| Item 1.01. | Entry into a Material Definitive Agreement |
On December 21, 2023, Lincoln National Corporation (the “Company”) entered into an amended and restated credit agreement with a syndicate of banks, including Bank of America, N.A., as administrative agent, and the other lenders named therein (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amended and restated the Company’s existing amended and restated credit agreement, dated as of June 21, 2021, as amended, which included extending the maturity date of the agreement, decreasing the amount available under the agreement and updating the financial covenants (discussed below). The Second Amended and Restated Credit Agreement, which is unsecured, allows for the issuance of letters of credit and borrowing of up to $2.0 billion and has a commitment termination date of December 21, 2028.
Under the Second Amended and Restated Credit Agreement, we will continue to pay the current fee of 0.975% per annum on issued syndicated letters of credit and a facility fee of 0.15% per annum on the aggregate commitment. These fees adjust automatically in the event of a change in our credit ratings.
The Second Amended and Restated Credit Agreement continues to contain customary terms and conditions, including covenants restricting our ability to incur liens, merge or consolidate with another entity where we are not the surviving entity and dispose of all or substantially all of our assets. The Second Amended and Restated Credit Agreement also continues to include financial covenants including: (i) maintenance of a minimum consolidated net worth equal to the sum of (a) $8,626,000,000 plus (b) fifty percent (50%) of the aggregate net cash proceeds of equity issuances received by us after September 30, 2023 in accordance with the terms of the Second Amended and Restated Credit Agreement; (ii) a debt-to-capital ratio as defined in accordance with the Second Amended and Restated Credit Agreement not to exceed 0.35 to 1.00; and (iii) a cap on secured non-operating indebtedness and non-operating indebtedness of our subsidiaries equal to 7.5% of total capitalization, as defined in accordance with the Second Amended and Restated Credit Agreement. Further, the Second Amended and Restated Credit Agreement continues to contain customary events of default, subject to certain materiality thresholds and grace periods for certain of those events of default. The events of default include payment defaults, covenant defaults, material inaccuracies in representations and warranties, certain cross-defaults, bankruptcy and liquidation proceedings and other customary defaults. Upon an event of default, the Second Amended and Restated Credit Agreement provides that, among other things, the commitments may be terminated and the loans then outstanding may be declared due and payable.
The foregoing description of the Second Amended and Restated Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Second Amended and Restated Credit Agreement, which is attached as Exhibit 10.1 and incorporated herein by reference.
From time to time, in the ordinary course of their business, certain lenders under the Second Amended and Restated Credit Agreement or their affiliates have provided, and may in the future provide, various financial advisory, investment banking, commercial banking, financing arrangements or investment management services to us and our affiliates, and have been or are counterparties in various securities transactions, for which they have received and may continue to receive customary fees and commissions. In addition, the lenders under the Second Amended and Restated Credit Agreement or their affiliates may, from time to time, engage in transactions with or perform services for us in the ordinary course of business, including acting as distributors of various life and annuity products of our subsidiaries.
