Exhibit 10.6

Notice of Grant of
Award and Award Agreement
Hospira, Inc. 
ID: 20-0504497
275 N. Field Drive
Lake Forest, IL 60045
 
Award Number:
 
Plan: Hospira 2004 Long-Term Stock Incentive Plan
ID:
 
 
 
 
 

Effective __________, 2013, you have been granted Performance Share Units with
respect to _______ shares of Hospira, Inc. (the “Company”) stock.
The Performance Share Units are subject to the attainment of performance goals
described in the attached Term Sheet and will become fully vested on the date
shown.

Units
Vest Type
Full Vest
 
On Vest Date
December 31, 2015

By accepting this award, the Participant agrees that these Performance Share
Units are granted under and governed by the terms and conditions of the Hospira
2004 Long-Term Stock Incentive Plan, the Performance Share Unit Award Agreement
and the administrative rules governing the Performance Share Unit Agreement, all
of which are attached and made a part of this document.

________ ____, 2013
Hospira, Inc.
Name: F. Michael Ball
Title: Chief Executive Officer

 
Date

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PERFORMANCE SHARE UNIT AWARD AGREEMENT

You have been selected to be a Participant in the Hospira, Inc. 2004 Long-Term
Stock Incentive Plan (the “Plan”), as specified in the attached Notice of Grant
of Award and Award Agreement (the “Notice”):
THIS AGREEMENT (“Agreement”), effective as of the date set forth in the attached
Notice, is between Hospira, Inc., a Delaware corporation (the “Company”) and the
Grantee named in the Notice, pursuant to the provisions of the Plan. Except
where the context clearly implies to the contrary, any capitalized term not
defined in this Agreement shall have the meaning ascribed to that term under the
Plan.
The parties hereto agree as follows:
1.  Award of Performance Share Units. The Company hereby grants to Grantee the
number of performance share units (the “Units”) set forth in the attached Notice
subject to the terms and conditions set forth below and in the attached Term
Sheet. The term “Units” shall include “Earned Units” as defined in Section 2(a)
below.
2.      Restrictions. The Units are being awarded to Grantee subject to the
forfeiture conditions set forth below (the "Restrictions") which shall, unless
otherwise stated, lapse, if at all, as set forth in the attached Term Sheet.
(a)    The Units are subject to the attainment of performance goals during the
performance period, as described in the attached Term Sheet. The number of Units
earned upon the attainment of the performance goals (the “Earned Units”) shall
be determined by the Compensation Committee of the Board of Directors (the
“Committee”) upon completion of the performance period.
(b)    Any Units subject to the Restrictions shall be automatically forfeited
upon the earliest to occur of the following: (i) except as provided in Section
7, the date of the Grantee's termination of employment with the Company or a
subsidiary for any reason other than death, Disability or Retirement; (ii)
subject to the provisions of Section 3, the date the Grantee engages in conduct
which constitutes Restricted Activity; or (iii) as provided in Section 4.
3.    Restricted Activity.
(a)              Without the prior written consent of the Committee, the Grantee
shall not, while employed by the Company and for a period of one year following
the termination of employment for any reason:
(i)       directly or indirectly engage or assist any person engaging in any
Competitive Business, 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 Grantee’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 paragraph 3(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;
(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;
(iii)     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; or

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(iv)    engage in conduct which constitutes Cause.
(b)         If the Grantee engages in any activity described in paragraph 3(a)
above without the written consent of the Committee, the Company, as determined
by the Committee in its sole discretion, may terminate the Agreement as of the
date on which the Grantee engaged in such Restricted Activity, and (i) the
Grantee shall pay to the Company in cash any Financial Gain the Grantee realized
from the vesting of the Units, provided that such vesting occurred within one
year from the date that the Grantee engaged in such Restricted Activity, and
(ii) if the Restricted Activity occurs prior to the delivery of the Earned
Units, the Grantee shall forfeit the Units and this Agreement shall terminate as
of the date on which the Grantee first engaged in such Restricted Activity.
4.    Other Right to Correct Payments. Subject to the Company’s Executive
Compensation Recovery Policy, and notwithstanding anything in the Agreement to
the contrary, if the Committee determines, in its sole discretion, that the
number of Units determined to be delivered under the Agreement or the value of
such Units was based on the Company’s published financial statements that have
been restated then, at the Committee’s discretion, the Company may, but in no
case later than 60 months of such restatement:
(a)     cancel all Units (whether vested or unvested) that were based upon the
financial performance in the published financial statements that was
subsequently restated;
(b)     rescind any delivery of Units 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 the vesting of the Units that would
have been lower had the financial results been properly reported, recover all or
any Financial Gain realized by the Grantee, as determined by the Committee in
its sole discretion, that resulted from the financial results that were
subsequently restated, and the Grantee agrees to repay and return any such
Financial Gain to the Company.
The Committee may, in its sole discretion, effect any such recovery by obtaining
repayment directly from the Grantee, setting off the amount owed to the Company
against any amount or award that would otherwise be granted by the Company to
the Grantee, reducing any future compensation or benefit to the Grantee or any
combination thereof.
5.    Death, Disability or Retirement. In the event of the death, Disability or
Retirement of the Grantee at any time during the performance period, the a
number of shares of Common Stock equal to the number of Earned Units (or cash
equal to the value of the shares) will be delivered to the Grantee or the
Grantee’s personal representative, upon the determination of the number of
Earned Units after the end of the performance period, but no later than 90 days
following the end of such performance period.
6.    Change in Control. In the event of a Change in Control of the Company
during the performance period, the Grantee will be deemed to have earned an
award based on the target performance goal established by the Committee and a
number of shares of Common Stock equal to the number of deemed Earned Units (or
cash equal to the value of the shares) will be delivered to the Grantee no later
than 90 days following such Change in Control.
7.    Termination of Employment. In the event of the Grantee’s Involuntary
Termination of Employment during the performance period, the number of shares of
Common Stock equal to the number of Earned Units as of the date of such
Involuntary Termination of Employment will be delivered to the Grantee, upon the
determination of the number of Earned Units after the end of the performance
period, but no later than 90 days following the end of such performance period.
If Grantee’s termination of employment during the performance period for reasons
other than death, Disability or Retirement does not constitute an Involuntary
Termination of Employment, all Units shall be forfeited. The Company will not be
obligated to pay Grantee any consideration whatsoever for forfeited Units
(whether or not earned).
8.    Dividend Equivalents. Neither dividends nor Dividend Equivalents will be
paid or accrued on unvested Units.

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9.      Adjustments. If the number of outstanding shares of Common Stock is
changed as a result of stock dividend, stock split or the like without
additional consideration to the Company, the number of Units subject to this
Award shall be adjusted in accordance with the applicable provisions of the Plan
pertaining to such adjustments.
10.      Delivery of Certificate. Subject to withholding of taxes as provided in
Section 11 below, the Company shall deliver to the Grantee a certificate
representing a number of shares of Common Stock equal to the number of Earned
Units on which Restrictions have lapsed plus a cash payment equal to the value
of any fractional Earned Unit then credited to the Grantee’s account, upon the
lapse of Restrictions.
11.      Withholding Taxes. The Company is entitled to withhold an amount equal
to the Company’s required statutory withholding taxes for the respective tax
jurisdiction attributable to any share of Common Stock or property deliverable
in connection with the Earned Units. Subject to such limitations as the Company
may establish from time to time, Grantee may satisfy any withholding obligation
in whole or in part by making a cash payment equal to the amount required to be
withheld.
12.      Nontransferability. Grantee may not directly or indirectly, by
operation of law or otherwise, voluntarily or involuntarily, sell, assign,
pledge, encumber, charge or otherwise transfer any of the Units subject to this
Award.
13.    Voting and Other Rights.
(a)  
Grantee shall have no rights as a stockholder of the Company in respect of the
Earned Units, including the right to vote and to receive dividends and other
distributions, until delivery of certificates representing shares of Common
Stock in satisfaction of the Earned Units.

(b)  
The grant of Units does not confer upon Grantee any right to continue in the
employ of the Company or a subsidiary or to limit or interfere with the right of
the Company or a subsidiary, to terminate Grantee’s employment at any time.

(c)  
The grant of an award under the Plan is a one-time benefit and does not create
any contractual or other right to receive an award in the future. Future grants,
if any, will be at the sole discretion of the Company, including, but not
limited to, the timing of any grant, the amount of the award and vesting
provisions.

(d)  
The Committee retains the right to reduce the number of Units subject to this
Award at any time prior to payment or delivery based on the performance of the
Grantee.

14.      Funding. No assets or shares of Common Stock shall be segregated or
earmarked by the Company in respect of any Units awarded hereunder. The grant of
Units hereunder shall not constitute a trust and shall be solely for the purpose
of recording an unsecured contractual obligation of the Company.
15.    Definitions. For purposes of this Agreement, the following words shall
have the meaning provided below:
(a)
Cause. The term “Cause” shall mean, in the sole opinion and discretion of the
Committee, the Grantee 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 Grantee’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 Grantee’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

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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 grant of the award under this Agreement on which the
Grantee 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 Grantee
between the Company and a subsidiary or between two subsidiaries; and further
provided that the Grantee’s employment shall not be considered terminated while
the Grantee is on a leave of absence from the Company or a subsidiary approved
by the Grantee’s employer. If, as a result of a sale or other transaction, the
Grantee’s employer ceases to be a subsidiary (and the Grantee’s employer is or
becomes an entity that is separate from the Company), and the Grantee 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 Grantee’s Date of Termination caused by the Grantee
being discharged by the employer.

(d)
Disability. The term “Disability” means the Grantee either is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; or by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, the Grantee is receiving income replacement benefits
for a period of not less than three months under an accident and health plan
covering employees of the Company or a subsidiary.

(e)
Dividend Equivalent. “Dividend Equivalent” means, with respect to any shares of
Hospira common stock that are to be issued pursuant to an award at the end of
the performance period, an amount equal to cash dividends that are payable to
stockholders of record during the performance period on a like number of shares
of Hospira common stock.

(f)
Financial Gain. “Financial Gain” means the Fair Market Value of the Common Stock
on the date the Unit is deemed vested, multiplied by the number of Units
actually distributed pursuant to this Agreement, reduced by any taxes paid in
countries other than the United States, to the extent that such taxes are not
otherwise eligible for refund from the taxing authorities.

(g)
Involuntary Termination of Employment. “Involuntary Termination of Employment”
means the Grantee’s position with the Company and its affiliates is eliminated
due to a reduction in force or other restructuring or the Grantee’s employment
is otherwise terminated for reasons not related to performance, illegal
activity, failure to abide by the Company’s Code of Conduct, or other good cause
as determined by the Committee and is otherwise considered to be involuntary.

(h)
Retirement. “Retirement” of the Grantee means, the occurrence of the Grantee’s
Date of Termination on or after the date that the Grantee 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 Grantee
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).

16.      Notices. Any written notice under this Award shall be deemed given on
the date that is two business days after it is sent in writing, delivered either
in hand, by certified mail, return receipt requested, postage prepaid, or by
Federal Express or other recognized delivery service, which provides proof of
delivery, all delivery charges prepaid, and addressed as follows:
To the Company: Hospira, Inc.

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275 N. Field Drive
Lake Forest, IL 60045
Attention: Corporate Secretary

To the Grantee or his or her representative at the address of the Grantee at the
time appearing in the employment records of the Company, currently as shown in
the attached Notice or
At such other address as either party may designate by notice given to the other
in accordance with these provisions.
17.      Governing Law. All questions concerning the construction, validity and
interpretation of this Award shall be governed by and construed according to the
internal law and not the law of conflicts of the State of Illinois.
18.    Amendment. This Agreement may be amended in accordance with the
provisions of the Plan, and may otherwise be amended by written agreement of the
Grantee and the Company without the consent of any other person; provided that
the Committee may amend by the Company as it shall deem necessary and
appropriate in its sole discretion to comply with the requirements of Section
409A.
19.      Plan Documents. The Plan and the Prospectus for the Hospira, Inc. 2004
Long Term Incentive Plan are available at:
www.benefitaccess.com

or from:

Ms. Joseph Railey
Corporate Compensation, Hospira, Inc.
Mail Stop H1 South, 275 N. Field Drive, Lake Forest, IL 60045
phone: 224-212-2662 fax: 224-212-3358; e-mail: joseph.railey@Hospira.com

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2013 – 2015 Total Shareholder Return (TSR) TERM SHEET
PERFORMANCE PERIOD:
Beginning January 1, 2013, and ending December 31, 2015.
PERFORMANCE GOAL:
•    Relative Total Shareholder Return (“RTSR”) compared to peer companies
(identified in Appendix I) is the FY13-15 performance measure. Relative Total
Shareholder Return is defined as the percentile rank of Hospira’s Total
Shareholder Return compared to the Total Shareholder Return of Hospira’s peer
companies over the Performance Period. Total Shareholder Return is the total
rate of return on a share of common stock, reflecting stock price appreciation
plus reinvestment of dividends and the compounding effect of dividends, adjusted
appropriately to reflect stock splits, spin-offs and similar transactions.

The Base Price of Hospira’s common stock, and each peer company’s common stock,
is the average of the closing prices for the last 30 trading days before the
start of Performance Period. The average closing price for the last 30 trading
days of FY12 preceding the FY13-15 Performance Period is $30.85 and serves as
the base for relative comparisons over the Performance Period.

The payment levels at various percentile rankings against the peer companies are
shown in the following table:

 
HOSPIRA %Percentile Rank
 
% of Units
Earned
 
 
 
 
 
 
 
75th 
 
200
%
 
 
70th 
 
180
%
 
 
65th
 
160
%
 
 
60th 
 
140
%
 
 
55th 
 
120
%
 
 
50th 
 
100
%
 
 
45th 
 
85
%
 
 
40th 
 
70
%
 
 
35th
 
55
%
 
 
30th 
 
40
%
 
 
25th
 
25
%
 
 
<25th 
 
0
%
 
 
•    With linear interpolation between percentiles
•    Percentile rank includes HOSPIRA
 

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VESTING:
Subject to the terms of the Performance Share Unit Award Agreement, restrictions
on the units earned during the performance period, as determined above, will
lapse on December 31, 2015, if the Grantee is a full-time active employee of the
Company on that date.
Final determination and distribution of the number of units earned will be made
after the actual TSR growth during the performance period has been certified by
Hospira, Inc.’s independent auditor and the Audit Committee of the Company’s
Board of Directors.

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Appendix I
Peer Companies for Relative TSR Comparison
Ticker
Company Name
Sector
ABT
Abbott Labs
Health Care
A
Agilent Technologies Inc.
Health Care
ALXN
Alexion Pharmaceuticals Inc.
Health Care
AGN
Allergan Inc.
Health Care
ABC
AmerisourceBergen Corp.
Health Care
AMGN
Amgen
Health Care
BAX
Baxter International Inc.
Health Care
BDX
Becton Dickinson
Health Care
BIIB
BIOGEN IDEC Inc.
Health Care
BSX
Boston Scientific
Health Care
BMY
Bristol-Myers Squibb
Health Care
CAH
Cardinal Health Inc.
Health Care
CFN
CareFusion Corp.
Health Care
CELG
Celgene Corp.
Health Care
CERN
Cerner Corp
Health Care
COV
Covidien plc
Health Care
BCR
CR Bard Inc.
Health Care
DVA
DaVita Healthcare Partners Inc.
Health Care
XRAY
Dentsply International
Health Care
EW
Edwards Lifescience Corp
Health Care
ESRX
Express Scripts
Health Care
FRX
Forest Laboratories
Health Care
GILD
Gilead Sciences
Health Care
HSP
Hospira Inc.
Health Care
ISRG
Intuitive Surgical Inc.
Health Care
JNJ
Johnson & Johnson
Health Care
LH
Laboratory Corp. of America Holding
Health Care
LIFE
Life Technologies Corp.
Health Care
LLY
Lilly (Eli) & Co.
Health Care
MCK
McKesson Corp.
Health Care
MDT
Medtronic Inc.
Health Care
MRK
Merck & Co.
Health Care
MYL
Mylan Inc.
Health Care
PDCO
Patterson Cos. Inc.
Health Care
PKI
PerkinElmer
Health Care

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PRGO
Perrigo Company
Health Care
PFE
Pfizer Inc.
Health Care
DGX
Quest Diagnostics
Health Care
STJ
St Jude Medical
Health Care
SYK
Stryker Corp.
Health Care
THC
Tenet Healthcare Corp.
Health Care
TMO
Thermo Fisher Scientific
Health Care
VAR
Varian Medical Systems
Health Care
WAT
Waters Corporation
Health Care
WPI
Watson Pharmaceuticals
Health Care
ZM
Zimmer Holdings
Health Care