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EXHIBIT 10.7
THE LILLY DIRECTORS' DEFERRAL PLAN
(As amended and restated through January 1, 2004)
SECTION 1. ESTABLISHMENT OF THE PLAN AND
SHARES AVAILABLE.
1.1. Establishment of Plan. This Plan was established effective
January
1, 1996, to permit Directors of the Company
who are not salaried employees of
the Company to voluntarily defer receipt of
some or all of their meeting fees
and retainer and to share in the long-term
growth of the Company by acquiring,
on a deferred basis, an ownership interest
in the Company. This amended and
restated Plan is effective January 1,
2004.
1.2. Shares Available. Subject to adjustment as provided in
Section
7.5, the aggregate number of shares of Eli
Lilly and Company common stock that
may be issued or transferred under this
Plan after April 28, 2003, is 750,000.
The shares may be authorized and unissued
shares or treasury shares.
SECTION 2. DEFINITIONS.
The following terms shall have the
definitions set forth in this Section 2:
2.1. Annual Allocation Date. The last Business Day in November of
each
calendar year, or such other annual date,
not earlier than the third Monday in
February, established by the Committee as
the date as of which Shares are
allocated to each Share Account in
accordance with Section 6.
2.2. Beneficiary. The beneficiary or beneficiaries (including
any
contingent beneficiary or beneficiaries)
designated pursuant to subsection 8.3
hereof.
2.3 Business Day. A day on which the Company's corporate
headquarters
are open for regular business.
2.4. Board of Directors. The Board of Directors of the Company.
2.5. Committee. The Directors and Corporate Governance Committee of
the
Board of Directors, or any successor
committee of the Board of Directors that is
charged with matters relating to the
compensation of non-employee directors.
2.6. Company. Eli Lilly and Company.
2.7. Company Credit. For any calendar year or part thereof, an
amount
computed, and credited annually to a
Participant's Deferred Compensation Account
at an annual rate that is equal to one
hundred twenty percent (120%) of the
applicable federal long-term rate, with
compounding (as prescribed under Section
1274(d) of the Internal Revenue Code) that
was in effect for the month of
December immediately preceding the calendar
year.
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2.8. Deferred Amount. The amount of a Monthly Deferral
Participant's
Monthly Compensation that the Participant
elects to defer in accordance with
Section 4 hereof.
2.9. Deferred Stock Participant. A Director who is not, and for
the
preceding 12 months has not been, a
salaried employee of the Company and who
becomes a Participant in the Plan in
accordance with Section 3 hereof.
2.10. Director. A member of the Board of Directors.
2.11. Dividend Payment Date. The date as of which the Company pays
a
cash dividend on Shares.
2.12. Dividend
Record Date. With respect to any Dividend Payment Date,
the date established by the Board of
Directors as the record date for
determining shareholders entitled to the
dividend.
2.13. Individual Accounts or Accounts. The separate accounts
(the
Deferred Compensation Account and the Share
Account) described in Section 7
hereof. When used in the singular, the term
shall refer to one of these two
accounts, as the context requires.
2.14. Monthly Compensation. For any month, the monthly retainer and
the
aggregate of all meeting fees, committee
fees and committee chairperson fees to
which a Director is entitled for services
rendered to the Company as a Director
during the month, as established from time
to time by resolution of the Board of
Directors. For avoidance of doubt, Monthly
Compensation does not include stock
options granted to Directors or the Shares
allocated pursuant to Section 6 of
this Plan.
2.15. Monthly Deferral Participant. A Director who is not a
salaried
employee of the Company and who has elected
to defer all or part of his or her
Compensation pursuant to the Plan in
accordance with Section 4 hereof.
2.16. Participant. A Director who is a Deferred Stock Participant,
a
Monthly Deferral Participant, or both.
2.17. Plan. The Lilly Directors' Deferral Plan, as set forth herein
and
as it may be amended from time to time.
2.18. Share. A share of common stock of the Company.
2.19. Valuation Date. For any month, the third Monday of the month,
or
if Shares are not traded on the New York
Stock Exchange on such third Monday,
the next day on which Shares are traded on
the New York Stock Exchange.
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SECTION 3. DEFERRED STOCK PARTICIPANTS.
Each Director who participated in The Lilly
Non-Employee Directors' Deferred
Stock Plan immediately before the effective
date of this Plan shall continue as
a Deferred Stock Participant on such
effective date, and all elections in effect
under The Lilly Non-Employee Directors'
Deferred Stock Plan shall remain in
effect under this Plan, unless and until
amended in accordance with this Plan.
Thereafter, each person who becomes a
Director, and who is not, and for the
preceding 12 months has not been, a
salaried employee of the Company, shall
become a Deferred Stock Participant.
SECTION 4. MONTHLY DEFERRAL
PARTICIPANTS.
Each Director who participated in The Lilly
Directors' Deferred Compensation
Plan immediately before the effective date
of the Plan shall continue as a
Monthly Deferral Participant on such
effective date, and all elections in effect
under The Lilly Directors' Deferred
Compensation Plan shall remain in effect
under this Plan, unless and until amended
in accordance with this Plan. Prior to
the beginning of each calendar year, any
Director who is not a salaried employee
of the Company may defer the receipt of
Monthly Compensation to be earned by the
Director during such year by filing with
the Company a written election that:
(i) defers payment of a designated amount (of one Thousand
Dollars ($1,000) or more) or percentage of
his or her Monthly Compensation for
services attributable to the following
calendar year or portion thereof (the
"Deferred Amount");
(ii) specifies the payment option selected by the Participant
pursuant to subsection 8.2 hereof for such
Deferred Amount; and
(iii) specifies the option selected by the Participant
pursuant to Section 5 hereof for such
Deferred Amount.
The amount deferred may not exceed the
Director's aggregate Monthly Compensation
for the calendar year. Notwithstanding the
foregoing, any individual who is
newly elected or appointed to serve as a
Director may, not later than thirty
(30) days after his election or appointment
becomes effective, elect in
accordance with the preceding provisions of
this Section 4, to defer the receipt
of Monthly Compensation earned during the
portion of the current calendar year
that follows the filing of the election
with the Company. Except as provided in
subsections 8.2 and 8.4 hereof, any
elections made pursuant to this Section 4
with respect to a calendar year shall be
irrevocable when made. If a Participant
fails to make an election under section 5
with respect to his or her Deferred
Amount for a future calendar year, the
Participant's previous election shall
remain in effect, provided that the
Participant may amend his or her election
with regard to a future calendar year at
any time.
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SECTION 5. FORM OF DEFERRED COMPENSATION
CREDITS.
5.1. Deferred Compensation Account. Except with respect to
Deferred
Amounts which a Monthly Deferral
Participant elects to have credited in Shares
in accordance with subsection 5.2 hereof,
the Deferred Amount shall be
denominated in U.S. dollars and credited to
the Participant's Deferred
Compensation Account pursuant to subsection
7.1 hereof.
5.2. Shares. Prior to the beginning of each calendar year, a
Monthly
Deferral Participant may elect to have all
or a percentage of the Deferred
Amount for the following calendar year
credited in Shares and allocated to the
Participant's Share Account pursuant to
subsection 7.2 hereof.
SECTION 6. ANNUAL ALLOCATIONS TO SHARE
ACCOUNTS.
6.1. Annual Allocation of Shares. As of the Annual Allocation Date
of
each calendar year, there shall be
allocated to the Share Account (as described
in Section 7.2 below) of each Deferred
Stock Participant who is a Director on
that date, as part of his or her
compensation for service on the Board of
Directors, seven hundred (700) Shares or
such other number of Shares, not to
exceed 3,000 shares, as may be specified
from time to time by resolution of the
Board of Directors.
SECTION 7. INDIVIDUAL ACCOUNTS.
The Company shall maintain Individual
Accounts for Participants as follows:
7.1. Deferred Compensation Account. The Company shall maintain
a
Deferred Compensation Account in the name
of each Monthly Deferral Participant
who elects to defer the receipt of Monthly
Compensation pursuant to Section 4
hereof for a calendar year and does not
elect to have the Deferred Amount for
such calendar year credited in Shares
pursuant to subsection 5.2 hereof. The
Deferred Compensation Account shall be
denominated in U.S. dollars, rounded to
the nearest whole cent. For each month,
Deferred Amounts allocated to a Deferred
Compensation Account pursuant to subsection
5.1 hereof shall be credited to the
Deferred Compensation Account as of the
last Business Day of the month.
7.2. Share Account. The Company shall maintain a Share Account for
each
Deferred Stock Participant and for each
Monthly Deferral Participant who elects
to have a Deferred Amount credited in
Shares pursuant to subsection 5.2 hereof.
The Share Account shall be denominated in
Shares and maintained in fractions
rounded to three (3) decimal places. Shares
allocated to each Share Account
shall be hypothetical and not issued or
transferred by the Company until payment
is made pursuant to Section 8 hereof.
For each month, Deferred Amounts allocated to a Share Account
pursuant
to subsection 5.2 hereof shall be credited
to the Share Account as of the last
Business Day of the month. Shares and, if
necessary, fractional Shares, shall be
credited based upon the average of the high
and low price of Sh
