Document:

Exhibit 10.1

 

Summary of 2008 Terms of Employment
for Named Executive Officers

 

Salary

 

	
  Officer

  	
   

  	
  Salary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Christopher B. Begley,
  Chairman and Chief Executive Officer

  	
   

  	
  $

  	
  1,050,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Terrence C. Kearney, Chief
  Operating Officer

  	
   

  	
  625,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Thomas E. Werner, Senior
  Vice President, Finance and Chief Financial Officer

  	
   

  	
  445,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Brian J. Smith, Senior
  Vice President, General Counsel and Secretary

  	
   

  	
  425,000

  	
   

  
					

 

The salary for
each officer took effect on March 24, 2008.  The prior year’s salary (which took effect on
March 26, 2007) for each officer was $960,000 for Mr. Begley,
$575,000 for Mr. Kearney, $405,000 for Mr. Werner, and $390,000 for Mr. Smith.

 

Annual
Cash Incentive

 

Each is a
participant in the Hospira Inc. 2004 Performance Incentive Plan, which is filed
as Exhibit 10.9 to Hospira’s Annual Report on Form 10-K for the year
ended December 31, 2007 (the “2007 Form 10-K”).  The plan
provides for a base award equal to 2.0% of Hospira’s earnings before interest,
taxes, depreciation and amortization for the chief executive officer, 1.5% for
the chief operating officer and 1.0% for the other named executive
officers.  The compensation committee of Hospira’s board of directors has
discretion to reduce, but not increase, the award from the base award. 
The committee will consider Hospira’s adjusted net income, net sales, cash
flows and corporate well-being as factors in exercising such discretion and
determining actual awards payable under such plan for 2008 performance.

 

Equity

 

Each officer is eligible
to receive option and performance share awards under the Hospira 2004 Long-Term
Stock Incentive Plan, which is filed as Exhibit 10.8 to Hospira’s 2007 Form 10-K. 
 Awards are made in the discretion of the compensation committee of
Hospira’s board of directors.

 

Change
in Control and Severance Pay

 

Each officer is
party to a change-in-control agreement in the forms filed as Exhibit 10.12
(for each officer other than Mr. Werner) to Hospira’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2004, and Exhibit 10.1 (for Mr. Werner)
to Hospira’s Current Report on Form 8-K filed on August 11,
2006.  The agreements were amended in the forms filed as Exhibit 10.12(a)(i) (for
each officer other than Mr. Werner) and Exhibit 10.12(b)(i) (for
Mr. Werner) to the 2007 Form 10-K.

 

All of the named
executive officers, except the chairman and chief executive officer, are
covered by Hospira’s Corporate Officer Severance Plan, which provides severance
pay and benefits to corporate officers and is filed as Exhibit 10.1 to
Hospira’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2007.

 

Non-qualified
Deferred Compensation Plan

 

Each officer is
eligible to participate in Hospira’s Non-Qualified Savings and Investment Plan,
a non-qualified deferred compensation plan, which is filed as Exhibit 10.19
to Hospira’s 2007 Form 10-K.

 

A description of
the above-described items is included in Hospira’s proxy statement for the 2008
Annual Meeting of Shareholders.Exhibit
10.2

 

HOSPIRA 2004
LONG-TERM STOCK INCENTIVE PLAN

 

NQSO TERMS

 

The Participant specified below has been granted this Option by Hospira, Inc.
(the “Company”) under the terms of the Hospira 2004 Long-Term Stock Incentive
Plan (the “Plan”).  The Option shall be
subject to the following terms and conditions (the “Option Terms”):

 

1.             Terms
of Award.  The following words and
phrases relating to the grant of the Option shall have the following meanings:

 

(a)           The “Participant” is
                                  .

 

(b)           The “Grant Date” is
                                        .

 

(c)           The number of “Covered
Shares” shall be
                
shares of Stock.

 

(d)           The “Exercise Price”
is $                   
per share.

 

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.

 

2.             Non-Qualified
Stock Option.  The Option is not
intended to constitute an “incentive stock option” as that term is used in Code
section 422.

 

3.             Date
of Exercise.  Subject to the
limitations of the Option Terms, on the first anniversary of the Grant Date
one-third of the Covered Shares subject to These Options (rounded up) may be
purchased; on the second anniversary of the Grant Date two-thirds of the
Covered Shares subject to These Options (rounded up) may be purchased; and on
the third anniversary of the Grant Date these Options may be exercised in full,
provided the Expiration Date has not occurred prior to such vesting dates.

 

(a)           Notwithstanding the
foregoing provisions of this paragraph 3, the Option shall become fully
exercisable upon a Change in Control that occurs on or before the Date of
Termination.

 

(b)           The Option may be
exercised (prior to or following the Date of Termination) only as to that
portion of the Covered Shares which may be purchased under the foregoing
schedule, as of the date of exercise.

 

(c)           The Covered Shares
shall continue to become exercisable pursuant to this Section 3 until the
Expiration Date (as defined in Section 4).

 

(d)           Notwithstanding the
foregoing provisions of this paragraph 3, in the event of termination of
employment for reasons other than death, Disability or Retirement, the Option
may only be exercised on or after the Date of Termination only as to that
portion 

 

 

of the Covered
Shares for which it was exercisable immediately prior to the Date of
Termination, or became exercisable on the Date of Termination.

 

4.             Expiration.  The Option shall not be exercisable after the
Company’s close of business on the last business day that occurs prior to the
Expiration Date.  The “Expiration Date”
shall be the earliest to occur of:

 

(a)           the seven-year
anniversary of the Grant Date;

 

(b)           if the termination
of employment occurs for reasons other than death, Disability (as defined in Section 9)
or Retirement (as defined in Section 9), the three-month anniversary of
the Date of Termination (as defined in Section 9); provided, however, that
if the Participant dies during such three month period following the Date of Termination,
then the three-month anniversary of the date of death;

 

(c)           the date on which
the Participant engages in conduct which constitutes Cause;

 

(d)           the date on which
the Participant, at any time prior to the one-year anniversary of the Date of
Termination, engages, directly or indirectly, for the benefit of the
Participant or others, in any activity, employment or business which, in the
sole opinion and discretion of the Committee, is competitive with the Company
or any of its Subsidiaries; or

 

(e)           as provided under Restricted Activity
in Section 5.

 

5.             Restricted Activity.

 

(a)           The Participant
shall not, while employed by the Company and for a period of one year following
the termination of employment for any reason:

 

(i)            without
the prior written consent of the Committee, directly or indirectly engage or
assist any person engaging in any Competitive Business (as defined in Section 9),
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 Section 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 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.

 

 

2

 

(b)           The Participant
shall not, while employed by the Company and for a period of two years
following the termination of employment for any reason: 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.

 

(c)           If the Participant
engages in any activity described in paragraph 5(a) or paragraph 5(b) above
without the written consent of the Committee, the Company, as determined by the
Committee in its sole discretion, may (i) cancel and terminate all of the
Participant’s unexercised, unexpired or unpaid Options (whether vested or
unvested) under the Plan, and (ii) rescind any exercise, payment or delivery
under any Option occurring within 12 months prior to, or at any time following,
the date of the Participant’s termination of employment for any reason.  Upon any such rescission, the Participant
shall immediately (A) pay to the Company the amount of any gain realized
or payment received, and (B) forfeit to the Company any Shares received as
a result of the rescinded exercise, payment or delivery under any Options, in
such manner and on such terms and conditions as the Committee shall require,
and the Company shall be entitled, as permitted by applicable law, to deduct
from any amounts the Company owes the Participant from time to time the amount
of any such gain realized or payment received. 
“Gain realized” shall be the excess of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price, multiplied by the
number of Shares purchased.

 

6.             Method
of Option Exercise.  Subject to the
Option Terms and the Plan, the Option may be exercised in whole or in part by
filing a written notice with the Secretary of the Company at its corporate
headquarters prior to the Company’s close of business on the last business day
that occurs prior to the Expiration Date. 
Such notice shall specify the number of shares of Stock which the
Participant elects to purchase, and shall be accompanied by payment of the
Exercise Price for such shares of Stock indicated by the Participant’s
election. Payment may be by cash or by check payable to the Company, or except
as otherwise provided by the Committee before the Option is exercised: (i) all
or a portion of the Exercise Price may be paid by the Participant by delivery
of shares of Stock (by actual delivery or by attestation) owned by the
Participant and acceptable to the Committee having an aggregate Fair Market
Value (valued as of the date of exercise) that is equal to the amount of cash
that would otherwise be required; and (ii) the Participant may pay the
Exercise Price by authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such
exercise.  Except as otherwise provided
by the Committee prior to exercise, payments made with shares of Stock in
accordance with clause (i) above shall be limited to shares held by the
Participant for not less than six months prior to the payment date.  The Option shall not be exercisable if and to
the extent the Company determines that such exercise would violate applicable
state or Federal securities laws or the rules and regulations of any
securities exchange on which the Stock is traded and shall not be exercisable
during any blackout period established by the Company from time to time.

 

7.             Withholding.  The exercise of the Option is subject to
withholding of all applicable taxes.  At
the election of the Participant, and subject to such rules and limitations
as 

 

3

 

may be established by the Committee from time to time,
such withholding obligations may be satisfied (i) through cash payment by
the Participant; (ii) through the surrender of shares of Stock by (actual
delivery or by attestation) which the Participant already owns (provided,
however, that to the extent shares described in this clause (ii) are used
to satisfy more than the minimum statutory withholding obligation, as described
below, then, except as otherwise provided by the Committee, payments made with
shares of Stock in accordance with this clause (ii) shall be limited to
shares held by the Participant for not less than six months prior to the
payment date); or (iii) through the surrender of shares of Stock to which
the Participant is otherwise entitled under the Plan; provided, however, that
such shares under this clause (iii) may be used to satisfy not more than
the Company’s minimum statutory withholding obligation (based on minimum
statutory withholding rates for Federal and state tax purposes, including
payroll taxes, that are applicable to such supplemental taxable income).

 

8.             Transferability.  The Option is not transferable by the
Participant other than by will or by the laws of descent and distribution, and
during the Participant’s life, may be exercised only by the Participant.  It may not be assigned, transferred (except
as aforesaid), pledged or hypothecated by the Participant in any way 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 this
Option contrary to the provisions hereof, and the levy of any attachment or
similar process upon this option, shall be null and void and without effect.

 

9.             Definitions.  For purposes of the Option Terms, words and
phrases shall be defined as follows:

 

(a)           Cause.  The term “Cause” shall mean, in the sole
opinion and discretion of the Committee, the Participant 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 Participant’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 Participant’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 the Grant Date on which
the Participant 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
Participant between the Company and a Subsidiary or between two Subsidiaries;
and further provided that the Participant’s employment shall not be considered
terminated while the Participant is on a leave of absence from the Company or 

 

4

 

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.

 

(d)           Disability.  The Term “Disability” shall mean the
Participant’s disability as defined in the Hospira Extended Disability Plan,
whether or not such Participant is a participant in such disability plan, for a
period of twelve (12) consecutive months.

 

(e)           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.          Heirs
and Successors.  The Option Terms
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.          Administration.  The authority to manage and control the
operation and administration of the Option Terms shall be vested in the
Committee, and the Committee shall have all powers with respect to the Option
Terms as it has with respect to the Plan. Any interpretation of the Option
Terms by the Committee and any decision made by it with respect to the Option
Terms is final and binding on all persons.

 

12.          Plan
Governs. Notwithstanding anything in the Option Terms to the contrary, the
Option Terms 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;
and the Option Terms is subject to all interpretations, amendments, rules and
regulations promulgated by the Committee from time to time pursuant to the
Plan.

 

13.          Not
An Employment Contract. The Option will not confer on the Participant any
right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate or modify the terms
of such Participant’s employment or other service at any time.

 

14.          Notices.  Any written notices provided for in the Option
Terms or the Plan shall be in writing and shall be deemed sufficiently given if
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. 

 

5

 

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.

 

15.          Fractional
Shares. In lieu of issuing a fraction of a share upon any exercise of the
Option, resulting from an adjustment of the Option pursuant to paragraph 3.4 of
the Plan or otherwise, the Company will be entitled to pay to the Participant
an amount equal to the fair market value of such fractional share.

 

16.          No
Rights As Shareholder.  The
Participant shall not have any rights of a shareholder with respect to the
shares subject to the Option, until a stock certificate has been duly issued
following exercise of the Option as provided herein.

 

17.          Amendment.  The Option Terms 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.

 

IN WITNESS WHEREOF, the Company has caused these presents to be
executed in its name and on its behalf, all as of the Grant Date.

 

	
   

  	
  Hospira, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  

 

 

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