**Exhibit 10.8**

 

**HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN****(AsAmended and Restated as of the Effective Date)**

 

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**HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN****(As Amended and Restated as of the Effective Date)**

 

**SECTION 1**

 

**GENERAL**

 

1.1                                 Purpose, Effective Date and Term.  Thepurpose of this Hospira 2004 Long-Term Stock Incentive Plan (the “Plan”) is topromote the longer-term financial success of Hospira, Inc. (the “Company”) andits subsidiaries by providing  a meansto attract, retain and reward individuals who can and do contribute to suchsuccess and to further identify their interests with those of the Company’sshareholders. The “Effective Date” of the Plan is the date on which the sharesof the Company are distributed to the shareholders of Abbott Laboratoriespursuant to the Separation and Distribution Agreement entered into between theCompany and Abbott Laboratories (the “Distribution”).  The Plan shall be unlimited in duration and, in the event of Plantermination, shall remain in effect as long as any awards under it areoutstanding; provided, however, that no awards may be granted under the Planafter the ten-year anniversary of the most recent approval of the Plan by theCompany’s shareholders.

 

1.2                                 Administration.  Theauthority to control and manage the operation of the Plan shall be vested in acommittee of the Company’s Board of Directors (the “Committee”) in accordancewith Section 6.1.

 

1.3                                 Participation. Each recipient of an Abbott Conversion Award as described in Section 4and each other employee or director of the Company or any subsidiary of theCompany who is granted an award in accordance with the terms of the Plan shallbe a “Participant” in the Plan.  Awardsunder the Plan shall be limited to employees and directors of the Company; provided,however, that an award (other than an award of an ISO) may be granted to anindividual prior to the date on which he first performs services as an employeeor director (including individuals who it is anticipated will transfer fromAbbott to the Company within 24 months following the Distribution) providedthat such award does not become vested prior to the date such individualcommences such services.

 

1.4                                 Definitions.  Capitalized terms in the Planshall be defined as set forth in the Plan (including the definition provisionsof Section 9).

 

SECTION2

 

AWARDS

 

2.1                                 General.  Any award under the Plan maybe granted singularly, in combination with another award (or awards), or intandem whereby the exercise or vesting of one award held by a Participant cancelsanother award held by the Participant. Each award under the Plan shall be subject to the terms and conditionsof the Plan and such additional terms, conditions, limitations and restrictionsas the Committee shall provide with respect to such award.  Subject to Section 2.3, an award may begranted as an alternative to or replacement of an existing award under the Planor any other plan of the Company or any subsidiary or as the form of paymentfor

 

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grants or rights earned or dueunder any other compensation plan or arrangement of the Company or itssubsidiaries, including without limitation the Hospira Non-Employee Directors’Fee Plan and the plan of any entity acquired by the Company or anysubsidiary.  The types of awards thatmay be granted under the Plan include:

 

(a)                                  *Stock Options*.  Astock option represents the right to purchase shares of Stock at an ExercisePrice established by the Committee.  Anyoption may be either an incentive stock option (an “ISO”) that is intended tosatisfy the requirements applicable to an “incentive stock option” described insection 422(b) of the Code or a non-qualified option that is not intended to bean ISO, provided, that no ISOs may be granted after the ten-year anniversary ofthe earlier of the date of adoption or shareholder approval of the Plan.  Unless otherwise specifically provided byits terms, any option granted under the Plan shall be a non-qualified option.

 

(b)                                 *Stock Appreciation Rights.*  Astock appreciation right (a “SAR”) is a right to receive, in cash or Stock, anamount equal to or based upon the excess of: (a) the Fair Market Value of ashare of Stock at the time of exercise, over (b) an Exercise Price establishedby the Committee.

 

(c)                                  *Stock Awards.*  Astock award is a grant of shares of Stock or a right to receive shares of Stock(or their cash equivalent or a combination of both) in the future.  Such awards may include, but shall not belimited to, bonus shares, stock units, performance shares, performance units,restricted stock or restricted stock units.

 

(d)                                 *Cash Incentive Awards*.  Acash incentive award is the grant of a right to receive a payment of cash,determined on an individual basis or as an allocation of an incentive pool (orStock having a value equivalent to the cash otherwise payable) that iscontingent on the achievement of performance objectives.

 

2.2                                 Exercise of Options and SARs.  Anoption or SAR shall be exercisable in accordance with such terms and conditionsand during such periods as may be established by the Committee.  In no event, however, shall an option or SARexpire later than ten years after the date of its grant.** **The“Exercise Price” of each option and SAR shall not be less than the par value ofa share of Stock; provided however, that the Exercise Price of an ISO shall notbe less than 100% of the Fair Market Value of a share of Stock on the date ofgrant.  The payment of the ExercisePrice of an option shall be by cash or, subject to limitations imposed byapplicable law, by such other means as the Committee may from time to timepermit, including, without limitation, (i) by promissory note, (ii) bytendering, either actually or by attestation, shares of Stock acceptable to theCommittee, and valued at Fair Market Value as of the day of exercise, (iii) byirrevocably authorizing a third party, acceptable to the Committee, to sellshares of Stock (or a sufficient portion of the shares) acquired upon exerciseof the option and to remit to the Company a sufficient portion of the saleproceeds to pay the entire Exercise Price and any tax withholding resultingfrom such exercise or (iv) by any combination thereof.

 

2.3                                 No Repricing. Except for adjustments pursuant to Section 3.4 (relating to theadjustment of shares), and reductions of the Exercise Price approved by theCompany’s stockholders, the Exercise Price for any outstanding option may notbe decreased after the date

 

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of grant nor may an outstandingoption granted under the Plan be surrendered to the Company as considerationfor the grant of a replacement option with a lower exercise price.

 

2.4                                 Performance-Based Compensation. Any award under the Plan which is intendedto be “performance-based compensation” within the meaning of section 162(m) ofthe Code shall be conditioned on the achievement of one or more objectiveperformance measures, to the extent required by Code section 162(m) as may bedetermined by the Committee.

 

(a)                                  *Performance Measures.*  Suchperformance measures may be based on any one or more of the following: earnings(e.g., earnings before interest and taxes; earnings before interest, taxes,depreciation and amortization; or earnings per share); financial return ratios(e.g., return on investment; return on invested capital; return on equity; orreturn on assets); increase in revenue, operating or net cash flows; cash flowreturn on investment; total shareholder return; market share; net operatingincome, operating income or net income; debt load reduction; expensemanagement; economic value added; stock price; and strategic businessobjectives, consisting of one or more objectives based on meeting specific costtargets, business expansion goals and goals relating to acquisitions ordivestitures.  Performance measures maybe based on the performance of the Company as a whole or of any one or morebusiness units of the Company and may be measured relative to a peer group oran index.

 

(b)                                 *Partial Achievement.*  Theterms of any such award may provide that partial achievement of the performancemeasures may result in a payment or vesting based upon the degree ofachievement.

 

(c)                                  *Extraordinary Items.*  Inestablishing any performance measures, the Committee may provide for theexclusion of the effects of the following items, to the extent identified inthe audited financial statements of the Company, including footnotes, or in theManagement Discussion and Analysis section of the Company’s annual report: (i)extraordinary, unusual, and/or nonrecurring items of gain or loss; (ii) gainsor losses on the disposition of a business; (iii) changes in tax or accountingprinciples, regulations or laws; or (iv) mergers or acquisitions.  To the extent not specifically excluded,such effects shall be included in any applicable performance measure.

 

2.5                                 Dividends and Dividend Equivalents.  Anyaward under the Plan, including without limitation any option or SAR, mayprovide the Participant with the right to receive dividend payments or dividendequivalent payments with respect to Stock subject to the award, which paymentsmay be either made currently or credited to an account for the Participant, andmay be settled in cash or Stock.

 

2.6                                 Deferral of Payment.  Tothe extent permitted by the Committee or the terms of any award under the Plan,a Participant may defer receipt of the cash or Stock otherwise payable underthe award and be credited with interest or dividend equivalents with respectthereto; provided, however, that any award otherwise payable in stock shallcontinue to be payable only in stock.

 

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2.7                                 Non-U.S. Awards.  TheCommittee may grant awards, in its sole discretion, to employees and directorsof the Company and its subsidiaries who are residing in jurisdictions outsideof the United States.  For purposes ofthe foregoing, the Committee may, in its sole discretion, vary the terms of thePlan in order to conform any awards to the legal and tax requirements of eachnon-U.S. jurisdiction where such individual resides.  The Committee may, in its sole discretion, establish one or moresub-plans of the Plan and/or may establish administrative rules and proceduresto facilitate the operation of the Plan in such non-U.S. jurisdictions.  For purposes of clarity, any terms containedherein which are subject to variation in a non-U.S. jurisdiction and anyadministrative rules and procedures established for a non-U.S. jurisdictionshall be reflected in a written addendum to the Plan.  To the extent permitted under applicable law, the Committee maydelegate its authority and responsibilities under this Section 2.7 of the Planto one or more officers of the Company.

 

SECTION3

 

SHARESSUBJECT TO PLAN

 

3.1                                 Available Shares.  Theshares of Stock with respect to which awards may be made under the Plan shallbe shares currently authorized but unissued or currently held or, to the extentpermitted by applicable law, subsequently acquired by the Company as treasuryshares, including shares purchased in the open market or in privatetransactions.

 

3.2                                 Share Limitations. Subject to the following provisions of this subsection 3.2, the maximumnumber of shares of Stock that may be delivered to Participants and theirbeneficiaries under the Plan shall be equal to Thirty One Million (31,000,000)shares of Stock (all of which may be granted as ISOs). The maximum number ofshares of Stock that may be issued in conjunction with awards other thanoptions and SARS shall be 25% of that number of shares in the immediatelypreceding sentence.

 

(a)                                  *Reuse of Shares. *To the extent any shares of Stock covered by an award are forfeited orare not delivered to a Participant or beneficiary for any reason, includingbecause the award is forfeited or canceled, or is settled in cash or used tosatisfy the applicable tax withholding obligation, such shares shall not bedeemed to have been delivered for purposes of determining the maximum number ofshares of Stock available for delivery under the Plan

 

(b)                                 *Net Shares. *If the exercise price of any stock option granted under the Plan issatisfied by tendering shares of Stock to the Company (either actually or byattestation), only the number of shares of Stock issued net of the shares ofStock tendered shall be deemed delivered for purposes of determining themaximum number of shares of Stock available for delivery under the Plan.

 

3.3                                 Limitations on Grants to Individuals.

 

(a)                                  *Options and SARs. *The maximum number of shares of Stock that may be subject to options orSARs granted to any Participant during any calendar year (excluding any awardsintended to constitute Conversion Awards) shall be One Million (1,000,000).

 

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(b)                                 *Stock Awards. *The maximum number of shares of Stock that may be subject to stockawards described under paragraph 2.1(c) which are granted to any Participantduring any calendar year and are intended to be “performance-basedcompensation” (as that term is used for purposes of Code section 162(m)), shallbe Five Hundred Thousand (500,000).

 

(c)                                  *Cash Incentive Awards. *The maximum dollar amount that may be payable to a Participant pursuantto cash incentive awards described under paragraph 2.1(d) which are granted toany Participant during any calendar year and are intended to be“performance-based compensation” (as that term is used for purposes of Codesection 162(m)), shall be Five Million Dollars ($5 million).

 

(d)                                 *Director Fees.* Other than with respect to initial grants tonew Directors or one-time grants due to extraordinary circumstances, themaximum number of shares that may be covered by awards granted to any oneindividual non-employee director pursuant to Section 2.1(a) and 2.1(b)(relating to options and SARs) shall be****OneHundred Thousand (100,000)****sharesduring any calendar year under the terms of the Hospira Non-Employee Director’sFee Plan and the maximum number of shares that may be covered by awards grantedto any one individual non-employee director pursuant to Section 2.1(c)(relating to Other Stock awards) shall be Fifty Thousand (50,000) shares duringany calendar year under the terms of the Hospira Non-Employee Director’s FeePlan.  The foregoing limitations shallnot apply to cash-based director fees that the Non-Employee Director elects toreceive in the form of Stock or Stock Units.

 

(e)                                  *Dividend, DividendEquivalents and Earnings. *For purposes of determining whether an awardis intended to be qualified as a performance-based compensation, the foregoinglimitations of this Section 3.3, (i) the right to receive dividends anddividend equivalents with respect to any award which is not yet vested shall betreated as a separate award, and (ii) if the delivery of any shares or cashunder an award is deferred, any earnings, including dividends and dividendequivalents, shall be disregarded.

 

3.4                                 Corporate Transactions. Subject to paragraphs (a) and (b) below, 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), the Committee may adjust awards to preserve the benefitsor potential benefits of the awards and the Plan.  Action by the Committee may include: (i) adjustment of the numberand kind of shares which may be delivered under the Plan; (ii) adjustment ofthe number and kind of shares subject to outstanding awards; (iii) adjustmentof the Exercise Price of outstanding options and SARs; and (iv) any otheradjustments that the Committee determines to be equitable (which may include,without limitation, (I) replacement of awards with other awards which theCommittee determines have comparable value and which are based on stock of acompany resulting from the transaction, and (II) cancellation of the award inreturn for cash payment of the current value of the award, determined as thoughthe award was fully vested at the time of payment, provided that in the case ofan option or SAR, the amount of such payment may be the excess of the value ofthe Stock subject to the option or SAR at the time of the transaction over theExercise Price).

 

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(a)                                  Notwithstanding any other provision of thisPlan, including the terms of any award granted hereunder, if the outstandingcommon shares of the Company shall be combined, or be changed into, orexchanged for, another kind of stock of the Company, into securities of anothercorporation, or into property (including cash) whether throughrecapitalization, reorganization, sale, merger, consolidation, spin-off,business combination or a similar transaction (a “Transaction”), the Companyshall cause its successor, acquiror (or ultimate parent of any successor oracquiror), as applicable, to assume each stock option and SAR outstandingimmediately prior to the Transaction (or to cause new options or rights to besubstituted therefor).  Pursuant to suchassumed or substituted option or rights, holders of such option or right shallthereafter be entitled to receive, upon due exercise of any portion of theoption or right, (a) in the event of a Transaction in which the outstandingcommon shares of the Company are combined, or changed into, or exchanged for,solely another kind of stock of the Company or securities of anothercorporation (disregarding, for this purpose, cash paid in lieu of fractionalshares), the securities which that person would have been entitled to receivefor common shares acquired through exercise of the same portion of such optionor right immediately prior to the effective date of such Transaction, and (b)in the event of a Transaction in which the outstanding common shares of theCompany are changed into, or exchanged for, property (including cash) otherthan solely stock of the Company or securities of another corporation (disregarding,for this purpose, cash paid in lieu of fractional shares), securities the fairmarket value of which immediately following the effective date of suchTransaction (as determined by the Committee) equals the fair market value (asdetermined by the Committee) of the property which that person would have beenentitled to receive for common shares acquired through exercise of the sameportion of such option or right immediately prior to the effective date of suchTransaction.  In each case such assumedor substituted option or right shall continue to be subject to the same termsand conditions (including, without limitation, with respect to any right toreceive “replacement options” upon option exercise) to which it was subjectimmediately prior to the Transaction.

 

(b)                                 Notwithstanding the immediately precedingparagraph, upon a Transaction in which the outstanding common shares of theCompany are changed into, or exchanged for, property (including cash) otherthan solely stock of the Company or securities of another corporation(disregarding, for this purpose, cash paid in lieu of fractional shares) andwhich constitutes a Change in Control, each holder of an option or SAR mayelect to receive, immediately following such Transaction in exchange for cancellationof any stock option or SAR held by such person immediately prior to theTransaction, a cash payment, with respect to each common share subject to suchoption or right, equal to the difference between the value of consideration (asdetermined by the Committee) received by the shareholders for a common share ofthe Company in the Transaction, less any applicable purchase price.

 

3.5                                 Delivery of Shares. Delivery of shares of Stock or other amounts under the Plan shall besubject to the following:

 

(a)                                  *Compliance with ApplicableLaws. *Notwithstanding any other provision of thePlan, the Company shall have no obligation to deliver any shares of Stock ormake any

 

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other distribution ofbenefits under the Plan unless such delivery or distribution complies with allapplicable laws (including, without limitation, the requirements of theSecurities Act of 1933), and the applicable requirements of any securitiesexchange or similar entity.

 

(b)                                 *Certificates. *To the extent that the Plan provides for the issuance of shares ofStock, the issuance may be effected on a non-certificated basis, to the extentnot prohibited by applicable law or the applicable rules of any stock exchange.

 

SECTION4

 

ABBOTTCONVERSION AWARDS

 

4.1                                 General.  Certain employees transferredto the employ of the Company and its subsidiaries have received awards underthe Plan (“Conversation Awards”) as of the Effective Date as replacement awardsfor awards granted under the Abbott Laboratories 1996 Incentive Stock Programand the Abbott Laboratories 1991 Incentive Stock Program (the “Abbott Plans”)and cancelled in connection with the Distribution.   The number of such Conversion Awards has been determined byapplying a conversion ratio established by the committee administering theAbbott Plans in accordance with the terms of such plans on a basis intended tobe consistent with Section 424 of the Code and applicable accountingprinciples.

 

4.2                                 Share Limitations. Conversion Awards shall be taken into account in applying the sharelimitations set forth in Section 3.2, but shall be excluded in calculating theindividual limitations under Section 3.3(a).

 

4.3                                 Replacement Options.  Ifan option granted under the Plan constitutes a Conversion Award with respect toan option under the Abbott Plans that provided for the grant of replacementstock options if all or a portion of the exercise price or taxes incurred inconnection with the exercise of the option are paid with the delivery (or inthe case of payment of taxes, the withholding of shares) of other shares ofAbbott Laboratories, then the Conversion Award shall provide for a replacementstock option (a “Replacement Option”). Each Replacement Option shall cover the number of shares of Stock surrendered(by actual delivery or by attestation) to satisfy the Exercise Price, plus thenumber of shares surrendered (by actual delivery or attestation) or withheld tosatisfy the Participant’s tax liability, shall have an Exercise Price equal to100% of the of the Fair Market Value of Stock on the date such ReplacementOption is granted, shall be first exercisable six months from the date of grantof the Replacement Option and shall have the expiration date of the originaloption.

 

SECTION5

 

CHANGEIN CONTROL

 

5.1                                 Subject to the provisions of Section 3.4(relating to the adjustment of shares), and except as otherwise provided in thePlan or the terms of any award:

 

(a)                                  If a Participant who is an employee orDirector of the Company or a subsidiary at the time of a Change in Control thenholds one or more outstanding options or SARs, all

 

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such options and SARs thenheld by the Participant shall become fully exercisable on and after the date ofthe Change in Control (subject to the expiration provisions otherwiseapplicable to the option or SAR), and any Stock purchased by the Participantunder such option or acquired under such SAR following such Change in Controlshall be fully vested upon exercise.

 

(b)                                 If a Participant who is an employee orDirector of the Company or a subsidiary at the time of a Change in Control thenholds one or more stock awards described in paragraph 2.1(c) or cash incentiveawards described in paragraph 2.1(d), such awards shall be fully earned andvested (and all performance measures deemed to be achieved).

 

5.2                                 Change in Control.  Forpurposes of this Plan, unless otherwise provided in an Award Agreement, theterm “Change in Control” shall be deemed to have occurred on the earliest of the following dates:

 

(a)                                  the date any Person is or becomes theBeneficial Owner, directly or indirectly, of securities of the Company (notincluding in the securities beneficially owned by such Person any securities ac­quireddirectly from the Company or its Affiliates) representing 20% or more of thecombined voting power of the Company’s then out­standing securities, excludingany Person who becomes such a Bene­ficial Owner in connection with atransaction described in clause (a) of paragraph 5.2(c) below; or

 

(b)                                 the date the following individuals cease forany reason to constitute a majority of the number of directors then serving:individ­uals who, on the date hereof, constitute the Board of Directors and anynew direc­tor (other than a director whose initial assumption of office is inconnection with an actual or threatened election contest, including but notlimited to a consent solicitation, relating to the election of direc­tors ofthe Company) whose appointment or election by the Board of Directors ornomination for election by the Company’s shareholders was approved orrecommended by a vote of at least two-thirds (2/3) of the directors then stillin office who either were directors on the date hereof or whose appointment,election or nomination for election was previ­ously so approved or recommended;or

 

(c)                                  the date on which there is consummated amerger or consolidation of the Company or any direct or indirect subsidiary ofthe Company with any other corporation or other entity, other than (a) a mergeror consolidation (I) immediately following which the individuals who comprisethe Board of Directors immediately prior thereto constitute at least a majorityof the Board of Directors of the Company, the entity surviv­ing such merger orconsolidation or, if the Company or the entity surviving such merger orconsolidation is then a subsidiary, the ultimate parent thereof and (II) whichresults in the voting securities of the Company outstanding immediately priorto such merger or consolidation contin­uing to represent (either by remainingoutstanding or by being con­verted into voting securities of the survivingentity or any parent thereof), 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, at least 50% of the combined votingpower of the securities of the Company or such surviving entity or any parentthereof outstanding immediately after such merger or consolidation, or (b) a

 

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merger or consolidationeffected to implement a recapitalization of the Company (or similartransaction) in which no Person is or be­comes the Beneficial Owner, directlyor indirectly, 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)                                 the date the shareholders of the Companyapprove a plan of complete liquidation or dissolution of the Company or thereis consummated an agreement for the sale or disposition by the Company of allor substantially all of the Company’s assets, other than a sale or dispositionby the Company of all or substantially all of the Company’s assets to anentity, at least 50% of the combined voting power of the voting securities ofwhich are owned by shareholders of the Company, in combination with theownership of any trustee or other fiduciary holding securities under anemployee benefit plan of the Company or any subsidiary of the Company, insubstantially the same proportions as their ownership of the Companyimmediately prior to such sale.

 

(e)                                  Notwithstanding the foregoing, a “Change inControl” shall not be deemed to have occurred by virtue of the consummation ofany transaction or series of integrated transactions immediately followingwhich the record holders of the common stock of the Company immediately priorto such transaction or series of transactions continue to have****substantially the same proportionateownership in an entity which owns all or substantially all of the assets of theCompany immediately following such transaction or series of transactions.

 

(f)                                    For purposes of this Plan: “Affiliate” shallhave the meaning set forth in Rule 12b-2 promulgated under Section 12 of theExchange Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3under the Exchange Act; “Exchange Act” shall mean the Securities Exchange Actof 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 in Sections13(d) and 14(d) thereof, except that such term shall not include (i) the Companyor any of its subsidiaries, (ii) a trustee or other fiduciary holdingsecurities 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.

 

5.3                                 Amendment of Section 5.  Theprovisions of this Section 5 may not be amended or deleted, nor superseded byany other provision of this Plan during the pendency of a Potential Change inControl.  A “Potential Change inControl” shall exist during any period in which the circumstances described inparagraphs (a), (b), (c) or (d), below, exist (provided, however, that aPotential Change in Control shall cease to exist not later than the occurrenceof a Change in Control):

 

(a)                                  The Company enters into an agreement, theconsummation of which would result in the occurrence of a Change in Control,provided that a Potential Change in Control

 

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described in this Section5.3 shall cease to exist upon the expiration or other termination of all suchagreements.

 

(b)                                 Any Person (without regard to the exclusionsset forth in subsections (i) through (iv) of such definition) publiclyannounces an intention to take or to consider taking actions the consummationof which would constitute a Change in Control; provided that a Potential Changein Control described in this paragraph (b) shall cease to exist upon thewithdrawal of such intention, or upon a determination by the Board of Directorsthat there is no reasonable chance that such actions would be consummated.

 

(c)                                  Any Person becomes the Beneficial Owner, directlyor indirectly, of securities of the Company representing 10% or more of eitherthe then outstanding shares of common stock of the Company or the combinedvoting power of the Company’s then outstanding securities (not including in thesecurities beneficially owned by such Person any securities acquired directlyfrom the Company or its Affiliates).

 

(d)                                 The Board of Directors adopts a resolution tothe effect that, for purposes of this Agreement, a Potential Change in Controlexists; provided that a Potential Change in Control described in this paragraph(d) shall cease to exist upon a determination by the Board of Directors thatthe reasons that gave rise to the resolution providing for the existence of aPotential Change in Control have expired or no longer exist.

 

SECTION6

 

COMMITTEE

 

6.1                                 Administration.  Theauthority to control and manage the operation and administration of the Planshall be vested in a committee (the “Committee”) in accordance with thisSection 6.  The Committee shall beselected by the Board.  Subject toapplicable stock exchange rules, if the Committee does not exist, or for anyother reason determined by the Board, the Board may take any action under thePlan that would otherwise be the responsibility of the Committee.  Notwithstanding the foregoing, with respectto any action, determination, interpretation or modification with respect to aspecific Award granted to a non-Employee Director, other than ministerialactions, the Committee shall be comprised of the Board.

 

6.2                                 Powers of Committee.  TheCommittee’s administration of the Plan shall be subject to the following:

 

(a)                                  Subject to the provisions of the Plan, theCommittee will have the authority and discretion to select from among theCompany’s employees and directors those persons who shall receive awards, todetermine the time or times of receipt, to determine the types of awards andthe number of shares covered by the awards, to establish the terms, conditions,performance criteria, restrictions, and other provisions of such awards, and(subject to the restrictions imposed by Section 7) to cancel or suspend awards.

 

(b)                                 To the extent that the Committee determinesthat the restrictions imposed by the Plan preclude the achievement of thematerial purposes of the awards in jurisdictions outside the United States, theCommittee will have the authority and discretion to modify

 

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those restrictions as theCommittee determines to be necessary or appropriate to conform to applicablerequirements or practices of jurisdictions outside of the United States.

 

(c)                                  The Committee will have the authority anddiscretion to interpret the Plan, to establish, amend, and rescind any rulesand regulations relating to the Plan, and to make all other determinations thatmay be necessary or advisable for the administration of the Plan.

 

(d)                                 Any interpretation of the Plan by theCommittee and any decision made by it under the Plan is final and binding onall persons.

 

(e)                                  In controlling and managing the operation andadministration of the Plan, the Committee shall take action in a manner thatconforms to the articles and by-laws of the Company, and applicable statecorporate law.

 

6.3                                 Delegation by Committee. Except to the extent prohibited by applicable law, the applicable rulesof a stock exchange or this Plan, or as necessary to comply with the exemptiveprovisions of Rule 16b-3 under the Exchange Act, the Committee may allocate allor any portion of its responsibilities and powers to any one or more of itsmembers and may delegate all or any part of its responsibilities and powers toany person or persons selected by it, including without limitation, (a)delegating to a committee of one or more members of the Board who are not“independent directors” within the meaning of Section 162(m) of the Code, theauthority to grant awards under the Plan to eligible persons who are either (i)not then “covered employees,” within the meaning of Section 162(m) of the Codeand are not expected to be “covered employees” at the time of recognition ofincome resulting from such award or (ii) not persons with respect to whom theCompany wishes to comply with Section 162(m) of the Code and/or (b) delegatingto a committee of one or more members of the Board who are not “non-employeedirectors,” within the meaning of Rule 16b-3, the authority to grant awardsunder the Plan to eligible persons who are not then subject to Section 16 ofthe Exchange Act.  Any such allocationor delegation may be revoked by the Committee at any time.  To the extent permitted by applicable lawand resolution of the Board, the Committee may delegate all or any part of itsresponsibilities to any officer of the Company.

 

6.4                                 Information to be Furnished to Committee.  Asmay be permitted by applicable law, the Company and its subsidiaries shallfurnish the Committee with such data and information as it determines may berequired for it to discharge its duties. The records of the Company and its subsidiaries as to an employee’s orParticipant’s employment, termination of employment, leave of absence,reemployment and compensation shall be conclusive on all persons unlessdetermined to be incorrect.  Subject toapplicable law, Participants and other persons entitled to benefits under thePlan must furnish the Committee such evidence, data or information as theCommittee considers desirable to carry out the terms of the Plan.

 

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SECTION7

 

AMENDMENTAND TERMINATION

 

Subject to the limitationsof Section 5.3, the Board may, at any time, amend or terminate the Plan, andmay amend any Award Agreement, provided that no amendment or termination may,in the absence of written consent to the change by the affected Participant(or, if the Participant is not then living, the affected beneficiary),adversely affect the rights of any Participant or beneficiary under any Awardgranted under the Plan prior to the date such amendment is adopted by theBoard; and further provided, that adjustments pursuant to Section 3.4 (and notin violation of paragraphs (a) and (b) thereof) shall not be subject to theforegoing limitations of this Section 7; and further provided that no amendmentmay (i) remove the provisions of subsection 2.3 (relating to option repricing),(ii) materially increase the benefits accruing to Participants under the Plan,(iii) materially increase the aggregate number of securities which may beissued under the Plan, or (iv) materially modify the requirements forparticipation in the Plan, unless the amendment is approved by the Company’sstockholders.

 

SECTION8

 

GENERALTERMS

 

8.1                                 No Implied Rights .

 

(a)                                  *No Rights to SpecificAssets. *Neither a Participant nor any other personshall, by reason of participation in the Plan, acquire any right in or title toany assets, funds or property of the Company or any subsidiary whatsoever,including, without limitation, any specific funds, assets, or other propertywhich the Company or any subsidiary, in its sole discretion, may set aside inanticipation of a liability under the Plan. A Participant shall have only a contractual right to the Stock oramounts, if any, payable under the Plan, unsecured by any assets of the Companyor any subsidiary, and nothing contained in the Plan shall constitute aguarantee that the assets of the Company or any subsidiary shall be sufficientto pay any benefits to any person.

 

(b)                                 *No Contractual Right toEmployment or Future Awards. *The Plan does not constitute a contract ofemployment, and selection as a Participant will not give any participatingemployee the right to be retained in the employ of the Company or anysubsidiary, nor any right or claim to any benefit under the Plan, unless suchright or claim has specifically accrued under the terms of the Plan.  Except as otherwise provided in the Plan, noaward under the Plan shall confer upon the holder thereof any rights as ashareholder of the Company prior to the date on which the individual fulfillsall conditions for receipt of such rights.

 

8.2                                 Transferability.  TheCommittee may provide at the time it makes an award under the Plan or at anytime thereafter that such award may be transferable by the Participant, subjectto such limitations as the Committee may impose.  Except as otherwise so provided by the Committee, awards underthe Plan are not transferable except as designated by the Participant by willor by the laws of descent and distribution.

 

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8.3                                 Form and Time of Elections. Unless otherwise specified herein, each election required or permittedto be made by any Participant or other person entitled to benefits under thePlan, and any permitted modification, or revocation thereof, shall be filedwith the Company at such times, in such form, and subject to such restrictionsand limitations, not inconsistent with the terms of the Plan, as the Committeeshall require.

 

8.4                                 Evidence.  Evidence required of anyoneunder the Plan may be by certificate, affidavit, document or other informationwhich the person acting on it considers pertinent and reliable, and signed,made or presented by the proper party or parties.

 

8.5                                 Tax Withholding.  Alldistributions under the Plan are subject to withholding of all applicabletaxes, and the Committee may condition the delivery of any shares or otherbenefits under the Plan on satisfaction of the applicable withholdingobligations.  Except as otherwiseprovided by the Committee, such withholding obligations may be satisfied (i)through cash payment by the Participant; (ii) through the surrender of sharesof Stock which the Participant already owns; or (iii) through the surrender ofshares of Stock to which the Participant is otherwise entitled under the Plan;provided, however, that except as otherwise specifically provided by the Committee,such shares under clause (iii) may not be used to satisfy more than theCompany’s minimum statutory withholding obligation.

 

8.6                                 Action by Company or Subsidiary.  Anyaction required or permitted to be taken by the Company or any subsidiary shallbe by resolution of its board of directors, or by action of one or more membersof the board (including a committee of the board) who are duly authorized toact for the board, or (except to the extent prohibited by applicable law orapplicable rules of any stock exchange) by a duly authorized officer of suchcompany.

 

8.7                                 Successors.  All obligations of theCompany under this Plan shall be binding upon and inure to the benefit of anysuccessor to the Company, whether the existence of such successor is the resultof a direct or indirect purchase, merger, consolidation, or otherwise, of allor substantially all of the business, stock, and/or assets of the Company.

 

8.8                                 Gender and Number. Where the context admits, words in any gender shall include any othergender, words in the singular shall include the plural and the plural shallinclude the singular.

 

SECTION9

 

DEFINEDTERMS

 

In addition to the otherdefinitions contained herein, the following definitions shall apply:

 

(a)                                  Affiliates.  The term “Affiliates” has themeaning ascribed to it in paragraph 5.2(f).

 

(b)                                 Beneficial Owner.  Theterm “Beneficial Owner” has the meaning ascribed to it in paragraph 5.2(f).

 

(c)                                  Board.  The term “Board” means theBoard of Directors of the Company.

 

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(d)                                 Change in Control.  Theterm “Change in Control” has the meaning ascribed to it in Section 5.2.

 

(e)                                  Code.  The term “Code” means theInternal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to anysuccessor provision of the Code.

 

(f)                                    Committee.  The term “Committee” meansthe Committee acting under Section 6.

 

(g)                                 Company.  The term “Company” meansHospira, Inc. and its successors and assigns.

 

(h)                                 Conversion Award.  Theterm “Conversion Award” means an award described in Section 4.1.

 

(i)                                     Director.  The term “Director” means amember of the Board.

 

(j)                                     Distribution.  Theterm “Distribution” means the distribution of Company shares to shareholders ofAbbott Laboratories pursuant to the Separation and Distribution Agreement.

 

(k)                                  Exchange Act.  Theterm “Exchange Act” has the meaning ascribed to it by paragraph 5.2(f).

 

(l)                                     Exercise Price.  Theterm “Exercise Price” means the price established with respect to an option orSAR pursuant to Section 2.2.

 

(m)                               Fair Market Value.  The“Fair Market Value” of the Stock at any time shall be determined in such manneras the Committee may deem equitable, or as required by applicable law orregulation.

 

(n)                                 ISO.  The term ISO has the meaningascribed to it in paragraph 2.1(a).

 

(o)                                 Participant.  The term “Participant” meansany individual who has received an award under the Plan.

 

(p)                                 Person.  The term “Person” has themeaning ascribed to it by paragraph 5.2(f).

 

(q)                                 Potential Change in Control.  Theterm “Potential Change in Control” has the meaning ascribed to it in Section5.3.

 

(r)                                    SAR.  The term “SAR” has themeaning ascribed to it in paragraph 2.1(b).

 

(s)                                  Separation and Distribution Agreement.  Theterm “Separation and Distribution Agreement” means the agreement entered intobetween the Company and Abbott Laboratories pursuant to which AbbottLaboratories accomplished the spin-off of the Hospira Business (as definedtherein).

 

(t)                                    Stock.  The term “Stock” means commonstock of the Company.

 

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(u)                                 Transaction.  The term “Transaction” hasthe meaning ascribed to it in paragraph 3.4(a).

 

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