Eli Lilly and Company Relative Value Award Agreement
▇▇▇ ▇▇▇▇▇ and Company Relative Value Award
Exhibit 10.4 Form of Relative Value Award Under the 2002 Lilly Stock Plan
▇▇▇ ▇▇▇▇▇ and Company
This Relative Value Award has been granted on [•] (“Grant Date”) by ▇▇▇ ▇▇▇▇▇ and Company, an Indiana corporation, with its principal offices in Indianapolis, Indiana (“Lilly” or the “Company”), to the Eligible Individual who has received this Relative Value Award Agreement (the “Grantee”).
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| Units Granted: | [•] | ||||
| Grant Date: | [•] | ||||
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▇▇▇▇▇ Relative Total Shareholder Return Performance Levels:
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Table of Contents
Section 1. Grant of Relative Value Award
▇▇▇ ▇▇▇▇▇ and Company, an Indiana corporation (“Lilly” or the “Company”), has granted to the Eligible Individual who has received this Relative Value Award Agreement (the “Grantee”) a Performance-Based Award (the “Relative Value Award” or the “Award”) with respect to the target number of shares of ▇▇▇▇▇ ▇▇▇▇▇▇ Stock (the “Shares”) set forth on the first page of this document and available by logging on to the Company’s stock plan administrator’s website at ▇▇▇▇://▇▇▇▇▇▇▇.▇▇▇▇▇.▇▇▇ (the “Target Number of Shares”).
The Award is made pursuant to and subject to the terms and conditions set forth in the Amended and Restated 2002 Lilly Stock Plan (the “Plan”) and to the terms and conditions set forth in this Relative Value Award Agreement, including all appendices, exhibits and addenda hereto (the “Award Agreement”). In the event of any conflict between the terms of the Plan and this Award Agreement, the terms of the Plan shall govern except with respect to the provisions described in Section 12 below and Section 5.b. (in which case, the terms of the Award Agreement shall govern).
Any capitalized terms used but not defined in this Award Agreement shall have the meanings set forth in the Plan.
Section 2. Vesting
As soon as reasonably practicable following the end of the Performance Period, the Committee shall determine the number of Shares that are eligible to vest which shall be equal to the product of (i) the Target Number of Shares, multiplied by (ii) the Payout Multiple, subject to a maximum number of Shares that shall in no event exceed the Payout Cap, where:
a. “Performance Levels Table” shall mean the Lilly Relative Total Shareholder Return Performance Levels table set forth on the first page of this document.
b. “Payout Cap” shall mean the value equal to four times the Fair Market Value of the Target Number of Shares on the Grant Date. If the resulting value of Shares eligible to vest, determined by multiplying the number of Shares eligible to vest by the Fair Market Value of Shares on the last day of the Performance Period, exceeds the Payout Cap, the Payout Multiple will be reduced to the degree necessary for the value of the resulting number of Shares eligible to vest to equal the Payout Cap, with allowance for rounding practices consistent with standard administration of the Award. For the avoidance of doubt, the Payout Cap shall in no event be interpreted or construed to restrict the Committee’s authority to exercise its discretion to reduce the number of Shares eligible to vest below the number otherwise determined pursuant this Section 2.
c. “Payout Multiple” shall mean the payout multiple set forth in the Performance Levels Table, representing the attainment level of ▇▇▇▇▇’▇ rTSR, measured against the
performance goal attainment levels set forth in the Performance Levels Table, subject to the following reduction.
In the event ▇▇▇▇▇’▇ TSR for the Performance Period is negative (and without regard to the TSR attainment level of the Peer Group) and the Payout Multiple exceeds 100%, the Payout Multiple shall be reduced to the greater of (i) 100% or (ii) the Payout Multiple based on the rTSR attainment level that would have otherwise been determined in accordance with the Performance Levels Table without regard to the reduction contemplated under this sentence, reduced by 25%. For the avoidance of doubt, if the Payout Multiple is equal to or less than 100%, the Payout Multiple shall not be subject to the adjustment contemplated under the preceding sentence.
d. “Final Lilly Stock Price” shall mean the average of the closing price of a share of Lilly Common Stock on the New York Stock Exchange for each trading day in the last 20 trading days of the Performance Period, rounded to the nearest cent.
e. “Total Shareholder Return” or “TSR” shall mean the quotient of (i) the Final Lilly Stock Price or Final Peer Stock Price, as applicable, minus the corresponding Beginning Stock Price, including the impact of Dividend reinvestment on each ex-dividend date, if any, paid by the applicable issuer during the Performance Period, divided by (ii) the corresponding Beginning Stock Price.
The stock prices and cash dividend payments reflected in the calculation of TSR shall be adjusted to reflect stock splits during the Performance Period and dividends shall be assumed to be reinvested in the relevant issuer’s shares for purposes of the calculation of TSR.
f. “Relative Total Shareholder Return” or “rTSR” shall mean the comparison between ▇▇▇▇▇’▇ TSR and the TSR of the Peer Group over the Performance Period, measured as the absolute percentage point difference in the performance of the Company’s TSR compared to the Peer Group’s median TSR.
g. “Beginning Stock Price” shall mean the average closing price of a share of Lilly Common Stock on the New York Stock Exchange or a share of each Peer Group company’s stock, as applicable, for each trading day in the first 20 trading days beginning with the Grant Date, rounded to the nearest cent.
h. “Final Peer Stock Price” shall mean the average of the closing price of a share of each Peer Group company’s stock, on Nasdaq, the New York Stock Exchange, or other market where an independent share price can be determined, for each trading day of the last 20 trading days of the Performance Period, rounded to the nearest cent.
i. “Dividend” shall mean ordinary or extraordinary cash dividends paid by ▇▇▇▇▇ or a Peer Group company to its shareholders of record at any time during the Performance Period.
j. “Peer Group” shall mean all companies identified and most recently approved by the Committee as a member of the Company’s peer group in effect for the purpose of
this Award as of the Grant Date. Companies that are members of the Peer Group at the beginning of the Performance Period that subsequently cease to be traded on a market where an independent share price can be determined shall be excluded from the Peer Group.
In the event the Grantee’s Service is terminated prior to the end of the Performance Period for any reason or in any circumstance other than as described in Sections 3 or 4 below, the Award shall be forfeited.
Section 3. Impact of Certain Employment Status Changes
Unless the Committee determines, in its sole discretion, that such treatment is not advisable after consideration of Applicable Laws, the number of Shares that are eligible to vest upon a change in employment status of the Grantee during the Performance Period will be as follows:
a. Retirement; Death. Except as otherwise provided below (including Section 12), in the event the Grantee’s Service is terminated (i) on or following the Retirement Vesting Date (A) due to the Grantee’s Retirement or (B) due to the Grantee’s Qualifying Termination (as defined below) on a date that the Grantee is eligible for Retirement, or (ii) due to the Grantee’s death, the number of Shares eligible to vest shall be the number determined in accordance with Section 2 above. For the avoidance of any doubt, the Award shall be forfeited in the event the Grantee’s Service is terminated prior to the Retirement Vesting Date due to the Grantee’s Retirement.
“Retirement” means retirement as a “retiree,” which is a person who is (A) a retired employee under The Lilly Retirement Plan; (B) a retired employee under the retirement plan or program of an Affiliate; (C) a retired employee under a retirement program specifically approved by the Committee; (D) required to retire under local law, to the extent authorized by the Company to address such local requirements or (E) otherwise determined to be a retired employee in the sole discretion of the Company. A Grantee who has not received a year-end individual performance rating and (i) is on final written warning (or equivalent as determined by the Committee) for unsatisfactory performance and elects to retire in lieu of a termination of employment; or (ii) elects to retire in lieu of termination of employment because of an immediately terminable offense (e.g., absence of three days without notice, insubordination, violation of substance abuse policy, possession of firearms, misconduct) will not be considered to have terminated due to Retirement as described herein.
“Retirement Vesting Date” means, if the Grantee is not an Executive Officer, the date that is on or following July 31 immediately following the commencement of the Performance Period and, if the Grantee is an Executive Officer, the date that is on or following December 31 immediately following the commencement of the Performance Period.
“Executive Officer” means a Grantee who is designated an Executive Officer of the Company as of the Grant Date.
b. Qualifying Termination. Except as otherwise provided in section 3(a), in the event the Grantee’s employment is subject to a Qualifying Termination (as defined below), the number of Shares eligible to vest shall be the number determined in accordance with Section 2 above, reduced proportionally for the portion of the total days during the Performance Period in which the Grantee was not in active Service.
For purposes of this Award Agreement, a “Qualifying Termination” means the termination of the Grantee’s Service under any one of the following circumstances:
i. due to a plant closing or reduction in workforce (as defined below);
ii. as a result of the Grantee’s failure to locate a position within the Company or an Affiliate following the placement of the Grantee on reallocation, including reallocation due to the Grantee’s inability to continue to work due to medical reasons, in the United States (or equivalent as determined by the Committee).
“Plant closing” means the closing of a plant site or other corporate location that directly results in termination of the Grantee’s Service.
“Reduction in workforce” means the elimination of a work group, functional or business unit or other broadly applicable reduction in job positions that directly results in termination of the Grantee’s Service.
c. Misconduct. The Committee may, in its sole discretion, cancel this Relative Value Award or reduce the number of Shares eligible to vest, prorated according to time or other measure as determined appropriate by the Committee, if, during any portion of the Performance Period, the Grantee is subject to disciplinary action for Misconduct pursuant to and as such term is defined under the ▇▇▇ ▇▇▇▇▇ and Company Executive Compensation Recovery Policy, effective October 2, 2023, as may be amended, restated, or superseded from time to time.
The Committee’s determination as to whether (1) a transfer of employment between Lilly and an Affiliate or between Affiliates constitutes a termination of Service, (2) the Grantee’s Service has been terminated by reason of Retirement, (3) the Grantee is eligible for Retirement, (4) the Grantee’s Service has been terminated as a direct result of either a plant closing or a reduction in force, and (5) the Grantee’s Service has been terminated as a result of the failure to locate a position within the Company or an Affiliate following reallocation or medical reassignment, shall be final and binding on the Grantee.
Section 4. Change in Control
The provisions of Section 13.2 of the Plan apply to this Award with the following modifications:
a. The only Change in Control event that shall result in a benefit under this Section 4 shall be the consummation of a merger, share exchange, or consolidation of the Company, as defined in Section 2.6(c) of the Plan (a “Transaction”).
b. In the event the Award is converted, assumed, substituted, continued or replaced by a successor or surviving corporation, or a parent or subsidiary thereof, in connection with a Transaction, any Fractional Share issued under this Award shall vest automatically and be payable in cash unless otherwise determined by the Committee, in its sole discretion.
c. In the event of a Transaction that occurs prior to the last day of the Performance Period, the Grantee will be credited with an award of Restricted Stock Units equal to the number of Shares eligible to vest, calculated in a manner consistent with Section 2, but the Final Lilly Stock Price shall be equal to the value of Shares established for the consideration to be paid to holders of Shares in the Transaction and the Final Peer Stock Price shall be equal to the closing price of a share of each Peer Group company’s stock, on Nasdaq, the New York Stock Exchange, or other market where an independent share price can be determined, on the date the Transaction closes (or if such day is not a trading date, the first trading date immediately preceding such date) (the “Credited RSU Award”). The Credited RSU Award shall be eligible to vest on the last day of the Performance Period, subject to the Grantee’s continued Service through the last day of the Performance Period, except as provided below:
i. In the event the Credited RSU Award is not converted, assumed, substituted, continued or replaced by a successor or surviving corporation, or a parent or subsidiary thereof, in connection with a Transaction, then immediately prior to the Transaction, the Credited RSU Award shall vest automatically in full.
ii. In the event the Credited RSU Award is converted, assumed, substituted, continued or replaced by a successor or surviving corporation, or a parent or subsidiary thereof, in connection with the Transaction and the Grantee is subject to a Covered Termination (as defined below) prior to the end of the Performance Period, then immediately as of the date of the Covered Termination, the Credited RSU Award shall vest automatically in full.
For purposes of this Award Agreement, “Covered Termination” shall mean a termination of Service as described in Sections 3(b), ▇▇▇▇▇▇▇’s termination of Service without Cause or the Grantee’s resignation for Good Reason. “Cause” and “Good Reason” shall have the meanings ascribed to them in the ▇▇▇ ▇▇▇▇▇ and Company 2007 Change in Control Severance Pay Plan for Select Employees as may be amended, restated, or superseded from time to time.
d. If the Grantee is entitled to receive stock of the acquiring entity or successor to the Company as a result of the application of this Section 4, then references to Shares in this Award Agreement shall be read to mean stock of the successor or surviving corporation, or a parent or subsidiary thereof, as and when applicable.
Section 5. Settlement
a. Except as provided below, the Award shall be paid to the Grantee as soon as practicable, but in no event later than sixty (60) days, following the last day of the Performance Period.
b. Notwithstanding anything in this Award Agreement to the contrary, ▇▇▇▇▇▇▇ agrees and covenants that if, at any time that the Award remains unsettled, ▇▇▇▇▇ determines that Grantee engaged in any activity that violates Section 12.b or that would have violated Section 12.b. had Grantee engaged in such activity during the Restricted Period (as such term is defined in Section 12.b), Grantee shall automatically forfeit any rights Grantee may have with respect to the Award as of the date of such determination, including any right to receive a payment under the Award.
c. If the Award vests pursuant to Section 4(c)(i), the Award shall be paid to the Grantee immediately prior to the Transaction, provided that if the Award is considered an item of non-qualified deferred compensation subject to Section 409A of the Code (“NQ Deferred Compensation”) and the Transaction does not constitute a “change in control event,” within the meaning of the U.S. Treasury Regulations (a “409A CIC”), then the Award shall be paid in cash (calculated based on the value of the Shares established for the consideration to be paid to holders of Shares in the Transaction) on the earliest of (i) the date that the Grantee experiences a “separation from service” within the meaning of Section 409A of the Code (a “Section 409A Separation”), provided that if the Grantee is a “specified employee” within the meaning of Section 409A of the Code as of the date of the Section 409A Separation , the Award shall instead be paid on the first day following the six (6) month anniversary of the Grantee’s Section 409A Separation (the “409A Delayed Payment Date”), (ii) the date of the Grantee’s death and (iii) the date set forth in Section 5(a) above.
d. If the Award vests pursuant to Section 4(c)(ii), the Award shall be paid to the Grantee as soon as practicable, but in no event later than sixty (60) days, following the date the Grantee is subject to a Covered Termination, provided that if the Award is NQ Deferred Compensation (and further provided that the Transaction constitutes a 409A CIC), (i) the Award shall be paid within sixty (60) days following the date the Grantee experiences a Section 409A Separation, and (ii) if the Grantee is a “specified employee” within the meaning of Section 409A of the Code as of the date of the Section 409A Separation, the Award shall instead be paid on the earliest of (1) the 409A Delayed Payment Date and (2) the date of the Grantee’s death.
e. At the time of settlement, Lilly shall issue or transfer Shares to the Grantee that became vested (including, in the interest of clarity, a Fractional Share). Notwithstanding the foregoing, a Fractional Share may be paid in cash or rounded to the extent provided in any appendix attached hereto (the “Appendix”) for the Grantee’s country or to the extent otherwise determined by the Committee in its sole
discretion. For purposes of this Award, references to “issue” or variations of such term shall instead mean “allocate” when used in the context of Fractional Shares.
f. In the event of the death of the Grantee, the payments described above shall be made to the successor of the Grantee.
Section 6. Rights of the Grantee
a. No Shareholder Rights. The Relative Value Award does not entitle the Grantee to any rights of a shareholder of Lilly until such time as the Relative Value Award is settled and Shares are issued or transferred to the Grantee. In the event a Fractional Share is issued, the Grantee shall have the rights of a shareholder to receive dividends payable with respect to a Share and, unless otherwise provided by the Committee, the right to vote, in each case, that is proportionate to the interest the Fractional Share bears to a whole Share.
b. No Trust; ▇▇▇▇▇▇▇’s Rights Unsecured. Neither this Award Agreement nor any action in accordance with this Award Agreement shall be construed to create a trust of any kind. The right of the Grantee to receive a payment pursuant to this Award Agreement shall be an unsecured claim against the general assets of the Company.
Section 7. Prohibition Against Transfer
a. Awards. The right of a Grantee to receive payments under this Award may not be transferred except to a duly appointed guardian of the estate of the Grantee or to a successor of the Grantee by will or the applicable laws of descent and distribution and then only subject to the provisions of this Award Agreement. A Grantee may not assign, sell, pledge, or otherwise transfer this Award or the rights thereunder to which he or she may be entitled hereunder prior to transfer or payment thereof to the Grantee, and any such attempted assignment, sale, pledge or transfer shall be void.
b. Holding Period for Shares. Notwithstanding any other provision of this Award Agreement, any Shares issued or transferred to the Grantee upon settlement shall be subject to a mandatory holding period of twelve (12) months, if the Grantee is an Executive Officer, and six (6) months, if the Grantee is not an Executive Officer, in each case, commencing as of the last day of the Performance Period (as applicable, the “Holding Period”). During the Holding Period, the Grantee shall not sell, transfer, assign, pledge, or otherwise dispose of any such Shares, except as may be required by law or as may be approved by the Committee, as determined in its sole discretion.
c. Fractional Shares. Any Fractional Share issued to the Grantee shall remain in the Grantee’s account at the Company’s broker until the disposition of the Fractional Share and shall not become transferrable to another broker unless and until any Fractional Shares issued to the Grantee aggregate to a whole Share.
Section 8. Responsibility for Taxes
a. Regardless of any action Lilly and/or the Employer takes with respect to any or all income tax (including federal, state, local and non-U.S. tax), social insurance, payroll tax, fringe benefits tax, payment on account or other tax related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax Related Items”), the Grantee acknowledges that the ultimate liability for all Tax Related Items is and remains the Grantee’s responsibility and may exceed the amount actually withheld by ▇▇▇▇▇ or the Employer. The Grantee further acknowledges that ▇▇▇▇▇ and the Employer (i) make no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the Award, including the grant of the Relative Value Award, the vesting of the Relative Value Award, the transfer and issuance of any Shares and/or Fractional Shares, the receipt of any cash payment pursuant to the Award, the receipt of any dividends (including any dividends that are reinvested in additional Shares) and the sale or other disposition of any Shares and/or Fractional Shares acquired pursuant to this Award; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Grantee’s liability for Tax Related Items or achieve any particular tax result. Furthermore, if the Grantee becomes subject to Tax Related Items in more than one jurisdiction, the Grantee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax Related Items in more than one jurisdiction.
b. In connection with the applicable taxable or tax withholding event, as applicable, the Grantee shall pay or make adequate arrangements satisfactory to Lilly and/or the Employer to satisfy all Tax Related Items.
i. If the Relative Value Award is paid to the Grantee in cash in lieu of Shares and/or Fractional Shares, the Grantee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any obligation for Tax Related Items by withholding from the cash amount paid to the Grantee pursuant to the Award or from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer.
ii. If the Relative Value Award is paid to the Grantee in Shares and/or Fractional Shares and the Grantee is not subject to the short-swing profit rules of Section 16(b) of the Exchange Act, the Grantee authorizes ▇▇▇▇▇ and/or the Employer, or their respective agents, at their discretion, to (A) withhold from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer, (B) arrange for the sale of Shares and/or Fractional Shares to be issued upon settlement of the Award (on the Grantee’s behalf and at the Grantee’s direction pursuant to this authorization or such other authorization as the Grantee may be required to provide to Lilly or its designated broker in order for such sale to be effectuated) and withhold from the proceeds of such sale, (C) withhold in Shares and/or Fractional
Shares otherwise issuable to the Grantee pursuant to this Award, and/or (D) apply any other method of withholding determined by the Company and, to the extent required by Applicable Laws or the Plan, approved by the Committee.
iii. If the Relative Value Award is paid to the Grantee in Shares and/or Fractional Shares and the Grantee is subject to the short-swing profit rules of Section 16(b) of the Exchange Act, ▇▇▇▇▇ will withhold in Shares and Fractional Shares otherwise issuable to the Grantee pursuant to this Award, unless the use of such withholding method is prevented by Applicable Laws or has materially adverse accounting or tax consequences, in which case the withholding obligation for Tax Related Items may be satisfied by one or a combination of the methods set forth in Section 8(b)(ii)(A) and (B) above.
c. Depending on the withholding method, Lilly and/or the Employer may withhold or account for Tax Related Items by considering applicable statutory or other withholding rates, including minimum or maximum rates in the jurisdiction(s) applicable to the Grantee. In the event of over-withholding, the Grantee may receive a refund of any over-withheld amount in cash (without interest and without entitlement to the equivalent amount in Shares). If the obligation for Tax Related Items is satisfied by withholding Shares, for tax purposes, the Grantee will be deemed to have been issued the full number of Shares and/or Fractional Shares to which he or she is entitled pursuant to this Award, notwithstanding that a number of Shares and/or Fractional Shares are withheld to satisfy the obligation for Tax Related Items.
▇. ▇▇▇▇▇ may refuse to deliver Shares and/or Fractional Shares or any cash payment to the Grantee if the Grantee fails to comply with the Grantee’s obligation in connection with the Tax Related Items as described in this Section 8.
e. For purposes of this Section 8, references to the withholding or sale of a Share shall also mean the withholding or sale of any portion that is less than a whole Share, to the extent applicable.
Section 9. Section 409A Compliance
To the extent applicable, it is intended that this Award comply with the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended and the Treasury Regulations and other guidance issued thereunder (“Section 409A”) and this Award shall be interpreted and applied by the Committee in a manner consistent with this intent in order to avoid the imposition of any additional tax under Section 409A.
Section 10. ▇▇▇▇▇▇▇’s Acknowledgment
In accepting this Award, the Grantee acknowledges, understands and agrees that:
a. the Plan is established voluntarily by ▇▇▇▇▇, it is discretionary in nature and it may be modified, amended, suspended or terminated by ▇▇▇▇▇ at any time, as provided in the Plan;
b. the Award is voluntary and occasional and does not create any contractual or other right to receive future Performance-Based Awards, or benefits in lieu thereof, even if Performance-Based Awards have been granted in the past;
c. all decisions with respect to future Performance-Based Awards or other awards, if any, will be at the sole discretion of the Committee;
d. the Grantee’s participation in the Plan is voluntary;
e. the Award is not intended to replace any pension rights or compensation;
f. the Award is not part of normal or expected compensation for any purpose, including but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, holiday pay, leave pay, pension or welfare or retirement benefits or similar mandatory payments;
g. unless otherwise agreed with ▇▇▇▇▇, the Award is not granted as consideration for, or in connection with, the service the Grantee may provide as a director of an Affiliate;
h. neither the Award nor any provision of this Award Agreement, the Plan or the policies adopted pursuant to the Plan, confer upon the Grantee any right with respect to employment or continuation of current employment, and in the event that the Grantee is not an employee of Lilly or any subsidiary of Lilly, the Award shall not be interpreted to form an employment contract or relationship with ▇▇▇▇▇ or any Affiliate;
i. the future value of the underlying Shares and other amounts that may be acquired pursuant to this Award is unknown, indeterminable and cannot be predicted with certainty;
j. no claim or entitlement to compensation or damages shall arise from forfeiture of the Award or recoupment of any Shares and other amounts that may be acquired pursuant to this Award acquired under the Plan or proceeds therefrom resulting from (i) the application of a clawback policy described in Section 16 of this Award Agreement or required by law, (ii) the application of Section 5(b) of this Award Agreement, (iii) the application of any of the remedies described in Section 12 of this Award Agreement, or (iv) the Grantee ceasing to provide employment or other services to Lilly or the Employer (for any reason whatsoever, whether or not later found to be invalid or in breach of local labor laws in the jurisdiction where the Grantee is employed or the terms of ▇▇▇▇▇▇▇’s employment agreement, if any);
k. for purposes of the Award, the Grantee’s employment will be considered terminated as of the date he or she is no longer actively providing services to the Company or an Affiliate and the Grantee’s right, if any, to earn and be paid any portion of the Award after such termination of employment or services (regardless of the reason for such termination and whether or not such termination is later found to be invalid or in
breach of employment laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s employment agreement, if any) will be measured by the date the Grantee ceases to actively provide services and will not be extended by any notice period (e.g., active service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s employment agreement, if any); the Committee shall have the exclusive discretion to determine when the Grantee is no longer actively providing services for purposes of the Award (including whether the Grantee may still be considered to be actively providing services while on a leave of absence) in accordance with Section 409A;
l. unless otherwise provided in the Plan or by the Committee in its discretion, the Award and the benefits evidenced by this Award Agreement do not create any entitlement to have the Award or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares and other amounts that may be acquired pursuant to this Award;
m. the Company has communicated share ownership guidelines that apply to the Grantee, and the Grantee understands and agrees that those guidelines may impact any Shares subject to, or issued pursuant to, the Award;
n. the Grantee is solely responsible for investigating and complying with any laws applicable to him or her in connection with the Award; and
o. neither the Company, the Employer nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Grantee’s local currency and the United States Dollar that may affect the value of the Award or any amounts due to the Grantee pursuant to the settlement of the Award or the subsequent sale of any Shares and other amounts that may be acquired pursuant to this Award acquired upon settlement.
Section 11. Data Privacy
a. Data Collection and Usage. The Company and the Employer may collect, process and use certain personal information about the Grantee, and persons closely associated with the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, email address, date of birth, social insurance number, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Relative Value Awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor (“Data”), for the purposes of implementing, administering and managing the Plan. The legal basis, where required, for the processing of Data is the Grantee’s consent. Where required under applicable laws, Data may also be disclosed to certain securities or other regulatory authorities where the Company’s securities are
listed or traded or regulatory filings are made and the legal basis, where required, for such disclosure are the applicable laws.
b. Stock Plan Administration Service Providers. The Company transfers Data to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇’▇ E*TRADE Financial Corporate Services, Inc. and/or its affiliated companies (“E*TRADE”), an independent service provider, which is assisting the Company with the implementation, administration and management of the Plan. In the future, the Company may select a different service provider and share Data with such other provider serving in a similar manner. The Grantee may be asked to agree on separate terms and data processing practices with the service provider, with such agreement being a condition to the ability to participate in the Plan. The Company may also transfer Data to KPMG, an independent service provider, which is also assisting the Company with certain aspects of the implementation, administration and management of the Plan. In the future, the Company may select a different service provider and share Data with such other provider serving in a similar manner.
c. International Data Transfers. The Company and its service providers are based in the United States. The Grantee’s country or jurisdiction may have different data privacy laws and protections than the United States. The Company’s legal basis, where required, for the transfer of Data is ▇▇▇▇▇▇▇’s consent.
d. Data Retention. The Company will hold and use the Data only as long as is necessary to implement, administer and manage the Grantee’s participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax and security laws.
e. Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and the Grantee is providing the consents herein on a purely voluntary basis. If the Grantee does not consent, or if the Grantee later seeks to revoke the Grantee’s consent, the Grantee’s salary from or employment and career with the Employer will not be affected; the only consequence of refusing or withdrawing the Grantee’s consent is that the Company would not be able to grant this Award or other awards to the Grantee or administer or maintain such awards.
f. Data Subject Rights. The Grantee understands that data subject rights regarding the processing of Data vary depending on applicable laws and that, depending on where the Grantee is based and subject to the conditions set out in such applicable laws, the Grantee may have, without limitation, the right to (i) inquire whether and what kind of Data the Company holds about the Grantee and how it is processed, and to access or request copies of such Data, (ii) request the correction or supplementation of Data about the Grantee that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, (iii) obtain the erasure of Data no longer necessary for the purposes underlying the processing, (iv) request the Company to restrict the processing of the Grantee’s Data in certain situations where the Grantee feels its processing is inappropriate, (v) object, in certain circumstances, to the processing of Data for legitimate interests, and to (vi) request portability of the
▇▇▇▇▇▇▇’s Data that the Grantee has actively or passively provided to the Company or the Employer (which does not include data derived or inferred from the collected data), where the processing of such Data is based on consent or the Grantee’s employment and is carried out by automated means. In case of concerns, the Grantee understands that he or she may also have the right to lodge a complaint with the competent local data protection authority. Further, to receive clarification of, or to exercise any of, the Grantee’s rights, the Grantee understands that he or she should contact his or her local human resources representative.
g. Declaration of Consent. By accepting the Award and indicating consent via the Company’s online acceptance procedure, the Grantee is declaring that he or she agrees with the data processing practices described herein and consents to the collection, processing and use of Data by the Company and the transfer of Data to the recipients mentioned above, including recipients located in countries which do not adduce an adequate level of protection from a European (or other non-U.S.) data protection law perspective, for the purposes described above.
Section 12. Restrictive Covenants and Remedies
This Section 12 is entered into by Lilly (which for purposes of Section 12 includes any of its Affiliates1 to which Grantee provides (or has provided) services during Grantee’s employment) and Grantee as of the date of Grantee’s acceptance of this Award. This Section 12 is not applicable if the Grantee is working and/or residing in Canada or otherwise where impermissible under applicable law. However, conduct involving misappropriation of Lilly trade secrets or confidential information will remain prohibited as provided in the Grantee’s Employee Confidentiality and Invention Agreement and nothing in this Award Agreement shall be construed to limit or eliminate any rights or remedies ▇▇▇▇▇ would have against Grantee under trade secret law, unfair competition law, or other applicable laws.
In consideration of the Grantee’s receipt of the Award from ▇▇▇▇▇, and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantee and ▇▇▇▇▇ hereby agree as follows:
a. Confidential Information.
i. Grantee understands and agrees that ▇▇▇▇▇▇▇’s employment by ▇▇▇▇▇ creates a relationship of confidence and trust with respect to any information or materials of a confidential, non-public or proprietary nature that have been or may be made, created or discovered by Grantee or that have been or will be disclosed to Grantee in relation to the business of ▇▇▇▇▇, or its direct or indirect parents, subsidiaries or Affiliates (together with ▇▇▇▇▇, the “Lilly Group Companies”), or any of their respective predecessors, or any entity, business or assets acquired in whole or in part by any of the Lilly Group Companies (each, an “Acquired Company”), or any Protected Contact, or any other person with whom the Lilly Group Companies agrees to hold such information
1 For purposes of this Section 12, “Affiliate” means any entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, ▇▇▇ ▇▇▇▇▇ and Company or Lilly USA, LLC.
or materials in confidence (the “Confidential Information”). For the avoidance of doubt, any information developed by an Acquired Company will be considered “Confidential Information” if it meets the definition of that term herein regardless of whether the Confidential Information was developed by the Acquired Company prior to or after the acquisition by ▇▇▇▇▇. Without limitation as to the forms that Confidential Information may take, ▇▇▇▇▇▇▇ acknowledges and agrees that Confidential Information may be contained in tangible material such as writings, drawings, samples, electronic media, or computer programs, or may be in the nature of unwritten knowledge or know-how. Confidential Information includes, but is not limited to, information concerning the Lilly Group Companies’ inventions, marketing plans, products, designs, processes, services, research data, prototypes, specimens, test protocols, laboratory notebooks, business strategies, financial information, forecasts, personnel information, contract information, Protected Contacts, business pursuits and other information that is not generally known outside the Lilly Group Companies and from which the Lilly Group Companies could derive economic value, including any such information to which Grantee had access prior to agreeing to the terms of this Section 12. Notwithstanding the foregoing, it is understood that Confidential Information does not include information that is generally known in the trade or industry through no breach of this Section 12 or other act or omission by Grantee or any other person with confidentiality obligations to the Lilly Group Companies, or information arising from ▇▇▇▇▇▇▇’s general training, knowledge, skill or experience.
ii. At all times, both during ▇▇▇▇▇▇▇’s employment and during the Confidentiality Restricted Period (as defined herein) after the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ for any reason, and to the fullest extent permitted by law, ▇▇▇▇▇▇▇ agrees to keep and hold all Confidential Information in strict confidence and trust. Grantee will not use or disclose any Confidential Information without the prior written consent of ▇▇▇▇▇ in each instance, except in the good faith performance of ▇▇▇▇▇▇▇’s duties as an employee of ▇▇▇▇▇ for the benefit of ▇▇▇▇▇. For purposes of this Section 12, “Confidentiality Restricted Period” shall mean: (i) five (5) years following the end of Grantee’s employment with ▇▇▇▇▇ for any reason if the item of Confidential Information at issue does not constitute a trade secret under applicable law; and (ii) if the item of Confidential Information at issue constitutes a trade secret under applicable law, the longer of (A) five (5) years following the end of Grantee’s employment with Lilly for any reason, and (B) for so long as such item of Confidential Information at issue continues to constitute a trade secret.
iii. ▇▇▇▇▇▇▇ understands and agrees that all Confidential Information, and all other documents, supplies, equipment and other physical property furnished
to Grantee by ▇▇▇▇▇, produced by Grantee or others in connection with ▇▇▇▇▇▇▇’s employment, or otherwise pertaining to ▇▇▇▇▇▇▇’s work with ▇▇▇▇▇ or any of the Lilly Group Companies (collectively, “Lilly Property”) will be and remain the sole property of ▇▇▇▇▇. Upon the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ for any reason, ▇▇▇▇▇▇▇ agrees to promptly deliver to ▇▇▇▇▇ all Confidential Information and all other Lilly Property, and Grantee will not take with Grantee or retain in any form any documents or materials or copies containing any Confidential Information, excepting only ▇▇▇▇▇▇▇’s personal copies of records of ▇▇▇▇▇▇▇’s employment or compensation with ▇▇▇▇▇.
b. Non-Competition. Except as may be modified for Grantee as described in subsection 12.i., ▇▇▇▇▇▇▇ agrees that during ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ and for twelve (12) months immediately following the end of Grantee’s employment (regardless of reason) (the “Restricted Period”), Grantee will not directly or indirectly, anywhere in or with respect to the United States or any other country in which ▇▇▇▇▇ operates or conducts business as of the end of ▇▇▇▇▇▇▇’s employment (the “Restricted Territory”), work for, advise, manage, act as an agent, employee or consultant for, or otherwise provide any services, in each case in a Competitively-Sensitive Capacity (as defined herein), to any person or entity engaged in research, development, production, sale, or distribution of a product or service competitive with or substantially similar to any product or service in research, development or design, or manufactured, produced, sold, or distributed by Lilly (each such person or entity, a “Competitor”).
For purposes of this Section 12, “Competitively-Sensitive Capacity” means: (i) the same or similar capacity or function in which Grantee worked for ▇▇▇▇▇ at any time during the two (2) years immediately preceding the end of Grantee’s employment; (ii) any officer, director, executive or senior management capacity or function; (iii) any research or development capacity or function; (iv) any sales management or business development management capacity or function; (v) any ownership capacity (except Grantee may own as a passive investment up to 2% of any publicly traded securities); or (vi) any other capacity or function in which the trade secrets or other Confidential Information of Lilly or any of the Lilly Group Companies to which Grantee had access during the two (2) years immediately preceding the end of Grantee’s employment, if used or disclosed by ▇▇▇▇▇▇▇, would enable a Competitor to unfairly compete with Lilly. For purposes of clarity, if a Competitor has multiple divisions, lines or segments, some of which are not competitive with the business of Lilly, nothing in this Section 12 will prohibit Grantee from being employed by, working for or assisting only that division, line or segment of such Competitor that is not competitive with (or planned to be competitive with) the business of ▇▇▇▇▇, provided Grantee is not involved in a Competitively-Sensitive Capacity in the research, development, production, sale or distribution of any product or service competitive with or substantially similar to any product or service in research, development or design, or manufactured, produced, sold, or distributed by Lilly.
In accordance with American Bar Association Model Rule 5.6, this subsection 12.b. shall be inapplicable following the end of ▇▇▇▇▇▇▇’s employment if: (i) during ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇, Grantee primarily performed services for ▇▇▇▇▇ as a licensed attorney, and (ii) Grantee provides legal services as a licensed attorney to a company other than Lilly.
c. Non-Interference with Protected Contacts. Except as may be modified for Grantee as described in subsection 12.i., Grantee agrees that, during the Restricted Period, Grantee will not directly or indirectly, anywhere in or with respect to the Restricted Territory, solicit, urge, divert, induce, or seek to induce any Protected Contact to: (a) terminate their relationship with, or representation of, ▇▇▇▇▇ or any of the Lilly Group Companies; (b) cancel, withdraw, reduce, limit or in any manner to adversely modify any such person’s business with, or representation of, Lilly or any of the Lilly Group Companies; or (c) enter into a relationship, represent, or provide services to a Competitor.
For purposes of this Section 12, “Protected Contact” means any independent contractor, subcontractor, business partner, distributor, broker, consultant, sales representative, customer, vendor, supplier or any other person with which ▇▇▇▇▇ or any of the Lilly Group Companies has a business relationship and (i) with which Grantee had material interaction during ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇, or (ii) about which Grantee had access to Confidential Information during ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇.
d. Non-Solicitation of Employees. ▇▇▇▇▇▇▇ agrees that, during the Restricted Period, Grantee will not, directly or indirectly solicit, urge, divert, induce, or seek to induce any Protected Employee of Lilly to: (a) terminate or adversely modify their relationship with ▇▇▇▇▇ or any of the Lilly Group Companies; or (b) enter into a relationship, represent, or provide services to a Competitor.
For purposes of this Section 12, “Protected Employee” means any employee of Lilly or any of the Lilly Group Companies that has or has had access to Confidential Information and: (i) with whom Grantee had material interaction during Grantee’s employment with ▇▇▇▇▇; or (ii) about whom ▇▇▇▇▇▇▇ had access to Confidential Information during ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇.
e. Reasonableness of Restrictions. ▇▇▇▇▇▇▇ acknowledges and agrees that during the course of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇, Grantee will be provided access to and will become intimately familiar with trade secrets and other Confidential Information key to ▇▇▇▇▇’▇ (and the Lilly Group Companies’) unique competitive advantage. ▇▇▇▇▇▇▇ also acknowledges and agrees that ▇▇▇▇▇’▇ (and the Lilly Group Companies’) trade secrets and other Confidential Information will retain continuing vitality throughout and beyond the Restricted Period. And ▇▇▇▇▇▇▇ acknowledges and agrees that, should ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ end for any reason and, during the Restricted Period, Grantee works in a Competitively-Sensitive Capacity with a Competitor, it would be highly likely, if not inevitable, that Grantee would rely on trade secrets or other Confidential Information of ▇▇▇▇▇ or the Lilly Group Companies
in the course of ▇▇▇▇▇▇▇’s work, either consciously or subconsciously, thereby irreparably harming Lilly and the Lilly Group Companies. For these and other reasons, ▇▇▇▇▇▇▇ agrees that the restrictions in this Section 12 are reasonable and necessary to protect the legitimate business interests of ▇▇▇▇▇ and the Lilly Group Companies and do so by creating a specific amount of time after ▇▇▇▇▇▇▇’s employment ends during which ▇▇▇▇▇▇▇ will not be able to engage or prepare to engage in the activities restricted in this Section 12. Grantee and ▇▇▇▇▇ further acknowledge and agree that Lilly and the Lilly Group Companies conduct business throughout the Restricted Territory and the geographic scope of the foregoing covenants is reasonable and necessary given, among other things, that: (a) absent such restrictions, Grantee could utilize Lilly’s (or Lilly Group Companies) trade secrets and other Confidential Information and unfairly compete with ▇▇▇▇▇ in the Restricted Territory from virtually anywhere in the world; and (b) such scope is the only way for Lilly and the Lilly Group Companies adequately to protect its trade secrets and other Confidential Information.
f. Remedies. ▇▇▇▇▇▇▇ acknowledges that a breach by Grantee of this Section 12 will give rise to irreparable injury to ▇▇▇▇▇ and money damages will not be adequate relief for such injury. As a result, ▇▇▇▇▇▇▇ agrees that ▇▇▇▇▇ (including any third-party beneficiary) will be entitled to obtain equitable or injunctive relief without having to post any bond or other security to restrain or prohibit any such breach or threatened breach, in addition to any other remedies which may be available, including the recovery of monetary damages from Grantee. If ▇▇▇▇▇ determines that Grantee has violated any applicable provisions of this Section 12, in addition to injunctive relief and damages, Grantee agrees and covenants that: (i)Grantee will automatically forfeit any rights Grantee may have with respect to this Award as well as any equity grant (of any form or type) awarded after the date Grantee accepts this Award Agreement, including any right to continue to be eligible to vest or receive a payment under such equity awards; and (ii) if Grantee was an Executive Officer during ▇▇▇▇▇▇▇’s employment, and is entitled to receive benefits under The Lilly Excess Benefits Plan-Retirement (the “SERP”), Grantee will forfeit 60 months of payment under the SERP (whether payment has commenced at the time of breach or commences in the future). Further, Grantee acknowledges that Lilly and the Lilly Group Companies reserve all other rights and remedies available at law or in equity. In addition, in the event Grantee violates any of the restrictive covenants contained herein, the Restricted Period or Confidentiality Restricted Period (as applicable) for the violated restrictive covenants will automatically be extended by the length of time during which Grantee was in violation of such restrictive covenants.
g. Notification Requirements. During the Restricted Period, ▇▇▇▇▇▇▇ acknowledges and agrees to notify ▇▇▇▇▇ of the name, job title, job duties and location of ▇▇▇▇▇▇▇’s next employer or any other person or entity for which Grantee otherwise will be working or providing services. This notification to Lilly is necessary to ensure adherence to Grantee’s post-employment obligations and to protect ▇▇▇▇▇ trade secrets and confidential information from improper disclosure. During the Restricted
Period or Confidentiality Restricted Period, Grantee will provide a copy of Grantee’s post-employment obligations under this Section 12 to each subsequent employer and to each other person or entity for which Grantee otherwise will be working or providing services, in each case prior to commencing employment with or providing any services to such employer, person or entity. ▇▇▇▇▇▇▇ also authorizes ▇▇▇▇▇ to notify third parties, including any actual or potential employers and Protected Contacts, of the terms of this Section 12 and ▇▇▇▇▇▇▇’s obligations hereunder, by providing a copy of this Section 12 or otherwise.
h. Government Agencies; Permitted Disclosures. Notwithstanding anything in this Section 12 to the contrary, Grantee understands that Grantee may report possible violations of law or regulation to any governmental agency or entity, or make other disclosures that are protected under law or regulation. ▇▇▇▇▇▇▇ also understands that nothing in this Section 12 requires Grantee to obtain prior authorization from Lilly to make any such reports or disclosures or to notify ▇▇▇▇▇ that you have made such reports or disclosures. Nor shall anything in this Section 12 impede Grantee from discussing or disclosing in good faith information about unlawful acts in the workplace, such as harassment (including sexual harassment), discrimination, sexual assault, or any other conduct Grantee has reason to believe in good faith is unlawful, or from exercising any rights Grantee may have under Section 7 of the National Labor Relations Act. Grantee further understands that Grantee may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (a) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Without prior written authorization of Lilly, however, Grantee is not authorized to disclose to any third party (including any government official or any attorney Grantee may retain) any communication that is covered by the attorney-client privilege of Lilly or any of the Lilly Group Companies.
i. State Law Considerations. Grantee and ▇▇▇▇▇ intend for this Section 12 to comply with all applicable state laws and that this Section 12 should be read and construed consistent with this shared intention. As such, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ agree that this Section 12 is hereby modified as set forth in this subsection 12.i. to the extent Grantee primarily is employed by and primarily provide services to Lilly in one of the states identified in this subsection 12.i. as of the dates described below.
i. If, as of the date on which Grantee receives this Award Agreement, Grantee primarily is employed by and primarily provide services to Lilly in a state identified in this subsection 12.i.(i), the following shall apply:
A. Colorado. ▇▇▇▇▇▇▇ acknowledges receipt of a separate notice attached to this Award Agreement as “Appendix for Colorado Employees” that ▇▇▇▇▇ has provided to Grantee contemporaneously with this Award Agreement, which
identifies this Award Agreement by name, states that this Award Agreement contains covenants not to compete that could restrict ▇▇▇▇▇▇▇’s options for subsequent employment following the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇, and directs Grantee to the specific sections of this Award Agreement containing such covenants.
B. District of Columbia. Grantee is advised of the following notice: “The District’s Ban on Non-Compete Agreements Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. ▇▇▇▇▇ has determined that Grantee is a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).”
▇. ▇▇▇▇▇▇▇▇▇▇. Subsection 12.j.(v) shall not apply to Grantee, and the following language is substituted as a new subsection 12.j.(viii): “Choice of Law; Jurisdiction. This Section 12 will be interpreted and enforced in accordance with the laws of the State of Washington, without giving effect to any choice-of-law or conflict-of-law principle that would cause the application of the substantive law of any jurisdiction other than Washington. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ agree that any legal action arising out of or relating to this Section 12 will be commenced and maintained exclusively before any state or federal court having appropriate subject matter jurisdiction located in Washington; further, with respect to any such legal action, Grantee and ▇▇▇▇▇ hereby irrevocably consent and submit to the personal jurisdiction and venue of such courts located in Washington.”
ii. If, as of the date on which ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ ends, Grantee primarily is employed by and primarily provide services to Lilly in a state identified in this subsection 12.i.(ii), the following shall apply:
A. California. The “Restricted Period,” for purposes of subsections 12.b. and 12.c., means during the period of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ (and not, for the avoidance of doubt, for any period following the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇), notwithstanding any other provision of Section 12 to the contrary.
B. Colorado. Subsection 12.j.(v) shall not apply to Grantee, and the following language is substituted as a new subsection 12.j.(v): “Choice of Law; Jurisdiction. This Section 12 will be interpreted and enforced in accordance with the laws of the State of Colorado, without giving effect to any choice-of-law or conflict-of-law principle that would cause the application of the substantive law of any jurisdiction other than Colorado.
Grantee and ▇▇▇▇▇ agree that any legal action arising out of or relating to this Section 12 will be commenced and maintained exclusively before any state or federal court having appropriate subject matter jurisdiction located in Colorado; further, with respect to any such legal action, Grantee and ▇▇▇▇▇ hereby irrevocably consent and submit to the personal jurisdiction and venue of such courts located in Colorado.”
C. Massachusetts.
1. Subsection 12.b. shall not apply during the Restricted Period following the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ if ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ ended as a result of a termination of ▇▇▇▇▇▇▇’s employment by ▇▇▇▇▇ without cause or in a layoff.
2. Subsection 12.j.(v) shall not apply to Grantee, and the following language is substituted as a new subsection 12.j.(v): “Choice of Law; Jurisdiction. This Section 12 will be interpreted and enforced in accordance with the laws of the State of Massachusetts, without giving effect to any choice-of-law or conflict-of-law principle that would cause the application of the substantive law of any jurisdiction other than Massachusetts. Grantee and ▇▇▇▇▇ agree that any legal action arising out of or relating to this Section 12 will be commenced and maintained exclusively before any state or federal court having appropriate subject matter jurisdiction located in Massachusetts; further, with respect to any such legal action, Grantee and ▇▇▇▇▇ hereby irrevocably consent and submit to the personal jurisdiction and venue of such courts located in Massachusetts.
D. Minnesota, North Dakota, or Oklahoma. The “Restricted Period,” for purposes of subsection 12.b., means during the period of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ (and not, for the avoidance of doubt, for any period following the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇), notwithstanding any other provision of Section 12 to the contrary.
E. Nevada.
1. Subsection 12.b. shall not apply during the Restricted Period following the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ if ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ ended as a result of a reduction of force, reorganization or similar restructuring.
2. The following sentence shall be added to the end of subsection 12.b.: “Nothing in this subsection 12.b. shall restrict Grantee from providing a service to a customer or client of Lilly if (i) Grantee
does not solicit the customer or client, (ii) the customer or client voluntarily chose to leave and seek services from Grantee, and (iii) Grantee is otherwise in full compliance with the terms and conditions of this Section 12 (including subsection 12.b. hereof).”
F. Virginia. The following sentence shall be added to the end of subsection 12.c.: “Nothing in this subsection 12.c. shall restrict Grantee from providing a service to a customer or client of ▇▇▇▇▇ if Grantee does not initiate contact with or solicit the customer or client.”
▇. ▇▇▇▇▇▇▇▇▇▇.
1. Subsection 12.b. shall not apply during the Restricted Period following the end of ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ if ▇▇▇▇▇▇▇’s employment with ▇▇▇▇▇ ended as a result of a layoff.
2. Subsection 12.j.(v) shall not apply to Grantee, and the following language is substituted as a new subsection 12.j.(viii): “Choice of Law; Jurisdiction. This Section 12 will be interpreted and enforced in accordance with the laws of the State of Washington, without giving effect to any choice-of-law or conflict-of-law principle that would cause the application of the substantive law of any jurisdiction other than Washington. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ agree that any legal action arising out of or relating to this Section 12 will be commenced and maintained exclusively before any state or federal court having appropriate subject matter jurisdiction located in Washington; further, with respect to any such legal action, Grantee and ▇▇▇▇▇ hereby irrevocably consent and submit to the personal jurisdiction and venue of such courts located in Washington.”
j. Other Provisions.
i. Successors and Assigns; Third Party Beneficiaries. This Section 12 shall bind and inure to the benefit of and be enforceable by ▇▇▇▇▇, the ▇▇▇▇▇ Group Companies and Grantee and their respective successors and assigns; provided, ▇▇▇▇▇▇▇’s rights and obligations under this Section 12 may not be assigned or delegated. ▇▇▇▇▇▇▇ acknowledges and agrees that any Lilly Group Company is an intended third-party beneficiary of Section 12 of this Award Agreement, which may be enforced by ▇▇▇▇▇ or any such Lilly Group Company, either singularly or jointly.
ii. Reformation; Severability. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ acknowledge and agree that if any particular covenant or provision is determined by a court to be unreasonable or unenforceable in any respect, including the time period, geographic area, or scope of activity covered by any restrictive covenant, such covenant or provision will be reformed or modified so that such covenant or provision will have the closest effect permitted by applicable law to the original form and will be given
effect and enforced as so reformed or modified, or, if such reformation or modification is not possible, such covenant or provision will be removed from this Section 12. In either case, this Section 12 shall be interpreted, even if reformed or modified, to achieve the full intent expressed, and the other provisions of this Section 12 will remain in force and unmodified and will be enforced as written. Any court interpreting any restrictive covenant provision of this Section 12 will, if necessary, reform or modify any such provision to make it enforceable under applicable law.
iii. Entire Agreement. This Section 12 embodies the complete agreement and understanding among the parties hereto and supersedes and preempts any prior understandings, discussions, agreements or representations by or among the parties hereto, written or oral, which may have related to the subject matter hereof. Notwithstanding the foregoing, this Section 12 is intended to, among other things, supplement (and not supersede) all applicable statutes protecting trade secrets and the duties Grantee owes to Lilly or any of the Lilly Group Companies under the common law, as well as any other written non-competition, non-solicitation, or confidentiality provisions that Grantee agreed to in the past, including those in Grantee’s Employee Confidentiality and Invention Agreement and any Non-Compete Payment Agreement entered into between Grantee and ▇▇▇▇▇ (collectively, “Prior Agreements”), each of which remains in full force and effect, or that ▇▇▇▇▇▇▇ agrees to in writing in the future. To the extent of conflict between this Section 12 and any Prior Agreement, this Section 12 shall control.
iv. Amendment and Waiver. This Section 12 may be amended, and any provision of this Section 12 may be waived, only by a written agreement executed and delivered by ▇▇▇▇▇ and ▇▇▇▇▇▇▇. No course of dealing between or among the parties hereto shall be deemed effective to modify, amend or discharge any part of this Section 12 or any rights or obligations of any party hereto under or by reason of this Section 12.
v. Choice of Law. Except as may be modified for Grantee as described in subsection 12.i. of this Award Agreement, this Section 12 will be interpreted and enforced in accordance with the laws of the State of Indiana, without giving effect to any choice-of-law or conflict-of-law principle that would cause the application of the substantive law of any jurisdiction other than Indiana. Grantee and ▇▇▇▇▇ agree that any legal action arising out of or relating to this Section 12 will be commenced and maintained exclusively before any state or federal court having appropriate subject matter jurisdiction located in Indianapolis, Indiana; further, with respect to any such legal action, Grantee and Lilly hereby irrevocably consent and submit to the personal jurisdiction and venue of such courts located in Indianapolis, Indiana.
vi. Acknowledgements. ▇▇▇▇▇▇▇ acknowledges and agrees that ▇▇▇▇▇▇▇ has been given at least fourteen (14) calendar days (or, if longer, ten (10) business days) from the date of ▇▇▇▇▇▇▇’s receipt of this Award Agreement (the “Consideration
Period”) to consider its terms. Grantee represents and warrants that, if ▇▇▇▇▇▇▇ accepts this Award Agreement before the expiration of the Consideration Period, ▇▇▇▇▇▇▇ has done so knowingly and voluntarily. ▇▇▇▇▇▇▇ also acknowledges and agrees that ▇▇▇▇▇▇▇ has read, understands and agrees with this Section 12, and that ▇▇▇▇▇▇▇ will faithfully comply with each term of this Section 12. ▇▇▇▇▇▇▇ further acknowledges that ▇▇▇▇▇▇▇ has been advised by ▇▇▇▇▇ to consult with an attorney before agreeing to this Section 12, and has had the opportunity to do so if desired.
vii. Declaration of Consent. By accepting this Award and indicating consent via the Company’s online acceptance procedure, ▇▇▇▇▇▇▇ is declaring that he or she agrees to this Section 12. No party hereto shall raise the use of the online acceptance procedure that any signature or document was transmitted or communicated through the use of an electronic device as a defense to the formation of a contract, and each such party forever waives any such defense.
Section 13. Additional Terms and Conditions
a. Country-Specific Conditions. The Award shall be subject to any special terms and conditions set forth in any Appendix to this Award Agreement for the Grantee’s country. Moreover, if the Grantee relocates to one of the countries included in the Appendix, the special terms and conditions for such country will apply to the Grantee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes part of this Award Agreement.
b. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ / Market Abuse Laws. The Grantee may be subject to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ restrictions and/or market abuse laws in applicable jurisdictions, including but not limited to the United States and the Grantee’s country of residence, which may affect the Grantee’s ability to directly or indirectly, for the Grantee or for a third party, acquire or sell, or attempt to sell, or otherwise dispose of Shares and/or Fractional Shares or rights to acquire Shares and/or Fractional Shares (e.g., the Relative Value Award) under the Plan during such times as the Grantee is considered to have “inside information” regarding the Company (as determined under the laws or regulations in the applicable jurisdictions). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ policy. The Grantee acknowledges that it is his or her responsibility to comply with any applicable restrictions, and the Grantee should consult with his or her personal legal advisor on this matter.
c. Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Award and any Shares and/or other amounts acquired pursuant to this Award under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Grantee to execute any additional agreements or undertakings that may be necessary to
accomplish the foregoing. Without limitation to the foregoing, the Grantee agrees that the Relative Value Award and any benefits or proceeds the Grantee may receive hereunder shall be subject to forfeiture and/or repayment to the Company to the extent required to comply with any requirements imposed under Applicable Laws, any compensation recovery policy of the Company that reflects the provisions of Applicable Laws, or to the extent provided in any agreement between Grantee and the Company.
Section 14. Governing Law and Choice of Venue
The validity, construction, and enforcement of this Award Agreement shall be governed by the laws of the State of Indiana, U.S.A. without regard to laws that might cause other law to govern under applicable principles of conflict of laws or cause the application of substantive law of any jurisdiction other than Indiana. For purposes of litigating any dispute that arises under this Award Agreement, the parties hereby submit to and consent to the jurisdiction and venue of the State of Indiana, and agree that such litigation shall be conducted exclusively in the courts having appropriate subject matter jurisdiction in Marion County, Indiana, or the federal courts for the United States for the Southern District of Indiana, and no other courts, where this Award is granted and/or to be performed.
Section 15. Miscellaneous Provisions
a. Notices and Electronic Delivery and Participation. Any notice to be given by the Grantee or successor Grantee shall be in writing, and any notice shall be deemed to have been given or made only upon receipt thereof by the Corporate Secretary of ▇▇▇▇▇ at ▇▇▇▇▇ Corporate Center, Indianapolis, Indiana 46285, U.S.A. Any notice or communication by ▇▇▇▇▇ in writing shall be deemed to have been given in the case of the Grantee if mailed or delivered to the Grantee at any address specified in writing to Lilly by the Grantee and, in the case of any successor Grantee, at the address specified in writing to ▇▇▇▇▇ by the successor ▇▇▇▇▇▇▇. In addition, ▇▇▇▇▇ may, in its sole discretion, decide to deliver any documents related to the Award and participation in the Plan by electronic means or request the Grantee’s consent to participate in the Plan by electronic means. By accepting this Award, the Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by ▇▇▇▇▇ or a third party designated by ▇▇▇▇▇.
b. Language. The Grantee acknowledges that he or she is proficient in the English language, or has consulted with an advisor who is sufficiently proficient in English, so as to allow the Grantee to understand the terms and conditions of this Award Agreement. If the Grantee has received this Award Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
c. Waiver. The waiver by ▇▇▇▇▇ of any provision of this Award Agreement at any time or for any purpose shall not operate as or be construed to be a waiver of the same or any other provision of this Award Agreement at any subsequent time or for any other purpose.
d. Severability and Section Headings. If one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Award Agreement to be construed so as to ▇▇▇▇▇▇ the intent of this Award Agreement and the Plan.
The section headings in this Award Agreement are for convenience of reference only and shall not be deemed a part of, or germane to, the interpretation or construction of this instrument.
e. No Advice Regarding Grant. ▇▇▇▇▇ is not providing any tax, legal or financial advice, nor is ▇▇▇▇▇ making any recommendations regarding the Grantee’s participation in the Plan or the Grantee’s acquisition or sale of the underlying Shares and/or other amounts acquired pursuant to this Award. The Grantee should consult with his or her own personal tax, legal and financial advisors regarding the Grantee’s participation in the Plan before taking any action related to the Plan.
Section 16. Compensation Recovery
a. The Grantee agrees that this Award and any Shares or any other benefits or proceeds therefrom that the Grantee may receive hereunder shall be subject to forfeiture and/or repayment to the Company pursuant to any recovery, recoupment, “clawback” or similar policy of the Company that is in effect as of the Grant Date, including but not limited to the ▇▇▇ ▇▇▇▇▇ and Company Executive Compensation Recovery Policy, effective October 2, 2023, as may be amended, restated, or superseded from time to time (with the provisions contained in such policy deemed incorporated into this Award Agreement without the Grantee’s additional or separate consent).
b. At any time during the three years following the date on which the number of Shares eligible to vest under this Award has been determined under Section 2 above, the Company reserves the right to and, in appropriate cases, will seek restitution of all or part of any Shares that have been issued or cash that has been paid pursuant to this Award if:
i. (A) the number of Shares or the amount of the cash payment was calculated based, directly or indirectly, upon the achievement of financial results that were subsequently the subject of a restatement of all or a portion of the Company’s financial statements, (B) the Grantee engaged in intentional misconduct that
caused or partially caused the need for such a restatement; and (C) the number of Shares or the amount of cash payment that would have been issued or paid to the Grantee had the financial results been properly reported would have been lower than the number of Shares actually issued or the amount of cash actually paid; or
ii. the Grantee has been determined to have committed a material violation of law or Company policy or to have failed to properly manage or monitor the conduct of an employee who has committed a material violation of law or Company policy whereby, in either case, such misconduct causes significant harm to the Company.
Furthermore, in the event the number of Shares issued or cash paid pursuant to this Award is determined to have been based on materially inaccurate financial statements or other Company performance measures or on calculation errors (without any misconduct on the part of the Grantee), the Company reserves the right to and, in appropriate cases, will (A) seek restitution of the Shares or cash paid pursuant to this Award to the extent that the number of Shares issued or the amount paid exceeded the number of Shares that would have been issued or the amount that would have been paid had the inaccuracy or error not occurred, or (B) issue additional Shares or make additional payment to the extent that the number of Shares issued or the amount paid was less than the correct amount.
c. For purposes of the foregoing, the Grantee expressly and explicitly authorizes the Company to issue instructions, on the Grantee’s behalf, to any brokerage firm and/or third-party administrator engaged by the Company to hold any Shares and other amounts acquired pursuant to this Award to re-convey, transfer or otherwise return such Shares and/or other amounts acquired pursuant to this Award to the Company upon the Company’s enforcement of this Section 16.
d. This Section 16 is not intended to limit the Company’s power to take such action as it deems necessary to remedy any misconduct, prevent its reoccurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer in a manner it deems appropriate.
Section 17. Award Subject to Acknowledgement of Acceptance
Notwithstanding any provisions of this Award Agreement, the Award is subject to acknowledgement of acceptance by the Grantee on or before [•], through the website of E*TRADE, the Company’s stock plan administrator. If the Grantee does not acknowledge acceptance of the Award on or before [•], the Award will be cancelled, subject to the Committee’s discretion for unforeseen circumstances.
IN WITNESS WHEREOF, ▇▇▇▇▇ has caused this Award Agreement to be executed in Indianapolis, Indiana, by its proper officer.
▇▇▇ ▇▇▇▇▇ AND COMPANY
By: _________________________
Appendix
▇▇▇ ▇▇▇▇▇ and Company
Amended and Restated 2002 Lilly Stock Plan
This Appendix includes special terms and conditions applicable to the Grantee’s country and the State of Colorado. These terms and conditions supplement or replace (as indicated) the terms and conditions set forth in the Award Agreement to which it is attached. If the Grantee is a citizen or resident of a country other than the one in which the Grantee is currently working and/or residing (or is considered as such for local law purposes), or if the Grantee transfers employment or residency to a different country after the Award is granted, ▇▇▇▇▇ will, in its discretion, determine the extent to which the terms and conditions herein will apply. This Appendix also includes other information relevant to the Award.
Unless otherwise defined herein, the terms defined in the Plan or the Award Agreement, as applicable, shall have the same meanings in this Appendix. Notwithstanding the foregoing, for purposes of this Appendix, “Share” shall mean a share of Common Stock and shall include any Fractional Share.
There are no special terms and conditions or information for the following countries:
Belgium
Germany
India
Japan
United States
However, the Grantee should be aware that he or she may be required to take certain steps to comply with Applicable Laws in the Grantee’s country in connection with the Award. For example, exchange control, foreign asset and/or account and/or other tax reporting obligations may apply to the Grantee upon receipt of the Award or the Shares subject to the Award or upon the sale of Shares. For more information regarding such obligations, the Grantee should refer to the Country-Specific Tax Supplement for the Grantee’s country, if any. The Grantee should also consult with his or her own personal tax and legal advisors to determine what, if any, obligations exist with respect to the Award and/or the acquisition or sale of Shares. Neither the Company nor the Employer is responsible for any failure on the part of the Grantee to be aware of or comply with Applicable Laws.