My understanding of the wording was that neither party may call the bond for 2 years.
After 2 years, if the bondholder made the call, LNC could either issue shares at face value of $3.40 to the value of the outstanding debt, or settle the debt in cash, which may be the cash value of the number of shares at $3.40 to settle the debt times the actual SP at the time.
Accordingly the call would only be made if the SP was above $3.40 and thus the bondholders view must be that the SP will be in excess of $3.40 within 2 years, otherwise all they will receive is 7% on their loan.
LNC Price at posting:
$2.24 Sentiment: None Disclosure: Held