THE LILLY EMPLOYEE 401(K) PLAN PROSPECTUS

THE LILLY EMPLOYEE 401(K) PLAN PROSPECTUS This document constitutes a part of a prospectus covering securities that have been registered under the Securities Act of 1933 April 30, 2014

TABLE OF CONTENTS Item 1. Plan Information.... 1 (a) General Plan Information... 1 (b) Securities to be Offered... 4 (c) Employees Who May Participate in the Plan... 4 (d) Purchase of Securities Pursuant to the Plan and Payment for Securities Offered... 4 (e) Resale Restrictions... 7 (f) Forfeitures of Company Contributions... 8 (g) Withdrawal from the Plan; Assignment of Interest... 8 (h) Tax Effects of Plan Participation... 21 (i) Investment of Funds... 32 (j) Charges and Deductions and Liens... 40 Item 2. Registrant Information and Employee Plan Annual Information.... 40 - i -

THE LILLY EMPLOYEE 401(K) PLAN PROSPECTUS Item 1. Plan Information. (a) General Plan Information Eli Lilly and Company (the Company ) established, effective July 1, 1956, The Lilly Employee Savings Plan for the purpose of helping its eligible employees, and the eligible employees of its subsidiary and affiliated companies that adopt such plan, to provide additional security for their retirement by affording such employees the means of making regular savings and by providing employer contributions to be added to such savings. Effective January 1, 2006, the name of the Plan was changed to The Lilly Employee 401(k) Plan (the Plan ). The Plan was amended and restated, effective as of January 1, 1989, to incorporate an employee stock ownership plan (the ESOP ), which is designed to invest primarily in qualifying employer securities. It is the intention of the Company that the non-esop portion of the Plan (the Profit-Sharing Plan ) be a profit-sharing plan that is qualified under Sections 401(a) and 401(k) of the Code of 1986, as amended (the Code ); that the ESOP shall be both a stock bonus plan and an employee stock ownership plan that is qualified under Sections 401(a) and 4975(e)(7) of the Code and described in Section 407(d)(6) of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ); that the Profit-Sharing Plan and the ESOP together shall constitute a single plan (the Plan ) under Section 1.414(l)-1(b)(1) of the Treasury regulations; that the Plan shall satisfy the requirements of ERISA; and that the Trust Fund maintained under the Plan shall be tax-exempt under Section 501(a) of the Code. The Plan was amended and restated, generally effective as of January 1, 2002 (unless otherwise noted), to incorporate tax law changes known as GUST and to make other miscellaneous changes. The Plan is now amended and restated, generally effective as of January 1, 2011 (unless otherwise noted), to incorporate Economic Growth and Tax Relief Reconciliation Act (EGTRRA) changes and to make other miscellaneous changes. It is the expectation of the Company that the Plan will continue indefinitely, but the Company reserves the right to amend or modify the Plan in any respect or to terminate it in whole or in part by action of its Board of Directors. Any such termination or modification shall be effective at such date as the Company may determine. The rights to benefits of any eligible employee whose employment terminated prior to the effective date of any amendment shall be determined solely by the provisions of the Plan in effect at the time of such termination of employment, unless specifically otherwise provided herein. - 1 -

The Plan is designed to qualify under Section 401(a) and other applicable provisions of the Code and to comply with ERISA. The Company through action of its Board of Directors may make any modifications or amendments to the Plan that are necessary or appropriate to qualify or maintain the Plan as a plan meeting the requirements of Section 401(a) or any other applicable provisions of the Code, ERISA, or other laws, regulations or rulings. The Plan is intended to be a plan described in Section 404(c) of ERISA regarding participant-directed individual account plans. Section 404(c) provides that a plan s fiduciaries may not be held liable for losses attributable to a participant s investment decisions regarding contributions to any of the funds, or transfers of existing account balances into or out of any of the funds, to the extent the participant has exercised investment control. Therefore, participants in the Plan are solely responsible for losses resulting from their investment choices. Under a 404(c) plan, fiduciaries have a responsibility to ensure that participants are provided with, or have the opportunity to obtain, sufficient information to make informed investment decisions with respect to all designated investment alternatives offered by the plan. The Fund Advisory Committee, which is appointed by the Board of Directors of the Company, is the fiduciary responsible for Plan investment matters. The Fund Advisory Committee reviews and designates certain funds as Plan funds to which participants may direct their investments. The Fund Advisory Committee also is the fiduciary responsible for providing certain information automatically to Plan participants and making certain information available upon request and for ensuring the confidentiality of participant and beneficiary decisions to purchase, sell, vote, tender or exercise rights with respect to the Lilly Stock Fund. The Employee Benefits Committee, which is appointed by the Board of Directors of the Company, is the Plan s administrator and fiduciary with respect to the administration of the Plan. The Employee Benefits Committee is the Plan fiduciary who is obligated to receive and follow investment instructions from participants. In the event of a tender offer, the Board of Directors is the fiduciary responsible for appointing an independent fiduciary. Pursuant to certain trust agreements, the Northern Trust Company is a directed trustee to the Plan with responsibility for the custody and administration of the Plan s assets, except for the Company common stock (the Lilly Stock ) held in the Lilly Stock Fund, and PNC Bank, National Association, is the trustee of the Plan with responsibility for the custody and administration of the Lilly Stock Fund. The Fund Advisory Committee has authority to modify the trust agreements. The Employee Benefits Committee has contracted with Hewitt Associates, LLC to assist in the administration of the Plan. - 2 -

Information that is provided automatically to participants includes descriptions of the objectives, risk and return characteristics, and the type and diversification of the assets for each of the Plan funds available to participants. Information is provided to Plan participants through a variety of Plan communications, including Plan enrollment materials, newsletters, fee disclosure notice, fund fact sheet pages, and account valuations on the Lilly Benefits Center website (http://benefitscenter.lilly.com), or via a toll-free telephone inquiry by calling the Lilly Benefits Center at 1-800-472-4720. Participants also receive written summary annual reports. Individualized account statements can be viewed online at the Lilly Benefits Center website. Participants also may request to receive a printed account statement by mail. Information that is available to participants upon request includes a description of the annual operating expenses of each designated Plan fund that reduce the rate of return under that designated Plan fund and the aggregate amount of such expense expressed as a percentage of average net assets of the designated Plan fund. In addition, participants may request copies of any prospectus, financial statement and report, and other material relating to the funds under the Plan to the extent such information is provided to the Plan. Requests may also be made for a list of the Plan assets that comprise the portfolio of each designated fund under the Plan, the value of each such asset and, with respect to any fixed-rate investment contract, the issuer s name, the term of the contract, and the rate of return on the contract. Additionally, participants may request information concerning the values of shares or units in each designated fund under the Plan, as well as the past and current investment performance of the Plan funds, determined, net of expenses, on a reasonable and consistent basis. Information concerning the value of shares or units of each designated Plan fund held in the account of the participant may also be requested. In addition to the designated Plan funds, the Plan also offers a self-directed mutual fund window which allows participants to direct investments to fund(s) that they select. None of the individual funds available through the self-directed mutual fund window have been reviewed or designated as Plan funds by the Fund Advisory Committee. When a participant invests in funds through the self-directed mutual fund window, the participant will be considered a named fiduciary under the Plan. This means that the participant will be responsible for choosing and monitoring the fund(s) in which they invest, directing the Employee Benefits Committee with respect to such fund(s), and exercising voting rights or other rights with respect to the fund(s) that they select. Any participant who wishes to have additional information about the funds should contact The Fund Advisory Committee at Lilly Corporate Center, Indianapolis, Indiana, 46285, Attention: Secretary of Committee; telephone 317-276-2000. The address of the Employee Benefits Committee is Lilly Corporate Center, Indianapolis, Indiana, 46285, Attention: Vice President, Human Resources; telephone 317-276-2000. - 3 -

(b) Securities to be Offered 8,550,000 shares of Eli Lilly and Company common stock. (c) Employees Who May Participate in the Plan A common law employee receiving regular compensation from the Company or any of its subsidiary and affiliated companies that adopt the Plan (e.g., Lilly USA, LLC, or ImClone Systems LLC), who is either (1) a citizen of the United States (but not a resident of the Commonwealth of Puerto Rico); (2) employed with a Lilly affiliate in the West Indies; or (3) designated by the Company as an international service employee, and to whom no contributions under a funded plan of deferred compensation are being provided by any person other than the Company, is eligible to participate in the Plan. In addition, a common law employee who is not a citizen of the United States or the Commonwealth of Puerto Rico may participate in the Plan if (1) he or she has been selected for participation in the Plan by the Employee Benefits Committee or its designee, or (2) such person holds a valid H-1B visa, provided such employee does not participate in The Lilly Global Services, Inc. Retirement and Death Benefit Plan for Globalist Employees (or any successor plan) and is not maintained on home country benefits. Notwithstanding anything herein to the contrary, the following categories of employees are not eligible to participate in the Plan: (1) employees whose wages are not effectively connected with the conduct of a trade or business within the United States and includible in the Participant s United States gross income; and (2) members of a recognized collectivebargaining agreement, unless the agreement makes the Plan applicable to members of such unit. Generally, employees are eligible to participate in the Plan as of their date of hire. However, special-status employees must complete 1,000 hours of service within any one period of 12 consecutive months that begins with their date of employment in order to be eligible. Special-status employees generally are employees whose employment status is temporary, seasonal, part-time or otherwise inconsistent with regular employment status. (d) Purchase of Securities Pursuant to the Plan and Payment for Securities Offered Enrollment in the Plan; Contributions Eligible employees can enroll in the Plan by logging onto the Lilly Benefits Center website or by calling the Lilly Benefits Center at 800-472-4720. An eligible employee must select the percentage of base salary that the participant wishes to contribute to the Plan and the type of contributions to be made -- pre-tax, Roth, or a combination of both. An eligible employee may begin making contributions to the Plan once he or she enrolls and his or her payroll deduction election has been processed. Contributions are made through semimonthly payroll deductions. - 4 -

Employees who do not enroll in the Plan within 60 days of employment will begin contributing six percent of their base salary to the Plan automatically. Employees may, however, choose not to participate in the auto-enrollment feature by opting out of the Plan on the Lilly Benefits Center website (http://benefitscenter.lilly.com). Employees who elect not to participate in the Plan may change their minds and begin participating at a later date. The amount a participant contributes to the Plan must be a whole percentage amount within the range of 1 to 50 percent of his or her semi-monthly base salary, up to a maximum annual contribution limit prescribed by law (e.g., $17,500 in 2014). If a participant is age 50 or over, the participant may also make catch-up contributions to the Plan, subject to IRS limits (e.g., $5,500 in 2014). These catch-up contributions are additional contributions and are not eligible for the Company matching contributions described below. Base salary includes certain military differential payments to an eligible employee who does not currently perform services for the Company by reason of qualified military service. Contributions deducted from a participant s paychecks are contributed to the Plan as soon as administratively feasible after they are so deducted. A participant s percentage from the prior year will carry over unless he or she requests a change. A participant is permitted to make unlimited changes in his or her contribution percentage during the year. If a participant does make a change in contribution percentage during the year, the change will apply only to future contributions and become effective as soon as administratively practicable. If a participant s base salary changes during the year, the participant s contribution will be automatically adjusted based on the percent the participant elected to contribute to the Plan. The Internal Revenue Code and the Plan contain rules that may limit contributions for certain participants. Generally, such rules restrict or prohibit contributions by certain highly compensated employees. If a participant is affected, the participant will be notified. If an employee elects to make contributions to the Plan, as described above, the Company makes a matching pre-tax contribution at the end of each month to the participant s Plan account equal to 100% of the first 6 percent of the participant s monthly base salary that he or she contributes. This Company contribution is allocated based on the investment selection the participant makes for his own contributions to the Plan. Matching contributions generally are paid to the Plan on a monthly basis. Investments under the Plan Each participant invests his or her contributions and account balances among investment alternatives offered under the Plan, including the Plan s funds and self-directed mutual fund window, which are described under Item 1(i), below. Investments in the Plan s funds, except for the self-directed mutual fund window, are expressed in units. The term unit price refers to the worth of one unit. Unit price (also called Net Asset Value or NAV) is - 5 -

calculated by adding the value of the fund s assets, subtracting the liabilities, and then dividing the results by the number of units outstanding. Total assets total liabilities Number of units outstanding = unit price Unit price is determined after the close of business of the New York Stock Exchange ( NYSE ). The unit price of Plan funds invested in bonds and/or stocks can fluctuate daily, increasing as interest or dividends are earned on securities held by the fund, and increasing or decreasing with changes in the market value of the individual securities held by the fund. Each time a participant makes a contribution to one of the Plan s funds or transfers an existing balance from one fund to another fund, the participant s account is credited with as many full and/or fractional units as can be purchased with the amount of the contribution or transferred funds. Valuation occurs the same business day for requests made prior to market close or the next business day for requests made after market close. The trustee calculates all daily prices. For funds using Plan-specific prices, the trustee transmits the current-day NAV and prior day unit positions to the recordkeeper via an electronic file transmission each business day. The recordkeeper is responsible for transmitting the daily buy/sell instructions to the Plan trustee. If the New York Stock Exchange communicates a planned early close for the market or, due to unexpected circumstances the market closes, the recordkeeper modifies its system to accurately date activity to the next available business day if requested after the market close. One of the investment options available through the Plan is a self-directed mutual fund window. A transfer to the self-directed mutual fund window must be at least $1,000, with a minimum of $5,000 remaining in Plan funds after the transfer. To participate in the selfdirected mutual fund window, a participant must direct the transfer of some or all of his or her existing balances in other Plan fund(s) to the participant s self-directed mutual fund account. The self-directed mutual fund account is subject to a separate quarterly fee for participation. Participants can execute transactions in their self-directed mutual fund account on any business day on which the stock market is open. On the business day after a participant requests that money from other Plan funds be transferred to his or her self-directed mutual fund account, the money will be initially invested in the Hewitt Money Market Fund within the self-directed mutual fund account. Participants may direct transactions the same business day with Hewitt Financial Services. A participant can transfer money from his or her self-directed mutual fund account back into the Plan funds at any time. To transfer money back into the Plan funds, a participant must first sell the mutual funds held within the self-directed mutual fund account. The - 6 -

money from the sale will be transferred into the Hewitt Money Market Fund in the self-directed mutual fund account, generally within one to three business days depending on the settlement period of the mutual fund(s) that were sold. After the mutual fund sale transaction is complete, a participant can transfer the money from the self-directed mutual fund account back to the participant s account for investment in one or more Plan funds. Any money transferred or reallocated out of the Stable Income Fund, including gains and losses, must be invested in a Plan investment other than the self-directed mutual fund window for a minimum of 90 days after the transfer or reallocation. Lilly Stock Participants may invest contributions and existing account balances in the Lilly Stock Fund. Investments in the Lilly Stock Fund are expressed in units (like the Plan s other funds, other than the self-directed mutual fund window). Lilly stock may be either purchased or sold on the open market by the Trustee based on the net daily flows in or out of this investment option. Commissions on these trades will be paid from the assets for the Lilly Stock Fund. All dividends to be paid on shares of Lilly Stock held in the Lilly Stock Fund are credited to participant accounts as of the paid date and added to the number of units in the participant s account. Reports to Participants Participants may request information (including a written statement) about their current account balances at any time by logging on to the Lilly Benefits Center website (http://benefitscenter.lilly.com) or by calling the Lilly Benefits Center (800-472-4720). Representatives are available generally between 9 a.m. and 5 p.m., Eastern Time, Monday through Friday. The automated phone system is available 24 hours a day, Monday through Saturday, and after 1 p.m., Eastern Time, on Sunday. Participants will be provided quarterly a written statement of their personal accounts based on the account value on the last day of the quarter. These personal statements show a breakdown of the contributions to the participant s account and the value of those contributions. They also include information about any withdrawals, distributions, loans, and self-directed mutual fund account information. In addition, individualized account statements can be viewed online at the Lilly Benefits Center website. (e) Resale Restrictions Participants generally may transfer their account balances invested in the Lilly Stock Fund to another investment alternative available under the Plan at any time. Participants may withdraw from the Plan and receive the value of their Plan account as further described in Item (f). Participants may elect to receive an in-kind distribution of some or all of their account balance in the Lilly Stock Fund in shares of Lilly Stock. - 7 -

In general, the Company does not impose any restrictions on resale of the shares of Lilly Stock that are distributed to participants from the Plan. However, under Federal securities law, Plan participants deemed to be Affiliates of the Company may not sell shares of Lilly Stock acquired under the Plan unless such shares are registered under the Securities Act of 1933, as amended (the 1933 Act ) for the purpose of such sale or are sold pursuant to an exemption from registration. Rule 405 under the 1933 Act defines Affiliates as persons who, directly or indirectly, through one or more intermediaries, control or are controlled by, or are under common control with, an issuer of securities. Plan participants who are not Affiliates of the Company generally may reoffer or resell shares of Lilly Stock distributed from the Plan without further registration of such shares. Employees should ensure that their transactions involving interests in the Lilly Stock Fund or Lilly Stock distributed from the Plan comply with the Company s insider trading policies. Transactions in the Lilly Stock Fund or Lilly Stock distributed from the Plan by executive officers of the Company may also be subject to the insider trading rules under Section 16 of the Securities Exchange Act of 1934. Employees with questions about the Company s policies with respect to insider trading should contact the corporate secretary s office at (317) 276-2000. (f) Forfeitures of Company Contributions Active participants in the Plan become fully vested in the event of any of the following: Completion of two years of service Death Disabled under The Lilly Extended Disability Plan Retirement under The Lilly Retirement Plan Attainment of age 65 Nonvested balances are forfeited at the earlier of distribution or the last day of the month following termination from employment. The nonvested balance of an eligible employee s account may be permanently forfeited only when the participant incurs five consecutive one-year breaks in service. (g) Withdrawal from the Plan; Assignment of Interest How Withdrawals Work While Working for the Company The Plan s primary purpose is to provide benefits when a participant retires. A participant can, however, withdraw money from his or her account under certain circumstances while still working. - 8 -

Four types of in-service withdrawals are available: Hardship Withdrawals Nonhardship Withdrawals Age 59-1/2 Withdrawals Military Leave Withdrawal The amount available to a participant and the way the withdrawal affects the participant s account depends on the type of withdrawal the participant requests. There is no minimum withdrawal amount. Depending on the type of withdrawal, a participant may be able to roll over the withdrawal to another eligible retirement plan or individual retirement account ( IRA ). There is no limit to the number of in-service withdrawals that can be taken within any calendar year. The amount a participant can withdraw depends on the amount available to the participant. After Leaving the Company Participants can request a final settlement distribution from the Plan if: The participant leaves the Company The participant becomes totally and permanently disabled Participants distribution options, and the amount eligible to be received, depend on their vested account balances at the time they leave the Company. If there is money in a participant s account when he or she dies, the beneficiary receives the vested portion of the participant s account balance. Requesting a Withdrawal To request a withdrawal, follow the withdrawal procedures. Special tax rules apply when a participant takes a withdrawal. Depending on the type of withdrawal a participant takes, a participant may be able to defer taxes by rolling over the withdrawal to another eligible employer plan or an IRA. If a Participant Has a Self-Directed Mutual Fund Account Although the balance of a participant s self-directed mutual fund account is included in the total amount the participant may withdraw, a participant cannot take a withdrawal directly from a self-directed mutual fund account. A participant can access this money for a withdrawal, however, by transferring the amount desired to be withdrawn from the self-directed mutual fund account to the Plan s funds. - 9 -

Nonhardship Withdrawals Rules for Nonhardship Withdrawals A participant can take a nonhardship withdrawal of amounts listed on the chart below for any reason. A participant can roll over the withdrawal to another eligible employer plan or IRA. Withdrawal Sources The money in a participant s account is divided into categories. A participant must completely withdraw the available money in each category in the following order before withdrawing money from the next category, to the extent a withdrawal is permissible from such subaccount: Order in Which Contributions are Withdrawn After-tax contributions (pre-1983) Rollover contributions PAYSOP contributions Company contributions Roth rollover contributions Amount Available A participant can withdraw all after-tax contributions and associated investment earnings. A participant can withdraw all rollover contributions and associated investment earnings. A participant can withdraw all vested PAYSOP contributions and associated investment earnings. A participant can withdraw all vested Company contributions and associated investment earnings. A participant can withdraw all Roth rollover contributions and associated investment earnings. Order in Which Contributions are Withdrawn Note: If a participant has less than 5 years of service, the participant may not withdraw Company contributions made within the past 2 years. All of the available money in the first subaccount must be depleted before money is taken from the next subaccount. For example, the amount available in a participant s after-tax contributions subaccount must be fully depleted before money may be taken from the rollover contributions subaccount. How Withdrawals Affect Investment Fund Balances If a participant is 100% vested, withdrawals can be paid in cash, shares, or a combination of both. If a participant elects to take shares, the Lilly Stock Fund will be depleted first. If a participant is less than 100% vested, the withdrawal will be paid completely in cash. The amount taken from each investment fund reflects how a participant s subaccounts are invested. For example, if all of the money for a participant s withdrawal is taken from the after-tax contributions subaccount, and 10% of that subaccount is invested in the Stable Income Fund, 10% of the withdrawal amount will be taken from that fund. The percentage taken from each fund is based on the actual subaccount balance invested in that fund, not the participant s investment choices for future contributions. - 10 -

Age 59-1/2 Withdrawals Rules for Age 59-1/2 Withdrawals Once a participant reaches age 59-1/2, the participant can take a withdrawal for any reason, including a withdrawal of pre-tax or Roth contributions. Withdrawal Sources The money in a participant s account is divided into categories. A participant must completely withdraw the available money in each category in the following order before they may withdraw money from the next category, to the extent a withdrawal is permissible from such subaccount: Order in Which Contributions are Withdrawn After-tax contributions (pre-1983) Rollover contributions PAYSOP contributions Company contributions Pre-tax contributions Roth rollover contributions Roth contributions Amount Available A participant can withdraw all after-tax contributions and associated investment earnings. A participant can withdraw all rollover contributions and associated investment earnings. A participant can withdraw all vested PAYSOP contributions and associated investment earnings. A participant can withdraw all vested Company contributions and associated investment earnings. A participant can withdraw all pre-tax contributions and associated investment earnings. A participant can withdraw all Roth rollover contributions and associated investment earnings. A participant can withdraw all Roth contributions and associated investment earnings. Except with respect to any Roth subaccount, all of the available money in the first subaccount must be depleted before money is taken from the next subaccount. For example, the amount available in a participant s after-tax contributions subaccount must be fully depleted before money is taken from the rollover contributions subaccount. For a participant with a Roth subaccount and any other subaccount(s), the participant may elect to take a withdrawal from a Roth subaccount listed above before withdrawing monies from any non-roth subaccount. If a participant is 100% vested, withdrawals can be paid in cash, shares, or a combination of both. If a participant is less than 100% vested, the withdrawal will be paid completely in cash. All or a portion of the withdrawal may be directly transferred to an IRA or other qualified plan. - 11 -

How Withdrawals Affect Investment Fund Balances The amount taken from each investment fund reflects how the participant s subaccounts are invested. For example, if all of the money for a participant s withdrawal is taken from his or her after-tax contributions subaccount, and 10% of that subaccount is invested in the Stable Income Fund, 10% of the withdrawal amount will be taken from that fund. The percentage taken from each fund is based on the actual subaccount balance invested in that fund, not the participant s investment choices for future contributions. Hardship Withdrawals Rules for Hardship Withdrawals In certain situations, a participant can take a hardship withdrawal from his or her pre-tax or Roth contributions. To take a hardship withdrawal: The participant must have an immediate and heavy financial need The withdrawal must be necessary to satisfy that need The participant must provide documentation to prove his or her financial hardship The participant must take any non-hardship amounts available to satisfy the immediate and heavy financial need prior to requesting a hardship withdrawal The participant must have an outstanding Plan loan to be eligible In most cases, a participant must incur the expense before requesting the withdrawal. However, a participant cannot pay the expense and then request a hardship withdrawal for reimbursement. The money a participant withdraws for hardship must be used to pay for that expense. If a participant s hardship request is approved, the Plan will suspend the participant s contributions for 6 months after the withdrawal. A participant s contributions will automatically restart after the suspension period. Amount A Participant Can Withdraw A participant can withdraw up to the amount of the immediate financial need or the maximum amount available, whichever is less. However, a participant can request that the amount of a hardship withdrawal be increased to cover any federal, state, or local income taxes or penalties reasonably anticipated to result from the withdrawal. Federal law prohibits the withdrawal of earnings related to any pretax contributions credited to a participant s account after December 31, 1988. A participant cannot roll over the withdrawal to another eligible retirement plan, IRA or Roth IRA. - 12 -

How Withdrawals Affect Investment Fund Balances The amount taken from each investment fund reflects how a participant s subaccounts are invested. For example, if all of the money for the withdrawal is taken from a participant s after-tax contributions subaccount, and 10% of that subaccount is invested in the Stable Income Fund, 10% of the withdrawal amount will be taken from that fund. The percentage taken from each fund is based on the actual subaccount balances invested in that fund, not the participant s investment choices for future contributions. Hardship Withdrawal Requirements Events That Qualify as a Hardship If a participant has already paid an expense, it is no longer a financial need and does not qualify for a hardship withdrawal. A participant can apply for a hardship withdrawal only if his or her financial need is for one of these reasons: Costs directly related to buying a primary residence (excluding mortgage payments) Payments necessary to prevent the eviction from his or her primary residence or foreclosure on the mortgage on that residence Unreimbursed medical care expenses that can be deducted on the participant s income tax return which either: The participant, his or her spouse, or a dependent (as defined by the Code) previously incurred, or Were necessary for the participant, his or her spouse, or dependent to receive medical care Payment of tuition, related educational fees, or room and board expenses for the current semester, quarter, or year of post-secondary education for the participant, his or her spouse, children, or dependent (as defined by the Code) Payment of funeral expenses for the participant s parents, spouse, child, or other dependent (as defined by the Code) Costs to repair his or her primary residence due to a disaster A participant will be required to submit documentation supporting a hardship request. Meeting the Financial Need Requirement A hardship withdrawal request is deemed necessary if: The withdrawal does not exceed the amount of the immediate and heavy financial need. The participant has obtained all other withdrawals, distributions, and nontaxable loans available from the Company s plans. The participant stops contributing to the Plan and to all other plans maintained by the employer for at least 6 months after the hardship withdrawal. - 13 -

Note: If a participant takes a hardship withdrawal, the participant s contributions to the Plan will be automatically suspended for 6 months. The contribution rate that a participant chooses will be kept on file during that time. After the 6-month suspension, a participant s contributions will begin again automatically at the same rate. Hardship Documentation - To be approved for a hardship withdrawal, a participant must send supporting documents to the Lilly Benefits Center. (A) Purchase of A Participant s Primary Residence For costs directly related to buying a participant s primary residence, submit a copy of one of these: Signed purchase contract Intent-to-purchase agreement (Good Faith Estimate) If building, the builder s contract The contract or agreement must be dated within the last 30 days and reflect all of the following: The participant s name as the buyer Address of the residence being purchased Purchase price Down payment amount A closing date no more than 6 months in the future Signatures of both buyer and seller (B) Prevent Mortgage Foreclosure or Eviction To prevent a participant s eviction from a primary residence or foreclosure on a mortgage, submit a copy of one of these: Bank/mortgage statement Letter from bank/mortgage company Letter from landlord Court document substantiating the eviction or foreclosure legal proceedings The letter, statement, or court document must: Be dated within the past 30 days Contain the participant s name Reflect the amount necessary to prevent foreclosure or eviction Show an eviction or foreclosure date in the future Threaten eviction or foreclosure, if statement or letter - 14 -

(C) Unreimbursed Medical Expenses For expenses that have not been reimbursed by the participant s medical insurance, submit a copy of each of these: An Explanation of Benefits ( EOB ) from the participant s medical insurer The corresponding bill from the provider If the participant does not have medical insurance, submit both of these: An itemized bill from the provider A letter from the provider stating that the participant, spouse, or dependent is not insured For services to be provided at a future date, submit a bill from the provider stating the prepayment required for the service. The EOB must be dated within the last 6 months and reflect: Amount paid by the insurance company Amount owed by the insured The provider s bill must be dated within the past 6 months and indicate the amount still due. (D) Post-Secondary Education Expenses For post-secondary education tuition, related educational fees, or room and board expenses for the current semester, quarter, or year, submit a copy of one of these: Itemized tuition bill Room and board expense statement from the school Book expenses cannot be used to qualify for a hardship withdrawal. The bill or statement must: Show the name of the school Be dated within the past 90 days Be dated within 2 months before or after the beginning of the quarter or semester - 15 -

(E) Funeral Expenses For funeral/burial expenses for the participant s parent, spouse, children, or other dependents, submit a copy of the funeral/burial billing statement, including all of the following: Name of deceased Dates of services provided within the past 6 months Party liable for expenses Itemized funeral/burial expenses (F) Primary Residence Repairs Due to Disaster For repair expenses of unforeseen damage to the participant s primary residence not paid for by insurance, submit one of the following: Insurance report that includes: Address of the property damaged Date of damage within the past 90 days Cause of damage, if available Amount paid or to be paid by the insurance company Amount owed by the participant A letter from the participant stating that he or she has no insurance, which includes address of the property damage, cause of damage, date of damage within the past 90 days and a statement from the participant that the property is not insured In addition, the participant must submit an estimate or bill of itemized repairs that includes all of the following: The participant s name Address of the damaged property Date when the estimate or bill was calculated Document explaining the cause of the damage, if the participant s insurance report does not include it (police or fire report, newspaper story, or a letter from the participant, for example) Proof that the participant owns or rents the residence (property tax bill, mortgage statement, property deed, or lease agreement, for example), which reflects: Address of property damaged The participant is the owner or renter of the property The participant is liable if they rent to the owner for damages Note: All bills must be unpaid to qualify for a hardship withdrawal. If a bill has already been paid, the hardship withdrawal does not apply. - 16 -

Special Withdrawal Option for Eligible Employees on Military Leave As part of the Heroes Earnings Assistance and Relief Tax Act of 2008 ( HEART Act ), a participant on a qualifying military leave of more than 30 days is eligible to withdraw his or her pre-tax or Roth contributions and earnings. A participant cannot make additional contributions to the Plan for six months after receiving a payment made under the HEART Act. For more information, contact the Lilly Benefits Center. How to Request a Withdrawal A participant can request a withdrawal on the Lilly Benefits Center website or by contacting the Lilly Benefits Center. The amount available for withdrawal is based on a participant s account value at the close of each business day (4:00 p.m., Eastern time, or when the stock market closes, if earlier). While Working for the Company If a participant requests more than the amount available for withdrawal when a request is processed, he or she will receive only the amount available. Hardship Withdrawals For a hardship withdrawal, the participant can initiate the request online at the Lilly Benefits Center website or by calling the Lilly Benefits Center at 1-800-472-4720. The participant must return a signed hardship withdrawal form to the Lilly Benefits Center with supporting documentation before the hardship withdrawal can be approved. A hardship form is generally reviewed within 2 business days of when it is received. Participants can track the status of their request on the Lilly Benefits Center website. If a participant s form and supporting documentation are completed correctly and the participant qualifies, the hardship withdrawal will be posted to his or her account on this site. If there is a problem with the materials a participant sent or the participant did not qualify, the participant will be notified. Timing for Receiving Payments When a participant requests a withdrawal, he or she can choose to have the payment either: Direct deposited to the participant s account at a financial institution Mailed to the participant. If the participant s hardship withdrawal is approved, the payment will be direct deposited within 2 to 3 business days or mailed within 2 business days depending on the participant s choice. - 17 -

How Distributions Work If a participant retires or becomes disabled, he or she may request one of the following distribution options: Lump-Sum Distributions A participant can request a lump-sum distribution of Roth and/or non-roth accounts anytime after the participant separates from employment with the Company. When a participant takes a lump-sum distribution, the participant may receive his or her entire Roth, non-roth or entire account balance. The payment can be in cash or a combination of cash and shares of Lilly stock. The participant may elect to receive a lump sum distribution of the Roth account, if applicable, at a different time than the lump sum distribution from the non-roth accounts. A participant may be able to roll over a lump-sum distribution into another eligible retirement plan, IRA or Roth IRA. Partial Distributions If a participant defers payment of his or her account after the participant retires or the participant is receiving installments, the participant may choose to take partial distributions. A participant may take partial distributions at any time. There is no minimum amount required. Partial distributions can be paid in cash, shares of Lilly stock, or a combination of both. If the participant elects to take shares, the Lilly Stock Fund will be depleted before all other funds. The participant must file a separate payment election for Roth accounts and non-roth accounts. A participant may be able to roll over a partial distribution to another eligible retirement plan, IRA or Roth IRA. Installments When a participant separates from employment, the participant can receive his or her account balance in installments. These payments are made in cash. Note: Once a participant begins receiving installments, the participant is restricted from opening a self-directed mutual fund account. Also, if a participant currently has a self-directed mutual fund account, that amount will be excluded from the installment calculation. - 18 -

There are 2 types of installments available under the Plan. Calculated Installments With this option, a participant can choose to receive payments based on his or her life expectancy or, if married, based on the joint life expectancy of the participant and his or her spouse. Each calculated installment depends on: The participant s account balance The length of the participant s payment period, which cannot exceed the participant s life expectancy, or the joint life expectancy of the participant and the participant s beneficiary Investment earnings during the payment period Other payments the participant takes during the payment period To estimate the amount of the participant s first payment, divide the participant s total account balance, not including any unpaid loan balances, by the number of payments the participant chooses. Future payments are calculated by dividing the participant s account balance at the time the payment is made, including investment earnings, by the number of installment payments remaining. Fixed Installments With this option, payments are calculated based on a participant s account balance when payments begin and his or her life expectancy. The length of time a participant is likely to receive payments depends on: The participant s account balance The participant s installment amount Investment earnings during the payment period Other payments the participant takes during the payment period After the participant chooses an installment amount, the Plan calculates how long the payments are expected to last. This calculation is based on an interest rate provided by the Plan administrator. A participant s installments end automatically when they have received the entire account balance. Changes to A Participant s Installments After a participant starts receiving installments, the participant can change his or her tax withholding election at any time. A participant may also change the frequency of payments once each year in December. The change applies to the next calendar year. A participant can choose to receive payments monthly, quarterly, semiannually, or annually. A participant can stop receiving installments by calling the Lilly Benefits Center. - 19 -

Rolling Over Installments Installments that are scheduled or expected to last for less than 10 years may be eligible for rollover to another eligible retirement plan, IRA or Roth IRA. Installments that are scheduled or expected to last 10 years or more are not eligible for rollover. Required Minimum Distributions Required minimum distributions must be paid from a participant s account, beginning in the year he or she retires or reaches age 70-1/2, whichever is later. A participant must receive the first required minimum distribution no later than April 1 of the calendar year following the year in which the participant retires or reaches age 70-1/2, whichever is later. A participant must receive the second required minimum distribution no later than December 31 of the calendar year following the year in which the participant retires or reaches age 70-1/2, whichever is later. This means the participant may receive the first 2 required minimum distributions in the same tax year. A participant must receive the subsequent required minimum distributions by December 31 of each following year. To calculate the minimum amount a participant must receive each year, the Plan determines the closing account balance for December 31 of the prior year and divides that amount by a life expectancy factor set by the Internal Revenue Service. If a participant receives or requests a payment during a year in which the participant is required to receive a minimum distribution: That payment will count toward the participant s required minimum distribution for the year. If the payment is not enough to satisfy the participant s required minimum distribution for the year, the participant will automatically receive payment for the remaining amount before the end of the year. However, it is the participant s responsibility to make sure he or she receives the entire amount of the required minimum distribution by December 31 each year. Special payment rules apply for the participant s beneficiaries. How to Request a Distribution A participant can request most types of distributions on the Lilly Benefits Center website. However, if a participant wants to request installments, the participant must call the Lilly Benefits Center. The amount available for distribution is determined at the close of each business day (4:00 p.m. Eastern time, or when the stock market closes). - 20 -

After the participant s request is processed, the payment will be direct deposited within 2 to 3 business days or mailed within 2 business days, depending on the participant s choice. If the participant requests shares of Lilly stock, they will be issued within 2 to 3 weeks. Note: If a participant wants to receive a distribution check via overnight delivery, the participant must provide the Lilly Benefits Center with a street address and a Federal Express billing number. Checks cannot be sent via Federal Express to a P.O. Box. In-Plan Roth Conversions If a participant is eligible to take a withdrawal or distribution from his or her account, the participant may choose to convert any pre-tax amounts to a Roth account within the Plan. No assets are actually sold and no withholding is applied to the amount converted. All amounts not previously taxed will be included in the participant s gross income and the participant will pay tax on the income generated by the conversion when filing a tax return for the year in which the conversion occurred. In general, the amount the participant converts and any earnings on that amount can be distributed to the participant without additional tax once the participant is at least age 59-1/2 and the Roth account in the Plan has been open for at least five years. Roth in-plan conversions can be processed at the Lilly Benefits Center website. Non-Assignment of Benefits The Plan provides that a participant s account may not be assigned or transferred to another except in case of a qualified domestic relations order. (h) Tax Effects of Plan Participation The Plan is qualified under Section 401(a) of the Code. As a result, participants pre-tax contributions and the Company s matching contributions are not taxable at the time they are contributed to the Plan. This reduces participants taxable income and, in turn, reduces the amount of taxes they currently have to pay. By contributing on a before-tax basis, participants defer paying taxes. These amounts are taxed as ordinary income when they are distributed to the participants. In addition, earnings and investment gains on contributions to participants accounts will be taxed when they are distributed to them. For a participant s Roth contributions, taxes are paid before being contributed to the participant s account. In that case, the contributions and earnings generally are not taxable when withdrawn if the participant has had the Roth account for at least five years and is age 59-1/2 or older. A withdrawal of any taxable amounts is subject to regular taxation in the year received unless a participant rolls over the amount into a traditional IRA or qualified plan (including a governmental 457 plan or a 403(b) annuity). A participant may also roll over after-tax contributions to a traditional IRA or a defined contribution plan that accepts the contributions. Roth contributions may only be rolled over to a Roth-IRA or a defined contribution plan that accepts Roth contributions. In addition, if a participant is under age - 21 -

59-1/2 when he or she makes the withdrawal, the participant may be subject to an early distribution tax of 10 percent of the taxable amount withdrawn, unless the withdrawal is rolled over. There are various tax considerations that depend on the timing of the payment, the amount of the payment, and the form of the payment (cash or stock). For example, the tax consequences vary if a distribution is a lump sum distribution versus another type of distribution. Any distribution that is eligible to be rolled over (not a hardship withdrawal) that is made directly to a participant is subject to mandatory 20% federal income tax withholding on the taxable amount. A Lilly Benefits Center representative will give the participant more information about the distribution rules before he or she receives any distribution. If a participant is thinking of taking a withdrawal, he or she should carefully consider the tax implications before action is taken. The rules described here are not comprehensive. General information regarding the tax consequences of distributions from the Plan is available in the Payment Rights Notice posted on the Lilly Benefits Center at http://benefitscenter.lilly.com. A participant should consult a tax adviser for specific tax information regarding his or her situation before making a withdrawal from his or her account or retiring. The taxable portion of a payment that is not eligible to be rolled over is subject to federal income tax withholding unless the participant elects not to have withholding apply. Withholding on the taxable portion of a payment that is eligible to be rolled over is described in the Special Tax Notice Regarding Plan Payments section below. A participant may elect not to have federal withholding apply to the taxable portion of his or her payment that is not eligible to be rolled over, or change the withholding, by calling the Lilly Benefits Center. A participant s election will remain in effect for any subsequent payment that is part of the same payment stream until revoked. A participant may make and revoke an election not to have withholding apply as often as the participant chooses. Any election or revocation will be effective as soon as administratively feasible after the participant s election or revocation is received. If the payment is a periodic payment (e.g., calculated installment, fixed installment), withholding will be determined according to the wage withholding tables as if the participant were married, claiming three allowances, unless the participant elects otherwise. If the payment is a nonperiodic payment (e.g., hardship withdrawal), withholding will be deducted from the payment at a flat 10% rate. If a participant elects not to have withholding apply, or if the participant does not have enough federal income tax withheld, the participant may be responsible for the payment of estimated tax. A participant may incur penalties under the estimated tax rules if withholding and estimated tax payments are not sufficient. - 22 -

Company s Deduction The Company claims an income tax deduction for contributions made to the Plan. Rollover Options All or a portion of a payment received from the Plan may be eligible to be rolled over to an IRA or an employer plan. The information in the General Information About Rollovers section is intended to help a participant decide whether to roll over a distribution. It describes the rollover rules that apply to payments from the Plan that are not from a designated Roth account (a type of account with special tax rules in some employer plans). Special rules that only apply in certain circumstances are described in the Special Rules and Options section. General Information About Rollovers How can a rollover affect my taxes? For a payment not from a designated Roth account, a participant will be taxed on a payment from the Plan if the participant does not roll it over. If a participant is under age 59-1/2 and does not roll over the distribution, the participant must also pay a 10% additional income tax on early distributions (unless an exception applies). However, if a participant rolls the distribution over, the participant will not have to pay tax until he or she receives payments later and the 10% additional income tax will not apply if those payments are made after the participant is age 59-1/2 (or if an exception applies). For a payment from a designated Roth account, after-tax contributions included in a payment from a designated Roth account are not taxed, but earnings might be taxed. The tax treatment of earnings included in the payment depends on whether the payment is a qualified distribution. If a payment is only part of a participant s designated Roth account, the payment will include an allocable portion of the earnings in the participant s designated Roth account. If the payment from the Plan is not a qualified distribution and the participant does not do a rollover to a Roth IRA or a designated Roth account in an employer plan, the participant will be taxed on the earnings in the payment. If a participant is under age 59-1/2, a 10% additional income tax on early distributions will also apply to the earnings (unless an exception applies). However, if a participant does a rollover, the participant will not have to pay taxes currently on the earnings and the participant will not have to pay taxes later on payments that are qualified distributions. If the payment from the Plan is a qualified distribution, the participant will not be taxed on any part of the payment even if the participant does not do a rollover. If a participant does a rollover, the participant will not be taxed on the amount rolled over and any earnings on the amount rolled over will not be taxed if paid later in a qualified distribution. A qualified distribution from a Roth account in the Plan is a payment made after a participant is age 59-1/2 (or after the participant s death or disability) and after a participant has had a designated Roth account in the Plan for at least 5 years. In applying the 5-year rules, a participant counts from January 1 of the year the participant s first contribution was made to the designated - 23 -

Roth account. However, if a participant did a direct rollover to a designated Roth account in the Plan from a designated Roth account in another employer plan, their participation will count from January 1 of the year the participant s first contribution was made to the designated Roth account in the Plan or, if earlier, to the designated Roth account in the other employer plan. Where may I roll over the payment? For a payment not from a designated Roth account, a participant may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an employer plan (a tax-qualified plan, section 403(b) plan, or governmental section 457(b) plan) that will accept the rollover contribution. The rules of the IRA or employer plan that holds the rollover contribution will determine a participant s investment options, fees, and rights to payment from the IRA or employer plan (e.g., no spousal consent rules apply to IRAs and IRAs may not provide loans). Further, the amount rolled over will become subject to the tax rules that apply to the IRA or employer plan. For a payment from a designated Roth account, a participant may roll over the payment to either a Roth IRA (a Roth individual retirement account or Roth individual retirement annuity) or a designated Roth account in an employer plan (a tax-qualified plan or section 403(b) plan) that will accept the rollover. The rules of the Roth IRA or employer plan that holds the rollover will determine the participant s investment options, fees, and rights to payment from the Roth IRA or employer plan (e.g., no spousal consent rules apply to Roth IRAs and Roth IRAs may not provide loans). Further, the amount rolled over will become subject to the tax rules that apply to the Roth IRA or the designated Roth account in the employer plan. In general, these tax rules are similar to those described elsewhere in this document, but differences include: If a participant does a rollover to a Roth IRA, all of the participant s Roth IRAs will be considered for purposes of determining whether the participant has satisfied the 5-year rule (counting from January 1 of the year for which the participant s first contribution was made to any of the participant s Roth IRAs). If a participant does a rollover to a Roth IRA, the participant will not be required to take a distribution from the Roth IRA during the participant s lifetime and the participant must keep track of the aggregate amount of the after-tax contributions in all of the participant s Roth IRAs (in order to determine the participant s taxable income for later Roth IRA payments that are not qualified distributions). Eligible rollover distributions from a Roth IRA can only be rolled over to another Roth IRA. How do I roll over my distribution? There are two ways to roll over a distribution. A participant can roll over a distribution directly to an IRA, Roth IRA, or another employer s plan or contribute the distribution to an IRA, Roth IRA, or another employer s plan no later than 60 days after the distribution. - 24 -

If a participant rolls the distribution over directly, the Plan will make the payment directly to the participant s IRA, Roth IRA, or employer s plan. The participant should contact the IRA or Roth IRA sponsor or the administrator of the employer plan for information on how to make a direct rollover. If a participant does not roll over a distribution that is not from a designated Roth account directly, the participant may still roll over the distribution by making a deposit into an IRA or eligible employer plan that will accept it. A participant will have 60 days after the participant receives the payment to make the deposit. If a participant does not roll the distribution over, the Plan is required to withhold 20% of the payment for federal income taxes (up to the amount of cash and property received other than employer stock). In order to roll over the entire payment within 60 days, a participant may use other funds to make up the 20% of the distribution that is withheld from the distribution for taxes. If a participant does not roll over the entire amount of the payment, the portion not rolled over will be taxed and will be subject to the 10% additional income tax on early distributions if a participant is under age 59-1/2 (unless an exception applies). If a participant does not roll over a distribution from a designated Roth account directly, the participant may still do a rollover by making a deposit within 60 days into a Roth IRA, whether the payment is a qualified or nonqualified distribution. In addition, a participant can do a rollover by making a deposit within 60 days into a designated Roth account in an employer plan if the payment is a nonqualified distribution and the rollover does not exceed the amount of the earnings in the payment. A participant cannot do a 60-day rollover to an employer plan of any part of a qualified distribution. If a participant receives a distribution that is a nonqualified distribution and the participant does not roll over an amount at least equal to the earnings allocable to the distribution, the participant will be taxed on the amount of those earnings not rolled over, including the 10% additional income tax on early distributions if the participant is under age 59-1/2 (unless an exception applies). If a participant does a direct rollover of only a portion of the amount paid from the Plan and a portion is paid to the participant, each of the payments will include an allocable portion of the earnings in the participant s designated Roth account. If a participant does not do a direct rollover and the payment is not a qualified distribution, the Plan is required to withhold 20% of the earnings for federal income taxes (up to the amount of cash and property received other than employer stock). This means that, in order to roll over the entire payment in a 60-day rollover to a Roth IRA, a participant must use other funds to make up for the 20% withheld. - 25 -

How much may I roll over? If a participant wishes to roll over a distribution, the participant may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except: Certain payments spread over a period of at least 10 years or over a participant s life or life expectancy (or the lives or joint life expectancy of the participant and his or her beneficiary) Required minimum distributions after age 70-1/2 (or after death) Hardship distributions ESOP dividends Corrective distributions of contributions that exceed tax law limitations Loans treated as deemed distributions (e.g., loans in default due to missed payments before the participant s employment ends) The Plan administrator can tell a participant what portion of a payment is eligible to be rolled over. If I do not roll over a distribution, will I have to pay the 10% additional income tax on early distributions? For payments not from a designated Roth account, if a participant is under age 59-1/2, the participant will have to pay the 10% additional income tax on early distributions for any payment from the Plan (including amounts withheld for income tax) that is not rolled over, unless one of the exceptions listed below applies. For payments from a designated Roth account, if the payment is not a qualified distribution and the participant is under age 59-1/2, the participant will have to pay the 10% additional income tax on early distributions with respect to the earnings allocated to the payment that is not rolled over (including amounts withheld for income tax), unless one of the exceptions below applies. This tax is in addition to the regular income tax on the payment not rolled over. The 10% additional income tax does not apply to the following payments from the Plan: Payments made after a participant separates from service if the participant will be at least age 55 in the year of separation Payments that start after a participant separates from service if paid at least annually in equal or close to equal amounts over his or her life or life expectancy (or the lives or joint life expectancy of the participant and his or her beneficiary) Payments made due to disability Payments after the participant s death Payments of ESOP dividends Corrective distributions of contributions that exceed tax law limitations Payments made directly to the government to satisfy a federal tax levy Payments made under a qualified domestic relations order - 26 -

Payments up to the amount of a participant s deductible medical expenses Certain payments made while a participant is on active duty if the participant was a member of a reserve component called to duty after September 11, 2001 for more than 179 days. If I roll over a distribution to an IRA or Roth IRA, will the 10% additional income tax apply to early distributions from the IRA or Roth IRA? If a participant receives a payment from an IRA or Roth IRA and is under age 59-1/2, the participant will have to pay the 10% additional income tax on early distributions from the IRA or Roth IRA, unless an exception applies. In general, the exceptions to the 10% additional income tax for early distributions from an IRA or Roth IRA are the same as the exceptions listed above for early distributions from a plan. However, there are a few differences for payments from an IRA or Roth IRA, including: There is no exception for payments after separation from service that are made after age 55 (non-roth) or after separation from service (Roth). The exception for qualified domestic relations orders does not apply (although a special rule applies under which, as part of a divorce or separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or former spouse). The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without regard to whether a participant has had a separation from service. There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in a qualified first-time home purchase, and (3) payments after a participant has received unemployment compensation for 12 consecutive weeks (or would have been eligible to receive unemployment compensation but for self-employed status). Will I owe State income taxes? This document does not describe any State or local income tax rules (including withholding rules). Please consult with a professional tax advisor. Special Rules And Options If a participant s payment includes after-tax contributions After-tax contributions included in a payment are not taxed. If a payment is only part of a participant s benefit, an allocable portion of after-tax contributions is generally included in the payment. If a participant has pre-1987 after-tax contributions maintained in a separate account, a special rule may apply to determine whether the after-tax contributions are included in a payment. A participant may roll over to an IRA a payment that includes aftertax contributions through either a direct rollover or a 60-day rollover. A participant must keep track of the aggregate amount of the after-tax contributions in all of his or her IRAs (in order to determine the taxable income for later payments from the IRAs). If a participant rolls over directly only a portion of the amount paid from the Plan and a portion - 27 -

is paid to the participant, each of the payments will include an allocable portion of the after-tax contributions. If a participant rolls over only a portion of the distribution to an IRA within 60 days of receiving the distribution, the after-tax contributions are treated as rolled over last. For example, assume a participant is receiving a complete distribution of a benefit which totals $12,000, of which $2,000 is after-tax contributions. In this case, if a participant rolls over $10,000 to an IRA in a 60-day rollover, no amount is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions. A participant may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and only if the receiving plan separately accounts for aftertax contributions and is not a governmental section 457(b) plan). A participant can do a 60-day rollover to an employer plan of part of a payment that includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over. If a participant misses the 60-day rollover deadline Generally, the 60-day rollover deadline cannot be extended. However, the IRS has limited authority to waive the deadline under certain extraordinary circumstances, such as when external events prevented a participant from completing the rollover by the 60-day rollover deadline. To apply for a waiver, a participant must file a private letter ruling request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more information, see IRS Publication 590, Individual Retirement Arrangements. If a participant s payment includes Lilly stock that the participant did not roll over If a participant does not roll over a distribution, the participant can apply a special rule to payments of Lilly stock (or other employer securities) that are either attributable to after-tax contributions or paid in a lump sum after separation from service (or after age 59-1/2, disability, or the participant s death). Under the special rule, the net unrealized appreciation on the stock will not be taxed when distributed from the Plan and will be taxed at capital gain rates when a participant sells the stock. Net unrealized appreciation is generally the increase in the value of Lilly stock after it was acquired by the Plan. If a participant rolls over a payment that includes Lilly stock (e.g., by selling the stock and rolling over the proceeds within 60 days of the payment), the special rule relating to the distributed employer stock will not apply to any subsequent payments from the IRA or employer plan. The Plan administrator can tell the participant the amount of any net unrealized appreciation. If a participant does a rollover to a Roth IRA for a nonqualified distribution that includes employer stock If a participant does a rollover to a Roth IRA for a nonqualified distribution that includes employer stock (e.g., by selling the stock and rolling over the proceeds within 60 days of the distribution), the participant will not have any taxable income and the special rule relating to the distributed employer stock will not apply to any subsequent payments from the Roth IRA or employer plan. If a participant receives a payment that is a qualified distribution that includes employer stock and did not roll it over, the participant s basis in the stock (used to determine gain or loss when a participant later sells the stock) will equal the fair market value of the stock at the time of the payment from the Plan. - 28 -

If a participant has an outstanding loan that is being offset If a participant has an outstanding loan from the Plan, the participant s Plan benefit may be offset by the amount of the loan, typically when employment ends. The loan offset amount is treated as a distribution to a participant at the time of the offset and will be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless the participant rolls over the amount of the loan offset to an IRA, Roth IRA, or employer plan within 60 days of receiving the distribution. If a participant was born on or before January 1, 1936 If a participant was born on or before January 1, 1936 and receives a lump sum distribution that the participant does not roll over, special rules for calculating the amount of the tax on the payment might apply. For more information, see IRS Publication 575, Pension and Annuity Income. If a participant rolls over his or her payment from an account not designated as a Roth account to a Roth IRA If a participant rolls over the payment to a Roth IRA, a special rule applies under which the amount of the payment rolled over (reduced by any after-tax amounts) will be taxed. However, the 10% additional income tax on early distributions will not apply (unless a participant takes the amount rolled over out of the Roth IRA within 5 years, counting from January 1 of the year of the rollover). If a participant rolls over the payment to a Roth IRA, later payments from the Roth IRA that are qualified distributions will not be taxed (including earnings after the rollover). A qualified distribution from a Roth IRA is a payment made after a participant is age 59-1/2 (or after his or her death or disability, or as a qualified first-time homebuyer distribution of up to $10,000) and after the participant has had a Roth IRA for at least 5 years. In applying this 5-year rule, a participant counts from January 1 of the year for which his or her first contribution was made to a Roth IRA. Payments from the Roth IRA that are not qualified distributions will be taxed to the extent of earnings after the rollover, including the 10% additional income tax on early distributions (unless an exception applies). A participant does not have to take required minimum distributions from a Roth IRA during his or her lifetime. For more information, see IRS Publication 590, Individual Retirement Arrangements. A participant cannot roll over a non-roth payment from the Plan to a designated Roth account in an employer plan, but can roll it into the designated Roth account of the Plan (see below). If a participant rolls over a payment to a designated Roth account within the Plan If a participant chooses to directly roll money into the Plan s designated Roth account, the amount of the rollover less any money attributable to after-tax contributions, will be taxable to the participant. The 10% early distribution penalty tax will not apply unless the participant takes the money out of the Roth account within a 5 year period beginning January 1 st of the year of the rollover. Once a participant rolls money into the designated Roth account, later payments, including earnings, will not be taxed as long as the payment meets the requirements for a qualified Roth distribution. A qualified Roth distribution is one that is made after a participant is age 59-1/2 and has had a designated Roth account for at least 5 years. If a participant does not already have money in the Plan s designated Roth account, this 5-year period will begin January 1 of the year the participant - 29 -

rolls Plan money into the designated Roth account. If a participant takes a distribution from a designated Roth account that isn t a qualified distribution, it will be taxed to the extent it s allocable to earnings and the 10% early distribution penalty may also apply to those taxable amounts. If a participant is not a Plan participant Payments after death of the participant. If a participant receives a distribution after the participant s death that the participant does not roll over, the distribution will generally be taxed in the same manner described elsewhere in this document. However, the 10% additional income tax on early distributions does not apply, and the special rule described under the section If a participant was born on or before January 1, 1936 applies only if the participant was born on or before January 1, 1936. For payments from a designated Roth account, whether the payment is a qualified distribution generally depends on when the participant first made a contribution to the designated Roth account in the Plan. If a participant is a surviving spouse. If a participant receives a payment from the Plan as the surviving spouse of a deceased participant, the participant has the same rollover options that the participant would have had, as described elsewhere in this document. In addition, if a participant chooses to roll over a distribution to an IRA or Roth IRA, he or she may treat the IRA or Roth IRA as his own or as an inherited IRA or Roth IRA. An IRA or Roth IRA the participant treats as his or her own is treated like any other IRA or Roth IRA of the participant, so that payments made to a participant before they are age 59-1/2 will be subject to the 10% additional income tax on early distributions (unless an exception applies) and required minimum distributions from his or her IRA or Roth IRA do not have to start until after they are age 70-1/2. If a participant treats the IRA or Roth IRA as an inherited IRA or Roth IRA, payments from the IRA or Roth IRA will not be subject to the 10% additional income tax on early distributions. However, if the participant had started taking required minimum distributions, the participant will have to receive required minimum distributions from the inherited IRA or Roth IRA. If the participant had not started taking required minimum distributions from the Plan, the participant will not have to start receiving required minimum distributions from the inherited IRA or Roth IRA until the year the participant would have been age 70-1/2. If a participant is a surviving beneficiary other than a spouse. If a participant receives a payment from the Plan because of the participant s death and the participant is a designated beneficiary other than a surviving spouse, the only rollover option the participant has is a direct rollover to an inherited IRA or Roth IRA. Payments from the inherited IRA or Roth IRA will not be subject to the 10% additional income tax on early distributions. A participant will have to receive required minimum distributions from the inherited IRA or Roth IRA. - 30 -

Payments under a qualified domestic relations order. If the spouse or former spouse of the participant receives a payment from the Plan under a qualified domestic relations order, the spouse or former spouse of the participant generally has the same options the participant would have (e.g., the spouse or former spouse of the participant may roll over the payment to his or her own IRA, Roth IRA, or an eligible employer plan that will accept it). Payments under the qualified domestic relations order will not be subject to the 10% additional income tax on early distributions. If a participant is a nonresident alien If a participant is a nonresident alien and does not roll over the distribution directly to a U.S. IRA, U.S. Roth IRA, or U.S. employer plan, instead of withholding 20%, the Plan is generally required to withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount of tax the participant owes (as may happen if they do a 60-day rollover), the participant may request an income tax refund by filing Form 1040NR and attaching Form 1042-S. See Form W-8BEN for claiming that the participant is entitled to a reduced rate of withholding under an income tax treaty. For more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Other Special Rules If a payment is one in a series of payments for less than 10 years, a participant s choice whether to roll over any payments directly to an IRA, Roth IRA, or another employer s plan will apply to all later payments in the series (unless a different choice is made for later payments). If a participant s payments for the year are less than $200, the Plan is not required to allow the participant to roll over the distributions directly and is not required to withhold for federal income taxes. However, a participant may roll over such a distribution pursuant to the 60-day rollover option. Unless a participant elects otherwise, a mandatory cash-out of more than $1,000 will be directly rolled over to an IRA or Roth IRA chosen by the Plan administrator or the payor. A mandatory cash-out is a payment from a plan to a participant made before age 62 (or normal retirement age, if later) and without consent, where the participant s benefit does not exceed $5,000 (not including any amounts held under the Plan as a result of a prior rollover made to the Plan). A participant may have special rollover rights if the participant recently served in the U.S. Armed Forces. For more information, see IRS Publication 3, Armed Forces Tax Guide. For More Information A participant may wish to consult with the Plan administrator, or a professional tax advisor, before taking a payment from the Plan. Also, a participant can find more detailed information on the federal tax treatment of payments from employer plans in: IRS Publication 575, Pension and Annuity Income; IRS Publication 590, Individual Retirement Arrangements; and IRS Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). These publications are available from a local IRS office, on the web at www.irs.gov, or by calling 1-800-TAX-FORM. - 31 -

If a participant needs additional information, they can access the Lilly Benefits Center at http://benefitscenter.lilly.com or they can call the Lilly Benefits Center toll-free at 1-800-472-4720. Lilly Benefits Center Representatives are available between 9 a.m. and 5 p.m., Eastern time, Monday through Friday. (i) Investment of Funds The Plan s Funds The Plan contains eight investment fund options, nine Target Date Portfolios, and a selfdirected mutual fund window from which to choose. Participants are responsible for deciding in which of these investment alternatives the participant s account will be invested. The Plan funds are designed to meet different investment goals and objectives, and reflect different levels of potential risk and return. Therefore, a participant s selection of a fund, or a combination of funds, will depend on his or her particular needs and investment goals. A participant may not invest in more than one Target Date Portfolio at the same time. A participant may, however, invest in a single Target Date Portfolio and any combination of other funds. A participant may change his or her investment election at any time. Company matching contributions are invested according to the participant s investment selections for participant contributions. A participant may transfer any portion of his account invested in the Lilly Stock Fund into other Plan investments. A participant may also transfer additional funds into the Lilly Stock Fund at any time. More information about each fund follows. Any money a participant transfers or reallocates to the International Equity Fund (Active or Index) including any gain or loss on the amount must remain in the fund for a minimum of seven days before a participant can move it to the other investment funds. Any money transferred or reallocated out of the Stable Income Fund, including gains and losses, must be invested in a Plan investment other than the self-directed mutual fund window for a minimum of 90 days after the transfer or reallocation. Additional restrictions on transfers or reallocations among Plan funds may be imposed from time to time in the discretion of the Fund Advisory Committee or Employee Benefits Committee. The Fund Advisory Committee, appointed by the Company s Board of Directors, serves as the Plan fiduciary in investment matters including selection of Plan investment options. While frequent change is neither expected nor desirable, the process of monitoring investment performance relative to specified guidelines will be ongoing and the Fund Advisory Committee may, in its sole discretion, effect changes from time to time as it deems necessary and proper. If an investment option is deleted from the Plan, the Fund Advisory Committee may direct the existing balances in that investment option to a substantially similar investment option. If no substantially similar fund exists, the existing balance may be directed into an age-appropriate target date portfolio. Participants investments in other Plan investment options will not be changed so long as such other investment options remain available under the Plan. - 32 -

Stable Income - Active The stable value (income) fund seeks to provide a stable rate of return while preserving principal. The stable value fund invests in contracts from banks and insurance companies that offer stability of principal and a positive rate of return that changes gradually with market conditions. The underlying securities are intermediate maturity, high-quality fixedincome investments. Unlike other types of investment funds that are typically marked to market daily, the stable value fund carries the value of his or her investments at book value, which reflects net deposits plus accrued interest. The long-term returns of the stable value fund should be similar to intermediate fixed-income assets, and are expected to outperform cash/money market instruments over the long term. Relative Risk: Low (Total Annual Operating Expenses: 0.42% 1 ) U.S. All Cap Equity - Index This is a passive fund that seeks to provide a broad, well-diversified investment mix in the U.S. equity market and to replicate the performance of the Russell 3000 Index. The Russell 3000 Index currently represents about 98% of the U.S. stock market and includes small to very large companies. Relative Risk: Moderate to High (Total Annual Operating Expenses: 0.10% 2 ) U.S. All Cap Equity - Active This is an actively managed fund that seeks to provide a broad, well-diversified investment mix in the U.S. equity market and to outperform the Russell 3000 Index. The Russell 3000 Index currently represents about 98% of the U.S. stock market and includes small to very large companies. The fund seeks excess returns from small and mid-size companies and stocks with good risk/reward characteristics in the large cap market. The fund employs a multi-manager approach in which different money managers identify U.S. stocks with strong return potential. Relative Risk: Moderate to High (Total Annual Operating Expenses: 0.49% 2 ) - 33 -

International Equity - Active This is an actively managed fund that seeks to provide a broad investment mix in developing and emerging non-u.s. equity markets. It seeks to outperform the MSCI All Country World ex-us IMI Index, which currently represents about 99% of the global stock market outside the U.S. The fund may invest in companies of all sizes. The fund employs a multi-manager approach in which different money managers identify stocks with strong return potential. Relative Risk: Moderate to High (Total Annual Operating Expenses: 0.64% 3 ) International Equity - Index This passive fund seeks to provide a broad investment mix in developing and emerging non-u.s. equity markets. It seeks to replicate the performance of the MSCI All Country World ex-us IMI Index, which currently represents about 99% of the global stock market outside the U.S. The fund may invest in companies of all sizes. Relative Risk: Moderate to High (Total Annual Operating Expenses: 0.15% 2 ) Fixed Income - Active This is an actively managed fund that seeks to provide income and total return with less volatility, in general, than stock funds. It seeks to exceed the Barclays U.S. Aggregate Bond Index and invests in U.S. corporate and government fixed-income securities. It also invests in emerging market debt and high yield bonds. The fund seeks current income consistent with the preservation of capital in addition to total return. The fund employs a multi-manager approach in which different money managers identify fixed income investment opportunities. Relative Risk: Moderate (Total Annual Operating Expenses: 0.40% 4 ) Real Assets Real assets are tangible assets that have value due to their substance and physical properties (e.g., precious metals, commodities, real estate, etc.). Real assets are different from financial assets (e.g., stocks and bonds) and, therefore, they can also help to diversify a traditional portfolio. The fund invests in a mix of U.S. Treasury Inflation Protection Securities, Real Estate Investment Trusts, and commodities. It is intended to complement existing investments and is not meant to replace equities or fixed income investments. Relative Risk: Moderate to High (Total Annual Operating Expenses: 0.22% 2 ) - 34 -

Lilly Stock This fund invests primarily in Lilly stock. The total return of the Lilly Stock Fund will reflect dividend payments to shareholders, as well as capital appreciation or depreciation. Because this fund invests in only one company, the fund is not diversified and therefore is considered riskier than funds that invest across the diversified broad market. The fund holds a small percent of assets in cash equivalents for liquidity purposes. Therefore, the performance of the Lilly Stock Fund may not reflect the exact performance of the underlying security over any given time period. Relative Risk: High (Total Annual Operating Expenses: 0.06% 5 ) 1 2 3 4 5 This fee includes an estimated fund administration fee from the investment manager equal to 0.01%. This JPMorgan fund administration fee is capped not to exceed 0.01%; in some cases the actual fee may be less. This fee includes an estimated fund administration fee from the investment manager equal to 0.02%. This fund administration fee is capped not to exceed 0.02%; in some cases the actual fee may be less. This fee includes an estimated fund administration fee from the investment manager equal to 0.132%. This fund administration fee is capped not to exceed 0.132%; in some cases the actual fee may be less. This fee includes an estimated fund administration fee from the investment manager equal to 0.03%. This fund administration fee is capped not to exceed 0.03%; in some cases the actual fee may be less. The benchmarks shown for the Eli Lilly Common Stock Fund reflect, in the case of the Russell 1000, the performance of a diversified pool of securities; and, in the case of the Amex Pharmaceutical Index, a pool of securities representing the Pharmaceutical industry. The Eli Lilly Common Stock Fund is not a diversified investment option, and is not managed to perform similarly to the benchmarks. The performance of the Eli Lilly Common Stock Fund is directly related to the performance of a single company. As a result, the performance of the Eli Lilly Common Stock Fund may deviate substantially from the benchmarks performance. - 35 -

Fund Overview Asset Fund Name(s) Objective Relative Risk Relative Long- Term Appreciation Potential Stable Value Stable Income Active Seeks to provide stability of principal while providing current income. Low Low Stocks U.S. Stocks Stocks International Stocks Stocks U.S. All Cap Equity Index U.S. All Cap Equity Active International Equity Active International Equity Index Lilly Stock Seeks to provide a broad, well-diversified investment mix in U.S. equity market. Risk and award will vary based on the stocks within each fund. Seeks to provide a broad investment mix in developing and emerging non-u.s. equity markets. Seeks to provide long-term growth through ownership of Lilly Stock. Lilly Stock Fixed Income Fixed Income Active Seeks to provide income and total return with less volatility, in general, than stock funds. Real Assets Real Assets Seeks to complement existing investments; not meant to replace equities or fixed income investments. Moderate to High Moderate to High High Moderate Moderate to High Moderate to High Moderate to High Moderate to High Moderate Moderate For additional information about each of the funds, including investment returns, managers and fees, see fund fact pages on the Lilly Benefits Center website. Target Date Portfolios The Plan also offers nine Target Date Portfolio investment alternatives. Each Target Date Portfolio starts with a mix of stocks, bonds, and money market instruments. As time passes, the investment mix shifts from a greater concentration of higher-risk investments (namely, stocks) to more conservative investments (e.g., bonds and money market instruments). The Target Date Portfolios are designed such that a participant can simply select the one with the date closest to the time when they expect to begin withdrawing money (often but not always at retirement). The asset allocation for each Target Date Portfolio changes over time, becoming more conservative as each fund nears maturity. - 36 -

Target Date Portfolio Options Target Date Portfolios seek total return for investors who expect to begin withdrawing their money in the targeted year described below. Each fund uses an asset allocation approach. The allocation changes, becoming more conservative as each fund nears its maturation. Each fund allocates assets among funds contained in various domestic and foreign indexes, and may invest between 26-47 percent of assets in securities traded in foreign markets. Visit the fund fact pages at http://benefitscenter.lilly.com for detailed information about each of these funds, including investment returns, managers, and fees. As of December 31, 2013, the asset allocation of the Target Date Portfolios available under the Plan was as follows: Target Date Portfolio Target Date Retirement Portfolio Target Date Portfolio 2015 Target Date Portfolio 2020 Target Date Portfolio 2025 Target Date Portfolio 2030 Target Date Portfolio 2035 Target Date Portfolio 2040 Target Date Portfolio 2045 Target Date Portfolio 2050 Percent U.S. Equity Percent International Equity Percent Bonds Percent Real Estate Commodities 22.90% 26.21% 43.66% 3.47% 3.76% 23.36% 26.99% 42.26% 3.69% 3.69% 25.17% 30.34% 36.00% 4.79% 3.71% 26.72% 33.36% 30.28% 5.84% 3.80% 28.25% 36.12% 25.13% 6.73% 3.78% 29.54% 38.78% 20.14% 7.77% 3.76% 30.77% 41.12% 15.64% 8.73% 3.74% 31.87% 43.47% 11.48% 9.40% 3.77% 32.68% 45.65% 7.35% 10.35% 3.97% Due to rounding percentages may not total exactly 100%. - 37 -

Note: As discussed, the asset allocations for each Target Date Portfolio change over time, becoming more conservative as each fund nears maturity; therefore, the current asset allocation of any Target Date Portfolio may be different from that stated on this chart after December 31, 2013. (Total Annual Operating Expenses: 0.33%) Fund Performance The following table provides the returns for each Plan fund over the past three calendar years. Returns are net of all fees. Investment Type 2011 Returns 2012 Returns 2013 Returns Stable Income-Active 1.79% 1.87% 1.70% Target Date Retirement Portfolio 0.82% 12.30% 10.36% Target Date Portfolio 2015 0.05% 12.95% 10.95% Target Date Portfolio 2020-0.96% 13.89% 12.42% Target Date Portfolio 2025-1.95% 14.92% 13.85% Target Date Portfolio 2030-2.76% 15.60% 15.09% Target Date Portfolio 2035-3.48% 16.29% 16.41% Target Date Portfolio 2040-4.35% 17.09% 17.54% Target Date Portfolio 2045-4.98% 17.64% 18.65% Target Date Portfolio 2050-5.67% 18.43% 19.60% US All Cap Equity-Active - - 15.80%* US All Cap Equity-Index - - 17.07%* International Equity-Active - - 16.51%* International Equity-Index - - 15.60%* Real Assets - - 0.52%* Fixed Income-Active - - 0.88%* Lilly Stock 25.15% 23.89% 7.21% Self-Directed Mutual Fund Account N/A N/A N/A *Since inception as of July 1, 2013-38 -

Plan Fees and Expenses There are two general types of fees borne by the Plan Total Annual Operating Expenses and Individual Fees. The performance data presented above is net of all fees and expenses. The table below gives a brief overview of the two general fee types: Fee Type Total Annual Operating Expenses Individual Fees Description A participant will not see these fees directly because they are paid as a percent of Plan assets and come out of a participant s investment earnings. The Total Annual Operating Expense for each fund option is shown above. These expenses include investment management fees; administrative costs for Plan and fund services, such as recordkeeping and participant service fees, trustee fees, legal fees and accounting fees; and other expenses relating to the maintenance of the Plan or its funds. These expenses reduce the rate of return earned on the investment option. A participant also may have individual fees that result in a separate fee being charged to the participant s account due to activity requested by the participant. The Plan uses institutional investment funds. Because of the amount of money in the Plan and use of institutional managers, the Plan generally is able to obtain fees that are more favorable to participants than fees charged by typical retail mutual funds (such as those published in the newspaper). Higher investment management fees do not necessarily mean better performance, nor is cheaper necessarily better. Compare the long-term net returns relative to the risks among the investment options offered. Use of Financial Futures in the Plan The investment managers of many of the funds may periodically seek to control investment risk by purchasing or selling financial futures contracts to a limited extent. These types of contracts will not be used for speculation but will be used only for hedging purposes or to manage or reduce certain risks to portfolio investments, which may arise from changing security prices or changing foreign currency exchange rates. Following are some ways that futures contracts may be used by an investment manager in managing investment strategies. As an example, managers may wish to quickly change the mix of a premixed investment strategy to include fewer U.S. stocks when they believe there is risk of a decline in the stock market. It may take at least a week before enough stocks are effectively sold to change the mix and complete the strategy. Alternatively, S&P 500 Index contracts can be sold on a regulated futures exchange to change the mix right away, thus avoiding the market risk present while going through the actual process of selling - 39 -

individual stocks. When enough individual stocks have been sold, the S&P 500 Index contracts would be removed. As another example, S&P 500 Index, Treasury Bill, Treasury Note, and Treasury Bond futures contracts may be used to keep a portion of the invested portfolio liquid so that Plan participants money can move easily into or out of funds, thus avoiding the more costly transactions of actually buying or selling individual securities. In either of the above cases, the use of futures contracts is not considered speculative. Rather, it acts to assist the investment manager in carrying out routine strategies through hedging and managing portfolio risk in a cost-effective manner. In this way, the use of these instruments is expected to add investment return over time. As with any investment within the broad area of financial futures contracts, potential risks exist. When used in the ways described above, these risks are no greater or less than the risk associated with more conventional investments. (j) Charges and Deductions and Liens Participants may incur individual account fees for the following Plan services; $85 for initiation of a Plan loan $48 per quarter for participation in the self-directed mutual fund window $750 for processing a qualified domestic relations order (split evenly between the two accounts) Item 2. Registrant Information and Employee Plan Annual Information. The following documents are incorporated by reference into the Company s Registration Statement on Form S-8 dated February 24, 2011 relating to the securities offered in connection with the Plan, and are also incorporated by reference into this Prospectus: The Annual Reports of Eli Lilly and Company (the Company or Registrant ) on Form 10-K for the fiscal years ended December 31, 2010, 2011, 2012, and 2013; All other reports filed by the Company pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934 since the end of the fiscal year ended December 31, 2013; The description of the Company s common stock contained in the Company s Registration Statement under the Securities Exchange Act of 1934 with respect to that stock filed with the Securities and Exchange Commission, including any amendments or reports filed for the purpose of updating that description; and - 40 -

all documents that may be subsequently filed by the Company and the Plan pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, from the date of filing of those documents with the Securities and Exchange Commission. Copies of the documents described above, as well as copies of any other documents referenced in this Prospectus, are available to all plan participants at no cost upon written or oral request. To request this information please write to Corporate Secretary, Eli Lilly and Company, Lilly Corporate Center, Indianapolis, Indiana, 46285, or call 317-276-2000 and ask to speak with the corporate secretary s office. While every effort has been made to make the information here as complete and accurate as possible, the Plan is fully detailed in a separate legal document. In the event of any inconsistencies between these materials and the Plan document, the terms of the Plan document will control. The company reserves the right to amend, modify or terminate its benefit plans, programs, or services at any time in its discretion. - 41 -