Exhibit 10.1

 

Amended effective June 18, 2008

 

HOSPIRA, INC. NON-EMPLOYEE DIRECTORS’ FEE PLAN

 

SECTION 1
PURPOSE

 

Hospira, Inc. Non-Employee Directors’ Fee Plan (the “Plan”) has been established
by Hospira, Inc. (the “Company”), effective as of April 30, 2004 (the “Effective
Date”) to attract and retain as members of its Board of Directors persons who
are not employees of the Company or any of its subsidiaries but whose business
experience and judgment are a valuable asset to the Company and its
subsidiaries.  The Plan provides for the payment to Directors of fees in the
form of some or all of the following: Annual Retainer Fees, Committee Chairman
Fees, Meeting Fees and Restricted Stock awards (generally, the “Director Fees”).

 

SECTION 2
DIRECTORS COVERED

 

As used in the Plan, the term “Director” means any person who is elected to the
Board of Directors of the Company as of the Effective Date or at any time
thereafter, and is not an employee of the Company or any of its subsidiaries.

 

SECTION 3
FEES PAYABLE TO DIRECTORS

 

3.1           Annual Retainer Fee.  Each Director shall be entitled to an annual
retainer fee (the “Retainer Fee”) to be paid quarterly, on the last business day
of each calendar quarter for which the Director served in the capacity as a
Director (excluding, on a pro rata basis, the partial month in which he is first
elected a Director and any whole months in which he did not serve in such
capacity).  The amount of the Annual Retainer Fee shall be as determined from
time to time in the sole discretion of the Board of Directors of the Company
(the “Board”), with such amount initially set at Fifty Thousand Dollars
($50,000.00) per year.

 

3.2           Committee Chairman Fee.  A Director who serves as Chairman of any
committee created by the Board shall be entitled to an additional annual
retainer fee (the “Committee Chairman Fee”) to be paid quarterly, on the last
business day of each calendar quarter for which the Director served in the
capacity as a committee chairman (excluding, on a pro rata basis, the partial
month in which he is first selected to be the committee chairman and any whole
months in which he did not serve in such capacity).  The amount of the Committee
Chairman Fee shall be as determined from time to time in the sole discretion of
the Board, with such amount currently set as follows: (i) Seven Thousand and
Five Hundred Dollars ($7,500.00) per year for each of the Compensation
Committee, Science and Technology Committee, and Government and Public Policy
Committee; and (ii) Ten Thousand Dollars ($10,000.00) per year for the Audit
Committee.

 

3.3           Meeting Fees.  A Director who attends a meeting of the Board or
any committee thereof shall be entitled to an additional fee (the “Meeting Fee”)
to be paid on the last business day of each calendar quarter in which the
meeting was held.  The amount of the Meeting Fee

 

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shall be as determined from time to time in the sole discretion of the Board,
with such amount currently set at One Thousand and Five Hundred Dollars
($1,500.00) for each Board or Committee Meeting attended in person and One
Thousand Dollars ($1,000.00) for each meeting attended other than in person, in
a manner acceptable to the Board.  In the event there is held one or more
committee or Board meetings on the same date, there will be a Meeting Fee paid
for each such meeting for that date.

 

3.4           Lead Director Fees.  A Director who serves as Lead Director of the
Board shall be entitled to an additional annual retainer fee (the “Lead Director
Fee”) to be paid quarterly, on the last business day of each calendar quarter
for which the Director served in the capacity as Lead Director (excluding, on a
pro rata basis, the partial month in which he is first selected to be the Lead
Director and any whole months in which he did not serve in such capacity).  The
amount of the Lead Director Fee shall be as determined from time to time in the
sole discretion of the Board, with such amount currently set at Seventy-Five
Thousand Dollars ($75,000.00) per year.

 

SECTION 4
RESTRICTED STOCK

 

4.1           Annual Restricted Stock Award.

 

(i)            As of January 1, 2008, each Director, who is elected a
Non-Employee Director at the annual shareholders meeting (or who retains such
position if they were not subject to election at such meeting), shall be granted
shares of Company’s Common Stock, par value $0.01 per share (the “Stock”), with
such stock subject to certain restrictions set forth below (the “Restricted
Stock”).  The Restricted Stock shall be granted automatically to the Director on
the last business day of the calendar quarter in which the annual shareholder
meeting occurs.  If more than one shareholder meeting occurs in a given calendar
year, only a single Restricted Stock award shall be granted for such year and
such award shall be granted as of the last business day of the calendar quarter
in which such first shareholder meeting occurs.

 

(ii)           The number of shares covered by the Restricted Stock award shall
be equal to that number of shares whose aggregate value (based on the Fair
Market Value of a share of Stock on the date of grant) equals One Hundred Fifty
Thousand Dollars ($150,000.00), rounded down to the next whole share. Each
Non-Employee Director as of September 28, 2007 shall be granted automatically a
Restricted Stock award equal to that number of shares whose aggregate value
(based on the Fair Market Value of a share of Stock on September 28, 2007)
equals Fifty Thousand Dollars ($50,000.00), rounded down to the next whole
share.

 

(iii)          Notwithstanding anything contained in this Section 4.1 to the
contrary, a Non-Employee Director, who is elected between any annual
shareholders meetings, shall automatically be granted Restricted Stock on the
last business day of the calendar quarter in which such Director is elected;
provided, however, that the number of shares of the Restricted Stock granted to
such Director shall be equal to that number of shares (rounded to the next whole
share) whose aggregate value

 

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(based on the Fair Market Value of a share of Stock on the date of grant) equals
One Hundred Fifty Thousand Dollars ($150,000.00), multiplied by the fraction of
A over 12, with “A”  being the number of whole calendar months between the first
day of the month coinciding with or immediately following such Director’s
election and first day of the month during which the next annual shareholders
meeting is scheduled to occur.  The term “Fair Market Value” shall be as defined
in the 2004 Plan (as defined in Section 6.6 below).

 

4.2           Issuance of Certificates.  Each certificate issued in respect of
the Restricted Stock Award shall be registered in the name of the Director and
shall be deposited in a bank designated by the Company or retained by the
Company.  The certification of shares is conditioned upon the Director endorsing
in blank a stock power for the covered shares.  During the Restricted Period,
all certificates evidencing the Restricted Stock will be imprinted with the
following legend: “The securities evidenced by this certificate are subject to
the transfer restrictions, forfeiture restrictions and other provisions of the
Restricted Stock Agreement dated                          between Hospira, Inc.
and [insert Director name].”  Upon lapse of the Restriction Period, the Director
shall be entitled to have the legend removed from certificates representing the
shares.

 

4.3           Rights.  Upon issuance of the certificates, the Directors in whose
names they are registered shall, subject to the restrictions of this Section 4,
have all of the rights of a shareholder with respect to the shares represented
by the certificate, including the right to vote such shares and to receive cash
dividends and other distributions thereon.

 

4.4           Forfeiture Period.  All Restricted Stock granted under this
Section 4 shall be subject to forfeiture pursuant to Section 4.5 for a period
(the “Forfeiture Period”) commencing with the date of the award and ending on
the earliest of the following events:

 

(i)            The one-year anniversary of the date of grant of Restricted Stock

 

(ii)           The first regularly scheduled annual shareholders meeting
following the date of grant;

 

(iii)          The date of the Director’s death or disability; or

 

(iv)          The date of a Change in Control (as defined in Section 5 of the
2004 Plan).

 

4.5           Forfeiture.  In the event that the Director’s date of termination
occurs during the Forfeiture Period, the Director shall forfeit any and all
rights and interests with respect to such unvested Restricted Stock (or
Restricted Stock Units, if a Deferral Election, under Section 10 below, is
applicable) and the Company shall have the right to cancel any such certificates
evidencing such Restricted Stock.

 

4.6.      Restrictions on Sale.  All Restricted Stock granted under this
Section 4 shall be subject to the following restrictions on sale beginning on
the date of grant and continuing, except as otherwise provided below in this
Section 4.6, for all periods while the Director is actively serving as a
Director of the Company (the “Restricted Period”):

 

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(i)            The shares may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except to the extent that after the
Forfeiture Period such sale, assignment, transfer, pledge, hypothecation or
other disposal does not cause a Director to fail to meet the minimum holding
requirements under the Company’s then existing Company share retention and
ownership guidelines for Directors.

 

(ii)           Except as provided in paragraph (i) of this Section 4.6, any
additional common shares of the Company issued with respect to shares covered by
Awards granted under this Section 4 as a result of any stock dividend, stock
split or reorganization, shall be subject to the restrictions and other
provisions of this Section 4.

 

(iii)          A Director shall not be entitled to receive any shares prior to
completion of all actions deemed appropriate by the Company to comply with
federal or state securities laws and stock exchange requirements.

 

SECTION 5
CHANGE IN CONTROL

 

In the event of a Change in Control, (i) all Restricted Stock awards shall
become fully vested and shall no longer be subject to the restrictions set forth
in Section 4 of this Plan, and (ii) all Deferred Fees shall be paid to the
Director at such time and in such form as set forth in the Director’s Deferral
Election.

 

SECTION 6
OPERATION AND ADMINISTRATION

 

6.1           Administration.

 

(i)            The Plan and all benefits pursuant hereto shall be administered
by the full Board.

 

(ii)           The Board shall have the authority and discretion to interpret
and administer the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan and to determine the terms and provisions of
any award agreement made pursuant to the Plan.  All questions of interpretation
with respect to the Plan, the benefits established herein, the number of shares
of Stock, or other security, or rights granted and the terms of any agreements
evidencing any of the Director Fees (the “Award Agreements”), including the
timing, pricing, and amounts of Awards, shall be determined by the Board, and
its determination shall be final and conclusive upon all parties in interest. 
In the event of any conflict between an Award Agreement and this Plan, the terms
of this Plan shall govern.

 

(iii)          Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, the Board may delegate to the officers or
employees of the Company and its subsidiaries the authority to execute and
deliver such instruments and documents, to do all such acts and things, and to
take all such other steps deemed necessary, advisable or convenient for the
effective administration of the Plan in

 

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accordance with its terms and purpose, except that the Board may not delegate
any discretionary authority with respect to substantive decisions or functions
regarding the Plan or benefits and awards thereunder, including, but not limited
to, decisions regarding the timing, eligibility, pricing, amount or other
material terms of such benefits or awards. Any such delegation may be revoked by
the Board at any time.

 

(iv)          To the extent that the Board determines that the restrictions
imposed by the Plan preclude the achievement of the material purposes of the
benefit provided herein in jurisdictions outside the United States, if
applicable, the Board will have the authority and discretion to modify those
restrictions as the Board determines to be necessary or appropriate to conform
to applicable requirements or practices of jurisdictions outside of the United
States.

 

6.2           Limits of Liability.

 

(i)            Any liability of the Company or a subsidiary to any Director with
respect to an Award shall be based solely upon contractual obligations created
by the Plan and the applicable Award Agreement.

 

(ii)           Neither the Company nor a subsidiary, nor any member of the Board
or any other person participating in any determination of any question under the
Plan, or in the interpretation, administration or application of the Plan, shall
have any liability to any party for any action taken or not taken in good faith
under the Plan except as may be expressly provided by statute.

 

6.3           Rights of Director.  Nothing contained in this Plan or in any
Award Agreement (or in any other documents related to this Plan or to any award
or Award Agreement) shall confer upon any Director any right to continue in the
service of the Company or a subsidiary, constitute any contract or limit in any
way the right of the Company or a subsidiary to change such person’s
compensation or other benefits or to terminate the service of such person with
or without cause or confer any right on the part of such person to be nominated
for reelection to the Board, to be reelected to the Board or to be appointed to
any committee of the Board.

 

6.4           Form and Time of Elections.  Any election required or permitted
shall be in writing, and shall be deemed to be filed when timely delivered to
the Secretary of the Company.

 

6.5           Action by Company.  Any action required or permitted to be taken
by the Company shall be by resolution of the Board, 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 the
provisions of Rule 16b-3, applicable local law, the applicable rules of any
stock exchange, or any other applicable rules) by a duly authorized officer of
the Company.

 

6.6           Hospira, Inc. 2004 Long-Term Stock Incentive Plan.  Any shares of
Stock awarded to, or subject to Awards granted to Directors under this Plan as
Director Fees shall be issued pursuant to the Hospira, Inc. 2004 Long-Term Stock
Incentive Plan (the “2004 Plan”), subject to all of the terms and conditions
herein.  Except in the event of conflict, all provisions of

 

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the 2004 Plan shall apply to this Plan.  In the event of any conflict between
the provisions of the 2004 Plan and this Plan, this Plan shall control, provided
that the Director Fees granted provided may not exceed the share limitations set
forth in the 2004 Plan.

 

SECTION 7
MISCELLANEOUS

 

7.1           Beneficiaries.  Each Director or former Director entitled to
payment of Director Fees hereunder, from time to time may name any person or
persons (who may be named contingently or successively) to whom any Director
Fees earned by him and payable to him are to be paid in case of his death before
he receives any or all of such Director Fees.  Each designation will revoke all
prior designations by the same Director or former Director, shall be in form
prescribed by the Company, and will be effective only when filed by the Director
or former Director in writing with the Secretary of the Company during his
lifetime. If a deceased Director or former Director shall have failed to name a
beneficiary in the manner provided above, or if the beneficiary named by a
Director or former Director dies before him or before payment of all the
Director’s or former Director’s Director Fees, the Company, in its discretion,
may direct payment in a single sum of any remaining Director Fees to either:

 

(i)            any one or more or all of the next of kin (including the
surviving spouse) of the Director or former Director, and in such proportions as
the Company determines; or

 

(ii)           the legal representative or representatives of the estate of the
last to die of the Director or former Director and his last surviving
beneficiary.

 

The person or persons to whom any deceased Director’s or former Director’s
Director Fees are payable under this section will be referred to as his
“beneficiary.”

 

7.2           Alienation of Rights.  Payment of Director Fees will be made only
to the person entitled thereto in accordance with the terms of the Plan, and
Director Fees are not in any way subject to the debts or other obligations of
persons entitled thereto, and may not be voluntarily or involuntarily sold,
transferred or assigned.

 

7.3           Facility of Payment.  When a person entitled to a payment under
the Plan is under legal disability or, in the Company’s opinion, is in any way
incapacitated so as to be unable to manage his financial affairs, the Company
may direct that payment be made to such person’s legal representative, or to a
relative or friend of such person for his benefit, and with respect to the
Director’s Stock Unit Account (defined in Section 9 below), if any, any
distribution shall be pursuant to the Director’s beneficiary designation form,
as may be on file with the Company. Any payment made in accordance with the
preceding sentence shall be in complete discharge of the Company’s obligation to
make such payment under the Plan.

 

7.4           Unfunded Plan.  Any obligation to pay cash or Deferred Fees under
this Plan shall constitute an unfunded unsecured obligation of the Company.  The
Company may, but shall not be obligated to, establish a trust to hold assets for
the purpose of satisfying obligations under this Plan.

 

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7.5           Adjustment Provisions.  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), in
addition to any adjustments made pursuant to Section 3.4 of the 2004 Plan, the
Board may adjust the Director Fees (including Deferred Fees) to preserve the
benefits or potential benefits of participation in the Plan.

 

7.6           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 8
AMENDMENT AND DISCONTINUANCE

 

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 Director (or, if the Director is
not then living, the affected beneficiary), adversely affect the rights of any
Director 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 9.4 shall not be subject to the foregoing limitations of
this Section 8.  Subject to Section 9.4, any amendment or discontinuance of the
Plan shall be prospective in operation only, and shall not affect the payment of
any Director Fees theretofore earned by any Director, or the conditions under
which any such fees are to be paid or forfeited under the Plan.

 

SECTION 9
ELECTIVE DEFERRALS

 

9.1           DEFERRAL ELECTION

 

(i)            Annual Deferral Election.  A Director who would otherwise be
entitled to receive Director Fees in the form of shares of Stock or a cash
payment under the terms of the Plan may instead elect to defer delivery of all
or a portion of such fees, subject to the following terms of this Section 9
(once deferred, the “Deferred Fees”).  An election to defer the Director Fees
shall be made on an election form (the “Deferral Election”).  The form of
distribution of the Deferred Fees shall be elected by the Director on the
Deferral Election form, which may be either (a) a lump sum payment on the first
business day following the quarter within which the Director’s service on the
Board terminates (the “Distribution Commencement Date”) or (b) annual
installments for a number of years, not exceeding 10, payable on the
Distribution Commencement Date and each anniversary thereof. Except as provided
in paragraphs (ii) and (iii) of this Section 9.1, any Deferral Election shall be
made in the calendar year before the year in which the Director Fees are payable
and shall be irrevocable as of the first day of the year for which it is to be
effective.  Deferral Elections shall remain in effect with respect to any future
year

 

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unless a new election with respect to such year is filed in accordance with
paragraph (iii) of this Section 9.1.

 

(ii)           Deferral Election for New Directors.  Notwithstanding the
foregoing, a Deferral Election by a Director upon first becoming a member of the
Board must be submitted within 30 days after becoming a Director and shall be
effective for all fees paid for services performed following the date on which
the election is received by the Company. Any such Deferral Elections shall be
irrevocable as of its effective date and shall remain in effect with respect to
the calendar year in which it was made and any future year unless a new election
with respect to Deferral Election is filed in accordance with paragraph (iii) of
this Section 9.1.

 

(iii)          Subsequent Changes to Initial Deferrals.

 

(a)           Deferral Elections shall remain in effect with respect to Director
Fees to be paid in any future year unless a new election with respect to such
year is filed by the Director making the change prior to the year to which it is
intended to apply; and

 

(b)           A Director may elect to change the timing or form of distribution
for his or her Deferred Fees (a “Subsequent Election”), provided the Subsequent
Election is made at least 12 months before the date of the first scheduled
payment, if any; the Subsequent Election is not effective for at least 12 months
after the date of the election; and the first payment under the Subsequent
Election must be delayed for at least five years from the date it otherwise
would have been paid. Notwithstanding the foregoing provisions of this
subparagraph (b), payment of the Deferred Fees shall begin under the terms of a
Director’s most current Deferral Election as of first business day following the
quarter within which the Director’s services on the Board terminates due to a
death or disability. For this purpose, “disability” shall mean that the Director
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.

 

(c)           During 2007 and 2008, a Director may elect to change the timing or
form of distribution for his Deferred Fees without meeting the foregoing
requirements, provided that no Director whose Distribution Commencement Date
occurs (or would otherwise occur) within 2007 may make or change a payment
election during 2007 and no Director whose Distribution Commencement Date occurs
(or would otherwise occur) within 2008 may make or change a payment election
during 2008.

 

(iv)          Conversion of Cash or Restricted Stock to Stock Units.  Deferred
Fees shall be credited to a Stock Unit Account (as defined below) under this
Section 9 as follows:

 

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(a)           Cash-based Deferred Fees shall be converted to Stock Units by
dividing the cash-based fees the Director elected to defer by the Fair Market
Value of the Stock as of the date the Director would have had a right to payment
of such Director Fees had the Director not made a Deferral Election.

 

(b)           Stock-based Deferred Fees shall be converted to that number of
Stock Units equal to that number of shares of Restricted Stock the Director
elected to defer.

 

9.2           ACCOUNTS

 

(i)            Stock Unit Account.  A “Stock Unit Account” shall be maintained
on behalf of each Director who elects to defer all or a portion of his Director
Fees under this Section 9, for the period during which delivery of such fees is
deferred. A Director’s Stock Unit Account shall be subject to the following
adjustments:

 

(a)           The Stock Unit Account will be credited with Stock Units as of the
date on which the Director would have been entitled to payment of the cash-based
fees or the date on which the Director would have been granted the Restricted
Stock award, both as if the Director had not made a Deferral Election with
respect to such fees.

 

(b)           As of each dividend payment date for the Stock, the Director’s
Stock Unit Account shall be credited with additional Stock Units (including
fractional Stock Units) equal to (i) the amount of the dividend that would be
payable with respect to the number of shares of Stock equal to the number of
Stock Units credited to the Director’s Stock Unit Account on the dividend record
date, divided by (ii) the Fair Market Value of a share of Stock on the dividend
payment date.

 

(c)           As of the date of any distribution with respect to a Director’s
Stock Unit Account under Section 9.3, the Stock Units credited to a Director’s
Stock Unit Account shall be reduced by the amounts distributed to the Director.

 

(ii)           Statement of Accounts.  As soon as practicable after the end of
each Plan Year, the Company shall provide each Director having an Stock Unit
Account under the Plan with a statement of the transactions in his Stock Unit
Account during that year and his account balance as of the end of the year.

 

9.3           DISTRIBUTIONS

 

(i)            General.  Subject to the terms of this Section 9.3, a Director
shall specify, as part of his Deferral Election with respect to Deferred Fees,
the time and form of the distribution of the amounts deferred pursuant to such
election.  In the event that an election with respect to the timing or form of
distribution is not in effect as of the date of the Director’s termination
(including a termination due to the Director’s death), the Director’s entire
Stock Unit Account shall be distributed in

 

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a single lump sum stock payment within 60 days following the first anniversary
of the Director’s date of termination or death.

 

(ii)           If a scheduled distribution date would otherwise occur after a
dividend record date but before the payment of the dividend, the distribution
may, in the discretion of the Board, be deferred (but not more than 30 days)
until the dividend payment date.

 

(iii)          In determining a Director’s right to distributions under this
Section 9.3, the vesting provisions of Section 4 of the Plan shall apply to the
Stock Units credited to the Director’s Stock Unit Account as though each unit
represented one share of Stock, and with all units attributable to payment of
dividends being fully vested as of the date they are credited to the Director’s
Stock Unit Account.

 

9.4           Termination of Deferral by Company.  The Board shall retain the
right to terminate, at any time, for any reason, or no reason, the deferral
provisions under this Section 9 (which may, but need not, be in conjunction with
a termination of the Plan), and shall distribute all Stock Unit Accounts to
Directors provided (i) the Company terminates all non-qualified deferred
compensation arrangements of the same type as this Plan at the same time that
the Plan is terminated; (ii) except for payments that would be payable if the
termination had not occurred, the Company makes no payments to Directors for 12
months but makes all payments within 24 months; and (iii) the Company adopts no
new non-qualified deferred compensation arrangement of the same type as this
Plan for five years.

 

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