Eli Lilly 2007 Annual Report Download - page 125

PROXY STATEMENT
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(b) Substitute Grants. In the event of a business combination in which another corporation is combined
with the Company by reason of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation in which the Company is the surviving entity, the Committee may make
Grants to individuals who are or were employees, directors, or consultants to such other corporation in
substitution for stock options, performance awards, restricted stock grant, stock appreciation rights, or
stock unit awards granted to such individuals by such other corporation that are outstanding at the time
of the business combination (“Substituted Stock Incentives”). The terms and conditions of the substitute
Grants may vary from the terms and conditions that would otherwise be required by the 2002 Plan and
from those of the Substituted Stock Incentives. The Committee shall prescribe the exact provisions of
the substitute Grants, preserving where practical the provisions of the Substituted Stock Incentives.
The Committee shall also determine the number of shares of Lilly Stock to be taken into account under
Section 4.
(c) Subsidiaries. The term “subsidiary” means a corporation, limited liability company or similar form of
entity of which Eli Lilly and Company owns directly or indirectly 50 percent or more of the voting power.
(d) Fractional Shares. Fractional shares shall not be issued or transferred under a Grant, but the Committee
may pay cash in lieu of a fraction or round the fraction.
(e) Compliance with Law. The 2002 Plan, the exercise of Grants, and the obligations of the Company to issue
or transfer shares of Lilly Stock under Grants shall be subject to all applicable laws and regulations and
to approvals by any governmental or regulatory agency as may be required. The Committee may revoke
any Grant if it is contrary to law or modify a Grant to bring it into compliance with any valid and mandatory
law or government regulation. The Committee may also adopt rules regarding the withholding of taxes on
payment to Grantees.
(f) Ownership of Stock. A Grantee or Successor Grantee shall have no rights as a shareholder of the Company
with respect to any shares of Lilly Stock covered by a Grant until the shares are issued or transferred to
the Grantee or Successor Grantee on the Company’s books.
(g) No Right to Employment or to Future Grants. The 2002 Plan and the Grants under it shall not confer
upon any Eligible Employee or Grantee the right to continue in the employment of the Company or as a
member of the Board or affect in any way (i) the right of the Company to terminate the employment of an
Eligible Employee or Grantee at any time, with or without notice or cause, or (ii) any right of the Company
or its shareholders to terminate the Grantee’s service on the Board. Neither the status of an individual
as an Eligible Employee nor the receipt of one or more Grants by a Grantee shall confer upon the Eligible
Employee or Grantee any rights to future Grants.
(h) Foreign Jurisdictions. The Committee may adopt, amend, and terminate such arrangements and make
such Grants, not inconsistent with the intent of the 2002 Plan, as it may deem necessary or desirable to
make available tax or other benefi ts of the laws of foreign jurisdictions to Grantees who are subject to
such laws. The terms and conditions of such foreign Grants may vary from the terms and conditions that
would otherwise be required by the 2002 Plan.
(i) Governing Law. The 2002 Plan and all Grants made under it shall be governed by and interpreted in
accordance with the laws of the State of Indiana, regardless of the laws that might otherwise govern
under applicable Indiana confl ict-of-laws principles.
(j) Effective Date of the Amended 2002 Plan. The amended 2002 Plan is effective upon its approval by the
Company’s shareholders at the annual meeting to be held on April 1521, 20082, or any adjournment of
the meeting.
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