Eli Lilly and Company
Performance Award
(for Executive Officers)

This Performance Award has been granted on February 9, 2018, for the Award
Period of January 1, 2018 through February 1, 2021, by Eli Lilly and Company, an
Indiana corporation with its principal offices in Indianapolis, Indiana (“Lilly”
or the “Company”), to Grantee.

lly2017123110kexhibit_image1.gif [lly2017123110kexhibit_image1.gif]
A. Recitals
Under the 2002 LILLY STOCK PLAN ("2002 Plan"), the Compensation Committee
("Committee") has determined the form of this Performance Award and selected the
Grantee, an Eligible Employee of the Company or one of its subsidiaries, to
receive a Performance Award for the Award Period January 1, 2018 through
February 1, 2021. The applicable terms of the 2002 Plan are incorporated in this
Performance Award by reference, including the definitions of terms contained in
the 2002 Plan.
B. Performance Award
Lilly grants to the Grantee the right to acquire Lilly Stock by issuance to the
Grantee of a number of Performance Shares (determined in accordance with
Sections 2 and 3 below) in the form of restricted stock units or in the form of
a cash payment (each, as described in Section 6 below), subject to certain
restrictions and on the terms and conditions contained in this Performance Award
and the 2002 Plan. In the event of any conflict between the terms of the 2002
Plan and this Performance Award, the terms of the 2002 Plan shall govern.
Section 1. Statement of Performance Period and Award Period
The Performance Period shall begin January 1, 2018 and end December 31, 2019.
The Award Period shall begin January 1, 2018 and end February 1, 2021.
Section 2. Number of Shares

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The target number of Performance Shares for the Award Period shall be determined
by the value approved by the Grantee’s supervisor, multiplied by the percentage
determined by the Committee to be granted as a Performance Award, divided by the
grant fair value determined in accordance with accounting principles currently
applicable in the Unites States, rounded to the nearest full share. Target
shares are set at an EPS growth rate of 8.10%. The actual cumulative EPS will be
used to determine the actual number of Performance Shares awarded at payout,
subject to adjustment as provided below in this Section or in Section 8.
Grantees may view their Performance Award by logging on to the Merrill Lynch
website at http://myequity.lilly.com beginning March 1 of each grant year.
The number of Performance Shares for the Award Period and the cumulative EPS as
described in Section 3 below, shall be subject to adjustment in accordance with
the provisions of Section 4(b) of the 2002 Plan for certain corporate
recapitalizations and other events, and to the extent the Performance Award is
intended to constitute “qualified performance-based compensation” under Section
162(m) of the Code (“Performance-Based Compensation”), in a manner that will not
cause the Performance Award to fail to so qualify. A fractional share resulting
from such adjustment shall in the discretion of the Committee either be paid in
cash or rounded.
Section 3. Computation of Cumulative EPS
The cumulative EPS for the Performance Period shall be computed in accordance
with Section 18 and using the following procedures:
a.
A determination of adjusted consolidated net income ascertained from the
Company's audited consolidated financial statements shall be made for each
fiscal year in the Performance Period in accordance with accounting principles
currently applicable in the United States, adjusted to the extent deemed
appropriate by the Committee for any unusual items deemed significant by the
Committee; provided, however, to the extent the Performance Award is intended to
constitute “qualified performance-based compensation” under Section 162(m) of
the Code (“Performance-Based Compensation”), no such adjustment shall be made in
a manner that will cause the Performance Award to fail to so qualify.

b.
The number of shares of outstanding Lilly Stock used to compute consolidated
earnings per share shall be determined as of the end of each fiscal year in the
Performance Period on a diluted basis or its equivalent in accordance with
accounting principles currently applicable in the United States.

c.
To calculate consolidated earnings per share for each fiscal year in the
Performance Period, the adjusted consolidated net income shall be divided by the
number of shares of outstanding Lilly Stock as computed in accordance with
subsection (b) above and the quotient rounded to the nearest cent.

d.
To determine the cumulative EPS for the Performance Period, the EPS amounts for
each fiscal year as determined above shall be added.

Section 4. Determination and Announcement of Award
After the cumulative EPS for the Performance Period is computed, the cumulative
EPS and the resulting number of Performance Shares for Grantee (determined in
accordance with Sections 2 and 8), together with the Committee’s election
between cash and Performance Shares under Section 5, shall be communicated to
Grantee.

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Section 5. Committee Election to Pay Cash
At any time until the determination of cumulative EPS and the resulting number
of Performance Shares, the Committee may, in the case of the Grantee’s
termination of employment for one of the reasons set forth in Section 8(c) and
if the Committee so elects, determine to pay part or all of any Performance
Award in cash in lieu of issuing Performance Shares in the form of restricted
stock units. The amount of cash shall be based upon the fair market value of
Lilly Stock on a valuation date to be determined by the Committee.
Section 6. Issuance of Performance Shares / Restricted Stock Units
Lilly shall issue to the Grantee the number of Performance Shares determined to
be payable under Section 4 in the form of restricted stock units that will be
governed by the provisions of Section 10 of the 2002 Plan and as further
detailed below, or shall make a cash payment to the Grantee as determined under
Section 5, in each case within a sixty day period starting the day after the
Performance Period expiration (as stated in Section 1) and ending on the
sixtieth day after the Performance Period expiration. In the event Grantee is
entitled to a fractional restricted stock unit, the fraction may be paid in cash
or rounded, in the Committee’s discretion.
a.
No Shareholder Rights. Any Performance Shares issued to the Grantee in the form
of restricted stock units shall not entitle Grantee to any rights of a
shareholder of Lilly Stock until such time as the restricted stock units vest
and shares of Lilly Stock are issued or transferred to the Grantee in accordance
with the terms set forth in this instrument. The rights of Grantee with respect
to the shares of Lilly Stock subject to the restricted stock units shall remain
forfeitable at all times prior to the date on which the restrictions with
respect to the restricted stock units lapse as described in this instrument.

b.
Dividend Equivalent Units. As long as the Grantee holds restricted stock units
issued pursuant to this Performance Award, the Company shall accrue for the
Grantee, on each date that the Company pays a cash dividend to holders of Lilly
Stock, Dividend Equivalent Units equal to the total number of restricted stock
units issued to the Grantee under this Performance Award multiplied by the
dollar amount of the cash dividend paid per share of Lilly Stock by the Company
on such date. Dividend Equivalent Units shall accrue in an account denominated
in U.S. dollars and shall not accrue interest or other credits prior to being
paid. A report showing the accrued Dividend Equivalent Units shall be sent to
the Grantee periodically, as determined by the Company. The accrued Dividend
Equivalent Units shall be subject to the same restrictions as the restricted
stock units to which the Dividend Equivalent Units relate, and the Dividend
Equivalent Units shall be forfeited in the event that the restricted stock units
with respect to which such Dividend Equivalent Units were credited are
forfeited.

c.
No Trust; Grantee’s Rights Unsecured. Neither this Performance Award nor any
action pursuant to or in accordance with this Performance Award shall be
construed to create a trust of any kind. The right of Grantee to receive
payments of cash or shares of Lilly Stock under this Performance Award shall be
an unsecured claim against the general assets of the Company.

d.
Record of the Restricted Stock Units and Dividend Equivalent Units. During the
Restriction Period (as defined in Section 9), records of the restricted stock
units and accumulated Dividend Equivalent Units will reside in an account at the
Company or an Equity Administration Agent designated by the Company.    

Section 7. Continued Employment Requirement

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If the status of the Grantee as an Eligible Employee, as defined in the 2002
Plan, terminates before the issuance of the restricted stock units then, except
as outlined in Section 8(c), all rights of the Grantee under this Performance
Award shall terminate. The Company shall incur no liability to Grantee under
this Performance Award by terminating Grantee's status as an Eligible Employee
whether by action with respect to Grantee individually, either with or without
cause, or by dissolution or liquidation of Lilly or merger or consolidation of
Lilly with a corporation in which Lilly is not the surviving corporation, or
otherwise.
Section 8. Adjustments for Certain Employment Status Changes
The number of Performance Shares described in Section 2 is based on the
assumption that the Grantee is an employee in good standing throughout the
entire Performance Period. Unless the Committee determines, in its sole
discretion, that such adjustments are not advisable after consideration of
employment laws in the country where the Grantee resides, the number of
Performance Shares shall be adjusted for changes in employment status during the
Performance Period as follows:
a.
Leaves of Absence. The number of Performance Shares shall be reduced
proportionally for any portion of the total days in the Performance Period
during which the Grantee is on an approved unpaid leave of absence longer than
ninety (90) days.

b.
Demotions, Disciplinary Actions and Misconduct. The Committee may, at its
discretion, cancel this Performance Award or reduce the number of Performance
Shares, prorated according to time or other measure as determined appropriate by
the Committee, if during any portion of the Performance Period the Grantee has
been (i) subject to disciplinary action by the Company or (ii) 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
conduct causes significant harm to the Company.

c.
Qualifying Termination. In the event the Grantee’s employment is subject to a
Qualifying Termination (as defined below), the number of Performance Shares
shall be reduced proportionally for the portion of the total days during the
Performance Period in which the Grantee was not an active employee. Any
Performance Shares that have been reduced by operation of this Section 8(c)
shall be paid within a sixty day period starting the day after the Performance
Period expiration (as stated in Section 1) and ending on the sixtieth day after
the Performance Period expiration.

Further, in the event the Grantee’s employment is subject to a Qualifying
Termination before the issuance of the restricted stock units, then Lilly may
determine to issue the Performance Shares to the Grantee in the form of shares
of Lilly stock or in the form of a cash payment as described in Section 5 above,
in each case subject to the withholding tax provisions in Section 20 below. In
the event Grantee is entitled to a fractional share, the fraction may be paid in
cash or rounded, in the Committee’s discretion.
A “Qualifying Termination” means any one of the following:

(i)
retirement as a “retiree,” which is a person who is (i) a retired employee under
the Lilly Retirement Plan; (ii) a retired employee under the retirement plan or
program of a Lilly subsidiary; or (iii) a retired employee under a retirement
program specifically approved by the Committee;

(ii)    death of the Grantee while in the active service of the Company or any
subsidiary;

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(iii)    termination due to disability;
(iv)
termination resulting directly from the closing of a plant site or other
corporate location that directly results in termination of employment;

(v)
termination resulting directly from the elimination of a work group, functional
or business unit or other broadly applicable reduction in job positions that
directly results in termination of employment;

(vi)
termination as a result of the Grantee’s failure to locate a position within the
Company or any of its subsidiaries or affiliates following the placement of the
Grantee on reallocation or medical reassignment in the United States.

For purposes of this Performance Award, the Committee shall be responsible for
approving, in its discretion, what is classified as a Qualifying Termination.
Section 9. Restriction Period for Restricted Stock Units
The period of restriction (“Restriction Period”) applicable to the restricted
stock units issued pursuant to this Performance Award shall commence on a
valuation date to be determined by the Committee and expire at the close of
business on the earlier of the following dates:
a.
the first day of the month following the one-year anniversary of a valuation
date to be determined by the Committee; provided, however, that in the event
that the restricted stock units constitute an item of non-qualified deferred
compensation subject to Section 409A of the Code (“NQ Deferred Compensation”),
the date contemplated under this Section 9(a) shall be a date occurring during
the second calendar year following the last day of the Performance Period; and

b.
the date of a Qualifying Termination (as defined in Section 8(c) above);
provided however, that in the event that the restricted stock units constitute
NQ Deferred Compensation, the date shall instead be the date of a Qualifying
Termination that also constitutes a “separation from service” within the meaning
of Section 409A of the Code and the Treasury Regulations promulgated and other
guidance issued thereunder (“Section 409A,” and such separation, a “Section 409A
Separation”)).

Notwithstanding anything in Section 10(a) of the 2002 Plan to the contrary, the
Committee shall not modify the expiration dates set forth above so as to
accelerate the termination of the Restriction Period.
Section 10. Retirement During Restriction Period
In the event the Grantee’s employment is terminated due to retirement as a
retiree (as defined in Section 8(c) above) prior to the end of the Restriction
Period, the restricted stock units will continue pursuant to the established
Restriction Period and Dividend Equivalent Unit accrual schedule. The restricted
stock units and Dividend Equivalent Units will be paid in full to the retiree
upon the lapse of all restrictions as noted in Section 9.
A Grantee who has not received a year-end individual performance rating and (i)
is on employment probation (or its equivalent outside the United States, as
determined by the Committee) for unsatisfactory performance and takes retirement
in lieu of a termination of employment; or (ii) takes retirement 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.

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Section 11. Conditions During Restriction Period
a.
During the entire Restriction Period, the employment of the Grantee with the
Company (or a subsidiary of the Company) must not terminate except for reasons
and under the circumstances specified in Sections 9(b) or 10. "Termination of
employment" shall mean the cessation for any reason of the relationship of
employer and employee between the Grantee and the Company (or a subsidiary of
the Company).

b.
If the Grantee is placed on employment probation (or its equivalent outside the
United States, as determined by the Committee) at any time within the
Restriction Period, the Grantee will forfeit the next Restricted Stock Unit
Award to vest, as determined by the restriction lapse date indicated in each of
the Grantee’s unvested Restricted Stock Unit Awards. If one or more Restricted
Stock Unit Awards include the same restriction lapse date, all such Awards will
be forfeited.

c.
The Committee may, at its discretion, cancel this Performance Award or reduce
the number of Performance Shares, prorated according to time or other measure as
deemed appropriate by the Committee, if during any portion of the Award Period,
the Grantee has been (i) subject to disciplinary action by the Company or (ii)
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 conduct causes significant harm to the Company.

Section 12. Consequences of Breach of Conditions During Restriction Period
If any of the conditions that must continue to be satisfied during the
Restriction Period under Section 11 is breached during the Restriction Period,
either by act of the Grantee or otherwise, the Grantee, by accepting this
Performance Award, agrees that upon such breach all interest of the Grantee in
the restricted stock units and associated Dividend Equivalent Units shall
terminate and be forfeited. The Committee’s determination shall be final and
binding on the Grantee. The Company shall incur no liability to the Grantee
under this Performance Award by terminating the Grantee's status as an Eligible
Employee, whether by action with respect to the Grantee individually, either
with or without cause, or by dissolution or liquidation of Lilly or merger or
consolidation of Lilly with a corporation in which Lilly is not the surviving
corporation, or otherwise. Notwithstanding anything in Section 10(a) of the 2002
Plan to the contrary, the Committee shall not waive the breach of the conditions
set forth in Section 11.
Section 13. Committee Election to Pay Restricted Stock Units in Cash
At any time during the Restriction Period or until paid in accordance with
Section 14, the Committee may, if it so elects, determine to pay part or all of
the restricted stock units in cash in lieu of issuing or transferring shares of
Lilly Stock. The amount of cash shall be based upon the fair market value of
Lilly Stock at the end of the Restriction Period as outlined in Section 14.
Section 14. Lapse of Restrictions
At the end of the Restriction Period, if the conditions specified in Section 11
have not been breached during the Restriction Period, all restrictions shall
terminate. The restricted stock units and accumulated Dividend Equivalent Units
shall be paid to Grantee within a sixty day period starting the day after the
end of the Restriction Period and ending on the sixtieth day after the end of
the Restriction Period, but no later than December 31 of the year in which the
Restriction Period ends, as follows:
a.
Lilly shall issue or transfer to the Grantee shares of Lilly Stock or the cash
equivalent, as described in Section 13 above, equal to one share per restricted
stock unit, subject to the withholding tax

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provisions in Section 20 below. In the event Grantee is entitled to a fractional
share, the fraction may be paid in cash or rounded, in the Committee’s
discretion.
b.
Lilly shall pay to the Grantee in cash all accrued Dividend Equivalent Units
following deduction for Tax-Related Items in accordance with Section 20 below.

In the event that the Restriction Period ends by reason of death of the Grantee,
the payments as described above shall be made to the Successor Grantee.
Notwithstanding anything in Section 10(a) of the 2002 Plan to the contrary, the
Committee shall not direct that the restrictions on the restricted stock unit
will lapse other than as expressly set forth in this Performance Award.
Notwithstanding the foregoing, if the Grantee is treated as a “specified
employee” within the meaning of Section 409A as of the date of any payment
hereunder, the commencement of any payment shall be delayed in accordance with
Section 21 below.
Section 15. Compensation Recovery
At any time during the three years following the date on which the number of
Performance Shares subject to the Performance Award has been determined under
Section 4 above, the Company reserves the right to and, in appropriate cases,
will seek restitution of all or part of any shares of Lilly stock that have been
issued or cash that has been paid pursuant to this Performance Award if:
a. (i)
the number of Performance Shares was calculated based, directly or indirectly,
upon the achievement of earnings per share (EPS) that were subsequently the
subject of restatement of all or a portion of the Company’s financial
statements;

(ii)
the Grantee engaged in intentional misconduct that caused or partially caused
the need for such a restatement; and

(iii)
the number of Performance Shares 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 Performance Shares actually issued or the amount of cash
actually paid; or

b. 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 conduct causes significant harm to the company.
Furthermore, in the event the number of any Performance Shares issued pursuant
to this Performance 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 of Lilly Stock issued or cash paid pursuant to
this Performance Award to the extent that the number of shares of Lilly Stock
issued or the amount paid exceeded the number of shares of Lilly Stock 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 of Lilly Stock or make additional payment to the extent
that the number of shares of Lilly Stock issued or the amount paid was less than
the correct amount.

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This Section 15 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 16. Determinations by Committee
Determinations by the Committee pursuant to any provision of the 2002 Plan,
pursuant to rules, regulations and procedures adopted by the Committee or
pursuant to this instrument, including without limitation (a) the determination
of the amount and method of computation of EPS, (b) whether to make an exception
to the rule of Section 7 or adjustments under Section 2 or Section 3 or (c) what
constitutes “misconduct” for purposes of Section 15 and any other determinations
under Section 15, shall be final and binding on the Grantee and any Successor
Grantee.
Section 17. Prohibition Against Transfer
The right of a Grantee to receive Performance Shares or payments of shares of
Lilly stock or cash under this Performance Award may not be transferred except
to a duly appointed guardian of the estate of the Grantee or to a Successor
Grantee by will or the applicable laws of descent and distribution and then only
subject to the provisions of this Performance Award. A Grantee may not assign,
sell, pledge or otherwise transfer Performance Shares, shares of Lilly Stock or
cash to which he or she may be entitled hereunder prior to the transfer of
shares of Lilly Stock or payment of cash to the Grantee and any such attempted
assignment, sale, pledge or transfer shall be void.
Section 18. Revocation or Modification
This Performance Award shall be irrevocable except that Lilly shall have the
right to revoke or modify this Performance Award under Sections 13(e) and/or
13(k) of the 2002 Plan or pursuant to Section 8(b) or Section 11(c) above.
Section 19. Change in Control
The provisions of Section 12(a) of the 2002 Plan apply to the Performance Award
with the following modifications:
a.
The only Change in Control event that shall result in a benefit under this
Section 19 shall be the consummation of a change in ownership of the Company as
defined in Section 12(b)(i) of the 2002 Plan (a “Transaction”) prior to the
issuance of Performance Shares in the form of restricted stock units or payment
of cash pursuant to Section 6 above.

b.
In the event of a Transaction that occurs prior to the end of the Performance
Period, the Grantee will be credited with a Stock Unit Award representing a
number of share units with respect to Lilly common stock equal to the Grantee's
award opportunity for the Performance Award based on the Company’s expected
results for the Performance Period (as determined by the Company’s last approved
forecast prior to the consummation of the Transaction, not considering the
impact of the Transaction), which shall then be eligible to vest on the last day
of the Performance Period, subject to the Grantee’s continued status as an
Eligible Employee through the last day of the Performance Period. The Stock Unit
Award shall be paid in stock of the acquiring or successor corporation within
sixty (60) days following the Performance Period; provided, however, that if the
Stock Unit Award constitutes NQ Deferred Compensation, the Stock Unit Award
shall instead be paid in the second calendar year following the last day of the
Performance Period.

c.
The following provisions shall apply notwithstanding anything to the contrary in
Section 19(b):

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i.
In the event that (A) the Grantee is subject to a Qualifying Termination prior
to the end of the Performance Period or (B) the acquiring entity or successor to
the Company does not assume, continue or substitute the Stock Unit Award in
connection with the Transaction, then the Company shall pay the Performance
Shares credited to the Grantee in the form of shares of Lilly Stock immediately
prior to the consummation of the Transaction in order to allow the shares of
Lilly Stock to be outstanding and for the Grantee to be eligible to receive the
consideration being paid to Lilly shareholders in connection with the
Transaction; provided, however, that if the Stock Unit Award constitutes NQ
Deferred Compensation and the Transaction is not a “change in control event”
within the meaning of Section 409A (a “Section 409A CIC”), then the Grantee
shall receive an equivalent amount in cash (based on the fair market value of
the Lilly Stock at the time of the consummation of the Transaction) in the
second calendar year following the last day of the Performance Period.

ii.
In the event that the acquiring entity or successor to the Company assumes,
continues or substitutes the Stock Unit Award issued pursuant to this Section 19
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, the
Stock Unit Award shall vest automatically in full and shall be settled in stock
of the acquiring or successor corporation within sixty (60) days of the date of
the Covered Termination; provided however, that in the event that the Stock Unit
Award constitutes NQ Deferred Compensation, the Stock Unit Award shall instead
be settled within sixty (60) days of a Covered Termination that also constitutes
Section 409A Separation, but in no event later than December 31 of the year in
which the Section 409A Separation occurs.

“Covered Termination” for purposes of this Performance Award shall mean a
Qualifying Termination, Grantee’s termination without Cause or the Grantee’s
resignation for Good Reason. “Cause” and “Good Reason” shall have the meanings
ascribed to them in the Eli Lilly and Company 2007 Change in Control Severance
Pay Plan for Select Employees (as amended from time to time) or any successor
plan or arrangement thereto.

d.
The following provisions shall apply to restricted stock units that are issued
in payment of Performance Shares:

i.
In the event of a Transaction that occurs prior to the expiration of the
Restriction Period and the restricted stock units are not assumed, continued or
substituted by the acquiring entity or successor to the Company, the restricted
stock units shall vest automatically and shares of Lilly Stock will be issued to
the Grantee immediately prior to the consummation of the Transaction in order to
allow the shares of Lilly Stock to be outstanding and for the Grantee to be
eligible to receive the consideration being paid to Lilly shareholders in
connection with the Transaction; provided, however, that if the restricted stock
units constitute NQ Deferred Compensation and the Transaction is not a Section
409A CIC then the Grantee shall receive an equivalent amount in cash (based on
the fair market value of the Lilly Stock at the time of the consummation of the
Transaction) in the second calendar year following the last day of the
Performance Period.

ii.
In the event that the acquiring entity or successor to the Company assumes,
continues or substitutes the restricted stock units in connection with the
Transaction and the Grantee is subject to a Covered Termination prior to the end
of the Restriction Period, the restricted

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stock units shall vest automatically in full and shall be settled in stock of
the acquiring or successor corporation within sixty (60) days of the date of the
Covered Termination; provided, however, that if the restricted stock units
constitute NQ Deferred Compensation, the restricted stock units shall instead
vest automatically and be settled in stock of the acquiring or success
corporation within sixty (60) days of the date of a Covered Termination that
also constitutes a Section 409A Separation, but in no event later than December
31 of the year in which the Section 409A Separation occurs.

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 19, then
references to Lilly Stock in this instrument shall be read to mean stock of the
acquiring entity or successor to the Company as and when applicable.
Section 20. Responsibility for Taxes
Regardless of any action Lilly and/or the Grantee’s employer (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
2002 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 Lilly or the Employer. The Grantee further acknowledges that Lilly
and the Employer (a) make no representations or undertakings regarding the
treatment of any Tax Related Items in connection with any aspect of the
Performance Award, including the grant of the Performance Award, the expiration
of the Performance Period or the Award Period, the issuance of Performance
Shares, the lapse of restrictions applicable to the restricted stock units, the
transfer and issuance of shares of Lilly Stock or the receipt of a cash payment
in lieu of shares of Lilly Stock, the accrual and payment of Dividend Equivalent
Units, the receipt of any dividends and the sale of any shares of Lilly Stock
acquired pursuant to this Performance Award; and (b) do not commit to and are
under no obligation to structure the terms of the grant or any aspect of the
Performance Award to reduce or eliminate the Grantee’s liability for Tax Related
Items or achieve any particular tax result. Furthermore, if the Grantee has
become subject to tax in more than one jurisdiction between the date of grant
and the date of any relevant taxable or tax withholding event, 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.
Prior to 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.

a.
In the case of any cash payment made to the Grantee pursuant to this Performance
Award, 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 or
from the Grantee’s wages or other cash compensation paid to the Grantee by the
Company and/or the Employer.

b.
If the Performance Award is paid in shares of Lilly Stock and the Grantee is not
subject to the short-swing profit rules of Section 16(b) of the 1934 Act, the
Grantee authorizes Lilly and/or the Employer, or their respective agents, at
their discretion, to (i) withhold from the Grantee’s wages or other cash
compensation paid to the Grantee by the Company and/or the Employer, (ii)
arrange for the sale of shares of Lilly Stock to be issued pursuant to the
Performance 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

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for such sale to be effectuated) and withhold from the proceeds of such sale,
and/or (iii) withhold in shares of Lilly Stock otherwise issuable to the Grantee
pursuant to the Performance Award.
c.
If the Performance Award is paid in shares of Lilly Stock and the Grantee is
subject to the short-swing profit rules of Section 16(b) of the 1934 Act, Lilly
will withhold in shares of Lilly Stock otherwise issuable to the Grantee
pursuant to the Performance Award, unless the use of such withholding method is
prevented by applicable law 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
20(b)(i) and (ii) above.

Depending on the withholding method, Lilly and/or the Employer may withhold or
account for Tax Related Items by considering applicable minimum statutory
withholding amounts or other applicable withholding rates, including maximum
applicable rates, in which case the Grantee will receive a refund of any
over-withheld amount in cash and will not be entitled to the equivalent amount
in shares of Lilly Stock. If the obligation for Tax Related Items is satisfied
by withholding shares of Lilly Stock as described in Section 20(b)(iii) or
Section 20(c) above, for tax purposes, the Grantee will be deemed to have been
issued the full number of shares of Lilly Stock to which he or she is entitled
pursuant to the Performance Award, notwithstanding that a number of shares of
Lilly Stock are withheld to satisfy the obligation for Tax Related Items. Lilly
may require Grantee to pay Lilly and/or the Employer any amount of Tax Related
Items that Lilly and/or the Employer may be required to withhold or account for
as a result of any aspect of this Performance Award that cannot be satisfied by
the means previously described. Lilly may refuse to deliver shares of Lilly
Stock 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 20.
Section 21. Section 409A Compliance
To the extent applicable, it is intended that this Performance Award comply with
the requirements of Section 409A, and this Performance 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.
Notwithstanding anything elsewhere in this instrument to the contrary, if the
Performance Award constitutes NQ Deferred Compensation and the Grantee is
treated as a “specified employee” as of the date of any payment pursuant to the
Performance Award in connection with the Grantee’s Section 409A Separation , as
determined by the Company in accordance with its procedures, then, to the extent
required, such payment pursuant to this Performance Award shall be paid on the
earliest of (a) the date set forth in Section 8(c) above, (b) the date set forth
in Section 9(a) above,(c) the first day following the six (6) month anniversary
of the Grantee’s Section 409A Separation, (d) the date of a Section 409A CIC,
and (e) the date of the Grantee’s death. This Performance Award is subject to
Section 13(k) of the 2002 Plan concerning Section 409A.
Section 22. Grantee’s Acknowledgements
In accepting this Performance Award, the Grantee acknowledges, understands and
agrees that:
a.
the 2002 Plan is established voluntarily by Lilly, it is discretionary in nature
and may be modified, amended, suspended or terminated by Lilly at any time, as
provided in the 2002 Plan;

b.
the Performance Award is voluntary and occasional and does not create any
contractual or other right to receive future Performance Awards, or benefits in
lieu of Performance Awards even if Performance Awards have been granted in the
past;

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c.
all decisions with respect to future grants of Performance Awards or other
grants, if any, will be at the sole discretion of Lilly;

d.
the Grantee’s participation in the 2002 Plan is voluntary;

e.
the Performance Award and any Performance Shares are not intended to replace any
pension rights or compensation;

f.
the Performance Award and any Performance Shares, and the income and value of
same, are not part of normal or expected compensation or salary for purposes of
calculating any severance, resignation, termination, redundancy, end of service
payments, bonuses, long-service awards, pension or welfare or retirement
benefits or similar payments;

g.
neither the Performance Award nor any provision of this instrument, the 2002
Plan or the policies adopted pursuant to the 2002 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 Performance Award shall not be interpreted to form an employment
contract or relationship with Lilly or any subsidiary of Lilly;

h.
the future value of the Performance Shares and any shares of Lilly Stock that
may be acquired in connection with this Performance Award is unknown,
indeterminable and cannot be predicted with certainty;

i.
the value of any Performance Shares or any shares of Lilly Stock acquired in
connection with this Performance Award may increase or decrease, even below the
tax valuation price;

j.
no claim or entitlement to compensation or damages shall arise from forfeiture
of the Performance Award or any Performance Shares resulting from the Grantee
ceasing to provide employment or other services to Lilly or the Employer (for
any reason whatsoever and 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 the Grantee's employment agreement, if any);

k.
for purposes of the Performance Award, the Grantee’s employment will be
considered terminated as of the date he or she is no longer actively providing
services to Lilly or a subsidiary of Lilly and the Grantee’s right, if any, to
earn and be paid any portion of the Performance Award, the restricted stock
units and the Dividend Equivalent Units 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 Performance 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.
the Grantee is solely responsible for investigating and complying with any laws
applicable to him or her in connection with the Performance Award; and

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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 of Lilly Stock that may be issued pursuant to this Performance Award.

Section 23. No Advice Regarding Grant
Lilly is not providing any tax, legal or financial advice, nor is Lilly making
any recommendations regarding the Grantee’s participation in the 2002 Plan or
the Grantee’s acquisition or sale of the underlying shares of Lilly Stock. The
Grantee is hereby advised to consult with his or her own personal tax, legal and
financial advisors regarding the Grantee’s participation in the 2002 Plan before
taking any action related to the 2002 Plan.
Section 24. Data Privacy
The Grantee hereby explicitly and unambiguously consents to the collection, use
and transfer, in electronic or other form, of the Grantee’s personal data as
described in this Performance Award and any other Performance Award materials by
and among, as applicable, the Employer, Lilly, its subsidiaries and its
affiliates for the exclusive purpose of implementing, administering and managing
the Grantee’s participation in the 2002 Plan.
The Grantee understands that Lilly and the Employer may hold certain personal
information about the Grantee, including, but not limited to, the Grantee’s
name, home address and telephone number, date of birth, social insurance number
or other identification number, salary, nationality, job title, any shares of
stock or directorships held in Lilly, details of all Performance Awards or any
other entitlement to shares awarded, canceled, vested, unvested or outstanding
in the Grantee’s favor, for the purpose of implementing, administering and
managing the 2002 Plan (“Data”).
The Grantee understands that Data will be transferred to Merrill Lynch, KPMG
and/or any other stock plan service provider or tax or legal advisor as may be
selected by the Company in the future, which is assisting in the implementation,
administration and management of the 2002 Plan. The Grantee understands that
these recipients may be located in the Grantee’s country, or elsewhere, and that
the recipient’s country may have different data privacy laws and protections
than the Grantee’s country. The Grantee authorizes the recipients to receive,
possess, use, retain and transfer the Data, in electronic or other form, for the
sole purpose of implementing, administering and managing the Grantee’s
participation in the 2002 Plan, including any requisite transfer of such Data as
may be required to a broker, escrow agent or other third party with whom any
shares or cash received pursuant to the Performance Award may be deposited. The
Grantee understands that Data will be held only as long as is necessary to
implement, administer and manage the Grantee’s participation in the 2002 Plan.
The Grantee understands that the Grantee may, at any time, request an equity
award transaction statement, request any necessary amendments to Data or refuse
or withdraw the consents herein, in any case without cost, by contacting in
writing the Grantee’s local human resources representative. Further, the Grantee
understands that he or she is providing the consents herein on a purely
voluntary basis. If the Grantee does not consent, or if the Grantee later seeks
to revoke his or her consent, the Grantee’s employment status or service and
career with the Employer will not be adversely affected; the only consequence of
refusing or withdrawing the Grantee’s consent is that the Company would not be
able to grant the Grantee the Performance Award or other equity awards or
administer or maintain such awards. Therefore, the Grantee understands that
refusal or withdrawal of consent may affect the Grantee’s ability to participate
in the 2002 Plan. For more information on the consequences of the Grantee’s
refusal to consent or withdrawal of consent, the Grantee understands that the
Grantee may contact the Grantee’s local human resources representative.
Section 25. Notices, Electronic Delivery and Participation

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Any notice to be given by the Grantee or Successor Grantee shall be in writing,
and any notice or payment shall be deemed to have been given or made only upon
receipt thereof by the Treasurer of Lilly at Lilly Corporate Center,
Indianapolis, Indiana 46285, U.S.A. Any notice or communication by Lilly 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 Lilly by the Successor Grantee.

In addition, Lilly may, in its sole discretion, decide to deliver any documents
related to the Performance Award and participation in the 2002 Plan by
electronic means or request the Grantee’s consent to participate in the 2002
Plan by electronic means. By accepting this Performance Award, the Grantee
hereby consents to receive such documents by electronic delivery and agrees to
participate in the 2002 Plan through an on-line or electronic system established
and maintained by Lilly or a third party designated by Lilly.
Section 26. Waiver
The waiver by Lilly of any provision of this instrument at any time or for any
purpose shall not operate as or be construed to be a waiver of that provision or
any other provision of this instrument at any subsequent time or for any other
purpose.
Section 27. Language
If the Grantee has received this instrument or any other document related to the
2002 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.
Section 28. Imposition of Other Requirements
If the Grantee relocates to another country, any special terms and conditions
applicable to Performance Awards granted in 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.
In addition, the Company reserves the right to impose other requirements on the
Performance Award and any shares of Lilly Stock acquired 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.
Section 29. Governing Law and Choice of Venue
The validity and construction of this Performance Award 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. For
purposes of litigating any dispute that arises under this Performance Award, the
parties hereby submit to and consent to the jurisdiction of the State of
Indiana, and agree that such litigation shall be conducted in the courts of
Marion County, Indiana, or the federal courts for the United States for the
Southern District of Indiana, and no other courts, where this Performance Award
is granted and/or to be performed.
Section 30. Severability and Section Headings
If one or more of the provisions of this instrument 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

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be construed, interpreted or revised retroactively to permit this instrument to
be construed so as to foster the intent of this Performance Award and the 2002
Plan.
The section headings in this instrument are for convenience of reference only
and shall not be deemed a part of, or germane to, the interpretation or
construction of this instrument.
Section 31. Effective Date
The effective date of this instrument shall be the date of grant.
Section 32. Award Subject to Acknowledgement of Acceptance
Notwithstanding any provisions of this instrument, the Performance Award is
subject to acknowledgement of acceptance by the Grantee prior to 4:00 PM (EDT)
April 30, 2018 through the website of Merrill Lynch, the Company’s stock plan
administrator. If the Grantee does not acknowledge acceptance of the Performance
Award prior to 4:00 PM (EDT) April 30, 2018, the Award will be cancelled,
subject to the Committee’s discretion for unforeseen circumstances.

IN WITNESS WHEREOF, Lilly has caused this Performance Award to be executed and
granted in Indianapolis, Indiana, by its proper officer.

ELI LILLY AND COMPANY
lly2017123110kexhibit_image2.gif [lly2017123110kexhibit_image2.gif]

By: _________________________
David A. Ricks
Chairman of the Board, President and
Chief Executive Officer