**Exhibit 10.12**

 

# **AGREEMENT REGARDINGCHANGE IN CONTROL**

 

THIS AGREEMENT (“Agreement”), is made and entered into as of the    day of April, 2004 (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 ofits shareholders to foster the continuous employment of key managementpersonnel, and the Board of Directors of the Company (the “Board”) recognizesthat, as is the case with many publicly held corporations, a change in controlmight occur and that such possibility, and the uncertainty and questions whichit may raise among management, may result in the departure or distraction ofmanagement personnel to the detriment of the Company and its shareholders; and

 

WHEREAS, the Board has determined that appropriate steps should betaken to reinforce and encourage the continued attention and dedication ofmembers of the Company’s management, including the Executive, to their assignedduties without distraction in the face of potentially disturbing circumstancesarising from the possibility of a change in control of the Company;

 

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

 

1.   AGREEMENTTERM. THE INITIAL “AGREEMENT TERM” SHALL BEGIN ON THE EFFECTIVE DATE AND SHALLCONTINUE THROUGH DECEMBER 31, 2007. AS OF DECEMBER 31, 2004, AND AS OF EACH DECEMBER 31THEREAFTER, THE AGREEMENT TERM SHALL EXTEND AUTOMATICALLY TO THE THIRDANNIVERSARY THEREOF UNLESS THE COMPANY GIVES NOTICE TO THE EXECUTIVE PRIOR TOTHE DATE OF SUCH EXTENSION THAT THE AGREEMENT TERM WILL NOT BE EXTENDED. NOTWITHSTANDINGTHE FOREGOING, IF A CHANGE IN CONTROL (AS DEFINED IN SECTION 7 BELOW),OCCURS DURING THE AGREEMENT TERM, THE AGREEMENT TERM SHALL CONTINUE THROUGH ANDTERMINATE ON THE SECOND ANNIVERSARY OF THE DATE ON WHICH THE CHANGE IN CONTROLOCCURS.

 

2.   ENTITLEMENTTO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled to the Change inControl Benefits described in Section 3 hereof if the Executive’semployment by the Company is terminated during the Agreement Term but after aChange in Control (i) by the Company for any reason other than PermanentDisability or Cause, (ii) by the Executive for Good Reason or (iii) by the

 

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Executive for any reason during the 30-dayperiod commencing on the first date which is six months after the date of theChange in Control.  For purposes of thisAgreement:

 

(a)                                  Atermination of the Executive’s employment shall be treated as a termination byreason of “Permanent Disability” only if, due to a mental or physicaldisability, the Executive is absent from the full time performance of dutieswith the Company for a period of at least twelve consecutive months and failsto return to the full time performance of duties within 30 days after receiptof a demand by the Company to do so.

 

(b)                                 Theterm “Cause” shall mean the willful engaging by the Executive in illegalconduct or gross misconduct which is demonstrably and materially injurious tothe Company. For purposes of this Agreement, no act, or failure to act, on theExecutive’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 theExecutive’s action or omission was in the best interests of the Company.Notwithstanding the foregoing, the Executive shall not be deemed to have beenterminated for Cause unless and until the Company delivers to the Executive acopy of a resolution duly adopted by the affirmative vote of not less thanthree-quarters of the entire membership of the Board at a meeting of the Boardcalled and held for such purpose (after reasonable notice to the Executive andan opportunity for the Executive, together with counsel, to be heard before theBoard) finding that, in the good faith opinion of the Board, the Executive wasguilty of conduct set forth above and specifying the particulars thereof indetail.

 

(c)                                  Theterm “Good Reason” shall mean the occurrence of any of the followingcircumstances without the Executive’s express written consent:

 

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

 

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(ii)                                  thefailure by the Company to pay the Executive any portion of the Executive’scurrent compensation;

 

(iii)                               areduction in the Executive’s annual base salary (or a material change in thefrequency of payment) as in effect immediately prior to the Change in Controlas the same may be increased from time to time;

 

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

 

(v)                                 thefailure by the Company to award the Executive equity-based incentivecompensation (such as stock options, shares of restricted stock, or otherequity-based compensation) on a periodic basis consistent with the Company’spractices with respect to timing, value and terms prior to the Change inControl;

 

(vi)                              thefailure by the Company to continue to provide the Executive with the welfarebenefits, fringe benefits and perquisites enjoyed by the Executive immediatelyprior 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, lifeinsurance, medical, dental, prescription, health and accident, disability,vacation, and other executive perquisites;

 

(vii)                           therelocation of the Company’s principal executive offices to a location more thanthirty-five miles from the location of such offices immediately prior to theChange in Control or the Company requiring the Executive to be based anywhereother than the Company’s principal executive offices except for required travelto the Company’s business to an extent substantially consistent with theExecutive’s business travel obligations immediately prior to the Change inControl; or

 

(viii)                        thefailure of the Company to obtain a satisfactory agreement from any successor tothe Company to

 

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assume and agree to performthis Agreement as contemplated by Section 16.

 

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

 

3.   CHANGE INCONTROL BENEFITS. In the event of a termination of employment entitling theExecutive to benefits in accordance with Section 2, the Executive shallreceive the following:

 

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

 

(b)                                 Ifthe Executive’s date of termination occurs after the end of a performanceperiod applicable to an annual incentive (bonus) award, and prior to thepayment of the award for the period, the Executive shall be entitled to a lumpsum payment in cash no later than twenty (20) business days after the date oftermination equal to the greatest of (i) the Executive’s annual incentive(bonus) award for that period, as determined under the terms of that incentiveaward arrangement, (ii) the Executive’s annual incentive (bonus) award for thatperiod, with the determination of the amount of such award based on anassumption that the target level of performance had been achieved or (iii) theExecutive’s average annual incentive (bonus) award for the three annualperformance periods preceding that period (provided that if the Executive wasnot a participant in the incentive award arrangement for any of those threeprior years, the averaging period shall be reduced from three years to thenumber of years during the three year period in which the Executive was aparticipant; and further provided that if the Executive’s award for any suchyear was reduced because

 

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the Executive was not aparticipant for the full year, such amount shall be annualized for purposes ofthe computation in this clause (iii)).

 

(c)                                  Forany annual incentive (bonus) plan or arrangement in which the Executive participatesfor the performance period in which the Executive’s termination of employmentoccurs, the Executive shall be entitled to a lump sum payment in cash no laterthan twenty (20) business days after the date of termination equal to thegreater of (i) the Executive’s annual incentive (bonus) award for theperformance period that includes the date of termination, with thedetermination of the amount of such award based on an assumption that thetarget level of performance has been achieved or (ii) the Executive’s averageannual incentive (bonus) award for the three annual performance periodspreceding the performance period that includes the date of termination  (provided that if the Executive was not aparticipant in the incentive award arrangement for any of those three prioryears, the averaging period shall be reduced from three years to the number ofyears 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 reducedbecause the Executive was not a participant for the full year, such amountshall be annualized for purposes of the computation in this clause (ii));provided that such payment shall be subject to a pro-rata reduction to reflectthe 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 amountsthat may otherwise be due to the Executive with respect to any annual incentive(bonus) plan or arrangement in which the Executive participates for theperformance period in which the Executive’s date of termination occurs.

 

(d)                                 TheExecutive 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 sumof:

 

(i)                                     anamount equal to 2.99 times the Executive’s annual salary rate in effect on thedate of the Change in Control or, if greater, as in effect immediately prior tothe date of termination; plus

 

(ii)                                  anamount equal to 2.99 times the greater of (x) the Executive’s annual incentive(bonus) award for the

 

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performance period thatincludes the date of the Executive’s termination of employment, with thedetermination of the amount of such award based on an assumption that thetarget level of performance has been achieved or (y) the Executive’s averageannual incentive (bonus) award for the three annual performance periodspreceding the performance period that includes the date of termination (providedthat if the Executive was not a participant in the incentive award arrangementfor any of those three prior years, the averaging period shall be reduced fromthree years to the number of years during the three year period in which theExecutive was a participant; and further provided that if the Executive’s awardfor any such year was reduced because the Executive was not a participant forthe full year, such amount shall be annualized for purposes of the computationin this clause (y).

 

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

 

(e)                                  TheExecutive shall be entitled to benefits under the Hospira Supplemental PensionPlan (the “Supplemental Plan”) which shall be determined as if the Executivehad been credited for benefit accrual purposes with three additional years ofservice and three additional years of eligible earnings at the higher of theExecutive’s eligible earnings on the date of termination or the Executive’seligible earnings on the date of the Change in Control and, for purposes ofdetermining the Executive’s eligibility for subsidized early retirementbenefits, determined as if the Executive were three years older than theExecutive’s actual age on the date of termination. For purposes of thisparagraph (e), “eligible earnings” shall include salary, annual incentive(bonus) awards and all other forms of compensation used to calculate benefitsunder the Supplemental Plan. The amounts of the annual incentive (bonus) awardsshall be calculated in accordance with this paragraph (e) and, to the extentapplicable, paragraphs (b) and (c) above. The Executive’s benefits under theSupplemental Plan shall be determined, paid and

 

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administered without regard toany termination or amendment (including any amendment affecting actuarialfactors) of such plan or of any other plan, which is adopted on or after aChange in Control or in contemplation of a Change in Control and, subject to paragraph(f) below, shall be paid in accordance with the terms of that plan and theExecutive’s elections under that plan. Within twenty (20) days of Executive’sdate of termination, the Company shall provide the Executive with all forms,elections and materials required in connection with the payment of theExecutive’s benefits under that plan. Within twenty (20) days of the Company’sreceipt of properly executed and completed forms, elections and other requiredmaterials from the Executive, the Company shall pay the additional benefits tothe extent provided by the terms of such plan.

 

(f)                                    TheCompany shall provide the Executive with outplacement services and tax andfinancial counseling suitable to the Executive’s position through the thirdanniversary of the date of the Executive’s termination of employment, or, ifearlier, the date on which the Executive becomes employed by another employer.

 

If theExecutive is a participant in the Hospira Performance Incentive Plan or anysuccessor thereto, the Executive’s annual incentive (bonus) award for theperformance period which includes the date of termination under paragraphs (c)and (d)(ii) above and, if applicable, for the period preceding the date oftermination under paragraph (b) shall, be determined under the bonus levelscommunicated in writing to the Executive by the Company for such year.

 

4.   MITIGATION.The Executive shall not be required to mitigate the amount of any paymentprovided for in this Agreement by seeking other employment or otherwise. Exceptas set forth in paragraph 3(a) with respect to benefits, the Company shall notbe entitled to set off against the amounts payable to the Executive under thisAgreement any amounts owed to the Company by the Executive, any amounts earnedby the Executive in other employment after the Executive’s termination ofemployment with the Company, or any amounts which might have been earned by theExecutive in other employment had the Executive sought such other employment.

 

5.   MAKE-WHOLEPAYMENTS. If any payment or benefit to which the Executive (or any person onaccount of the Executive) is entitled, whether under this Agreement orotherwise, in connection with a Change in Control or the Executive’stermination of employment (a “Payment”) constitutes a “parachute payment”within the meaning of section 280G of the Internal Revenue Code of 1986,as amended (the “Code”), and as a result thereof the Executive is subject to atax under section 4999 of the Code, or any successor thereto, (an “ExciseTax”), the Company shall pay to the Executive an additional amount (the“Make-Whole Amount”) which is intended to make

 

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the Executive whole for such Excise Tax. TheMake-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 taxwhich are imposed in connection with the imposition of such Excise Tax, plus(iii) all income, excise and other applicable taxes imposed on the Executiveunder the laws of any Federal, state or local government or taxing authority byreason of the payments required under clauses (i) and (ii) and this clause(iii).

 

(a)                                  Forpurposes of determining the Make-Whole Amount, the Executive shall be deemed tobe 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 Amountis paid. The Make-Whole Amount payable with respect to an Excise Tax shall bepaid by the Company coincident with the Payment with respect to which suchExcise Tax relates.

 

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

 

(c)                                  Ifthe Executive gives written notice to the Company of any objection to theresults of the Company’s calculations within 60 days of the Executive’s receiptof written notice thereof, the dispute shall be referred for determination toindependent tax counsel selected by the Company and reasonably acceptable tothe Executive (“Tax Counsel”). The Company shall pay all fees and expenses ofsuch Tax Counsel. Pending such determination by Tax Counsel, the Company shallpay the Executive the Make-Whole Amount as determined by it in good faith. TheCompany shall pay the Executive any additional amount determined by Tax Counselto be due under this Section 5 (together with interest thereon at a rateequal to 120% of the Federal short-term rate determined undersection 1274(d) of the Code) promptly after such determination.

 

(d)                                 Thedetermination by Tax Counsel shall be conclusive and binding upon all partiesunless the Internal Revenue Service, a court of competent jurisdiction, or suchother

 

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duly empowered governmentalbody or agency  (a “Tax Authority”)determines that the Executive owes a greater or lesser amount of Excise Taxwith respect to any Payment than the amount determined by Tax Counsel.

 

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

 

(i)                                     TheExecutive shall notify the Company of any such claim within 10 days of becomingaware 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 theExecutive or such shorter time as the Taxing Authority may specify forresponding to such claim) request the Executive to contest the claim. TheExecutive shall not make any payment of any tax which is the subject of theclaim before the Executive has given the notice or during the 30-day periodthereafter unless the Executive receives written instructions from the Companyto make such payment together with an advance of funds sufficient to make therequested payment plus any amounts payable under this Section 5 determinedas if such advance were an Excise Tax, in which case the Executive will actpromptly in accordance with such instructions.

 

(ii)                                  Ifthe Company so requests, the Executive will contest the claim by either payingthe tax claimed and suing for a refund in the appropriate court or contestingthe claim in the United States Tax Court or other appropriate court, asdirected by the Company; PROVIDED, HOWEVER, that any request by the Company forthe Executive to pay the tax shall be accompanied by an advance from theCompany to the Executive of funds sufficient to make the requested payment plusany amounts payable under this Section 5 determined as if such advancewere an Excise Tax. If directed by the Company in writing the Executive willtake all action necessary to compromise or settle the claim, but in no eventwill the Executive compromise or

 

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settle the claim or cease tocontest the claim without the written consent of the Company; PROVIDED,HOWEVER, that the Executive may take any such action if the Executive waives inwriting the Executive’s right to a payment under this Section 5 for anyamounts payable in connection with such claim. The Executive agrees tocooperate in good faith with the Company in contesting the claim and to complywith any reasonable request from the Company concerning the contest of theclaim, including the pursuit of administrative remedies, the appropriate forumfor any judicial proceedings, and the legal basis for contesting the claim.Upon request of the Company, the Executive shall take appropriate appeals ofany judgment or decision that would require the Company to make a payment underthis Section 5. Provided that the Executive is in compliance with theprovisions of this section, the Company shall be liable for and indemnify theExecutive against any loss in connection with, and all costs and expenses,including attorneys’ fees, which may be incurred as a result of, contesting theclaim, and shall provide to the Executive within 30 days after each writtenrequest therefor by the Executive cash advances or reimbursement for all suchcosts and expenses actually incurred or reasonably expected to be incurred bythe Executive as a result of contesting the claim.

 

(f)                                    Shoulda Tax Authority finally determine that an additional Excise Tax is owed, thenthe Company shall pay an additional Make-Whole Amount to the Executive in amanner consistent with this Section 5 with respect to any additionalExcise Tax and any assessed interest, fines, or penalties. If any Excise Tax ascalculated by the Company or Tax Counsel, as the case may be, is finallydetermined by a Tax Authority to exceed the amount required to be paid underapplicable law, then the Executive shall repay such excess to the Companywithin 30 days of such determination; provided that such repayment shall bereduced by the amount of any taxes paid by the Executive on such excess whichis not offset by the tax benefit attributable to the repayment.

 

6.   TERMINATIONDURING POTENTIAL CHANGE IN CONTROL. If a Potential Change in Control (asdefined in Section 8) occurs during the Agreement Term, and the Companyterminates the Executive’s employment for reasons other than

 

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Permanent Disability or Cause during suchPotential Change in Control, the Executive shall be entitled to receive thebenefits that the Executive would have received under Section 3, suchbenefits to be calculated based upon the Executive’s compensation prior to theactual termination of employment but paid within 20 business days of the dateof such termination.

 

7.   CHANGE INCONTROL. For purposes of this Agreement, a “Change in Control” shall be deemedto have occurred on the earliest of the following dates:

 

(a)                                  thedate any Person is or becomes the Beneficial Owner, directly or indirectly, ofsecurities of the Company (not including in the securities beneficially ownedby such Person any securities acquired directly from the Company or itsAffiliates) representing 20% or more of the combined voting power of theCompany’s then outstanding securities, excluding any Person who becomes such aBeneficial Owner in connection with a transaction described in clause (i) ofparagraph (c) below; or

 

(b)                                 thedate on which the following individuals cease for any reason to constitute amajority of the number of directors then serving: individuals who, on the datehereof, constitute the Board and any new director (other than a director whoseinitial assumption of office is in connection with an actual or threatenedelection contest, including but not limited to a consent solicitation, relatingto the election of directors of the Company) whose appointment or election bythe Board or nomination for election by the Company’s shareholders was approvedor recommended by a vote of at least two-thirds (2/3) of the directors thenstill in office who either were directors on the date hereof or whoseappointment, election or nomination for election was previously so approved orrecommended; or;

 

(c)                                  thedate on which there is consummated a merger or consolidation of the Company orany direct or indirect subsidiary of the Company with any other corporation orother entity, other than (i) a merger or consolidation (A) immediatelyfollowing which the individuals who comprise the Board immediately prior theretoconstitute at least a majority of the board of directors of the Company, theentity surviving such merger or consolidation or, if the Company or the entitysurviving such merger or consolidation is then a subsidiary, the ultimateparent thereof and (B) which results in the voting securities of the Companyoutstanding immediately prior to such merger or consolidation continuing torepresent (either by remaining

 

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outstanding or by beingconverted into voting securities of the surviving entity or any parentthereof), in combination with the ownership of any trustee or other fiduciaryholding securities under an employee benefit plan of the Company or anysubsidiary of the Company, at least 50% of the combined voting power of thesecurities of the Company or such surviving entity or any parent thereofoutstanding immediately after such merger or consolidation, or (ii) a merger orconsolidation effected to implement a recapitalization of the Company (or similartransaction) in which no Person is or becomes the Beneficial Owner, directly orindirectly, of securities of the Company (not including in the securitiesBeneficially Owned by such Person any securities acquired directly from theCompany or its Affiliates) representing 20% or more of the combined votingpower of the Company’s then outstanding securities; or

 

(d)                                 thedate on which the shareholders of the Company approve a plan of completeliquidation or dissolution of the Company or there is consummated an agreementfor the sale or disposition by the Company of all or substantially all of theCompany’s assets, other than a sale or disposition by the Company of all orsubstantially all of the Company’s assets to an entity, at least 50% of thecombined voting power of the voting securities of which are owned byshareholders of the Company, in combination with the ownership of any trusteeor other fiduciary holding securities under an employee benefit plan of theCompany or any subsidiary of the Company, in substantially the same proportionsas their ownership of the Company immediately prior to such sale.

 

Notwithstanding the foregoing,a “Change in Control” shall not be deemed to have occurred by virtue of theconsummation of any transaction or series of integrated transactionsimmediately following which the record holders of the common stock of theCompany immediately prior to such transaction or series of transactionscontinue to have****substantially thesame proportionate ownership in an entity which owns all or substantially allof the assets of the Company immediately following such transaction or seriesof transactions.

 

For purposes of this Agreement:“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated underSection 12 of the Exchange Act; “Beneficial Owner” shall have the meaningset forth in Rule 13d-3 under the Exchange Act; “Exchange Act” shall

 

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mean the Securities ExchangeAct of 1934, as amended from time to time; and “Person” shall have the meaninggiven in Section 3(a)(9) of the Exchange Act, as modified and used inSections 13(d) and 14(d) thereof, except that such term shall not include (i)the Company or any of its subsidiaries, (ii) a trustee or other fiduciaryholding securities under an employee benefit plan of the Company or any of itsAffiliates, (iii) an underwriter temporarily holding securities pursuant to anoffering of such securities, or (iv) a corporation owned, directly orindirectly, by the shareholders of the Company in substantially the sameproportions as their ownership of stock of the Company.

 

8.   POTENTIALCHANGE IN CONTROL. A “Potential Change in Control” shall exist during anyperiod in which the circumstances described in paragraphs (a), (b), (c) or (d),below, exist (provided, however, that a Potential Change in Control shall ceaseto exist not later than the occurrence of a Change in Control):

 

(a)                                  TheCompany enters into an agreement, the consummation of which would result in theoccurrence of a Change in Control, provided that a Potential Change in Controldescribed in this paragraph (a) shall cease to exist upon the expiration orother termination of all such agreements;

 

(b)                                 AnyPerson (without regard to the exclusions set forth in subsections (i) through(iv) of such definition) publicly announces an intention to take or to considertaking 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 adetermination by the Board that there is no reasonable chance that such actionswould be consummated;

 

(c)                                  AnyPerson becomes the Beneficial Owner, directly or indirectly, of securities ofthe Company representing 10% or more of either the then outstanding shares ofcommon stock of the Company or the combined voting power of the Company’s thenoutstanding securities (not including in the securities beneficially owned bysuch Person any securities acquired directly from the Company or itsAffiliates);

 

(d)                                 TheBoard adopts a resolution to the effect that, for purposes of this Agreement, aPotential Change in Control exists; provided that a Potential Change in Controldescribed in this paragraph (d) shall cease to exist upon a determination bythe Board that the reasons that gave rise

 

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to the resolution providing forthe existence of a Potential Change in Control have expired or no longer exist.

 

9.   STOCK ANDOPTION AWARDS. With respect to any award granted to the Executive under any ofthe Company’s stock incentive plans, including the Company’s 2004 Long-TermStock Incentive Plan (the “Program”) or any successor program, the followingshall apply:

 

(a)                                  ifthe award (other than Conversion Awards, [as defined in the Program] that areincentive stock options granted pursuant to Section 422 of the InternalRevenue Code (each a “Converted Incentive Stock Option”) prior to the firstdate on which the agreement regarding Change in Control, dated as of the 1stday of January, 2000, by and between Abbott Laboratories and the Executive(“Original Agreement”), was executed)includes a provision substantially similarto the provision contained in the first paragraph in Appendix A, then after aChange in Control no forfeiture shall be effected pursuant to such provisionunless the Executive shall have been terminated for “Cause” within the meaningof paragraph 2(b) above;

 

(b)                                 ifthe award (other than a Converted Incentive Stock Option granted prior toJune 20, 2003) includes a provision substantially similar to the provisioncontained in the second paragraph in Appendix A, then after a Change in Controlno forfeiture shall be effected pursuant to such provision unless the Executiveshall have been terminated for “Cause” within the meaning of paragraph 2(b)above; and

 

(c)                                  ifthe Executive becomes entitled to Change in Control Benefits underSection 2 above, then in determining the Executive’s rights with respectto that award, other than Converted Incentive Stock Options granted prior tothe first date on which the Original Agreement was executed, the Executiveshall be treated as having incurred a termination of employment due toretirement.

 

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

 

11.   NONALIENATION.The interests of the Executive under this Agreement are not subject in anymanner to anticipation, alienation, sale, transfer,

 

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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 theparties in writing without the consent of any other person. So long as theExecutive lives, no person, other than the parties hereto, shall have anyrights under or interest in this Agreement or the subject matter hereof.

 

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

 

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

 

15.   WAIVER OFBREACH. No waiver by any party hereto of a breach of any provision of thisAgreement by any other party, or of compliance with any condition or provisionof this Agreement to be performed by such other party, will operate or beconstrued as a waiver of any subsequent breach by such other party of any similaror dissimilar provisions and conditions at the same or any prior or subsequenttime. The failure of any party hereto to take any action by reason of suchbreach will not deprive such party of the right to take action at any timewhile such breach continues.

 

16.   SUCCESSORS,ASSUMPTION OF CONTRACT. This Agreement shall be binding upon and inure to thebenefit of the Company and any successor of the Company. The Company willrequire any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all of the business and/orassets of the Company to expressly assume and agree to perform this Agreementin the same manner and to the same extent that the Company would be required toperform it if no succession had taken place. This Agreement is personal to theExecutive and may not be assigned by the Executive without the written consentof the Company. However, to the extent that rights or benefits under thisAgreement otherwise survive the Executive’s death, the Executive’s heirs andestate shall succeed to such rights and benefits pursuant to the Executive’swill or the laws of descent and distribution; provided that the Executive shallhave the right at any time and from time to time, by notice delivered to theCompany, to designate or to change the beneficiary or beneficiaries withrespect to such benefits.

 

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

 

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

 

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

 

(c)                                  inthe case of facsimile, the date upon which the transmitting party receivedconfirmation of receipt by facsimile, telephone or otherwise;

 

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

 

to theCompany:

 

Corporate VicePresident of Human Resources

 Hospira, Inc.

275 North Field Road

Lake Forest Illinois 60064

 

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

 

General Counsel and Secretary

Hospira, Inc.

275 North Field Road

Lake Forest, Illinois 60064

 

or to theExecutive:

 

Name

Address

City, State  Zip

 

Each party, bywritten notice furnished to the other party, may modify the applicable deliveryaddress, except that notice of change of address shall be effective only uponreceipt.

 

18.   RESOLUTIONOF ALL DISPUTES. Any controversy or claim arising out of or relating to thisAgreement (or the breach thereof) (a “Dispute”) shall be settled by alternativedispute resolution procedures in accordance with Appendix B hereto.  During the pendency of any Dispute, theCompany shall continue to pay the Executive the full compensation in effectwhen the notice giving rise to the Dispute was given (including, but notlimited to, salary) and continue the Executive (and, where applicable, theExecutive’s family) as a participant in all compensation, benefit and

 

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insurance plans in which the Executive wasparticipating when the notice giving rise to the Dispute was given, until suchDispute is resolved.

 

19.   LEGAL ANDENFORCEMENT COSTS. The provisions of this Section 19 shall apply if itbecomes necessary or desirable for the Executive to retain legal counsel orincur other costs and expenses in connection with enforcing any and all rightsunder this Agreement or any other compensation plan maintained by the Company,including, but not limited to the Hospira 2004 Long-Term Stock Incentive Plan,the Hospira Performance Incentive Plan, the Hospira 401(k) Supplemental Plan,the Hospira Supplemental Pension Plan, the Hospira Management Incentive Planor, in each case, any trust adopted pursuant thereto:

 

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

 

(b)                                 Paymentsrequired under this Section 19 shall be made by the Company to theExecutive (or directly to the Executive’s attorney) promptly followingsubmission to the Company of appropriate documentation evidencing theincurrence of such attorneys’ fees, costs, and expenses.

 

(c)                                  TheExecutive shall be entitled to select legal counsel; provided, however, thatsuch right of selection shall not affect the requirement that any costs andexpenses reimbursable under this Section 19 be reasonable.

 

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

 

20.   SURVIVALOF AGREEMENT. Except as otherwise expressly provided in this Agreement, therights and obligations of the parties to this Agreement shall survive thetermination of the Executive’s employment with the Company.

 

21.   ENTIREAGREEMENT. Except as otherwise provided herein, this Agreement constitutes theentire agreement between the parties concerning the subject matter hereof andsupersedes all prior or contemporaneous agreements, between the partiesrelating to the subject matter hereof; provided, however, that nothing in thisAgreement shall be construed to limit any policy or agreement that is otherwiseapplicable relating to confidentiality, rights to inventions, copyrightablematerial, business and/or technical information, trade secrets, solicitation ofemployees, interference with relationships with other businesses, competition,and other similar policies or agreement for the protection of the business andoperations of the Company and the subsidiaries.

 

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

 

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IN WITNESS THEREOF, the Executive has hereunto set his hand, and theCompany 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            ,2004, all as of the Effective Date.

 

 
|    |          |   |
|---------|---------------|--------|
|    | EXECUTIVE     |
|    |          |
|    |          |
|    | HOSPIRA, INC. |
|    |          |
|    |          |
|    | By            |   |   |
|    |          |
|    | Its           |   |   |
|    |          |
| ATTEST: |          |
|    |          |
|    |          |
|    |          |   |
| (Seal)  |          |   |

 

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