Document:

Exhibit 10.1

 

Amended effective June 16, 2010

 

HOSPIRA, INC. NON-EMPLOYEE DIRECTORS’
FEE PLAN

 

SECTION 1

PURPOSE

 

Hospira, Inc.
Non-Employee Directors’ Fee Plan (the “Plan”) has been established by Hospira, Inc.
(the “Company”), effective as of April 30, 2004 (the “Effective Date”) to
attract and retain as members of its Board of Directors persons who are not
employees of the Company or any of its subsidiaries but whose business
experience and judgment are a valuable asset to the Company and its subsidiaries.  The Plan provides for the payment to
Directors of fees in the form of some or all of the following: Annual Retainer
Fees, Committee Chairman Fees, Meeting Fees and Restricted Stock awards
(generally, the “Director Fees”).

 

SECTION 2

DIRECTORS COVERED

 

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

 

SECTION 3

FEES PAYABLE TO DIRECTORS

 

3.1                               Annual Board
Retainer Fee.  Each
Director shall be entitled to an annual retainer fee (the “Annual Board
Retainer Fee”) to be paid quarterly, on the last business day of each calendar
quarter for which the Director served in the capacity as a Director (excluding,
on a pro rata basis, any portion of the quarter in which he did not serve in
such capacity).  The amount of the Annual
Board Retainer Fee shall be as determined from time to time in the sole
discretion of the Board of Directors of the Company (the “Board”), with such
amount currently set at Sixty-Five Thousand Dollars ($65,000) per year.

 

3.2                               Annual
Committee Retainer Fee.  A
director who serves on any committee created by the Board shall be entitled to
an additional annual retainer fee (the “Annual Committee Retainer Fee”) to be
paid quarterly, on the last business day of each calendar quarter for which the
Director served in the capacity as a committee member (excluding, on a pro rata
basis, any portion of the quarter in which he did not serve in such
capacity).  The amount of the Annual
Committee Retainer Fee shall be as determined from time to time in the sole
discretion of the Board, with such amount currently set as follows: (i) Five
Thousand Dollars ($5,000) per year for each of the Science, Technology and
Quality Committee and Governance and Public Policy Committee; (ii) Ten
Thousand Dollars ($10,000) per year for the Compensation Committee; and (iii) Seventeen
Thousand and Five Hundred Dollars ($17,500) per year for the Audit Committee.

 

 

3.3                               Committee
Chairman Fee.  A Director
who serves as Chairman of any committee created by the Board shall be entitled
to an additional annual retainer fee (the “Committee Chairman Fee”) to be paid
quarterly, on the last business day of each calendar quarter for which the
Director served in the capacity as a committee chairman (excluding, on a pro
rata basis, any portion of the quarter in which he did not serve in such
capacity).  The amount of the Committee
Chairman Fee shall be as determined from time to time in the sole discretion of
the Board, with such amount currently set as follows: (i) Twelve Thousand
and Five Hundred Dollars ($12,500) per year for each of the Science, Technology
and Quality Committee and Governance and Public Policy Committee; (ii) Twenty
Thousand Dollars ($20,000) per year for the Compensation Committee; and (ii) Twenty
Five Thousand Dollars ($25,000) per year for the Audit Committee.

 

3.4                               Global Travel
Allowance Fee.  A global
travel allowance fee (the “Global Travel Allowance Fee”) shall be paid to
compensate a Director for international travel to attend a meeting of the Board
or any committee thereof.  The Global
Travel Allowance Fee shall be paid on the last business day of the calendar quarter
in which the meeting was held.  International
travel shall be deemed to occur whenever the Director is required to fly from
his or her principal domicile over either the Atlantic Ocean or the Pacific
Ocean, or to another country in which the flight is greater than six (6) hours.
 The amount of the Global Travel
Allowance Fee shall be as determined from time to time in the sole discretion
of the Board, with such amount currently set at Two Thousand Dollars ($2,000).

 

3.5                               Lead Director
Fees.  A Director who serves as Lead
Director of the Board shall be entitled to an additional annual retainer fee
(the “Lead Director Fee”) to be paid quarterly, on the last business day of
each calendar quarter for which the Director served in the capacity as Lead
Director (excluding, on a pro rata basis, any portion of the quarter in which
he did not serve in such capacity).  The
amount of the Lead Director Fee shall be as determined from time to time in the
sole discretion of the Board, with such amount currently set at Fifty Thousand
Dollars ($50,000) per year.  This amount
is in addition to the Annual Board Retainer Fee set forth in Section 3.1.

 

SECTION 4

RESTRICTED STOCK

 

4.1                               Annual
Restricted Stock Award.

 

(i)                                     As of January 1,
2008, each Director, who is elected a Non-Employee Director at the annual
shareholders meeting (or who retains such position if they were not subject to
election at such meeting), shall be granted shares of Company’s Common Stock,
par value $0.01 per share (the “Stock”), with such stock subject to certain
restrictions set forth below (the “Restricted Stock”).  The Restricted Stock shall be granted
automatically to the Director on the last business day of the calendar quarter
in which the annual shareholder meeting occurs. 
If more than one shareholder meeting occurs in a given calendar year,
only a single Restricted Stock award shall be granted for such year and such
award shall be granted as of the last business day of the calendar quarter in
which such first shareholder meeting occurs.

 

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(ii)                                  The number of
shares covered by the Restricted Stock award shall be equal to that number of
shares whose aggregate value (based on the Fair Market Value of a share of
Stock on the date of grant) equals One Hundred Fifty Thousand Dollars
($150,000), rounded down to the next whole share. 

 

(iii)                             Notwithstanding
anything contained in this Section 4.1 to the contrary, a Non-Employee
Director, who is elected between any annual shareholders meetings, shall
automatically be granted Restricted Stock on the last business day of the
calendar quarter in which such Director is elected; provided, however, that the
number of shares of the Restricted Stock granted to such Director shall be
equal to that number of shares (rounded to the next whole share) whose
aggregate value (based on the Fair Market Value of a share of Stock on the date
of grant) equals One Hundred Fifty Thousand Dollars ($150,000), multiplied by
the fraction of A over 12, with “A” 
being the number of whole calendar months between the first day of the
month coinciding with or immediately following such Director’s election and
first day of the month during which the next annual shareholders meeting is
scheduled to occur.  The term “Fair
Market Value” shall be as defined in the 2004 Plan (as defined in Section 6.6
below).

 

4.2                               Issuance of
Certificates.  Each
certificate issued in respect of the Restricted Stock Award shall be registered
in the name of the Director and shall be deposited in a bank designated by the
Company or retained by the Company.  The
certification of shares is conditioned upon the Director endorsing in blank a
stock power for the covered shares. 
During the Restricted Period, all certificates evidencing the Restricted
Stock will be imprinted with the following legend: “The securities evidenced by
this certificate are subject to the transfer restrictions, forfeiture
restrictions and other provisions of the Restricted Stock Agreement dated [insert date] between Hospira, Inc.
and [insert Director name].”  Upon lapse of the Restriction Period, the
Director shall be entitled to have the legend removed from certificates
representing the shares.

 

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

 

4.4                               Forfeiture
Period.  All Restricted Stock granted
under this Section 4 shall be subject to forfeiture pursuant to Section 4.5
for a period (the “Forfeiture Period”) commencing with the date of the award
and ending on the earliest of the following events:

 

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

 

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

 

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

 

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

 

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

 

4.6.                            Restrictions on Sale.  All Restricted Stock granted under
this Section 4 shall be subject to the following restrictions on sale
beginning on the date of grant and continuing, except as otherwise provided below in this Section 4.6, for
all periods while the Director is actively serving as a Director of the Company
(the “Restricted Period”):

 

(i)                                   The shares may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except: (a) to the extent that after the
Forfeiture Period such sale, assignment, transfer, pledge, hypothecation or
other disposal does not cause a Director to fail to meet the minimum holding
requirements under the Company’s then existing Company share retention and
ownership guidelines for Directors; or (b) if upon the end of the
Forfeiture Period of a Director’s Restricted Stock, the Restricted Stock
becomes taxable to the Director, the Company may withhold or arrange for the
sale of the number of shares of such Stock that have an aggregate Fair Market
Value equal to the amount of tax required to be withheld by the Company under
applicable law.

 

(ii)                                Except as
provided in paragraph (i) of this Section 4.6, any additional common shares of the
Company issued with respect to shares covered by Awards granted under this Section 4
as a result of any stock dividend, stock split or reorganization, shall be
subject to the restrictions and other provisions of this Section 4.

 

(iii)                             A Director shall not be entitled to
receive any shares prior to completion of all actions deemed appropriate by the
Company to comply with federal or state securities laws and stock exchange
requirements.

 

SECTION 5

CHANGE IN CONTROL

 

In
the event of a Change in Control, (i) all Restricted Stock awards shall
become fully vested and shall no longer be subject to the restrictions set
forth in Section 4 of this Plan, and (ii) all Deferred Fees shall be
paid to the Director at such time and in such form as set forth in the Director’s
Deferral Election.

 

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SECTION 6

OPERATION AND ADMINISTRATION

 

6.1                               Administration.

 

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

 

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

 

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

 

(iv)                            To the extent
that the Board determines that the restrictions imposed by the Plan preclude
the achievement of the material purposes of the benefit provided herein in
jurisdictions outside the United States, if applicable, the Board will have the
authority and discretion to modify those restrictions as the Board determines
to be necessary or appropriate to conform to applicable requirements or
practices of jurisdictions outside of the United States.

 

6.2                               Limits of
Liability.

 

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

 

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

 

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6.3                               Rights of
Director.  Nothing
contained in this Plan or in any Award Agreement (or in any other documents
related to this Plan or to any award or Award Agreement) shall confer upon any
Director any right to continue in the service of the Company or a subsidiary,
constitute any contract or limit in any way the right of the Company or a
subsidiary to change such person’s compensation or other benefits or to
terminate the service of such person with or without cause or confer any right
on the part of such person to be nominated for reelection to the Board, to be
reelected to the Board or to be appointed to any committee of the Board.

 

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

 

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

 

6.6                               Hospira, Inc.
2004 Long-Term Stock Incentive Plan.  Any shares of Stock awarded to, or subject to
Awards granted to Directors under this Plan as Director Fees shall be issued
pursuant to the Hospira, Inc. 2004 Long-Term Stock Incentive Plan (the “2004
Plan”), subject to all of the terms and conditions herein.  Except in the event of conflict, all
provisions of the 2004 Plan shall apply to this Plan.  In the event of any conflict between the
provisions of the 2004 Plan and this Plan, this Plan shall control, provided
that the Director Fees granted provided may not exceed the share limitations
set forth in the 2004 Plan.

 

SECTION 7

MISCELLANEOUS

 

7.1                               Beneficiaries.  Each Director or former Director entitled to
payment of Director Fees hereunder, from time to time may name any person or
persons (who may be named contingently or successively) to whom any Director
Fees earned by him and payable to him are to be paid in case of his death
before he receives any or all of such Director Fees.  Each designation will revoke all prior
designations by the same Director or former Director, shall be in form
prescribed by the Company, and will be effective only when filed by the Director
or former Director in writing with the Secretary of the Company during his
lifetime. If a deceased Director or former Director shall have failed to name a
beneficiary in the manner provided above, or if the beneficiary named by a
Director or former Director dies before him or before payment of all the
Director’s or former Director’s Director Fees, the Company, in its discretion,
may direct payment in a single sum of any remaining Director Fees to either:

 

(i)                                     any one or more
or all of the next of kin (including the surviving spouse) of the Director or
former Director, and in such proportions as the Company determines; or

 

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

 

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

 

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

 

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

 

7.4                               Unfunded Plan.  Any obligation to pay cash or Deferred Fees
under this Plan shall constitute an unfunded unsecured obligation of the
Company.  The Company may, but shall not
be obligated to, establish a trust to hold assets for the purpose of satisfying
obligations under this Plan.

 

7.5                               Adjustment Provisions.  In the event of a corporate
transaction involving the Company (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination or
exchange of shares), in addition to any adjustments made pursuant to Section 3.4
of the 2004 Plan, the Board may adjust the Director Fees (including Deferred
Fees) to preserve the benefits or potential benefits of participation in the
Plan.

 

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

 

SECTION 8

AMENDMENT AND DISCONTINUANCE

 

The
Board may, at any time, amend or terminate the Plan, and may amend any Award
Agreement, provided that no amendment or termination may, in the absence of
written consent to the change by the affected Director (or, if the Director is
not then living, the affected beneficiary), adversely affect the rights of any
Director or beneficiary under any Award granted under the Plan prior to the
date such amendment is adopted by the Board; and further provided, that
adjustments pursuant to Section 9.4 shall not be subject to the foregoing
limitations of this Section 8. 
Subject to Section 9.4, any amendment or discontinuance of the Plan
shall be prospective in operation only, and shall not affect the payment of any
Director Fees theretofore 

 

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earned
by any Director, or the conditions under which any such fees are to be paid or
forfeited under the Plan.

 

SECTION 9

ELECTIVE DEFERRALS

 

9.1                               DEFERRAL
ELECTION

 

(i)                                     Annual Deferral
Election.  A Director
who would otherwise be entitled to receive Director Fees in the form of shares
of Stock or a cash payment under the terms of the Plan may instead elect to
defer delivery of all or a portion of such fees, subject to the following terms
of this Section 9 (once deferred, the “Deferred Fees”).  An election to defer the Director Fees shall
be made on an election form (the “Deferral Election”).  The form of distribution of the Deferred Fees
shall be elected by the Director on the Deferral Election form, which may be
either (a) a lump sum payment on the first business day following the
quarter within which the Director’s service on the Board terminates (the “Distribution
Commencement Date”) or (b) annual installments for a number of years, not
exceeding 10, payable on the Distribution Commencement Date and each
anniversary thereof. Except as provided in paragraphs (ii) and (iii) of
this Section 9.1, any Deferral Election shall be made in the calendar year
before the year in which the Director Fees are payable and shall be irrevocable
as of the first day of the year for which it is to be effective.  Deferral Elections shall remain in effect
with respect to any future year unless a new election with respect to such year
is filed in accordance with paragraph (iii) of this Section 9.1.

 

(ii)                                 Deferral
Election for New Directors.  Notwithstanding the foregoing, a Deferral
Election by a Director upon first becoming a member of the Board must be
submitted within 30 days after becoming a Director and shall be effective for
all fees paid for services performed following the date on which the election
is received by the Company. Any such Deferral Elections shall be irrevocable as
of its effective date and shall remain in effect with respect to the calendar
year in which it was made and any future year unless a new election with
respect to Deferral Election is filed in accordance with paragraph (iii) of
this Section 9.1.

 

(iii)                               Subsequent
Changes to Initial Deferrals.

 

(a)                                 Deferral
Elections shall remain in effect with respect to Director Fees to be paid in
any future year unless a new election with respect to such year is filed by the
Director making the change prior to the year to which it is intended to apply;
and

 

(b)                                 A Director may
elect to change the timing or form of distribution for his or her Deferred Fees
(a “Subsequent Election”), provided the Subsequent Election is made at least 12
months before the date of the first scheduled payment, if any; the Subsequent
Election is not effective for at least 12 

 

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months after the date of the
election; and the first payment under the Subsequent Election must be delayed
for at least five years from the date it otherwise would have been paid.
Notwithstanding the foregoing provisions of this subparagraph (b), payment of
the Deferred Fees shall begin under the terms of a Director’s most current
Deferral Election as of first business day following the quarter within which
the Director’s services on the Board terminates due to a death or disability.
For this purpose, “disability” shall mean that the Director 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.

 

(c)                                  During 2007 and 2008, a
Director may elect to change the timing or form of distribution for his
Deferred Fees without meeting the foregoing requirements, provided that no
Director whose Distribution Commencement Date occurs (or would otherwise occur)
within 2007 may make or change a payment election during 2007 and no Director
whose Distribution Commencement Date occurs (or would otherwise occur) within
2008 may make or change a payment election during 2008.

 

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

 

(a)                                 Cash-based
Deferred Fees shall be converted to Stock Units by dividing the cash-based fees
the Director elected to defer by the Fair Market Value of the Stock as of the
date the Director would have had a right to payment of such Director Fees had
the Director not made a Deferral Election.

 

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

 

9.2                               ACCOUNTS

 

(i)                                     Stock Unit
Account.  A “Stock Unit Account” shall
be maintained on behalf of each Director who elects to defer all or a portion
of his Director Fees under this Section 9, for the period during which
delivery of such fees is deferred. A Director’s Stock Unit Account shall be
subject to the following adjustments:

 

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

 

(b)                                 As of each
dividend payment date for the Stock, the Director’s Stock Unit Account shall be
credited with additional Stock Units (including fractional 

 

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Stock Units) equal to (i) the
amount of the dividend that would be payable with respect to the number of
shares of Stock equal to the number of Stock Units credited to the Director’s
Stock Unit Account on the dividend record date, divided by (ii) the
Fair Market Value of a share of Stock on the dividend payment date.

 

(c)                                  As of the date
of any distribution with respect to a Director’s Stock Unit Account under Section 9.3,
the Stock Units credited to a Director’s Stock Unit Account shall be reduced by
the amounts distributed to the Director.

 

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

 

9.3                               DISTRIBUTIONS

 

(i)                                     General.  Subject to the terms of this Section 9.3,
a Director shall specify, as part of his Deferral Election with respect to
Deferred Fees, the time and form of the distribution of the amounts deferred
pursuant to such election.  In the event
that an election with respect to the timing or form of distribution is not in
effect as of the date of the Director’s termination (including a termination
due to the Director’s death), the Director’s entire Stock Unit Account shall be
distributed in a single lump sum stock payment within 60 days following the
first anniversary of the Director’s date of termination or death.

 

(ii)                                  If a scheduled
distribution date would otherwise occur after a dividend record date but before
the payment of the dividend, the distribution may, in the discretion of the
Board, be deferred (but not more than 30 days) until the dividend payment date.

 

(iii)                               In determining
a Director’s right to distributions under this Section 9.3, the vesting
provisions of Section 4 of the Plan shall apply to the Stock Units
credited to the Director’s Stock Unit Account as though each unit represented
one share of Stock, and with all units attributable to payment of dividends
being fully vested as of the date they are credited to the Director’s Stock
Unit Account.

 

9.4                               Termination of
Deferral by Company.  The Board
shall retain the right to terminate, at any time, for any reason, or no reason,
the deferral provisions under this Section 9 (which may, but need not, be
in conjunction with a termination of the Plan), and shall distribute all Stock
Unit Accounts to Directors provided (i) the Company terminates all
non-qualified deferred compensation arrangements of the same type as this Plan
at the same time that the Plan is terminated; (ii) except for payments
that would be payable if the termination had not occurred, the Company makes no
payments to Directors for 12 months but makes all payments 

 

10

 

within 24 months; and (iii) the
Company adopts no new non-qualified deferred compensation arrangement of the
same type as this Plan for five years.

 

11Exhibit 10.2

 

Hospira Corporate Officer
Severance Plan

(Effective September 1,
2007 and as amended through the Second Amendment effective December 9,
2009)

 

1.                                      Purpose.  The Hospira Corporate Officer Severance Plan
(“Plan”) was established to provide Severance Pay and other benefits to
terminated Corporate Officers of Hospira, Inc. (the “Company”) who satisfy
the terms of the Plan.  Severance Pay and
benefits under the Plan shall be in lieu of any benefits available under the
Hospira Transitional Pay Plan or any other severance plan or policy maintained
by the Company or any of its subsidiaries and affiliates (each an “Affiliate”);
and benefits will not be payable under the Plan if the relevant termination of
employment results in the employee being eligible for equivalent (or greater)
severance pay and benefits under an employment agreement between the Company or
an Affiliate and the employee, or under the Hospira, Inc. Change in
Control Severance Pay Plan or any Change in Control agreement between the Company
or any Affiliate and the employee.

 

2.                                      Administration.  The Plan is administered by the Company’s
Corporate Vice President, Human Resources (“Administrator”), except as
specifically stated herein.  The
Administrator has the complete discretion and authority with respect to the
Plan and its application.  The
Administrator reserves the right to interpret the Plan, prescribe, amend and
rescind rules and regulations relating to it, determine the terms and
provisions of Severance Pay and benefits and make all other determinations it
deems necessary or advisable for the administration of the Plan.  The determination of the Administrator in all
matters regarding the Plan shall be conclusive and binding on all persons.  The Administrator may delegate any of his or
her duties under the Plan to one or more other persons.

 

3.                                      Scope.  The Plan will apply to all Corporate Officers
(“Participants”).  For purposes of the
Plan, the term “Corporate Officer” means an individual elected a corporate
officer of the Company by its Board of Directors or designated as a Plan
participant by the Compensation Committee of the Board of Directors of the
Company (“Committee”) and listed on the attached Exhibit A, but shall not
include assistant officers or the Company’s Chief Executive Officer (“CEO”).

 

4.                                      Eligibility for
Severance Pay.  A
Participant becomes entitled to receive severance pay (“Severance Pay”) only if
he or she is terminated by the Company or an Affiliate for any of the following
reasons, and the conditions described in Section 5
below are met:

 

(a)                                 The Participant’s
position is eliminated due to a reduction in force or other restructuring.

 

(b)                                 The Participant’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 Administrator and is otherwise considered to be
involuntary.

 

 

A Participant’s eligibility for Severance Pay shall
not be affected by the Company’s decision to accept his or her resignation or
retirement following the occurrence of any of the conditions described in Sections 4(a) and 4(b). The
decision as to whether a Participant is eligible for Severance Pay and benefits
under this Plan shall be made by the Administrator, not the Participant.  If the Participant disagrees, the Participant
must follow the procedures set forth in Section 14.

 

5.                                      Conditions to
Receipt of Severance Pay.

 

(a)                                 Severance Pay
is not available to a Participant otherwise eligible for Severance Pay who
transfers to another position with the Company or any Affiliate.

 

(b)                                 A Participant
must sign an agreement in a form provided by the Administrator under which the
Participant agrees to use all best efforts to protect the secrecy and
confidentiality of information that is confidential and proprietary to Hospira
or any of its Affiliates (“Confidential Information”) and under which the
Participant agrees that, for a period of 2 years after his or her termination
of employment the Participant will: (1) not engage, directly or
indirectly, in any activity or employment, for the benefit of the Participant
or others, in a manner that contributes to any research, discovery,
development, manufacture, importation, marketing, promotion, sale or use of any
competing Hospira product, process or service, which is related in any way to
the Participant’s employment with the Company or any of its Affiliates; (2) not
engage in any activity or employment in the performance of which any
Confidential Information obtained, provided or otherwise acquired, directly or
indirectly, during the term of employment with Hospira or any of its Affiliates
is likely to be used or disclosed, notwithstanding the Participant’s
undertaking to the contrary; (3) not solicit the customers of the Company
or any of its Affiliates or entice any employee of the Company or any of its
Affiliates to leave the employment of the Company or any of its Affiliates; and
(4) inform the Company of other employment by contacting the Administrator
within 5 days of accepting such other employment.

 

(c)                                  A Participant
must satisfy any other condition specified in Section 5
and Section 6.  During the period in which a Participant is
entitled to consider the execution of the waiver and release agreement
described in Section 6, or during such
other period as is otherwise agreed to by the Administrator and the
Participant, he or she may be required to complete unfinished business projects
and be available for discussions regarding matters relative to the Participant’s
duties with the Company or any of its Affiliates.

 

(d)                                 A Participant
must return all property and information of the Company or any of its
Affiliates.

 

(e)                                  A Participant
must agree to pay all outstanding amounts owed to the Company or any Affiliate
and authorize the Company or Affiliate to withhold any outstanding amounts from
his or her final paycheck and/or Severance Pay.

 

2

 

6.                                      Amount of
Severance Pay.  The amount
of Severance Pay to which a Participant is entitled under the Plan is the sum
of:

 

(a)                                 2 years of the
Participant’s base salary at the rate in effect on the date of termination,
plus

 

(b)                                 for the year of
termination: (1) if the Participant also participates in the Hospira
Incentive Plan or a successor plan (“HIP”), the Participant’s pro rata annual
incentive bonus award through the date of termination, with the determination
of the amount of such award based on an assumption that the target level of
performance has been achieved; or (2) if the Participant also participates
in the Hospira, Inc. Performance Incentive Plan or a successor plan (“PIP”),
the Participant’s pro rata annual incentive bonus award, if any, through the
date of termination as determined under the PIP.

 

In addition to
the pro-rata bonus provided under Section 6(b) above,
if the Participant’s date of termination occurs after the end of a performance
period applicable to an annual incentive bonus award in which the Participant
participates, and prior to the payment of the award, if any, for the period,
the Participant shall be entitled to a lump sum payment in cash with respect to
such prior performance period, as determined under the terms of that incentive
award arrangement.

 

A
Participant who is receiving benefits under a short term disability plan
maintained by the Company or any Affiliate will be entitled to Severance Pay at
the end of the period of payment of short term disability if, and only if, (1) he or she
is not then eligible for benefits under a long term disability plan maintained
by the Company or an Affiliate, and (2) he or she is not offered
employment with the Company or an Affiliate that, in the discretion of the
Administrator, is comparable to that held by the Participant at the time the
applicable period of short term disability commenced.  A Participant will not be entitled to
Severance Pay at the end of the period of long term disability.

 

Except
as provided in the last sentence of this paragraph, Severance Pay will be paid
to a Participant in one lump sum cash payment. 
Payment will be made as soon as practicable after the last to occur of
(1) the date of the Participant’s termination of employment, (2)  the
effective date of the Participant’s executed waiver and release agreement in
the form provided by the Administrator (i) which releases the Company and
its Affiliates, and their respective officers, directors and employees, from
any and all actions, suits, proceedings, claims and demands relating to the
Participant’s employment with the Company or any Affiliate and the termination
thereof, (ii) which releases all rights and benefits required under
any other severance policy or plan maintained by the Company or any Affiliate,
and (iii) under which the Participant agrees to maintain and protect the
reputation of the Company and its Affiliates and their businesses, products and
personnel, and the Participant agrees further to not disparage the Company, any
Affiliate,  or any person representing
the Company or any Affiliate, or engage in any similar activities which
reasonably could be anticipated to affect negatively the reputation of the
Company and any Affiliate and their businesses, products and personnel, and
relationships with current or prospective customers, suppliers and employees
and (3) the satisfaction of the 

 

3

 

conditions
described in Sections 5(b), (c),  (d) and (e).  In any event,
the payment shall be made no later than 2 1⁄2 months after the end of the year in
which the termination described in Section 4
occurs. Severance Pay shall be reduced by applicable amounts necessary to
comply with federal, state and local income tax withholding requirements.
Notwithstanding any provision contained herein, for a Participant who
participates in the PIP, the payment described in Section 6(b)(2) shall
be paid after the determination of such amount, but no later than 2 1⁄2 months
after the end of the year in which the termination described in Section 4 occurs. 
For all participants, the benefits described in this Plan shall be
forfeited if the Participant fails to execute the agreement described in Section 5(b) and the waiver and release agreement
described in this paragraph within 2 1⁄2 months after the end of the year in
which the termination described in Section 4 occurs.

 

7.                                      Benefits.

 

(a)                                 Welfare
Benefits.  A
Participant entitled to Severance Pay shall receive, at the time of payment of
Severance Pay, a lump sum payment equivalent to 130% of the cost of 72-weeks of
COBRA (as defined in Section 4980B of the Internal Revenue Code of 1986, as
amended (the “Code”), and Sections 601-609 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or any successor sections)
continuation coverage premiums in lieu of any continued medical, dental,
vision, and other welfare benefits offered by the Company or any
Affiliate.  Such period of COBRA
continuation coverage shall be included as part of the period during which the
Participant may elect continued group health coverage under COBRA.

 

(b)                                 Outplacement
Services.  A
Participant entitled to Severance Pay shall receive outplacement services,
selected by the Company at its expense, for a period commencing on the date of
termination of employment and continuing until the earlier to occur of the
Participant accepting other employment or 12 months thereafter.

 

8.                                      Death of
Participant.  No
Severance Pay will be paid if a Participant dies before satisfying Section 4 and Section 5;
provided, however, that if a Participant dies after becoming entitled to
receive Severance Pay by satisfying Section 4
and Section 5 but prior to receiving
Severance Pay pursuant to Section 4,
payment of the Severance Pay determined under Section 4
will be made to the representative of his or her estate.  Notwithstanding any provision of this Plan to
the contrary, the Administrator and the Participant’s estate may agree to
alternative means for the satisfaction of the requirements in Sections 5 (b), (c), (d) and (e).

 

9.                                      Effective Date
of Plan.  The Plan is effective as of September 1,
2007.

 

10.                               Amendment or
Termination.

 

(a)                                 Hospira
reserves the right to amend or terminate the Plan at any time; provided,
however, that no amendment or termination may adversely affect any Severance
Pay and benefits of a Participant who has terminated employment and is entitled

 

4

 

to Severance Pay and
benefits by satisfying the requirements in Section 4
and Section 5.  All amendments and any termination of the
Plan will be adopted by resolution of the Committee.

 

(b)                                 Severance Pay
and benefits under the Plan are not intended to be a vested right.

 

11.                               Code Section 409A.  Notwithstanding anything to the contrary in
this Plan, the Committee may adopt such amendments to the Plan, or adopt
policies or procedures, as may be necessary or appropriate to (a) exempt
Severance Pay and benefits from Code Section 409A and/or to preserve the
intended tax treatment thereof or (b) otherwise comply with the
requirements of Code Section 409A and related regulations.

 

12.                               Governing Law.  The terms of the Plan shall, to the extent
not preempted by federal law, be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois, including all matters of
construction, validity and performance.

 

13.                               Miscellaneous
Provisions.

 

(a)                                 Severance Pay
and other benefits pursuant to the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge prior to actual receipt by a Participant, and any attempt to so
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge prior
to such receipt shall be void and neither the Company nor any Affiliate shall
be liable in any manner for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to any Severance Pay or other
benefits under the Plan.

 

(b)                                 Nothing
contained in the Plan shall confer upon any individual the right to be retained
in the service of the Company or any Affiliate, nor limit the right of the
Company or Affiliate to discharge or otherwise deal with any individual without
regard to the existence of the Plan.

 

(c)                                  The Plan shall
at all times be entirely unfunded.  No
provision shall at any time be made with respect to segregating assets of the
Company or any Affiliate for payment of any Severance Pay or other benefits
hereunder.  No employee or any other
person shall have any interest in any particular assets of the Company or any
Affiliate by reason of the right to receive Severance Pay or other benefits
under the Plan, and any such employee or any other person shall have only the
rights of a general unsecured creditor of the Company or an Affiliate with
respect to any rights under the Plan.

 

14.                               Appeals
Procedure.  If a
Participant feels he or she should be eligible for Severance Pay or benefits
under the Plan, the Participant may file a written claim with the
Administrator. If a written claim for Severance Pay or benefits under the Plan
by a Participant or his or her beneficiary is denied, either in whole or in
part, the Administrator will let the claimant know in writing within
90 days.  If the claimant does not
hear within 90 days, the claimant may treat the claim as if it had been
denied.  A notice of a denial of a claim
will refer to a specific reason or reasons for the denial of the claim; will
have specific 

 

5

 

references to the Plan
provisions upon which the denial is based; will describe any additional
material or information necessary for the claimant to perfect the claim and
explain why such material information is necessary; and will have an
explanation of the Plan’s review procedure.

 

The claimant will have 60 days after the date
of the denial to request in writing for a review and a hearing.  The claimant must file a written request with
the CEO for a review.  During this time
the claimant may review pertinent documents and may submit issues and comments
in writing.  The CEO will have another
60 days in which to consider the claimant’s written request for
review.  If special circumstances require
an extension of time for processing, the CEO may have an additional
60 days to answer the claimant.  The
claimant will receive a written notice if the extra days are needed.  The claimant may submit in writing any
document, issues and comments he or she may wish.  The decision of the CEO will tell the
claimant the specific reasons for his or her actions, and refer the claimant to
the specific Plan provisions upon which its decision is based.

 

15.                           Rights Under
ERISA.  Each Participant in the Plan
is entitled to certain rights and protection under ERISA, which provides that
all Participants shall be entitled to:

 

(a)                                 Examine, without charge, at
the Company’s office all Plan documents.

 

(b)                                 Obtain copies
of all Plan documents and other Plan information upon written request to the
Administrator.  The Administrator may
make a reasonable charge for the copies.

 

In
addition to creating rights for Participants, ERISA imposes duties upon the
people who are responsible for the operation of an employee benefit plan.  The people who operate the Plan, called “fiduciaries”
of the Plan, have a duty to do so prudently and in the interest of the
Participants and beneficiaries.  No one,  including
the Company, any Affiliate or any other person, may fire a Participant or
otherwise discriminate against a Participant in any way to prevent him or her
from obtaining a benefit or exercising his or her rights under ERISA.  If a Participant’s claim for a benefit is
denied in whole or in part, he or she must receive a written explanation of the
reason for the denial.  A Participant has
the right to have the CEO review and reconsider his or her written claim.  Under ERISA, there are steps a Participant
can take to enforce the above rights. 
For instance, if a Participant requests materials from the Administrator
and does not receive them within thirty (30) days, he or she may file suit
in a federal court.  In such a case the
court may require the Company to provide the materials and pay the Participant
up to $110 a day until the Participant receives the materials, unless the
materials were not sent because of reasons beyond the control of the
Company.  If a Participant has a claim
for benefits, which is denied or ignored, in whole or in part, he or she may
file suit in a state or federal court. 
If a Participant is discriminated against for asserting his or her
rights, he or she may ask assistance from the United States Department of
Labor, or he or she may file suit in a federal court.  The court will decide who should pay the
court costs and legal fees.  If the
Participant is successful, the court may order the person he or she has 

 

6

 

sued
to pay these costs and fees.  If the
Participant loses, the court may order him or her to pay these costs and fees,
for example, if it finds his or her claim to be frivolous.  If a Participant has questions about the
Plan, he or she should contact the Administrator.  If a Participant has any questions about this
statement or about his or her rights under ERISA, he or she should contact the
nearest Area Office of the United States Labor-Management Services
Administration, Department of Labor.

 

16.                               Plan Facts:

 

	
  Company:

  Address:

  	
   

  	
  Hospira, Inc.

  275 North Field Drive

  Lake Forest, IL  60045

  
	
   

  	
   

  	
   

  
	
  Plan
  Name:

  	
   

  	
  Hospira
  Corporate Officer Severance Plan

  
	
   

  	
   

  	
   

  
	
  Type
  of Plan:

  	
   

  	
  Severance
  Plan-Welfare Benefits Plan

  
	
   

  	
   

  	
   

  
	
  Plan
  Year:

  	
   

  	
  Calendar
  year

  
	
   

  	
   

  	
   

  
	
  Employer
  Identification Number (EIN):

  	
   

  	
  20-0504497

  
	
   

  	
   

  	
   

  
	
  Plan
  Administrator:

  	
   

  	
  Corporate
  Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
  Business
  Address:

  	
   

  	
  275
  North Field Drive

  Lake Forest, IL  60045

  
	
   

  	
   

  	
   

  
	
  Agent
  for Service of Legal Process:

  	
   

  	
  Corporate
  Vice President, Human Resources

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  275
  North Field Drive

  Lake Forest, IL  60045

  

 

7

 

Hospira Corporate Officer Severance Plan

 

Exhibit A

List of Plan Participants

 

	
  Name

  	
   

  	
  Position

  
	
   

  	
   

  	
   

  
	
  Lori
  Carlson

  	
   

  	
  Corporate
  Vice President, Business Alignment and Integration

  
	
   

  	
   

  	
   

  
	
  Anil
  D’Souza

  	
   

  	
  Corporate
  Vice President, Global Marketing and Corporate Development

  
	
   

  	
   

  	
   

  
	
  Arthur
  J. Fiocco, Jr.

  	
   

  	
  Corporate
  Vice President, Global Quality

  
	
   

  	
   

  	
   

  
	
  James
  H. Hardy, Jr.

  	
   

  	
  Corporate
  Vice President, Supply Chain

  
	
   

  	
   

  	
   

  
	
  Richard
  J. Hoffman

  	
   

  	
  Corporate
  Vice President and Controller

  
	
   

  	
   

  	
   

  
	
  Daphne
  Jones

  	
   

  	
  Senior
  Vice President and Chief Information Officer

  
	
   

  	
   

  	
   

  
	
  Terrence
  Kearney

  	
   

  	
  Chief
  Operating Officer

  
	
   

  	
   

  	
   

  
	
  Michael
  Kotsanis

  	
   

  	
  Corporate
  Vice President and President, Europe, Middle East and Africa

  
	
   

  	
   

  	
   

  
	
  Jim
  Mahoney

  	
   

  	
  Corporate
  Vice President, Global Manufacturing Operations

  
	
   

  	
   

  	
   

  
	
  Kenneth
  F. Meyers

  	
   

  	
  Senior
  Vice President of Organizational Transformation and People Development

  
	
   

  	
   

  	
   

  
	
  Thomas
  Moore

  	
   

  	
  Corporate
  Vice President and President, U.S.

  
	
   

  	
   

  	
   

  
	
  Timothy
  Oldham

  	
   

  	
  Corporate
  Vice President and President, Asia-Pacific

  
	
   

  	
   

  	
   

  
	
  Sumant
  Ramachandra

  	
   

  	
  Senior
  Vice President, Research and Development, Medical Affairs and Chief
  Scientific Officer

  
	
   

  	
   

  	
   

  
	
  Brian
  Smith

  	
   

  	
  Senior
  Vice President, General Counsel and Secretary

  
	
   

  	
   

  	
   

  
	
  Ron
  Squarer

  	
   

  	
  Chief
  Commercial Officer

  
	
   

  	
   

  	
   

  
	
  Thomas
  Werner

  	
   

  	
  Senior
  Vice President, Finance and Chief Financial Officer

  

 

Exhibit A (as revised May 11, 2010)

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