Exhibit
10.6(e)


 


AGREEMENT REGARDING


CHANGE IN CONTROL


 


THIS AGREEMENT (“Agreement”), is made and entered
into as of the 15th day of June 2007 (the “Effective Date”) by and
between Hospira, Inc. (the “Company”) and                                (the “Executive”).


 


WITNESSETH THAT:


 


WHEREAS, the Company considers it essential to the
best interests of its shareholders to foster the continuous employment of key
management personnel, and the Board of Directors of the Company (the “Board”)
recognizes that, as is the case with many publicly held corporations, a change
in control might occur and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and its
shareholders; and


 


WHEREAS, the Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control of the
Company;


 


NOW, THEREFORE, to induce the Executive to remain in
the employ of the Company and in consideration of the premises and mutual
covenants set forth herein, IT IS HEREBY AGREED by and between the parties as
follows:


 


1.               AGREEMENT TERM. THE INITIAL “AGREEMENT TERM”
SHALL BEGIN ON THE EFFECTIVE DATE AND SHALL CONTINUE THROUGH DECEMBER 31, 2010.
AS OF DECEMBER 31, 2007, AND AS OF EACH DECEMBER 31 THEREAFTER, THE AGREEMENT
TERM SHALL EXTEND AUTOMATICALLY TO THE THIRD ANNIVERSARY THEREOF UNLESS THE
COMPANY GIVES NOTICE TO THE EXECUTIVE PRIOR TO THE DATE OF SUCH EXTENSION THAT
THE AGREEMENT TERM WILL NOT BE EXTENDED. NOTWITHSTANDING THE FOREGOING, IF A
CHANGE IN CONTROL (AS DEFINED IN SECTION 7 BELOW), OCCURS DURING THE AGREEMENT
TERM, THE AGREEMENT TERM SHALL CONTINUE THROUGH AND TERMINATE ON THE SECOND
ANNIVERSARY OF THE DATE ON WHICH THE CHANGE IN CONTROL OCCURS.


 


2.               ENTITLEMENT TO CHANGE IN CONTROL BENEFITS.
The Executive shall be entitled to the Change in Control Benefits described in Section
3 hereof if the Executive’s employment by the Company is terminated during the
Agreement Term but after a Change in Control (i) by the Company for any reason
other than Permanent Disability or Cause, or (ii) by the Executive for Good
Reason.  For purposes of this Agreement:


 


1

















 


(a)                                  A termination of the
Executive’s employment shall be treated as a termination by reason of “Permanent
Disability” only if, due to a mental or physical disability, the Executive is
absent from the full time performance of duties with the Company for a period
of at least twelve consecutive months and fails to return to the full time
performance of duties within 30 days after receipt of a demand by the Company
to do so.


 


(b)                                 The term “Cause” shall mean
the willful engaging by the Executive in illegal conduct or gross misconduct
which is demonstrably and materially injurious to the Company. For purposes of
this Agreement, no act, or failure to act, on the Executive’s part shall be
deemed “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive’s action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until the Company delivers to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth above and specifying the particulars thereof in detail.


 


(c)                                  The term “Good Reason” shall
mean the occurrence of any of the following circumstances without the Executive’s
express written consent:


 


(i)                                     a significant adverse change
in the nature, scope or status of the Executive’s position, authorities or
duties from those in effect immediately prior to the Change in Control,
including, without limitation, if the Executive was, immediately prior to the
Change in Control, an officer of a public company, the Executive ceasing to be
an officer of a public company;


 


(ii)                                  the failure by the Company
to pay the Executive any portion of the Executive’s current compensation;


 


(iii)                               a reduction in the Executive’s
annual base salary (or a material change in the frequency of payment) as in 


 


2

















 


effect immediately prior to the Change in Control as the same may be
increased from time to time;


 


(iv)                              the failure by the Company
to award the Executive an annual bonus in any year which is at least equal to
the annual bonus, awarded to the Executive under the annual bonus plan of the
Company for the year immediately preceding the year of the Change in Control;


 


(v)                                 the failure by the Company
to award the Executive equity-based incentive compensation (such as stock
options, shares of restricted stock, or other equity-based compensation) on a
periodic basis consistent with the Company’s practices with respect to timing,
value and terms prior to the Change in Control;


 


(vi)                              the failure by the Company
to continue to provide the Executive with the welfare benefits, fringe benefits
and perquisites enjoyed by the Executive immediately prior to the Change in
Control under any of the Company’s plans or policies, including, but not
limited to, those plans and policies providing pension, life insurance,
medical, dental, prescription, health and accident, disability, vacation,  and other executive perquisites;


 


(vii)                           the relocation of the
Company’s principal executive offices to a location more than thirty-five miles
from the location of such offices immediately prior to the Change in Control or
the Company requiring the Executive to be based anywhere other than the Company’s
principal executive offices except for required travel to the Company’s
business to an extent substantially consistent with the Executive’s business
travel obligations immediately prior to the Change in Control; or


 


(viii)                        the failure of the Company
to obtain a satisfactory agreement from any successor to the Company to assume
and agree to perform this Agreement as contemplated by Section 16.


 


For
purposes of any determination regarding the existence of Good Reason, any good
faith determination by the Executive that Good Reason exists shall be
conclusive.


 


3

















 


3.               CHANGE IN CONTROL BENEFITS. In the event of a
termination of employment entitling the Executive to benefits in accordance
with Section 2, the Executive shall, subject to the provisions of the last
paragraph of this Section 3, receive the following:


 


(a)                                  The Executive shall be
entitled to receive the following employee welfare benefits: medical, health
and accident, dental, prescription, disability, and life insurance coverage for
the Executive (and, where applicable under the Company’s welfare benefit plans,
the Executive’s family) through the second anniversary of the Executive’s date
of termination of employment, or, if earlier, the date on which the Executive
becomes employed by another employer. The benefits provided by the Company
shall be no less favorable in terms of coverage and cost to the Executive than
those provided under the Company’s welfare benefit plans applicable to the
Executive (and, where applicable, the Executive’s family) prior to the Change
in Control, determined as if the Executive remained in the employ of the
Company through such second anniversary.


 


(b)                                 If the Executive’s date of
termination occurs after the end of a performance period applicable to an
annual incentive (bonus) award, and prior to the payment of the award for the
period, the Executive shall be entitled to a lump sum payment in cash no later
than twenty (20) business days after the date of termination equal to the
greatest of (i) the Executive’s annual incentive (bonus) award for that period,
as determined under the terms of that incentive award arrangement, (ii) the
Executive’s annual incentive (bonus) award for that period, with the
determination of the amount of such award based on an assumption that the
target level of performance had been achieved or (iii) the Executive’s average
annual incentive (bonus) award for the three annual performance periods
preceding that period (provided that if the Executive was not a participant in
the incentive award arrangement for any of those three prior years, the
averaging period shall be reduced from three years to the number of years
during the three year period in which the Executive was a participant; and
further provided that if the Executive’s award for any such year was reduced
because the Executive was not a participant for the full year, such amount
shall be annualized for purposes of the computation in this clause (iii)).


 


(c)                                  For any annual incentive
(bonus) plan or arrangement in which the Executive participates for the
performance period 


 


4

















 


in which the Executive’s termination of employment occurs, the
Executive shall be entitled to a lump sum payment in cash no later than twenty
(20) business days after the date of termination equal to the greater of (i) the
Executive’s annual incentive (bonus) award for the performance period that
includes the date of termination, with the determination of the amount of such
award based on an assumption that the target level of performance has been
achieved or (ii) the Executive’s average annual incentive (bonus) award for the
three annual performance periods preceding the performance period that includes
the date of termination (provided that if the Executive was not a participant
in the incentive award arrangement for any of those three prior years, the
averaging period shall be reduced from three years to the number of years
during the three year period in which the Executive was a participant; and
further provided that if the Executive’s award for any such year was reduced
because the Executive was not a participant for the full year, such amount
shall be annualized for purposes of the computation in this clause (ii));
provided that such payment shall be subject to a pro-rata reduction to reflect
the number of days in the performance period following the date of termination.
The amount payable under this paragraph (c) shall be in lieu of any amounts
that may otherwise be due to the Executive with respect to any annual incentive
(bonus) plan or arrangement in which the Executive participates for the
performance period in which the Executive’s date of termination occurs.


 


(d)                                 The Executive shall be
entitled to a lump sum payment in cash no later than twenty (20) business days
after the Executive’s date of termination equal to the sum of:


 


(i)                                     an amount equal to two times
the Executive’s annual salary rate in effect on the date of the Change in
Control or, if greater, as in effect immediately prior to the date of
termination; plus


 


(ii)                                  an amount equal to two times
the greater of (x) the Executive’s annual incentive (bonus) award for the
performance period that includes the date of the Executive’s termination of
employment, with the determination of the amount of such award based on an
assumption that the target level of performance has been achieved or (y) the
Executive’s average annual incentive (bonus) award for the three annual
performance periods preceding the performance 


 


5

















 


period that includes the date of termination (provided that if the
Executive was not a participant in the incentive award arrangement for any of
those three prior years, the averaging period shall be reduced from three years
to the number of years during the three year period in which the Executive was
a participant; and further provided that if the Executive’s award for any such
year was reduced because the Executive was not a participant for the full year,
such amount shall be annualized for purposes of the computation in this clause
(y)).


 


The
amount payable under this paragraph (d) shall be inclusive of the amounts, if
any, to which the Executive would otherwise be entitled as severance pay under
any severance pay plan, or by law and shall be in addition to (and not
inclusive of) any amount payable under any written agreement(s) directly
between the Executive and the Company or any of its subsidiaries.


 


(e)                                  The Company shall provide
the Executive with outplacement services suitable to the Executive’s position
through the second anniversary of the date of the Executive’s termination of
employment, or, if earlier, the date on which the Executive becomes employed by
another employer.


 


If
the Executive is a participant in the Hospira Performance Incentive Plan, the
Hospira 2004 Long-Term Stock Incentive Plan, or any successor thereto, the
Executive’s annual incentive (bonus) award for the performance period which
includes the date of termination under paragraphs (c) and (d)(ii) above and, if
applicable, for the period preceding the date of termination under paragraph (b)
shall, be determined under the bonus levels communicated in writing to the
Executive by the Company for such year.


 


For
purposes of this Agreement, the Executive is deemed a “key employee” within the
meaning of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and the regulations thereunder (“Specified Employee”). As a Specified Employee,
notwithstanding any provision in this Agreement, any payments or benefits under
Sections 3(b), (c) or (d) (“Restricted Payments”) shall be provided to the
Executive on the first day of the seventh month following the date of the Executive’s
termination of employment (the “Delay Period”). 
After the Delay Period, any Restricted Payments that constitute
reimbursements to the Executive shall be made in accordance with their payment
terms under this Agreement but no later than the end of the calendar year
following the year in which the expense was incurred.


 


4.               MITIGATION. The Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement
by seeking other employment or 


 


6

















 


otherwise. Except as set forth in paragraph 3(a) with respect to
benefits, the Company shall not be entitled to set off against the amounts
payable to the Executive under this Agreement any amounts owed to the Company
by the Executive, any amounts earned by the Executive in other employment after
the Executive’s termination of employment with the Company, or any amounts
which might have been earned by the Executive in other employment had the
Executive sought such other employment.


 


5.               MAKE-WHOLE PAYMENTS. If any payment or
benefit to which the Executive (or any person on account of the Executive) is
entitled, whether under this Agreement or otherwise, in connection with a
Change in Control or the Executive’s termination of employment (a “Payment”)
constitutes a “parachute payment” within the meaning of section 280G of the
Code, and as a result thereof the Executive is subject to a tax under section
4999 of the Code, or any successor thereto, (an “Excise Tax”), the Company
shall pay to the Executive an additional amount (the “Make-Whole Amount”) which
is intended to make the Executive whole for such Excise Tax. The Make-Whole
Amount shall be equal to (i) the amount of the Excise Tax, plus (ii) the
aggregate amount of any interest, penalties, fines or additions to any tax
which are imposed in connection with the imposition of such Excise Tax, plus (iii)
all income, excise and other applicable taxes imposed on the Executive under
the laws of any Federal, state or local government or taxing authority by
reason of the payments required under clauses (i) and (ii) and this clause
(iii).


 


(a)                                  For purposes of determining
the Make-Whole Amount, the Executive shall be deemed to be taxed at the highest
marginal rate under all applicable local, state, federal and foreign income tax
laws for the year in which the Make-Whole Amount is paid. The Make-Whole Amount
payable with respect to an Excise Tax shall be paid by the Company coincident
with the Payment with respect to which such Excise Tax relates.


 


(b)                                 All calculations under this Section
5 shall be made initially by the Company and the Company shall provide prompt
written notice thereof to the Executive to enable the Executive to timely file
all applicable tax returns. Upon request of the Executive, the Company shall
provide the Executive with sufficient tax and compensation data to enable the
Executive or the Executive’s tax advisor to independently make the calculations
described in subparagraph (a) above and the Company shall reimburse the
Executive for reasonable fees and expenses incurred for any such verification.


 


(c)                                  If the Executive gives
written notice to the Company of any objection to the results of the Company’s
calculations within 60 days of the Executive’s receipt of written notice
thereof, the dispute shall be referred for determination to 


 


7

















 


independent tax counsel selected by the Company and reasonably
acceptable to the Executive (“Tax Counsel”). The Company shall pay all fees and
expenses of such Tax Counsel. Pending such determination by Tax Counsel, the
Company shall pay the Executive the Make-Whole Amount as determined by it in
good faith. The Company shall pay the Executive any additional amount
determined by Tax Counsel to be due under this Section 5 (together with
interest thereon at a rate equal to 120% of the Federal short-term rate
determined under section 1274(d) of the Code) promptly after such
determination.


 


(d)                                 The determination by Tax
Counsel shall be conclusive and binding upon all parties unless the Internal
Revenue Service, a court of competent jurisdiction, or such other duly empowered
governmental body or agency (a “Tax Authority”) determines that the Executive
owes a greater or lesser amount of Excise Tax with respect to any Payment than
the amount determined by Tax Counsel.


 


(e)                                  If a Taxing Authority makes
a claim against the Executive which, if successful, would require the Company
to make a payment under this Section 5, the Executive agrees to contest the
claim with counsel reasonably satisfactory to the Company, on request of the
Company subject to the following conditions:


 


(i)                                     The Executive shall notify
the Company of any such claim within 10 days of becoming aware thereof. In the
event that the Company desires the claim to be contested, it shall promptly
(but in no event more than 30 days after the notice from the Executive or such
shorter time as the Taxing Authority may specify for responding to such claim)
request the Executive to contest the claim. The Executive shall not make any
payment of any tax which is the subject of the claim before the Executive has
given the notice or during the 30-day period thereafter unless the Executive
receives written instructions from the Company to make such payment together
with an advance of funds sufficient to make the requested payment plus any
amounts payable under this Section 5 determined as if such advance were an
Excise Tax, in which case the Executive will act promptly in accordance with
such instructions.


 


8

















 


(ii)                                  If the Company so requests,
the Executive will contest the claim by either paying the tax claimed and suing
for a refund in the appropriate court or contesting the claim in the United
States Tax Court or other appropriate court, as directed by the Company;
PROVIDED, HOWEVER, that any request by the Company for the Executive to pay the
tax shall be accompanied by an advance from the Company to the Executive of
funds sufficient to make the requested payment plus any amounts payable under
this Section 5 determined as if such advance were an Excise Tax. If directed by
the Company in writing the Executive will take all action necessary to
compromise or settle the claim, but in no event will the Executive compromise
or settle the claim or cease to contest the claim without the written consent
of the Company; PROVIDED, HOWEVER, that the Executive may take any such action
if the Executive waives in writing the Executive’s right to a payment under
this Section 5 for any amounts payable in connection with such claim. The
Executive agrees to cooperate in good faith with the Company in contesting the
claim and to comply with any reasonable request from the Company concerning the
contest of the claim, including the pursuit of administrative remedies, the
appropriate forum for any judicial proceedings, and the legal basis for
contesting the claim. Upon request of the Company, the Executive shall take
appropriate appeals of any judgment or decision that would require the Company
to make a payment under this Section 5. Provided that the Executive is in
compliance with the provisions of this section, the Company shall be liable for
and indemnify the Executive against any loss in connection with, and all costs
and expenses, including attorneys’ fees, which may be incurred as a result of,
contesting the claim, and shall provide to the Executive within 30 days after
each written request therefor by the Executive cash advances or reimbursement
for all such costs and expenses actually incurred or reasonably expected to be
incurred by the Executive as a result of contesting the claim.


 


(f)                                    Should a Tax Authority
finally determine that an additional Excise Tax is owed, then the Company shall
pay an additional Make-Whole Amount to the Executive in a 


 


9

















 


manner consistent with this Section 5 with respect to any additional
Excise Tax and any assessed interest, fines, or penalties. If any Excise Tax as
calculated by the Company or Tax Counsel, as the case may be, is finally
determined by a Tax Authority to exceed the amount required to be paid under
applicable law, then the Executive shall repay such excess to the Company
within 30 days of such determination; provided that such repayment shall be
reduced by the amount of any taxes paid by the Executive on such excess which
is not offset by the tax benefit attributable to the repayment.


 


(g)                                 Notwithstanding the
foregoing, the payment of any Make-Whole Amount to an Executive shall be made
no later than the end of the calendar year following the calendar year in which
the Excise Tax is paid.”


 


6.               TERMINATION DURING POTENTIAL CHANGE IN
CONTROL. If a Potential Change in Control (as defined in Section 8) occurs
during the Agreement Term, and the Company terminates the Executive’s
employment for reasons other than Permanent Disability or Cause during such
Potential Change in Control, the Executive shall be entitled to receive the
benefits that the Executive would have received under Section 3, such benefits
to be calculated based upon the Executive’s compensation prior to the actual
termination of employment but paid within 20 business days of the date of such
termination.


 


7.               CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in
Control” shall be deemed to have occurred on the earliest of a Change in
Ownership, a Change in Effective Control, or a Change in Ownership of Assets,
each as defined below.


 


(a)                                  Change in
Ownership


 


(i)                                     In general. Except as
provided in paragraph (b)(ii) of this Section, a Change in Ownership of the
Company occurs on the date that any one person, or more than one person acting
as a group (as defined in paragraph (a)(ii) of this Section), acquires
ownership of the Company’s stock that, together with stock held by such person
or group, constitutes more than 50% of the total fair market value or total
voting power of the Company’s stock. However, if any one person, or more than
one person acting as a group, is considered to own more than 50% of the total
fair market value or total voting power of the Company’s stock, the acquisition
of additional stock by the same person or persons is not considered to cause a
Change in Ownership of the Company (or to cause a Change in Effective Control
of the Company (within the meaning of paragraph (b) of this Section)). An
increase in the percentage of stock owned by any one person, or persons acting
as a group, as a result of a transaction in which the Company acquires its
stock in exchange for property will be treated as an


 


10














 


acquisition of stock for purposes of this
Section. This paragraph (a)(i) applies only when there is a transfer of the
Company’s stock (or issuance of stock of the Company) and stock in the Company
remains outstanding after the transaction.


 


(ii) Persons acting as a group. For purposes
of paragraph (a)(i) above, persons will not be considered to be acting as a
group solely because they purchase or own stock of the Company at the same
time. However, persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with the Company. If a
person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock, or similar
transaction, such shareholder is considered to be acting as a group with other
shareholders only with respect to the ownership in that corporation before the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.


 


(b)                                 Change in
Effective Control


 


(i) In general. Notwithstanding that the
Company has not undergone a Change in Ownership under paragraph (a) of this
Section, a Change in Effective Control of the Company occurs only on either of
the following dates:


 


(1) The date any one person, or more than one
person acting as a group (as determined under paragraph (a)(ii) of this
Section), acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the Company possessing 30% or more of the total voting power of the stock of
the Company.


 


(2) The date a majority of members of the
Company’s board of directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Company’s board of directors before the date of the appointment
or election.


 


(ii) Acquisition of additional control. If
any one person, or more than one person acting as a group, is considered to
effectively control the Company (within the meaning of this paragraph (b)), the
acquisition of additional control of the Company by the same person or persons
is not considered to cause a Change in Effective Control of the Company (or to
cause a Change in Ownership of the Company within the meaning of paragraph (a) of
this Section).


 


11

















 


(c)                                  Change in
Ownership of Assets


 


(i)                                     In general. A Change in
Ownership of Assets occurs on the date that any one person, or more than one
person acting as a group (as determined in paragraph (a)(ii) of this Section),
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the Company’s assets immediately before such
acquisition or acquisitions. For this purpose, gross fair market value means
the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.


 


(ii)                                  Transfers to a related person—There
is no Change in Control event under this paragraph (c) when there is a transfer
to an entity that is controlled by the shareholders of the transferring
corporation immediately after the transfer, as provided in this paragraph
(c)(ii). A transfer of assets by the Company is not treated as a Change in
Ownership of Assets if the assets are transferred to—


 


(1) A shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to its stock;


 


(2) An entity, 50% or more of the total value
or voting power of which is owned, directly or indirectly, by the Company;


 


(3) A person, or more than one person acting
as a group, that owns, directly or indirectly, 50% or more of the total value
or voting power of all the outstanding stock of the Company; or


 


(4) An entity, at least 50% of the total
value or voting power of which is owned, directly or indirectly, by a person
described in paragraph (c)(ii)(3) above.


 


For purposes of this paragraph (c)(ii) and except as otherwise provided
above, a person’s status is determined immediately after the transfer of the
assets.


 


(iii)                               Persons acting
as a group. Persons will not be considered to be acting as a group solely
because they purchase assets of the Company at the same time. However, persons
will be considered to be acting as a group if they are owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of assets, or
similar business transaction with the Company. If a person, including an entity
shareholder, owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of assets, or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a
corporation only to the extent of the ownership in that corporation before the
transaction giving rise to the 


 


12

















 


change
and not with respect to the ownership interest in the other corporation.


 


8.               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 described in this
paragraph (a) 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 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 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
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.


 


9.               STOCK AND OPTION AWARDS. With respect to any
award granted to the Executive under any of the Company’s stock incentive
plans, including the Company’s 2004 Long-Term Stock Incentive Plan or any
successor program, the following shall apply:


 


(a)                                  if the award includes a
provision substantially similar to the provision contained in the first
paragraph in Appendix A, 


 


13

















 


then after a Change in Control no forfeiture shall be effected pursuant
to such provision unless the Executive shall have been terminated for “Cause”
within the meaning of paragraph 2(b) above; and


 


(b)                                 if the award includes a
provision substantially similar to the provision contained in the second
paragraph in Appendix A, then after a Change in Control no forfeiture shall be
effected pursuant to such provision unless the Executive shall have been
terminated for “Cause” within the meaning of paragraph 2(b) above; and


 


10.         WITHHOLDING. All payments to the Executive under
this Agreement will be subject to withholding of applicable taxes. The Company
shall withhold the applicable taxes in an amount calculated at the minimum
statutory rate and shall pay the amount so withheld to the appropriate tax
authority.


 


11.         NONALIENATION. The interests of the Executive under
this Agreement are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Executive or the Executive’s beneficiary.


 


12.         AMENDMENT. This Agreement may be amended or canceled
only by mutual agreement of the parties in writing without the consent of any
other person. So long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.  Any amendment or
cancellation of this Agreement shall not accelerate the payment of any
compensation or benefit hereunder and shall not otherwise modify or change the
time or times when compensation or benefits are payable hereunder.


 


13.         APPLICABLE LAW. The provisions of this Agreement
shall be construed in accordance with the laws of the State of Illinois,
without regard to the conflict of law provisions of any state.


 


14.         SEVERABILITY. The invalidity or unenforceability of
any provision of this Agreement will not affect the validity or enforceability
of any other provision of this Agreement, and this Agreement will be construed
as if such invalid or unenforceable provision were omitted (but only to the
extent that such provision cannot be appropriately reformed or modified).


 


15.         WAIVER OF BREACH. No waiver by any party hereto of a
breach of any provision of this Agreement by any other party, or of compliance
with any condition or provision of this Agreement to be performed by such other
party, will operate or be construed as a waiver of any subsequent breach by
such other party of any similar or dissimilar provisions and conditions at the
same or any prior or subsequent time. The failure of any party hereto to take
any action by reason of such breach will not deprive such party of the right to
take action at any time while such breach continues.


 


14

















 


16.         SUCCESSORS, ASSUMPTION OF CONTRACT. This Agreement
shall be binding upon and inure to the benefit of the Company and any successor
of the Company. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no succession had
taken place. This Agreement is personal to the Executive and may not be
assigned by the Executive without the written consent of the Company. However,
to the extent that rights or benefits under this Agreement otherwise survive
the Executive’s death, the Executive’s heirs and estate shall succeed to such rights
and benefits pursuant to the Executive’s will or the laws of descent and
distribution; provided that the Executive shall have the right at any time and
from time to time, by notice delivered to the Company, to designate or to
change the beneficiary or beneficiaries with respect to such benefits.


 


17.         NOTICES. Notices and all other communications
provided for in this Agreement shall be in writing and shall be delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid (provided that international mail shall be sent via overnight
or two-day delivery), or sent by facsimile or prepaid overnight courier to the
parties at the addresses set forth below. Such notices, demands, claims and
other communications shall be deemed given:


 


(a)                                  in the case of delivery by
overnight service with guaranteed next day delivery, the next day or the day
designated for delivery;


 


(b)                                 in the case of certified or
registered U.S. mail, five days after deposit in the U.S. mail; or


 


(c)                                  in the case of facsimile,
the date upon which the transmitting party received confirmation of receipt by
facsimile, telephone or otherwise;


 


provided, however, that in
no event shall any such communications be deemed to be given later than the
date they are actually received. Communications that are to be delivered by the
U.S. mail or by overnight service or two-day delivery service are to be
delivered to the addresses set forth below:


to the Company:


 


Corporate
Vice President of Human Resources


Hospira,
Inc.


275 North Field Drive


Lake Forest, Illinois 60064


 


with
a copy (which shall not constitute notice) to:


 


General Counsel and Secretary


Hospira, Inc.


 


15

















 


275 North Field Drive


Lake Forest, Illinois 60064


 


or
to the Executive:


 


Each party, by written
notice furnished to the other party, may modify the applicable delivery
address, except that notice of change of address shall be effective only upon
receipt.


 


18.         RESOLUTION OF ALL DISPUTES. Any controversy or claim
arising out of or relating to this Agreement (or the breach thereof) (a “Dispute”)
shall be settled by alternative dispute resolution procedures in accordance
with Appendix B hereto.  During the
pendency of any Dispute, the Company shall continue to pay the Executive the
full compensation in effect when the notice giving rise to the Dispute was
given (including, but not limited to, salary) and continue the Executive (and,
where applicable, the Executive’s family) as a participant in all compensation,
benefit and insurance plans in which the Executive was participating when the
notice giving rise to the Dispute was given, until such Dispute is resolved.


 


19.         LEGAL AND ENFORCEMENT COSTS. The provisions of this Section
19 shall apply if it becomes necessary or desirable for the Executive to retain
legal counsel or incur other costs and expenses in connection with enforcing
any and all rights under this Agreement or any other compensation plan
maintained by the Company, including, but not limited to, Hospira 2004 Long-Term
Stock Incentive Plan, the Hospira, Inc. Incentive Plan, or, in each case, any
trust adopted pursuant thereto:


 


(a)                                  The Executive shall be
entitled to recover from the Company reasonable attorneys’ fees, costs and
expenses incurred in connection with such enforcement or defense.


 


(b)                                 Payments required under this
Section 19 shall be made by the Company to the Executive (or directly to the
Executive’s attorney) promptly following submission to the Company of
appropriate documentation evidencing the incurrence of such attorneys’ fees,
costs, and expenses.


 


(c)                                  The Executive shall be
entitled to select legal counsel; provided, however, that such right of
selection shall not affect the requirement that any costs and expenses
reimbursable under this Section 19 be reasonable.


 


16

















 


(d)                                 The Executive’s rights to
payments under this Section 19 shall not be affected by the final outcome of
any dispute with the Company.


 


20.         SURVIVAL OF AGREEMENT. Except as otherwise expressly
provided in this Agreement, the rights and obligations of the parties to this
Agreement shall survive the termination of the Executive’s employment with the
Company.


 


21.         ENTIRE AGREEMENT. Except as otherwise provided
herein, this Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior or
contemporaneous agreements, between the parties relating to the subject matter
hereof; provided, however, that nothing in this Agreement shall be construed to
limit any policy or agreement that is otherwise applicable relating to
confidentiality, rights to inventions, copyrightable material, business and/or
technical information, trade secrets, solicitation of employees, interference
with relationships with other businesses, competition, and other similar
policies or agreement for the protection of the business and operations of the
Company and the subsidiaries.


 


22.         COUNTERPARTS. This Agreement may be executed in two
or more counterparts, any one of which shall be deemed the original without
reference to the others.


 


17

















 


IN WITNESS THEREOF, the Executive has hereunto set
his hand, and the Company has caused these presents to be executed in its name
and on its behalf, and its corporate seal to be hereunto affixed on this            day of                       , 2007, all as of the
Effective Date.


 


 


	
   

  	
   

  
	
   

  	
  Ron
  Squarer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOSPIRA,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  
	
   

  	
  Christopher
  B. Begley

  
	
   

  	
  Its:
  Chief Executive Officer

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Brian J. Smith

  	
   

  
	
  Secretary

  	
   

  



 


18














 


APPENDIX A


 


AGREEMENT REGARDING CHANGE IN CONTROL


FORFEITURE PROVISION REFERENCED IN SECTION 9


 


Notwithstanding paragraphs (x*), (y*) and (z*),
these options (this restricted stock award, etc.) shall immediately terminate
(be forfeited), if in the sole opinion and discretion of the Compensation
Committee or its delegate, the employee (a) engages in a material breach of the
company’s Code of Business Conduct; (b) commits an act of fraud, embezzlement
or theft in connection with the employee’s duties or in the course of
employment; or (c) wrongfully discloses secret processes or confidential
information of the company or its subsidiaries.


 


Notwithstanding paragraphs (x*), (y*) and (z*),
these options shall immediately terminate in the event the employee engages
directly or indirectly, for the benefit of the employee or others, in any
activity, employment or business during employment or within twelve (12) months
after the date of termination or retirement which, in the sole opinion and
discretion of the compensation committee or its delegate, is competitive with
the company or any of its subsidiaries.


 






* Provisions contained in
the agreements pertaining to nonforfeiture for death, disability, etc.


 


1

















 


APPENDIX B


 


AGREEMENT REGARDING CHANGE IN CONTROL


ALTERNATIVE DISPUTE RESOLUTION PROCEDURES


 


The parties to the Agreement Regarding Change in
Control dated as of the        day of                         , 2007 (the “Agreement”)
recognize that a bona fide dispute as to certain matters may arise from time to
time during the term of the Agreement which relates to either party’s rights
and/or obligations. To have such a dispute resolved by this Alternative Dispute
Resolution (“ADR”) provision, a party first must send written notice of the
dispute to the other party for attempted resolution by good faith negotiations
between the Executive and the Company within twenty-eight (28) days after such
notice is received (all references to “days” in the ADR provision are to calendar
days).


 


If the matter has not been resolved within
twenty-eight (28) days of the notice of dispute, or if the parties fail to meet
within such twenty-eight (28) days, either party may initiate an ADR proceeding
as provided herein. The parties shall have the right to be represented by
counsel in such a proceeding.


 


23.   To
begin an ADR proceeding, a party shall provide written notice to the other
party of the issues to be resolved by ADR. Within fourteen (14) days after its
receipt of such notice, the other party may, by written notice to the party
initiating the ADR, add additional issues to be resolved within the same ADR.


 


24.   Within
twenty-one (21) days following receipt of the original ADR notice, the parties
shall select a mutually acceptable neutral to preside in the resolution of any
disputes in this ADR proceeding. If the parties are unable to agree on a
mutually acceptable neutral within such period, either party may request the
President of the CPR Institute for Dispute Resolution (“CPR”), 366 Madison
Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to
the following procedures:


 


(a)                                  The CPR shall submit to the
parties a list of not less than five (5) candidates within fourteen (14) days
after receipt of the request, along with a Curriculum
Vitae for each candidate.  No
candidate shall be an employee, director or shareholder of either party or any
of their subsidiaries or affiliates.


 


(b)                                 Such list shall include a
statement of disclosure by each candidate of any circumstances likely to affect
his or her impartiality.


 


(c)                                  Each party shall number the
candidates in order of preference (with the number one (1) signifying the
greatest preference) and shall deliver the list to the CPR within seven (7) days
following receipt of the list of candidates. If a party believes a conflict of
interest exists regarding any of the candidates, that party shall provide a
written explanation of the conflict to the CPR along with its list showing its
order 


 


1

















 


of preference for the candidates. Any party failing to return a list of
preferences on time shall be deemed to have no order of preference.


 


(d)                                 If the parties collectively
have identified fewer than three (3) candidates deemed to have conflicts, the
CPR immediately shall designate as the neutral the candidate for whom the
parties collectively have indicated the greatest preference. If a tie should
result between two candidates, the CPR may designate either candidate. If the
parties collectively have identified three (3) or more candidates deemed to
have conflicts, the CPR shall review the explanations regarding conflicts and,
in its sole discretion, may either (i) immediately designate as the neutral the
candidate for whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5) candidates, in
which case the procedures set forth in subparagraphs 2(a)-2(d) shall be
repeated.


 


25.   No
earlier than twenty-eight (28) days or later than fifty-six (56) days after
selection, the neutral shall hold a hearing to resolve each of the issues
identified by the parties. The ADR proceeding shall take place at a location
agreed upon by the parties. If the parties cannot agree, the neutral shall designate
a location other than the principal place of business of either party or any of
the subsidiaries or affiliates.


 


26.   At
least seven (7) days prior to the hearing, each party shall submit the
following to the other party and the neutral:


 


(a)                                  a copy of all exhibits on
which such party intends to rely in any oral or written presentation to the
neutral;


 


(b)                                 a list of any witnesses such
party intends to call at the hearing, and a short summary of the anticipated
testimony of each witness;


 


(c)                                  a proposed ruling on each
issue to be resolved, together with a request for a specific damage award or
other remedy for each issue. The proposed rulings and remedies shall not
contain any recitation of the facts or any legal arguments and shall not exceed
one (1) page per issue.


 


(d)                                 a brief in support of such
party’s proposed rulings and remedies, provided that the brief shall not exceed
twenty (20) pages. This page limitation shall apply regardless of the number of
issues raised in the ADR proceeding. Except as expressly set forth in
subparagraphs 4(a) - 4(d), no discovery shall be required or permitted by any
means, including 


 


2

















 


deposition, interrogatories, requests for admissions or production of
documents.


 


27.   The
hearing shall be conducted on two (2) consecutive days and shall be governed by
the following rules:


 


(a)                                  Each party shall be entitled
to five (5) hours of hearing time to present its case. The neutral shall
determine whether each party has had the five (5) hours to which it is
entitled.


 


(b)                                 Each party shall be
entitled, but not required, to make an opening statement, to present regular or
rebuttal testimony, documents or other evidence, to cross-examine witnesses and
to make a closing argument. Cross-examination of witnesses shall occur
immediately after their direct testimony, and cross-examination time shall be
charged against the party conducting the cross-examination.


 


(c)                                  The party initiating the ADR
shall begin the hearing and, if it chooses to make an opening statement, shall
address not only issues it raised, but also any issues raised by the responding
party. The responding party, if it chooses to make an opening statement, also
shall address all issues raised in the ADR. Thereafter, the presentation of
regular and rebuttal testimony and documents, other evidence and closing
arguments shall proceed in the same sequence.


 


(d)                                 Except when testifying,
witnesses shall be excluded from the hearing until closing arguments.


 


(e)                                  Settlement negotiations, including
any statements made therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also shall not be
admissible. As to all other matters, the neutral shall have sole discretion
regarding the admissibility of any evidence.


 


28.   Within
seven (7) days following completion of the hearing, each party may submit to
the other party and the neutral a post-hearing brief in support of its proposed
rulings and remedies, provided that such brief shall not contain or discuss any
new evidence and shall not exceed ten (10) pages. This page limitation shall
apply regardless of the number of issues raised in the ADR proceeding.


 


29.   The
neutral shall rule on each disputed issue within fourteen (14) days following
completion of the hearing. Such ruling shall adopt in its entirety the proposed
ruling and remedy of one of the parties on each disputed issue but may adopt
one party’s proposed rulings and remedies on some issues and the other party’s
proposed rulings and 


 


3

















 


remedies on other issues. The neutral shall not issue any written
opinion or otherwise explain the basis of the ruling.


 


30.   The
neutral shall be paid a reasonable fee plus expenses by the Company. The
Company shall bear its own fees and expenses. The Executive’s fees and expenses
shall be paid or reimbursed by the Company to the extent provided by the
Agreement.


 


31.   The
rulings of the neutral and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.


 


32.   Except
as provided in Section 9 or as required by law, the existence of the dispute,
any settlement negotiations, the ADR hearing, any submissions (including
exhibits, testimony, proposed rulings, and briefs), and the rulings shall be
deemed Confidential Information. The neutral shall have the authority to impose
sanctions for unauthorized disclosure of Confidential Information.


 


4