exv10w16



 






EXHIBIT 10.16




TIME SHARING AGREEMENT



This Time Sharing Agreement
(this “Agreement”) is made effective as of March 4, 2005 by and between
Eli Lilly and Company, an Indiana corporation (“Company”), and Sidney Taurel (“Executive”).




RECITALS



WHEREAS, Company owns or rightfully possesses and operates three (3) Gulfstream Aerospace model
G-IV civil aircraft bearing United States Registration Numbers N310EL (S/N 1021), N311EL (S/N 1095)
and N312EL (S/N 1105) (individually and collectively, as the context requires, “the Aircraft” or
“Aircraft”); and

WHEREAS, Company employs a fully qualified flight crew to operate the Aircraft; and

WHEREAS, Executive is Chairman of the Board and Chief Executive Officer of Company; and

WHEREAS, in order to protect the safety and security of Executive and maximize his availability to carry out
his responsibilities, Company’s Board of Directors has adopted a policy that generally requires
Executive to travel on the Aircraft for all his air travel, whether on Company business or personal
travel; and

WHEREAS, Executive desires to lease the Aircraft from time to time on a time-sharing basis as
defined in Section 91.501(c) (1) of the Federal Aviation Regulations (“FARs”) when he is required
under the Board’s policy to fly on the Aircraft for personal travel.



NOW, THEREFORE, in consideration of the foregoing, and the other promises contained herein, the
parties, intending to be legally bound hereby, agree as follows:



1. Company agrees to lease the Aircraft to Executive on a non-exclusive basis from time to time as
mutually agreed between the parties pursuant to the provisions of FAR 91.501(c)(1) and to provide a
fully qualified flight crew for all operations conducted under this Agreement. This Agreement
shall be effective on the date set forth above and shall remain in effect until terminated by
either party upon ten (10) days prior written notice to the other.




 








 




2. (a) Executive shall pay to Company for each flight conducted under this Agreement a lease fee
(“Lease Fee”) equal to the actual expenses of each specific flight as authorized by FAR Part
91.501(d) subject to the limitations set forth in subparagraph 2(b) below. Such actual expenses
shall include:





	 	•  	Fuel, oil, lubricants, and other additives;
	 
	 	•  	Travel expenses of the crew, including food, lodging and ground transportation;
	 
	 	•  	Hangar and tie-down costs away from the Aircraft’s base of operation;
	 
	 	•  	Insurance obtained for the specific flight;
	 
	 	•  	Landing fees, airport taxes and similar assessments;
	 
	 	•  	Customs, foreign permits, and similar fees directly related to the flight;
	 
	 	•  	In-flight food and beverages;
	 
	 	•  	Passenger ground transportation; and
	 
	 	•  	Flight planning and weather contract services.




(b) Notwithstanding the foregoing, in no event shall Executive be obligated to pay Company a Lease
Fee in excess of the greater of (x) or (y) below, where:





	 	(x)  	equals the applicable subsection (i) or (ii) below:






	 	(i)  	For travel between cities served by regularly scheduled first
class commercial airline service, an amount equal to the published cost of the
lowest first class airfare available to the general public, which will be
solicited within one business day of the date the Executive requests the
specific flight, for the dates traveled multiplied by the number of persons in
Executive’s party for the flight; or
	 
	 	(ii)  	For travel between cities served by regularly scheduled coach
or business class, but not first class commercial airline service, an amount
equal to the published cost of the lowest unrestricted coach (or, if available,
business class) airfare available to the general public, which will be
solicited within one business day of the date the Executive requests the
specific flight, for





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	 	   	the dates traveled multiplied by the number of persons in Executive’s party
for the flight; and






	 	(y)  	equals the amount of income that would be imputed to Executive for the flight
under the applicable Standard Industry Fare Levels as set forth in 26 C.F.R.
§1.61-21(g) assuming that Executive did not pay the Lease Fee.




For purposes of the foregoing computation, if a city is not served by regularly scheduled
commercial airline service, the foregoing provisions shall be applied utilizing a city selected by
Company as close as reasonably practicable to the city without such service. Company’s
determination of the Lease Fee shall be conclusive. Prior to any proposed flight, Company shall
provide Executive with an estimate of the Lease Fee for the particular flight. If Executive
proceeds with the proposed flight, he shall be obligated to pay the Lease Fee. Executive shall
also be responsible to pay, together with any Lease Fee, applicable state and federal taxes
(including, without limitation, federal excise taxes). If Executive declines the proposed flight,
neither Executive nor Company shall have any further obligation with respect to the proposed
flight.



3. Company will pay all expenses related to the operation of the Aircraft when incurred, and will
provide an invoice to Executive for the Lease Fee determined in accordance with paragraph 2 above
within fifteen (15) days after any flight or flights for the account of Executive. Executive shall
pay Company the Lease Fee, together with applicable taxes, within ten (10) days of receipt of the
invoice.



4. Executive will provide Company with requests for flight time and proposed flight schedules as
far in advance of any given flight as possible, and in any case, at least two (2) business days in
advance of Executive’s planned departure (unless Company agrees to a shorter notice in a particular
case in its discretion). Requests for flight time shall be in a form, whether written or oral,
mutually convenient to, and agreed upon by the parties. In addition to the proposed schedules and
flight times, Executive shall provide at least the following information




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for each proposed flight prior to scheduled departure as required by the Company or Company’s
flight crew:





	 	(a)  	proposed departure point;
	 
	 	(b)  	destination;
	 
	 	(c)  	date and time of flight;
	 
	 	(d)  	the number, name, and relationship to the Executive of
anticipated passengers;
	 
	 	(e)  	the nature and extent of luggage and/or cargo to be carried;
	 
	 	(f)  	the date and time of return flight, if any; and
	 
	 	(g)  	any other information concerning the proposed flight that may be pertinent or
required by Company or Company’s flight crew.




5. Company shall have final authority over the scheduling of the Aircraft, provided, however, that
Company will use reasonable efforts to accommodate Executive’s requests and to avoid conflicts in
scheduling. It is understood that Company shall not be obligated to retain or contract for
additional flight crew or maintenance personnel or equipment in order to accommodate Executive’s
schedule requests.



6. Company shall be solely responsible for securing maintenance, preventive maintenance and
required or otherwise necessary inspections on the Aircraft, and shall take such requirements into
account in scheduling the Aircraft. No period of maintenance, preventative maintenance or
inspection shall be delayed or postponed for the purpose of scheduling the Aircraft, unless said
maintenance or inspection can be safely conducted at a later time in compliance with all applicable
laws and regulations, and within the sound discretion of the pilot in command. The pilot in
command shall have final and complete authority to cancel any flight for any reason or condition
that in his or her judgment would compromise the safety of the flight.



7. Company shall ensure that for each flight conducted under this Agreement, the Aircraft will be
under the command of a qualified flight crew. All flight operations by or on behalf of Executive
under this Agreement shall be conducted under Part 91 of the FAR. The Company




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shall have and exercise exclusive operational control of the Aircraft during all phases of all
flights under this Agreement, including, without limitation, all flights during which Executive,
and/or his guests, designees, or property are on-board the Aircraft.



8. In accordance with applicable FARs, the qualified flight crew provided by Company will exercise
all of its duties and responsibilities in regard to the safety of each flight conducted hereunder.
Executive specifically agrees that the flight crew, in its sole discretion, may terminate any
flight, refuse to commence any flight, or take other action that in the considered judgment of the
pilot in command is necessitated by considerations of safety. No such action of the pilot in
command shall create or support any liability for loss, injury, damage or delay to Executive or any
other person. The parties further agree that Company shall not be liable for delay or failure to
furnish the Aircraft and crew pursuant to this Agreement for any reason whatsoever.



9. Company will provide such additional insurance coverage as Executive shall request or require,
provided, however, that the cost of such additional insurance shall be borne by Executive as set
forth in paragraph 2.



10. Executive warrants that:





	 	(a)  	He will use the Aircraft for and on account of his own business or personal use
only, and will not use the Aircraft for the purpose of providing transportation of
passengers or cargo in air commerce for compensation or hire;
	 
	 	(b)  	He will refrain from incurring any mechanics or other lien in connection with
inspection, preventative maintenance, maintenance or storage of the Aircraft, whether
permissible or impermissible under this Agreement, nor shall there be any attempt by
Executive to convey, mortgage, assign, lease or any way alienate the Aircraft or create
any kind of lien or security interest involving the Aircraft or do anything or take any
action that might mature into such a lien; and
	 
	 	(c)  	During the term of this Agreement, he will, and will cause any passengers in
his party to, abide by and conform to all such laws, governmental and airport orders,





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	 	   	rules and regulations, as shall from time to time be in effect relating in any way
to the operation and use of the Aircraft by a timesharing lessee.




11. The Company assumes and shall bear the entire risk of loss, theft, confiscation, damage to, or
destruction of the Aircraft. The Company shall release, indemnify, defend and hold harmless the
Executive and his heirs, executors and personal representatives from and against any and all
losses, liabilities, claims, judgments, damages, fines, penalties, deficiencies and expenses
(including, without limitation, reasonable attorneys fees and expenses) incurred or suffered by
Executive on account of a claim or action made or instituted by a third person arising out of or
resulting from operations of the Aircraft hereunder and/or any services provided by the Company to
Executive hereunder, except to the extent attributable to the gross negligence or willful
misconduct of Executive or his guests on the Aircraft.



12. For purposes of this Agreement, the permanent base of operation of the Aircraft shall be
Indianapolis International Airport.



13. Executive hereby acknowledges and agrees that all rights of Executive under this Agreement with
respect to the Gulfstream Aerospace model G-IV aircraft bearing FAA registration number N310EL and
manufacturer’s serial number 1021, are and will be subject and expressly subordinate to the terms
and conditions contained in that certain Aircraft Lease Agreement (S/N 02) (the “Main Lease”) dated
June 3, 2004, between Company and SunTrust Leasing Corporation (the “Lender”) and the rights of the
Lender contained therein. Notwithstanding anything to the contrary contained herein, this
Agreement shall terminate, or be canceled, at the option of the Lender, upon written notice to
Executive upon the occurrence of an Event of Default (as such term is defined in the Main Lease).



14. Neither this Agreement nor any party’s interest herein shall be assignable to any other party
whatsoever. This Agreement shall inure to the benefit of and be binding upon the parties hereto,
and their respective heirs, representatives and successors.




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15. This Agreement constitutes the entire agreement of the parties with respect to the time-share
of the Aircraft as set forth herein. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Indiana.




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16. TRUTH IN LEASING STATEMENT



THE AIRCRAFT, GULFSTREAM AEROSPACE MODEL G-IV AIRCRAFT, BEARING MANUFACTURER’S SERIAL NUMBERS 1021,
1095 AND 1105, CURRENTLY REGISTERED WITH THE FEDERAL AVIATION ADMINISTRATION AS N310EL, N311EL AND
N312EL, RESPECTIVELY, HAVE BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91.409(f)(3) DURING THE 12
MONTH PERIOD PRECEDING THE DATE OF THIS LEASE.



THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91.409(f)(3) FOR OPERATIONS TO BE
CONDUCTED UNDER THIS LEASE.



ELI LILLY AND COMPANY, AN INDIANA CORPORATION, IS CONSIDERED RESPONSIBLE FOR OPERATIONAL CONTROL OF
ALL AIRCRAFT IDENTIFIED AND TO BE OPERATED UNDER THIS LEASE. I, THE UNDERSIGNED, DEIRDRE P.
CONNELLY, AS SENIOR VICE PRESIDENT OF ELI LILLY AND COMPANY, CERTIFY THAT IT IS RESPONSIBLE FOR
OPERATIONAL CONTROL OF THE AIRCRAFT FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE AND THAT IT
UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.



AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION REGULATIONS
CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE.



THE ADDRESS OF ELI LILLY AND COMPANY IS LILLY CORPORATE CENTER, INDIANAPOLIS, INDIANA 46285.



IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.



	 	 	 	 	 
	 	ELI LILLY AND COMPANY

 	 
	 	By:  	/s/ Deirdre P. Connelly 	 
	 	 	 	 
	 	 	Name:  	Deirdre P. Connelly 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	 	 
	 	/s/ Sidney Taurel	 
	 	
 	 
	 	 	SIDNEY TAUREL