Exhibit 10.1

 

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Elanco Animal Health Incorporated

Performance-Based Award Agreement

 

This Replacement Performance-Based Award has been granted on March 1, 2019,
(“Grant Date”), by Elanco Animal Health Incorporated, an Indiana corporation
(“Elanco” or the “Company”), to the Eligible Individual who has received this
Performance-Based Award Agreement (the “Grantee”).

 

Number of Shares:

Log into UBS account at

 

http://equity.elancodirect.com

 

 

Grantee:

 

 

 

Performance Goals:

 

 

 

 

[Intentionally Omitted]

 

 

Performance Period:

January 1, 2019- December 31, 2020

 

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Elanco and Company Performance-Based Award

 

Table of Contents

 

Section 1.

Grant of Performance-Based Award

3

Section 2.

Vesting

3

Section 3.

Adjustments for Certain Employment Status Changes

4

Section 4.

Change in Control

5

Section 5.

Settlement

6

Section 6.

Rights of the Grantee

6

Section 7.

Prohibition Against Transfer

7

Section 8.

Responsibility for Taxes

7

Section 9.

Section 409A Compliance

9

Section 10.

Nature of Grant

9

Section 11.

Data Privacy

10

Section 12.

Additional Terms and Conditions

12

Section 13.

Miscellaneous Provisions

12

Section 14.

Governing Law and Venue

14

Section 15.

Award Subject to Acknowledgment of Acceptance

14

 

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Section 1.            Grant of Performance-Based Award

 

Elanco, an Indiana corporation (“Elanco” or the “Company”), has granted to the
Eligible Individual who has received this Performance-Based Award Agreement (the
“Grantee”) an award of performance-based restricted stock units (the
“Performance-Based Award” or the “Award”). The number of shares of Elanco Common
Stock (the “Shares”) (as set forth on the first page of this document)
underlying the Award will vest based on the attainment of the Company’s
performance conditions, in whole or in part, for the Performance Period and the
other vesting conditions set forth below under Section 2.  The Grantee may view
the number of Shares underlying the Award by logging on to the UBS Financial
Services Inc. website at http://equity.elancodirect.com.

 

The Award is made pursuant to and subject to the terms and conditions set forth
in the 2018 Elanco Stock Plan (the “Plan”) and to the terms and conditions set
forth in this Performance-Based Award Agreement, including any appendices,
exhibits and addenda hereto (the “Award Agreement”).  Unless otherwise stated in
the Plan where the terms in this Award Agreement may govern in the event of any
conflict between the terms of the Plan and this Award Agreement, in the event of
any such conflict, the terms of the Plan shall otherwise govern.

 

Any capitalized terms used but not defined in this Award Agreement shall have
the meanings set forth in the Plan.

 

Section 2.                  Vesting

 

a.                                      The Award shall vest at the close of
business in Greenfield, Indiana, U.S.A. on the last day of the Performance
Period with respect to the Shares that become eligible to vest based on the
attainment of the performance conditions set forth on page 1 of this Award
Agreement, provided the Grantee continues in Service through the last day of the
Performance Period;

 

i.                              As soon as reasonably practicable following the
end of the Performance Period, the Committee shall determine the number of
Shares eligible to vest based on the Company’s actual adjusted earnings before
interest and taxes ascertained from the Company’s audited consolidated financial
statements for each fiscal year in the Performance Period in accordance with
accounting principles currently applicable in the United States (“US GAAP”),
adjusted to the extent deemed appropriate by the Committee for any unusual items
deemed significant by the Committee (“EBIT”) for the Performance Period, the
corresponding payout multiple and the number of Shares subject to this Award.

 

ii.                           The actual EBIT for the Performance Period shall
be ascertained from the Company’s audited consolidated financial statements for
each fiscal year of the Performance Period in accordance with U.S. GAAP each
year, adjusted to the extent deemed appropriate by the Committee for any unusual
items deemed significant by the Committee.

 

iii.                        The payout multiple corresponding to the EBIT (as
shown on page 1 of this document) for each fiscal year shall then be applied to
the number of Shares subject to this Award.

 

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iv.                       The number of Shares eligible to vest with respect to
this Award will be the number of Shares resulting from the calculation described
in subsections (ii) and (iii) above.

 

b.                                      In the event the Grantee’s Service is
terminated prior to the last day of the Performance Period for any reason or in
any circumstance other than a Qualifying Termination (as described below), the
Award shall be forfeited.

 

Section 3.                  Adjustments for Certain Employment Status Changes

 

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 Shares shall be adjusted for changes in
employment status during the Performance Period as follows:

 

a.                                      Leaves of Absence.  The number of Shares
eligible to vest 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, in its sole discretion, cancel this
Performance-Based 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 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, as determined in the sole
discretion of the Company.

 

c.                                       Qualifying Termination.  In the event
the Grantee’s employment is subject to a Qualifying Termination (as defined
below), a pro-rata portion of the Award will vest on the originally scheduled
vesting date based on the ratio of (x) the number of full or partial months
worked by the Grantee from the Grant Date to the Qualifying Termination to
(y) the total number of months from the Grant Date to the scheduled vesting
date.

 

For purposes of this Award Agreement, a “Qualifying Termination” means any one
of the following:

 

(i)                                     the date of the Grantee’s Retirement;

(ii)                                  the date the Grantee’s Service is
terminated due to the Grantee’s death;

(iii)                               the date the Grantee’s Service is terminated
by reason of Disability;

(iv)                              the date the Grantee’s Service is terminated
due to a closing of a plant site or other corporate location;

(v)                                 the date the Grantee’s Service is terminated
due to the elimination of a work group, functional or business unit or other
broadly applicable reduction in job positions; or

(vi)                              the date the Grantee’s Service is terminated
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 or medical
reassignment in the United States.

 

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“Retirement” for purposes of this Award means either (A) age sixty (60) or
(B) thirty (30) years of Service with the Company or an Affiliate, including any
years of Service with Eli Lilly & Company (“Lilly”) prior to the Company’s
spin-off from Lilly.

 

The Committee, in its sole discretion, shall determine whether and when a
Qualifying Termination has occurred and/or if a leave of absence or transfer of
employment between the Company and an Affiliate or between Affiliates
constitutes a termination of Service.  Such determination 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 that the 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 Award shall
accelerate and vest, with the portion of the Award subject to Company
performance vesting determined based on the target level of attainment.

 

c.                                       In the event that 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 and the Grantee is subject to a Covered Termination (as defined
below) prior to any applicable vesting date, the Award shall accelerate and vest
automatically in full with the portion of the Award subject to Company
performance vesting determined based on the target level of attainment.

 

For purposes of this provision, “Covered Termination” 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 Elanco Animal Health, Inc. 2018 Change in Control Severance Pay Plan
for Employees or the Elanco Animal Health, Inc. 2018 Change in Control Severance
Pay Plan for Select Employees (both as amended from time to time) or any
successor plan or arrangement thereto, as applicable.

 

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.

 

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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 days, following the last day of the Performance Period.

 

b.                                      If the Award vests pursuant to
Section 4(b), 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 the date that the Grantee experiences a
“separation from service” within the meaning of Section 409A of the Code (a
“Section 409A Separation”) (subject to any delay applicable to “specified
employees” described in Section 5(c) below), the date of the Grantee’s death and
the date set forth in Section 2(a) above.

 

c.                                       If the Award vests pursuant to
Section 4(c) and the Award is NQ Deferred Compensation, (i) the Award shall be
paid within sixty 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 Grantee’s Section 409A
Separation, the Award shall instead be paid on the earliest of (1) the first day
following the six (6) month anniversary of the Grantee’s Section 409A
Separation, (2) the date set forth in Section 2(a) above, and (3) the date of
the Grantee’s death.

 

d.                                      At the time of settlement provided in
this Section 5, the Company shall issue or transfer Shares or the cash
equivalent, as contemplated under Section 5(e) below, to the Grantee.  In the
event the Grantee is entitled to a fractional Share, the fraction may be paid in
cash or rounded, in the Committee’s discretion.

 

e.                                       At any time prior to the end of the
Performance Period or until the Award is paid in accordance with this Section 5,
the Committee may, if it so elects, determine to pay part or all of the Award in
cash in lieu of issuing or transferring Shares.  The amount of cash shall be
calculated based on the Fair Market Value of the Shares on the last day of the
Performance Period in the case of payment pursuant to Section 5(a) and on the
date of payment in the case of a payment pursuant to Section 5(c).

 

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 Trust; Grantee’s Rights Unsecured. 
Neither this Performance-Based Award nor any action pursuant to or in accordance
with this Performance-Based Award shall be

 

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construed to create a trust of any kind.  The right of Grantee to receive
payments of cash or Shares under this Performance-Based Award shall be an
unsecured claim against the general assets of the Company

 

b.                                      No Shareholder Rights.  The
Performance-Based Award does not entitle the Grantee to any rights of a
shareholder of the Company until such time as the Performance-Based Award is
settled and Shares are issued or transferred to the Grantee.

 

Section 7.                  Prohibition Against Transfer

 

The right of a Grantee to receive payments of Shares and/or cash 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
Shares or cash 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.

 

Section 8.                  Responsibility for Taxes

 

Regardless of any action the Company 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 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 the Company or the Employer.  The Grantee further
acknowledges that the Company 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 Performance-Based Award, the
expiration of the Performance Period, the issuance of Shares, the transfer and
issuance of Shares, the receipt of any cash pursuant to the Award, the receipt
of any dividends and the sale of any 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.

 

Prior to the applicable taxable or tax withholding event, as applicable, the
Grantee shall pay, or make adequate arrangements satisfactory to the Company
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 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.

 

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b.                                      If the Performance-Based Award is paid
in Shares and the Grantee is not subject to the short-swing profit rules of
Section 16(b) of the Exchange Act, the Grantee authorizes the Company 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 to be issued
pursuant to 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 the Company or its designated broker in order for such
sale to be effectuated) and withhold from the proceeds of such sale, and/or
(iii) withhold in Shares otherwise issuable to the Grantee pursuant to this
Award.

 

c.                                       If the Performance-Based Award is paid
in Shares and the Grantee is subject to the short-swing profit rules of
Section 16(b) of the Exchange Act, the Company will withhold in Shares otherwise
issuable to the Grantee pursuant to this 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 8(b)(i) and (ii) above.

 

Depending on the withholding method, the Company 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 as soon as practicable and without interest and
will not be entitled 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 to which he
or she is entitled pursuant to the Performance-Based Award, notwithstanding that
a number of Shares are withheld to satisfy the obligation for Tax Related Items.

 

The Company may require Grantee to pay the Company and/or the Employer any
amount of Tax Related Items that the Company and/or the Employer may be required
to withhold or account for as a result of any aspect of this Award that cannot
be satisfied by the means previously described.  The Company may refuse to
deliver 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.

 

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Section 9.                  Section 409A Compliance

 

To the extent applicable, it is intended that this Performance-Based Award
comply with the requirements of Section 409A of the U.S. Internal Revenue Code
of 1985, 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.           Nature of Grant

 

In accepting this Performance-Based Award, the Grantee acknowledges, understands
and agrees that:

 

a.                                      the Plan is established voluntarily by
the Company, it is discretionary in nature and may be modified, amended,
suspended or terminated by the Company at any time, as provided in the Plan;

 

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

 

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

 

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

 

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

 

f.                                        the Award and any Shares subject to
the Award, and the income from and value of same, are not part of normal or
expected compensation for any purpose, including but not limited to, calculating
any severance, resignation, termination, redundancy, end of service payments,
bonuses, long-service awards, holiday pay, leave pay, pension or welfare or
retirement benefits or similar mandatory payments;

 

g.                                       the future value of the underlying
Shares is unknown, indeterminable and cannot be predicted with certainty;

 

h.                                      no claim or entitlement to compensation
or damages shall arise from forfeiture of the Award resulting from the Grantee
ceasing to provide employment or other services to the Company 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);

 

i.                                          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

 

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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);

 

j.                             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

 

k.                          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 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 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 Law, 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 UBS Financial Services Inc. and/or its affiliated
companies (“UBS”), 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.

 

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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. For example, the European Commission has issued a limited
adequacy finding with respect to the United States that applies only to the
extent companies register for the EU-U.S. Privacy Shield program, which is open
to companies subject to Federal Trade Commission jurisdiction and in which the
Company participates with respect to employee data. The Company’s legal basis,
where required, for the transfer of Data is the Grantee’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.                           Data Subject Rights. The Grantee understands that
data subject rights regarding the processing of Data vary depending on
applicable law and that, depending on where the Grantee is based and subject to
the conditions set out in such applicable law, 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 Grantee’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.

 

f.                             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.

 

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

 

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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.  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.                          Insider Trading / Market Abuse Laws. The Grantee may
be subject to insider trading 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 or rights to acquire Shares
(e.g., the Performance-Based 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 insider
trading 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
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. Without limitation to the foregoing, the Grantee
agrees that the 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 or
any compensation recovery policy of the Company that reflects the provisions of
Applicable Laws.

 

Section 13.  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 or payment shall be deemed to have been given or made only upon
receipt thereof by the Corporate Secretary of the Company at the Elanco Animal
Health Global Headquarters, Greenfield, Indiana 46140, U.S.A. Any notice or
communication by the Company 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 the Company by the Grantee and, in the case of any
successor Grantee, at the address specified in writing

 

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to the Company by the successor Grantee.  In addition, the Company 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 the Company or a third party designated by the
Company.

 

b.                          Language.  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 from the English version, the English version will control.

 

c.                           Waiver.  The waiver by the Company 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.

 

d.                          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 be construed, interpreted or revised retroactively to
permit this instrument to be construed so as to foster the intent of this Award
and the  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.

 

e.                           No Advice Regarding Grant.  The Company is not
providing any tax, legal or financial advice, nor is the Company making any
recommendations regarding the Grantee’s participation in the Plan or the
Grantee’s acquisition or sale of the underlying Shares.  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.

 

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Section 14.    Governing Law and Choice of Venue

 

The validity and construction of this Performance-Based 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-Based
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 e Award is granted and/or to be
performed.

 

Section 15.    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 prior to 4:00 PM (EDT) on the
60th day after the Grant Date, through the website of UBS, the Company’s stock
plan administrator. If the Grantee does not acknowledge acceptance of the Award
prior to 4:00 PM (EDT) on or prior to the 60th day after the Grant Date, the
Award will be cancelled, subject to the Committee’s discretion for unforeseen
circumstances.

 

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IN WITNESS WHEREOF, the Company has caused this Award to be executed and granted
in Greenfield, Indiana, by its proper officer.

 

 

ELANCO ANIMAL HEALTH INCORPORATED

 

 

 

By:

/s/Jeffrey N. Simmons

 

 

Jeffrey N. Simmons

 

 

President, Chief Executive Officer and Director

 

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