**Exhibit10.2**

**Amended effective August 22, 2007**

**HOSPIRA, INC. NON-EMPLOYEE DIRECTORS’ FEE PLAN**

 SECTION 1PURPOSE

Hospira, Inc. Non-Employee Directors’ Fee Plan (the “Plan”)has been established by Hospira, Inc. (the “Company”), effective as of April30, 2004 (the “Effective Date”) to attract and retain as members of its Boardof Directors persons who are not employees of the Company or any of itssubsidiaries but whose business experience and judgment are a valuable asset tothe Company and its subsidiaries.  ThePlan provides for the payment to Directors of fees in the form of some or allof the following: Annual Retainer Fees, Committee Chairman Fees, Meeting Feesand Restricted Stock awards (generally, the “Director Fees”).

SECTION 2DIRECTORS COVERED

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

SECTION 3FEES PAYABLE TO DIRECTORS

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

3.2           Committee Chairman Fee.  A Director who serves as Chairman of anycommittee created by the Board shall be entitled to an additional annualretainer fee (the “Committee Chairman Fee”) to be paid quarterly, on the lastbusiness day of each calendar quarter for which the Director served in thecapacity as a committee chairman (excluding, on a pro rata basis, the partialmonth in which he is first selected to be the committee chairman and any wholemonths in which he did not serve in such capacity).  The amount of the Committee Chairman Feeshall 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 Boardor any committee thereof  shall beentitled to an additional fee (the “Meeting Fee”) to be paid on the lastbusiness day of each calendar quarter in which the meeting was held.  The amount of the Meeting Fee shall be asdetermined from time to time in the sole discretion of the Board, with suchamount 

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initially set at One Thousand Dollars ($1,000.00) foreach Board or Committee Meeting attended in person and Five Hundred Dollars($500.00) for each meeting attended other than in person, in a manneracceptable to the Board.  In the eventthere is held one or more committee or Board meetings on the same date, therewill 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-employeeDirector serving as the Company’s Chairman of the Board shall be granted aone-time initial option to purchase such number of shares and under such termsand conditions as shall be determined by the Board at the time of grant.

SECTION 4RESTRICTED STOCK

4.1           Annual Restricted Stock Award.

(i)                                     As of January 1, 2008, each Director, whois elected a Non-Employee Director at the annual shareholders meeting (or whoretains 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 RestrictedStock shall be granted automatically to the Director on the last business dayof the calendar quarter in which the annual shareholder meeting occurs.  If more than one shareholder meeting occursin a given calendar year, only a single Restricted Stock award shall be grantedfor such year and such award shall be granted as of the last business day ofthe calendar quarter in which such first shareholder meeting occurs.

(ii)                                  The number of shares covered by theRestricted Stock award shall be equal to that number of shares whose aggregatevalue (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 thenext whole share. Each Non-Employee Director as of September 28, 2007 shall begranted automatically a Restricted Stock award equal to that number of shareswhose aggregate value (based on the Fair Market Value of a share of Stock onSeptember 28, 2007) equals Fifty Thousand Dollars ($50,000.00), rounded down tothe next whole share.

(iii)                               Notwithstanding anything contained inthis Section 4.1 to the contrary, a Non-Employee Director, who is electedbetween any annual shareholders meetings, shall automatically be grantedRestricted Stock on the last business day of the calendar quarter in which suchDirector is elected; provided, however, that the number of shares of theRestricted Stock granted to such Director shall be equal to that number ofshares (rounded to the next whole share) whose aggregate value (based on theFair Market Value of a share of Stock on the date of grant) equals One HundredFifty Thousand Dollars ($150,000.00), multiplied by the fraction of A over 12,with “A”  being the number of wholecalendar months between the first day of the month coinciding with orimmediately following such Director’s election and first day of the monthduring which the next annual shareholders 

 

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                                                meeting is scheduled to occur.  The term “Fair Market Value” shall be asdefined in the 2004 Plan (as defined in Section 6.6 below).

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

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

4.4           Forfeiture Period.  All Restricted Stock granted under thisSection 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 onthe earliest of the following events:

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

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

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

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

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

4.6           Restrictions on Sale.  All Restricted Stock granted under thisSection 4 shall be subject to the following restrictions on sale beginning onthe date of grant and continuing for all periods while the Director is activelyserving 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 theCompany issued with respect to shares covered by Awards granted under thisSection 4 as a result of any stock dividend, 

 

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                                                stock split or reorganization, shall besubject to the restrictions and other provisions of this Section 4.

(iii)                               A Director shall not be entitled toreceive any shares prior to completion of all actions deemed appropriate by theCompany to comply with federal or state securities laws and stock exchangerequirements.

SECTION 5CHANGE IN CONTROL

In the event of a Change in Control, (i) allRestricted Stock awards shall become fully vested and shall no longer besubject to the restrictions set forth in Section 4 of this Plan, and (ii) allDeferred Fees shall be paid to the Director pursuant to such Director’sDeferral Election.

SECTION6OPERATION AND ADMINISTRATION

6.1           Administration.

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

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

(iii)                               Except to the extent prohibited by applicable law orthe applicable rules of a stock exchange, the Board may delegate to theofficers or employees of the Company and its subsidiaries the authority toexecute and deliver such instruments and documents, to do all such acts andthings, and to take all such other steps deemed necessary, advisable orconvenient for the effective administration of the Plan in accordance with itsterms and purpose, except that the Board may not delegate any discretionaryauthority with respect to substantive decisions or functions regarding the Planor benefits and awards thereunder, including, but not limited to, decisions regardingthe timing, eligibility, pricing, amount or other material terms of suchbenefits or awards. Any such delegation may be revoked by the Board at anytime.

(iv)                              To the extent that the Board determinesthat the restrictions imposed by the Plan preclude the achievement of thematerial purposes of the benefit provided herein in jurisdictions outside theUnited States, if applicable, the Board will have the 

 

 

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                                                authority and discretion to modify thoserestrictions as the Board determines to be necessary or appropriate to conformto applicable requirements or practices of jurisdictions outside of the UnitedStates.

6.2           Limits of Liability.

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

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

6.3           Rights of Director.  Nothing contained in this Plan or in anyAward Agreement (or in any other documents related to this Plan or to any awardor Award Agreement) shall confer upon any Director any right to continue in theservice of the Company or a subsidiary, constitute any contract or limit in anyway the right of the Company or a subsidiary to change such person’scompensation or other benefits or to terminate the service of such person withor without cause or confer any right on the part of such person to be nominatedfor reelection to the Board, to be reelected to the Board or to be appointed toany committee of the Board.

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

6.5           Action by Company.  Any action required or permitted to be takenby the Company shall be by resolution of the Board, or by action of one or moremembers of the Board (including a committee of the Board) who are dulyauthorized to act for the Board or (except to the extent prohibited by theprovisions of Rule 16b-3, applicable local law, the applicable rules of anystock exchange, or any other applicable rules) by a duly authorized officer ofthe Company.

6.6           Hospira, Inc. 2004 Long-Term StockIncentive Plan.  Any shares of Stockawarded to, or subject to Awards granted to Directors under this Plan asDirector Fees shall be issued pursuant to the Hospira, Inc. 2004 Long-TermStock Incentive Plan (the “2004 Plan”), subject to all of the terms andconditions herein.  Except in the eventof conflict, all provisions of the 2004 Plan shall apply to this Plan.  In the event of any conflict between theprovisions of the 2004 Plan and this Plan, this Plan shall control, providedthat the Director Fees granted provided may not exceed the share limitationsset forth in the 2004 Plan.

SECTION 7MISCELLANEOUS

7.1           Beneficiaries.  Each Director or former Director entitled topayment of Director Fees hereunder, from time to time may name any person orpersons (who may be named contingently or successively) to whom any DirectorFees earned by him and payable to him are 

 

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to be paid in case of his death before he receives anyor all of such Director Fees.  Eachdesignation will revoke all prior designations by the same Director or formerDirector, shall be in form prescribed by the Company, and will be effectiveonly when filed by the Director or former Director in writing with the Secretaryof the Company during his lifetime. If a deceased Director or former Directorshall have failed to name a beneficiary in the manner provided above, or if thebeneficiary named by a Director or former Director dies before him or beforepayment 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 DirectorFees 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 insuch proportions as the Company determines; or

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

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

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

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

7.4           Unfunded Plan.  Any obligation to pay cash or Deferred Feesunder this Plan shall constitute an unfunded unsecured obligation of theCompany.  The Company may, but shall notbe obligated to, establish a trust to hold assets for the purpose of satisfyingobligations under this Plan.

7.5           Adjustment Provisions.  In the event of a corporatetransaction involving the Company (including, without limitation, any stockdividend, stock split, extraordinary cash dividend, recapitalization,reorganization, merger, consolidation, split-up, spin-off, combination orexchange of shares), in addition to any adjustments made pursuant to Section3.4 of the 2004 Plan, the Board may adjust the Director Fees (includingDeferred Fees) to preserve the benefits or potential benefits of participationin the Plan.

7.6           Gender and Number.**** Where the context admits, words in any gendershall include any other gender, words in the singular shall include the pluraland the plural shall include the singular.

 

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SECTION 8AMENDMENT AND DISCONTINUANCE

The Board may, at any time, amend or terminate thePlan, and may amend any Award Agreement, provided that no amendment ortermination may, in the absence of written consent to the change by theaffected Director (or, if the Director is not then living, the affectedbeneficiary), adversely affect the rights of any Director or beneficiary underany Award granted under the Plan prior to the date such amendment is adopted bythe Board; and further provided, that adjustments pursuant to Section 9.4 shallnot be subject to the foregoing limitations of this Section 8.  Any amendment or discontinuance of the Planshall be prospective in operation only, and shall not affect the payment of anyDirector Fees theretofore earned by any Director, or the conditions under whichany such fees are to be paid or forfeited under the Plan, unless the Directoraffected shall expressly consent thereto.

SECTION 9ELECTIVE DEFERRALS

9.1           DEFERRALELECTION

(i)                                     General. A Director who would otherwise be entitled to receive Director Fees inthe form of shares of Stock or a cash payment under the terms of the Plan mayinstead elect to defer delivery of all or a portion of such fees, subject tothe following terms of this Section 9 (once deferred, the “Deferred Fees”).

(ii)                                  DeferralElection.  An election to defer the Director Fees shall be made onan election form as provided by the Board (the “Deferral Election”).  Any Deferral Election shall be irrevocable asof the first day of the year for which it is to be effective.  Deferral Elections shall remain in effectwith respect to any future year unless a new election with respect to such yearis filed in accordance with rules established by the Board prior to the firstday of the year for which it is to be effective.  Notwithstanding the foregoing, if theelection is being made with respect to the Director first becoming a member ofthe Board, an election submitted within 30 days of becoming a Director shall beeffective for all fees paid following the date on which the election isreceived by the Company.  A director mayelect to convert a Restricted Stock award into a Restricted Stock Unit award bysubmitting a Deferral Election prior to the first day of the calendar year inwhich the Forfeiture Period applicable to the Restricted Stock lapses.

TheDeferral Election form shall provide for the types and amounts of the DirectorFees to be deferred and shall provide for the timing and method of distributionat the end of the deferral period.

 

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

(a)                                  Cash-based Deferred Fees shall beconverted to Stock Units by dividing the cash-based fees the Director electedto defer by the Fair Market Value of the Stock as of the date the Directorwould have had a right to payment of such Director Fees had the Director notmade a Deferral Election.

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

9.2           ACCOUNTS

(i)                                     Stock UnitAccount.  A “Stock Unit Account” shall be maintained onbehalf of each Director who elects to defer all or a portion of his DirectorFees under this Section 9, for the period during which delivery of such fees isdeferred. A Director’s Stock Unit Account shall be subject to the followingadjustments:

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

(b)                                 As of each dividend payment date for theStock, the Director’s Stock Unit Account shall be credited with additionalStock Units (including fractional Stock Units) equal to (i) the amount of thedividend that would be payable with respect to the number of shares of Stockequal to the number of Stock Units credited to the Director’s Stock UnitAccount 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 withrespect to a Director’s Stock Unit Account under Section 9.3, the Stock Unitscredited to a Director’s Stock Unit Account shall be reduced by the amountsdistributed to the Director.

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

9.3           DISTRIBUTIONS

(i)                                     General.  Subject tothe terms of this Section 9.3, a Director shall specify, as part of hisDeferral Election with respect to Deferred Fees, the time and manner of thedistribution of the amounts deferred pursuant to such election.  In the event that no election is made withrespect to the timing or method of distribution as of the date of the Director’stermination, the Director’s entire Stock Unit Account shall be distributed in asingle lump sum stock payment as of the first anniversary of the Director’sdate of termination.

 

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(ii)                                  If a scheduled distribution date wouldotherwise occur after a dividend record date but before the payment of thedividend, 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 todistributions under this Section 9.3, the vesting provisions of Section 4 ofthe Plan shall apply to the Stock Units credited to the Director’s Stock UnitAccount as though each unit represented one share of Stock, and with all unitsattributable to payment of dividends being fully vested as of the date they arecredited to the Director’s Stock Unit Account.

9.4           Termination of Deferral by Company.  The Board shall retain the right toterminate, at any time, for any reason, or no reason, the deferral provisionsunder this Section 9 (which may, but need not, be in conjunction with atermination of the Plan), and shall immediately distribute all, but not lessthan all, of the Stock Unit Accounts as of the date of such termination.

 

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