Exhibit 10.1

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-third of the Covered
Shares subject to These Options (rounded up) may be purchased; on the second
anniversary of the Grant Date two-thirds of the Covered Shares subject to These
Options (rounded up) may be purchased; and on the third 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 a Change in Control that occurs on or
before the Date of Termination.

(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 or after the Date of
Termination only as to that portion

 

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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 8) or Retirement (as defined in Section
8), the three-month anniversary of the Date of Termination (as defined in
Section 8); 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; or

(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.

5.             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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6.             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).

7.             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.

8.             Definitions.  For purposes of the Option Terms, words and phrases
shall be defined as follows:

(a)           Cause.  The term “Cause” shall mean, 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)           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

 

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shall be treated as the Participant’s Date of Termination caused by the
Participant being discharged by the employer.

(c)           Disability.  The Term “Disability” shall mean the Participant’s
disability as defined in the Hospira Extended Disability Plan, whether or not
such Participant is a participant in such disability plan, for a period of
twelve (12) consecutive months.

(d)           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).

9.             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.

10.           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.

11.           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.

12.           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.

13.           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.

14.           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

 

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otherwise, the Company will be entitled to pay to the Participant an amount
equal to the fair market value of such fractional share.

15.           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.

16.           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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