Document:

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EXHIBIT 10.1

                             1989 LILLY STOCK PLAN
                     (as amended through October 18, 1993)

  The 1989 Lilly Stock Plan ("1989 Plan") authorizes the Compensation Committee
("Committee") to provide officers and other key executive and management
employees of Eli Lilly and Company and its subsidiaries ("Company") with certain
rights to acquire shares of the Company's common stock.  The Company believes
that this incentive program will cause those persons to contribute materially to
the growth of the Company, thereby benefiting its shareholders.

1.  Administration.

  The 1989 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 is not eligible and has not been eligible to receive a Grant under the 1989
Plan or the 1984 Plan for at least one year before his appointment.  The
Committee shall determine the fair market value of the Company's common stock
("Lilly Stock") for purposes of the 1989 Plan.  The Committee's decisions shall
be final and conclusive with respect to the interpretation and administration of
the 1989 Plan and any Grant made under it.

2.  Grants.

  Incentives under the 1989 Plan shall consist of incentive stock options,
nonqualified stock options, stock appreciation rights, 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 this 1989 Plan as the Committee deems appropriate.
The Committee shall approve the form and provisions of each Grant.  Grants under
a particular section of the 1989 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, 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 1989 Plan is 10,000,000.  The shares may be
authorized but unissued shares or treasury shares.  The number of shares
available for Grants at any given time shall be 10,000,000, 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.

  (b) Recapitalization Adjustment.  If any subdivision or combination of shares
of Lilly Stock or any stock dividend, capital reorganization, recapitalization,
consolidation, or merger with the Company as the surviving corporation occurs
after the adoption of the 1989 Plan, the Committee shall make such adjustments
as it determines appropriate in the number of shares of Lilly Stock that may be
issued or
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transferred in the future under Section 4(a). The Committee shall also adjust
the number of shares and Option Price in all outstanding Grants made before the
event.

5.  Stock Options.

  The Committee may grant options qualifying as incentive stock options under
the Internal Revenue Code of 1986, as amended ("Incentive Stock Options"), and
nonqualified options (collectively, "Stock Options").  The following provisions
are applicable to Stock Options:

          (a) Option Price.  The price at which Lilly Stock may be purchased by
     the Grantee under a Stock Option ("Option Price") shall be the fair market
     value of Lilly Stock on the date of the Grant.

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

          (c) Exercise of Option.  A Grantee may exercise a Stock Option by
     delivering a notice of exercise to the Company, either with or without
     accompanying payment of the Option Price.  The notice of exercise, once
     delivered, shall be irrevocable.

          (d) Satisfaction of Option Price.  The Grantee shall pay the Option
     Price in cash, or with the Committee's permission, by delivering 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 shares.  The Grantee shall pay the Option Price not later than thirty
     (30) days after the date of a statement from the Company following exercise
     setting forth the Option Price, fair market value of Lilly Stock on the
     exercise date, the number of shares of Lilly Stock that may be delivered in
     payment of the Option Price, and the amount of withholding tax due, if any.
     If the Grantee fails to pay the Option Price within the thirty (30) day
     period, the Committee shall have the right to take whatever action it deems
     appropriate, including voiding the option exercise.  The Company shall not
     issue or transfer shares of Lilly Stock upon exercise of a Stock Option
     until the Option Price is 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 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 electing to have the Company withhold shares
     of Lilly Stock having a fair market value equal to the amount of the
     withholding tax.

          (f) Limits on Incentive Stock Options.  The aggregate fair market
     value of the stock covered by Incentive Stock Options granted under the
     1989 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 time of grant.  An Incentive
     Stock Option shall not be granted to any Eligible Employee who, at the time
     of grant, owns stock possessing more than 10 percent of the total combined
     voting power of all classes of stock of the Company or any subsidiary or
     parent of the Company.

6.  Stock Appreciation Right.

  The Committee may grant a Stock Appreciation Right ("SAR") with respect to any
Stock Option granted under the 1989 Plan either at the time of grant of the
option or thereafter and may also grant an
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                                      -3-

SAR with respect to any outstanding option granted under a prior plan of the
Company ("Prior Stock Option"). The following provisions are applicable to each
SAR:

          (a) Options to Which Right Relates.  Each SAR shall specify the Stock
     Option or Prior Stock Option to which the right is related, together with
     the Option Price and number of option shares subject to the SAR at the time
     of its grant.

          (b) Requirement of Employment.  An SAR may be exercised only while the
     Grantee is in the employment of the Company, except that the Committee may
     provide for partial or complete exceptions to this requirement as it deems
     equitable.

          (c) Exercise.  A Grantee may exercise an SAR in whole or in part by
     delivering a notice of exercise to the Company.  The notice of exercise
     once given shall be irrevocable.  An SAR may be exercised only to the
     extent that the Stock Option or Prior Stock Option to which it relates is
     exercisable.  If a Grantee exercises an SAR, he agrees to forgo the right
     to purchase the number of shares under the related Stock Option or Prior
     Stock Option with respect to which the SAR has been exercised.

          (d) Payment and Form of Settlement.  If a Grantee exercises an SAR, he
     shall receive the aggregate of the excess of the fair market value of each
     share of Lilly Stock with respect to which the SAR is being exercised over
     the Option Price of each such share.  Payment may be made in cash, Lilly
     Stock at fair market value, or a combination of the two, in the discretion
     of the Committee.  The fair market value shall be determined as of the date
     of exercise.

          (e) Expiration and Termination.  Each SAR shall expire on a date
     determined by the Committee at the time of grant.  If a Stock Option or
     Prior Stock Option is exercised in whole or in part, the SAR related to the
     shares purchased shall terminate immediately.

7.  Performance Awards.

  The Committee may grant Performance Awards under which payment shall be made
in shares of Lilly Stock ("Performance Shares"), or in cash, if the financial
performance of the Company or any subsidiary or division of the Company
("Business Unit") selected by the Committee during the Award Period meets
certain financial goals established by the Committee.  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 (4) 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.  A Performance Award may not be granted for a given
     Award Period after one half (1/2) or more of such period has elapsed.

          (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, may include earnings per share, return on
     shareholders' equity, return on assets, net income, divisional income, or
     any other financial measurement established by the Committee.  The
     Committee shall also establish the method of calculating the amount of
     payment to be made under a Performance Award if the Performance Goals are
     met, including the fixing of a maximum payment.

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                                      -4-

          (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 determine the number of
     Performance Shares payable under a Performance Award.  The Committee, in
     its sole discretion, may elect to pay the Performance Award in cash in lieu
     of issuing or transferring part or all of the Performance Shares.  The cash
     payment shall be based on the fair market value of Lilly Stock on the date
     of payment.  The Company shall promptly notify each Grantee of the number
     of Performance Shares and the amount of cash 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 financial performance of the Business Unit and
     which in the judgment of the Committee make the application of the
     Performance Goals unfair unless a revision is made.

          (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.

8.  Restricted Stock Grants.

  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 "Restricted Period," the
     Restricted Stock Grant terminates and the shares of Lilly Stock must be
     returned immediately to the Company.  However, the Committee may provide
     for partial or complete exceptions to this requirement as it deems
     equitable.

          (b) Restrictions on Transfer and Legend on Stock Certificate.  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 contain a legend giving
     appropriate notice of the restrictions in the Grant.

          (c) Lapse of Restrictions.  All restrictions imposed under the
     Restricted Stock Grant shall lapse upon the expiration of the Restriction
     Period if all conditions stated in Sections 8(a) and (b) have been met.
     The Grantee shall then be entitled to have the legend removed from the
     certificate.

9.  Amendment and Termination of the 1989 Plan.

          (a) Amendment.  The Company's Board of Directors may amend or
     terminate the 1989 Plan, subject to shareholder approval to the extent
     necessary for the continued applicability of Rule 16b-3 under the
     Securities Exchange Act of 1934, but no amendment shall withdraw from the
     Committee the right to select Grantees under Section 3.

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                                      -5-

          (b) Termination of 1989 Plan.  The 1989 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 1989 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 1989 Plan shall not impair the power and authority of the Committee
     with respect to outstanding Grants.  Whether or not the 1989 Plan has
     terminated, an outstanding Grant may be terminated or amended under Section
     10(e) or may be amended by agreement of the Company and the Grantee
     consistent with the 1989 Plan.

10.  General Provisions.

          (a) Prohibitions Against Transfer.  Only a Grantee or his authorized
     representative may exercise rights under a Grant.  Such persons may not
     transfer those rights.  When a Grantee dies, the personal representative or
     other person entitled under a Prior Stock Option or a Grant under the 1989
     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.

          (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, stock appreciation right, performance award, or restricted
     stock grant granted by such corporation ("Substituted Stock Incentive").
     The terms and conditions of the substitute Grant may vary from the terms
     and conditions required by the 1989 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
     the Company owns directly or indirectly 50% or more of the voting power.

          (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 1989 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 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 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.
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                                      -6-

          (g) No Right to Employment.  The 1989 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.

          (h) Effective Date of the 1989 Plan.  The 1989 Plan shall become
     effective upon its approval by the Company's shareholders at the annual
     meeting to be held on April 17, 1989, or any adjournment of the meeting.<PAGE>

EXHIBIT 10.6

                    Eli Lilly and Company EVA(R) Bonus Plan

                     -------------------------------------

              (As amended and restated effective January 1, 2001)

                     -------------------------------------
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
<S>                                                                  <C>
ARTICLE I    Bonus Plan Statement of Purpose and Summary............  1

ARTICLE II   Definitions of Certain Terms...........................  1

ARTICLE III  Definition and Components of EVA.......................  2

ARTICLE IV   Definition and Computation of the EVA Bonus............  3

ARTICLE V    Plan Administration....................................  4

ARTICLE VI   General Provisions.....................................  6

ARTICLE VII  Limitations............................................  7

ARTICLE VIII Committee Authority....................................  7

ARTICLE IX   Notice.................................................  8

ARTICLE X    Effective Date.........................................  8

ARTICLE XI   Amendments and Termination.............................  8

ARTICLE XII  Applicable Law.........................................  9
</TABLE>
<PAGE>

                                    ARTICLE I

                   Bonus Plan Statement of Purpose and Summary
                   -------------------------------------------

1.1      The purpose of the Plan is to provide a system of bonus compensation
         for selected employees of Eli Lilly and Company and subsidiaries which
         will promote the maximization of shareholder value over the long term,
         by linking performance incentives to increases in shareholder value.
         The Plan ties bonus compensation to Economic Value Added ("EVA"), and
         thereby rewards employees for long-term, sustained improvement in
         shareholder value. The Plan is intended to satisfy the requirements for
         providing "performance-based" compensation under Section 162(m) of the
         Internal Revenue Code.

1.2      EVA will be used as the performance measure of value creation. EVA
         reflects the benefits and costs of capital employment. Employees create
         economic value when the operating profits from a business exceed the
         capital charge associated with the capital assets employed.

                              ARTICLE II

                          Definitions of Certain Terms
                          ----------------------------

Unless the context requires a different meaning, the following terms shall have
the following meanings:

2.1      "Company" means Eli Lilly and Company and its subsidiaries.
          -------

2.2      "Committee" means the Compensation Committee, the members of which
          ---------
         shall be selected by the Board of Directors of Eli Lilly and Company
         from among its members. Each Committee member shall, at all times while
         serving, satisfy the requirements of an "outside director" within the
         meaning of Section 162(m).

2.3      "Participant" means any employee of the Company designated by the
          -----------
         Committee as a participant in the Plan with respect to any Plan Year.
         In its discretion, the Committee may designate Participants either on
         an individual basis or by determining that all employees in specified
         job categories, classifications or levels shall be Participants.

2.4      "Plan" means this Eli Lilly and Company EVA Bonus Plan.
          ----

2.5      "Plan Year" means the applicable calendar year.
          ---------

2.6      "Retirement" means the cessation of employment upon the attainment of
          ----------
         at least eighty age and benefit years of service points, as determined
         by the provisions of The Lilly Retirement Plan as amended from time to
         time, assuming eligibility to participate in that plan.

2.7      "Disability" means the time at which a Participant becomes eligible for
          ----------
         a payment under The Lilly Extended Disability Plan, assuming
         eligibility to participate in that plan.

                                      -2-
<PAGE>

2.8      "Section 162(m)" means Section 162(m) of the Internal Revenue Code of
          --------------
         1986, as amended.

2.9      "Section 162(m) Participant" means a Participant who, in the
          --------------------------
         determination of the Committee, is or may in the future become a
         "covered employee" under Section 162(m).

                                   ARTICLE III

                        Definition and Components of EVA
                        --------------------------------

The following terms set forth the calculation of EVA and the components of
calculating EVA. The calculation of EVA for a Plan Year is used in determining
the bonuses earned by Participants under the Plan, as set forth in Article IV.

3.1      "Economic Value Added" or "EVA" means the excess NOPAT that remains
          --------------------      ---
         after subtracting the Capital Charge.

3.2      "Net Operating Profit After Tax" or "NOPAT" means the after tax
          ------------------------------      -----
         operating earnings of the Company for the Plan Year. NOPAT is
         determined by adding net sales plus other net income and subtracting
         the following: cost of goods sold, marketing and administrative
         expenses (excluding goodwill amortization and interest expense),
         amortization of research and development, taxes (excluding the tax
         benefit of interest expense) and amounts associated with discontinued
         operations.

3.3      "Capital Charge" means the deemed opportunity cost of employing capital
          --------------
         for the Company. The Capital Charge is calculated by multiplying
         Operating Capital times Operating Cost of Capital (OC*) and Cash
         Capital times Non-operating Cost of Capital (NOC*), then summing the
         two products.

3.4      "Operating Capital" means the net investment employed in the operations
          -----------------
         of the Company produced by operations. Operating Capital is calculated
         by adding together current assets (excluding cash and short-term
         marketable securities), net property, plant and equipment, gross
         goodwill, net intangibles, other assets, and capitalized research and
         development, and the present value of operating leases, and subtracting
         the following: non-interest bearing liabilities and capital associated
         with discontinued operations.

3.5      "Cash Capital" means the aggregate balances of any cash plus short-term
          ------------
         marketable securities.

3.6      "Cost of Operating Capital" or "OC*" is the percentage calculated from
          -------------------------      --
         the weighted average of Cost of Debt and Cost of Equity. Cost of
         Operating Capital for each Plan Year is determined by the Chief
         Financial Officer and approved by the Committee.

3.7       "Cost of Non-operating Capital" or "NOC*" is the after-tax opportunity
          ------------------------------      ---
          cost of capital associated with Cash Capital, as deemed appropriate
          for Cash Capital by the Chief Financial Officer and approved by the
          Committee.

                                      -3-
<PAGE>

3.8      "Cost of Debt" capital is the marginal long-term borrowing rate
          ------------
         adjusted for the credit rating of the Company times (one minus the tax
         rate).

3.9      "Cost of Equity" capital is the risk-free rate plus (beta times the
          --------------
         market risk premium). For this purpose, the risk-free rate, the beta
         and the market risk premium are determined by the Chief Financial
         Officer and approved by the Committee.

                                   ARTICLE IV

                   Definition and Computation of the EVA Bonus
                   -------------------------------------------

Bonuses earned under the Plan for a Plan Year are determined based on a
comparison of actual EVA to the "Target EVA" for the year, which is established
as described below to motivate improvement in EVA from year to year. The result
of this comparison is adjusted by a "Leverage Factor" measuring the volatility
of industry EVA returns. The factor produced is referred to as the "Bonus
Multiple," which is multiplied by the Participant's applicable "Target Bonus"
amount established for the year to produce the actual bonus earned. This amount,
referred to as the "Declared Bonus," is credited to the Participant's "Bonus
Bank" balance and paid out in the manner provided below.

4.1      Target Bonus. The Target Bonus Award will be determined by the
         Committee on a basis that takes into consideration a Participant's
         salary grade level, job responsibilities as well as past and expected
         future job performance. Target Bonus Awards for a particular Plan Year
         are expressed as a percentage of annual base salary as in effect on the
         fixed annual merit date in that Plan Year or on the first day of the
         Plan Year if there is no merit date in a given Plan Year. Early in the
         Plan Year, each Participant (except Section 162(m) Participants) will
         receive three Target Bonus Awards to correspond with each of the three
         performance ratings. The actual Target Bonus used to calculate the
         Declared Bonus will be determined by the individual's performance
         rating for the given Plan Year as determined by the individual's
         supervision. Section 162(m) Participants shall receive a single Target
         Bonus Award. If a Participant moves from any salary grade level to a
         G-6 or above salary grade level during a Plan Year, he/she will receive
         an award that is pro-rated according to time based on the Target Bonus
         percentage and base salary applicable to each such salary grade. For
         purposes of pro-rating, the individual's performance rating at the end
         of the Plan Year will apply to the entire Plan Year. The Target Bonus
         will be based on the currency in which the highest portion of base pay
         is regularly paid. The Committee shall determine the appropriate
         foreign exchange conversion methodology in its discretion.

4.2      Declared Bonus. A Declared Bonus is the applicable Target Bonus times
         the Bonus Multiple.

4.3      Bonus Multiple. The Bonus Multiple is Actual EVA less Target EVA
         (positive or negative), divided by the Leverage Factor, plus one. In
         years in which the Bonus Multiple is equal to or less than zero, the
         Target Bonus used to calculate the Declared Bonus will be the Target
         Bonus associated with the "Successful" or middle performance rating.

4.4      Bonus Bank. All bonus payments are made from the Bonus Bank. Each
         Participant's beginning Bonus Bank balance in his/her first year of
         participation is zero. The Bonus Bank is increased or decreased for any
         Plan Year by the amount of Declared Bonus. If the

                                      -4-
<PAGE>

         available Bonus Bank balance after the inclusion of the Declared Bonus
         is positive, the Participant will be paid from such balance up to the
         applicable Target Bonus Award, plus one third of any such balance that
         remains after subtracting the Target Bonus Award from the available
         Bonus Bank balance. If the available Bonus Bank balance is negative, no
         payment will occur. After any payment as calculated above, the
         beginning Bonus Bank balance for the subsequent Plan Year shall be as
         follows:

         (a) Any positive balance shall be carried forward as the new beginning
             Bonus Bank balance.
         (b) Any negative balance resulting from a negative Bonus Multiple shall
             be carried forward as the new beginning (negative) Bonus Bank
             balance.
         (c) If the Bonus Bank balance has been completely depleted because of a
             Bonus Multiple between zero and 1.0, the new beginning Bonus Bank
             balance shall be zero.

4.5      Target EVA. The Target EVA for each year will be calculated as follows:

         Target EVA = Prior Year's Actual EVA + Expected Improvement

4.6      Expected Improvement. The Expected Improvement is the additional EVA
         amount determined by the Committee that is used to assure that a
         minimum level of improvement is achieved in order to earn target
         awards.

4.7      Leverage Factor. The Leverage Factor determines the rate of change in
         bonuses as EVA surpasses or falls short of Target EVA, determined by
         the Committee from an evaluation of the long term volatility of
         industry returns.

4.8      Section 162(m) Requirements, Bonus Maximum. In the case of Section
         162(m) Participants, all determinations necessary for computing
         Declared Bonuses for a Plan Year, including establishment of all
         components of the EVA calculation and of the Target Bonus percentages,
         shall be made by the Committee not later than 90 days after the
         commencement of the Plan Year. As and to the extent required by Section
         162(m), the terms of a Declared Bonus for a Section 162(m) Participant
         must state, in terms of an objective formula or standard, the method of
         computing the amount of compensation payable to the Section 162(m)
         Participant, and must preclude discretion to increase the amount of
         compensation payable that would otherwise be due under the terms of the
         award. Notwithstanding anything elsewhere in the Plan to the contrary,
         the maximum amount of the Declared Bonus that may be paid from the
         Bonus Bank to a Section 162(m) Participant during any one calendar year
         shall be $5 million.

                                    ARTICLE V

                               Plan Administration
                               -------------------

5.1      Time of Payment. Payment from the Bonus Bank will be made before April
         1 of the year following the Plan Year.

5.2      Certification of Results. Before any amount is paid under the Plan, the
         Committee shall certify in writing the calculation of EVA for the Plan
         Year and the satisfaction of all other material terms of the
         calculation of the Declared Bonus.

                                      -5-
<PAGE>

5.3      New Hires, Promotions. New hires or individuals promoted who are first
         selected for participation by the Committee effective on a date other
         than January 1 will participate on a pro-rata basis in their first year
         of participation, based on the Declared Bonus determined for the Plan
         Year, pro-rated for that period of the year during which the
         Participant was selected for participation in the Plan. Any such
         Participant's Target Bonus Award for that Plan Year will be determined,
         as applicable, based on his or her annual base salary as in effect on
         (i) the fixed annual merit date in that Plan Year, (ii) January 1 in
         years when there is no merit date in that Plan Year, or (iii) on the
         date of hire or promotion if hired or promoted after the fixed annual
         merit date in that Plan Year. Notwithstanding the foregoing, in the
         case of any Section 162(m) Participant who first becomes eligible to
         participate in the Plan after January 1 of a Plan Year, such
         Participant's Declared Bonus may be determined, at the discretion of
         the Committee exercised at the time such participation begins, in a
         manner that complies with the requirements for "performance-based
         compensation" under Section 162(m).

5.4      Termination of Employment, Demotions. If a Participant ceases
         employment with the Company on or before the last day of a Plan Year
         for reasons other than Retirement, Disability or death, or is demoted
         to a non-global job level with the Company effective on or before the
         last day of a Plan Year, the Participant shall receive no Declared
         Bonus for that Plan Year, and his/her Bonus Bank balance shall be
         forfeited. The Committee may make complete or partial exceptions to
         this rule, in its sole discretion, and, with respect to employees other
         than executive officers, may delegate to the vice president responsible
         for human resources the authority to make such exceptions.
         Notwithstanding the foregoing, with respect to the Declared Bonus for a
         Section 162(m) Participant, any such termination of employment or
         demotion shall result in payment of a bonus based on the Declared Bonus
         determined for the Plan Year but pro-rated for the period of the year
         prior to such event, subject to the Committee's discretion to forfeit
         all or any portion of such bonus, and the Bonus Bank balance shall be
         forfeited as well.

5.5      Leave of Absence. If a Participant takes an approved leave of absence
         from employment during a Plan Year, the Participant will not be
         eligible for the Declared Bonus for the Plan Year. The Committee may
         make complete or partial exceptions to this rule, in whatever manner it
         deems appropriate, and, with respect to employees other than executive
         officers, may delegate to the vice president responsible for human
         resources the authority to make such exceptions. The Participant will
         retain his Bonus Bank balance if he returns to employment following the
         period of leave of absence. Notwithstanding the foregoing, with respect
         to the Declared Bonus for a Section 162(m) Participant, any such leave
         of absence shall result in payment of a bonus based on the Declared
         Bonus determined for the Plan Year but pro-rated for the period of the
         year that the Participant was actively employed by the Company, subject
         to the Committee's discretion to forfeit all or any portion of such
         bonus.

5.6      Retirement, Disability or Death. If a Participant ceases employment
         with the Company on or before the last day of the Plan Year because of
         Retirement, Disability or death, the Participant or personal
         representative, as the case may be, shall receive into his or her Bonus
         Bank before April 1 of the next year a Declared Bonus based on the
         Declared Bonus determined for the Plan Year but pro-rated for that
         period of the Plan Year during which the Participant was an active
         employee of the Company. Following payment of such bonus in accordance
         with Section 4.4, any remaining positive Bonus Bank balance shall be
         paid.

                                      -6-
<PAGE>

5.7      Plan Participation. A Participant may not participate in this Plan for
         any portion of a Plan Year for which he/she is entitled to receive
         payment under the Eli Lilly and Company Contingent Compensation Plan,
         and shall be treated in accordance with Section 5.3.

5.8      Forfeiture Events. Notwithstanding any other provision of this Plan to
         the contrary, the Committee may, in its sole discretion, upon the
         occurrence of a Forfeiture Event (as defined below), forfeit all or any
         portion of a Participant's Declared Bonus and Bonus Bank balance and
         terminate such Participant's future participation in the Plan. For
         purposes hereof, a "Forfeiture Event" shall mean the occurrence of one
         or more of the following events with respect to a Participant: (i) the
         termination or forced resignation from employment of the Participant
         for "misconduct" (as defined in the Company's Employee Information
         Handbook), (ii) any violation by the Participant of the Guidelines of
         Company Policy (the "Redbook") that is detrimental to the Company,
         (iii) any breach of a noncompetition, nonsolicitation, nondisclosure or
         other restrictive covenant that may apply by written agreement between
         the Company and the Participant or (iv) Participant's having engaged in
         any other activity that, in the judgment of the Committee, is
         detrimental to the business, affairs or reputation of the Company
         (including, without limitation, engaging in any criminal activity).
         Except with respect to executive officers, the Committee may delegate
         the authority granted under this section to the vice president
         responsible for human resources.

                                   ARTICLE VI

                               General Provisions
                               ------------------

6.1      Withholding of Taxes. The Company shall have the right to withhold the
         amount of taxes which in the sole determination of the Company are
         required to be withheld under law with respect to any amount due or
         payable under the Plan.

6.2      Expenses. All expenses and costs in connection with the adoption and
         administration of the Plan shall be borne by the Company.

6.3      No Prior Right or Offer, No Right to Future Participation.
         Participation in the Plan for Plan Years is determined from
         year-to-year by the Committee in its sole discretion. Except and until
         expressly granted pursuant to the Plan, nothing in the Plan shall be
         deemed to give any employee any contractual or other right to
         participate in the benefits of the Plan. No award to any such
         Participant in any Plan Year shall be deemed to create a right to
         receive any award or to participate in the benefits of the Plan in any
         subsequent Plan Year.

6.4      Rights Personal to Employee. Any rights provided to an employee under
         the Plan shall be personal to such employee, shall not be transferable,
         except by will or pursuant to the laws of descent or distribution, and
         shall be exercisable during his/her lifetime, only by such employee, or
         a court-appointed guardian for the employee.

6.5      Non-Allocation of Award. In the event of a suspension of the Plan in
         any Plan Year, as described in Section 11.1, no awards under the Plan
         for the Plan Year during which such suspension occurs shall affect the
         calculation of awards for any subsequent period in which the Plan is
         continued.

                                      -7-
<PAGE>

                                   ARTICLE VII

                                   Limitations
                                   -----------

7.1      No Continued Employment. Neither the establishment of the Plan nor the
         grant of an award thereunder shall be deemed to constitute an express
         or implied contract of employment of any Participant for any period of
         time or in any way abridge the rights of the Company to determine the
         terms and conditions of employment or to terminate the employment of
         any employee with or without notice or cause at any time.

7.2      No Vested Rights. Except as expressly provided herein, no employee or
         other person shall have any claim of right (legal, equitable, or
         otherwise) to any award, allocation, or distribution or any right,
         title, or vested interest in any amounts in his/her Target Bonus or
         Bonus Bank and no officer or employee of the Company or any other
         person shall have any authority to make representations or agreements
         to the contrary.

7.3      Non-alienation. No interest conferred herein to a Participant shall be
         assignable or subject to claim by a Participant's creditors. Except as
         provided in Subsection 6.1, no Participant or other person shall have
         any right or power, by draft, assignment, or otherwise, to mortgage,
         pledge or otherwise encumber in advance any payment under the Plan, and
         every attempted draft, assignment, or other disposition of any interest
         or payment under this Plan shall be absolutely void.

                                  ARTICLE VIII

                               Committee Authority
                               -------------------

8.1      Authority to Interpret and Administer. Except as otherwise expressly
         provided herein, full power and authority to interpret and administer
         this Plan shall be vested in the Committee. The Committee may from time
         to time make such decisions and adopt such rules and regulations for
         implementing the Plan as it deems appropriate for any Participant under
         the Plan. Except as to Participants who are treated by the Company as
         executive officers of the Company for federal securities law reporting
         purposes (including any Section 162(m) Participant), the Committee may
         delegate in writing to officers or employees of the Company the power
         and authority granted by this Section 8.1 to interpret and administer
         this Plan. Any decision taken by the Committee or officer or employee
         to whom authority has been delegated, arising out of or in connection
         with the construction, administration, interpretation and effect of the
         Plan shall be final, conclusive and binding upon all Participants and
         any person claiming under or through Participants.

8.2      Adjustments for Significant Events. Prior to the beginning of a Plan
         Year, the Committee may specify with respect to Declared Bonuses for
         the Plan Year that EVA will be determined before the effects of
         acquisitions, divestitures, restructurings or changes in corporate
         capitalization, accounting changes, and/or events that are treated as
         extraordinary items for accounting purposes; provided that such
         adjustments shall be made only to the extent permitted by Section
         162(m) in the case of Section 162(m) Participants.

                                      -8-
<PAGE>

8.3      Financial And Accounting Terms. Except as otherwise provided, financial
         and accounting terms, including terms defined herein, shall be
         determined by the Committee in accordance with generally accepted
         accounting principles and as derived from the audited consolidated
         financial statements of the Company, prepared in the ordinary course of
         business.

8.4      Section 162(m) Deferrals. To the extent that, notwithstanding the terms
         of the Plan, the Company's tax deduction for remuneration in respect of
         the payment of bonuses under the Plan to a Section 162(m) Participant
         would be disallowed under Section 162(m) by reason of the fact that
         such Participant's applicable employee remuneration, as defined in
         Section 162(m), either exceeds or, if such bonus were paid, would
         exceed the $1,000,000 limitation in Section 162(m), any such excess (as
         determined by the Committee in its sole discretion) shall be
         automatically deferred under the terms of The Lilly Deferred
         Compensation Plan. Payment of any deferred amounts shall be made to the
         Participant in the first year thereafter that the Company's tax
         deduction in respect of the payment would not be disallowed under
         Section 162(m).

                                   ARTICLE IX

                                     Notice
                                     ------

9.1      Any notice to be given to the Company or Committee pursuant to the
         provisions of the Plan shall be in writing and directed to Secretary,
         Eli Lilly and Company, Lilly Corporate Center, Indianapolis, IN 46285.

                                    ARTICLE X

                                 Effective Date
                                 --------------

10.1     This Plan, as amended and restated herein, shall be effective for the
         Plan Year commencing January 1, 2001. The terms of this restated plan
         shall apply to Declared Bonuses earned in 2001 and future Plan Years.
         All Declared Bonuses earned in Plan Years prior to 2001 shall be
         payable in accordance with the terms of the Plan as in effect for the
         year to which the Declared Bonus relates. The final Plan Year of this
         Plan, unless amended by the Board (or the Committee) and approved by
         the stockholders to the extent provided in Article XI, shall be the
         2002 Plan Year.

                                   ARTICLE XI

                           Amendments and Termination
                           --------------------------

11.1     This Plan may be amended, suspended or terminated at any time at the
         discretion of the Board of Directors of Eli Lilly and Company, and may,
         except for this Section 11.1, be amended at any time by the Committee.
         Solely to the extent deemed necessary or advisable by the Board (or the
         Committee) for purposes of complying with Section 162(m), the Board (or
         the Committee) may seek the approval of any such amendment by the
         Company's stockholders. Any such approval shall be by the affirmative
         votes of a majority of the

                                      -9-
<PAGE>

         stockholders of the Company present, or represented, and entitled to
         vote at a meeting duly held in accordance with applicable state law and
         the Articles of Incorporation and By-laws of the Company. The material
         terms of EVA must be disclosed to and reapproved by the stockholders of
         the Company no later than the Company's annual meeting of stockholders
         that occurs in the year 2003.

                                   ARTICLE XII

                                 Applicable Law
                                 --------------

12.1     This Plan shall be governed by and construed in accordance with the
         provisions of the laws of the State of Indiana without regard to the
         conflicts-of-law principles of Indiana.

                                     -10-

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