Exhibit 10.9

 

HOSPIRA, INC.

2004 PERFORMANCE INCENTIVE PLAN

 

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HOSPIRA, INC.

2004 PERFORMANCE INCENTIVE PLAN

 

SECTION 1.    Establishment and Purposes

 

1.1                                 Establishment of the Plan.  Hospira, Inc.
(“Hospira”) hereby establishes the “Hospira, Inc. Performance Incentive Plan”
the (“Plan”), as set forth in this document.  The Plan shall become effective as
of April 30, 2004 (the “Effective Date”) and shall remain in effect as provided
in Section 6.1 hereof.

 

1.2                                 Purposes of the Plan.  The purposes of the
Plan are to:

 

(a)                                  Provide flexibility to Hospira in its
ability to attract, motivate, and retain the services of participants in the
Plan (“Participants”) who make significant contributions to Hospira’s success
and to allow Participants to share in the success of Hospira;

 

(b)                                 Optimize the profitability and growth of
Hospira through incentives which are consistent with Hospira’s goals and which
link the performance objectives of Participants to those of Hospira’s
shareholders; and

 

(c)                                  Provide Participants with an incentive for
excellence in individual performance.

 

SECTION 2.    Administration

 

2.1                                 General.  The Plan shall be administered by
the Compensation and Nominations Committee (the “Committee”) of the Board of
Directors of Hospira (the “Board”).

 

2.2                                 Authority of the Committee.  The Committee
will have full authority to administer the Plan, including the authority to
interpret and construe any provision of the Plan, and to establish and amend
rules pertaining thereto.  All rules, regulations and interpretations shall be
conclusive and binding on all persons.  The Committee has sole responsibility
for selecting Participants, establishing performance objectives, setting award
targets, and determining award amounts.

 

2.3                                 Delegation by the Committee.  The Committee
from time to time may delegate the performance of certain ministerial functions
in connection with the Plan, such as the keeping of records, to such person or
persons as the Committee may select.  The cost of administration of the Plan
will be paid by Hospira.

 

SECTION 3.    Eligibility and Participation

 

3.1                                 Eligibility and Participation.  Eligibility
for participation in the Plan shall be limited to officers of Hospira and its
subsidiaries.  Participants in the Plan will be determined annually by the
Committee from those officers eligible to participate in the Plan.

 

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SECTION 4.    Performance Objectives.

 

4.1                                 Performance Objectives.  The Plan’s
performance objectives (the “Performance Objectives”) shall be determined with
reference to Hospira’s Earnings Before Interest, Taxes, Depreciation and
Amortization (“EBITDA”) excluding any special items identified in the Company’s
quarterly or annual earnings releases and prepared in accordance with generally
accepted accounting principles.

 

4.2                                 Individual Base Award Allocation – Defined.

 

(a)                                  For the performance period beginning on the
Effective Date and ending on December 31, 2004 (the “2004 Period”), the base
award allocation for the Chief Executive Officer, if a Participant for such
period, shall be .020 of Hospira’s EBITDA for the 2004 Period.  The base award
allocation for the Chief Operating Officer, if a participant for such period,
shall be .015 of Hospira’s EBITDA for the 2004 Period.  The base award
allocation for any other Participant shall be .010 of Hospira’s EBITDA for the
2004 Period.

 

(b)                                 For all fiscal years beginning after
December 31, 2004, the base award allocation for the Chief Executive Officer, if
a Participant for such fiscal year, shall be .020 of Hospira’s EBITDA for that
fiscal year.  The base award allocation for the Chief Operating Officer, if a
participant for such fiscal year, shall be .015 of Hospira’s EBITDA for that
fiscal year.  The base award allocation for any other Participant shall be .010
of Hospira’s EBITDA for that fiscal year

 

SECTION 5.    Final Awards

 

5.1                                 Final Award Allocation.  As soon as
practical after the close of each fiscal year, a Participant’s final award
allocation will be determined solely on the basis of the Performance
Objectives.  In determining a Participant’s final award allocation, the
Committee will have the discretion to reduce, but not increase, a Participant’s
base award allocation, provided that a Participant’s individual performance will
be considered by the Committee in exercising that discretion.

 

5.2                                 Payment of Awards.  A Participant’s final
award allocation will be paid or deferred in the manner and at the time(s)
established by the Committee.

 

SECTION 6.    Duration, Amendment and Termination

 

6.1                                 Duration of the Plan.  The Plan shall
commence on the Effective Date, as described in Section 1.1 hereof, and shall
remain in effect until terminated by the Board.

 

6.2                                 Amendment and Termination.  The Board, in
its sole discretion, may modify or amend any or all of the provisions of the
Plan at any time and, without notice, may suspend or terminate it entirely. 
However, no such modification may, without the consent of the Participant,
reduce the right of a Participant to a payment or distribution to which the
Participant is entitled by reason of an outstanding award allocation.

 

SECTION 7.    Successors

 

7.1                                 Obligations.  All obligations of Hospira
under the Plan with respect to awards granted hereunder shall be binding on any
successor to Hospira, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of Hospira.

 

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SECTION 8.    Grantor Trusts

 

8.1                                 2004 Payments.  With respect to the final
award allocation for the 2004 Period, based on elections previously filed with
Abbott Laboratories for the 2004 calendar year, solely with respect to
participants who have grantor trusts that were established under a similar
Abbott Laboratories incentive program, Hospira shall distribute such 2004 Period
award to the participant in a manner that facilitates the contribution of such
amounts to such participant’s grantor trust in a manner prescribed under the
1986 Abbott Laboratories Management Incentive Plan.  Hospira shall have no
obligation to maintain or make any future contributions to such grantor trusts,
other than as herein provided.

 

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