Exhibit
10.2


Amended effective August 22, 2007


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 initially set at Five Thousand Dollars ($5,000.00) per year.


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 shall be as
determined from time to time in the sole discretion of the Board, with such
amount 

















initially set at One Thousand Dollars ($1,000.00) for
each Board or Committee Meeting attended in person and Five Hundred Dollars
($500.00) 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           Chairman of the Board.  As of the Effective Date, the non-employee
Director serving as the Company’s Chairman of the Board shall be granted a
one-time initial option to purchase such number of shares and under such terms
and conditions as shall be determined by the Board at the time of grant.


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 (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 


 


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                                                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 for all periods while the Director is actively
serving as a Director of the Company (the “Restricted Period”):


(i)                                     The shares may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of.


(ii)                                  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, 


 


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                                                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 pursuant to such 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 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 


 


 


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                                                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 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 


 


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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.


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.


 


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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.  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, unless the Director
affected shall expressly consent thereto.


SECTION 9

ELECTIVE DEFERRALS


9.1           DEFERRAL
ELECTION


(i)                                     General. 
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”).


(ii)                                  Deferral
Election.  An election to defer the Director Fees shall be made on
an election form as provided by the Board (the “Deferral Election”).  Any Deferral Election 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 unless a new election with respect to such year
is filed in accordance with rules established by the Board prior to the first
day of the year for which it is to be effective.  Notwithstanding the foregoing, if the
election is being made with respect to the Director first becoming a member of
the Board, an election submitted within 30 days of becoming a Director shall be
effective for all fees paid following the date on which the election is
received by the Company.  A director may
elect to convert a Restricted Stock award into a Restricted Stock Unit award by
submitting a Deferral Election prior to the first day of the calendar year in
which the Forfeiture Period applicable to the Restricted Stock lapses.


The
Deferral Election form shall provide for the types and amounts of the Director
Fees to be deferred and shall provide for the timing and method of distribution
at the end of the deferral period.


 


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(iii)                               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:


(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 manner of the
distribution of the amounts deferred pursuant to such election.  In the event that no election is made with
respect to the timing or method of distribution as of the date of the Director’s
termination, the Director’s entire Stock Unit Account shall be distributed in a
single lump sum stock payment as of the first anniversary of the Director’s
date of termination.


 


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(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 immediately distribute all, but not less
than all, of the Stock Unit Accounts as of the date of such termination.


 


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