Document:

HSP-EX10.4_2014.3.31-10Q

	
				
	Notice of Grant of  
Award and Award Agreement
	Hospira, Inc. 
ID: 20-0504497 
275 N. Field Drive 
Lake Forest, IL 60045

	 
	Award Number:

	 
	Plan: Hospira 2004 Long-Term Stock Incentive Plan

	ID:

	 
	 

	 
	 
	 

Effective __________, 2014, you have been granted Performance Share Units with respect to _______      shares of Hospira, Inc. (the “Company”) stock.
The Performance Share Units are subject to the attainment of performance goals described in the attached Term Sheet and will become fully vested on the date shown.

	
			
	Units
	Vest Type
	Full Vest

	 
	On Vest Date
	December 31, 2016

	
	
	By accepting this award, the Participant agrees that these Performance Share Units are granted under and governed by the terms and conditions of the Hospira 2004 Long-Term Stock Incentive Plan, the Performance Share Unit Award Agreement and the administrative rules governing the Performance Share Unit Agreement, all of which are attached and made a part of this document.

________ ____, 2014
	
			
	Hospira, Inc.
Name: F. Michael Ball 
Title: Chief Executive Officer

	 
	Date

PERFORMANCE SHARE UNIT AWARD AGREEMENT 

You have been selected to be a Participant in the Hospira, Inc. 2004 Long-Term Stock Incentive Plan (the “Plan”), as specified in the attached Notice of Grant of Award and Award Agreement (the “Notice”):
THIS AGREEMENT (“Agreement”), effective as of the date set forth in the attached Notice, is between Hospira, Inc., a Delaware corporation (the “Company”) and the Grantee named in the Notice, pursuant to the provisions of the Plan. Except where the context clearly implies to the contrary, any capitalized term not defined in this Agreement shall have the meaning ascribed to that term under the Plan. 
The parties hereto agree as follows:
1.  Award of Performance Share Units.  The Company hereby grants to Grantee the number of performance share units (the “Units”) set forth in the attached Notice subject to the terms and conditions set forth below and in the attached Term Sheet.  The term “Units” shall include “Earned Units” as defined in Section 2(a) below.
2.      Restrictions.  The Units are being awarded to Grantee subject to the forfeiture conditions set forth below (the "Restrictions") which shall, unless otherwise stated, lapse, if at all, as set forth in the attached Term Sheet.
(a)    The Units are subject to the attainment of performance goals during the performance period, as described in the attached Term Sheet.  The number of Units earned upon the attainment of the performance goals (the “Earned Units”) shall be determined by the Compensation Committee of the Board of Directors (the “Committee”) upon completion of the performance period.
(b)    Any Units subject to the Restrictions shall be automatically forfeited upon the earliest to occur of the following: (i) except as provided in Section 7, the date of the Grantee's termination of employment with the Company or a subsidiary for any reason other than death, Disability or Retirement; (ii) subject to the provisions of Section 3, the date the Grantee engages in conduct which constitutes Restricted Activity; or (iii) as provided in Section 4. 
3.    Restricted Activity.
(a)              Without the prior written consent of the Committee, the Grantee shall not, while employed by the Company and for a period of one year following the termination of employment for any reason: 
(i)       directly or indirectly engage or assist any person engaging in any Competitive Business, individually, or as an officer, director, employee, agent, consultant, owner, partner, lender, manager, member, principal, or in any other capacity, or render any services to any entity that is engaged in any Competitive Business; provided, however, that the Grantee’s ownership of 1% of any class of equity security of any entity engaged in 

any Competitive Business shall not be deemed a breach of this paragraph 3(a) provided such securities are listed on a national securities exchange or quotation system or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended; 
(ii)       directly or indirectly divert, take away, solicit, or assist others in soliciting any current or prospective customer, supplier, independent contractor or service provider of the Company or any affiliate or otherwise interfere with the relationship between the Company or any affiliate and any current or prospective customer, service provider, supplier, independent contractor or stockholder;  
(iii)     directly or indirectly induce any person to leave employment with the Company, or solicit for employment other than on behalf of the Company, offer employment to, or employ, any person who was an employee of the Company, in each case within six months of such inducement, solicitation, or offer; or 
(iv)    engage in conduct which constitutes Cause.
(b)         If the Grantee engages in any activity described in paragraph 3(a) above without the written consent of the Committee, the Company, as determined by the Committee in its sole discretion, may terminate the Agreement as of the date on which the Grantee engaged in such Restricted Activity, and (i) the Grantee shall pay to the Company in cash any Financial Gain the Grantee realized from the vesting of the Units, provided that such vesting occurred within one year from the date that the Grantee engaged in such Restricted Activity, and (ii) if the Restricted Activity occurs prior to the delivery of the Earned Units, the Grantee shall forfeit the Units and this Agreement shall terminate as of the date on which the Grantee first engaged in such Restricted Activity. 
4.    Other Right to Correct Payments.  Subject to the Company’s Executive Compensation Recovery Policy, and notwithstanding anything in the Agreement to the contrary, if the Committee determines, in its sole discretion, that the number of Units determined to be delivered under the Agreement or the value of such Units was based on the Company’s published financial statements that have been restated then, at the Committee’s discretion, the Company may, but in no case later than 60 months of such restatement: 
(a)     cancel all Units (whether vested or unvested) that were based upon the financial performance in the published financial statements that was subsequently restated; 
(b)     rescind any delivery of Units that were based upon the financial performance in the published financial statements that was subsequently restated; and 
(c)     if any amount has been realized from the vesting of the Units that would have been lower had the financial results been properly reported, recover 

all or any Financial Gain realized by the Grantee, as determined by the Committee in its sole discretion, that resulted from the financial results that were subsequently restated, and the Grantee agrees to repay and return any such Financial Gain to the Company. 
The Committee may, in its sole discretion, effect any such recovery by obtaining repayment directly from the Grantee, setting off the amount owed to the Company against any amount or award that would otherwise be granted by the Company to the Grantee, reducing any future compensation or benefit to the Grantee or any combination thereof.  
5.    Death, Disability or Retirement.  In the event of the death, Disability or Retirement of the Grantee at any time during the performance period, the a number of shares of Common Stock equal to the number of Earned Units (or cash equal to the value of the shares) will be delivered to the Grantee or the Grantee’s personal representative, upon the determination of the number of Earned Units after the end of the performance period, but no later than 90 days following the end of such performance period. 
6.    Change in Control.  In the event of a Change in Control of the Company during the performance period, the Grantee will be deemed to have earned an award based on the target performance goal established by the Committee and a number of shares of Common Stock equal to the number of deemed Earned Units (or cash equal to the value of the shares) will be delivered to the Grantee no later than 90 days following such Change in Control.
7.    Termination of Employment.  In the event of the Grantee’s Involuntary Termination of Employment during the performance period, the number of shares of Common Stock equal to the number of Earned Units as of the date of such Involuntary Termination of Employment will be delivered to the Grantee, upon the determination of the number of Earned Units after the end of the performance period, but no later than 90 days following the end of such performance period. If Grantee’s termination of employment during the performance period for reasons other than death, Disability or Retirement does not constitute an Involuntary Termination of Employment, all Units shall be forfeited.  The Company will not be obligated to pay Grantee any consideration whatsoever for forfeited Units (whether or not earned).
8.    Dividend Equivalents.  Neither dividends nor Dividend Equivalents will be paid or accrued on unvested Units.  
9.      Adjustments.  If the number of outstanding shares of Common Stock is changed as a result of stock dividend, stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted in accordance with the applicable provisions of the Plan pertaining to such adjustments.
10.      Delivery of Certificate.  Subject to withholding of taxes as provided in Section 11 below, the Company shall deliver to the Grantee a certificate representing a 

number of shares of Common Stock equal to the number of Earned Units on which Restrictions have lapsed plus a cash payment equal to the value of any fractional Earned Unit then credited to the Grantee’s account, upon the lapse of Restrictions.
11.      Withholding Taxes.  The Company is entitled to withhold an amount equal to the Company’s required statutory withholding taxes for the respective tax jurisdiction attributable to any share of Common Stock or property deliverable in connection with the Earned Units.  Subject to such limitations as the Company may establish from time to time, Grantee may satisfy any withholding obligation in whole or in part by making a cash payment equal to the amount required to be withheld. 
12.      Nontransferability.  Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units subject to this Award.
13.    Voting and Other Rights. 
		
	(a)  
	Grantee shall have no rights as a stockholder of the Company in respect of the Earned Units, including the right to vote and to receive dividends and other distributions, until delivery of certificates representing shares of Common Stock in satisfaction of the Earned Units.

		
	(b)  
	The grant of Units does not confer upon Grantee any right to continue in the employ of the Company or a subsidiary or to limit or interfere with the right of the Company or a subsidiary, to terminate Grantee’s employment at any time.

		
	(c)  
	The grant of an award under the Plan is a one-time benefit and does not create any contractual or other right to receive an award in the future.  Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the amount of the award and vesting provisions.

		
	(d)  
	The Committee retains the right to reduce the number of Units subject to this Award at any time prior to payment or delivery based on the performance of the Grantee.

14.      Funding.  No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder.  The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company.
15.    Definitions.  For purposes of this Agreement, the following words shall have the meaning provided below:
		
	(a)
	Cause.  The term “Cause” shall mean, in the sole opinion and discretion of the Committee, the Grantee has (i) engaged in a material breach of the Company’s code of business conduct, (ii) 

committed an act of fraud, embezzlement or theft in connection with the Grantee’s duties or in the course of employment, or (iii) wrongfully disclosed secret processes or confidential information of the Company or its subsidiaries.
		
	(b)
	Competitive Business.  The term “Competitive Business” means any business activity in which the Company or any subsidiary is actively engaged at the time the Grantee’s employment terminates.  For these purposes, entities deemed to be engaged in Competitive Business include, by way of example and not limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva Pharmaceuticals, Becton, Dickinson and Company, B. Braun Melsungen AG, Cardinal Healthcare Inc., Fresenius Medical Care AG, Terumo Medical Corporation, Patheon, Inc., and Edwards Lifesciences Corporation.

		
	(c)
	Date of Termination.  The term “Date of Termination” means the first day occurring on or after grant of the award under this Agreement on which the Grantee is not employed by the Company or any subsidiary, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Grantee between the Company and a subsidiary or between two subsidiaries; and further provided that the Grantee’s employment shall not be considered terminated while the Grantee is on a leave of absence from the Company or a subsidiary approved by the Grantee’s employer.  If, as a result of a sale or other transaction, the Grantee’s employer ceases to be a subsidiary (and the Grantee’s employer is or becomes an entity that is separate from the Company), and the Grantee is not, at the end of the 30‐day period following the transaction, employed by the Company or an entity that is then a subsidiary, then the occurrence of such transaction shall be treated as the Grantee’s Date of Termination caused by the Grantee being discharged by the employer.

		
	(d)
	Disability.  The term “Disability” means the Grantee either is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months;  or by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Grantee is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or a subsidiary.

		
	(e)
	Dividend Equivalent. “Dividend Equivalent” means, with respect to any shares of Hospira common stock that are to be issued pursuant 

to an award at the end of the performance period, an amount equal to cash dividends that are payable to stockholders of record during the performance period on a like number of shares of Hospira common stock.

		
	(f)
	Financial Gain.  “Financial Gain” means the Fair Market Value of the Common Stock on the date the Unit is deemed vested, multiplied by the number of Units actually distributed pursuant to this Agreement, reduced by any taxes paid in countries other than the United States, to the extent that such taxes are not otherwise eligible for refund from the taxing authorities.

		
	(a)
	Involuntary Termination of Employment.  “Involuntary Termination of Employment” means the Grantee’s position with the Company and its affiliates is eliminated due to a reduction in force or other restructuring or the Grantee’s employment is otherwise terminated for reasons not related to performance, illegal activity, failure to abide by the Company’s Code of Conduct, or other good cause as determined by the Committee and is otherwise considered to be involuntary. 

		
	(b)
	Retirement.  “Retirement” of the Grantee means, the occurrence of the Grantee’s Date of Termination on or after the date that the Grantee reaches the age of 55 and has 10 years of combined service with the Company or its subsidiaries (or with Abbott Laboratories and its affiliates, provided that the Grantee transitioned employment from Abbott to the Company in conjunction with the distribution of the Company’s common stock to the Abbott shareholders) (as determined by the Committee).

16.      Notices.  Any written notice under this Award shall be deemed given on the date that is two business days after it is sent in writing, delivered either in hand, by certified mail, return receipt requested, postage prepaid, or by Federal Express or other recognized delivery service, which provides proof of delivery, all delivery charges prepaid, and addressed as follows:
To the Company:    Hospira, Inc. 
            275 N. Field Drive
Lake Forest, IL  60045 
    Attention:  Corporate Secretary

To the Grantee or his or her representative at the address of the Grantee at the time appearing in the employment records of the Company, currently as shown in the attached Notice or
At such other address as either party may designate by notice given to the other in accordance with these provisions.

17.      Governing Law.  All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the internal law and not the law of conflicts of the State of Illinois.
18.    Amendment.  This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Grantee and the Company without the consent of any other person; provided that the Committee may amend by the Company as it shall deem necessary and appropriate in its sole discretion to comply with the requirements of Section 409A.
19.      Plan Documents.  The Plan and the Prospectus for the Hospira, Inc. 2004 Long Term Incentive Plan are available at: 
 www/netbenefits.fidelity.com 

or from:

Elizabeth LaBuda
Corporate Compensation, Hospira, Inc.
Mail Stop  H1 South, 275 N. Field Drive, Lake Forest, IL  60045
phone:  224-212-2288  fax:  224-212-3358; e-mail: Elizabeth.LaBuda@Hospira.com

2014 – 2016 Total Shareholder Return (TSR) TERM SHEET
	
		
	PERFORMANCE PERIOD:
	Beginning January 1, 2014 and ending December 31, 2016.

	PERFORMANCE GOAL:
	•    Relative Total Shareholder Return (“RTSR”) compared to peer companies (identified in Appendix I) is the FY14-16 performance measure. Relative Total Shareholder Return is defined as the percentile rank of Hospira’s Total Shareholder Return compared to the Total Shareholder Return of Hospira’s peer companies over the Performance Period.  Total Shareholder Return is the total rate of return on a share of common stock, reflecting stock price appreciation plus reinvestment of dividends and the compounding effect of dividends, adjusted appropriately to reflect stock splits, spin-offs and similar transactions.

The Base Price of Hospira’s common stock, and each peer company’s common stock, is the average of the closing prices for the last 30 trading days before the start of Performance Period. The average closing price for the last 30 trading days of FY13 preceding the FY14-16 Performance Period is $40.32 and serves as the base for relative comparisons over the Performance Period.

The payment levels at various percentile rankings against the peer companies are shown in the following table:

	
						
	 
	HOSPIRA %Percentile Rank
	 
	% of Units
Earned
	 

	 
	 
	 
	 
	 

	 
	75th 
	 
	200
	%
	 

	 
	70th 
	 
	180
	%
	 

	 
	65th
	 
	160
	%
	 

	 
	60th 
	 
	140
	%
	 

	 
	55th 
	 
	120
	%
	 

	 
	50th 
	 
	100
	%
	 

	 
	45th 
	 
	85
	%
	 

	 
	40th 
	 
	70
	%
	 

	 
	35th
	 
	55
	%
	 

	 
	30th 
	 
	40
	%
	 

	 
	25th
	 
	25
	%
	 

	 
	<25th 
	 
	0
	%
	 

	 
	•    With linear interpolation between percentiles
•    Percentile rank includes HOSPIRA
	 

	
		
	VESTING:
	Subject to the terms of the Performance Share Unit Award Agreement, restrictions on the units earned during the performance period, as determined above, will lapse on December 31, 2016, if the Grantee is a full-time active employee of the Company on that date.   
Final determination and distribution of the number of units earned will be made after the actual TSR growth during the performance period has been certified by Hospira, Inc.’s independent auditor and the Audit Committee of the Company’s Board of Directors.

Appendix I
Peer Companies for Relative TSR Comparison 

	
			
	Ticker
	Company Name
	Sector

	ABT
	Abbott Labs
	Health Care

	ALXN
	Alexion Pharmaceuticals Inc.
	Health Care

	ABBV
	Abbvie Inc.
	Health Care

	ACT
	Actavis plc
	Health Care

	A
	Agilent Technologies Inc.
	Health Care

	AGN
	Allergan  Inc.
	Health Care

	ABC
	AmerisourceBergen Corp.
	Health Care

	AMGN
	Amgen
	Health Care

	BAX
	Baxter International Inc.
	Health Care

	BDX
	Becton  Dickinson
	Health Care

	BIIB
	BIOGEN IDEC Inc.
	Health Care

	BSX
	Boston Scientific
	Health Care

	BMY
	Bristol-Myers Squibb
	Health Care

	CAH
	Cardinal Health  Inc.
	Health Care

	CFN
	CareFusion Corp.
	Health Care

	CELG
	Celgene Corp.
	Health Care

	COV
	Covidien plc
	Health Care

	CERN
	Cerner Corp
	Health Care

	BCR
	CR Bard Inc.
	Health Care

	DVA
	DaVita Healthcare Partners Inc.
	Health Care

	XRAY
	Dentsply International
	Health Care

	EW
	Edwards Lifescience Corp
	Health Care

	ESRX
	Express Scripts
	Health Care

	FRX
	Forest Laboratories
	Health Care

	GILD
	Gilead Sciences
	Health Care

	HSP
	Hospira Inc.
	Health Care

	ISRG
	Intuitive Surgical Inc.
	Health Care

	JNJ
	Johnson & Johnson
	Health Care

	LH
	Laboratory Corp. of America Holding
	Health Care

	LIFE
	Life Technologies Corp.
	Health Care

	LLY
	Lilly (Eli) & Co.
	Health Care

	MCK
	McKesson Corp.
	Health Care

	MDT
	Medtronic Inc.
	Health Care

	MRK
	Merck & Co.
	Health Care

	MYL
	Mylan Inc.
	Health Care

	PDCO
	Patterson Cos. Inc.
	Health Care

	PKI
	PerkinElmer
	Health Care

	PRGO
	Perrigo Company
	Health Care

	PFE
	Pfizer  Inc.
	Health Care

	DGX
	Quest Diagnostics
	Health Care

	REGN
	Regeneron Pharmaceuticals
	Health Care

	
			
	STJ
	St Jude Medical
	Health Care

	SYK
	Stryker Corp.
	Health Care

	THC
	Tenet Healthcare Corp.
	Health Care

	TMO
	Thermo Fisher Scientific
	Health Care

	VAR
	Varian Medical Systems
	Health Care

	VRTX
	Vertex Pharmaceuticals
	Health Care

	WAT
	Waters Corporation
	Health Care

	ZMH
	Zimmer Holdings
	Health Care

	ZTS
	Zoetis, Inc.
	Health CareHSP-EX10.5_2014.3.31-10Q

HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (the “Agreement”) is made between Hospira, Inc., a Delaware corporation (the “Company”), and the Participant specified below.  The Agreement is subject to the provisions of the Hospira 2004 Long-Term Stock Incentive Plan (the “Plan”), the terms of which are incorporated herein by reference.
1.Terms of Award.  The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:
(a)    The “Participant” is ______________________.
(b)    The “Grant Date” is ______________.
		
	(c)
	The number of “Restricted Stock Units” awarded under this Agreement is __________.  “Restricted Stock Units” are units of shares of Stock representing the right to receive an equal number of shares of Stock on a Delivery Date.

		
	(d)
	The "Delivery Dates" are the respective dates on which Restricted Stock Units vest and the shares of Stock represented by the Restricted Stock Units become deliverable to the Participant pursuant to paragraph 4 below. The shares of Stock shall be delivered in an equal whole number of shares of Stock (plus cash equal to the Fair Market Value of any fractional share) to the Participant, or to his/her personal representative in the event of the Participant’s death or Disability, on the Delivery Date or within 30 days following such Delivery Date. 

Except where the context clearly implies to the contrary, any capitalized term in this award shall have the meaning ascribed to that term under the Plan.  Other words and phrases used in this Agreement are defined pursuant to paragraph 9 or elsewhere in this Agreement.
2.    Award.  The Participant is hereby awarded the number of Restricted Stock Units set forth in paragraph 1.
3.    Dividends and Voting Rights.  Prior to each applicable Delivery Date of the shares of Stock represented by Restricted Stock Units: (a) the Participant shall not be treated as a shareholder as to those shares, and shall only have contractual rights to receive them, unsecured by any assets of the Company or its subsidiaries; (b) the Participant shall not be permitted to vote the Restricted Stock Units; (c) neither dividends nor dividend equivalents shall be paid or accrued with respect to the 

	
			
	 
	 
	 

Restricted Stock Units; and (d) the Participant's right to receive shares with respect to the Restricted Stock Units shall be subject to the adjustment provisions relating to mergers, reorganizations and similar events set forth in the Plan. 
4.    Forfeiture Period.  
		
	(a)
	The Restricted Stock Units shall be subject to forfeiture pursuant to paragraph 4(d) for a period (the "Forfeiture Period") commencing with the date of the award and ending on the earliest to occur of the events described in paragraphs 4(b) and 4(c).

		
	(b)
	The Restricted Stock Units shall vest on each consecutive anniversary date of the Grant Date with respect to one-third of the Restricted Stock Units (each such anniversary date a “Delivery Date”).

		
	(c)
	The Restricted Stock Units to the extent they have not vested in accordance with paragraph 4(b) and to the extent they have not previously been forfeited, shall vest upon the date of a Change in Control that occurs on or before the Date of Termination if the successor company (or parent thereof) has not either (i) assumed the Restricted Stock Units effective on the date of the Change in Control, without any modifications except as provided in the next sentence, or (ii) replaced it with comparable restricted stock units as of such date having the same intrinsic value as the Restricted Stock Units, and the same vested percentage and vesting schedule as the Restricted Stock Units.  The Restricted Stock Units (if assumed) or the replacement restricted stock units shall provide for full vesting if, within the first 24 months following the date of the Change in Control, the Participant is involuntarily terminated for any or no reason or if the Participant terminates with Good Reason.

		
	(d)
	The Restricted Stock Units shall be automatically forfeited upon the earliest to occur of the following: (i) the Participant’s Date of Termination for any reason other than death, Disability or Retirement; or (ii) subject to the provisions of Section 5, the date the Participant engages in conduct which constitutes Restricted Activity. 

5.    Restricted Activity.
		
	(a)
	The Participant shall not, while employed by the Company and for a period of one year following his/her Date of Termination: 

		
	(i)
	without the prior written consent of the Committee, directly or indirectly engage or assist any person engaging in any 

	
			
	 
	2

	 

Competitive Business individually, or as an officer, director, employee, agent, consultant, owner, partner, lender, manager, member, principal or in any other capacity, or render any services to any entity that is engaged in any Competitive Business; provided, however, that the Participant’s ownership of 1% of any class of equity security of any entity engaged in any Competitive Business shall not be deemed a breach of this paragraph 5(a) provided such securities are listed on a national securities exchange or quotation system or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended; or 
		
	(ii)
	directly or indirectly divert, take away, solicit, or assist others in soliciting any current or prospective customer, supplier, independent contractor or service provider of the Company or any subsidiary or otherwise interfere with the relationship between the Company or any subsidiary and any current or prospective customer, service provider, supplier, independent contractor or stockholder; or 

		
	(iii)
	directly or indirectly induce any person to leave employment with the Company, or solicit for employment other than on behalf of the Company, offer employment to, or employ, any person who was an employee of the Company, in each case within six months of such inducement, solicitation or offer.

		
	(b)
	If the Participant engages in any activity described in paragraph 5(a) without the written consent of the Committee, the Company, as determined by the Committee in its sole discretion, may terminate this Agreement and forfeit all of the Restricted Stock Units (whether vested or unvested), and the Participant shall immediately pay to the Company in cash the amount of any Financial Gain realized by the Participant from the vesting of the Restricted Stock Units, provided that such vesting occurred within one year from the date that the Participant engaged in such Restricted Activity.  The Committee may, in its sole discretion, recover any amount owed by the Participant by setting off such amount against any amount or award that would otherwise be granted or paid by the Company to the Participant, reducing any future compensation or benefit to the Participant or any combination thereof.  

6.    Other Right to Correct Payments.  Subject to the Company’s Executive Compensation Recovery Policy, and notwithstanding anything in the Agreement to the contrary, if the Committee determines, in its sole discretion, that the number or value of Restricted Stock Units awarded under the Agreement was based on 

	
			
	 
	3

	 

the Company’s published financial statements that have been restated then, at the Committee’s discretion, the Company may, but in no case later than 60 months of such restatement: 
		
	(a)
	cancel all Restricted Stock Units (whether vested or unvested) that were based upon the financial performance in the published financial statements that was subsequently restated; 

		
	(b)
	rescind any delivery of shares of Stock that was based upon the financial performance in the published financial statements that was subsequently restated; and 

		
	(c) 
	if any amount or value has been realized from the vesting of the Restricted Stock Units that would have been lower had the financial results been properly reported, recover all or any Financial Gain realized by the Participant, as determined by the Committee in its sole discretion, that resulted from the financial results that were subsequently restated, and the Participant agrees to repay and return any such Financial Gain to the Company. The Committee may, in its sole discretion, effect any such recovery by obtaining repayment directly from the Participant, setting off the amount owed to the Company against any amount or award that would otherwise be granted by the Company to the Participant, reducing any future compensation or benefit to the Participant or any combination thereof.  

7.    Award Not Transferable.  The Restricted Stock Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, whether by operation of law or otherwise, and shall not be subject to execution, attachment or similar process.  Any attempt at assignment, transfer, pledge or hypothecation, or other disposition of the Restricted Stock Units contrary to the provisions hereof, and the levy of any attachment or similar process upon the Restricted Stock Units, shall be null and void and without effect.
8.    Withholding. The Company is entitled to withhold an amount equal to the Company’s required statutory withholding taxes for the respective tax jurisdiction attributable to any share of Common Stock or cash deliverable in connection with the Restricted Stock Units.  Subject to such limitations as the Company may establish from time to time, the Participant may satisfy any withholding obligation in whole or in part by making a cash payment equal to the amount required to be withheld. 
9.    Definitions.  For purposes of this Agreement, the terms used in this Agreement shall be subject to the following:
		
	(a)
	Competitive Business.  The term “Competitive Business” means any business activity in which the Company or any subsidiary is 

	
			
	 
	4

	 

actively engaged on the Participant’s Date of Termination.  For these purposes, entities deemed to be engaged in Competitive Business include, by way of example and not limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva Pharmaceuticals, Becton, Dickinson and Company, B. Braun Melsungen AG, Cardinal Healthcare Inc., Fresenius Medical Care AG, Terumo Medical Corporation, Patheon, Inc., and Edwards Lifesciences Corporation.
		
	(b)
	Date of Termination.  The term “Date of Termination” means the first day occurring on or after the Grant Date on which the Participant is not employed by the Company or any of its subsidiaries (including the first day of a leave classified within the Company’s Human Resources System as a Pay Continuation Leave), regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a subsidiary or between two subsidiaries; and further provided that, except for a leave classified as a Pay Continuation Leave, the Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a subsidiary approved by the Participant’s employer.  If, as a result of a sale or other transaction, the Participant’s employer ceases to be a subsidiary (and the Participant’s employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30‐day period following the transaction, employed by the Company or an entity that is then a subsidiary, then the occurrence of such transaction shall be treated as the Participant’s Date of Termination caused by the Participant being discharged by the employer.

		
	(c)
	Disability.  The term “Disability” means the Participant either is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months;  or by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, the Participant is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or a subsidiary.

		
	(d)
	Financial Gain.  The term “Financial Gain” means the Fair Market Value of the Common Stock on the Delivery Date that the Restricted Stock Unit is deemed vested, multiplied by the number 

	
			
	 
	5

	 

of shares of Stock actually distributed pursuant to this Agreement, reduced by any taxes paid in countries other than the United States, to the extent that such taxes are not otherwise eligible for refund from the taxing authorities.
		
	(e)
	Good Reason.  The term “Good Reason” means the occurrence of any of the following circumstances without the Participant's express written consent:

		
	(i)
	a significant adverse change in the nature, scope or status of the Participant's position, authorities or duties from those in effect immediately prior to the Change in Control, including, without limitation, if the Participant was, immediately prior to the Change in Control, an executive officer of a public company, the Participant ceasing to be an executive officer of a public company;

		
	(ii)
	the failure by the Company to pay the Participant any portion of the Participant's current compensation; 

		
	(iii)
	a reduction in the Participant's annual base salary (or a material change in the frequency of payment) as in effect immediately prior to the Change in Control as the same may be increased from time to time;

		
	(iv)
	the failure by the Company to award the Participant an annual bonus in any year which is at least equal to the annual bonus, awarded to the Participant under the annual bonus plan of the Company for the year immediately preceding the year of the Change in Control; 

		
	(v)
	the failure by the Company to award the Participant equity-based incentive compensation (such as stock options, shares of restricted stock, or other equity-based compensation) on a periodic basis consistent with the Company's practices with respect to timing, value and terms prior to the Change in Control;

		
	(vi)
	the failure by the Company to continue to provide the Participant with the welfare benefits, fringe benefits and perquisites enjoyed by the Participant immediately prior 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, life insurance, medical, dental, prescription, health and accident, disability, vacation, and other executive perquisites; 

	
			
	 
	6

	 

		
	(vii)
	the relocation of the Company's principal executive offices to a location more than thirty-five miles from the location of such offices immediately prior to the Change in Control or the Company requiring the Participant to be based anywhere other than the Company's principal executive offices except for required travel to the Company's business to an extent substantially consistent with the Participant's business travel obligations immediately prior to the Change in Control; or 

		
	(viii)
	the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform this Agreement as contemplated by paragraph 4. 

For purposes of any determination regarding the existence of Good Reason, any good faith determination by the Participant that Good Reason exists shall be conclusive.
		
	(f)
	Retirement.  “Retirement” of the Participant means, the occurrence of the Participant’s Date of Termination on or after the date that the Participant reaches the age of 55 and has 10 years of combined service with the Company or its subsidiaries (or with Abbott Laboratories and its affiliates, provided that the Participant transitioned employment from Abbott to the Company in conjunction with the distribution of the Company’s common stock to the Abbott shareholders) (as determined by the Committee).

10.    Successors.  This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business.  
11.    Not An Employment Contract. Restricted Stock Units do not confer on the Participant any right with respect to continuance of employment or other service with the Company or any of its subsidiaries, nor will it interfere in any way with any right the Company or any of its subsidiaries would otherwise have to terminate or modify the terms of such Participant’s employment or other service at any time.
12.    Administration.  The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan.  Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement is final and binding.
13.    Notices.  Any written notice from one party to the other that is related to this Agreement shall be in writing and shall be deemed sufficiently given if 

	
			
	 
	7

	 

either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail.  Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant's address indicated by the Company's records, or if to the Company, at the Company's principal executive office.
14.    Plan Governs.  Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company.
15.    Amendment.  This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.  Notwithstanding the foregoing, the terms of the Agreement may be amended by Hospira as it shall deem necessary and appropriate in order to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and any proposed, temporary or final regulations promulgated thereunder.
* * * * * * *
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.
Participant

    

Hospira, Inc.

By:     
Its:  Chief Executive Officer 

	
			
	 
	8

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