Eli Lilly 2007 Annual Report Download - page 124

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terminated, an outstanding Grant may be terminated or amended under Section 13(e) or may be amended (i)
by agreement of the Company and the Grantee consistent with the 2002 Plan or (ii) by action of the Committee
provided that the amendment is consistent with the 2002 Plan and is found by the Committee not to impair the
rights of the Grantee under the Grant.
12. Change in Control.
(a) Effect on Grants. The Committee may provide in the agreement relating to a Grant or at any later date, that upon
the occurrence of a Change in Control (as defi ned below) the following shall occur:
(i) In the case of Stock Options, each outstanding Stock Option that is not then fully exercisable shall
automatically become fully exercisable and shall remain so for the period permitted in the agreement
relating to the Grant;
(ii) The Restriction Period on all outstanding Restricted Stock Grants shall automatically expire and all
restrictions imposed under such Restricted Stock Grants shall immediately lapse;
(iii) Each Grantee of a Performance Award for an Award Period that has not been completed at the time of the
Change in Control shall be deemed to have earned a minimum Performance Award equal to the product
of (y) such Grantee’s maximum award opportunity for such Performance Award, and (z) a fraction, the
numerator of which is the number of full and partial months that have elapsed since the beginning of
such Award Period to the date on which the Change in Control occurs, and the denominator of which is
the total number of months in such Award Period; provided, however, that nothing in this subsection shall
prejudice the right of the Grantee to receive a larger payment under such Performance Award pursuant
to the terms of the Award or under any other plan of the Company;
(iv) Each outstanding Stock Appreciation Right that is not then fully exercisable shall automatically become
fully exercisable and shall remain so for the period permitted in the agreement relating to the Grant; and
(v) Each outstanding Stock Unit Award shall fully and immediately vest and become payable.
(b) Change in Control. For purposes of the 2002 Plan, a Change in Control shall mean the happening of any of the
following events:
(i) The acquisition by any “person,” as that term is used in Sections 13(d) and 14(d) of the 1934 Act (other
than (w) the Company, (x) any subsidiary of the Company, (y) any employee benefi t plan or employee
stock plan of the Company or a subsidiary of the Company or any trustee or fi duciary with respect to
any such plan when acting in that capacity, or (z) Lilly Endowment, Inc.,) of “benefi cial ownership,” as
defi ned in Rule 13d-3 under the 1934 Act, directly or indirectly, of 15 percent 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 of Directors of the Company (or which would have such voting power
but for the application of the Indiana Control Share Statute) (“Voting Stock”); provided, however, that an
acquisition of Voting Stock directly from the Company shall not constitute a Change in Control;
(ii) The fi rst day on which less than two-thirds of the total membership of the Board of Directors of the
Company shall be Continuing Directors (as that term is defi ned in Article 13(f) of the Company’s Articles
of Incorporation);
(iii) 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 50 percent of the Voting Stock of the Company or such
surviving entity immediately after such Transaction; or
(iv) 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.
13. General Provisions.
(a) Prohibitions Against Transfer. (i) Except as provided in part (ii) of this subparagraph, during a Grantee’s lifetime,
only the Grantee or his or her authorized legal representative may exercise rights under a Grant. Such persons
may not transfer those rights. The rights under a Grant may not be disposed of by transfer, alienation, pledge,
encumbrance, assignment, or any other means, whether voluntary, involuntary, or by operation of law, and
any such attempted disposition shall be void; provided, however, that when a Grantee dies, the personal
representative or other person entitled under a Grant under the 2002 Plan to succeed to the rights of the
Grantee (“Successor Grantee”) may exercise the rights. A Successor Grantee must furnish proof satisfactory
to the Company of his or her right to receive the Grant under the Grantee’s will or under the applicable laws of
descent and distribution.
(ii) Notwithstanding the foregoing, the Committee may, in its discretion and subject to such limitations and
conditions as the Committee deems appropriate, grant nonqualifi ed stock options (or amend previously-
granted options) on terms which permit the Grantee to transfer all or part of the stock option, for
estate or tax planning purposes or for donative purposes, and without consideration, to a member of
the Grantee’s immediate family (as defi ned by the Committee), a trust for the exclusive benefi t of such
immediate family members, or a partnership, corporation, limited liability company or similar entity the
equity interests of which are owned exclusively by the Grantee and/or one or more members of his or
her immediate family. No such stock option or any other Grant shall be transferable incident to divorce.
Subsequent transfers of a stock option transferred under this part (ii) shall be prohibited except for
transfers to a Successor Grantee upon the death of the transferee.