Exhibit 10.3
ELI LILLY AND COMPANY
CHANGE IN CONTROL SEVERANCE PAY PLAN
FOR SELECT EMPLOYEES
(amended and restated effective October 15, 2001)
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. The Plan was originally adopted by the Board on March 1, 1995,
and has been amended and restated by action of the Board effective as of October
15, 2001.
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 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.
(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) "EVA Plan" means the Eli Lilly and Company EVA Bonus Plan, as in
effect from time to time, or any similar bonus plan adopted by the
Board.
(l) "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.
(m) "Participating Employer" has the meaning given in Section 4.
(n) "Plan" means this Eli Lilly and Company Change in Control Severance
Pay Plan for Select Employees.
(o) "Severance Multiple" means the number of years represented by the
Severance Period for the Eligible Employee.
(p) "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.
(q) "Tier I Employees" and "Tier II Employees" have the meanings given in
Section 5.
3. CHANGE IN CONTROL
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 15% 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"); provided, however,
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that an acquisition of Voting Stock directly from the Company shall not
constitute a Change in Control under this Section 3(a);
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(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) consummation 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 60% of
the Voting Stock of the Company or such surviving entity immediately after
such Transaction;
(d) 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
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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
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,
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however, that if the Board shall make a final determination that such
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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
or limited liability company 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
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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 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 Senior
Management Forum (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 G-6 level (Executive Director) 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, subject to
Section 6 hereof relating to certain terminations of employment. 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.
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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:
(i) at any time within two (2) years following the date of a Change
in Control, termination of employment by a Participating Employer other
than for "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 other than for
"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
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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). For purposes of the Plan, a termination of employment shall be
effective as of the last date of the Eligible Employee's employment with the
Participating Employer.
An Eligible Employee shall not be treated as having suffered a Covered
Termination in the event of (1) death, (2) total disability (within the meaning
of the Company's Extended Disability Plan), (3) transfer of employment among
Participating Employers (unless such transfer gives rise to a "Good Reason"),
(4) involuntary termination by the Participating Employer for "Cause", (5)
voluntary termination by the Eligible Employer other than for Good Reason or
other than as provided in Section 6.A.1(ii) for Tier I Employees or (6) a
termination of employment for any reason by either the Participating Employer or
the Eligible Employee that does not occur during the time periods specified
above.
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:
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(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
(ii) the conviction of the Eligible Employee by a court of competent
jurisdiction of any crime (or the entering of a plea of guilty or nolo
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contendere to a charge of any crime) constituting a felony.
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A termination for Cause shall be communicated to the Eligible Employee in
writing by the Participating Employer and shall specify the provisions of the
Plan and factual matters relied upon in making the Cause determination.
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, retiree 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.
A termination for Good Reason shall be communicated to the Participating
Employer in writing by the Eligible Employee and shall specify the provisions of
the Plan and the factual matters relied upon in making the Good Reason
determination.
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7. SEVERANCE PAYMENT
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, less 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 benefits or other terms 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 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
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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. Retiree Welfare Benefits. Following a Covered Termination, the Participating
Employer shall continue to provide to the Eligible Employee (subject to normal
eligibility requirements as supplemented in the last sentence of this
paragraph), and shall not be permitted to terminate or amend in any manner
adverse to the Eligible Employee, all retiree medical and dental benefit plans
("Retiree Welfare Plans") that are in effect at the time of Covered Termination
(or, if it would provide benefits or other terms more favorable to the Eligible
Employee, at the time of the Change in Control). For purposes of determining
eligibility for the Retiree Welfare Plans, the Eligible Employee shall receive
additional credit for the number of years equal to the Severance Period
applicable to the Eligible Employee for purposes of both age and service
requirements under the Retiree Welfare Plans.
C. 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 (or, if it would provide
benefits or other terms more favorable to the Eligible Employee, at the time of
the Change in Control), 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.E).
D. 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, (ii) the Eligible Employee shall be entitled to exercise any stock
options or similar equity-based incentive 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 (iii) any performance
shares or shares of restricted stock granted to the Eligible Employee under a
stock incentive plan of a Participating 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. The
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provisions of this Section 8.D 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.
E. 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).
F. EVA Plan. Notwithstanding any provision of this Plan or the EVA Plan to the
contrary, the following provisions of this Section 8.F shall apply with respect
to any interest of an Eligible Employee under the EVA Plan, without duplication
by any otherwise applicable provision of this Section 8. The Eligible Employee
shall be entitled to the following payments within fifteen (15) days of a
Covered Termination: (i) payment of the positive balance, if any, of the amount
credited to his/her "Bonus Bank" (or similar bonus bank) under the EVA Plan
immediately prior to the Covered Termination, and (ii) payment of the amount of
his/her "Target Bonus Amount" (or similar target bonus) for the year in which
the Covered Termination occurs, prorated for any partial year of service prior
to the Covered Termination. The foregoing payments shall be made without offset
of one against the other and without regard to any negative balance that may
exist in the Bonus Bank immediately prior to the Covered Termination.
G. 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 and of a type and
level customary for persons in his/her position; provided, however, that the
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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.
H. 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
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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.
I. Retention Bonuses and Loans. Immediately upon a Covered Termination, there
shall automatically be forgiven any repayment obligation of the Eligible
Employee to the Participating Employer that arises under any retention bonus
agreement, forgivable loan or similar arrangement that provides for the lapse of
the Eligible Employee's repayment obligation over time based on continued
employment or other conditions (but not under any other loan obligations of the
Eligible Employee that do not include forgiveness provisions).
9. EXCISE TAX REIMBURSEMENT
In the event it shall be determined that any payment, right or distribution by
the Company or any other person or entity to or for the benefit of an Eligible
Employee is a "parachute payment" within the meaning of Section 280G of the
Code, pursuant to the terms of this Plan or otherwise, 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
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. The rights of the
Eligible Employee to a Gross-Up Payment under this Section 9 shall apply without
regard to whether the Eligible Employee has incurred a Covered Termination and
shall apply to all payments whether or not in connection with a Covered
Termination.
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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.
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
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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 sixty (60) 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 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
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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 became effective on March 1, 1995 (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
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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 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
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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.
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IN WITNESS WHEREOF, the Board has caused this amended and restated Plan to be
approved and executed by its duly authorized representative as of October 15,
2001.
ELI LILLY AND COMPANY
By:_________________________________
Title: Senior Vice President
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