**Exhibit10.11**

 

**HOSPIRA 401(k) SUPPLEMENTAL PLAN**

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SECTION 1INTRODUCTION

 

1-1.                             HISTORYAND PURPOSE.  Pursuant to aSeparation and Distribution Agreement by and between Abbott Laboratories(“Abbott”) and Hospira, Inc. (“Hospira”) dated as of April 12, 2004, Abbott distributed as adividend to its shareholders all of the outstanding shares of common stock, parvalue $0.01 per share, of Hospira, together with the associated preferred stockpurchase rights, owned by Abbott (the “Distribution”).  In connection with the Distribution, Hospiraestablished the Hospira 401(k) Retirement Savings Plan (the “401(k) Plan”) andcertain assets and liabilities were transferred from the Abbott LaboratoriesStock Retirement Plan (the “Abbott SRP”) to the 401(k) Plan with respect tocertain persons who were transferred from employment with Abbott to employmentwith Hospira in connection or contemporaneously with the Distribution(“Transferred Employees”).  Inconnection with the Distribution, Abbott retained all liabilities with respectto the Abbott Laboratories 401(k) Supplemental Plan (the “Abbott KSP”).  This Hospira 401(k) Supplemental Plan (the“Plan”) is being established by Hospira to provide Transferred Employees alimited opportunity to continue to accumulate capital for their retirement orother termination of employment in excess of the contributions allowed underthe 401(k) Plan.

 

1-2.                             EFFECTIVE DATE AND AUTOMATICTERMINATION.  The Plan shall beeffective as of May 1, 2004.  The Planshall immediately terminate as of December 31, 2004 without any furtheraction of any person.

 

1-3.                             ADMINISTRATION. The Plan shall be administered by the Compensation Committee (the“Committee”) appointed by the Board of Directors of Hospira (the “Board ofDirectors”).

 

SECTION 2ELIGIBILITY AND PARTICIPATION

 

2-1.                             PERSONS ELIGIBLE TO PARTICIPATE.  Participation in the Plan shall be limitedto employees who are Transferred Employees and who, immediately prior to theDistribution, were participants in the Abbott KSP.  Notwithstanding any other provision of the Plan, in no eventshall a participant be permitted to make pre-tax contributions under the Planunless and until the participant has made contributions under the 401(k) Planequal to the maximum elective deferrals permitted under section 402(g) ofthe Internal Revenue Code of 1986, as amended (the “Code”), or the maximumelective contributions permitted under the terms of the 401(k) Plan.

 

2-2.                             PARTICIPANT.  Aneligible employee may elect to participate in the Plan by electing to have contributionsmade on the employee’s behalf as provided in Section 5.

 

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SECTION 3EMPLOYEE CONTRIBUTIONS

 

3-1.                             ALLOWABLE CONTRIBUTIONS.  An eligible employee may elect to have hisemployer make “pre-tax contributions” on his behalf in an amount not greaterthan 18% in total of his compensation in any calendar year for servicesrendered to his employer.  A pre-taxcontribution made by an employer on behalf of a participant shall reduce theparticipant’s compensation at the time of payment of such compensation.  Subject to the terms and conditions of thePlan, each election hereunder shall be in writing, and shall be in multiples of1% of compensation.  For purposes ofdetermining whether the limitations of this subsection 3-1 are satisfiedfor 2004, pre-tax contributions made under the Abbott KSP prior to theDistribution shall be treated as made under the Plan.

 

3-2.                             COMPENSATION.  Aparticipant’s “compensation” shall have the same meaning as that term is usedin section 15.13 of the 401(k) Plan.

 

3-3.                             MAXIMUM EMPLOYEE CONTRIBUTIONS.  In no event shall the sum of:

 

(a)                                  theparticipant’s total contributions and pre-tax contributions made under the401(k) Plan (“401(k) plan contributions”); plus

 

(b)                                 theparticipant’s total pre-tax contributions made under the Plan;

 

for any calendar year,exceed 18% of the employee’s compensation for such year.  In the event the limitation described inthis subsection 3-3 would be exceeded for any participant, theparticipant’s pre-tax contributions made under this Plan shall be reduced untilthe limit is not exceeded.  For purposesof determining  the limitation describedin this subsection 3-3 for 2004, total contributions and pre-tax contributionsmade under the Abbott SRP prior to the Distribution shall be treated as made underthe 401(k) Plan and pre-tax contributions made under the Abbott KSP prior tothe Distribution shall be treated as made under the Plan.

 

SECTION 4EMPLOYER CONTRIBUTIONS

 

For the 2004 calendaryear, Hospira shall make a contribution on behalf of each participant in thePlan who makes pre-tax contributions under the Plan during such year at therate of two percent (2%) of compensation in excess of the limit in effect forsuch year under Code Section 401(a)(17). Such employer contribution shall be in an amount equal to thecontribution the participant would have received under section 3.6 of the401(k) Plan with respect to such pre-tax contributions had such pre-taxcontributions been made under section 3.2 of the 401(k) Plan.  A participant who suspends his pre-taxcontributions to the Plan during any calendar year shall receive an employercontribution under this Section 4 based on the basic contributions made bythe participant during such year.  Forpurposes of determining whether a participant’s compensation exceeds the limitof Code Section 401(a)(17) for the 2004 calendar year, compensation paidto the participant by Abbott prior to the Distribution shall be taken intoaccount and aggregated with compensation paid to the participant by Hospiraafter the Distribution.

 

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SECTION 5ELECTIONS

 

5-1.                             ELECTIONS PROCEDURES.  Except as provided in subsection 5-2, a participant’selection with respect to pre-tax contributions in effect under the Abbott KSP immediatelyprior to the Distribution shall continue in effect under this Plan from andafter the effective date hereof as though made hereunder and the participantshall not be permitted to revoke such election.

 

5-2.                             LIMITED CHANGES. A participant who**hasan election in effect under subsection 5-1 may increase or decrease suchpre-tax contributions during 2004 by filing a written election with theCommittee.  A participant may make nomore than two such elections under this subsection 5-2 during such calendaryear and any such elections made under the Abbott KSP prior to the Distributionshall be deemed to have been made pursuant to this subsection 5-2.  Any election filed under thissubsection 5-2 shall become effective for compensation earned no earlier thenthe first payroll period commencing after receipt of the election by theCommittee.  Any election filed underthis subsection 5-2 shall remain in effect for compensation earned duringthe remainder of such calendar year unless changed by a subsequent electionunder this subsection 5-2.

 

SECTION 6FUNDING EMPLOYER AND EMPLOYEE CONTRIBUTIONS

 

Each participant’s pre-tax contributions and employer contributionsshall be retained by Hospira and shall be credited to a Deferred Accountestablished under subsection 7-1.

 

SECTION 7ACCOUNTING

 

7-1.                             SEPARATE ACCOUNTS. The Committee shall maintain a bookkeeping account (a “DeferredAccount”) in the name of each participant which shall be comprised of anypre-tax contributions made on behalf of the participant undersubsection 3-1 and any employer contributions made on behalf of theparticipant under Section 4.

 

7-2.                             DESIGNATION OF BENEFICIARIES.  Subject to the conditions and limitationsset forth below, each participant, and after a participant’s death, each primarybeneficiary designated by a participant in accordance with the provisions ofthis subsection 7-2, shall have the right from time to time to designate aprimary beneficiary or beneficiaries and, successive or contingent beneficiaryor beneficiaries to receive unpaid amounts from the participant’s DeferredAccount under the Plan.  Beneficiariesmay be a natural person or persons or a fiduciary, such as a trustee of a trustor the legal representative of an estate. Any such designation shall take effect upon the death of the participantor such beneficiary, as the case may be, or in the case of any fiduciarybeneficiary, upon the termination of all of its duties (other than the duty todispose of the right to receive amounts remaining to be paid under the Plan).  The conditions and limitations relating tothe designation of beneficiaries are as follows:

 

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(a)                                  Anonfiduciary beneficiary shall have the right to designate a furtherbeneficiary or beneficiaries only if the original participant or the nextpreceding primary beneficiary, as the case may be, shall have expressly soprovided in writing; and

 

(b)                                 Afiduciary beneficiary shall designate as a further beneficiary or beneficiariesonly those persons or other fiduciaries who are entitled to receive the amountspayable from the participant’s account under the trust or estate of which it isa fiduciary.

 

Any beneficiarydesignation or grant of any power to any beneficiary under thissubsection may be exercised only by an instrument in writing, executed bythe person making the designation or granting such power and filed with theSecretary of Hospira during such person’s lifetime or prior to the terminationof a fiduciary’s duties.  If a deceasedparticipant or a deceased nonfiduciary beneficiary who had the right todesignate a beneficiary as provided above dies without having designated afurther beneficiary, or if no beneficiary designated as provided above isliving or qualified and acting, the Committee, in its discretion, may directdistribution of the amount remaining from time to time to either:

 

(i)                                     anyone or more or all of the next of kin (including the surviving spouse) of theparticipant or the deceased beneficiary, as the case may be, and in such proportionsas the Committee determines; or

 

(ii)                                  thelegal representative of the estate of the deceased participant or deceasedbeneficiary as the case may be.

 

Any beneficiary designation in effect with respect to a participantunder the Abbott KSP immediately prior to the effective date shall remain ineffect under the Plan as though made hereunder until changed by the participantin accordance with the provisions of this subsection 7.4.

 

7-3.                             NON-ASSIGNABILITY AND FACILITY OFPAYMENT.  Amounts payable toparticipants and their beneficiaries under the Plan are not in any way subjectto their debts and other obligations, and may not be voluntarily orinvoluntarily sold, transferred or assigned; provided that the precedingprovisions of this section shall not be construed as restricting in anyway a designation right granted to a beneficiary pursuant to the terms ofsubsection 7-2.  When a participantor the beneficiary of a participant is under legal disability, or in theCommittee’s opinion is in any way incapacitated so as to be unable to managehis or her financial affairs, the Committee may direct that payments shall bemade to the participant’s or beneficiary’s legal representative, or to arelative or friend of the participant or beneficiary for the benefit of theparticipant or beneficiary, or the Committee may direct the payment ordistribution for the benefit of the participant or beneficiary in any mannerthat the Committee determines.

 

7-4.                             PAYER OF AMOUNTS ALLOCATED TOPARTICIPANTS.  Any employer contributionmade on behalf of a participant in the Plan and any interest credited thereto(and to other contributions) will be paid by the employer (or such employer’ssuccessor) by whom the participant was employed during the calendar year forwhich any amount was allocated, and for that purpose, if a participant shallhave been employed by two or more employers during any calendar year the amountallocated under this Plan for that year shall be an obligation of each of

 

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the respectiveemployers in proportion to the respective amounts of compensation paid by eachof them in that calendar year.

 

7-5.                             MANNER OF PAYMENT. All pre-tax contributions and employer contributions, less theapproximate aggregate federal, state and local individual income taxes(determined as set forth below), shall be paid to Abbott by Hospira as soon aspracticable after the last complete payroll period of the calendar quarter inwhich the contributions were made. Abbott will contribute such amount to a Grantor Trust established by theapplicable participant in accordance with the Abbott KSP.  Hospira shall pay to the participant anamount equal to the approximate aggregate federal, state and local individualincome taxes (determined as set forth below). Upon Hospira’s payment of the foregoing amounts, Hospira’s obligationsunder and with respect to participants and all other persons with respect tosuch contributions  shall be satisfiedin full.  For purposes of determiningthe approximate federal, state and local individual income taxes for aparticipant for purposes of this subsection 7-5, the participant’s federalincome tax rate shall be deemed to be the highest marginal rate of federalindividual income tax in effect in the calendar year in which a calculationunder this subsection 7-5 is to be made, and state and local tax ratesshall be deemed to be the highest marginal rates of individual income tax ineffect in the state and locality of the participant’s residence on the datesuch a calculation is made, net of any federal tax benefits.

 

SECTION 8MISCELLANEOUS

 

8-1.                             RULES.  The Committeemay establish such rules and regulations as it may consider necessary ordesirable for the effective and efficient administration of the Plan.

 

8-2.                             TAXES.  Any employershall be entitled, if necessary or desirable, to pay, or withhold the amount ofany federal, state or local tax, attributable to any amounts payable by itunder the Plan after giving the person entitled to receive such amount noticeas far in advance as practicable, and may defer making payment of any amountwith respect to which any such tax question may be pending unless and untilindemnified to its satisfaction.

 

8-3.                             RIGHTS OF PARTICIPANTS.  Employment rights of participants with Hospira and itssubsidiaries shall not be enlarged or affected by reason of establishment of orinclusion as a participant in the Plan. Nothing contained in the Plan shall require Hospira or any subsidiary tosegregate or earmark any assets, funds or property for the purpose of paymentof any amounts which may have been deferred. The Deferred Accounts established pursuant to subsection 7-1 arefor the convenience of the administration of the Plan and no trust relationshipwith respect to such Accounts is intended or should be implied.  Participant’s rights shall be limited topayment to them at the time or times and in such amounts as are contemplated bythe Plan.  Any decision made by theCommittee which is within its sole and uncontrolled discretion, shall beconclusive and binding upon all persons whomsoever.

 

8-4.                             GENDER.  For purposes ofthe Plan, words in the masculine gender shall include the feminine and neutergenders, the singular shall include the plural and the plural shall include thesingular.

 

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8-5.                             MANNER OF ACTION BY COMMITTEE.  A majority of the members of the Committeequalified to act on any particular question may act by meeting or by writingsigned without meeting, and may execute any instrument or document required ordelegate to one of its members authority to sign.  The Committee from time to time may delegate the performance ofcertain ministerial functions in connection with the Plan, such as the keepingof records, to such person or persons as the Committee may select.  Except as otherwise expressly provided inthe Plan, the costs of administration of the Plan will be paid by Hospira.  Any notice required to be given to, or anydocument required to be filed with the Committee, will be properly given orfiled if mailed or delivered in writing to the Secretary of Hospira.

 

8-6.                             RELIANCE UPON ADVICE.  The Board of Directors and the Committee may rely upon anyinformation or advice furnished to it by any Officer of Hospira or by Hospira’sindependent auditors, or other consultants, and shall be fully protected inrelying upon such information or advice. No member of the Board of Directors or the Committee shall be liable forany act or failure to act on their part, excepting only any acts done oromitted to be done in bad faith, nor shall they be liable for any act orfailure to act of any other member.

 

SECTION 9AMENDMENT, TERMINATION AND CHANGE OFCONDITIONS RELATING TO PAYMENTS

 

The Plan will beeffective from its effective date until December 31, 2004.  The Board of Directors reserves the right toamend the Plan from time to time and to terminate the Plan at any time.  No such amendment or any termination of thePlan shall reduce any fixed or contingent obligations which shall have arisenunder the Plan prior to the date of such amendment or termination.

 

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**TABLE OF CONTENTS**

 
| SECTION 1 | INTRODUCTION                                |   |
|----------------|---------------------------------------------|--------|
| 1-1.           | HISTORY AND PURPOSE                         |   |
| 1-2.           | EFFECTIVE DATE  AND AUTOMATIC TERMINATION   |   |
| 1-3.           | ADMINISTRATION                              |   |
| SECTION 2 | ELIGIBILITY AND PARTICIPATION               |   |
| 2-1.           | PERSONS ELIGIBLE TO  PARTICIPATE            |   |
| 2-2.           | PARTICIPANT                                 |   |
| SECTION 3 | EMPLOYEE CONTRIBUTIONS                      |   |
| 3-1.           | ALLOWABLE CONTRIBUTIONS                     |   |
| 3-2.           | COMPENSATION                                |   |
| 3-3.           | MAXIMUM EMPLOYEE  CONTRIBUTIONS             |   |
| SECTION 4 | EMPLOYER CONTRIBUTIONS                      |   |
| SECTION 5 | ELECTIONS                                   |   |
| 5-1.           | ELECTIONS PROCEDURES                        |   |
| 5-2.           | LIMITED  CHANGES                            |   |
| SECTION 6 | FUNDING EMPLOYER AND EMPLOYEE CONTRIBUTIONS |   |
| SECTION 7 | ACCOUNTING                                  |   |
| 7-1.           | SEPARATE  ACCOUNTS                          |   |
| 7-2.           | DESIGNATION OF BENEFICIARIES                |   |
| 7-3.           | NON-ASSIGNABILITY  AND FACILITY OF PAYMENT  |   |
| 7-4.           | PAYER OF  AMOUNTS ALLOCATED TO PARTICIPANTS |   |
| 7-5.           | MANNER  OF PAYMENT                          |   |
| SECTION 8 | MISCELLANEOUS                               |   |
| 8-1.           | RULES                                       |   |
| 8-2.           | TAXES                                       |   |
| 8-3.           | RIGHTS OF PARTICIPANTS                      |   |
| 8-4.           | GENDER                                      |   |
| 8-5.           | MANNER OF ACTION BY  COMMITTEE              |   |
| 8-5.           | RELIANCE  UPON ADVICE                       |   |

 

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| SECTION 9 | AMENDMENT, TERMINATION AND CHANGE OF  CONDITIONS RELATING TO PAYMENTS |   |
|----------------|-----------------------------------------------------------------------|--------|

 

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