Exhibit 10.9
HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN
NQSO TERMS
The Participant specified below has been granted this Option by Hospira, Inc.
(the “Company”) under the terms of the Hospira 2004 Long-Term Stock Incentive
Plan (the “Plan”). The Option shall be subject to the following terms and
conditions (the “Option Terms”):
1.Terms of Award. The following words and phrases relating to the grant of the
Option shall have the following meanings:
(a)    The “Participant” is _________________.
(b)    The “Grant Date” is ____________________.
(c)    The number of “Covered Shares” shall be ________ shares of Stock.
(d)    The “Exercise Price” is $                    per share.
Except where the context clearly implies to the contrary, any capitalized term
in this award shall have the meaning ascribed to that term under the Plan.
2.    Non‑Qualified Stock Option. The Option is not intended to constitute an
“incentive stock option” as that term is used in Code section 422.
3.    Date of Exercise. Subject to the limitations of the Option Terms, on the
first anniversary of the Grant Date one-quarter of the Covered Shares subject to
these Options (rounded up) may be purchased; on the second anniversary of the
Grant Date one-half of the Covered Shares subject to these Options (rounded up)
may be purchased; on the third anniversary of the Grant Date three-quarters of
the Covered Shares subject to these Options (rounded up) may be purchased; and
on the fourth anniversary of the Grant Date these Options may be exercised in
full, provided the Expiration Date has not occurred prior to such vesting dates.
(a)    Notwithstanding the foregoing provisions of this paragraph 3, the Option
shall become fully exercisable upon the date of a Change in Control that occurs
on or before the Date of Termination if the successor company (or parent
thereof) has not either (i) assumed the Option effective on the date of the
Change in Control, without any modifications except as provided in the next
sentence, or (ii) replaced it with a comparable option as of such date having
the same intrinsic value as the Option, and the same vested percentage and
vesting schedule as the Option. The Option (if assumed) or the replacement
option shall provide for full vesting if, within the first 24 months following
the date of the Change in Control, the Participant is involuntarily terminated
for any or no reason or if the Participant terminates with Good Reason.
(b)    The Option may be exercised (prior to or following the Date of
Termination) only as to that portion of the Covered Shares which may be
purchased under the foregoing schedule, as of the date of exercise.
(c)    The Covered Shares shall continue to become exercisable pursuant to this
Section 3 until the Expiration Date (as defined in Section 4).
(d)    Notwithstanding the foregoing provisions of this paragraph 3, in the
event of termination of employment for reasons other than death, Disability or
Retirement, the Option may only be exercised on

 
 
 

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or after the Date of Termination only as to that portion of the Covered Shares
for which it was exercisable immediately prior to the Date of Termination, or
became exercisable on the Date of Termination.
4.    Expiration. The Option shall not be exercisable after the Company’s close
of business on the last business day that occurs prior to the Expiration Date.
The “Expiration Date” shall be the earliest to occur of:
(a)    the seven‑year anniversary of the Grant Date;
(b)    if the termination of employment occurs for reasons other than death,
Disability (as defined in Section 10) or Retirement (as defined in Section 10),
the three-month anniversary of the Date of Termination (as defined in Section
10); provided, however, that if the Participant dies during such three month
period following the Date of Termination, then the three-month anniversary of
the date of death;
(c)    the date on which the Participant engages in conduct which constitutes
Cause;
(d)    the date on which the Participant, at any time prior to the one-year
anniversary of the Date of Termination, engages, directly or indirectly, for the
benefit of the Participant or others, in any activity, employment or business
which, in the sole opinion and discretion of the Committee, is competitive with
the Company or any of its Subsidiaries;
(e)    as provided under Restricted Activity in Section 5; or
(f)    as provided under Other Right to Correct Payments in Section 6.

5.    Restricted Activity.
(a)                The Participant shall not, while employed by the Company and
for a period of one year following the termination of employment for any reason:
(i)                  without the prior written consent of the Committee,
directly or indirectly engage or assist any person engaging in any Competitive
Business (as defined in Section 10), individually, or as an officer, director,
employee, agent, consultant, owner, partner, lender, manager, member, principal,
or in any other capacity, or render any services to any entity that is engaged
in any Competitive Business; provided, however, that the Participant’s ownership
of 1% of any class of equity security of any entity engaged in any Competitive
Business shall not be deemed a breach of this Section 5(a) provided such
securities are listed on a national securities exchange or quotation system or
have been registered under Section 12(g) of the Securities Exchange Act of 1934,
as amended; or
(ii)                directly or indirectly divert, take away, solicit, or assist
others in soliciting any current or prospective customer, supplier, independent
contractor or service provider of the Company or any affiliate or otherwise
interfere with the relationship between the Company or any affiliate and any
current or prospective customer, service provider, supplier, independent
contractor or stockholder.
(b)        The Participant shall not, while employed by the Company and for a
period of two years following the termination of employment for any reason:
directly or indirectly induce any person to leave employment with the Company,
or solicit for employment other than on behalf of the Company, offer employment
to, or employ, any person who was an employee of the Company, in each case
within six months of such inducement, solicitation, or offer.
(c)               If the Participant engages in any activity described in
paragraph 5(a) or paragraph 5(b) above without the written consent of the
Committee, the Company, as determined by the Committee in its

 
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sole discretion, may (i) cancel and terminate all of the Participant’s
unexercised, unexpired or unpaid Options (whether vested or unvested) under the
Plan, and (ii) rescind any exercise, payment or delivery under any Option
occurring within 12 months prior to, or at any time following, the date of the
Participant’s termination of employment for any reason. Upon any such
rescission, the Participant shall immediately (A) pay to the Company the amount
of any gain realized or payment received, and (B) forfeit to the Company any
Shares received as a result of the rescinded exercise, payment or delivery under
any Options, in such manner and on such terms and conditions as the Committee
shall require, and the Company shall be entitled, as permitted by applicable
law, to deduct from any amounts the Company owes the Participant from time to
time the amount of any such gain realized or payment received. “Gain realized”
shall be the excess of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price, multiplied by the number of Shares purchased.

6.    Other Right to Correct Payments. Subject to the Company’s Executive
Compensation Recovery Policy, and notwithstanding anything in the Option Terms
to the contrary, if the Committee determines, in its sole discretion, that the
number of Covered Shares determined to be delivered under the Option Terms or
the value of such Options was based on the Company’s published financial
statements that have been restated then, at the Committee’s direction, the
Company may, but in no case later than 60 months of such restatement:
(a)     cancel all unexercised, unexpired or unpaid Options (whether vested or
unvested) under the Plan that were based upon the financial performance in the
published financial statements that was subsequently restated;
(b)     rescind any exercise, payment or delivery under any Option that were
based upon the financial performance in the published financial statements that
was subsequently restated; and
(c)     if any amount has been realized from exercised Options that would have
been lower had the financial results been properly reported, recover all or any
gain realized by the Participant, as determined by the Committee in its sole
discretion, under the Option Terms that resulted from the financial results that
were subsequently restated, and the Participant agrees to repay and return any
such gain realized to the Company.
The Committee may, in its sole discretion, effect any such recovery by obtaining
repayment directly from the Participant, setting off the amount owed to the
Company against any amount or award that would otherwise be granted by the
Company to the Participant, reducing any future compensation or benefit to the
Participant or any combination thereof. “Gain realized” shall be as determined
under Section 5(c).
7.    Method of Option Exercise. Subject to the Option Terms and the Plan, the
Option may be exercised in whole or in part by filing a written notice with the
Secretary of the Company at its corporate headquarters prior to the Company’s
close of business on the last business day that occurs prior to the Expiration
Date. Such notice shall specify the number of shares of Stock which the
Participant elects to purchase, and shall be accompanied by payment of the
Exercise Price for such shares of Stock indicated by the Participant’s election.
Payment may be by cash or by check payable to the Company, or except as
otherwise provided by the Committee before the Option is exercised: (i) all or a
portion of the Exercise Price may be paid by the Participant by delivery of
shares of Stock (by actual delivery or by attestation) owned by the Participant
and acceptable to the Committee having an aggregate Fair Market Value (valued as
of the date of exercise) that is equal to the amount of cash that would
otherwise be required; and (ii) the Participant may pay the Exercise Price by
authorizing a third party to sell shares of Stock (or a sufficient portion of
the shares) acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise Price and any
tax withholding resulting from such exercise. Except as otherwise provided by
the Committee prior to exercise, payments made with shares of Stock in
accordance with clause (i) above shall be limited to shares held by the
Participant for not less than six months prior to the payment date. The Option
shall not be exercisable if and to the extent the Company determines that such
exercise would violate applicable state or Federal securities laws or the rules
and regulations of any securities exchange on which the Stock is traded and
shall not be exercisable during any blackout period established by the Company
from time to time.

 
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8.    Withholding. The exercise of the Option is subject to withholding of all
applicable taxes. At the election of the Participant, and subject to such rules
and limitations as may be established by the Committee from time to time, such
withholding obligations may be satisfied (i) through cash payment by the
Participant; (ii) through the surrender of shares of Stock by (actual delivery
or by attestation) which the Participant already owns (provided, however, that
to the extent shares described in this clause (ii) are used to satisfy more than
the minimum statutory withholding obligation, as described below, then, except
as otherwise provided by the Committee, payments made with shares of Stock in
accordance with this clause (ii) shall be limited to shares held by the
Participant for not less than six months prior to the payment date); or (iii)
through the surrender of shares of Stock to which the Participant is otherwise
entitled under the Plan; provided, however, that such shares under this clause
(iii) may be used to satisfy not more than the Company’s minimum statutory
withholding obligation (based on minimum statutory withholding rates for Federal
and state tax purposes, including payroll taxes, that are applicable to such
supplemental taxable income).

9.    Transferability. The Option is not transferable by the Participant other
than by will or by the laws of descent and distribution, and during the
Participant’s life, may be exercised only by the Participant. It may not be
assigned, transferred (except as aforesaid), pledged or hypothecated by the
Participant in any way whether by operation of law or otherwise, and shall not
be subject to execution, attachment or similar process. Any attempt at
assignment, transfer, pledge or hypothecation, or other disposition of this
Option contrary to the provisions hereof, and the levy of any attachment or
similar process upon this Option, shall be null and void and without effect.
10.    Definitions. For purposes of the Option Terms, words and phrases shall be
defined as follows:
(a)    Cause. The term “Cause” means, in the sole opinion and discretion of the
Committee, the Participant has (i) engaged in a material breach of the Company’s
code of business conduct, (ii) committed an act of fraud, embezzlement or theft
in connection with the Participant’s duties or in the course of employment, or
(iii) wrongfully disclosed secret processes or confidential information of the
Company or its subsidiaries.
(b)    Competitive Business. The term “Competitive Business” means any business
activity in which the Company or any Subsidiary is actively engaged at the time
the Participant’s employment terminates. For these purposes, entities deemed to
be engaged in Competitive Business include, by way of example and not
limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva
Pharmaceuticals, Becton, Dickinson and Company, B. Braun Melsungen AG, Cardinal
Healthcare Inc., Fresenius Medical Care AG, Terumo Medical Corporation,
Patheon, Inc., and Edwards Lifesciences Corporation.
(c)    Date of Termination. The term “Date of Termination” means the first day
occurring on or after the Grant Date on which the Participant is not employed by
the Company or any Subsidiary, regardless of the reason for the termination of
employment; provided that a termination of employment shall not be deemed to
occur by reason of a transfer of the Participant between the Company and a
Subsidiary or between two Subsidiaries; and further provided that the
Participant’s employment shall not be considered terminated while the
Participant is on a leave of absence from the Company or a Subsidiary approved
by the Participant’s employer. If, as a result of a sale or other transaction,
the Participant’s employer ceases to be a Subsidiary (and the Participant’s
employer is or becomes an entity that is separate from the Company), and the
Participant is not, at the end of the 30‑day period following the transaction,
employed by the Company or an entity that is then a Subsidiary, then the
occurrence of such transaction shall be treated as the Participant’s Date of
Termination caused by the Participant being discharged by the employer.
(d)    Disability. The term “Disability” means the Participant’s disability as
defined in the Hospira Long Term Disability Plan, whether or not such
Participant is a participant in such disability plan, for a period of twelve
(12) consecutive months.

 
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(e)    Good Reason. The term “Good Reason” means the occurrence of any of the
following circumstances without the Participant's express written consent:
(i)
a significant adverse change in the nature, scope or status of the Participant's
position, authorities or duties from those in effect immediately prior to the
Change in Control, including, without limitation, if the Participant was,
immediately prior to the Change in Control, an executive officer of a public
company, the Participant ceasing to be an executive officer of a public company;

(ii)
the failure by the Company to pay the Participant any portion of the
Participant's current compensation;

(iii)
a reduction in the Participant's annual base salary (or a material change in the
frequency of payment) as in effect immediately prior to the Change in Control as
the same may be increased from time to time;

(iv)
the failure by the Company to award the Participant an annual bonus in any year
which is at least equal to the annual bonus, awarded to the Participant under
the annual bonus plan of the Company for the year immediately preceding the year
of the Change in Control;

(v)
the failure by the Company to award the Participant equity-based incentive
compensation (such as stock options, shares of restricted stock, or other
equity-based compensation) on a periodic basis consistent with the Company's
practices with respect to timing, value and terms prior to the Change in
Control;

(vi)
the failure by the Company to continue to provide the Participant with the
welfare benefits, fringe benefits and perquisites enjoyed by the Participant
immediately prior to the Change in Control under any of the Company's plans or
policies, including, but not limited to, those plans and policies providing
pension, life insurance, medical, dental, prescription, health and accident,
disability, vacation, and other executive perquisites;

(vii)
the relocation of the Company's principal executive offices to a location more
than thirty-five miles from the location of such offices immediately prior to
the Change in Control or the Company requiring the Participant to be based
anywhere other than the Company's principal executive offices except for
required travel to the Company's business to an extent substantially consistent
with the Participant's business travel obligations immediately prior to the
Change in Control; or

(viii)
the failure of the Company to obtain a satisfactory agreement from any successor
to the Company to assume and agree to perform this Agreement as contemplated by
paragraph 3.

For purposes of any determination regarding the existence of Good Reason, any
good faith determination by the Participant that Good Reason exists shall be
conclusive.
(f)    Retirement. “Retirement” of the Participant means, the occurrence of the
Participant’s Date of Termination on or after the date that the Participant
reaches the age of 55 and has 10 years of combined service with the Company or
its subsidiaries (or with Abbott Laboratories and its affiliates, provided that
the Participant transitioned employment from Abbott to the Company in
conjunction with the distribution of the Company’s common stock to the Abbott
shareholders) (as determined by the Committee).

 
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11.    Heirs and Successors. The Option Terms shall be binding upon, and inure
to the benefit of, the Company and its successors and assigns, and upon any
person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company’s assets and business.
12.    Administration. The authority to manage and control the operation and
administration of the Option Terms shall be vested in the Committee, and the
Committee shall have all powers with respect to the Option Terms as it has with
respect to the Plan. Any interpretation of the Option Terms by the Committee and
any decision made by it with respect to the Option Terms is final and binding on
all persons.
13.    Plan Governs. Notwithstanding anything in the Option Terms to the
contrary, the Option Terms shall be subject to the terms of the Plan, a copy of
which may be obtained by the Participant from the office of the Secretary of the
Company; and the Option Terms is subject to all interpretations, amendments,
rules and regulations promulgated by the Committee from time to time pursuant to
the Plan.
14.    Not An Employment Contract. The Option will not confer on the Participant
any right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate or modify the terms
of such Participant’s employment or other service at any time.
15.    Notices. Any written notices provided for in the Option Terms or the Plan
shall be in writing and shall be deemed sufficiently given if either hand
delivered or if sent by fax or overnight courier, or by postage paid first class
mail. Notices sent by mail shall be deemed received three business days after
mailing but in no event later than the date of actual receipt. Notices shall be
directed, if to the Participant, at the Participant’s address indicated by the
Company’s records, or if to the Company, at the Company’s principal executive
office.
16.    Fractional Shares. In lieu of issuing a fraction of a share upon any
exercise of the Option, resulting from an adjustment of the Option pursuant to
paragraph 3.4 of the Plan or otherwise, the Company will be entitled to pay to
the Participant an amount equal to the fair market value of such fractional
share.
17.    No Rights As Shareholder. The Participant shall not have any rights of a
shareholder with respect to the shares subject to the Option, until a stock
certificate has been duly issued following exercise of the Option as provided
herein.
18.    Amendment. The Option Terms may be amended in accordance with the
provisions of the Plan, and may otherwise be amended by written agreement of the
Participant and the Company without the consent of any other person.
IN WITNESS WHEREOF, the Company has caused these presents to be executed in its
name and on its behalf, all as of the Grant Date.
Hospira, Inc.

By:     
Its:     

 
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