EXHIBIT 10(xi)
February 14, 2005
DIRECTOR STOCK OPTION AWARD
TERMS AND PROSPECTUS-SUPPLEMENT
An automatic stock option award of 7,500 shares was granted on February 14, 2005
by Jefferson-Pilot Corporation (“Jefferson-Pilot or JP”) under our new
Non-Employee Directors’ Stock Option Plan (“Plan”) to each non-employee member
of JP’s Board of Directors (“Board”).
The terms of your stock option award are set forth below in question and answer
form. A copy of the current Plan is enclosed, and you can request another copy
at any time. The provisions of the Plan govern if there is any inconsistency.
All interpretations by the Committee established under the Plan (“Committee”)
are binding on you and Jefferson-Pilot.
What is my stock option exercise price? This option gives you the right to buy
JP common stock from Jefferson-Pilot in the future at $49.87 per share, the
closing market price on February 14, 2005.
How many shares can I buy? 7,500 shares.
The number of shares and exercise price will be adjusted to reflect stock splits
and certain other changes in JP stock as described in the Plan or as determined
by the Compensation Committee. For example, with our April 2001 3 for 2 stock
split, an option for 5,000 shares was automatically increased to 7,500 shares,
and the exercise price was reduced from $69.82 to $46.5467 (2/3 of $69.82). If
it splits again, similar adjustments will be made.
Does this option last indefinitely? No, it will expire in ten years — and may
expire earlier if you leave the Board before then. The last day it can be
exercised in any event is February 13, 2015.
Can I exercise before then? Yes, you can exercise at any time for some or all of
your Option Shares after they vest and before your option expires.
When do my Option Shares vest? On February 14, 2006, the first anniversary of
the award, if you are still serving on the Jefferson-Pilot Board on that date.
What if I leave the Board before then? (1) Your Option Shares vest early and
become exercisable if your service as a director terminates because you retire
or otherwise depart from the Board pursuant to Board policy, become permanently
disabled or die. Currently, under that policy, retirement occurs at the annual
meeting immediately prior to your 72nd birthday.
(2) If your service on the Board terminates for any other reason, before any
change in control, your Option Shares that have not yet vested at your date of
termination will never vest and will expire/be forfeited.
Will my Option Shares vest upon a “change in control”? Yes, for any change in
control as defined in Exhibit 1. Vesting would occur whether or not this results
in termination of your Board service. Generally this applies if JP is taken
over.
Once Option Shares are vested, do I have until February 13, 2015 to exercise?
Yes, if you remain on the Board until that date. If you leave the Board before
then for any reason including death, you or your heirs must exercise before the
fifth anniversary of the date you leave the Board. Only Option Shares vested at
your termination can be exercised. In any event your option must be exercised by
February 13, 2015.
This document constitutes part of a Prospectus covering securities that have
been registered
under the Securities Act of 1933.

E-13

--------------------------------------------------------------------------------

 

How do I exercise? By paying the exercise price for the shares you are buying,
at least 1,000 shares for each exercise. You must deliver to our Corporate
Secretary’s Office an exercise form — copies can be obtained from that Office
-and arrange for proper payment. When the form and payment are received, your
exercise becomes effective. If these exercise procedures change, we will notify
you.
Are there different ways I can pay the exercise price? Yes.
1. Pay with your own funds. You can write us a check, or send a wire from one of
your accounts, for the full exercise price for the portion you are exercising.
This will result in your owning all of the exercised shares, unless you ask us
to withhold shares for any applicable withholding taxes as discussed below.
2. Pay with JP shares. You can use JP shares you own, valued at market value, to
pay some or all of the purchase price. You simply must certify to us that you
own the shares and they are freely transferable. The exchanged shares may be
held in your name or jointly with your spouse, either of record or in our
dividend reinvestment plan. If you want to use shares in street name with your
bank or broker, they must be freely transferable and we may need to verify with
your broker. They cannot be in an IRA or similar tax favored account. Any gain
on the shares you use is tax deferred under current Federal tax law. This
procedure will result in your owning the shares you started with plus additional
shares representing your option gain. If you immediately sell some of these
shares to cover estimated taxes we can deliver them electronically to your
broker.
3. Cashless exercise. You can arrange with a stockbroker to borrow the exercise
price and at the same time sell some or all of the shares you are exercising.
This is called a cashless exercise. Most brokers will help with this. They
generally will charge a commission on the stock sale, and interest on the loan
for the few days before they receive the proceeds from your sale. Then you can
leave the net proceeds in your brokerage account or can have your broker send
them to you.
How are exercised shares delivered? If you request a stock certificate, it will
be mailed to you within a week or so after you exercise. If you want to avoid
the inconvenience and risk of loss of stock certificates, you can ask us to
deposit your shares under our dividend reinvestment plan. You then can elect
either to have dividends reinvested, or to receive dividend checks. In a
cashless exercise or at your request, the shares are delivered electronically to
your broker.
Will I get dividends on my option? No. Dividends are paid only on outstanding
stock. The option is only a right to buy the stock. Once you exercise, dividends
will be paid on JP shares you keep.
Can I voluntarily transfer my option to someone else? Generally, no. Your option
is not transferable except upon your death or under a qualified domestic
relations order. The Committee has approved procedures for limited transfers
under special circumstances.
Should you die, your option becomes part of your estate. Your estate, or whoever
receives the option in distribution from your estate, can exercise in the same
fashion and for the same time period as you could have after termination of
employment.
Will I have to pay taxes if I exercise? Yes, at the time you exercise. The
closing market value of the shares on the day you exercise, minus your exercise
price (the “spread”), is fully taxable as ordinary income, under today’s tax
laws. JP receives a corresponding tax deduction.
Am I responsible for withholding taxes? No, unless tax laws change. Under
current law, the taxable spread will be reported on Form 1099 and be subject to
income taxes and also self-employment Social Security and Medicare taxes. You
may need to make estimated tax filings to avoid penalties.
Will I pay more taxes on a later sale of shares I keep? Yes, if the share price
goes up. The closing market price of the shares on the day you exercise becomes
your tax basis in the shares you receive. Should you later sell the shares, you
would have a capital gain or loss, equal to the difference between this tax
basis and what you receive from the sale. Long term capital gains have favorable
tax rates, and there are annual limits on utilization of capital losses, under
today’s tax laws. You should consult your tax or financial advisor for specific
tax advice.

E-14

--------------------------------------------------------------------------------

 

Will exercise after I stop working affect my Social Security? Generally
speaking, no. Even before age 65 exercise will not reduce or eliminate your
receipt of Social Security benefits, because the taxable spread at exercise does
not count as income for the current earnings test. But as noted above, this
spread is subject to self-employment Social Security taxes. This possibly could
result in a recalculation upward of your Social Security benefits, if the
exercise year becomes one of your best income years under applicable Social
Security wage base limits.
Does this option guarantee me continued Board service for the vesting period or
perhaps for ten years? No. It does not create any rights to continued Board
service.
How can I get answers to questions about my option? Contact our Corporate
Secretary’s office in Greensboro: 336-691-3691, Fax 336-691-3258. They also can
provide exercise forms and helpful instructions.
Are there any restrictions on my sale of shares when I exercise? We have
policies as to timing and preclearances of sales for directors.
Under our current timing policy, directors are subject to a “blackout period”
each quarter. You may not have any market transactions in JP stock during this
period. It starts on the first day of each calendar quarter and ends on the
second business day after the Board meeting. Generally, the Board meets on the
first Monday in May, August and November and the second Monday in February, so
you can trade starting on the Wednesday after that.
Under our current preclearance policy, directors must preclear any market
transaction in JP stock with designated counsel (presently, Bob Reed). He can
advise whether there is any undisclosed material information that would make it
inadvisable to trade until public disclosure is made. We will notify you of any
changes in these policies.
We intend to register the Plan shares with the SEC. If this is not practicable,
we will notify you about securities law restrictions if any on your sales of JP
shares.
Directors also may be subject to additional provisions of the securities laws,
under ’34 Act Section 16 or Rule 144. You periodically receive information
concerning these additional restrictions that may apply to any of your
transactions in JP stock or options.

E-15

--------------------------------------------------------------------------------

 

February 14, 2005
EXHIBIT I
to
Stock Option Award
Terms and Prospectus-Supplement
Director’s Plan
For purposes of the attached Terms and Prospectus-Supplement:
Change in control means a change in control of JP of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A, promulgated under the Securities Exchange Act of 1934 as amended
or any successor thereto (“Act”), provided that without limiting the foregoing,
a change in control of JP also shall be deemed to have occurred if:

(1)  Any “person” (as defined under Section 3(a)(9) of the Act)(“Person”) or
“group” of persons (as provided in Rule 13d-3 under the Act) (“Group”) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 or otherwise under the
Act), directly or indirectly (including as provided in Rule 13d-3(d)(1) under
the Act), of 20% or more of either

  (A)  the then outstanding shares of JP common stock (the “Outstanding Common
Stock”), or

  (B)  the combined voting power of the then outstanding JP voting securities
entitled to vote generally in the election of directors (the “Outstanding Voting
Securities”);

  provided, however that for purposes of this paragraph 1), the following
acquisitions shall not constitute a change in control:

  (I) any acquisition directly from JP,     (II) any acquisition by JP,    
(III) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by JP or any corporation controlled by JP, or     (IV) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of paragraph (3) below; or

(2)  individuals who constitute the JP Board of Directors (“Board”) on
February 14, 2005 (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to such date whose election, or nomination for election, is at any
time approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though he or she were a member of the
Incumbent Board but excluding, for this purpose, any such individual whose
initial assumption of office as a director occurs as a result of (A) an actual
or threatened election contest with respect to the election or removal of
directors, (B) any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person or Group that beneficially owns 20% or
more of the Outstanding Common Stock or the Outstanding Voting Securities, or
(C) any other pressure from such a Person or Group; or   (3)  consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of JP or the acquisition of assets of another
corporation (a “Business Combination”), in each case, unless, following such
Business Combination,

  (A)  all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Common Stock and Outstanding
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% (40% for any Business Combination
characterized by resolution of the Incumbent Board prior to its consummation as
a merger of equals) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the

E-16

--------------------------------------------------------------------------------

 

  case may be, of the corporation resulting from such Business Combination
(including without limitation, a corporation which as a result of such
transaction owns JP or all or substantially all of JP assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the Outstanding
Common Stock and Outstanding Voting Securities, as the case may be,

  (B)  no person (excluding any employee benefit plan (or related trust) of JP,
such corporation resulting from such Business Combination, or any corporation
controlled by, controlling or under common control with either of them)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and     (C)  at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or

(4)  approval by JP shareholders of a complete liquidation or dissolution of JP;
or   (5)  any other event or condition specified by the Board as effectively
changing control such that early vesting of some or all options is appropriate.

E-17