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:
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Fuel, oil, lubricants, and other
additives;
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Travel expenses of the crew,
including food, lodging and ground transportation;
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Hangar and tie-down costs away from
the Aircraft’s base of operation;
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Insurance obtained for the specific
flight;
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Landing fees, airport taxes and
similar assessments;
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Customs, foreign permits, and
similar fees directly related to the flight;
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In-flight food and
beverages;
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Passenger ground transportation;
and
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Flight planning and weather contract
services.
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(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:
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(x)
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equals the applicable subsection
(i) or (ii) below:
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(i)
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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
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(ii)
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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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-2-
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the
dates traveled multiplied by the number of persons in
Executive’s party for the flight; and
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(y)
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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.
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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 E
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