EXHIBIT 10
ELI LILLY AND COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN
FOR SELECT EMPLOYEES
1. PURPOSE
This Eli Lilly and Company Change in Control Severance Pay Plan For
Select Employees has been established by the Company to provide for the payment
of severance pay and benefits to Eligible Employees whose employment with a
Participating Employer terminates due to certain conditions created by a Change
in Control of the Company. The purpose of the Plan is to assure a continuity in
operations of the Company during a period of Change in Control by allowing
employees to focus on their responsibilities to the Company knowing that they
have certain financial security in the event of their termination of employment.
The accomplishment of this purpose is in the best interests of the Company and
its shareholders.
2. DEFINITIONS
The terms defined in this Section 2 shall have the meanings given
below:
(a) "Annual Base Salary" means the amount of the Eligible Employee's
Monthly Base Salary multiplied by twelve (12).
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" has the meaning given in Section 3.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation and Management Development
Committee of the Board, or such other committee appointed by the Board
to perform the functions of the Committee under the Plan, provided
that at all times the Committee shall be constituted solely of
directors who are Continuing Directors (as defined in Section 3) to
the extent any such directors remain on the Board and are willing to
serve in such capacity.
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(f) "Covered Termination" has the meaning given in Section 6.
(g) "Company" means Eli Lilly and Company, an Indiana corporation.
(h) "Eligible Employee" means a Tier I Employee or a Tier II Employee.
(i) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Monthly Base Salary" means an Eligible Employee's gross monthly base
salary before any deductions, exclusions or any deferrals or
contributions under any Participating Employer plan or program, but
excluding bonuses, incentive awards or compensation, employee benefits
or any other non-salary form of compensation.
(l) "Participating Employer" has the meaning given in Section 4.
(m) "Plan" means this Eli Lilly and Company Change in Control Severance
Pay Plan for Select Employees.
(n) "Severance Multiple" means the number of years represented by the
Severance Period for the Eligible Employee.
(o) "Severance Period" means (i) in the case of Tier I Employees, the
three (3) year period immediately following a Covered Termination and
(ii) in the case of Tier II Employees, the two (2) year period
immediately following a Covered Termination.
(p) "Tier I Employees" and "Tier II Employees" have the meanings given in
Section 5.
3. CHANGE IN CONTROL
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For purposes of the Plan, a "Change in Control" of the Company shall
be deemed to have occurred upon:
(a) the acquisition by any "person," as that term is used in Sections
13(d) and 14(d) of the Exchange Act (other than (i) the Company, (ii) any
subsidiary of the Company, (iii) any employee benefit plan or employee
stock plan of the Company or a subsidiary of the Company or any trustee or
fiduciary with respect to any such plan when acting in that capacity, or
(iv) Lilly Endowment, Inc.) of "beneficial ownership," as defined in Rule
13d-3 under the Exchange Act, directly or indirectly, of 20% or more of the
shares of the Company's capital stock the holders of which have general
voting power under ordinary circumstances to elect at least a majority of
the Board (or which would have such voting power but for the application of
the Indiana Control Shares Statute) ("Voting Stock");
(b) the first day on which less than two-thirds of the total
membership of the Board shall be Continuing Directors (as that term is
defined in Article 13(f) of the Company's Articles of Incorporation);
(c) approval by the shareholders of the Company of a merger, share
exchange, or consolidation of the Company (a "Transaction"), other than a
transaction which would result in the Voting Stock of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the Voting Stock of the Company or such
surviving entity immediately after such Transaction;
(d) approval by the shareholders of the Company of a complete
liquidation of the Company or a sale or disposition of all or substantially
all the assets of the Company, other than a sale or disposition of assets
to any subsidiary of the Company;
(e) either (i) the Company shall have entered into a definitive
agreement with any Person, which, if consummated, would result in a Change
in Control as specified in paragraphs (a) through (d) of this Section 3 or
(ii) any Person initiates a tender offer or exchange offer to acquire
shares of the Voting Stock which, if consummated, would result in a Change
in Control as specified in paragraphs (a) through (d) of this Section 3;
provided, however, that if the Board shall make a final determination that
such agreement, tender offer or exchange offer will not be consummated, the
occurrence of any such event shall cease to constitute a Change in Control
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and the termination of employment of an Eligible Employee after such
determination shall not be treated as a Covered Termination on the basis of
such event; or
(f) the Board adopts a resolution to the effect that any Person has
taken actions which, if consummated, would result in its having acquired
effective control of the business and affairs of the Company; provided,
however, that if the Board shall make a final determination that such
actions will not be consummated, the occurrence of any such event shall
cease to constitute a Change in Control and the termination of employment
of an Eligible Employee after such determination shall not be treated as a
Covered Termination on the basis of such event.
For purposes of this Section 3 only, the term "subsidiary" means a corporation
of which the Company owns directly or indirectly fifty (50) percent or more of
the voting power.
4. PARTICIPATING EMPLOYERS
A. Designation of Participating Employers. The Company and each
subsidiary corporation of which the Company owns directly or indirectly one-
hundred (100) percent of the voting power at the time of the Change in Control
shall be Participating Employers under the Plan. In addition, the Committee may
designate other affiliates of the Company as Participating Employers under the
Plan, from time to time and under such terms and conditions, as shall be
specified by an action in writing by the Committee. Such terms and conditions
may impose limitations on the extent to which any such affiliate participates in
the Plan (including but not limited to the duration of any such participation),
but shall not provide rights or benefits to Eligible Employees that are broader
than those set forth in the Plan. Any entity that is a Participating Employer
at the time of a Change in Control shall continue to be a Participating Employer
following a Change in Control, and any person, firm or business that is a
successor to the business or interests of a Participating Employer following a
Change in Control shall be treated as a Participating Employer under the Plan.
B. Limitations in Foreign Jurisdictions.
Notwithstanding the foregoing or anything elsewhere in the Plan to the contrary,
the Committee shall have the discretionary authority, as specified below, to
exclude from participation or limit the participation of any Participating
Employer with respect to its Eligible Employees employed outside of the
United States. The Committee shall exercise this authority only by an action
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in writing taken prior to a Change in Control on the basis of a good faith
determination that, as a result of the specific effect of applicable local
law or practice with respect to the Plan, it would be in the best interests
of the Company to so exclude or limit such participation. In addition, to
the extent specified by an action in writing prior to a Change in Control,
the Committee may offset the benefits provided under the Plan to any such
Eligible Employee by benefits under severance arrangements that exist by
reason of applicable local law or practice.
5. ELIGIBLE EMPLOYEES
The following individuals shall be eligible to participate in the Plan
and shall be considered an Eligible Employee for all purposes hereunder:
(i) "Tier I Employees" - the Chief Executive Officer of the Company
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immediately prior to the Change in Control, and all members of the
Operations Committee (or a successor committee) of the Company appointed by
the Chief Executive Officer, as constituted immediately prior to the Change
in Control; and
(ii) "Tier II Employees" - all employees of the Participating
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Employers (other than Tier I Employees) who are classified by the Company
as Executive Directors or above (or any successor classifications)
immediately prior to the Change in Control.
Any person who is an Eligible Employee in accordance with the foregoing shall
continue to be an Eligible Employee (and shall retain his/her status as a Tier I
or Tier II Employee for purposes of the Plan) notwithstanding any change in
his/her position or classification following a Change in Control. The Committee
shall notify each Eligible Employee of his/her participation in the Plan and
status as a Tier I or Tier II Employee at the time of the Change in Control.
6. COVERED TERMINATIONS
A. General. An Eligible Employee shall be treated as having
suffered a "Covered Termination" hereunder under the following circumstances:
1. Tier I Employees. The termination of employment of a Tier I
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Employee shall be treated as a Covered Termination if his/her employment is
terminated under one of the following circumstances:
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(i) at anytime within two (2) years following the date of a Change in
Control, termination of employment by a Participating Employer without
"Cause" or by the Eligible Employee for "Good Reason"; or
(ii) beginning with the one (1) year anniversary of the date of a
Change in Control and for a period of thirty (30) calendar days thereafter,
termination of employment by a Participating Employer without "Cause" or by
the Eligible Employee for any reason (whether or not for "Good Reason").
2. Tier II Employees. The termination of employment of a Tier
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II Employee shall be treated as a Covered Termination if his/her employment
is terminated, within a period of two (2) years following the date of a
Change in Control, by a Participating Employer other than for "Cause" or by
the Eligible Employee for "Good Reason."
For purposes of the foregoing, the time periods specified above within which a
termination of employment may be treated as a Covered Termination shall commence
on the date the Change in Control becomes effective and, with respect to a
Change in Control under paragraphs (e) and (f) of Section 3, shall recommence
(for the full applicable period) on the date of consummation of the underlying
actions; provided, however, that in the event of a Change in Control under
paragraphs (e) and (f) of Section 3, the time period within which a Covered
Termination under clause (ii) of paragraph 1 above may occur shall be measured
only from the date of consummation of the underlying actions (and not from any
earlier date).
An Eligible Employee shall not be treated as having suffered a Covered
Termination in the event of his/her death, total disability (within the meaning
of the Company's Extended Disability Plan), transfer of employment among
Participating Employers (unless such transfer gives rise to a "Good Reason") or
involuntary termination for "Cause."
B. Termination For Cause. For purposes hereof, the termination of
an Eligible Employee's employment shall be deemed to be a termination for
"Cause" if as a result of:
(i) the willful refusal of the Eligible Employee to perform, without
legal cause, his/her material duties to the Participating Employer,
resulting in demonstrable economic harm to any Participating Employer,
which the Eligible Employee has failed to cure after thirty (30) calendar
days' advance written notice from the Company; or
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(ii) the conviction of the Eligible Employee by a court of competent
jurisdiction of any crime (or enters a plea of guilty or nolo contendere to
a charge of any crime) constituting a felony.
C. Termination for Good Reason. For purposes hereof, an Eligible
Employee may terminate his/her employment for "Good Reason" as a result of:
(i) a material diminution in the nature or status of the Eligible
Employee's position, title, reporting relationship, duties,
responsibilities or authority, or the assignment to him/her of additional
responsibilities that materially increase his/her workload;
(ii) any reduction in the Eligible Employee's then-current Monthly
Base Salary;
(iii) a material reduction in the Eligible Employee's
opportunities to earn incentive bonuses below those in effect for the year
most recently completed before the date of the Change in Control, taking
into account all material bonus factors such as targeted bonus amounts and
corporate performance measures;
(iv) a material reduction in the Eligible Employee's employee benefits
and coverages (including, without limitation, pension, profit sharing and
all welfare and fringe benefits) that are provided to the Eligible Employee
from the benefit levels in effect immediately prior to the Change in
Control;
(v) the failure to grant to the Eligible Employee stock options,
performance shares or similar equity incentive rights during each twelve
(12) month period following the Change in Control on the basis of a number
of shares or units and all other material terms (including vesting
requirements) at least as favorable to the Eligible Employee as those
rights granted to him/her on an annualized average basis for the three (3)
year period immediately prior to the Change in Control; or
(vi) relocation of the Eligible Employee by more than fifty (50) miles
from his/her regularly assigned workplace existing on the date of the
Change in Control.
7. SEVERANCE PAYMENT
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The amount of the severance payment to be received by an Eligible
Employee whose employment is terminated under conditions constituting a Covered
Termination shall equal the applicable Severance Multiple for the Eligible
Employee multiplied by the sum of:
(i) the Eligible Employee's Annual Base Salary at the time of Covered
Termination (calculated without regard to any reduction in Monthly Base
Salary that results in a Good Reason termination) or, if greater, at the
time of the Change in Control, plus
(ii) the greater of (a) the amount of the Eligible Employee's target
incentive bonus for the year of Covered Termination or (b) the amount of
the Eligible Employee's incentive bonus earned for the year immediately
prior to the Change in Control.
The severance payment to be made hereunder shall be paid to the
Eligible Employee in a single lump-sum cash payment, net of any required tax
withholding, within fifteen (15) calendar days after the date of the Eligible
Employee's Covered Termination. Any payment required under this Section 7 or
any other provision of the Plan that is not made in a timely manner shall bear
interest at a rate equal to one hundred twenty (120) percent of the monthly
compounded applicable federal rate, as in effect under Section 1274(d) of the
Code for the month in which the payment is required to be made.
8. OTHER SEVERANCE BENEFITS
In addition to the severance payment provided under Section 7, an
Eligible Employee shall be entitled to the following benefits and other rights
in the event of his/her Covered Termination:
A. Welfare Benefits. The Eligible Employee shall be entitled to
continued coverage and benefits for the duration of the applicable Severance
Period, at the Company's sole expense for coverage, under all employee welfare
benefit plans (including, without limitation, medical, dental, group life, death
benefit, dependent life, supplemental life, accidental death and dismemberment,
short-term disability and long-term disability plans, health care reimbursement
account and dependent day care reimbursement account) of a Participating
Employer for which he/she was eligible at the time of Covered Termination or, if
it would provide benefit coverages more favorable to the Eligible Employee, at
the time of the Change in Control, as though his/her termination of employment
had not occurred (the "Welfare Continuation Coverages"). All Welfare
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Continuation Coverages shall apply to the Eligible Employee and any of his/her
dependents who would have been eligible for coverage if the Eligible Employee
remained employed for the applicable Severance Period. The Company may provide
the Eligible Employee with the Welfare Continuation Coverages under arrangements
other than its generally applicable welfare benefit plans, provided that the
benefit coverages so provided are at least as favorable to the Eligible Employee
as coverage under the otherwise applicable Welfare Continuation Coverages, on a
coverage by coverage basis, and taking into account all tax consequences to the
Eligible Employee. At the expiration of the applicable Severance Period, the
Eligible Employee shall be treated as a then terminating employee with respect
to the right to elect continued medical and dental coverages in accordance with
Section 4980B of the Code (or any successor provision thereto).
B. Pension Supplement. The Eligible Employee shall be entitled to
the additional pension benefits that would be payable to him/her, under all
defined benefit pension plans of a Participating Employer in which he/she is
participating at the time of Covered Termination (including all such tax-
qualified and supplemental plans), by taking into account under such plans (i)
an additional number of years equal to the Severance Period applicable to the
Eligible Employee for purposes of the age and service credit of the Eligible
Employee under such plans and (ii) the amount of the severance payment to which
the Eligible Employee is entitled under Section 7, expressed on an annualized
basis for the number of years equal to the Severance Period applicable to the
Eligible Employee, for purposes of the compensation credit of the Eligible
Employee under such plans (but only to the extent such additional credit would
produce a higher benefit for the Eligible Employee than if it were not taken
into account). The additional pension benefits provided hereby shall be paid
pursuant to a supplemental pension plan of the Company, at the same time and in
the same form as pension benefits are otherwise payable to the Eligible Employee
(subject to clause (iii) of Section 8.D).
C. Equity Incentives. Immediately upon a Covered Termination, (i)
any stock options or similar equity-based incentive rights granted to the
Eligible Employee under a stock incentive plan of a Participating Employer that
are not then fully vested and exercisable shall become fully vested and
immediately exercisable and the Eligible Employee shall be entitled to exercise
any such rights until the expiration of their original full term (without regard
to any earlier termination otherwise applicable in the event of termination of
employment), and (ii) any performance shares or shares of restricted stock
granted to the Eligible Employee under a stock incentive plan of a Participating
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Employer that remain subject to forfeiture, performance conditions or transfer
restrictions at such time shall become fully and immediately vested and all such
conditions and restrictions shall immediately lapse. In addition, as to any
other types of equity-based incentive awards granted to the Eligible Employee
under a stock incentive plan of a Participating Employer prior to the date of
Covered Termination, any restrictions on exercise, payment or transfer shall
immediately lapse, and the Eligible Employee shall have all rights associated
with such awards as of the date of Covered Termination. Notwithstanding the
foregoing, the rights provided by this Section 8.C shall not apply with respect
to an Eligible Employee who is subject to Section 16 of the Exchange Act to the
extent that any such rights could not be made available under the terms of a
stock incentive plan of a Participating Employer, unless such plan could be
amended to make such rights available without any requirement for shareholder
approval for such plan to continue to meet the requirements for exemption of
Rule 16b-3 under the Exchange Act. The provisions of this Section 8.C shall
apply equally to any awards or rights into which the equity incentive rights
described herein are converted or for which such rights are substituted in
connection with a Change in Control.
D. Accrued Rights. The Eligible Employee shall be entitled to the
following payments and benefits in respect of accrued compensation rights at the
time of a Covered Termination, in addition to all other rights provided under
the Plan: (i) immediate payment of any accrued but unpaid Annual Base Salary
through the date of Covered Termination; (ii) payment within fifteen (15)
calendar days of Covered Termination of the accrued bonus for the year in effect
on the date of the Covered Termination, determined on the basis of the bonus
earned under terms of the applicable bonus plan through the date of termination
or, if greater, the pro-rata amount of the target bonus for the period of such
year through the date of termination; (iii) payment within fifteen (15) calendar
days of Covered Termination of all non-tax-qualified deferred compensation
rights, in lieu of payment in respect of such rights that would otherwise be
made at a later date in accordance with the terms of such arrangements, except
to the extent such rights are funded by amounts held under an irrevocable
grantor trust or other irrevocable commitment of funds by the Company; and (iv)
all benefits and rights accrued under the employee benefit plans, fringe benefit
programs and payroll practices of a Participating Employer (other than those
described in clause (iii) above) in accordance with their terms (including,
without limitation, employee pension, employee welfare, incentive bonus and
stock incentive plans).
E. Outplacement; Relocation. The Eligible Employee shall be
provided, at the Company's sole expense, with professional outplacement services
selected by the Eligible Employee consistent with his/her duties or profession
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and of a type and level customary for persons in his/her position; provided,
however, that the Company shall not be required to pay fees in connection with
the foregoing in an amount greater than fifteen (15) percent of the Eligible
Employee's Annual Base Salary for purposes of clause (i) of Section 7. The
Company shall honor any prior agreement or understanding with an Eligible
Employee who has suffered a Covered Termination to reimburse his/her relocation
expenses to the Indianapolis, Indiana metropolitan area or, if it does not
result in a greater cost to the Company, to such other location selected by the
Eligible Employee.
F. Indemnification. With respect to any Eligible Employee who is,
immediately prior to a Change in Control or a Covered Termination, indemnified
by the Company for his/her service as a director, officer or employee of a
Participating Employer, the Company shall indemnify such Eligible Employee to
the fullest extent permitted by applicable law, and the Company shall maintain
in full force and effect, for the duration of all applicable statute of
limitation periods, insurance policies at least as favorable to the Eligible
Employee as those maintained by the Company for the benefit of its directors and
officers at the time of Change in Control, with respect to all costs, charges
and expenses whatsoever (including payment of expenses in advance of final
disposition of a proceeding) incurred or sustained by the Eligible Employee in
connection with any action, suit or proceeding to which he/she may be made a
party by reason of being or having been a director, officer or employee of a
Participating Employer or serving or having served any other enterprise as a
director, officer or employee at the request of a Participating Employer.
9. EXCISE TAX REIMBURSEMENT
In the event it shall be determined that any payment or distribution
by the Company or any other person or entity to or for the benefit of an
Eligible Employee who suffers a Covered Termination is a "parachute payment"
within the meaning of Section 280G of the Code, whether paid or payable or
distributed or distributable pursuant to the terms of this Plan or otherwise, or
whether prior to or following the Covered Termination, in connection with, or
arising out of, his/her employment with a Participating Employer or a change in
ownership or effective control of the Company or a substantial portion of its
assets (a "Payment"), and would be subject to the excise tax imposed by Section
4999 of the Code (the "Excise Tax"), concurrent with the making of such Payment,
the Company shall pay to the Eligible Employee an additional payment (the
"Gross-Up Payment") in an amount such that the net amount retained by the
Eligible Employee, after deduction of any Excise Tax on such Payment and any
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federal, state or local income tax and Excise Tax on the Gross-Up Payment shall
equal the amount of such Payment. In the event the Internal Revenue Service
subsequently may assess or seek to assess from the Eligible Employee an amount
of Excise Tax in excess of that determined in accordance with the foregoing, the
Company shall pay to the Eligible Employee an additional Gross-Up Payment,
calculated as described above in respect of such excess Excise Tax, including a
Gross-Up Payment in respect of any interest or penalties imposed by the Internal
Revenue Service with respect to such excess Excise Tax.
10. NO MITIGATION OR OFFSET
The Eligible Employee shall be under no obligation to minimize or
mitigate damages by seeking other employment, and the obtaining of any such
other employment shall in no event effect any reduction of the Company's
obligation to make the payments and provide the benefits required under the
Plan. In addition, the Company's obligation to make the payments and provide
the benefits required under the Plan shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other rights which a Participating Employer may have against the Eligible
Employee.
11. UNFUNDED STATUS
The Plan is intended to constitute an employee pension benefit plan
under ERISA which is unfunded and is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, and shall be interpreted and administered accordingly.
The payments and benefits provided hereunder shall be paid from the general
assets of the Company. Nothing herein shall be construed to require the Company
to maintain any fund or to segregate any amount for the benefit of any employee,
and no employee or other person shall have any right against, right to, or
security or other interest in any fund, account or asset of the Company from
which the payment pursuant to the Plan may be made. Consistent with the
foregoing, the Company may, in its sole discretion, deposit funds in a grantor
trust or otherwise establish arrangements to pay amounts that become due under
the Plan, and, notwithstanding anything elsewhere in the Plan to the contrary,
the payments and benefits due under the Plan shall be reduced to reflect the
amount of any payment made in respect of any Eligible Employee from a grantor
trust or other arrangement established for this purpose.
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12. ADMINISTRATION
The Committee shall be the named fiduciary of the Plan and the plan
administrator for purposes of ERISA. The Committee shall be responsible for the
overall operation of the Plan and shall have the fiduciary responsibility for
the general operation of the Plan. The Committee may allocate to any one or
more of the Company's employees any responsibility the Committee may have under
the Plan and may designate any other person or persons to carry out any of the
Committee's responsibilities under the Plan. As plan administrator, the
Committee shall maintain records pursuant to the Plan's provisions and shall be
responsible for the handling, processing and payment of any claims for benefits
under the Plan.
13. CLAIMS AND DISPUTES
Within fifteen (15) calendar days of a Covered Termination, the
Company shall notify each Eligible Employee whom the Company determines is
entitled to payments and benefits under the Plan of his/her entitlement to such
payments and benefits. An Eligible Employee who is not so notified may submit a
claim for payments and benefits under the Plan in writing to the Company within
ninety (90) calendar days after becoming entitled to such benefits as described
in Section 6. All such claims shall be approved or denied in writing by the
Company within fifteen (15) calendar days after submission.
Any denial of a claim by the Company shall be in writing and shall
include: (i) the reason or reasons for the denial; (ii) reference to the
pertinent Plan provisions on which the denial is based; (iii) a description of
any additional material or information necessary for the Eligible Employee to
perfect the claim together with an explanation of why the material or
information is necessary; and (iv) an explanation of the Plan's claim review
procedure, described below.
An Eligible Employee shall have a reasonable opportunity to appeal a
denied claim to the Company for a full and fair review. The Eligible Employee
or authorized representative shall have thirty (30) calendar days after receipt
of written notification of the denial of claim in which to request a review and
to review pertinent documents of the Plan. The Company shall notify the
Eligible Employee or his/her authorized representative of the time and place for
the claim review. The Company shall issue a decision on the reviewed claim
promptly, but no later than fifteen (15) calendar days after receipt of the
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request for review. The Company's decision shall be in writing and shall
include: (i) the reasons for the decision, and (ii) references to the Plan
provisions on which the decision is based.
If the Eligible Employee shall dispute the Company's final decision,
the dispute shall be submitted to an arbitration proceeding, conducted before a
panel of three arbitrators, in accordance with the rules of the Center for
Public Resources (or such other organization selected by mutual agreement of the
Company and the Eligible Employee). Such arbitration shall take place in the
location most practicably proximate to the Eligible Employee's principal
workplace. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. Notwithstanding the foregoing, if an Eligible Employee
believes the claims procedure or dispute resolution mechanism provided under
this Section 13 would be futile or would cause such Eligible Employee
irreparable harm, the Eligible Employee may, in his/her sole discretion, elect
to enforce his/her rights under the Plan pursuant to Section 502 of ERISA.
The Company shall bear the expense of any enforcement proceeding
brought by an Eligible Employee under the Plan and shall reimburse the Eligible
Employee for all of his/her reasonable costs and expenses relating to such
enforcement proceeding, including, without limitation, reasonable attorneys'
fees and expenses, provided that the Eligible Employee is the prevailing party
in such proceeding. For purposes hereof, the trier of fact in such enforcement
proceeding shall be requested to make a determination as to the reimbursement of
the Eligible Employee's costs and expenses as a prevailing party hereunder. In
no event shall the Eligible Employee be required to reimburse the Company for
any of the costs or expenses relating to such enforcement proceeding.
14. TERM AND AMENDMENT
The Plan shall become effective on the date of its adoption by the
Board (the "Effective Date") and shall continue to be effective until the
"Expiration Date." The Expiration Date shall initially be the third anniversary
of the Effective Date, but as of the first anniversary of the Effective Date and
each anniversary date thereafter, the Expiration Date shall be extended by an
additional one (1) year unless, not later than ninety (90) calendar days prior
to the respective anniversary date of the Effective Date, the Board shall
specify by resolution or other written action that the Expiration Date shall not
be so extended. Notwithstanding the foregoing, in the event of a Change in
Control, the Plan shall continue in effect, and the Expiration Date shall not
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occur, until the satisfaction of all severance payments and benefits to which
Eligible Employees are or may become entitled to under the Plan. The Board
shall have the right, by resolution or other written action, to amend the Plan;
provided, however, that the Plan may only be amended prior to a Change in
Control, and then only to the extent such amendment is of a technical or
clarifying nature, or increases the rights or benefits of all affected Eligible
Employees, and does not in any manner reduce the rights or benefits of any
Eligible Employee, unless the Company has obtained the express written consent,
in return for good and valuable consideration, of all affected Eligible
Employees in respect of any such amendment.
15. SUCCESSORS AND ASSIGNS
The Plan shall be binding upon any person, firm or business that is a
successor to the business or interests of the Company, whether as a result of a
Change in Control of the Company or otherwise. All payments and benefits that
become due to an Eligible Employee under the Plan shall inure to the benefit of
his/her heirs, assigns, designees or legal representatives.
16. ENFORCEABILITY
The Company intends the Plan to constitute a legally enforceable
obligation between it and each Eligible Employee, and that the Plan confer
vested rights on each Eligible Employee in accordance with the terms of the
Plan, with each Eligible Employee being a third-party beneficiary thereof.
Nothing in the Plan, however, shall be construed to confer on any Eligible
Employee any right to continue in the employ of a Participating Employer or
affect the right of a Participating Employer to terminate the employment or
change the terms and conditions of employment of an Eligible Employee, with or
without notice or cause, prior to a Change in Control, or to take any such
action following a Change in Control, subject to the consequences specified by
the Plan.
The Plan shall be construed and enforced in accordance with ERISA and
the laws of the State of Indiana to the extent not preempted by ERISA,
regardless of the law that might otherwise govern under applicable principles or
provisions of choice or conflict of law doctrines. To the extent any provision
of the Plan shall be invalid or unenforceable under any applicable law, it shall
be considered deleted herefrom and all other provisions of the Plan shall be
unaffected and shall continue in full force and effect.
15
IN WITNESS WHEREOF, the Board has caused this Plan to be adopted and
executed by its duly authorized representative as of March 1, 1995.
ELI LILLY AND COMPANY
By: s/Pedro P. Granadillo
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Title: Vice President of Human Resources
Attest:
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