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EXHIBIT 10.1




1994

LILLY STOCK PLAN,

as amended through

April 15, 2002




     The 1994 Lilly Stock Plan (“1994 Plan”) authorizes the Compensation and Management Development
Committee (“Committee”) to provide officers and other key executive, management, professional, and
administrative employees of Eli Lilly and Company and its subsidiaries with certain rights to
acquire shares of Eli Lilly and Company common stock (“Lilly Stock”). The Company believes that
this incentive program will benefit the Company’s shareholders by allowing the Company to attract,
motivate, and retain key employees and by causing those employees, through stock-based incentives,
to contribute materially to the growth and success of the Company. For purposes of the 1994 Plan,
the term “Company” shall mean Eli Lilly and Company and its subsidiaries, unless the context
requires otherwise.



1. Administration.




     The 1994 Plan shall be administered and interpreted by the Committee consisting of not less
than three persons appointed by the Board of Directors of the Company from among its members. A
person may serve on the Committee only if he or she (i) is a “Non-employee Director” for purposes
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “1934 Act”), and (ii)
satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”). The Committee shall determine the fair market value
of Lilly Stock for purposes of the 1994 Plan. The Committee may, subject to the provisions of the
1994 Plan, from time to time establish such rules and regulations and delegate such authority to
administer the 1994 Plan as it deems appropriate for the proper administration of the Plan. The
decisions of the Committee or its authorized delegatees shall be final, conclusive, and binding
with respect to the interpretation and administration of the 1994 Plan and any Grant made under it.



2. Grants.




     Incentives under the 1994 Plan shall consist of incentive stock options, nonqualified stock
options, performance awards, and restricted stock grants (collectively, “Grants”). All Grants
shall be subject to the terms and conditions set out herein and to such other terms and conditions
consistent with the 1994 Plan as the Committee deems appropriate. The Committee shall approve the
form and provisions of each Grant. Grants under a particular section of the 1994 Plan need not be
uniform and Grants under two or more sections may be combined in one instrument.



3. Eligibility for Grants.




     Grants may be made to any employee of the Company who is an officer or other key executive,
managerial, professional, or administrative employee, including a person who is also a member of
the Board of Directors (“Eligible Employee”). The Committee shall select the



 









 







persons to receive Grants (“Grantees”) from among the Eligible Employees and determine the number of
shares subject to any particular Grant.



4. Shares Available for Grant.




     (a) Shares Subject to Issuance or Transfer. Subject to adjustment as provided in Section
4(b), the aggregate number of shares of Lilly Stock that may be issued or transferred under the
1994 Plan is 25,000,000. The shares may be authorized but unissued shares or treasury shares. The
number of shares available for Grants at any given time shall be 25,000,000, reduced by the
aggregate of all shares previously issued or transferred and of shares which may become subject to
issuance or transfer under then-outstanding Grants. Payment in cash in lieu of shares shall be
deemed to be an issuance of the shares for purposes of determining the number of shares available
for Grants under the 1994 Plan as a whole or to any individual Grantee.



     (b) Adjustment Provisions. If any subdivision or combination of shares of Lilly Stock or any
stock dividend, reorganization, recapitalization, or consolidation or merger with Eli Lilly and
Company as the surviving corporation occurs, or if additional shares or new or different shares or
other securities of the Company or any other issuer are distributed with respect to the shares of
Lilly Stock through a spin-off or other extraordinary distribution, the Committee shall make such
adjustments as it determines appropriate in the number of shares of Lilly Stock that may be issued
or transferred in the future under Sections 4(a), 5(f), and 6(f). The Committee shall also adjust
as it determines appropriate the number of shares and Option Price in outstanding Grants made
before the event.



5. Stock Options.




     The Committee may grant options qualifying as incentive stock options under the Code
(“Incentive Stock Options”), and nonqualified stock options (collectively, “Stock Options”). The
following provisions are applicable to Stock Options:



     (a) Option Price. The Committee shall determine the price at which Lilly Stock may be
purchased by the Grantee under a Stock Option (“Option Price”) which shall be not less than the
fair market value of Lilly Stock on the date the Stock Option is granted (the “Grant Date”). In
the Committee’s discretion, the Grant Date of a Stock Option may be established as the date on
which Committee action approving the Stock Option is taken or any later date specified by the
Committee.



     (b) Option Exercise Period. The Committee shall determine the option exercise period of each
Stock Option. The period shall not exceed twelve years from the Grant Date.



     (c) Exercise of Option. A Stock Option will be deemed exercised by a Grantee upon delivery of
(i) a notice of exercise to the Company or its representative as designated by the Committee, and
(ii) accompanying payment of the Option Price if the Stock Option requires such payment at the time
of exercise. The notice of exercise, once delivered, shall be irrevocable.



     (d) Satisfaction of Option Price. A Stock Option may require payment of the Option Price upon
exercise or may specify a period not to exceed 30 days following exercise within



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which payment must be made (“Payment Period”). The Grantee shall pay or cause to be paid the
Option Price in cash, or with the Committee’s permission, by delivering (or providing adequate
evidence of ownership of) shares of Lilly Stock already owned by the Grantee and having a fair
market value on the date of exercise equal to the Option Price, or a combination of cash and such
shares. If the Grantee fails to pay the Option Price within the Payment Period, the Committee
shall have the right to take whatever action it deems appropriate, including voiding the option
exercise or voiding that part of the Stock Option for which payment was not timely received. The
Company shall not deliver shares of Lilly Stock upon exercise of a Stock Option until the Option
Price and any required withholding tax are fully paid.



     (e) Share Withholding. With respect to any nonqualified option, the Committee may, in its
discretion and subject to such rules as the Committee may adopt, permit or require the Grantee to
satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the
exercise of the nonqualified option by having the Company withhold shares of Lilly Stock having a
fair market value equal to the amount of the withholding tax.



     (f) Limits on Individual Grants. No individual Grantee may be granted Stock Options under the
1994 Plan for more than 1,500,000 shares of Lilly Stock in any three consecutive calendar years.



     (g) Limits on Incentive Stock Options. The aggregate fair market value of the stock covered
by Incentive Stock Options granted under the 1994 Plan or any other stock option plan of the
Company or any subsidiary or parent of the Company that become exercisable for the first time by
any employee in any calendar year shall not exceed $100,000. The aggregate fair market value will
be determined at the Grant Date. An Incentive Stock Option shall not be granted to any Eligible
Employee who, on the Grant Date, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any subsidiary or parent of the Company.



6. Performance Awards.




     The Committee may grant Performance Awards which shall be denominated at the time of grant
either in shares of Lilly Stock (“Stock Performance Awards”) or in dollar amounts (“Dollar
Performance Awards”). Payment under a Stock Performance Award or a Dollar Performance Award shall
be made, at the discretion of the Committee, in shares of Lilly Stock (“Performance Shares”), or in
cash or in any combination thereof, if the financial performance of the Company or any subsidiary,
division, or other unit of the Company (“Business Unit”) selected by the Committee meets certain
financial goals established by the Committee for the Award Period. The following provisions are
applicable to Performance Awards:



     (a) Award Period. The Committee shall determine and include in the Grant the period of time
(which shall be four or more consecutive fiscal quarters) for which a Performance Award is made
(“Award Period”). Grants of Performance Awards need not be uniform with respect to the length of
the Award Period. Award Periods for different Grants may overlap. A Performance Award may not be
granted for a given Award Period after one half (1/2) or more of such period has elapsed.



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     (b) Performance Goals and Payment. Before a Grant is made, the Committee shall establish
objectives (“Performance Goals”) that must be met by the Business Unit during the Award Period as a
condition to payment being made under the Performance Award. The Performance Goals, which must be
set out in the Grant, are limited to earnings per share, divisional income, net income, or any of
the foregoing before the effect of acquisitions, divestitures, accounting changes, and
restructuring and special charges (determined according to criteria established by the Committee).
The Committee shall also set forth in the Grant the number of Performance Shares or the amount of
payment to be made under a Performance Award if the Performance Goals are met or exceeded,
including the fixing of a maximum payment (subject to Section 6(f)).



     (c) Computation of Payment. After an Award Period, the financial performance of the Business
Unit during the period shall be measured against the Performance Goals. If the Performance Goals
are not met, no payment shall be made under a Performance Award. If the Performance Goals are met
or exceeded, the Committee shall certify that fact in writing and certify the number of Performance
Shares or the amount of payment to be made under a Performance Award in accordance with the grant
for each Grantee. The Committee, in its sole discretion, may elect to pay part or all of the
Performance Award in cash in lieu of issuing or transferring Performance Shares. The cash payment
shall be based on the fair market value of Lilly Stock on the date of payment (subject to Section
6(f)). The Company shall promptly notify each Grantee of the number of Performance Shares and the
amount of cash, if any, he or she is to receive.



     (d) Revisions for Significant Events. At any time before payment is made, the Committee may
revise the Performance Goals and the computation of payment if unforeseen events occur during an
Award Period which have a substantial effect on the Performance Goals and which in the judgment of
the Committee make the application of the Performance Goals unfair unless a revision is made;
provided, however, that no such revision shall be made with respect to a Performance Award to the
extent that the Committee determines the revision would cause payment under the Award to fail to be
fully deductible by the Company under Section 162 (m) of the Code.



     (e) Requirement of Employment. To be entitled to receive payment under a Performance Award, a
Grantee must remain in the employment of the Company to the end of the Award Period, except that
the Committee may provide for partial or complete exceptions to this requirement as it deems
equitable in its sole discretion.



     (f) Maximum Payment. No individual may receive Performance Award payments in respect of Stock
Performance Awards in excess of 60,000 shares of Lilly Stock in any calendar year or payments in
respect of Dollar Performance Awards in excess of $2,000,000 in any calendar year. No individual
may receive both a Stock Performance Award and a Dollar Performance Award for the same Award
Period.



7. Restricted Stock Grants.




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     The Committee may issue or transfer shares of Lilly Stock to a Grantee under a Restricted
Stock Grant. Upon the issuance or transfer, the Grantee shall be entitled to vote the shares and
to receive any dividends paid. The following provisions are applicable to Restricted Stock Grants:



     (a) Requirement of Employment. If the Grantee’s employment terminates during the period
designated in the Grant as the “Restriction Period,” the Restricted Stock Grant terminates.
However, the Committee may provide for partial or complete exceptions to this requirement as it
deems equitable.



     (b) Restrictions on Transfer. During the Restriction Period, a Grantee may not sell, assign,
transfer, pledge, or otherwise dispose of the shares of Lilly Stock except to a Successor Grantee
under Section 10(a). Each certificate for shares issued or transferred under a Restricted Stock
Grant shall be held in escrow by the Company until the expiration of the Restriction Period.



     (c) Withholding Tax. Before delivering the certificate for shares of Lilly Stock to the
Grantee, Lilly may require the Grantee to pay to the Company any required withholding tax. The
Committee may, in its discretion and subject to such rules as the Committee may adopt, permit or
require the Grantee to satisfy, in whole or in part, any withholding tax requirement by having the
Company withhold shares of Lilly Stock from the Grant having a fair market value equal to the
amount of the withholding tax. In the event the Grantee fails to pay the withholding tax within
the time period specified in the Grant, the Committee may take whatever action it deems
appropriate, including withholding or selling sufficient shares from the Grant to pay the tax and
assessing interest or late fees to the Grantee.



     (d) Lapse of Restrictions. All restrictions imposed under the Restricted Stock Grant shall
lapse (i) upon the expiration of the Restriction Period if all conditions stated in Sections 7(a),
(b) and (c) have been met or (ii) as provided under Section 9(a)(ii). The Grantee shall then be
entitled to delivery of the certificate.



8. Amendment and Termination of the 1994 Plan.




     (a) Amendment. The Company’s Board of Directors may amend or terminate the 1994 Plan, but no
amendment shall withdraw from the Committee the right to select Grantees under Section 3.



     (b) Termination of 1994 Plan. The 1994 Plan shall terminate on the fifth anniversary of its
effective date unless terminated earlier by the Board or unless extended by the Board.



     (c) Termination and Amendment of Outstanding Grants. A termination or amendment of the 1994
Plan that occurs after a Grant is made shall not result in the termination or amendment of the
Grant unless the Grantee consents or unless the Committee acts under Section 10(e). The
termination of the 1994 Plan shall not impair the power and authority of the Committee with respect
to outstanding Grants. Whether or not the 1994 Plan has terminated, an outstanding Grant may be
terminated or amended under Section 10(e) or may be amended (i) by agreement of the Company and the
Grantee consistent with the 1994 Plan or (ii) by action of the Committee



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provided that the amendment is consistent with the 1994 Plan and is found by the Committee not to impair the rights
of the Grantee under the Grant.



9. Change in Control.



(a) Effect on Grants. Unless the Committee shall otherwise expressly provide in the agreement
relating to a Grant, upon the occurrence of a Change in Control (as defined below):



(i) In the case of Stock Options, (y) each outstanding Stock Option that is not then fully
exercisable shall automatically become fully exercisable until the termination of the option
exercise period of the Stock Option (as modified by subsection (i)(z) that follows), and (z) in the
event the Grantee’s employment is terminated within two years after a Change in Control, his or her
outstanding Stock Options at that date of termination shall be immediately exercisable for a period
of three months following such termination, provided, however, that, to the extent the Stock Option
by its terms otherwise permits a longer option exercise period after such termination, such longer
period shall govern, and provided further that in no event shall a Stock Option be exercisable more
than 10 years after the Grant Date;



(ii) The Restriction Period on all outstanding Restricted Stock Grants shall automatically expire
and all restrictions imposed under such Restricted Stock Grants shall immediately lapse; and



(iii) Each Grantee of a Performance Award for an Award Period that has not been completed at the
time of the Change in Control shall be deemed to have earned a minimum Performance Award equal to
the product of (y) such Grantee’s maximum award opportunity for such Performance Award, and (z) a
fraction, the numerator of which is the number of full and partial months that have elapsed since
the beginning of such Award Period to the date on which the Change in Control occurs, and the
denominator of which is the total number of months in such Award Period.



(b) Change in Control. For purposes of the 1994 Plan, a Change in Control shall mean the
happening of any of the following events:



(i) The acquisition by any “person,” as that term is used in Sections 13(d) and 14(d) of the 1934
Act (other than (w) the Company, (x) any subsidiary of the Company, (y) any employee benefit plan
or employee stock plan of the Company or a subsidiary of the Company or any trustee or fiduciary
with respect to any such plan when acting in that capacity, or (z) Lilly Endowment, Inc.,) of
“beneficial ownership,” as defined in Rule 13d-3 under the 1934 Act, directly or indirectly, of 15%
or more of the shares of the Company’s capital stock the holders of which have general voting power
under ordinary circumstances to elect at least a majority of the Board of Directors of the Company
(or which would have such voting power but for the application of the Indiana Control Share
Statute) (“Voting Stock”); provided, however, that an acquisition of Voting Stock directly from the
Company shall not constitute a Change in Control;



(ii) the first day on which less than two-thirds of the total membership of the Board of Directors
of the Company shall be Continuing Directors (as that term is defined in Article 13(f) of the
Company’s Articles of Incorporation);

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(iii) consummation of a merger, share exchange, or consolidation of the Company (a “Transaction”),
other than a Transaction which would result in the Voting Stock of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) more than 50% of the Voting
Stock of the Company or such surviving entity immediately after such Transaction; or



(iv) a complete liquidation of the Company or a sale or disposition of all or substantially all the
assets of the Company, other than a sale or disposition of assets to any subsidiary of the Company.




10. General Provisions.




     (a) Prohibitions Against Transfer. (i) Except as provided in part (ii) of this subparagraph,
only a Grantee or his or her authorized legal representative may exercise rights under a Grant.
Such persons may not transfer those rights. The rights under a Grant may not be disposed of by
transfer, alienation, pledge, encumbrance, assignment, or any other means, whether voluntary,
involuntary, or by operation of law, and any such attempted disposition shall be void; provided,
however, that when a Grantee dies, the personal representative or other person entitled under a
Grant under the 1994 Plan to succeed to the rights of the Grantee (“Successor Grantee”) may
exercise the rights. A Successor Grantee must furnish proof satisfactory to the Company of his or
her right to receive the Grant under the Grantee’s will or under the applicable laws of descent and
distribution.



     (ii) Notwithstanding the foregoing, the Committee may, in its discretion and subject to such
limitations and conditions as the Committee deems appropriate, grant non-qualified stock options on
terms which permit the Grantee to transfer all or part of the stock option, for estate or tax
planning purposes or for donative purposes, and without consideration, to a member of the Grantee’s
immediate family (as defined by the Committee), a trust for the exclusive benefit of such immediate
family members, or a partnership, corporation or limited liability company the equity interests of
which are owned exclusively by the Grantee and/or one or more members of his or her immediate
family. No such stock option or any other Grant shall be transferable incident to divorce.
Subsequent transfers of a stock option transferred under this part (ii) shall be prohibited except
for transfers to a Successor Grantee upon the death of the transferee.



     (b) Substitute Grants. The Committee may make a Grant to an employee of another corporation
who becomes an Eligible Employee by reason of a corporate merger, consolidation, acquisition of
stock or property, reorganization or liquidation involving the Company in substitution for a stock
option, performance award, or restricted stock grant granted by such other corporation
(“Substituted Stock Incentive”). The terms and conditions of the substitute Grant may vary from
the terms and conditions that would otherwise be required by the 1994 Plan and from those of the
Substituted Stock Incentives. The Committee shall prescribe the exact provisions of the substitute
Grants, preserving where possible the provisions of the Substituted Stock Incentives. The
Committee shall also determine the number of shares of Lilly Stock to be taken into account under
Section 4.



     (c) Subsidiaries. The term “subsidiary” means a corporation of which Eli Lilly and Company
owns directly or indirectly 50% or more of the voting power.



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     (d) Fractional Shares. Fractional shares shall not be issued or transferred under a Grant,
but the Committee may pay cash in lieu of a fraction or round the fraction.



     (e) Compliance with Law. The 1994 Plan, the exercise of Grants, and the obligations of the
Company to issue or transfer shares of Lilly Stock under Grants shall be subject to all applicable
laws and regulations and to approvals by any governmental or regulatory agency as may be required.
The Committee may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory law or government regulation. The Committee may also adopt
rules regarding the withholding of taxes on payment to Grantees.



     (f) Ownership of Stock. A Grantee or Successor Grantee shall have no rights as a shareholder
of the Company with respect to any shares of Lilly Stock covered by a Grant until the shares are
issued or transferred to the Grantee or Successor Grantee on the Company’s books.



     (g) No Right to Employment. The 1994 Plan and the Grants under it shall not confer upon any
Grantee the right to continue in the employment of the Company or affect in any way the right of
the Company to terminate the employment of a Grantee at any time, with or without notice or cause.



     (h) Foreign Jurisdictions. The Committee may adopt, amend, and terminate such arrangements
and make such Grants, not inconsistent with the intent of the 1994 Plan, as it may deem necessary
or desirable to make available tax or other benefits of the laws of foreign jurisdictions to
Grantees who are subject to such laws. The terms and conditions of such foreign Grants may vary
from the terms and conditions that would otherwise be required by the 1994 Plan.



     (i) Governing Law. The 1994 Plan and all Grants made under it shall be governed by and
interpreted in accordance with the laws of the State of Indiana, regardless of the laws that might
otherwise govern under applicable Indiana conflict-of-laws principles.



     (j) Effective Date of the 1994 Plan. The 1994 Plan shall become effective upon its approval
by the Company’s shareholders at the annual meeting to be held on April 18, 1994, or any
adjournment of the meeting.



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