 554 554 554 553 553 590 0 0 1987 0 329 422 425 425 426 415 418 418 421 0 0 1988 0 0 517 599 694 693 621 624 625 649 0 0 1989 0 0 0 446 618 618 579 598 600 620 0 0 1990 0 0 0 0 485 687 674 674 675 675 0 0 1991 0 0 0 0 0 405 545 588 589 589 0 0 1992 0 0 0 0 0 0 402 629 639 641 0 0 1993 0 0 0 0 0 0 0 670 800 809 0 0 1994 0 0 0 0 0 0 0 0 867 1481 0 0 1995 0 0 0 0 0 0 0 0 0 478 0 0
SCHEDULE P - PART 3H SECTION 1 OTHER LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 38667 65397 90930 106950 117599 121529 125021 132949 149160 4707 2763 1986 7099 17357 26816 37030 45279 49110 51886 53563 54561 55775 9261 2622 1987 0 7718 16801 28897 39222 46195 48719 52542 54000 56914 10716 2959 1988 0 0 8737 19915 34927 47287 56781 62335 67247 70165 11368 3211 1989 0 0 0 10232 22548 37279 50685 56903 64753 69741 10945 3289 1990 0 0 0 0 12627 22732 43882 54211 64196 72734 14271 2757 1991 0 0 0 0 0 7914 20586 34568 49013 60002 13987 2419 1992 0 0 0 0 0 0 8191 19277 33746 44344 5631 2371 1993 0 0 0 0 0 0 0 9970 26695 38363 5163 1860 1994 0 0 0 0 0 0 0 0 7062 16482 4359 1703 1995 0 0 0 0 0 0 0 0 0 5375 2856 1472
SCHEDULE P - PART 3H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 34 396 410 417 0 0 1986 0 4 0 0 -10 -10 -10 -4 -4 -4 59 112 1987 0 1 12 12 12 12 1 1 1 1 89 95 1988 0 0 0 0 -4 -4 167 167 167 165 58 60 1989 0 0 0 0 -1 -1 -18 -27 -27 -27 58 65 1990 0 0 0 0 -4 -4 21 0 0 0 80 112 1991 0 0 0 0 0 0 2527 2873 3264 11372 59 113 1992 0 0 0 0 0 0 23 855 1605 5002 45 139 1993 0 0 0 0 0 0 0 1564 1720 2139 30 121 1994 0 0 0 0 0 0 0 0 173 1438 22 93 1995 0 0 0 0 0 0 0 0 0 92 6 32
SCHEDULE P - PART 3I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLARY & THEFT)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 12276 15735 0 0 1994 0 0 0 0 0 0 0 0 31613 40015 0 0 1995 0 0 0 0 0 0 0 0 0 35560 0 0
SCHEDULE P - PART 3J AUTO PHYSICAL DAMAGE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 7636 6863 313 275 1994 0 0 0 0 0 0 0 0 131058 138907 131902 10260 1995 0 0 0 0 0 0 0 0 0 143766 117192 21586
SCHEDULE P - PART 3K FIDELITY / SURETY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 784 878 0 0 1994 0 0 0 0 0 0 0 0 554 1248 0 0 1995 0 0 0 0 0 0 0 0 0 304 0 0
SCHEDULE P - PART 3L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 30169 33937 0 0 1994 0 0 0 0 0 0 0 0 26325 44471 0 0 1995 0 0 0 0 0 0 0 0 0 21434 0 0
SCHEDULE P - PART 3M INTERNATIONAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 -6 -6 -6 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3N REINSURANCE A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 1989 0 0 0 140 964 946 754 950 1160 1061 0 0 1990 0 0 0 0 0 0 -598 -637 -489 -533 0 0 1991 0 0 0 0 0 0 -2068 -1389 -1343 -1161 0 0 1992 0 0 0 0 0 0 10521 18761 20489 20751 0 0 1993 0 0 0 0 0 0 0 2321 2977 3240 0 0 1994 0 0 0 0 0 0 0 0 0 -168 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3O REINSURANCE B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 1989 0 0 0 0 0 0 -2378 -2031 -1885 -1827 0 0 1990 0 0 0 0 0 0 -3179 -2682 -2138 -2133 0 0 1991 0 0 0 0 0 0 -4916 -4945 -4278 -4356 0 0 1992 0 0 0 0 0 0 599 1117 1770 -720 0 0 1993 0 0 0 0 0 0 0 143 340 7 0 0 1994 0 0 0 0 0 0 0 0 0 -741 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3P REINSURANCE C
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3Q REINSURANCE D
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 22438 46067 32126 60320 77381 73163 84573 89809 88330 0 0 1986 974 -37 0 0 0 0 -950 -647 -632 -739 0 0 1987 0 0 0 0 0 0 -657 -562 -469 -684 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 862 1290 138 1028 1832 2304 2467 2489 2569 5 7 1986 299 622 926 1407 1877 2279 2677 2892 3316 3655 36 55 1987 0 227 283 663 1197 2364 2414 2470 2592 2696 65 64 1988 0 0 298 769 1464 3317 3693 3779 3873 4322 79 83 1989 0 0 0 392 691 1318 1666 1878 2284 3026 202 130 1990 0 0 0 0 179 825 1071 1195 1564 2292 706 249 1991 0 0 0 0 0 553 786 1400 2187 2700 878 216 1992 0 0 0 0 0 0 101 172 781 1951 100 76 1993 0 0 0 0 0 0 0 69 231 481 110 63 1994 0 0 0 0 0 0 0 0 91 236 85 55 1995 0 0 0 0 0 0 0 0 0 106 53 69
SCHEDULE P - PART 3R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 3S FINANCIAL GUARANTY / MORTGAGE GUARANTY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 COL 12 COL 13 PRIOR 0 0 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4A HOMEOWNERS/FARMOWNERS
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 5099 395 227 132 141 141 38 1857 69 22 1986 12268 1630 324 209 91 97 42 14 12 11 1987 0 19637 2774 263 230 203 46 18 9 5 1988 0 0 21531 2405 654 780 223 60 18 13 1989 0 0 0 33127 3648 1104 179 77 47 19 1990 0 0 0 0 34711 4923 792 391 115 64 1991 0 0 0 0 0 29706 4701 731 306 194 1992 0 0 0 0 0 0 26630 2440 718 357 1993 0 0 0 0 0 0 0 16846 3987 677 1994 0 0 0 0 0 0 0 0 22197 4196 1995 0 0 0 0 0 0 0 0 0 11488
SCHEDULE P - PART 4B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 3046 509 28 12 7 10 2 21 25 16 1986 41102 2094 520 43 49 36 7 13 11 3 1987 0 48612 7552 1643 1054 101 21 13 28 16 1988 0 0 51737 10571 3602 763 58 33 49 31 1989 0 0 0 46258 15874 5005 1326 80 36 24 1990 0 0 0 0 53278 19611 3289 740 144 38 1991 0 0 0 0 0 56431 12233 1467 699 104 1992 0 0 0 0 0 0 48577 6491 5011 466 1993 0 0 0 0 0 0 0 40230 9101 2133 1994 0 0 0 0 0 0 0 0 32944 10786 1995 0 0 0 0 0 0 0 0 0 32549
SCHEDULE P - PART 4C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 2477 1554 117 28 29 8 6 2591 781 140 1986 32983 5633 2416 436 294 104 31 12 6 53 1987 0 37112 10400 4713 2378 389 163 77 105 110 1988 0 0 38916 12526 6938 1910 363 994 211 342 1989 0 0 0 45824 22413 8578 1134 682 323 819 1990 0 0 0 0 63143 24978 9737 1648 669 1065 1991 0 0 0 0 0 73923 25023 9256 4542 3803 1992 0 0 0 0 0 0 73000 19723 13494 12015 1993 0 0 0 0 0 0 0 51302 24500 10684 1994 0 0 0 0 0 0 0 0 42725 20632 1995 0 0 0 0 0 0 0 0 0 40805
SCHEDULE P - PART 4D WORKERS' COMPENSATION
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 6052 2831 2796 1902 2420 4322 6074 7153 5530 5838 1986 55103 5814 2416 1569 1330 2135 2693 2356 1964 1972 1987 0 65296 13956 3764 3878 3585 4450 3705 3484 3103 1988 0 0 67397 20984 11331 8829 6122 5044 4873 4294 1989 0 0 0 75712 29108 19441 14789 7225 6334 6437 1990 0 0 0 0 86055 38400 23450 18240 8159 7822 1991 0 0 0 0 0 92736 42931 28746 13554 8264 1992 0 0 0 0 0 0 86312 39160 21067 8809 1993 0 0 0 0 0 0 0 80969 25054 10871 1994 0 0 0 0 0 0 0 0 57210 18643 1995 0 0 0 0 0 0 0 0 0 42151
SCHEDULE P - PART 4E COMMERCIAL MULTIPLE PERIL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 11491 6923 9514 4920 3011 2716 6996 8760 6754 8830 1986 59618 15173 2967 4882 5960 1668 3410 2693 3778 4605 1987 0 83866 34298 13725 10503 6088 6095 5073 6303 5772 1988 0 0 89237 37024 24133 13472 10918 11067 8972 8376 1989 0 0 0 111411 56704 33285 30992 18144 18916 24841 1990 0 0 0 0 130753 71188 45917 33478 27711 31859 1991 0 0 0 0 0 153703 90415 56161 44166 38236 1992 0 0 0 0 0 0 144405 70176 49533 35915 1993 0 0 0 0 0 0 0 122241 63409 30690 1994 0 0 0 0 0 0 0 0 99655 39497 1995 0 0 0 0 0 0 0 0 0 69110
SCHEDULE P - PART 4F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 534 232 229 38 39 90 37 47 0 0 1986 87 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 9 0 0 0 1988 0 0 0 0 34 42 42 45 44 34 1989 0 0 0 56 6 20 21 0 0 0 1990 0 0 0 0 0 47 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 189 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4F SECTION 2 MEDICAL MALPRACTICE - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4G SPECIAL LIABILITY (OCEAN, MARINE, AIRCRAFT (ALL PERILS), BOILER AND MACHINERY)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 1 7 0 0 0 0 0 38 0 0 1986 140 0 0 0 0 0 0 0 0 0 1987 0 107 0 0 0 0 0 0 0 0 1988 0 0 147 6 6 6 0 0 0 0 1989 0 0 0 151 0 0 0 0 0 0 1990 0 0 0 0 250 0 8 0 0 0 1991 0 0 0 0 0 186 14 0 0 0 1992 0 0 0 0 0 0 349 0 0 0 1993 0 0 0 0 0 0 0 105 0 0 1994 0 0 0 0 0 0 0 0 66 0 1995 0 0 0 0 0 0 0 0 0 178
SCHEDULE P - PART 4H SECTION 1 OTHER LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 11395 6738 5413 3145 3755 3731 13559 10459 17285 17196 1986 52673 11611 5731 3883 3955 1084 1885 1178 1460 1709 1987 0 37878 27740 13547 7095 6042 4270 2056 1757 1842 1988 0 0 51881 30674 12983 9530 8699 4558 2652 2780 1989 0 0 0 57150 24726 18932 16076 11582 5545 4295 1990 0 0 0 0 47092 25306 17219 18868 16593 6258 1991 0 0 0 0 0 65291 39103 22580 20130 14255 1992 0 0 0 0 0 0 46394 31486 23725 17061 1993 0 0 0 0 0 0 0 58266 36011 24283 1994 0 0 0 0 0 0 0 0 54928 31766 1995 0 0 0 0 0 0 0 0 0 41703
SCHEDULE P - PART 4H SECTION 2 OTHER LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 190 0 0 0 0 374 983 700 259 1986 926 271 0 0 61 0 3 0 0 91 1987 0 1716 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 88 0 0 0 1990 0 0 0 0 82 0 14 0 0 0 1991 0 0 0 0 0 0 30 0 0 0 1992 0 0 0 0 0 0 0 31 25 21 1993 0 0 0 0 0 0 0 54 62 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 21
SCHEDULE P - PART 4I SPECIAL PROPERTY (FIRE, ALLIED LINES, INLAND MARINE, EARTHQUAKE, GLASS, BURGLA
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 7816 72 21 1994 0 0 0 0 0 0 0 0 3855 13 1995 0 0 0 0 0 0 0 0 0 1343
SCHEDULE P - PART 4J AUTO PHYSICAL DAMAGE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 10698 1131 933 1994 0 0 0 0 0 0 0 0 8000 463 1995 0 0 0 0 0 0 0 0 0 2791
SCHEDULE P - PART 4K FIDELITY / SURETY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 1176 0 0 1994 0 0 0 0 0 0 0 0 1075 0 1995 0 0 0 0 0 0 0 0 0 1053
SCHEDULE P - PART 4L OTHER (INCLUDING CREDIT, ACCIDENT AND HEALTH)
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 45106 15460 8286 1994 0 0 0 0 0 0 0 0 27887 9168 1995 0 0 0 0 0 0 0 0 0 27692
SCHEDULE P - PART 4M INTERNATIONAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 116 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4N REINSURANCE A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 26 0 0 0 0 0 34 1990 0 0 0 0 0 0 0 0 0 56 1991 0 0 0 0 0 0 0 0 0 85 1992 0 0 0 0 0 0 8524 0 500 64 1993 0 0 0 0 0 0 0 0 500 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4O REINSURANCE B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 0 0 0 1604 0 900 1351 1990 0 0 0 0 6172 0 2419 0 1400 1803 1991 0 0 0 0 0 0 3085 0 1400 1306 1992 0 0 0 0 0 0 8521 0 1400 2570 1993 0 0 0 0 0 0 0 0 500 805 1994 0 0 0 0 0 0 0 0 0 1576 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4P REINSURANCE C
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4Q REINSURANCE D
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 32655 32548 22405 10996 6304 16405 16228 48529 43584 111153 1986 2 2 4 0 0 0 0 0 0 600 1987 0 0 0 0 0 0 0 0 0 302 1988 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 1399 67 42 182 318 113 70 197 140 17 1986 817 317 148 160 513 25 3 53 49 72 1987 0 1418 1522 912 1542 272 136 57 82 136 1988 0 0 1442 1410 2361 1407 303 219 89 39 1989 0 0 0 1912 3370 1910 955 763 404 558 1990 0 0 0 0 2401 1830 1022 1497 441 767 1991 0 0 0 0 0 2255 936 1679 1406 714 1992 0 0 0 0 0 0 963 1162 1060 830 1993 0 0 0 0 0 0 0 1238 1109 799 1994 0 0 0 0 0 0 0 0 1225 1151 1995 0 0 0 0 0 0 0 0 0 1524
SCHEDULE P - PART 4R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 4S FINANCIAL GUARANTY / MORTGAGE GUARANTY
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 8036 586 245 91 55 53 15 15 13 6 1986 41347 47836 48242 48349 48416 48455 48464 48469 48478 48482 1987 0 46424 57311 57647 57788 57894 57914 57923 57931 57938 1988 0 0 53400 61138 61558 62647 62704 62739 62759 62766 1989 0 0 0 54081 65023 72965 73069 73134 73157 73171 1990 0 0 0 0 63447 81278 81731 81861 81919 81957 1991 0 0 0 0 0 67986 76574 77053 77180 77239 1992 0 0 0 0 0 0 52540 60318 60666 60768 1993 0 0 0 0 0 0 0 55678 61978 62290 1994 0 0 0 0 0 0 0 0 47715 53696 1995 0 0 0 0 0 0 0 0 0 43119
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 735 313 154 123 73 34 43 37 17 11 1986 2014 398 149 88 38 17 18 16 8 6 1987 0 2586 413 182 85 34 21 16 11 9 1988 0 0 2722 419 210 130 70 37 18 16 1989 0 0 0 4063 485 153 104 64 31 14 1990 0 0 0 0 4406 441 229 120 57 22 1991 0 0 0 0 0 3785 577 233 121 67 1992 0 0 0 0 0 0 3369 506 226 121 1993 0 0 0 0 0 0 0 2427 469 200 1994 0 0 0 0 0 0 0 0 2322 414 1995 0 0 0 0 0 0 0 0 0 5747
SCHEDULE P - PART 5A HOMEOWNERS/FARMOWNERS SECTION 3
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 44647 50260 50534 50605 50637 50668 50681 50694 50702 50707 1987 0 50815 60131 60362 60453 60552 60565 60580 60589 60597 1988 0 0 58418 64671 64993 66241 66275 66304 66318 66329 1989 0 0 0 59454 68232 76197 76282 76349 76366 76379 1990 0 0 0 0 72941 88957 89298 89428 89470 89496 1991 0 0 0 0 0 77053 83878 84282 84375 84415 1992 0 0 0 0 0 0 59799 66009 66287 66370 1993 0 0 0 0 0 0 0 61538 67009 67261 1994 0 0 0 0 0 0 0 0 53641 60124 1995 0 0 0 0 0 0 0 0 0 62905
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 10413 2475 928 320 131 113 32 16 23 9 1986 35024 45026 46527 46988 47155 47314 47339 47349 47360 47371 1987 0 49461 62117 63662 64144 64625 64688 64721 64739 64746 1988 0 0 51786 63957 65547 67925 68072 68147 68179 68192 1989 0 0 0 49098 61845 70656 71116 71288 71392 71442 1990 0 0 0 0 48728 66717 68286 68786 69030 69127 1991 0 0 0 0 0 47261 57771 59261 59854 60072 1992 0 0 0 0 0 0 41280 51271 52959 53512 1993 0 0 0 0 0 0 0 41908 51806 53378 1994 0 0 0 0 0 0 0 0 33693 43017 1995 0 0 0 0 0 0 0 0 0 31638
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 4136 1490 837 351 181 103 67 55 40 36 1986 9722 2445 1049 370 161 69 35 26 18 12 1987 0 14100 3312 1082 435 182 82 35 20 13 1988 0 0 14618 3257 1100 383 192 94 43 29 1989 0 0 0 13575 3274 1090 436 206 92 41 1990 0 0 0 0 13483 3192 1177 466 180 73 1991 0 0 0 0 0 11686 3053 1099 417 157 1992 0 0 0 0 0 0 11045 2811 1007 384 1993 0 0 0 0 0 0 0 10767 2714 1015 1994 0 0 0 0 0 0 0 0 10536 2827 1995 0 0 0 0 0 0 0 0 0 12669
SCHEDULE P - PART 5B PRIVATE PASSENGER AUTO LIABILITY/MEDICAL SECTION 3
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 46500 54589 55027 55142 55196 55362 55372 55380 55383 55393 1987 0 72168 76796 77193 77344 77915 77935 77956 77961 77966 1988 0 0 73608 80348 80921 84063 84114 84144 84154 84159 1989 0 0 0 69291 77248 84909 85065 85127 85156 85166 1990 0 0 0 0 67288 81286 81834 82026 82073 82094 1991 0 0 0 0 0 61649 67312 67889 68016 68048 1992 0 0 0 0 0 0 55002 60404 60825 60926 1993 0 0 0 0 0 0 0 54359 59161 59500 1994 0 0 0 0 0 0 0 0 52172 57178 1995 0 0 0 0 0 0 0 0 0 56191
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 6561 1354 536 183 89 67 19 9 3 8 1986 16755 22471 23282 23576 23684 23781 23800 23809 23813 23817 1987 0 20556 26349 27171 27461 27712 27757 27779 27789 27797 1988 0 0 24628 30875 31698 32826 32933 32986 33011 33018 1989 0 0 0 24374 30701 35258 35631 35794 35839 35864 1990 0 0 0 0 22275 31553 32684 33145 33262 33322 1991 0 0 0 0 0 22749 27941 30341 30640 30780 1992 0 0 0 0 0 0 17650 22661 23316 23575 1993 0 0 0 0 0 0 0 16966 20703 21408 1994 0 0 0 0 0 0 0 0 15750 19425 1995 0 0 0 0 0 0 0 0 0 14291
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 2404 981 429 203 114 63 60 42 36 79 1986 4274 1386 593 222 108 45 26 18 14 19 1987 0 4990 1501 526 233 98 49 32 22 20 1988 0 0 5402 1412 573 263 110 64 37 28 1989 0 0 0 5501 1519 682 338 137 158 125 1990 0 0 0 0 5459 2898 2705 1161 1036 980 1991 0 0 0 0 0 8998 4471 888 519 376 1992 0 0 0 0 0 0 4689 1409 626 299 1993 0 0 0 0 0 0 0 3840 1328 540 1994 0 0 0 0 0 0 0 0 3885 1333 1995 0 0 0 0 0 0 0 0 0 4563
SCHEDULE P - PART 5C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL SECTION 3
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 22912 27241 27559 27637 27666 27688 27694 27701 27710 27726 1987 0 28226 32066 32265 32370 32526 32539 32551 32560 32581 1988 0 0 33702 37655 37993 39012 39041 39070 39090 39110 1989 0 0 0 33532 37805 41998 42130 42160 42284 42303 1990 0 0 0 0 30884 39927 41021 40245 40826 40875 1991 0 0 0 0 0 36213 38168 36732 37422 37474 1992 0 0 0 0 0 0 25527 27729 28629 28687 1993 0 0 0 0 0 0 0 23788 26194 26391 1994 0 0 0 0 0 0 0 0 22588 25305 1995 0 0 0 0 0 0 0 0 0 23714
SCHEDULE P - PART 5D WORKERS' COMPENSATION SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 10978 3731 1554 684 456 335 167 107 92 67 1986 24365 34688 36737 37394 37694 37921 38009 38047 38085 38106 1987 0 32608 45345 47104 47734 48276 48434 48508 48559 48591 1988 0 0 40963 53390 55153 57577 57906 58060 58145 58209 1989 0 0 0 39869 51942 60133 60920 61254 61425 61511 1990 0 0 0 0 34507 50355 52201 52930 53263 53447 1991 0 0 0 0 0 31676 41592 43431 44078 44418 1992 0 0 0 0 0 0 23357 30751 32004 32444 1993 0 0 0 0 0 0 0 17824 23575 24444 1994 0 0 0 0 0 0 0 0 16020 21068 1995 0 0 0 0 0 0 0 0 0 13734
SCHEDULE P - PART 5D WORKERS' COMPENSATION SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 5238 2625 1928 1233 981 746 591 526 475 416 1986 6752 2791 1251 597 379 264 172 140 102 91 1987 0 9259 2998 1126 666 399 241 178 130 89 1988 0 0 10017 2941 1436 758 407 278 202 138 1989 0 0 0 9491 3226 1507 743 424 257 182 1990 0 0 0 0 9579 3335 1526 859 482 316 1991 0 0 0 0 0 8831 3179 1514 844 482 1992 0 0 0 0 0 0 6320 2206 1008 556 1993 0 0 0 0 0 0 0 4872 1583 764 1994 0 0 0 0 0 0 0 0 4236 1553 1995 0 0 0 0 0 0 0 0 0 5380
SCHEDULE P - PART 5D WORKERS' COMPENSATION SECTION 3
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 32393 40057 40575 40698 40770 40590 40607 40615 40622 40636 1987 0 44070 51674 51838 52014 52029 52054 52070 52081 52085 1988 0 0 54566 61586 62042 63599 63640 63666 63689 63697 1989 0 0 0 52629 60175 66396 66565 66604 66644 66672 1990 0 0 0 0 47009 58548 58881 58974 59005 59034 1991 0 0 0 0 0 43389 49171 49476 49578 49607 1992 0 0 0 0 0 0 31819 35813 36058 36115 1993 0 0 0 0 0 0 0 24213 27422 27600 1994 0 0 0 0 0 0 0 0 21673 25082 1995 0 0 0 0 0 0 0 0 0 22719
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 7507 1144 699 314 196 148 58 47 38 35 1986 21370 27630 28354 28697 28901 29071 29131 29177 29206 29235 1987 0 24201 32352 33189 33538 33863 33996 34068 34118 34163 1988 0 0 29036 37394 38375 39853 40045 40189 40282 40377 1989 0 0 0 31892 41972 48077 48530 48837 49031 49191 1990 0 0 0 0 33070 47106 48266 48828 49126 49343 1991 0 0 0 0 0 35181 44211 45401 45950 46247 1992 0 0 0 0 0 0 29800 37501 38487 38939 1993 0 0 0 0 0 0 0 28830 35354 36138 1994 0 0 0 0 0 0 0 0 26072 32466 1995 0 0 0 0 0 0 0 0 0 25435
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 2816 2010 917 539 335 293 380 231 222 190 1986 3658 1339 767 494 294 175 156 106 110 97 1987 0 4861 1637 782 483 311 208 181 175 125 1988 0 0 5842 1728 925 547 377 303 258 197 1989 0 0 0 6603 2086 1137 761 516 425 330 1990 0 0 0 0 6787 2281 1294 828 554 401 1991 0 0 0 0 0 6799 2524 1436 831 493 1992 0 0 0 0 0 0 5722 2253 1178 671 1993 0 0 0 0 0 0 0 5375 1981 1145 1994 0 0 0 0 0 0 0 0 5468 2011 1995 0 0 0 0 0 0 0 0 0 7925
SCHEDULE P - PART 5E COMMERCIAL MULTIPLE PERIL SECTION 3
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 27271 32910 33614 33914 34084 34274 34380 34447 34532 34591 1987 0 32272 39063 39677 39981 40379 40506 40635 40769 40850 1988 0 0 39436 46362 47194 49153 49352 49548 49729 49846 1989 0 0 0 44592 53426 59747 60248 60577 60890 61101 1990 0 0 0 0 46392 60469 61586 62103 62451 62691 1991 0 0 0 0 0 49586 57785 58857 59371 59601 1992 0 0 0 0 0 0 42003 49109 49970 50385 1993 0 0 0 0 0 0 0 40100 46146 46943 1994 0 0 0 0 0 0 0 0 37660 45007 1995 0 0 0 0 0 0 0 0 0 46978
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE SECTION 1A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 4 14 8 3 2 0 0 0 0 0 1986 0 0 0 0 0 3 3 3 3 3 1987 0 1 1 1 1 1 1 1 1 1 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 3 3 7 7 7 7 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 4 5 8 12 1993 0 0 0 0 0 0 0 0 3 3 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE SECTION 2A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 38 16 9 5 3 3 0 0 0 0 1986 4 0 0 4 3 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 1 3 3 4 4 3 3 1989 0 0 0 3 3 4 0 0 0 0 1990 0 0 0 0 0 3 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 5 0 4 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 5F SECTION 1 MEDICAL MALPRACTICE - OCCURRENCE SECTION 3A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 9 9 9 12 12 10 10 10 10 10 1987 0 1 1 1 1 1 1 1 1 1 1988 0 0 0 0 3 3 3 3 3 3 1989 0 0 0 3 5 6 6 6 6 6 1990 0 0 0 0 0 3 5 5 5 5 1991 0 0 0 0 0 3 3 3 3 3 1992 0 0 0 0 0 0 7 7 12 12 1993 0 0 0 0 0 0 0 4 7 7 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE SECTION 1A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 3715 1440 716 466 248 137 68 234 229 47 1986 5593 8130 8605 8872 9034 9140 9185 9221 9241 9261 1987 0 7085 9632 10159 10358 10518 10592 10642 10677 10717 1988 0 0 7504 10091 10515 11070 11261 11355 11415 11460 1989 0 0 0 6833 8792 10237 10600 10788 10875 10945 1990 0 0 0 0 5550 13035 13775 14064 14177 14271 1991 0 0 0 0 0 11440 12861 13635 13860 13987 1992 0 0 0 0 0 0 3562 5171 5458 5631 1993 0 0 0 0 0 0 0 3583 4888 5170 1994 0 0 0 0 0 0 0 0 3261 4359 1995 0 0 0 0 0 0 0 0 0 2856
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE SECTION 2A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 3779 2163 1477 939 662 539 901 1048 1192 697 1986 1543 983 733 473 240 133 104 99 99 76 1987 0 1658 979 564 336 207 178 147 140 91 1988 0 0 1789 858 585 477 353 181 148 128 1989 0 0 0 1476 757 788 753 385 216 165 1990 0 0 0 0 1307 1717 1968 660 348 288 1991 0 0 0 0 0 2257 1498 624 709 594 1992 0 0 0 0 0 0 941 649 610 489 1993 0 0 0 0 0 0 0 1110 592 435 1994 0 0 0 0 0 0 0 0 983 570 1995 0 0 0 0 0 0 0 0 0 1151
SCHEDULE P - PART 5H SECTION 1 OTHER LIABILITY - OCCURRENCE SECTION 3A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 7769 10591 11212 11482 11594 11591 11640 11722 11802 11852 1987 0 9716 12464 12980 13186 13262 13345 13433 13538 13601 1988 0 0 10461 13042 13561 14009 14099 14188 14301 14410 1989 0 0 0 9587 11749 13051 13340 13380 13520 13637 1990 0 0 0 0 7889 17047 17838 17366 17352 17524 1991 0 0 0 0 0 15285 16369 16474 17173 17375 1992 0 0 0 0 0 0 5612 7245 8147 8446 1993 0 0 0 0 0 0 0 5479 6984 7463 1994 0 0 0 0 0 0 0 0 5052 6631 1995 0 0 0 0 0 0 0 0 0 5476
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE SECTION 1B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 32 19 2 3 1 0 0 0 3 0 1986 15 43 51 58 59 59 59 59 59 59 1987 0 30 65 75 80 83 85 86 89 89 1988 0 0 20 44 49 52 54 54 58 58 1989 0 0 0 12 40 46 50 51 55 58 1990 0 0 0 0 21 56 64 67 73 80 1991 0 0 0 0 0 15 41 50 55 59 1992 0 0 0 0 0 0 12 21 37 45 1993 0 0 0 0 0 0 0 8 22 30 1994 0 0 0 0 0 0 0 0 11 22 1995 0 0 0 0 0 0 0 0 0 6
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE SECTION 2B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 29 6 3 3 0 0 0 0 37 8 1986 76 25 9 0 0 0 0 0 0 4 1987 0 107 47 23 10 7 5 5 4 4 1988 0 0 84 19 10 7 7 7 0 0 1989 0 0 0 83 24 13 11 10 5 5 1990 0 0 0 0 97 29 20 18 11 4 1991 0 0 0 0 0 100 39 29 14 8 1992 0 0 0 0 0 0 106 62 29 14 1993 0 0 0 0 0 0 0 111 60 29 1994 0 0 0 0 0 0 0 0 104 42 1995 0 0 0 0 0 0 0 0 0 113
SCHEDULE P - PART 5H SECTION 2 OTHER LIABILITY - CLAIMS-MADE SECTION 3B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 129 138 139 146 146 146 146 146 146 150 1987 0 162 172 176 176 177 177 177 177 177 1988 0 0 149 166 168 170 170 172 172 175 1989 0 0 0 131 142 145 145 145 145 149 1990 0 0 0 0 173 183 183 185 190 190 1991 0 0 0 0 0 167 170 170 173 173 1992 0 0 0 0 0 0 174 179 185 190 1993 0 0 0 0 0 0 0 147 170 174 1994 0 0 0 0 0 0 0 0 143 154 1995 0 0 0 0 0 0 0 0 0 147
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE SECTION 1A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 72 0 3 3 5 1986 0 0 0 0 0 28 28 31 34 38 1987 0 0 0 0 0 53 53 55 60 65 1988 0 0 0 0 0 63 63 68 74 79 1989 0 0 0 0 0 171 171 179 188 202 1990 0 0 0 0 0 670 672 686 696 706 1991 0 0 0 0 0 835 839 855 868 878 1992 0 0 0 0 0 0 40 68 84 100 1993 0 0 0 0 0 0 0 70 99 110 1994 0 0 0 0 0 0 0 0 59 85 1995 0 0 0 0 0 0 0 0 0 53
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE SECTION 2A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 46 23 18 17 8 1986 0 0 0 0 0 19 5 11 7 6 1987 0 0 0 0 0 16 8 8 10 7 1988 0 0 0 0 0 36 11 13 10 5 1989 0 0 0 0 0 54 23 23 21 20 1990 0 0 0 0 0 53 23 28 15 14 1991 0 0 0 0 0 64 31 45 37 28 1992 0 0 0 0 0 0 26 34 32 22 1993 0 0 0 0 0 0 0 29 25 25 1994 0 0 0 0 0 0 0 0 26 29 1995 0 0 0 0 0 0 0 0 0 42
SCHEDULE P - PART 5R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE SECTION 3A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 70 66 78 85 92 1987 0 0 0 0 0 111 111 117 130 136 1988 0 0 0 0 0 306 303 312 323 329 1989 0 0 0 0 0 782 779 793 807 826 1990 0 0 0 0 0 501 509 541 552 563 1991 0 0 0 0 0 352 356 402 424 438 1992 0 0 0 0 0 0 68 121 163 192 1993 0 0 0 0 0 0 0 121 166 194 1994 0 0 0 0 0 0 0 0 111 171 1995 0 0 0 0 0 0 0 0 0 164
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE SECTION 1B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE SECTION 2B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 5R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE SECTION 3B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 222043 220748 220604 1994 0 0 0 0 0 0 0 0 197471 193368 1995 0 0 0 0 0 0 0 0 0 190078
SCHEDULE P - PART 6C COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 6550 6701 6726 1994 0 0 0 0 0 0 0 0 3404 3501 1995 0 0 0 0 0 0 0 0 0 3181
SCHEDULE P - PART 6D WORKERS' COMPENSATION SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 238981 225370 224973 1994 0 0 0 0 0 0 0 0 219279 202989 1995 0 0 0 0 0 0 0 0 0 220290
SCHEDULE P - PART 6D WORKERS' COMPENSATION SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 1721 1769 1757 1994 0 0 0 0 0 0 0 0 1274 1556 1995 0 0 0 0 0 0 0 0 0 1093
SCHEDULE P - PART 6E COMMERCIAL MULTIPLE PERIL SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 396815 418417 418399 1994 0 0 0 0 0 0 0 0 360600 367827 1995 0 0 0 0 0 0 0 0 0 363569
SCHEDULE P - PART 6E COMMERCIAL MULTIPLE PERIL SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 12741 15876 15892 1994 0 0 0 0 0 0 0 0 12381 12448 1995 0 0 0 0 0 0 0 0 0 12277
SCHEDULE P - PART 6H SECTION 1 OTHER LIABILITY - OCCURRENCE SECTION 1A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 136736 155099 154874 1994 0 0 0 0 0 0 0 0 108478 110086 1995 0 0 0 0 0 0 0 0 0 103819
SCHEDULE P - PART 6H SECTION 1 OTHER LIABILITY - OCCURRENCE SECTION 2A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 14885 23751 23689 1994 0 0 0 0 0 0 0 0 12006 12152 1995 0 0 0 0 0 0 0 0 0 11669
SCHEDULE P - PART 6H SECTION 2 OTHER LIABILITY - CLAIMS-MADE SECTION 1B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 10504 9691 10692 1994 0 0 0 0 0 0 0 0 4788 4745 1995 0 0 0 0 0 0 0 0 0 5462
SCHEDULE P - PART 6H SECTION 2 OTHER LIABILITY - CLAIMS-MADE SECTION 2B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 54 54 54 1994 0 0 0 0 0 0 0 0 71 71 1995 0 0 0 0 0 0 0 0 0 2
SCHEDULE P - PART 6M INTERNATIONAL
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 113 116 116 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6M INTERNATIONAL ERR
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6N REINSURANCE A SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 4260 3791 2954 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6N REINSURANCE A SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 306 438 433 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6O REINSURANCE B SECTION 1
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 4270 3800 3487 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6O REINSURANCE B SECTION 2
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 16 31 31 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE SECTION 1A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 4551 4705 4700 1994 0 0 0 0 0 0 0 0 4506 4723 1995 0 0 0 0 0 0 0 0 0 4606
SCHEDULE P - PART 6R SECTION 1 PRODUCTS LIABILITY - OCCURRENCE SECTION 2A
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 19 19 19 1994 0 0 0 0 0 0 0 0 24 25 1995 0 0 0 0 0 0 0 0 0 25
SCHEDULE P - PART 6R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE SECTION 1B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
SCHEDULE P - PART 6R SECTION 2 PRODUCTS LIABILITY - CLAIMS-MADE SECTION 2B
COL 1 COL 2 COL 3 COL 4 COL 5 COL 6 COL 7 COL 8 COL 9 COL 10 COL 11 PRIOR 0 0 0 0 0 0 0 0 0 0 1986 0 0 0 0 0 0 0 0 0 0 1987 0 0 0 0 0 0 0 0 0 0 1988 0 0 0 0 0 0 0 0 0 0 1989 0 0 0 0 0 0 0 0 0 0 1990 0 0 0 0 0 0 0 0 0 0 1991 0 0 0 0 0 0 0 0 0 0 1992 0 0 0 0 0 0 0 0 0 0 1993 0 0 0 0 0 0 0 0 0 0 1994 0 0 0 0 0 0 0 0 0 0 1995 0 0 0 0 0 0 0 0 0 0
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