Exhibit 10.8

 

HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN
(As Amended and Restated as of the Effective Date)

 

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HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN
(As Amended and Restated as of the Effective Date)

 

SECTION 1

 

GENERAL

 

1.1                                 Purpose, Effective Date and Term.  The
purpose of this Hospira 2004 Long-Term Stock Incentive Plan (the “Plan”) is to
promote the longer-term financial success of Hospira, Inc. (the “Company”) and
its subsidiaries by providing  a means to attract, retain and reward individuals
who can and do contribute to such success and to further identify their
interests with those of the Company’s shareholders. The “Effective Date” of the
Plan is the date on which the shares of the Company are distributed to the
shareholders of Abbott Laboratories pursuant to the Separation and Distribution
Agreement entered into between the Company and Abbott Laboratories (the
“Distribution”).  The Plan shall be unlimited in duration and, in the event of
Plan termination, shall remain in effect as long as any awards under it are
outstanding; provided, however, that no awards may be granted under the Plan
after the ten-year anniversary of the most recent approval of the Plan by the
Company’s shareholders.

 

1.2                                 Administration.  The authority to control
and manage the operation of the Plan shall be vested in a committee of the
Company’s Board of Directors (the “Committee”) in accordance with Section 6.1.

 

1.3                                 Participation.  Each recipient of an Abbott
Conversion Award as described in Section 4 and each other employee or director
of the Company or any subsidiary of the Company who is granted an award in
accordance with the terms of the Plan shall be a “Participant” in the Plan. 
Awards under the Plan shall be limited to employees and directors of the
Company; provided, however, that an award (other than an award of an ISO) may be
granted to an individual prior to the date on which he first performs services
as an employee or director (including individuals who it is anticipated will
transfer from Abbott to the Company within 24 months following the Distribution)
provided that such award does not become vested prior to the date such
individual commences such services.

 

1.4                                 Definitions.  Capitalized terms in the Plan
shall be defined as set forth in the Plan (including the definition provisions
of Section 9).

 

SECTION 2

 

AWARDS

 

2.1                                 General.  Any award under the Plan may be
granted singularly, in combination with another award (or awards), or in tandem
whereby the exercise or vesting of one award held by a Participant cancels
another award held by the Participant.  Each award under the Plan shall be
subject to the terms and conditions of the Plan and such additional terms,
conditions, limitations and restrictions as the Committee shall provide with
respect to such award.  Subject to Section 2.3, an award may be granted as an
alternative to or replacement of an existing award under the Plan or any other
plan of the Company or any subsidiary or as the form of payment for

 

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grants or rights earned or due under any other compensation plan or arrangement
of the Company or its subsidiaries, including without limitation the Hospira
Non-Employee Directors’ Fee Plan and the plan of any entity acquired by the
Company or any subsidiary.  The types of awards that may be granted under the
Plan include:

 

(a)                                  Stock Options.  A stock option represents
the right to purchase shares of Stock at an Exercise Price established by the
Committee.  Any option may be either an incentive stock option (an “ISO”) that
is intended to satisfy the requirements applicable to an “incentive stock
option” described in section 422(b) of the Code or a non-qualified option that
is not intended to be an ISO, provided, that no ISOs may be granted after the
ten-year anniversary of the earlier of the date of adoption or shareholder
approval of the Plan.  Unless otherwise specifically provided by its terms, any
option granted under the Plan shall be a non-qualified option.

 

(b)                                 Stock Appreciation Rights.  A stock
appreciation right (a “SAR”) is a right to receive, in cash or Stock, an amount
equal to or based upon the excess of: (a) the Fair Market Value of a share of
Stock at the time of exercise, over (b) an Exercise Price established by the
Committee.

 

(c)                                  Stock Awards.  A stock award is a grant of
shares of Stock or a right to receive shares of Stock (or their cash equivalent
or a combination of both) in the future.  Such awards may include, but shall not
be limited to, bonus shares, stock units, performance shares, performance units,
restricted stock or restricted stock units.

 

(d)                                 Cash Incentive Awards.  A cash incentive
award is the grant of a right to receive a payment of cash, determined on an
individual basis or as an allocation of an incentive pool (or Stock having a
value equivalent to the cash otherwise payable) that is contingent on the
achievement of performance objectives.

 

2.2                                 Exercise of Options and SARs.  An option or
SAR shall be exercisable in accordance with such terms and conditions and during
such periods as may be established by the Committee.  In no event, however,
shall an option or SAR expire later than ten years after the date of its grant. 
The “Exercise Price” of each option and SAR shall not be less than the par value
of a share of Stock; provided however, that the Exercise Price of an ISO shall
not be less than 100% of the Fair Market Value of a share of Stock on the date
of grant.  The payment of the Exercise Price of an option shall be by cash or,
subject to limitations imposed by applicable law, by such other means as the
Committee may from time to time permit, including, without limitation, (i) by
promissory note, (ii) by tendering, either actually or by attestation, shares of
Stock acceptable to the Committee, and valued at Fair Market Value as of the day
of exercise, (iii) by irrevocably authorizing a third party, acceptable to the
Committee, to sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the option and to 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 or (iv) by any combination thereof.

 

2.3                                 No Repricing.  Except for adjustments
pursuant to Section 3.4 (relating to the adjustment of shares), and reductions
of the Exercise Price approved by the Company’s stockholders, the Exercise Price
for any outstanding option may not be decreased after the date

 

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of grant nor may an outstanding option granted under the Plan be surrendered to
the Company as consideration for the grant of a replacement option with a lower
exercise price.

 

2.4                                 Performance-Based Compensation. Any award
under the Plan which is intended to be “performance-based compensation” within
the meaning of section 162(m) of the Code shall be conditioned on the
achievement of one or more objective performance measures, to the extent
required by Code section 162(m) as may be determined by the Committee.

 

(a)                                  Performance Measures.  Such performance
measures may be based on any one or more of the following: earnings (e.g.,
earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; or earnings per share); financial return ratios
(e.g., return on investment; return on invested capital; return on equity; or
return on assets); increase in revenue, operating or net cash flows; cash flow
return on investment; total shareholder return; market share; net operating
income, operating income or net income; debt load reduction; expense management;
economic value added; stock price; and strategic business objectives, consisting
of one or more objectives based on meeting specific cost targets, business
expansion goals and goals relating to acquisitions or divestitures.  Performance
measures may be based on the performance of the Company as a whole or of any one
or more business units of the Company and may be measured relative to a peer
group or an index.

 

(b)                                 Partial Achievement.  The terms of any such
award may provide that partial achievement of the performance measures may
result in a payment or vesting based upon the degree of achievement.

 

(c)                                  Extraordinary Items.  In establishing any
performance measures, the Committee may provide for the exclusion of the effects
of the following items, to the extent identified in the audited financial
statements of the Company, including footnotes, or in the Management Discussion
and Analysis section of the Company’s annual report: (i) extraordinary, unusual,
and/or nonrecurring items of gain or loss; (ii) gains or losses on the
disposition of a business; (iii) changes in tax or accounting principles,
regulations or laws; or (iv) mergers or acquisitions.  To the extent not
specifically excluded, such effects shall be included in any applicable
performance measure.

 

2.5                                 Dividends and Dividend Equivalents.  Any
award under the Plan, including without limitation any option or SAR, may
provide the Participant with the right to receive dividend payments or dividend
equivalent payments with respect to Stock subject to the award, which payments
may be either made currently or credited to an account for the Participant, and
may be settled in cash or Stock.

 

2.6                                 Deferral of Payment.  To the extent
permitted by the Committee or the terms of any award under the Plan, a
Participant may defer receipt of the cash or Stock otherwise payable under the
award and be credited with interest or dividend equivalents with respect
thereto; provided, however, that any award otherwise payable in stock shall
continue to be payable only in stock.

 

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2.7                                 Non-U.S. Awards.  The Committee may grant
awards, in its sole discretion, to employees and directors of the Company and
its subsidiaries who are residing in jurisdictions outside of the United
States.  For purposes of the foregoing, the Committee may, in its sole
discretion, vary the terms of the Plan in order to conform any awards to the
legal and tax requirements of each non-U.S. jurisdiction where such individual
resides.  The Committee may, in its sole discretion, establish one or more
sub-plans of the Plan and/or may establish administrative rules and procedures
to facilitate the operation of the Plan in such non-U.S. jurisdictions.  For
purposes of clarity, any terms contained herein which are subject to variation
in a non-U.S. jurisdiction and any administrative rules and procedures
established for a non-U.S. jurisdiction shall be reflected in a written addendum
to the Plan.  To the extent permitted under applicable law, the Committee may
delegate its authority and responsibilities under this Section 2.7 of the Plan
to one or more officers of the Company.

 

SECTION 3

 

SHARES SUBJECT TO PLAN

 

3.1                                 Available Shares.  The shares of Stock with
respect to which awards may be made under the Plan shall be shares currently
authorized but unissued or currently held or, to the extent permitted by
applicable law, subsequently acquired by the Company as treasury shares,
including shares purchased in the open market or in private transactions.

 

3.2                                 Share Limitations.  Subject to the following
provisions of this subsection 3.2, the maximum number of shares of Stock that
may be delivered to Participants and their beneficiaries under the Plan shall be
equal to Thirty One Million (31,000,000) shares of Stock (all of which may be
granted as ISOs). The maximum number of shares of Stock that may be issued in
conjunction with awards other than options and SARS shall be 25% of that number
of shares in the immediately preceding sentence.

 

(a)                                  Reuse of Shares.  To the extent any shares
of Stock covered by an award are forfeited or are not delivered to a Participant
or beneficiary for any reason, including because the award is forfeited or
canceled, or is settled in cash or used to satisfy the applicable tax
withholding obligation, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of Stock available for
delivery under the Plan

 

(b)                                 Net Shares.  If the exercise price of any
stock option granted under the Plan is satisfied by tendering shares of Stock to
the Company (either actually or by attestation), only the number of shares of
Stock issued net of the shares of Stock tendered shall be deemed delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan.

 

3.3                                 Limitations on Grants to Individuals.

 

(a)                                  Options and SARs.  The maximum number of
shares of Stock that may be subject to options or SARs granted to any
Participant during any calendar year (excluding any awards intended to
constitute Conversion Awards) shall be One Million (1,000,000).

 

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(b)                                 Stock Awards.  The maximum number of shares
of Stock that may be subject to stock awards described under paragraph 2.1(c)
which are granted to any Participant during any calendar year and are intended
to be “performance-based compensation” (as that term is used for purposes of
Code section 162(m)), shall be Five Hundred Thousand (500,000).

 

(c)                                  Cash Incentive Awards.  The maximum dollar
amount that may be payable to a Participant pursuant to cash incentive awards
described under paragraph 2.1(d) which are granted to any Participant during any
calendar year and are intended to be “performance-based compensation” (as that
term is used for purposes of Code section 162(m)), shall be Five Million Dollars
($5 million).

 

(d)                                 Director Fees. Other than with respect to
initial grants to new Directors or one-time grants due to extraordinary
circumstances, the maximum number of shares that may be covered by awards
granted to any one individual non-employee director pursuant to Section 2.1(a)
and 2.1(b) (relating to options and SARs) shall be One Hundred Thousand
(100,000) shares during any calendar year under the terms of the Hospira
Non-Employee Director’s Fee Plan and the maximum number of shares that may be
covered by awards granted to any one individual non-employee director pursuant
to Section 2.1(c) (relating to Other Stock awards) shall be Fifty Thousand
(50,000) shares during any calendar year under the terms of the Hospira
Non-Employee Director’s Fee Plan.  The foregoing limitations shall not apply to
cash-based director fees that the Non-Employee Director elects to receive in the
form of Stock or Stock Units.

 

(e)                                  Dividend, Dividend Equivalents and
Earnings.  For purposes of determining whether an award is intended to be
qualified as a performance-based compensation, the foregoing limitations of this
Section 3.3, (i) the right to receive dividends and dividend equivalents with
respect to any award which is not yet vested shall be treated as a separate
award, and (ii) if the delivery of any shares or cash under an award is
deferred, any earnings, including dividends and dividend equivalents, shall be
disregarded.

 

3.4                                 Corporate Transactions.  Subject to
paragraphs (a) and (b) below, in the event of a corporate transaction involving
the Company (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
Committee may adjust awards to preserve the benefits or potential benefits of
the awards and the Plan.  Action by the Committee may include: (i) adjustment of
the number and kind of shares which may be delivered under the Plan; (ii)
adjustment of the number and kind of shares subject to outstanding awards; (iii)
adjustment of the Exercise Price of outstanding options and SARs; and (iv) any
other adjustments that the Committee determines to be equitable (which may
include, without limitation, (I) replacement of awards with other awards which
the Committee determines have comparable value and which are based on stock of a
company resulting from the transaction, and (II) cancellation of the award in
return for cash payment of the current value of the award, determined as though
the award was fully vested at the time of payment, provided that in the case of
an option or SAR, the amount of such payment may be the excess of the value of
the Stock subject to the option or SAR at the time of the transaction over the
Exercise Price).

 

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(a)                                  Notwithstanding any other provision of this
Plan, including the terms of any award granted hereunder, if the outstanding
common shares of the Company shall be combined, or be changed into, or exchanged
for, another kind of stock of the Company, into securities of another
corporation, or into property (including cash) whether through recapitalization,
reorganization, sale, merger, consolidation, spin-off, business combination or a
similar transaction (a “Transaction”), the Company shall cause its successor,
acquiror (or ultimate parent of any successor or acquiror), as applicable, to
assume each stock option and SAR outstanding immediately prior to the
Transaction (or to cause new options or rights to be substituted therefor). 
Pursuant to such assumed or substituted option or rights, holders of such option
or right shall thereafter be entitled to receive, upon due exercise of any
portion of the option or right, (a) in the event of a Transaction in which the
outstanding common shares of the Company are combined, or changed into, or
exchanged for, solely another kind of stock of the Company or securities of
another corporation (disregarding, for this purpose, cash paid in lieu of
fractional shares), the securities which that person would have been entitled to
receive for common shares acquired through exercise of the same portion of such
option or right immediately prior to the effective date of such Transaction, and
(b) in the event of a Transaction in which the outstanding common shares of the
Company are changed into, or exchanged for, property (including cash) other than
solely stock of the Company or securities of another corporation (disregarding,
for this purpose, cash paid in lieu of fractional shares), securities the fair
market value of which immediately following the effective date of such
Transaction (as determined by the Committee) equals the fair market value (as
determined by the Committee) of the property which that person would have been
entitled to receive for common shares acquired through exercise of the same
portion of such option or right immediately prior to the effective date of such
Transaction.  In each case such assumed or substituted option or right shall
continue to be subject to the same terms and conditions (including, without
limitation, with respect to any right to receive “replacement options” upon
option exercise) to which it was subject immediately prior to the Transaction.

 

(b)                                 Notwithstanding the immediately preceding
paragraph, upon a Transaction in which the outstanding common shares of the
Company are changed into, or exchanged for, property (including cash) other than
solely stock of the Company or securities of another corporation (disregarding,
for this purpose, cash paid in lieu of fractional shares) and which constitutes
a Change in Control, each holder of an option or SAR may elect to receive,
immediately following such Transaction in exchange for cancellation of any stock
option or SAR held by such person immediately prior to the Transaction, a cash
payment, with respect to each common share subject to such option or right,
equal to the difference between the value of consideration (as determined by the
Committee) received by the shareholders for a common share of the Company in the
Transaction, less any applicable purchase price.

 

3.5                                 Delivery of Shares.  Delivery of shares of
Stock or other amounts under the Plan shall be subject to the following:

 

(a)                                  Compliance with Applicable Laws. 
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to deliver any shares of Stock or make any

 

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other distribution of benefits under the Plan unless such delivery or
distribution complies with all applicable laws (including, without limitation,
the requirements of the Securities Act of 1933), and the applicable requirements
of any securities exchange or similar entity.

 

(b)                                 Certificates.  To the extent that the Plan
provides for the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

 

SECTION 4

 

ABBOTT CONVERSION AWARDS

 

4.1                                 General.  Certain employees transferred to
the employ of the Company and its subsidiaries have received awards under the
Plan (“Conversation Awards”) as of the Effective Date as replacement awards for
awards granted under the Abbott Laboratories 1996 Incentive Stock Program and
the Abbott Laboratories 1991 Incentive Stock Program (the “Abbott Plans”) and
cancelled in connection with the Distribution.   The number of such Conversion
Awards has been determined by applying a conversion ratio established by the
committee administering the Abbott Plans in accordance with the terms of such
plans on a basis intended to be consistent with Section 424 of the Code and
applicable accounting principles.

 

4.2                                 Share Limitations.  Conversion Awards shall
be taken into account in applying the share limitations set forth in Section
3.2, but shall be excluded in calculating the individual limitations under
Section 3.3(a).

 

4.3                                 Replacement Options.  If an option granted
under the Plan constitutes a Conversion Award with respect to an option under
the Abbott Plans that provided for the grant of replacement stock options if all
or a portion of the exercise price or taxes incurred in connection with the
exercise of the option are paid with the delivery (or in the case of payment of
taxes, the withholding of shares) of other shares of Abbott Laboratories, then
the Conversion Award shall provide for a replacement stock option (a
“Replacement Option”).  Each Replacement Option shall cover the number of shares
of Stock surrendered (by actual delivery or by attestation) to satisfy the
Exercise Price, plus the number of shares surrendered (by actual delivery or
attestation) or withheld to satisfy the Participant’s tax liability, shall have
an Exercise Price equal to 100% of the of the Fair Market Value of Stock on the
date such Replacement Option is granted, shall be first exercisable six months
from the date of grant of the Replacement Option and shall have the expiration
date of the original option.

 

SECTION 5

 

CHANGE IN CONTROL

 

5.1                                 Subject to the provisions of Section 3.4
(relating to the adjustment of shares), and except as otherwise provided in the
Plan or the terms of any award:

 

(a)                                  If a Participant who is an employee or
Director of the Company or a subsidiary at the time of a Change in Control then
holds one or more outstanding options or SARs, all

 

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such options and SARs then held by the Participant shall become fully
exercisable on and after the date of the Change in Control (subject to the
expiration provisions otherwise applicable to the option or SAR), and any Stock
purchased by the Participant under such option or acquired under such SAR
following such Change in Control shall be fully vested upon exercise.

 

(b)                                 If a Participant who is an employee or
Director of the Company or a subsidiary at the time of a Change in Control then
holds one or more stock awards described in paragraph 2.1(c) or cash incentive
awards described in paragraph 2.1(d), such awards shall be fully earned and
vested (and all performance measures deemed to be achieved).

 

5.2                                 Change in Control.  For purposes of this
Plan, unless otherwise provided in an Award Agreement, the term “Change in
Control” shall be  deemed to have occurred on the earliest of the following
dates:

 

(a)                                  the date any Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
ac­quired directly from the Company or its Affiliates) representing 20% or more
of the combined voting power of the Company’s then out­standing securities,
excluding any Person who becomes such a Bene­ficial Owner in connection with a
transaction described in clause (a) of paragraph 5.2(c) below; or

 

(b)                                 the date the following individuals cease for
any reason to constitute a majority of the number of directors then serving:
individ­uals who, on the date hereof, constitute the Board of Directors and any
new direc­tor (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of direc­tors of the
Company) whose appointment or election by the Board of Directors or nomination
for election by the Company’s shareholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors on the date hereof or whose appointment, election or nomination
for election was previ­ously so approved or recommended; or

 

(c)                                  the date on which there is consummated a
merger or consolidation of the Company or any direct or indirect subsidiary of
the Company with any other corporation or other entity, other than (a) a merger
or consolidation (I) immediately following which the individuals who comprise
the Board of Directors immediately prior thereto constitute at least a majority
of the Board of Directors of the Company, the entity surviv­ing such merger or
consolidation or, if the Company or the entity surviving such merger or
consolidation is then a subsidiary, the ultimate parent thereof and (II) which
results in the voting securities of the Company outstanding immediately prior to
such merger or consolidation contin­uing to represent (either by remaining
outstanding or by being con­verted into voting securities of the surviving
entity or any parent thereof), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, at least 50% of the combined voting
power of the securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (b) a

 

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merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or be­comes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 20% or more of the combined
voting power of the Company’s then outstanding securities; or

 

(d)                                 the date the shareholders of the Company
approve a plan of complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale or disposition by
the Company of all or substantially all of the Company’s assets to an entity, at
least 50% of the combined voting power of the voting securities of which are
owned by shareholders of the Company, in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, in substantially the same
proportions as their ownership of the Company immediately prior to such sale.

 

(e)                                  Notwithstanding the foregoing, a “Change in
Control” shall not be deemed to have occurred by virtue of the consummation of
any transaction or series of integrated transactions immediately following which
the record holders of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately following such transaction or series of
transactions.

 

(f)                                    For purposes of this Plan: “Affiliate”
shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act; “Beneficial Owner” shall have the meaning set forth in Rule
13d-3 under the Exchange Act; “Exchange Act” shall mean the Securities Exchange
Act of 1934, as amended from time to time; and “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) the Company
or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
owner­ship of stock of the Company.

 

5.3                                 Amendment of Section 5.  The provisions of
this Section 5 may not be amended or deleted, nor superseded by any other
provision of this Plan during the pendency of a Potential Change in Control.  A
“Potential Change in Control” shall exist during any period in which the
circumstances described in paragraphs (a), (b), (c) or (d), below, exist
(provided, however, that a Potential Change in Control shall cease to exist not
later than the occurrence of a Change in Control):

 

(a)                                  The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control,
provided that a Potential Change in Control

 

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described in this Section 5.3 shall cease to exist upon the expiration or other
termination of all such agreements.

 

(b)                                 Any Person (without regard to the exclusions
set forth in subsections (i) through (iv) of such definition) publicly announces
an intention to take or to consider taking actions the consummation of which
would constitute a Change in Control; provided that a Potential Change in
Control described in this paragraph (b) shall cease to exist upon the withdrawal
of such intention, or upon a determination by the Board of Directors that there
is no reasonable chance that such actions would be consummated.

 

(c)                                  Any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 10% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company’s then outstanding securities (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates).

 

(d)                                 The Board of Directors adopts a resolution
to the effect that, for purposes of this Agreement, a Potential Change in
Control exists; provided that a Potential Change in Control described in this
paragraph (d) shall cease to exist upon a determination by the Board of
Directors that the reasons that gave rise to the resolution providing for the
existence of a Potential Change in Control have expired or no longer exist.

 

SECTION 6

 

COMMITTEE

 

6.1                                 Administration.  The authority to control
and manage the operation and administration of the Plan shall be vested in a
committee (the “Committee”) in accordance with this Section 6.  The Committee
shall be selected by the Board.  Subject to applicable stock exchange rules, if
the Committee does not exist, or for any other reason determined by the Board,
the Board may take any action under the Plan that would otherwise be the
responsibility of the Committee.  Notwithstanding the foregoing, with respect to
any action, determination, interpretation or modification with respect to a
specific Award granted to a non-Employee Director, other than ministerial
actions, the Committee shall be comprised of the Board.

 

6.2                                 Powers of Committee.  The Committee’s
administration of the Plan shall be subject to the following:

 

(a)                                  Subject to the provisions of the Plan, the
Committee will have the authority and discretion to select from among the
Company’s employees and directors those persons who shall receive awards, to
determine the time or times of receipt, to determine the types of awards and the
number of shares covered by the awards, to establish the terms, conditions,
performance criteria, restrictions, and other provisions of such awards, and
(subject to the restrictions imposed by Section 7) to cancel or suspend awards.

 

(b)                                 To the extent that the Committee determines
that the restrictions imposed by the Plan preclude the achievement of the
material purposes of the awards in jurisdictions outside the United States, the
Committee will have the authority and discretion to modify

 

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those restrictions as the Committee determines to be necessary or appropriate to
conform to applicable requirements or practices of jurisdictions outside of the
United States.

 

(c)                                  The Committee will have the authority and
discretion to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, and to make all other determinations that may
be necessary or advisable for the administration of the Plan.

 

(d)                                 Any interpretation of the Plan by the
Committee and any decision made by it under the Plan is final and binding on all
persons.

 

(e)                                  In controlling and managing the operation
and administration of the Plan, the Committee shall take action in a manner that
conforms to the articles and by-laws of the Company, and applicable state
corporate law.

 

6.3                                 Delegation by Committee.  Except to the
extent prohibited by applicable law, the applicable rules of a stock exchange or
this Plan, or as necessary to comply with the exemptive provisions of Rule 16b-3
under the Exchange Act, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it, including without limitation, (a) delegating to a committee of
one or more members of the Board who are not “independent directors” within the
meaning of Section 162(m) of the Code, the authority to grant awards under the
Plan to eligible persons who are either (i) not then “covered employees,” within
the meaning of Section 162(m) of the Code and are not expected to be “covered
employees” at the time of recognition of income resulting from such award or
(ii) not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (b) delegating to a committee of one or more members
of the Board who are not “non-employee directors,” within the meaning of Rule
16b-3, the authority to grant awards under the Plan to eligible persons who are
not then subject to Section 16 of the Exchange Act.  Any such allocation or
delegation may be revoked by the Committee at any time.  To the extent permitted
by applicable law and resolution of the Board, the Committee may delegate all or
any part of its responsibilities to any officer of the Company.

 

6.4                                 Information to be Furnished to Committee. 
As may be permitted by applicable law, the Company and its subsidiaries shall
furnish the Committee with such data and information as it determines may be
required for it to discharge its duties.  The records of the Company and its
subsidiaries as to an employee’s or Participant’s employment, termination of
employment, leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect.  Subject to applicable law,
Participants and other persons entitled to benefits under the Plan must furnish
the Committee such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.

 

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SECTION 7

 

AMENDMENT AND TERMINATION

 

Subject to the limitations of Section 5.3, the Board may, at any time, amend or
terminate the Plan, and may amend any Award Agreement, provided that no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; and further provided, that adjustments
pursuant to Section 3.4 (and not in violation of paragraphs (a) and (b) thereof)
shall not be subject to the foregoing limitations of this Section 7; and further
provided that no amendment may (i) remove the provisions of subsection 2.3
(relating to option repricing), (ii) materially increase the benefits accruing
to Participants under the Plan, (iii) materially increase the aggregate number
of securities which may be issued under the Plan, or (iv) materially modify the
requirements for participation in the Plan, unless the amendment is approved by
the Company’s stockholders.

 

SECTION 8

 

GENERAL TERMS

 

8.1                                 No Implied Rights .

 

(a)                                  No Rights to Specific Assets.  Neither a
Participant nor any other person shall, by reason of participation in the Plan,
acquire any right in or title to any assets, funds or property of the Company or
any subsidiary whatsoever, including, without limitation, any specific funds,
assets, or other property which the Company or any subsidiary, in its sole
discretion, may set aside in anticipation of a liability under the Plan.  A
Participant shall have only a contractual right to the Stock or amounts, if any,
payable under the Plan, unsecured by any assets of the Company or any
subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any subsidiary shall be sufficient to pay any
benefits to any person.

 

(b)                                 No Contractual Right to Employment or Future
Awards.  The Plan does not constitute a contract of employment, and selection as
a Participant will not give any participating employee the right to be retained
in the employ of the Company or any subsidiary, nor any right or claim to any
benefit under the Plan, unless such right or claim has specifically accrued
under the terms of the Plan.  Except as otherwise provided in the Plan, no award
under the Plan shall confer upon the holder thereof any rights as a shareholder
of the Company prior to the date on which the individual fulfills all conditions
for receipt of such rights.

 

8.2                                 Transferability.  The Committee may provide
at the time it makes an award under the Plan or at any time thereafter that such
award may be transferable by the Participant, subject to such limitations as the
Committee may impose.  Except as otherwise so provided by the Committee, awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.

 

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8.3                                 Form and Time of Elections.  Unless
otherwise specified herein, each election required or permitted to be made by
any Participant or other person entitled to benefits under the Plan, and any
permitted modification, or revocation thereof, shall be filed with the Company
at such times, in such form, and subject to such restrictions and limitations,
not inconsistent with the terms of the Plan, as the Committee shall require.

 

8.4                                 Evidence.  Evidence required of anyone under
the Plan may be by certificate, affidavit, document or other information which
the person acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.

 

8.5                                 Tax Withholding.  All distributions under
the Plan are subject to withholding of all applicable taxes, and the Committee
may condition the delivery of any shares or other benefits under the Plan on
satisfaction of the applicable withholding obligations.  Except as otherwise
provided by the Committee, such withholding obligations may be satisfied (i)
through cash payment by the Participant; (ii) through the surrender of shares of
Stock which the Participant already owns; or (iii) through the surrender of
shares of Stock to which the Participant is otherwise entitled under the Plan;
provided, however, that except as otherwise specifically provided by the
Committee, such shares under clause (iii) may not be used to satisfy more than
the Company’s minimum statutory withholding obligation.

 

8.6                                 Action by Company or Subsidiary.  Any action
required or permitted to be taken by the Company or any subsidiary shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are duly authorized to act for
the board, or (except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of such company.

 

8.7                                 Successors.  All obligations of the Company
under this Plan shall be binding upon and inure to the benefit of any successor
to the Company, 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, stock, and/or assets of the Company.

 

8.8                                 Gender and Number.  Where the context
admits, words in any gender shall include any other gender, words in the
singular shall include the plural and the plural shall include the singular.

 

SECTION 9

 

DEFINED TERMS

 

In addition to the other definitions contained herein, the following definitions
shall apply:

 

(a)                                  Affiliates.  The term “Affiliates” has the
meaning ascribed to it in paragraph 5.2(f).

 

(b)                                 Beneficial Owner.  The term “Beneficial
Owner” has the meaning ascribed to it in paragraph 5.2(f).

 

(c)                                  Board.  The term “Board” means the Board of
Directors of the Company.

 

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(d)                                 Change in Control.  The term “Change in
Control” has the meaning ascribed to it in Section 5.2.

 

(e)                                  Code.  The term “Code” means the Internal
Revenue Code of 1986, as amended.  A reference to any provision of the Code
shall include reference to any successor provision of the Code.

 

(f)                                    Committee.  The term “Committee” means
the Committee acting under Section 6.

 

(g)                                 Company.  The term “Company” means Hospira,
Inc. and its successors and assigns.

 

(h)                                 Conversion Award.  The term “Conversion
Award” means an award described in Section 4.1.

 

(i)                                     Director.  The term “Director” means a
member of the Board.

 

(j)                                     Distribution.  The term “Distribution”
means the distribution of Company shares to shareholders of Abbott Laboratories
pursuant to the Separation and Distribution Agreement.

 

(k)                                  Exchange Act.  The term “Exchange Act” has
the meaning ascribed to it by paragraph 5.2(f).

 

(l)                                     Exercise Price.  The term “Exercise
Price” means the price established with respect to an option or SAR pursuant to
Section 2.2.

 

(m)                               Fair Market Value.  The “Fair Market Value” of
the Stock at any time shall be determined in such manner as the Committee may
deem equitable, or as required by applicable law or regulation.

 

(n)                                 ISO.  The term ISO has the meaning ascribed
to it in paragraph 2.1(a).

 

(o)                                 Participant.  The term “Participant” means
any individual who has received an award under the Plan.

 

(p)                                 Person.  The term “Person” has the meaning
ascribed to it by paragraph 5.2(f).

 

(q)                                 Potential Change in Control.  The term
“Potential Change in Control” has the meaning ascribed to it in Section 5.3.

 

(r)                                    SAR.  The term “SAR” has the meaning
ascribed to it in paragraph 2.1(b).

 

(s)                                  Separation and Distribution Agreement.  The
term “Separation and Distribution Agreement” means the agreement entered into
between the Company and Abbott Laboratories pursuant to which Abbott
Laboratories accomplished the spin-off of the Hospira Business (as defined
therein).

 

(t)                                    Stock.  The term “Stock” means common
stock of the Company.

 

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(u)                                 Transaction.  The term “Transaction” has the
meaning ascribed to it in paragraph 3.4(a).

 

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