**Exhibit10.2**

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**HOSPIRA 2004LONG-TERM STOCK INCENTIVE PLAN**

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**NQSO TERMS**

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The Participant specified below has been granted this Option by Hospira, Inc.(the “Company”) under the terms of the Hospira 2004 Long-Term Stock IncentivePlan (the “Plan”).  The Option shall besubject to the following terms and conditions (the “Option Terms”):

 

1.             Termsof Award.  The following words andphrases relating to the grant of the Option shall have the following meanings:

 

(a)           The “Participant” is                                  .

 

(b)           The “Grant Date” is                                        .

 

(c)           The number of “CoveredShares” shall be                shares of Stock.

 

(d)           The “Exercise Price”is $                   per share.

 

Except where the context clearly implies to thecontrary, any capitalized term in this award shall have the meaning ascribed tothat term under the Plan.

 

2.             Non-QualifiedStock Option.  The Option is notintended to constitute an “incentive stock option” as that term is used in Codesection 422.

 

3.             Dateof Exercise.  Subject to thelimitations of the Option Terms, on the first anniversary of the Grant Dateone-third of the Covered Shares subject to These Options (rounded up) may bepurchased; on the second anniversary of the Grant Date two-thirds of theCovered Shares subject to These Options (rounded up) may be purchased; and onthe third anniversary of the Grant Date these Options may be exercised in full,provided the Expiration Date has not occurred prior to such vesting dates.

 

(a)           Notwithstanding theforegoing provisions of this paragraph 3, the Option shall become fullyexercisable upon a Change in Control that occurs on or before the Date ofTermination.

 

(b)           The Option may beexercised (prior to or following the Date of Termination) only as to thatportion of the Covered Shares which may be purchased under the foregoingschedule, as of the date of exercise.

 

(c)           The Covered Sharesshall continue to become exercisable pursuant to this Section 3 until theExpiration Date (as defined in Section 4).

 

(d)           Notwithstanding theforegoing provisions of this paragraph 3, in the event of termination ofemployment for reasons other than death, Disability or Retirement, the Optionmay only be exercised on or after the Date of Termination only as to thatportion 

 

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of the CoveredShares for which it was exercisable immediately prior to the Date ofTermination, or became exercisable on the Date of Termination.

 

4.             Expiration.  The Option shall not be exercisable after theCompany’s close of business on the last business day that occurs prior to theExpiration Date.  The “Expiration Date”shall be the earliest to occur of:

 

(a)           the seven-yearanniversary of the Grant Date;

 

(b)           if the terminationof employment occurs for reasons other than death, Disability (as defined in Section 9)or Retirement (as defined in Section 9), the three-month anniversary ofthe Date of Termination (as defined in Section 9); provided, however, thatif the Participant dies during such three month period following the Date of Termination,then the three-month anniversary of the date of death;

 

(c)           the date on whichthe Participant engages in conduct which constitutes Cause;

 

(d)           the date on whichthe Participant, at any time prior to the one-year anniversary of the Date ofTermination, engages, directly or indirectly, for the benefit of theParticipant or others, in any activity, employment or business which, in thesole opinion and discretion of the Committee, is competitive with the Companyor any of its Subsidiaries; or

 

(e)           as provided under Restricted Activityin Section 5.

 

5.             ****Restricted Activity********.****

 

(a)           The Participantshall not, while employed by the Company and for a period of one year followingthe termination of employment for any reason:

 

(i)            withoutthe prior written consent of the Committee, directly or indirectly engage orassist any person engaging in any Competitive Business (as defined in Section 9),individually, or as an officer, director, employee, agent, consultant, owner,partner, lender, manager, member, principal, or in any other capacity, orrender any services to any entity that is engaged in any Competitive Business;provided, however, that the Participant’s ownership of 1% of any class ofequity security of any entity engaged in any Competitive Business shall not bedeemed a breach of this Section 5(a) provided such securities arelisted on a national securities exchange or quotation system or have beenregistered under Section 12(g) of the Securities Exchange Act of1934, as amended; or

 

(ii)           directlyor indirectly divert, take away, solicit, or assist others in soliciting anycurrent or prospective customer, supplier, independent contractor or serviceprovider of the Company or any affiliate or otherwise interfere with the relationship between the Company or anyaffiliate and any current or prospective customer, service provider, supplier,independent contractor or stockholder.

 

 

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(b)           The Participantshall not, while employed by the Company and for a period of two yearsfollowing the termination of employment for any reason: directly or indirectlyinduce any person to leave employment with the Company, or solicit foremployment other than on behalf of the Company, offer employment to, or employ,any person who was an employee of the Company, in each case within six monthsof such inducement, solicitation, or offer.

 

(c)           If the Participantengages in any activity described in paragraph 5(a) or paragraph 5(b) abovewithout the written consent of the Committee, the Company, as determined by theCommittee in its sole discretion, may (i) cancel and terminate all of theParticipant’s unexercised, unexpired or unpaid Options (whether vested orunvested) under the Plan, and (ii) rescind any exercise, payment or deliveryunder any Option occurring within 12 months prior to, or at any time following,the date of the Participant’s termination of employment for any reason.  Upon any such rescission, the Participantshall immediately (A) pay to the Company the amount of any gain realizedor payment received, and (B) forfeit to the Company any Shares received asa result of the rescinded exercise, payment or delivery under any Options, insuch manner and on such terms and conditions as the Committee shall require,and the Company shall be entitled, as permitted by applicable law, to deductfrom any amounts the Company owes the Participant from time to time the amountof any such gain realized or payment received. “Gain realized” shall be the excess of the Fair Market Value of theShares on the date of exercise over the Exercise Price, multiplied by thenumber of Shares purchased.

 

6.             Methodof Option Exercise.  Subject to theOption Terms and the Plan, the Option may be exercised in whole or in part byfiling a written notice with the Secretary of the Company at its corporateheadquarters prior to the Company’s close of business on the last business daythat occurs prior to the Expiration Date. Such notice shall specify the number of shares of Stock which theParticipant elects to purchase, and shall be accompanied by payment of theExercise Price for such shares of Stock indicated by the Participant’selection. Payment may be by cash or by check payable to the Company, or exceptas otherwise provided by the Committee before the Option is exercised: (i) allor a portion of the Exercise Price may be paid by the Participant by deliveryof shares of Stock (by actual delivery or by attestation) owned by theParticipant and acceptable to the Committee having an aggregate Fair MarketValue (valued as of the date of exercise) that is equal to the amount of cashthat would otherwise be required; and (ii) the Participant may pay theExercise Price by authorizing a third party to sell shares of Stock (or asufficient portion of the shares) acquired upon exercise of the Option andremit to the Company a sufficient portion of the sale proceeds to pay theentire Exercise Price and any tax withholding resulting from suchexercise.  Except as otherwise providedby the Committee prior to exercise, payments made with shares of Stock inaccordance with clause (i) above shall be limited to shares held by theParticipant for not less than six months prior to the payment date.  The Option shall not be exercisable if and tothe extent the Company determines that such exercise would violate applicablestate or Federal securities laws or the rules and regulations of anysecurities exchange on which the Stock is traded and shall not be exercisableduring any blackout period established by the Company from time to time.

 

7.             Withholding.  The exercise of the Option is subject towithholding of all applicable taxes.  Atthe election of the Participant, and subject to such rules and limitationsas 

 

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may be established by the Committee from time to time,such withholding obligations may be satisfied (i) through cash payment bythe Participant; (ii) through the surrender of shares of Stock by (actualdelivery or by attestation) which the Participant already owns (provided,however, that to the extent shares described in this clause (ii) are usedto satisfy more than the minimum statutory withholding obligation, as describedbelow, then, except as otherwise provided by the Committee, payments made withshares of Stock in accordance with this clause (ii) shall be limited toshares held by the Participant for not less than six months prior to thepayment date); or (iii) through the surrender of shares of Stock to whichthe Participant is otherwise entitled under the Plan; provided, however, thatsuch shares under this clause (iii) may be used to satisfy not more thanthe Company’s minimum statutory withholding obligation (based on minimumstatutory withholding rates for Federal and state tax purposes, includingpayroll taxes, that are applicable to such supplemental taxable income).

 

8.             Transferability.  The Option is not transferable by theParticipant other than by will or by the laws of descent and distribution, andduring the Participant’s life, may be exercised only by the Participant.  It may not be assigned, transferred (exceptas aforesaid), pledged or hypothecated by the Participant in any way whether byoperation of law or otherwise, and shall not be subject to execution,attachment or similar process.  Any attemptat assignment, transfer, pledge or hypothecation, or other disposition of thisOption contrary to the provisions hereof, and the levy of any attachment orsimilar process upon this option, shall be null and void and without effect.

 

9.             Definitions.  For purposes of the Option Terms, words andphrases shall be defined as follows:

 

(a)           Cause.  The term “Cause” shall mean, in the soleopinion and discretion of the Committee, the Participant has (i) engagedin a material breach of the Company’s code of business conduct, (ii) committedan act of fraud, embezzlement or theft in connection with the Participant’sduties or in the course of employment, or (iii) wrongfully disclosedsecret processes or confidential information of the Company or itssubsidiaries.

 

(b)           CompetitiveBusiness.  The term “CompetitiveBusiness” means any business activity in which the Company or any Subsidiary isactively engaged at the time the Participant’s employment terminates.  For these purposes, entities deemed to beengaged in Competitive Business include, by way of example and notlimitation,  Abraxis BioScience, Inc.,Baxter International Inc., Teva Pharmaceuticals, Becton, Dickinson and Company,B. Braun Melsungen AG, Cardinal Healthcare Inc., Fresenius Medical CareAG, Terumo Medical Corporation, Patheon, Inc., and Edwards LifesciencesCorporation.

 

(c)           Date ofTermination.  The term “Date ofTermination” means the first day occurring on or after the Grant Date on whichthe Participant is not employed by the Company or any Subsidiary, regardless ofthe reason for the termination of employment; provided that a termination ofemployment shall not be deemed to occur by reason of a transfer of theParticipant between the Company and a Subsidiary or between two Subsidiaries;and further provided that the Participant’s employment shall not be consideredterminated while the Participant is on a leave of absence from the Company or 

 

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a Subsidiaryapproved by the Participant’s employer.  If, as a result of a sale or othertransaction, the Participant’s employer ceases to be a Subsidiary (and theParticipant’s employer is or becomes an entity that is separate from theCompany), and the Participant is not, at the end of the 30-day period followingthe transaction, employed by the Company or an entity that is then aSubsidiary, then****the occurrence ofsuch transaction shall be treated as the Participant’s Date of Terminationcaused by the Participant being discharged by the employer.

 

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

 

(e)           Retirement.  “Retirement” of the Participant means, theoccurrence of the Participant’s Date of Termination on or after the date thatthe Participant reaches the age of 55 and has 10 years of combined service withthe Company or its subsidiaries (or with Abbott Laboratories and itsaffiliates, provided that the Participant transitioned employment from Abbottto the Company in conjunction with the distribution of the Company’s commonstock to the Abbott shareholders) (as determined by the Committee).

 

10.          Heirsand Successors.  The Option Termsshall be binding upon, and inure to the benefit of, the Company and itssuccessors and assigns, and upon any person acquiring, whether by merger,consolidation, purchase of assets or otherwise, all or substantially all of theCompany’s assets and business.

 

11.          Administration.  The authority to manage and control theoperation and administration of the Option Terms shall be vested in theCommittee, and the Committee shall have all powers with respect to the OptionTerms as it has with respect to the Plan. Any interpretation of the OptionTerms by the Committee and any decision made by it with respect to the OptionTerms is final and binding on all persons.

 

12.          PlanGoverns. Notwithstanding anything in the Option Terms to the contrary, theOption Terms shall be subject to the terms of the Plan, a copy of which may beobtained by the Participant from the office of the Secretary of the Company;and the Option Terms is subject to all interpretations, amendments, rules andregulations promulgated by the Committee from time to time pursuant to thePlan.

 

13.          NotAn Employment Contract. The Option will not confer on the Participant anyright with respect to continuance of employment or other service with theCompany or any Subsidiary, nor will it interfere in any way with any right theCompany or any Subsidiary would otherwise have to terminate or modify the termsof such Participant’s employment or other service at any time.

 

14.          Notices.  Any written notices provided for in the OptionTerms or the Plan shall be in writing and shall be deemed sufficiently given ifeither hand delivered or if sent by fax or overnight courier, or by postagepaid first class mail. Notices sent by mail shall be deemed received threebusiness days after mailing but in no event later than the date of actualreceipt. 

 

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Notices shall be directed, if to the Participant, atthe Participant’s address indicated by the Company’s records, or if to theCompany, at the Company’s principal executive office.

 

15.          FractionalShares. In lieu of issuing a fraction of a share upon any exercise of theOption, resulting from an adjustment of the Option pursuant to paragraph 3.4 ofthe Plan or otherwise, the Company will be entitled to pay to the Participantan amount equal to the fair market value of such fractional share.

 

16.          NoRights As Shareholder.  TheParticipant shall not have any rights of a shareholder with respect to theshares subject to the Option, until a stock certificate has been duly issuedfollowing exercise of the Option as provided herein.

 

17.          Amendment.  The Option Terms may be amended in accordancewith the provisions of the Plan, and may otherwise be amended by writtenagreement of the Participant and the Company without the consent of any otherperson.

 

IN WITNESS WHEREOF, the Company has caused these presents to beexecuted in its name and on its behalf, all as of the Grant Date.

 
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