Document:

Exhibit 4.1

 

 

HOSPIRA PUERTO RICO RETIREMENT SAVINGS PLAN

 

(Established effective August 1, 2005)

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1. INTRODUCTION

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Purpose

  	
   

  	
   

  
	
   

  	
  1.2.

  	
  Objective

  	
   

  	
   

  
	
  ARTICLE 2. PARTICIPATION

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Date of Participation

  	
   

  	
   

  
	
   

  	
  2.2.

  	
  Enrollment of Participants

  	
   

  	
   

  
	
   

  	
  2.3.

  	
  Duration of Participation

  	
   

  	
   

  
	
   

  	
  2.4.

  	
  Participation by Additional Participating
  Employers

  	
   

  	
   

  
	
   

  	
  2.5.

  	
  Securities Law Restrictions

  	
   

  	
   

  
	
  ARTICLE 3. CONTRIBUTIONS

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Participant Contributions

  	
   

  	
   

  
	
   

  	
  3.2.

  	
  Employee Pre-Tax Contributions

  	
   

  	
   

  
	
   

  	
  3.3.

  	
  Employee After-Tax Contributions

  	
   

  	
   

  
	
   

  	
  3.4.

  	
  Contribution Agreements

  	
   

  	
   

  
	
   

  	
  3.5.

  	
  Employer Contributions

  	
   

  	
   

  
	
   

  	
  3.6.

  	
  Qualified Non-elective Employer
  Contributions

  	
   

  	
   

  
	
   

  	
  3.7.

  	
  Time for Making and Crediting of
  Contributions

  	
   

  	
   

  
	
   

  	
  3.8.

  	
  Certain Limits Apply

  	
   

  	
   

  
	
   

  	
  3.9.

  	
  Return of Contributions

  	
   

  	
   

  
	
   

  	
  3.10.

  	
  Special Limits for Corporate Officers

  	
   

  	
   

  
	
  ARTICLE 4. PARTICIPANT ACCOUNTS

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Accounts

  	
   

  	
   

  
	
   

  	
  4.2.

  	
  Adjustment of Accounts

  	
   

  	
   

  
	
  ARTICLE 5. INVESTMENT OF ACCOUNTS

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Investment Funds

  	
   

  	
   

  
	
   

  	
  5.2.

  	
  Investment of Employer Contributions and
  Reinvestment of Hospira Stock

  	
   

  
	
   

  	
  5.3.

  	
  Investment Elections

  	
   

  	
   

  
	
   

  	
  5.4.

  	
  Default Investment Fund

  	
   

  	
   

  
	
   

  	
  5.5.

  	
  Participant Direction of Investments

  	
   

  	
   

  
	
   

  	
  5.6.

  	
  Dividends on Hospira Stock

  	
   

  	
   

  
	
   

  	
  5.7.

  	
  Voting of Hospira Stock

  	
   

  	
   

  
	
  ARTICLE 6. WITHDRAWALS PRIOR TO SEVERANCE
  FROM EMPLOUMENT

  	
   

  
	
   

  	
  6.1.

  	
  In-service Withdrawals of After-Tax
  Contributions

  	
   

  
	
   

  	
  6.2.

  	
  Required Distributions After Age 70 1/2

  	
   

  	
   

  
	
   

  	
  6.3.

  	
  Distributions Required by a Qualified
  Domestic Relations Order

  	
   

  
	
   

  	
  6.4.

  	
  Participant’s Consent to Distribution of
  Benefits and Direct Rollover Notice

  	
   

  
	
  ARTICLE 7. LOANS TO PARTICIPANTS

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  In General

  	
   

  	
   

  
	
   

  	
  7.2.

  	
  Rules and Procedures

  	
   

  	
   

  
	
   

  	
  7.3.

  	
  Maximum Amount of Loan

  	
   

  	
   

  
	
   

  	
  7.4.

  	
  Minimum Amount of Loan; Number of Loans;
  Frequency of Loans; Fees for Loans

  	
   

  
	
   

  	
  7.5.

  	
  Note; Security; Interest

  	
   

  	
   

  
							

 

 

	
   

  	
  7.6.

  	
  Repayment

  	
   

  	
   

  
	
   

  	
  7.7.

  	
  Repayment upon Distribution

  	
   

  	
   

  
	
   

  	
  7.8.

  	
  Default

  	
   

  	
   

  
	
   

  	
  7.9.

  	
  Nondiscrimination

  	
   

  	
   

  
	
   

  	
  7.10.

  	
  Source of Loan Proceeds

  	
   

  	
   

  
	
   

  	
  7.11.

  	
  Reinvestment of Loan Repayments

  	
   

  	
   

  
	
  ARTICLE 8. BENEFITS UPON RETIREMENT, DEATH
  OR SEVERANCE FROM EMPLOYMENT

  	
   

  
	
   

  	
  8.1.

  	
  Retirement

  	
   

  	
   

  
	
   

  	
  8.1A.

  	
  Vesting, Severance from Employment for
  Reasons Other Than Death or Retirement

  	
   

  
	
   

  	
  8.2.

  	
  Time of Distributions

  	
   

  	
   

  
	
   

  	
  8.3.

  	
  Amount and Manner of Distribution

  	
   

  	
   

  
	
   

  	
  8.4.

  	
  Distributions After a Participant’s Death

  	
   

  	
   

  
	
   

  	
  8.5.

  	
  Designation of Beneficiary

  	
   

  	
   

  
	
  ARTICLE 9. ADMINISTRATION

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Board of Review

  	
   

  	
   

  
	
   

  	
  9.2.

  	
  Administrator

  	
   

  	
   

  
	
   

  	
  9.3.

  	
  Powers of Administrator

  	
   

  	
   

  
	
   

  	
  9.4.

  	
  Nondiscriminatory Exercise of Authority

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Reliance on Tables, etc

  	
   

  	
   

  
	
   

  	
  9.6.

  	
  Claims and Review Procedures

  	
   

  	
   

  
	
   

  	
  9.7.

  	
  Indemnification

  	
   

  	
   

  
	
   

  	
  9.8.

  	
  Expenses and Compensation

  	
   

  	
   

  
	
   

  	
  9.9.

  	
  Notices; Participant Information

  	
   

  	
   

  
	
  ARTICLE 10. AMENDMENT AND TERMINATION

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Amendment

  	
   

  	
   

  
	
   

  	
  10.2.

  	
  Termination

  	
   

  	
   

  
	
   

  	
  10.3.

  	
  Distributions upon Termination of the Plan

  	
   

  	
   

  
	
   

  	
  10.4.

  	
  Merger or Consolidation of Plan; Transfer
  of Plan Assets

  	
   

  
	
  ARTICLE 11. LIMITS ON CONTRIBUTIONS

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  P-R Code
  section 1023(n) Limits

  	
   

  	
   

  
	
   

  	
  11.2.

  	
  P-R Code
  section 1165(e)(7)(A) Limits

  	
   

  	
   

  
	
   

  	
  11.3.

  	
  P-R Code
  section 1165(e)(3) Limits

  	
   

  	
   

  
	
  ARTICLE 12. ROLLOVER AND TRANSFER
  CONTRIBUTIONS

  	
   

  
	
   

  	
  12.1.

  	
  Contribution of Amount Distributed from
  Another Qualified Plan

  	
   

  
	
   

  	
  12.2.

  	
  Monitoring of Rollovers

  	
   

  	
   

  
	
   

  	
  12.3.

  	
  Transfer Contribution

  	
   

  	
   

  
	
   

  	
  12.4.

  	
  Treatment of Transferred Amount under the
  Plan

  	
   

  	
   

  
	
  ARTICLE 13. MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
  13.1.

  	
  Exclusive Benefit Rule

  	
   

  	
   

  
	
   

  	
  13.2.

  	
  Limitation of Rights

  	
   

  	
   

  
	
   

  	
  13.3.

  	
  Nonalienability of Benefits

  	
   

  	
   

  
	
   

  	
  13.4.

  	
  Changes in Vesting Schedule

  	
   

  	
   

  
	
   

  	
  13.5.

  	
  Governing Law

  	
   

  	
   

  
						

 

 

	
  ARTICLE 14. DEFINITIONS

  	
   

  	
   

  
	
   

  	
  14.1.

  	
  Accounts

  	
   

  	
   

  
	
   

  	
  14.2.

  	
  Administrator

  	
   

  	
   

  
	
   

  	
  14.3.

  	
  Affiliated Corporation

  	
   

  	
   

  
	
   

  	
  14.4.

  	
  Alternate Payee

  	
   

  	
   

  
	
   

  	
  14.5.

  	
  Beneficiary

  	
   

  	
   

  
	
   

  	
  14.6.

  	
  Board of Directors

  	
   

  	
   

  
	
   

  	
  14.7.

  	
  Board of Review

  	
   

  	
   

  
	
   

  	
  14.8.

  	
  Break Year

  	
   

  	
   

  
	
   

  	
  14.9.

  	
  Committee

  	
   

  	
   

  
	
   

  	
  14.10.

  	
  Compensation

  	
   

  	
   

  
	
   

  	
  14.11.

  	
  Contribution Agreement

  	
   

  	
   

  
	
   

  	
  14.12.

  	
  Corporation

  	
   

  	
   

  
	
   

  	
  14.13.

  	
  Division

  	
   

  	
   

  
	
   

  	
  14.14.

  	
  Effective Date

  	
   

  	
   

  
	
   

  	
  14.15.

  	
  Eligible Employee

  	
   

  	
   

  
	
   

  	
  14.16.

  	
  Employee

  	
   

  	
   

  
	
   

  	
  14.17.

  	
  Employee After-Tax Contribution

  	
   

  	
   

  
	
   

  	
  14.18.

  	
  Employee After-Tax Contribution Account

  	
   

  	
   

  
	
   

  	
  14.19.

  	
  Employee Pre-Tax Contribution

  	
   

  	
   

  
	
   

  	
  14.20.

  	
  Employee Pre-Tax Contribution Account

  	
   

  	
   

  
	
   

  	
  14.21.

  	
  Employer

  	
   

  	
   

  
	
   

  	
  14.22.

  	
  Employer Contributions

  	
   

  	
   

  
	
   

  	
  14.23.

  	
  Employer Contribution Account

  	
   

  	
   

  
	
   

  	
  14.24.

  	
  Entry Date

  	
   

  	
   

  
	
   

  	
  14.25.

  	
  ERISA

  	
   

  	
   

  
	
   

  	
  14.26.

  	
  Highly Compensated Employee

  	
   

  	
   

  
	
   

  	
  14.27.

  	
  Hospira

  	
   

  	
   

  
	
   

  	
  14.28.

  	
  Hospira Stock

  	
   

  	
   

  
	
   

  	
  14.29.

  	
  Hour of Service

  	
   

  	
   

  
	
   

  	
  14.30.

  	
  Investment Fund

  	
   

  	
   

  
	
   

  	
  14.31.

  	
  Participant

  	
   

  	
   

  
	
   

  	
  14.32.

  	
  Period of Credited Service

  	
   

  	
   

  
	
   

  	
  14.33.

  	
  Plan

  	
   

  	
   

  
	
   

  	
  14.34.

  	
  Plan Year

  	
   

  	
   

  
	
   

  	
  14.35.

  	
  PR-Code

  	
   

  	
   

  
	
   

  	
  14.36.

  	
  Qualified Domestic Relations Order

  	
   

  	
   

  
	
   

  	
  14.37.

  	
  Qualified Non-elective Employer
  Contribution

  	
   

  	
   

  
	
   

  	
  14.38.

  	
  Regulation

  	
   

  	
   

  
	
   

  	
  14.39.

  	
  Rollover Contribution

  	
   

  	
   

  
	
   

  	
  14.40.

  	
  Rollover Contribution Account

  	
   

  	
   

  
	
   

  	
  14.41.

  	
  Section

  	
   

  	
   

  
	
   

  	
  14.42.

  	
  Subsidiary

  	
   

  	
   

  
	
   

  	
  14.43.

  	
  Transfer Contribution

  	
   

  	
   

  
	
   

  	
  14.44.

  	
  Transfer Contribution Account

  	
   

  	
   

  
						

 

 

	
   

  	
  14.45.

  	
  Trust

  	
   

  	
   

  
	
   

  	
  14.46.

  	
  Trustee

  	
   

  	
   

  
	
   

  	
  14.47.

  	
  Valuation Date

  	
   

  	
   

  
	
   

  	
  14.48.

  	
  Year of Credited Service

  	
   

  	
   

  

 

 

ARTICLE 1. 
INTRODUCTION

 

1.1.                              Purpose.
This document sets forth the provisions of the Hospira Puerto Rico Retirement
Savings Plan (the “Plan”), effective as of August 1, 2005.  The Plan is a profit sharing plan containing a cash or deferred arrangement
intended to qualify under sections 1165(a) and (e) of the Puerto Rico
Internal Revenue Code of 1994 (the “PR-Code”) and the trust forming a part
thereof is intended to be exempt from taxation under PR-Code
section 1165(a) and, pursuant to section 1022(i)(1) of the Employee
Retirement Income Security Act of 1974, under section 501(a) of the United
States Income Tax Code of 1986, as amended.

 

1.2.                              Objective.   The
Plan provides an arrangement by which employees may invest in the Plan’s
investment options by contributing to the Hospira Puerto Rico Retirement
Savings Trust (the “Trust”) and by which Hospira Puerto Rico, LLC and its
affiliates in Puerto Rico will also make contributions to the Trust.

 

ARTICLE 2. 
PARTICIPATION

 

2.1.                              Date
of Participation.  Each individual
who is an Eligible Employee on the Effective Date shall be eligible to enroll
and be a Participant in the Plan.  After
the Effective Date, each other Eligible Employee shall become a Participant on
any Entry Date following his or her date of hire after he or she has completed
the applicable forms or is automatically enrolled under Sections 2.2, 3.2 and
3.4.

 

2.2.                              Enrollment
of Participants.  An Eligible
Employee shall become a Participant by signing an application form furnished by
the Administrator within 60 days after he or she receives the application, by
automatic enrollment as described in Section 3.2, or by such other means as the
Administrator establishes for enrollment. 
Such application or automatic enrollment shall authorize the Participant’s
Employer to deduct from his or her Compensation (or reduce his or her
Compensation by) the contributions required under Section 3.2, 3.3 or 3.5, whichever
is applicable.

 

2.3.                              Duration
of Participation.  An individual who
has become a Participant under the Plan will remain a Participant for as long
as an Account is maintained under the Plan for his or her benefit, or until his
or her death, if earlier. 
Notwithstanding the preceding sentence and unless otherwise expressly
provided for under the Plan, no contributions under the Plan shall be made on
behalf of any Participant, unless the Participant is an Eligible Employee at
the time for which the contribution or allocation is made.

 

2.4.                              Participation
by Additional Participating Employers. 
The Board of Review may extend the Plan to any nonparticipating Division
by filing with the Trustee and the Trustees a certified copy of an appropriate
resolution by the Board of Review to that effect.  Any Subsidiary or Affiliated Corporation may
adopt the Plan and become a participating Employer hereunder by:

 

 

(a)                                  filing
with the Board of Review and the Trustee a written instrument to that effect,
and;

 

(b)                                 filing
with the Trustee a certified copy of a resolution of the Board of Review
consenting to such action.

 

At the time
the Plan is extended to any Division of the Corporation or is adopted by any
Subsidiary or Affiliated Corporation or any time thereafter, the Board of
Review may modify the Plan or any of its terms as applied to said Division,
Subsidiary, or Affiliated Corporation and its employees.  The Board of Review may include in the Plan
any employee of any prior separate business entity, part or all of which was
acquired by or becomes a part of any Employer. 
To the extent and on the terms so provided by the Board of Review at the
time of acquisition, or at any subsequent date or in any supplement to the
Plan, the last continuous period of employment of any employee with such prior
separate business entity, part or all of which is or was acquired by, or
becomes a part of any Employer, will be considered a Period of Credited
Service.

 

2.5.                              Securities
Law Restrictions. The Administrator may, from time to time, impose such
restrictions on participation in the Plan, as the Administrator deems
advisable, to facilitate compliance with federal and state securities laws, to
secure exemption under any rule of the United States Securities and Exchange
Commission, or to comply with Hospira’s or the Corporation’s corporate policy
with respect to “blackout periods” related to Hospira Stock.  Such restrictions shall apply to all
Participants or to such individual Participants as the Administrator shall
determine in his or her sole discretion and may include but shall not be
limited to (i) moratoriums on purchases, sales, withdrawals or distributions of
Hospira Stock; (ii) moratoriums on loans and transfers into and out of Hospira
Stock; and (iii) suspensions of Employee Pre-Tax Contributions and Employee
After-Tax Contributions allocated to Hospira Stock.

 

ARTICLE  3. CONTRIBUTIONS

 

3.1                                 Participant
Contributions.  Except as provided in
Section 2.5, each Eligible Employee who has satisfied the eligibility
requirements of Section 2.1 may elect to have Employee Pre-Tax Contributions
made to the Plan on his or her behalf or become automatically enrolled in the
Plan as described in Section 3.2, and may elect to have Employee After-Tax
Contributions made to the Plan on his or her behalf as described in Section
3.3.

 

3.2.                              Employee
Pre-Tax Contributions.

 

(a)                                  Affirmative
Election.  Each Participant who is an
Eligible Employee may enter into a Contribution Agreement with the Employer
under which the Participant agrees that his or her Compensation for each pay
period shall be reduced in multiples of one percent (or such other multiples as
the Administrator shall determine), and the Employer will contribute to the
Trust an equal amount as an Employee Pre-Tax Contribution.

 

2

 

(b)                                 Automatic Enrollment.

 

(i)                                     An Eligible Employee who first performs
an Hour of Service or who performs an Hour of Service following his or her
re-employment after his or her employment with an Employer terminates and who
does not affirmatively elect, within 60 days of becoming an Eligible Employee,
to receive cash or have a specified amount of Employee Pre-Tax Contributions
contributed to the Plan shall have his or her Compensation automatically
reduced by a percentage elected by the Administrator (“Default Percentage”) and
this amount shall be contributed to the Trust on his or her behalf as an
Employee Pre-Tax Contribution.

 

(ii)                                  Subject to Section 3.4, an Eligible
Employee may elect at any time not to make Employee Pre-Tax Contributions or to
defer a different percentage of his or her Compensation.

 

(iii)                               The Administrator shall provide an
Eligible Employee who becomes eligible to participate in the Plan with a notice
that explains the automatic compensation reduction election under subparagraph
(i) and the Eligible Employee’s right to elect to have no such compensation
reduction contributions made to the Plan or to alter the amount of those
contributions, including the procedure for exercising that right and the timing
for implementation of any such election. The Eligible Employee shall be
notified annually of his or her Default Percentage and his or her right to
change that percentage.

 

In the event that a Participant’s Employee
Pre-Tax Contributions reach the required limitations of PR-Code Section
1165(e)(7)(A) in any Plan Year, all of such Participant’s future Employee
Pre-Tax Contributions shall automatically be discontinued; provided, however,
that, subject to the limitations contained elsewhere in the Plan, the first two
percent or, for a Participant whose Employee Pre-Tax Contribution is at least
three percent of his or her Compensation, the first three percent of such
Participant’s contributions shall continue to be contributed to the Trust as an
Employee After-Tax Contribution for the remainder of such Plan Year.  For the next Plan Year immediately following,
such Participant’s then existing Contribution Agreement shall be deemed to be
in effect until he or she changes or revokes such Contribution Agreement in
accordance with Section 3.4.

 

The
Participant’s Employee Pre-Tax Contributions may not exceed 10% of his or her
Compensation; provided that the aggregate of a Participant’s Employee Pre-Tax
Contribution and Employee After-Tax Contribution may not exceed 18% of his or
her Compensation.  For

 

3

 

purposes of this Section 3.2, Compensation shall be limited to that
portion of his or her Compensation as is determined from time to time by the
Board of Directors or the Board of Review. 
Each Participant who makes such contributions or is automatically
enrolled shall be eligible to share in the Employer Contributions under Section
3.5.

 

3.3.                              Employee
After-Tax Contributions.  Each
Participant who is an Eligible Employee may enter into a Contribution Agreement
with the Employer under which the Participant agrees that there shall be
deducted from his or her Compensation for each pay period an amount expressed
in multiples of one percent (or such other multiples as the Administrator shall
determine), and the Employer will contribute to the Trust an equal amount as an
Employee After-Tax Contribution; provided that a Participant’s Employee
After-Tax Contribution may not exceed 10% of his or her Compensation; and
provided further that the aggregate of the Participant’s Employee Pre-Tax
Contribution and After-Tax Contribution may not exceed 18% of his or her
Compensation.

 

3.4.                              Contribution
Agreements.  Each Contribution
Agreement shall be on a form prescribed or approved by the Administrator or in
such manner as the Administrator finds acceptable, and may be entered into,
changed or revoked by the Participant, with such prior notice as the
Administrator may prescribe, as of the first day of any pay period with respect
to Compensation payable thereafter.  A
Contribution Agreement shall be effective with respect to Compensation payable
to a Participant after the date determined by the Administrator, but not
earlier than the date on which the Agreement is entered.  The Administrator may reject, amend or revoke
the Contribution Agreement of any Participant if the Administrator determines
that the rejection, amendment, or revocation is necessary to ensure that the
limitations referred to in Section 3.8 and Article 11 are not exceeded.

 

3.5.                              Employer
Contributions. For each payroll period, the Employers shall make Employer
Contributions to the Trust for the benefit of each Participant who is an
Eligible Employee at any time during the payroll period and on whose behalf
Employee Pre-Tax Contributions or Employee After-Tax Contributions have been
made at any time during the payroll period. 
The amount of Employer Contributions made by the Employer for each
payroll period shall equal 5% of the Compensation of any Participant who
contributes at least 2% but less than 3% of his or her Compensation and shall
equal 6% of the Compensation of any Participant who contributes at least 3% of
his or her Compensation; provided that for any Eligible Employee who was age 40
or older as of December 31, 2004 and becomes a Participant on, but no later
than, the Effective Date, additional Employer Contributions shall be made by
the Employer for each payroll period during which the Participant contributes
at least 2% of his or her Compensation, at a percentage rate of his or her
Compensation determined by the Administrator, and uniformly applied to all such
Participants, for each of the following Plan Years: 2005, 2006, 2007, 2008, and
2009, up to a maximum aggregate percentage amount of 15% for all such Plan Years.  Employer Contributions shall be allocated
among the Employer Contribution Accounts of the eligible Participants on whose
behalf such contributions are made as provided in Section 3.7.  In the event any portion of the Employer
Contribution is to be invested in Hospira Stock, Hospira Stock shall be
purchased and sold by the Trustee on the open market.  The number of full and fractional shares of
Hospira Stock to be so allocated to the

 

4

 

Employer Contribution Account of each eligible Participant for such
payroll period shall be based on the average cost per share of the Hospira
Stock purchased with the Employer Contributions made for such payroll period.

 

3.6.                              Qualified
Non-elective Employer Contributions. At the direction of the Corporation,
an Employer may make Qualified Non-elective Employer Contributions to the Trust
for a Plan Year either (a) on behalf of all Participants for whom Employee Pre-Tax
Contributions are made for the Plan Year, or (b) on behalf of only those
Participants for whom Employee Pre-Tax Contributions for the Plan Year are made
and who are not Highly Compensated Employees for the Plan Year, as the Board of
Review shall determine.  Except as
otherwise expressly provided for, any Qualified Non-elective Employer
Contribution shall be treated as a Pre-Tax Contribution for all purposes under
the Plan. Qualified Non-elective Employer Contributions may be made pursuant to
this Section 3.6, (i) with respect only to Participants who are employed by the
Corporation, (ii) with respect only to Participants who are employed by any
Subsidiary which is not an Affiliated Corporation, (iii) with respect only to
Participants who are employed by Employers which are Affiliated Corporations,
or (iv) with respect to Participants described in  (i), (ii) and (iii).

 

3.7.                              Time
for Making and Crediting of Contributions. Employee Pre-Tax Contributions
and Employee After-Tax Contributions for any calendar month will be withheld
from the Participants’ Compensation through payroll deductions and will be paid
in cash to the Trust as soon as such contributions can reasonably be segregated
from the general assets of the Employers, but in any event no later than the 15th
business day of the next following month. 
Such contributions will be credited to the Participants’ respective
Employee Pre-Tax Contribution and Employee After-Tax Contribution Accounts as
of the earlier of (a) the date such contributions are received by the Trust and
(b) the last day of the Plan Year in which the Compensation is paid.  In addition and subject to the limits
provided in Section 3.3, a Participant may make Employee After-Tax
Contributions by delivering to the Trustee, a certified check in the amount of
such contribution and the contribution shall be credited to the Participant’s
Employee After-Tax Contribution Account as of the date it is received by the
Trustee. Any Employer Contributions or Qualified Non-elective Employer
Contributions for a Plan Year will be contributed to the Trust at such time as
the Corporation determines, but no later than the time prescribed by law
(including extensions) for filing the Corporation’s federal income tax return
for its taxable year in or with which the Plan Year ends.  Such contributions will be credited to the
Employer Contribution Accounts or Employee Pre-Tax Contribution Accounts,
respectively, of Participants on whose behalf they are made at such time as the
Corporation determines, but no later than the last day of such Plan Year.

 

3.8.                              Certain
Limits Apply.  All contributions to
this Plan are subject to the applicable limits set forth under PR-Code sections
1165(e) and 1023(n), as further described in Article 11.

 

3.9.                              Return
of Contributions.  No property of the
Trust or contributions made by the Employers pursuant to the terms of the Plan
shall revert to the Employers or be used for any purpose other than providing
benefits to Eligible Employees or their Beneficiaries and defraying the
expenses of the Plan and the Trust, except as follows:

 

5

 

(a)                                  Upon
request of the Corporation, contributions made to the Plan before the issuance
of a favorable determination letter by the Puerto Rico Treasury Department with
respect to the initial qualification of the Plan under section 1165(a) of the
PR-Code may be returned to the contributing Employer, with all attributable
earnings, within one year after the Puerto Rico Treasury Department refuses in
writing to issue such a letter.

 

(b)                                 Any
amount contributed under the Plan by an Employer by a mistake of fact as determined
by the Employer may be returned to such Employer upon its request, within one
year after its payment to the Trust.

 

(c)                              Any
amount contributed under the Plan by an Employer on the condition of its deductibility
under section 1023(n) of the PR-Code may be returned to such Employer upon its
request, within one year after the Puerto Rico Treasury Department disallows
the deduction in writing.

 

(d)                             Earnings
attributable to contributions returnable under paragraph (b) or (c) shall not
be returned to the Employer, and any losses attributable to those contributions
shall reduce the amount returned.

 

In no event
shall the return of a contribution hereunder cause any Participant’s Accounts
to be reduced to less than they would have been had the mistaken or
nondeductible amount not been contributed. 
No return of a contribution hereunder shall be made more than one year
after the mistaken payment of the contribution, or disallowance of the
deduction, as the case may be.

 

3.10.                        Special
Limits for Corporate Officers. 
Notwithstanding any other provision of the Plan, the Administrator may,
from time to time, impose additional limits on the percentages of Compensation
which may be contributed to the Plan by, or on behalf of, Corporate Officers,
provided that such additional limits are lower than the limits applicable to
other Participants.  The amount and terms
of such limits shall be determined by the Administrator in its sole discretion,
need not be the same for all Corporate Officers and may be changed or repealed
by the Administrator at any time.  For
purposes of this Section 3.10, the term “Corporate Officer” shall mean an
individual elected an officer of the Corporation by its Board of Directors but
shall not include assistant officers.

 

ARTICLE 4. 
PARTICIPANT ACCOUNTS

 

4.1.                              Accounts.  The Administrator will establish and maintain
(or cause the Trustee to establish and maintain) for each Participant, an
Employee Pre-Tax Contribution Account, an Employee After-Tax Contribution
Account, an Employer Contribution Account, a Rollover Contribution Account (if
applicable), a Transfer Contribution Account (if applicable) and such other
accounts or sub-accounts as the Administrator in its discretion deems
appropriate.  All such Accounts shall be
referred to collectively as the “Accounts”.

 

6

 

4.2.                              Adjustment
of Accounts.  Except as provided in
the following sentence, as of each Valuation Date, the Administrator or
Trustee, as the case may be, shall adjust the balances of each Account
maintained under the Plan on a uniform and consistent basis to reflect the
contributions, distributions, income, expense, and changes in the fair market
value of the assets attributable to such Account since the prior Valuation
Date, in such reasonable manner as the Administrator or Trustee, as the case
may be, shall determine.  Notwithstanding
any other provision of the Plan, to the extent that Participants’ Accounts are
invested in mutual funds or other assets for which daily pricing is available (“Daily
Pricing Media”), all amounts contributed to the Trust will be invested at the
time of their actual receipt by the Daily Pricing Media, and the balance of
each Account shall reflect the results of such daily pricing from the time of
actual receipt until the time of distribution. 
Investment elections and changes made pursuant to Section 5.3 shall be
effective upon receipt by the Daily Pricing Media.  References elsewhere in the Plan to the
investment of contributions “as of” a date other than that described in this
Section 4.2 shall apply only to the extent, if any, that assets of the Trust
are not invested in Daily Pricing Media.

 

ARTICLE 5. 
INVESTMENT OF ACCOUNTS

 

5.1.                              Investment
Funds.  The Committee may, from time
to time, direct the Trustee to establish one or more Investment Funds available
under the Plan in such increments and in such manner as the Committee and the
Trustee establish in investment procedures. 
A Participant may direct that some or all of his or her Employee Pre-Tax
Contributions, Employee After-Tax Contributions, Rollover Contributions or
Transfer Contributions be invested in one or more of the Investment Funds
established under this Section 5.1.  A
Participant may instruct the Trustee that amounts held in his or her Accounts
that are invested in Hospira Stock be transferred to and invested in one or
more of the Investment Funds established under this Section 5.1.  Any amounts held in a Participant’s Accounts
may be invested or reinvested in Hospira Stock or any of the Investment Funds
then available under the Plan in accordance with the procedures established
under Section 5.3.

 

5.2.                              Investment
of Employer Contributions and Reinvestment of Hospira Stock.  Notwithstanding any other provision in the
Plan to the contrary, and except as provided in the next two sentences, any
Employer Contribution, including those made under Section 3.2(b)(i), made under
the Plan to a Participant shall be invested on a pro rata basis in accordance
with the Participant’s investment election(s) in effect for his or her Employee
Pre-Tax Contributions at the time the Employer Contribution is made.  If a Participant’s Accounts consist solely of
Employee After-Tax Contributions, then any Employer Contribution made under the
Plan to such Participant shall be invested on a pro rata basis in accordance
with the Participant’s investment election(s) in effect for his or her
After-Tax Contributions at the time the Employer Contribution is made.  For purposes of Employee Pre-Tax
Contributions for automatic enrollments described in Section 3.2(b) with
respect to an Eligible Employee or Participant who has no investment

election(s) in effect or who fails to provide complete and clear investment
instructions, Employer Contributions shall be invested in the default
Investment Fund that the Administrator designates under Section 5.4.  A Participant may direct the Trustee to
liquidate all or a portion of the

 

7

 

Hospira Stock held in his or her Accounts and reinvest the proceeds in
any of the other Investment Funds described in Section 5.1 in accordance with
the procedures established under Section 5.3.

 

5.3.                              Investment
Elections.  A Participant,
Beneficiary or Alternate Payee may make or change investment instructions with
respect to the portion of the Accounts over which he or she has investment
direction at such times and at such frequency as the Administrator shall permit
in accordance with investment procedures established for the Plan.  Such investment instructions shall be in
writing or in such other form as is acceptable to the Trustee.

 

5.4.                              Default
Investment Fund.  The Administrator
shall from time to time identify one or more of the Investment Funds as the
default Investment Fund into which all contributions, for which the Participant
has the right to direct investment, shall be invested if the Participant fails
to provide complete and clear investment instructions for such contributions.  Such contributions shall remain in the
default Investment Fund until the Trustee receives investment instructions from
the Participant in a form acceptable to the Trustee.

 

5.5.                              Participant
Direction of Investments.  To the
extent that this Article 5 does not prohibit a Participant, Beneficiary or
Alternate Payee from directing the investment of his or her Accounts, the Plan
is intended to be a participant-directed plan and to comply with the
requirements of ERISA Section 404(c) and the United States Department of Labor
Regulations 2550.404c-1 as a participant-directed plan.  To the extent this Section 5.5 applies, the
Administrator shall direct the Trustee from time to time with respect to such
investments pursuant to the instructions of the Participant (or, if applicable,
the Alternate Payee, or the deceased Participant’s Beneficiary), but the
Trustee may refuse to honor any investment instruction if such instruction
would cause the Plan to engage in a prohibited transaction (as described in
ERISA section 406) or cause the Trust to be subject to income tax.  The Administrator shall prescribe the form
upon which, or such other manner in which such instructions shall be made, as
well as the frequency with which such instructions may be made or changed and
the dates as of which such instructions shall be effective.  The Board of Review reserves the right to
amend the Plan to remove the right of Participants, Beneficiaries or Alternate
Payees to give investment instructions with respect to their Accounts.  Nothing contained herein shall provide for
the voting of shares of Hospira Stock by any Participant, Beneficiary or
Alternate Payee, except as otherwise provided in the Trust.

 

5.6.                              Dividends
on Hospira Stock.  Cash dividends on
shares of Hospira Stock shall be credited to the applicable Accounts in which
the shares are held, invested in shares of Hospira Stock as soon as practicable
after such dividends or proceeds are received by the Trust, and shall be credited to such
Accounts based on the average cost of all shares purchased with such dividends
or proceeds.  Stock dividends or “split-ups”
and rights or warrants appertaining to such shares shall be credited to the
applicable Accounts when received by the Trust.

 

5.7.                              Voting
of Hospira Stock.  Each Participant
or Beneficiary shall be entitled to direct the manner in which shares of
Hospira Stock credited to his or her Account are to be voted, as provided in
the Trust.

 

8

 

ARTICLE 6. WITHDRAWALS PRIOR TO SEVERANCE
FROM EMPLOYMENT

 

6.1.                              In-service
Withdrawals of After-Tax Contributions.

 

(a)                                  Supplemental
After-Tax Contributions.    A Participant may elect to
withdraw from the Trust any or all of his or her Employee After-Tax
Contributions. Withdrawals shall be as the Participant elects, but only to the
extent such total withdrawals under this subsection (a) do not exceed the
Participant’s Employee After-Tax Contributions in his or her Employee After-Tax
Contribution Account.

 

(b)                                 Valuation of Shares Withdrawn.    Withdrawals of
shares of Hospira Stock under this Section 6.1 from the Employee After-Tax
Contribution Accounts shall be in whole shares except when withdrawal of a
fractional share is necessary to exhaust the Hospira Stock allocated to such
Accounts in which event the cash value of such fractional share shall be
withdrawn.

 

(c)         (i)                                            For purposes of Section 6.1(a), shares
of Hospira Stock purchased with a Participant’s Employee After-Tax Contributions
shall be determined as follows:

 

(A)                              First, the average cost to the Trust of all
withdrawn shares of Hospira Stock purchased with the Participant’s Employee
After-Tax Contributions and related dividends shall be established.

 

(B)                                Next, the total of the Participant’s
unwithdrawn Employee After-Tax Contributions applied to purchase Hospira Stock
shall be divided by the average cost established under subparagraph
(A) above and the resulting amount shall be the number of shares purchased
with the Participant’s Employee After-Tax Contributions.

 

For
purposes of determining a Participant’s unwithdrawn Employee After-Tax
Contributions, any shares of Hospira Stock purchased with the Participant’s
Employee After-Tax Contributions that were withdrawn by the Participant as of
any date shall be charged at the average cost established under subparagraph
(i)(A) above as of such date.

 

(d)                                 The foregoing provisions of this
Section 6.1 are subject to the following:

 

(i)                                     Shares of Hospira Stock and other amounts
that are withdrawn by a Participant under this Section 6.1 shall be
charged to his or her respective Employee After-Tax Contribution Account.

 

(ii)                                  No more than one withdrawal may be elected in
any calendar quarter; provided, however, that the Administrator, in his or her
sole discretion,

 

9

 

may waive this limitation in
unusual cases.

 

(iii)                               Distribution of the shares of Hospira Stock
or other amounts a Participant elects to withdraw under this Section 6.1
will be made within such time period and in accordance with the procedures
established by the Administrator and agreed to by the Trustee. If the
Participant dies prior to the time distribution of such shares or amounts is
made, distribution shall be made to the Participant’s Beneficiary in the same
manner as other distributions from the Trust.

 

(iv)                              Each request for a withdrawal shall be filed
with the Administrator, shall specify the dollar amount or the share amount (or
both) to be withdrawn, which amount shall not be less than $500 (or such amount
as the Administrator determines from time to time), and may not be revoked,
amended or changed by the Participant after it is filed. The Participant shall
indicate in his withdrawal request whether the withdrawal is to be made in cash
or in Hospira Stock.

 

(v)                                 Any fees associated with a withdrawal will be
charged to the Participant’s Accounts.

 

(vi)                              Withdrawals under this Section 6.1 shall
be subject to such further conditions and limitations as the Administrator may
establish from time to time and apply on a uniform basis.

 

(vii)                           Any shares of Hospira Stock that are
withdrawn will be considered as having been withdrawn at the average cost, as
of the date of the withdrawal, of the shares of Hospira Stock reflected in the
Account from which it was withdrawn.

 

6.2.                              Required
Distributions After Age 70 1⁄2.  Except
as provided in the next sentence, a Participant who remains an Employee on or
after his or her “required beginning date” (within the meaning of United States
Internal Revenue Code section 401(a)(9)) while an Employee shall receive a
distribution of the full value of his or her Accounts as of the date any
distribution under Code section 401(a)(9) would be required.  Any Participant (other than a 5% owner of the
Corporation, an Affiliated Corporation, or a Subsidiary in the year such owner
attains age 66 and any subsequent year) who attained age 70 1⁄2 before January 1,
2005 may defer receipt of the distributions under this Section 6.2 until the
April 1 following the calendar year in which he or she retires or attains age
70 1⁄2 , whichever is later.  Each
distribution described in this Section 6.4 shall be made at the latest possible
date determined under United States Internal Revenue Code section 401(a)(9) and
Regulations thereunder and in accordance with such administrative rules and
practices as may be adopted by the Administrator.

 

6.3.                              Distributions
Required by a Qualified Domestic Relations Order.  To the extent required by a Qualified
Domestic Relations Order, the Administrator shall make distributions

 

10

 

from a Participant’s Accounts to Alternate Payees named in such order
in a manner consistent with the distribution options otherwise available under
this Plan, regardless of whether the Participant is otherwise entitled to a
distribution at such time under the Plan.

 

6.4.                              Participant’s
Consent to Distribution of Benefits and Direct Rollover Notice.  If a Participant receives a withdrawal under
Section 6.1, 6.2, 6.3, or 6.4 or an Alternative Payee receives a distribution
under Section 6.3, no distribution may be made unless:

 

(a)                                  between
the 30th and 90th day prior to the date distribution is to be made or commence,
the Administrator notifies the Participant or the Alternate Payee (whichever is
applicable) in writing that he or she may defer distribution until the April 1
after the Plan Year in which he or she attains age 70 1⁄2  and provides the Participant or the Alternate
Payee (whichever is applicable) with a written description of the material
features and (if applicable) the relative values of the forms of distribution
available under the Plan including the right to make a direct rollover under
Section 8.3(c); and

 

(b)                                 the
Participant consents to the distribution in writing after the information described
above has been provided to him or her, and files such consent with the Administrator.  Distribution to the Participant will be made
or commence as soon as practicable after such consent is received by the
Administrator.  The Participant may waive
the 30-day notice period described in (a) above.

 

ARTICLE 7. 
LOANS TO PARTICIPANTS

 

7.1.                               In
General.  Upon the request of an
Eligible Borrower on a form approved or procedure prescribed by the
Administrator and subject to the conditions of this Article, the Administrator
shall direct the Trustee to make a loan from the Trust to the Eligible
Borrower.  For purposes of this Article,
an “Eligible Borrower” is:

 

(a)                                  a
Participant who is an Eligible Employee; or

 

(b)                                 a
Participant who is a former Employee and is a “party in interest” within the meaning
of ERISA section 3(14); or

 

(c)                                  a
deceased Participant’s Beneficiary who has not yet received the entire vested portion
of the Participant’s Accounts and who is a “party in interest” as described in
(b) above.

 

7.2.                              Rules
and Procedures.  The Administrator
shall promulgate such rules and procedures, not inconsistent with the express
provisions of this Article, as he or she deems necessary to carry out the
purposes of this Article.  All such rules
and procedures shall be deemed a part of the Plan for purposes of the United
States Department of Labor’s Regulations section 2550.408b-1(d).

 

11

 

7.3.                              Maximum
Amount of Loan.  The following
limitations shall apply in determining the amount of any loan to an Eligible
Borrower hereunder:

 

(a)                                  The
amount of the loan, together with any other outstanding indebtedness under this
Plan or any other qualified retirement plan of Hospira, the Corporation, any
Affiliated Corporation or any Subsidiary, shall not exceed $50,000 reduced by
the excess of (i) the highest aggregate outstanding loan balance of the
Eligible Borrower from such Plans during the one-year period ending on the day
prior to the date on which the loans are made, over (ii) the Eligible Borrower’s
outstanding loan balance from such Plans immediately prior to the loan.

 

(b)                                 The
amount of the loan shall not exceed 50 percent of the Eligible Borrower’s Accounts,
determined as of the date of the loan.

 

(c)                                  No
loan may exceed the aggregate value of the Participant’s Employee Pre-Tax
Contribution Account, Employer Contribution Account, Rollover Contribution
Account and Transfer Contribution Account (excluding any amount contributed by
the Participant on an after-tax basis).

 

7.4.                              Minimum
Amount of Loan; Number of Loans; Frequency of Loans; Fees for Loans.  The minimum amount of any single loan under
the Plan shall be $500.  Subject to the
next sentence, a Participant may have only two loans outstanding at any time
under the Plan or under any other tax-qualified plan maintained by the
Employer, an Affiliated Corporation or a Subsidiary.  No additional loans shall be made to a
Participant who already has a loan outstanding under the Plan or under any
other tax-qualified plan maintained by the Employer, an Affiliated Corporation
or a Subsidiary until such loan is no longer outstanding; provided, however,
that another loan may be made to a Participant who already has a loan
outstanding if one of the loans is being applied toward the purchase of a
principal residence of the Eligible Borrower. 
The Administrator may charge a loan fee and such fee may be charged to
the Participant’s Accounts or taken from the loan proceeds.

 

7.5.                              Note;
Security; Interest.  Each loan shall
be evidenced by a note signed by the Eligible Borrower, a Participant Credit
Agreement, or other legally enforceable evidence of indebtedness (“Note”).  The Note shall be an asset of the Trust which
shall be allocated to the Accounts of the Eligible Borrower, and shall for
purposes of the Plan be deemed to have a value at any given time equal to the
unpaid principal balance of the Note plus the amount of any accrued but unpaid
interest.  The Note shall be secured by
that portion of the Accounts represented by the Note (not to exceed 50% of the
Eligible Borrower’s vested interest in his or her Accounts determined as of the
date of the loan).  The loan shall bear
interest at an annual percentage interest rate to be determined by the
Administrator.  In determining the
interest rate, the Administrator shall take into consideration interest rates
currently being charged by persons in the business of lending money with
respect to loans made in similar circumstances.

 

12

 

7.6.                              Repayment.  Each loan made to an Eligible Borrower who is
receiving regular payments of Compensation from an Employer shall be repayable
by payroll deduction.  Loans made to
other Eligible Borrowers (and, in all events, where payroll deduction is no
longer practicable) shall be repayable in such manner as the Administrator may
from time to time determine.  In each
case payments shall be made not less frequently than quarterly, over a
specified term (as determined by the Administrator) not to extend beyond the
earlier of five years from the date of the loan or the Participant’s anticipated
retirement date, with substantially level amortization.  Where the loan is being applied toward the
purchase of a principal residence for the Eligible Borrower, the term for
repayment shall not extend beyond the earlier of 15 years from the date of the
loan or the Participant’s anticipated retirement date.  An Eligible Borrower may prepay the full
balance of an outstanding loan at any time by delivering to the Trustee a
certified check in the amount of such remaining balance and any accrued but unpaid
interest.  No refinancing of an
outstanding loan shall be permitted.

 

7.7.                              Repayment
upon Distribution.  Subject to the
rollover provisions of Section 8.4, if, at the time benefits are to be
distributed (or to commence being distributed) to an Eligible Borrower with
respect to a severance from employment, there remains any unpaid balance of a
loan hereunder, such unpaid balance shall, to the extent consistent with United
States Department of Labor regulations, become immediately due and payable in
full.  Such unpaid balance, together with
any accrued but unpaid interest on the loan, shall be deducted from the
Eligible Borrower’s Accounts, subject to the default provisions below, before
any distribution of benefits is made. 
Except as is provided in Section 7.1 or as may be required in order to
comply (in a manner consistent with continued qualification of the Plan under
PR-Code section 1165(a)) with United States Department of Labor regulations, no
loan shall be made to an Eligible Borrower under this Article after the
Eligible Borrower incurs a severance from employment whether or not he or she
has begun to receive distribution of his or her Accounts.

 

7.8.                               Default.  In the event of a default in making any
payment of principal or interest when due under the Note evidencing any loan
under this Article, if such default continues for more than 90 days after
written notice of the default by the Trustee, the unpaid principal balance of
the Note shall immediately become due and payable in full.  Such unpaid principal, together with any
accrued but unpaid interest, shall thereupon be deducted from the Eligible
Borrower’s Accounts, subject to the further provisions of this Section.  The amount so deducted shall be treated as
distributed to the Eligible Borrower and applied by the Eligible Borrower as a
payment of the unpaid interest and principal (in that order) under the Note
evidencing such loan.  In no event shall
the Administrator apply the Eligible Borrower’s Accounts to satisfy the
Eligible Borrower’s repayment obligation, whether or not he or she is in
default, unless the amount so applied otherwise could be distributed in
accordance with the Plan.  Default
distributions under this Section 7.8 shall be subject to such further
conditions and limitations as the Administrator may establish from time to time
and apply on a uniform basis.

 

7.9.                               Nondiscrimination.  Loans shall be made available under this
Article to all Eligible Borrowers on a reasonably equivalent basis.

 

13

 

7.10.                        Source
of Loan Proceeds.  The proceeds for a
loan shall be drawn from the Eligible Borrower’s Accounts in accordance with
rules established by the Administrator.

 

7.11.                        Reinvestment
of Loan Repayments.  Loan repayments
shall be made to the Eligible Borrower’s Accounts from which the proceeds were
drawn under Section 7.10 in proportion that the loan was taken from each such
Account at the origination of the loan. 
Within each such Account, the proceeds will be invested in accordance
with the investment instructions or restrictions applicable at the time of each
loan repayment.  If the Eligible Borrower
is not currently making contributions to any such Account at the time of loan
repayment, the proceeds will be invested within such Account in accordance with
any previous instructions on file with the Trustee for the investment of
contributions in such Account, and if there are no such instructions on file,
the proceeds will be invested in the default Investment Fund(s) then in effect
under Section 5.4.  The Participant may
change his or her investment instructions in accordance with Section 5.3 for
purposes of reinvesting the loan repayments even if he or she is not then
making contributions to the Plan.

 

ARTICLE 8. 
BENEFITS UPON RETIREMENT, DEATH OR

SEVERANCE FROM EMPLOYMENT

 

8.1.                              Retirement.  Following a Participant’s retirement from
Hospira, the Corporation, all Affiliated Corporations and all Subsidiaries on
or after attaining age 65 years (‘Normal Retirement Age’), the Participant will
receive the entire value of his or her Accounts in a single sum payment unless
he or she elects a direct rollover under Section 8.3(c).  To the extent that the Participant’s Accounts
hold Hospira Stock, he or she may receive the distribution in whole shares of
Hospira Stock and cash for any fractional share.

 

8.1A.                    Vesting,
Severance from Employment for Reasons Other Than Death or Retirement.   Following a Participant’s severance from
employment with Hospira, the Corporation, all Affiliated Corporations and all
Subsidiaries for any reason other than death or retirement at or after Normal
Retirement Age, the Participant will receive the value of his or her vested
Accounts (determined as provided below) in a single sum payment unless he or
she elects a direct rollover under Section 8.3(c).  To the extent that the participant’s Accounts
hold Hospira Stock, he or she may receive the distribution in whole shares of
Hospira Stock and cash for any fractional share.

 

A Participant will always be 100% vested in
his or her Employer Contribution Account, Employee Pre-Tax Contribution
Account, Employee After-Tax Contribution Account, Rollover Contribution Account
(if applicable) and Transfer Contribution Account (if applicable).

 

8.2.                              Time
of Distributions.  Distribution with
respect to a Participant’s severance from employment (other than on account of
death or retirement) normally will be made or commence as soon as practicable
after such severance.  Except as provided
in the last sentence of this Section 8.2, in the case of a Participant whose
Accounts are valued in excess of $5,000 (as determined under paragraph 8.3(b))
and who has not yet attained age 65, however, distribution

 

14

 

may not be made under this Section unless:

 

(a)                                  between
the 30th and 90th day prior to the date distribution is to be made or commence,
the Administrator notifies the Participant in writing that he or she may defer
distribution until the April 1 after the Plan Year in which he or she attains
age 70 1⁄2 and provides the Participant with a written description of the
material features and (if applicable) the relative values of the forms of
distribution available under the Plan; and

 

(b)                                 the
Participant consents to the distribution in writing after the information
described above has been provided to him or her, and files such consent with
the Administrator.  Distribution to the
Participant will be made or commence as soon as practicable after such consent
is received by the Administrator.  The
Participant may waive the 30-day notice period described in (a) above.

 

The value of a
Participant’s Accounts will be considered to be in excess of $5,000 if the
value exceeds such amount at the time of the distribution in question or
exceeded such amount at the time of any prior distribution to the Participant
under the Plan.  The Participant may
elect to defer the distribution of his or her Accounts until any subsequent
date, but not later than the April 1 after the Plan Year in which he or she
attains age 70 1/2.

 

Participants
will be deemed eligible for retirement on or after attaining age 65, and may
elect to receive the distribution in the calendar year in which he or she
retires.  Alternatively, the Participant
may elect to defer the distribution of his or her Accounts until any date, but
no later than the April 1 after the Plan Year in which he or she attains age 70
1/2.

 

8.3.                              Amount
and Manner of Distribution.  A
Participant who is eligible for a distribution from the Plan under this Article
8, may, subject to subsection (b), elect to receive his or her benefit in one
or more of the following forms:

 

(a)                                  Single
Sum Payment.  In the case of a
distribution to be made in a single sum, the amount of such distribution shall
be determined as of the Valuation Date which immediately precedes or coincides
with the date distribution is to be made.

 

(b)                                 Cash
out of Small Benefits.  If the value
of a Participant’s Accounts is $5,000 or less, distribution shall be made to
the Participant in a single sum payment as soon as practicable following the
Participant’s severance from employment. 
The amount of such distribution shall be determined as of the Valuation
Date immediately preceding or coinciding with the date the distribution is to
be made.  The Participant’s Accounts will
not be considered to be valued at $5,000 or less, if the value of such Accounts
at the time in question or at the time of any prior distribution to the
Participant under the Plan exceeds such amount.

 

(c)                                  Direct
rollover of single sum payments.  If
a Participant or an Alternate Payee of the Participant is entitled to a single
sum payment under Section 8.3(a), he or she

 

15

 

may
elect to have such payment transferred directly to another qualified plan, or
an individual retirement account. The Administrator shall not be obligated to
honor any transfer instruction under this Section that specifies more than one
transferee.

 

8.4.          Distributions
After a Participant’s Death.

 

(a)           Death
Prior to Severance from Employment. 
If a Participant dies prior to his or her severance from employment with
Hospira, the Corporation, all Affiliated Corporations and all Subsidiaries, the
Participant’s Beneficiary will receive the Participant’s Accounts in a single
sum payment as soon as practicable after the end of the Plan Year in which the
Participant’s death occurs; provided, however, the Beneficiary may elect to
receive the distribution in the Plan Year in which the Participant’s death
occurred.  Distribution must be made to a
Beneficiary who is not the Participant’s spouse no later than December 31 of
the calendar year following the year of the Participant’s death.  If the Beneficiary is the Participant’s
spouse, the Beneficiary may elect to defer receipt of the distribution of the
Participant’s Accounts until any date, but no later than the December 31 of the
Plan Year in which the Participant would have attained age 701⁄2.

 

(b)           Death
After Severance from Employment.  If
a Participant dies after severance from employment but before the complete
distribution of his or her Accounts has been made, the Participant’s
Beneficiary will receive the value of the Participant’s Accounts.  Distribution will be made in a single sum
payment as soon as practicable after the Participant’s death (but no later than
December 31 of the calendar year following the year of the Participant’s
death); provided, however, that if distribution to the Participant had begun
following his or her severance from employment in a form elected by the
Participant, distribution will continue to be made to the Beneficiary at least
as rapidly in such form unless the Beneficiary elects to receive distribution
in cash in a single sum as soon as practicable following the Participant’s
death.  Any such election must be made on
a form approved by the Administrator and must be received by the Administrator
within such period following the Participant’s death as the Administrator may
prescribe.  To the extent the Participant’s
Accounts held Hospira Stock at the time of the proposed distribution, the
Beneficiary may receive the distribution in whole shares of Hospira Stock and
cash for any fractional share.

 

(c)           Cash
out of Small Benefits.  If a Participant
dies and the value of a Participant’s Accounts is $5,000 or less, distribution
shall be made to the Beneficiary in a single sum payment as soon as practicable
following the Participant’s death (but in no event later than the 60th day
following the close of the Plan Year in which such death occurs) or such later
date on which the amount of the distribution can be determined by the
Administrator.  The amount of such
distribution shall be determined as of the Valuation Date immediately preceding
or coinciding with the date the distribution is to be made. The Participant’s
Accounts will not be

 

16

 

considered to be valued at $5,000 or less, if the value of such
Accounts at the time in question or at the time of any prior distribution to
the Participant under the Plan exceeds such amount.

 

(d)           Direct
rollover of single sum payments.  If a Beneficiary who is the spouse of a
deceased Participant is entitled to a single sum payment under
Section 8.3(a), he or she may elect to have such payment transferred
directly to an individual
retirement account. The Administrator shall not be obligated to honor any
transfer instruction under this Section that specifies more than one
transferee.

 

Any distribution to a Beneficiary under this Section in the form of a
single sum shall be determined as of the Valuation Date immediately preceding
or coinciding with the date distribution is to be made.

 

8.5.          Designation
of Beneficiary.  Subject to the
provisions of this Section, a Participant’s Beneficiary shall be the person or
persons (or entity or entities), if any, designated by the Participant from
time to time on a form or in a manner approved by the Administrator.  In the absence of an effective Beneficiary
designation, a Participant’s Beneficiary shall be his or her surviving spouse,
if any, or if none, the Participant’s issue, or if none, the Participant’s
estate.  A non-spouse Beneficiary
designation by a Participant who is married at the time of his or her death
shall not be effective unless

 

(a)           prior
to the Participant’s death, the Participant’s surviving spouse consented to and
acknowledged the effect of the Participant’s designation of a specific non-spouse
Beneficiary (including any class of Beneficiaries or any contingent
Beneficiaries) in a written form approved by the Administrator and witnessed by
a notary public or Plan representative; or

 

(b)           it
is established by the Participant prior to his or her death (by furnishing the Administrator
with a sworn statement), that the required consent may not be obtained because
there is no spouse, because the spouse cannot be located, or because of such
other circumstances as the Secretary of the Treasury may prescribe; or

 

(c)           the
spouse had earlier executed a general consent form permitting the Participant:

 

(i)            to
select from among certain specified persons without any requirement of further
consent by the spouse (and the Participant designates a Beneficiary from the
specified list), or

 

(ii)           to
change his or her Beneficiary without any requirement of further consent by the
spouse.  Any such general consent shall
be on a form approved by the Administrator, and must acknowledge that the
spouse has the right to limit consent to a specific Beneficiary and that the
spouse voluntarily elects to relinquish such right.

 

17

 

Any consent and acknowledgment by a spouse, or the establishment that
the consent and acknowledgment cannot be obtained, shall be effective only with
respect to such spouse, but shall be irrevocable once made.

 

ARTICLE 9. 
ADMINISTRATION

 

9.1.          Board
of Review.  The Board of Review,
except where such are specifically reserved to the Board of Directors, shall
have all powers, duties and obligations (whether imposed, granted or reserved
and whether explicit or implicit) which are lodged in the Corporation under the
Trust, or the Plan, or any supplement to the Plan or by law or
regulations.  It shall perform all
functions specifically assigned to it under the Plan and under the Trust
created pursuant to the Plan.  The Board
of Review at its sole discretion may delegate or redelegate any responsibility
which it is able to exercise, and may revoke such delegations at its sole
discretion.

 

9.2.          Administrator.  The Administrator will be the “administrator”
of the Plan as defined in Section 3(16)(A) of ERISA and a “named fiduciary” for
purposes of Section 402(a)(1) of ERISA with authority to control and manage the
operation and administration of the Plan, and will be responsible for complying
with all of the reporting and disclosure requirements of Part 1 of Subtitle B
of Title I of ERISA.  The Administrator
will not, however, have any authority over the investment of assets of the
Trust or the selection of Investment Funds.

 

9.3.          Powers
of Administrator.  The Administrator
will have full power to administer the Plan in all of its details and, other
than the selection of Investment Funds, subject, however, to the requirements
of ERISA.  Benefits under the Plan shall
be paid only if the Administrator decides, in his or her discretion, that the
applicant is entitled to them.  For this
purpose the Administrator’s power will include, but will not be limited to, the
following discretionary authority:

 

(a)           to
make and enforce such rules and regulations as the Administrator deems necessary
or proper for the efficient administration of the Plan or as required to comply
with applicable law;

 

(b)           to
interpret and enforce the Plan in accordance with the terms of the Plan  (including the rules and regulations adopted
under subsection (a)) and to make factual determinations thereunder, including
the discretionary power to determine the rights or eligibility of Employees or
Participants and any other persons, and the amount, if any, of their benefits
under the Plan, and to construe or interpret disputed, ambiguous, or uncertain
terms;

 

(c)           to
compute the amounts to be distributed under the Plan, to determine the person or
persons to whom such amounts are to be distributed, and to make equitable adjustments
for mistakes or errors;

 

18

 

(d)           to
authorize the payment of distributions, to compromise and settle any disputed claim,
and to direct the Trustee to make such payments from the Trust;

 

(e)           to
keep such records and submit such filings, elections, applications, returns or other
documents or forms as may be required under the PR-Code, ERISA and applicable
regulations, or under other federal, state or local law and regulations;

 

(f)            to
allocate and delegate the ministerial duties and responsibilities of the Administrator
and to appoint such agents, counsel, accountants, consultants, actuaries,
insurance companies and other persons as may be required or desired to assist
in administering the Plan;

 

(g)           by
written instrument, to allocate and delegate his or her fiduciary
responsibilities in accordance with ERISA section 405; and

 

(h)           to
furnish each Employer with such information and data as may be required by it for
tax and other purposes in connection with the Plan.

 

Actions taken in good faith by the Administrator shall be binding and
conclusive on all parties.

 

9.4.          Nondiscriminatory
Exercise of Authority.  Whenever, in
the administration of the Plan, any discretionary action by the Administrator
is required, the Administrator shall exercise his or her authority in a
nondiscriminatory manner so that all persons similarly situated will receive
substantially the same treatment.

 

9.5.          Reliance on Tables,
etc.  In administering the Plan, the
Administrator will be entitled, to the extent permitted by law, to rely
conclusively on all tables, valuations, certificates, opinions and reports
which are furnished by any accountant, trustee, counsel, actuary, insurance
company or other expert who is employed or engaged by the Administrator or by
the Corporation on the Administrator’s behalf.

 

9.6.          Claims and Review
Procedures.  The Administrator shall
adopt procedures for the filing and review of claims in accordance with ERISA
section 503.

 

9.7.          Indemnification.  The Corporation agrees to indemnify and
defend to the fullest extent of the law any of its employees or former
employees who serves or has served as Administrator or as a member of the Board
of Review or who has been appointed to assist the Administrator or the Board of
Review in administering the Plan or to whom the Administrator or the Board of
Review has delegated any duties or responsibilities against any liabilities,
damages, costs and expenses (including attorneys’ fees and amounts paid in
settlement of any claims approved by the Corporation) occasioned by any act or
omission to act in connection with the Plan, if such act or omission to act is
in good faith.

 

19

 

9.8.          Expenses
and Compensation.  No compensation
shall be paid to the Administrator or any assistant who is a full-time employee
of the Corporation, an Affiliated Corporation or a Subsidiary, but the
Administrator and his or her assistants shall be reimbursed for all expenses
reasonably incurred in the administration of the Plan.  Such expenses shall be charged to the Trust
and paid from Employer Contributions prior to allocation under Section 3.5,
unless the Employers pay such expenses directly.  To the extent that any record keeping
expense, withdrawal charge, loan fee or check fee is specifically attributable
to a Participant’s Accounts, such expenses may be charged to the Accounts of
such Participant.

 

9.9.          Notices;
Participant Information.  Any notice
required to be given to or any document required to be filed with the
Administrator, the Trustee or the Committee will be given or filed properly if
mailed by registered mail, postage prepaid, or delivered, to the Administrator,
the Trustee or the Committee, as the case may be, in care of the Corporation.  Participants (and their Beneficiaries) must
furnish to the Administrator such evidence, data, or information as they
consider necessary or desirable for the purpose of administering the Plan, and
the provisions of the Plan for each person are upon the condition that he or
she will furnish full, true and complete evidence, data and information
requested by the Administrator.

 

ARTICLE 10. 
AMENDMENT AND TERMINATION

 

10.1.        Amendment.  The Corporation reserves the power (and may
and hereby does specifically delegate a portion of the power to the Board of
Review) at any time or times to amend the provisions of the Plan and Trust to
any extent and in any manner that it may deem advisable.  The Corporation specifically reserves the
right to amend Article 5 with respect to the investment of Participant
Accounts.  However, the Corporation will
not have the power:

 

(a)           to
amend the Plan or Trust in such manner as would cause or permit any part of the
assets of the Trust to be diverted to purposes other than for the exclusive
benefit of each Participant and his or her Beneficiary (except as permitted by
Section 13.3 with respect to Qualified Domestic Relations Orders, or by Section
3.9 with respect
to the return of contributions upon nondeductibility or mistake of fact), unless such
amendment is required or permitted by law, governmental regulation or ruling;
or

 

(b)           to
amend the Plan or Trust retroactively in such a manner as would reduce the
accrued benefit determined
under ERISA section 204(g)) of any Participant, except as
otherwise permitted or required by law; or

 

(c)           to
change the duties or liabilities of the Trustee, the Committee or the
Administrator without their consent.

 

All major amendments and all decisions or amendments which are
reasonably expected to have the effect of suspending or terminating Employer
contributions, of suspending or terminating payment of benefits to Participants
or Beneficiaries, or of terminating the Plan shall

 

20

 

be made by the Board of
Directors.  All other amendments shall be
made by the Board of Review.  The Board
of Directors may delegate additional authority to the Board of Review.

 

For the purposes of the foregoing, a “major amendment” is defined to be
any amendment which will increase the average cost of the Plan to the Employers
(whether through the increase of Employer contributions or otherwise) by an
amount in excess of $5,000,000 per annum over the three full Plan Years next
succeeding the effective date of the amendment. 
Determination of whether an amendment is a major amendment or a decision
or amendment which is reasonably “to have the effect of suspending or
terminating Employer contributions, of suspending or terminating payment of
benefits, or of terminating the Plan” shall be made by the Board of Review
after obtaining such advice from such legal or tax counsel and the advice of
such actuarial consultants as the Board of Review may deem appropriate.  The secretary of the Board of Review shall
maintain detailed minutes reflecting the advice (if any) so received by the
Board of Review and the decisions reached by it regarding each amendment
adopted by it.

 

Notwithstanding anything contained in this Section 10.1, any material
revision (within the meaning of the New York Stock Exchange rules) to the Plan
or Trust shall be subject to the approval of Hospira’s compensation committee
or a majority of Hospira’s independent directors (within the meaning of the New
York Stock Exchange rules).

 

10.2.        Termination.  The Corporation has established the Plan and
authorized the establishment of the Trust with the bona fide intention and
expectation that contributions will be continued indefinitely, but the
Corporation will have no obligation or liability whatsoever to maintain the Plan
for any given length of time and may discontinue contributions under the Plan
or terminate the Plan at any time by written notice delivered to the Trustee
and the Committee without liability whatsoever for any such discontinuance or
termination.  Upon termination or partial
termination of the Plan, or upon complete discontinuance of contributions under
the Plan, the rights of all affected employees to benefits accrued to the date
of such termination, partial termination, or discontinuance, to the extent funded
as of such date, or the amounts credited to the employees’ accounts, shall be
nonforfeitable.

 

10.3.        Distributions
upon Termination of the Plan.  Upon
termination of the Plan by the Corporation, the Trustee will distribute to each
Participant (or other person entitled to distribution) the value of the
Participant’s Accounts determined as of the Valuation Date coinciding with or
next following the date of the Plan’s termination.  However, if a successor Plan is established,
Accounts shall be distributed to Participants and their Beneficiaries only in
accordance with Article 6 relating to in-service withdrawals and upon the
actual severance
from employment
by the Participant.

 

10.4.        Merger
or Consolidation of Plan; Transfer of Plan Assets.  In case of any merger or consolidation of the
Plan with, or transfer of assets and liabilities of the Plan to, any other
Plan, provision must be made so that each Participant would, if the Plan then
terminated, receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he or she would have
been entitled to receive immediately before the merger, consolidation or
transfer if the Plan had then terminated.

 

21

 

ARTICLE 11. 
LIMITS ON CONTRIBUTIONS

 

11.1.        PR-Code
section 1023(n) Limits.    The
sum of the contributions made by the Employers under the Plan for any Plan Year
shall not exceed the maximum amount deductible under the applicable provisions
of the PR-Code (all such contributions being hereby conditioned on their
deductibility under PR-Code section 1023(n)).

 

11.2.        PR-Code
section 1165(e)(7)(A) Limits.

 

(a)           In
general.    The maximum amount of Employee Pre-Tax
Contributions made on behalf of any Participant for any calendar year, when
added to the amount of elective deferrals under all other plans, contracts and
arrangements of Hospira, the Corporation, all Affiliated Corporations and all
Subsidiaries with respect to the Participant for the calendar year, shall in no
event exceed the lesser of 10% of the Participants Compensation or $ 8,000 or
any other applicable limit in effect for the calendar year under PR-Code
section 1165(e)(7)(A).

 

(b)           Distribution of excess deferrals.    In the event that an
amount is included in a Participant’s gross income for a taxable year as a
result of an excess deferral under PR-Code section 1165(e)(7)(B), and the
Participant notifies the Administrator on or before the March 1 following
the taxable year that all or a specified part of a Pre-Tax Contribution made or
to be made for his or her benefit represents an excess deferral, the
Administrator shall make every reasonable effort to cause such excess deferral,
adjusted for allocable income or loss, to be distributed to the Participant no
later than the April 15 following the calendar year in which such excess
deferral was made. No distribution of an excess deferral shall be made during
the taxable year in which the excess deferral was made unless the correcting
distribution is made after the date on which the Plan received the excess
deferral and both the Participant and the Plan designates the distribution as a
distribution of an excess deferral. The amount of any excess deferrals that may
be distributed to a Participant for a taxable year shall be reduced by the
amount of Employee Pre-Tax
Contributions that were excess contributions and were previously distributed to
the Participant for the Plan Year beginning with or within such taxable year.

 

11.3.        PR-Code
section 1165(e)(3) Limits.

 

(a)           Actual deferral ratios.    For each Plan Year,
the Administrator will determine the “actual deferral ratio” for each
Participant who is eligible for Employee Pre-Tax Contributions. The actual deferral ratio shall be the ratio,
calculated to the nearest one-hundredth of one percent, of the Employee Pre-Tax Contributions made on behalf of the
Participant for the Plan Year to the Participant’s Compensation for the
applicable period. For purposes of determining a Participant’s actual deferral
ratio,

 

22

 

(i)            Employee Pre-Tax Contributions will be taken into
account only to the extent permitted by the PR-Code and the Regulations;

 

(ii)           The applicable period for each Participant
for a given Plan Year shall be that portion of the 12-month period ending on
the last day of such Plan Year during which the individual was a Participant.

 

(iii)          Employer Contributions may be treated as Employee Pre-Tax Contributions to the extent
permitted by the PR-Code and the Regulations.

 

(b)           Actual deferral percentages.    The actual deferral
ratios for all Highly Compensated Employees who are eligible for Employee Pre-Tax Contributions for a Plan Year shall
be averaged to determine the actual deferral percentage for the highly compensated
group for the Plan Year, and the actual deferral ratios for all Employees who
are not Highly Compensated Employees but who are eligible for Employee Pre-Tax Contributions for the Plan Year
shall be averaged to determine the actual deferral percentage for the
non-highly compensated group for the Plan Year. The actual deferral percentages
for any Plan Year must satisfy at least one of the following tests, which shall
be interpreted and applied by the Administrator in a manner consistent with the
PR-Code and the Regulations:

 

(i)            The actual deferral percentage for the highly
compensated group does not exceed 125 percent of the actual deferral
percentage for the non-highly compensated group; or

 

(ii)           The excess of the actual deferral percentage
for the highly compensated group over the actual deferral percentage for the
non-highly compensated group does not exceed two percentage points, and the
actual deferral percentage for the highly compensated group does not exceed
twice the actual deferral percentage of the non-highly compensated group.

 

(c)           Adjustments by Administrator.    If, prior to the
time all Pre-Tax Contributions for a Plan Year have been contributed to the
Trust, the Administrator determines that Employee Pre-Tax Contributions are being made at a rate which will cause the
PR-Code section 1165(e)(3) limits to be exceeded for the Plan Year, the
Administrator may, in its sole discretion, limit the amount of Employee Pre-Tax Contributions to be made with
respect to one or more Highly Compensated Employees for the balance of the Plan
Year by suspending or reducing Pre-Tax Contribution elections to the extent the
Administrator deems appropriate. Any Employee Pre-Tax Contributions which would otherwise be made to the Trust shall
instead be paid in cash to the affected Participant.

 

(d)           Excess contributions.    If the PR-Code
section 1165(e)(3) limits have been exceeded for a Plan Year after all
contributions for the Plan Year have been made, the Administrator shall
determine the amount of excess contributions with respect

 

23

 

to
Participants who are Highly Compensated Employees. To do so, the Administrator
shall reduce the actual deferral ratio of the Highly Compensated Employee with
the highest actual deferral ratio to the extent necessary to (i) enable
the Plan to satisfy the 1165(e)(3) limits or (ii) cause such Employee’s
actual deferral ratio to equal the actual deferral ratio of the Highly
Compensated Employee with the next highest actual deferral ratio, and shall
repeat this process until the Plan no longer exceeds the PR-Code
section 1165(e)(3) limits. The amount of excess contributions for each
Highly Compensated Employee for the Plan Year shall equal the amount of Employee Pre-Tax Contributions (plus Employer
Contributions which are treated as Employee Pre-Tax Contributions for purposes of the PR-Code
section 1165(e)(3) limits) actually made to the Trust for the Plan Year,
less the product of the (i) the Highly Compensated Employee’s reduced
actual deferral ratio as determined under the preceding sentence, and
(ii) his or her Compensation. Any excess contributions will be distributed
as provided below. In no event will excess contributions remain unallocated or
be allocated to a suspense account for allocation in a future Plan Year.

 

(e)           Recharacterization of excess contributions.    At the option of the
Administrator, a Participant’s excess contributions may be recharacterized as Employee After-Tax Contributions, provided the
Administrator complies with the reporting requirements of the PR-Code for such
contributions and such recharacterization occurs no later than the
March 15 following the Plan Year for which the contributions were made.

 

(f)            Distribution of excess contributions.    A Participant’s excess
contributions, adjusted for income or loss, will be designated by the Employer
as a distribution of excess contributions and distributed to the Participant.
Distribution of excess contributions will be made after the close of the Plan
Year to which the contributions relate, but within 12 months after the
close of such Plan Year.

 

(g)           Special rules.    For purposes of
distributing excess contributions,

 

(i)            the amount of excess contributions that may
be distributed with respect to a Highly Compensated Employee for a Plan Year
shall be reduced by the amount of excess deferrals previously distributed to
the Highly Compensated Employee for his or her taxable year ending with or
within such Plan Year.

 

(ii)           Any distribution of less than the entire
amount of excess contributions with respect to a Highly Compensated Employee
shall be treated as a pro rata distribution of excess contributions and
allocable income or loss.

 

(h)           Record keeping requirement.    The Administrator,
on behalf of the Employer, shall maintain such records as are necessary to
demonstrate compliance with the PR-Code section 1165(e)(3) limits
including the extent to which qualified

 

24

 

matching
contributions and Qualified Nonelective Employer Contributions are taken into
account in determining the actual deferral ratios.

 

ARTICLE 12. 
ROLLOVER AND TRANSFER CONTRIBUTIONS

 

12.1         Contribution
of Amount Distributed from Another Qualified Plan.    An
Eligible Employee who was formerly a participant in a plan described in
section 1165(a) of the PR-Code (the “distributing plan”) and who has
received a total distribution (within the meaning of section 1165(b) of
the PR-Code) from the distributing plan (the “distribution”) may, within
60 days of receipt of the distribution from the distributing plan,
contribute to the Trust, as a “Rollover Contribution”, such distribution if it:

 

(a)           does not exceed the fair market value of the
distribution, and

 

(b)           includes no property other than
(i) money received in the distribution, and (ii) money attributable
to other property received in the distribution which is sold and the proceeds
of which are transferred.

 

12.2         Monitoring
of Rollovers

 

(a)           The Administrator shall establish such
procedures and require such information from employees seeking to make Rollover
Contributions as it deems necessary to insure that such Rollover Contributions
satisfy the requirements for tax-free rollovers established by conditions of
this Article and the PR-Code and the Regulations.

 

(b)           No amount may be contributed or transferred
under this Article until approved by the Administrator.

 

12.3         Transfer
Contribution.    Subject
to such restrictions and procedures as the Administrator may prescribe (which,
without limitation, may include restrictions as to the type of plan from which
transfers will be permitted), amounts held for the benefit of an Eligible
Employee under a plan that is qualified under section 1165(a) of the
PR-Code and exempt from tax under section 1165(a) of the PR-Code (the “distributing
plan”) may be transferred (the “Transfer Contribution”) directly by the
distributing plan to this Plan. A Transfer Contribution Account shall be
established for each Eligible Employee for whom a Transfer Contribution is
made. To the extent determined by the Administrator to be required under
section 204(g) of ERISA, an Eligible Employee for whom a Transfer
Contribution Account is maintained shall be entitled to distributions and
withdrawals from such Account under provisions not less restrictive than
applied under the distributing plan. To the extent the distributing plan was
subject to the requirements of section 205 of ERISA, such requirements
shall continue to apply to the transferred amount.

 

25

 

12.4         Treatment of Transferred Amount under the
Plan.    An
individual who makes a Rollover Contribution to the Trust or has a Transfer
Contribution made to the Trust on his or her behalf shall not be eligible to
make or receive any other contributions under the Plan until he or she has
actually become a Participant and satisfied the eligibility requirements
otherwise applicable to such contributions. However, for all other purposes
under the Plan (including without limitation, investment directions and
distributions), an individual who makes a Rollover Contribution or for whom a
Transfer Contribution has been made shall be treated as a Participant.

 

ARTICLE 13. 
MISCELLANEOUS

 

13.1.        Exclusive
Benefit Rule.  No part of the corpus
or income of the Trust forming part of the Plan will be used for or diverted to
purposes other than for the exclusive benefit of each Participant and
Beneficiary, except as otherwise provided under the provisions of the Plan
relating to Qualified Domestic Relations Orders, and the return of
contributions upon nondeductibility, mistake of fact, or the failure of the
Plan to qualify initially.

 

13.2.        Limitation
of Rights.  Neither the establishment
of the Plan or the Trust, nor any amendment thereof, nor the creation of any
fund or account, nor the payment of any benefits, will be construed as giving
to any Participant or other person any legal or equitable right against
Hospira, the Corporation, any Affiliated Corporation, any Subsidiary, the
Administrator, the Trustee, or the Committee except as provided herein, and in
no event will the terms of employment or service of any Participant be modified
or in any way be affected hereby.  It is
a condition of the Plan, and each Participant expressly agrees by his or her
participation herein, that each Participant will look solely to the assets held
in the Trust for the payment of any benefit to which he or she is entitled
under the Plan.

 

13.3.        Nonalienability
of Benefits.  The benefits provided
hereunder will not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to cause such
benefits to be so subjected will not be recognized, except to the extent as may
be required by law; provided, however, that if the Administrator receives any
Qualified Domestic Relations Order that requires the payment of benefits
hereunder or the segregation of any Account, such benefits shall be paid, and
such Account segregated, in accordance with the applicable requirements of such
Qualified Domestic Relations Order.

 

13.4.        Changes in Vesting
Schedule.  A Plan amendment which
changes a vesting schedule under the Plan shall apply with respect to any
Participant who has completed three Years of Service prior to the expiration of
the period described below only to the extent that the Participant’s vested
percentage in his or her Accounts determined under the amendment is greater
than the nonforfeitable percentage of his or her Accounts determined without
regard to the amendment.  The period
referred to in the preceding sentence will begin on the date the amendment of
the vesting schedule is adopted and will end 60 days after the latest of the
following dates:

 

26

 

(a)           the date on which such
amendment is adopted;

 

(b)           the date on which such
amendment becomes effective; and

 

(c)           the date on which the
Participant is issued written notice of such amendment by the Administrator.

 

13.5.        Governing
Law.  The Plan and Trust will be
construed, administered and enforced according to the laws of the Commonwealth
of Puerto Rico to the extent such laws are not preempted by ERISA.

 

ARTICLE 14. 
DEFINITIONS

 

Wherever used in the Plan, the singular includes the plural, and the
following terms have the following meanings, unless a different meaning is
clearly required by the context:

 

14.1.        “Accounts”
means, for any Participant, his or her Employee Pre-Tax Contribution Account,
Employee After-Tax Contribution Account, Employer Contribution Account,
Rollover Contribution Account (if applicable), Transfer Contribution Account
(if applicable) and any other accounts or subaccounts established on his or her
behalf under the Plan by the Administrator or the Trustee.

 

14.2.        “Administrator”
means the Corporate Vice President, Human Resources of Hospira, unless the
Board of Review appoints another entity or person(s) to administer the Plan.

 

14.3.        “Affiliated Corporation”
means (a) any corporation which is a member of a
controlled group of corporations (as defined in ERISA section 210(c))
which includes the Corporation; and (b) any trade or business (whether or not incorporated) which is under
common control (as defined in ERISA section 210(d)) with the Corporation.

 

14.4.        “Alternate
Payee” means an alternate payee (as defined in section 206(d)(3)(k) of ERISA)
who has rights to one or more Accounts under the Plan.

 

14.5.        “Beneficiary”
means any person entitled to receive benefits under the Plan upon the death of
a Participant.

 

14.6.        “Board
of Directors” means the Board of Directors of the Corporation.

 

14.7.        “Board
of Review” means the Employee Benefit Board of Review appointed by the Board of
Directors and having the duties and powers described in Article 9.

 

14.8.        “Break
Year” means, with respect to any Employee, a 12 consecutive month period of severance.

 

27

 

14.9.        “Committee”
means the persons appointed by the Board of Directors to serve as members of
the Committee under the Trust.

 

14.10.      “Compensation”  means,
for purposes of determining the amount of Employee Pre-Tax, Employee After-Tax,
and Employer Contributions to be made on behalf of a Participant, (i) the
Participant’s total compensation (prior to reduction for contributions under
PR-Code section 1165(e)) for personal services actually rendered in the
course of employment with participating Employers, including sales bonuses,
sales incentives and sales commissions, but excluding (ii) any
reimbursements, expense allowances, fringe benefits (cash or noncash), moving
expenses, or welfare benefits (whether or not those amounts are includible in
gross income), prizes, or any Christmas, anniversary, or discretionary bonuses,
or payments under any non-qualified profit sharing, bonus or similar plan, the
Hospira Incentive Plan, or plans maintained by any participating Employer which
are determined by the Administrator to be similar to such plans, or any
suggestion or other special awards. Compensation for any Participant for any
Plan Year shall not exceed $210,000 or such amount specified in Section 401(a)(17)
of the United States Internal Revenue Code of 1986, as amended.

 

14.11.      “Contribution
Agreement” means, for any Participant, the agreement by which the Participant,
or the Administrator under Section 3.2, elects to defer a certain portion of
his or her regular pay and the Corporation agrees to contribute the deferred
amount to the Participant’s Pre-Tax or After-Tax Contribution Account,
whichever is applicable.  Any such Agreement shall be in such form and
shall be made in such manner as the Administrator may determine.

 

14.12.      “Corporation”
means Hospira Puerto Rico, LLC, a Delaware limited liability company, and any
successor to all or a major portion of its assets or business which assumes the
obligations of the Corporation.

 

14.13.      “Division”
means any functionally or geographically separate operating unit of the
Corporation which is designated by the Board of Review as a “division” for the
purposes of the Plan.

 

14.14.      “Effective
Date” means August 1, 2005.

 

14.15.      “Eligible Employee” means
any Employee who is employed by an Employer provided that there shall be
excluded (i) any individual providing services to an Employer under a
contract, arrangement or understanding with either the individual directly or
with an agency or leasing organization that treats the individual as either an
independent contractor or an employee of such agency or leasing organization,
even if such individual is subsequently determined (by an Employer, the United
States Internal Revenue Service, the Puerto Rico Treasury Department, any other
governmental agency, judicial action, or otherwise) to have been a common law
employee of an Employer rather than an independent contractor or employee of
such agency or leasing organization in that Plan Year, (ii) an Employee with
respect to whom retirement benefits have been the subject of good faith
collective bargaining unless the Employee is a member of a group of employees
to whom the Plan has been extended by a collective bargaining agreement between
an Employer and its collective bargaining representative, (iii) any
Employee who does not

 

28

 

perform
services primarily in Puerto Rico within the meaning of ERISA
section 1022(i)(1) and the applicable regulations thereunder, or
(v) any Employee considered a United States expatriate on the records of
Hospira, the Corporation or any Affiliated Corporation. For purposes of making
Supplemental Contributions, a seasonal employee (namely an Employee who is
hired to work for less than one year) shall become an Eligible Employee once he
or she has completed one Year of Credited Service. For all purposes of the
Plan, an individual shall be an “Eligible Employee” for any Plan Year only if
during that Plan Year an Employer treats that individual as its employee for
purposes of employment taxes and wage withholding for Puerto Rico and/or
Federal income taxes, even if such individual is subsequently determined (by an
Employer, the United States Internal Revenue Service, the Puerto Rico Treasury
Department, any other governmental agency, judicial action, or otherwise) to
have been a common law employee of an Employer in that Plan Year.

 

14.16.      “Employee”
means any individual employed by the Corporation, an Affiliated Corporation or
a Subsidiary.

 

14.17.      “Employee After-Tax
Contribution” means any contribution made pursuant to Section 3.3  on an after-tax basis.

 

14.18.      “Employee After-Tax
Contribution Account” means, for any Participant, the account established by
the Administrator or Trustee to which Employee After-Tax Contributions made for
the Participant’s benefit are credited.

 

14.19.      “Employee Pre-Tax
Contribution” means any contribution made pursuant to Section 3.2  on a pre-tax basis.

 

14.20.      “Employee Pre-Tax
Contribution Account” means, for any Participant, the account established by
the Administrator or Trustee to which Employee Pre-Tax Contributions made for
the Participant’s benefit are credited.

 

14.21.      “Employer”
means the Corporation, any Affiliated Corporation or any Subsidiary with operations
in Puerto Rico that has adopted the Plan as provided in Section 2.4.

 

14.22.      “Employer
Contributions” means the contributions made by the Employers under Section 3.5
for the benefit of the Participants under the Plan on account of Employee Pre-Tax Contributions
or Employee After-Tax Contributions.

 

14.23.      “Employer
Contribution Account” means, for any Participant, the account established by
the Administrator or Trustee to which Employer Contributions made under Section
3.5 for the Participant’s benefit are credited.

 

14.24.      “Entry
Date” means the first day of each payroll period.

 

14.25.      “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor statute or statutes of similar import.

 

29

 

14.26.      “Highly
Compensated Employee” means any
Eligible Employee who has Compensation for a Plan Year that is greater than the
Compensation for such Plan Year of two-thirds (2/3)
of all other Eligible Employees employed by any Employer.

 

14.27.      “Hospira”
means Hospira, Inc.

 

14.28.      “Hospira
Stock” means common stock of Hospira, Inc.

 

14.29.      “Hour
of Service” means, with respect to any Employee, each hour for which the
Employee is paid or entitled to payment for the performance of duties for an
Employer each such hour to be credited to the Employee for the computation
period in which the duties were performed.

 

14.30.      “Investment
Fund” means any investment fund described in Article 5 or as subsequently
selected by the Committee as an investment option under the Plan.

 

14.31.      “Participant”
means each Eligible Employee who participates in the Plan pursuant to its
provisions or other individual for whom an Account is maintained.

 

14.32.      “Period of
Credited Service” means with respect to any Employee the aggregate of all time
periods beginning on the date the Employee first completes an Hour of Service
or is re-employed and ending on the date a Break Year begins, subject to the
following adjustments:

 

(a)           An Employee shall be credited with 1/12th of a
Year of Credited Service for each calendar month of employment (or portion
thereof) during which he or she is employed by the Corporation, an Affiliated
Corporation or a Subsidiary.

 

(c)           An Employee will also receive credit for any
period of severance of less than 12 consecutive months. Fractional periods of a
year will be expressed in terms of days. In the case of an individual who is
absent from work for maternity or paternity reasons, the 12-consecutive month
period beginning on the first anniversary of the first day of such absence
shall not constitute a Break Year. For purposes of this Section,

 

(i)            an absence from work for maternity or
paternity reasons means an absence (A) by reason of the pregnancy of the
individual, (B) by reason of the birth of a child of the individual,
(C) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (D) for
purposes of caring for such child for a period beginning immediately following
such birth or placement;

 

(ii)           a Break Year is a period of severance of at
least 12 consecutive months;

 

(iii)          a period of severance is a continuous period
of time during which the

 

30

 

Employee
is not employed by the Corporation, an Affiliated Corporation or a Subsidiary.
Such period begins on the date the Employee retires, quits or is discharged, or
if earlier, the 12-month anniversary of the date on which the Employee was
otherwise first absent from service; and

 

(iv)          in the case of a leave of absence for service
in the armed forces of the United States, no period shall be excluded under
this paragraph during which the Employee has reemployment rights with respect
to the Corporation, any Affiliated Corporation or any Subsidiary under federal
law.

 

(d)           If,
to the extent, and on the terms so provided by the Board of Directors at the
time of acquisition, or at any subsequent date or in any Supplement to the
Plan, the last continuous period of employment of any employee with any prior
separate business entity, part or all of which is or was acquired by, or
becomes part of an Employer will be considered a Period of Credited Service.

 

14.33.      “Plan”
means the Hospira Puerto Rico Retirement Savings Plan, as amended from time to
time.

 

14.34.      “Plan
Year” means: for the 2005 calendar year, the five (5) month period beginning on
August 1, 2005 and ending December 31, 2005; and for all subsequent periods,
the calendar year.

 

14.35.      “PR-Code” means the Puerto Rico Internal
Revenue Code of 1994, as amended from time to time. Reference to any section of
the PR-Code includes reference to any comparable or succeeding provisions of
any legislation which amends, supplements or replaces such section or
subsection.

 

14.36.      “Qualified
Domestic Relations Order” means any judgment, decree or order (including
approval of a property settlement agreement) which constitutes a “qualified
domestic relations order” within the meaning of ERISA section
206(d)(3)(B)).  A judgment, decree or
order shall not be considered not to be a Qualified Domestic Relations Order
merely because it requires a distribution to an alternate payee (or the
segregation of accounts pending distribution to an alternate payee) before the
Participant is otherwise entitled to a distribution under the Plan.

 

14.37.      “Qualified
Non-elective Employer Contribution” means a contribution (other than an
Employer Contribution) made for the benefit of a Participant by the Employer in
its discretion.

 

14.38.      “Regulation”
means a regulation issued by the Puerto Rico Treasury Department or the United
States Department of Labor, as the case may be, including any final regulation,
proposed regulation, temporary regulation, as well as any modification of any
such regulation contained in any notice, revenue procedure, advisory or similar
pronouncement issued by the Puerto Rico Treasury Department or the United
States Department of Labor, whichever is applicable.

 

31

 

14.39.      “Rollover
Contribution” means a contribution made by a Participant which satisfies the
requirements for rollover contributions as set forth in Article 12.

 

14.40.      “Rollover
Contribution Account” means, for any Participant, the account described in
Section 12.1 or 12.2, as established by the Administrator or the Trustee, to
which the Participant’s Rollover Contribution, if any, is allocated.

 

14.41.      “Section”
means a section of the Plan.

 

14.42.      “Subsidiary” means any
corporation, partnership, joint venture or business trust fifty percent (50%)
or more of the control of which is owned, directly or indirectly, by the
Corporation.

 

14.43.      “Transfer
Contribution” means a contribution made on behalf of a Participant by way of a
trustee-to-trustee transfer as described in Section 12.3.

 

14.44.      “Transfer
Contribution Account” means, for any Participant, the account described in
Section 12.3 established by the Administrator or the Trustee to which the
Participant’s Transfer Contribution, if any, is allocated.

 

14.45.      “Trust” means the trust
established between the Corporation and the Trustee in connection with the
Plan, together with any and all amendments thereto.

 

14.46.      “Trustee”
means the person(s) or entity appointed by the Board of Directors to serve as
Trustee under the Trust.

 

14.47.      “Valuation
Date” means each business day of each Plan Year.

 

14.48.      “Year
of Credited Service” means, with respect to any Employee, a twelve-month Period
of Credited Service.

 

32Exhibit 4.2

 

NUMBER ONE HUNDRED EIGHT

 

DEED OF TRUST

 

In the
Municipality of Guaynabo, Puerto Rico, this twenty-seventh (27th)
day of July, two thousand five (2005).

 

BEFORE ME

 

MARCOS R. VÉLEZ GREEN,
Notary Public in and for the Commonwealth of Puerto Rico, with residence in San
Juan, Puerto Rico and offices at Two Hundred Forty-Three (243) Road Two (2),
Villa Caparra, Guaynabo, Puerto Rico.

 

APPEAR

 

AS PARTY OF THE FIRST PART:
HOSPIRA PUERTO RICO, LLC, employer
identification number 90-0161518, a limited liability company organized and
existing under the laws of the State of Delaware and having its principal
office in Lake Forest, Illinois (hereinafter referred to as the “Company”)
represented herein by Lizette Maldonado-Fonseca, Commercial Director, Abbott,
social security number ______________ of legal age, dietician, single, and
resident of Trujillo Alto, Puerto Rico, whose representative authority to
appear herein on behalf of the Company is duly evidenced by virtue of a
Unanimous Written Consent of the Company’s Sole Member issued on July
twenty-two (22), two thousand five (2005), copy of which is attached herein.

 

AS PARTY OF THE SECOND PART:  BANCO
POPULAR DE PUERTO RICO, employer identification number 66-0561870, a
banking corporation organized and existing under the laws of the Commonwealth
of

 

1

 

Puerto Rico and having its principal office in San Juan, Puerto Rico
(hereinafter referred to as the “Trustee”) represented herein by Maryvette
Velázquez Torres, Vice President OF its Trust Division, social security number ______________
of legal age, married, and resident of Carolina, Puerto Rico, whose
representative authority to appear herein on behalf of the Trustee is duly
evidenced by virtue of a Certificate of Resolution of the Trustee’s Board of
Directors issued on August nineteen (19), two thousand four (2004), copy of
which is attached herein.

 

I, the Notary,
hereby certify that I personally know the person appearing herein as
representative of the party of the SECOND PART and that I have verified the
identity of the person appearing herein as representative of the party of the
FIRST PART by means provided under Article 17(c) of the Puerto Rico Notary Act
of 1987, specifically by Mrs. Maldonado’s Puerto Rico driver’s license,
since I, the Notary, do not know her personally.  Through their statements, I give faith as to
their personal circumstances. 
Mrs. Maldonado and Mrs. Velázquez have assured me that they
have, and in my judgment they do have, the necessary legal capacity to execute
this public instrument whereby they freely and voluntarily

 

STATE

 

WHEREAS, the Company
will establish and adopt the Hospira Puerto Rico Retirement Savings Plan (the “Plan”)
effective as of the first (1st) day of

 

2

 

August, two thousand five (2005); and

 

WHEREAS, the Company
wishes to designate Banco Popular de Puerto Rico as Trustee under the Plan,
effective as of the first (1st) day of August, two thousand five
(2005);

 

WHEREAS, under the
provisions of the Plan, funds will, from time to time, be contributed to the
Fund, which amounts, as and when received by the Trustee, will constitute the
principal of the Fund to be held for the exclusive benefit of the Participants
and/or their Beneficiaries; and

 

WHEREAS, the Trustee
has agreed to act as trustee and to hold and administer the funds of the Plan
in accordance with the terms of the Plan and this Agreement;

 

NOW, THEREFORE, the
Company hereby establishes a Fund with the Trustee which shall be held, managed
and administered by the Trustee without distinction between principal and
income upon the terms and conditions hereinafter set forth.

 

SECTION I

 

DEFINITIONS

 

The following
terms when used herein, shall have meanings as set forth below:

 

Agent  -  The
person or entity appointed by the Trustee pursuant to Section 4.1(h) of this
Agreement to act as its agent.

 

Agreement  -  This
Agreement, which creates the Hospira Puerto Rico Retirement Savings Plan Trust,
shall be known as the Hospira Puerto Rico Retirement Savings Plan Trust
Agreement, together

 

3

 

with all amendments thereto from time to time in effect.

 

Beneficiary  -  Any
person entitled to receive any payments due under the Plan on the death of the
Participant.

 

Board  -  The
Board of Directors of the Company or any similar body that controls the
operations of the Company.

 

Commingled Trust  -  A
collective investment or pooled trust fund established under Section 9.18 of
the Comptroller of the Currency’s regulations, or similar regulations of any
Federal or State authority or agency having jurisdiction over the Trustee or
the subject matter of the trust.

 

Committee  -  The
Hospira Puerto Rico, LLC Employee Benefits Committee appointed by the Board to
administer the Plan or those duly authorized (or designated) to provide
directions on the Committee’s behalf in accordance with sections 3.1 and
3.2.  The term Committee shall also
include any Recordkeeper, Agent or Custodian appointed by the Committee, or its
designees.

 

Company  -  Hospira
Puerto Rico, LLC and any successor that continues to sponsor the Plan.

 

Custodian  -  The
person or entity appointed by the Trustee pursuant to section 4.1(l) of this
Agreement to take custody of all or part of the Fund.

 

Declaration of Trust  -  The
document establishing any Commingled Trust.

 

Employer - 
Hospira Puerto Rico, LLC and any

 

4

 

other subsidiary or affiliate who adopts the Plan.

 

ERISA  -  The
Employee Retirement Income Security Act of 1974, including all amendments
thereto and regulations issued from time to time thereunder.

 

Fiscal Year  -  For
two thousand five (2005) calendar year, the five (5) month period beginning
August one (1), two thousand five (2005) and ending December thirty-one (31),
two thousand five (2005).  For all other
calendar years, the period beginning each January one (1) and ending on the
next following December thirty-one (31).

 

Float  -  The
time period between the date of issuance of a check for payment of benefits and
the cashing of the same.

 

Fund or Trust  -  A
trust fund consisting of cash and such other property acceptable to the Trustee
as shall, from time to time, be paid or delivered by the Employer to the
Trustee and the earnings and profits thereon less the payments which at the
time of reference shall have been made by the Trustee.

 

Hospira Stock  -  Hospira,
Inc. common stock.

 

Investment Fund  -  Each
mutual fund, Hospira Stock Fund, and other investment vehicle made available
under the Plan for the investment of Plan assets of the Fund.

 

Investment Manager  -  Any
person, firm or corporation who is a registered investment adviser under the
Investment Advisers Act of 1940, a bank or an insurance company who (a) has the
power to

 

5

 

manage, acquire, or dispose of Fund assets, and (b) acknowledges in
writing its fiduciary responsibility to the Plan.

 

Net Total Amount Per Investment Fund  -  Reconciliation of the Investment Fund
provided under the Plan where the beginning balance of units as well as the
beginning balance of carry value are compared with the ending balances of the
units and carry value of the statement as reflected by the Recordkeeper, Custodian
or Agent.  This decrease or increase
which includes, but is not limited to, contributions, distributions, interests,
dividends, capital gains, appreciation or depreciation of the Investment Fund
is reflected in a net entry per Investment Fund.

 

Participant  -  An
employee of the Employer who has become and continues to be a participant in,
or member of, the Plan in accordance with the provisions of the Plan.

 

Plan  -  The
provisions of the Hospira Puerto Rico Retirement Savings Plan established by
the Company and adopted by the Employer together with all amendments thereto
from time to time in effect.

 

PR-Code  -  The
Puerto Rico Internal Revenue Code of 1994, including all amendments thereto and
regulations issued from time to time thereunder.

 

Recordkeeper  -  The
person or entity appointed by the Committee to perform recordkeeping and other
administrative services on behalf of the Plan.

 

The plural of
any term shall have a meaning

 

6

 

corresponding to the singular thereof as so defined and any neuter
pronoun used herein shall include the masculine or feminine, as the context
shall require.

 

Any word or phrase not defined
in this Agreement shall have the meaning set out in the Plan, unless a
different meaning is plainly required by the context.

 

SECTION II

 

CONCERNING THE FUND

 

Section 2.1  -  IN
GENERAL:  The
Trustee shall be responsible only for such sums and property received by it as
Trustee, and shall not have authority to enforce the collection from the
Employer of any contribution to the Fund and shall not be required to determine
whether contributions of the Employer and Participants delivered to it comply
with the provisions of the Plan.

 

Section
2.2  -  DISBURSEMENT OF FUNDS:  The Trustee shall, from time to time, on the
directions of the Committee, make payments out of the Fund to such persons, in
such manner, in such amounts and for such purposes as may be specified by the
Committee, and upon any such payment being made, the amount thereof shall no longer
constitute a part of the Fund.  Each
direction by the Committee shall be considered by the Trustee to be a
representation and certification by the Committee that the payment directed is
in conformity with section 2.3 hereof. 
In addition, each such direction shall specify the amount of the payment

 

7

 

or the number of shares of Hospira Stock to be distributed, the date
such payment is to be made, the person to whom payment is to be made, and the
address to which the payment is to be sent.

 

Section
2.3  -  NON-DIVERSION OF FUND:  At no time prior to the satisfaction of all
liabilities with respect to the Participants and their Beneficiaries under this
Trust shall any part of the corpus or income of the Fund be used for, or
diverted to, purposes other than for the exclusive benefit of such Participants
or their Beneficiaries.  The assets of
the Fund shall be held for the exclusive purposes of providing benefits to Participants
of the Plan and their Beneficiaries and defraying reasonable expenses of
administering the Plan and Trust.

 

In the event
of the termination of the Plan, the provisions of the first paragraph of this
section notwithstanding, any residual assets of the Plan may be distributed to
the Employer at the direction of the Committee if all liabilities of the Plan
to the Participants and their Beneficiaries have been satisfied and the
distribution does not contravene any provision of law.

 

Section 2.4  -  RETURN OF
CONTRIBUTIONS: 
In the case of a contribution that is made by the Employer as a result
of a mistake of fact, section 2.3 above shall not prohibit the return to the
Employer of such contribution.  If a
contribution by the Employer is expressly conditioned upon the initial
qualification of the Plan under PR-Code Sections

 

8

 

1165(a) and/or (e), and if the Plan does not qualify, then section 2.3
above shall not prohibit the return to the Employer at the direction of the
Committee of such contribution within one (1) year after the date of denial of
qualification of the Plan, provided the application for the determination is
made by the time prescribed by law for filing the Employer’s return for the
taxable year in which such Plan was adopted, or such later date provided by
law.  Also, if a contribution by the
Employer is expressly conditioned upon the deductibility of the contribution
under PR-Code Section 1023(n), then, to the extent the deduction is disallowed,
section 2.3 above shall not prohibit the return to the Employer upon the
written direction of the Committee of such contribution (to the extent
disallowed) within one (1) year after the disallowance of its deduction.

 

SECTION III

 

THE BOARD, COMMITTEE AND THE TRUSTEE

 

Section 3.1  -  THE BOARD:  The Board shall certify to the Trustee the
names of the members of the Committee and such other individuals authorized to
act as agent of the Employer to administer the Plan.  The Board shall promptly notify to the
Trustee any changes in the membership of the Committee

 

9

 

or of such individuals authorized to act as the Company’s agent to
administer the Plan.  Until written
notice of any such changes is received by the Trustee, the Trustee shall be
fully protected in assuming that the membership of the Committee and such other
individuals remain unchanged and in acting according to their directions.

 

Section 3.2  -  THE
COMMITTEE:  The
Committee shall certify to the Trustee the names and specimen signatures of the
persons authorized to act for it in relation to the Trustee, and the Trustee
may act on any direction of the Committee which the Trustee believes to be
genuine, and to have been executed by the Committee or by any person whose
authority to act for the Committee has been certified to the Trustee by the
Committee.

 

Section 3.3  -  THE
TRUSTEE: The Trustee may rely upon any certificate,
notice or direction of the Board and/or the Committee which the Trustee
believes to be genuine,  and to have been
given by a duly authorized officer, member or agent of the Board and/or the
Committee.  The Trustee, unless it knows
that any such direction constitutes a breach of the above mentioned person’s
fiduciary responsibility with respect to the Plan, if any, shall not be liable
in any way for any payment made pursuant thereto but, in the absence of
knowledge that any such direction constitutes such a breach, the Trustee shall
have no duty to inquire or investigate prior to any act upon any such
direction.

 

Section
3.4  -  COMMUNICATIONS:  Communications from the Board and/or the
Committee to the Trustee shall be sent to such address as the Trustee shall
specify or by telephone, and such communications, including telephone
communications, confirmed in

 

10

 

writing by fax and original mailed to the Trustee shall be binding upon
the Fund and the Trustee, when received by the Trustee.

 

SECTION IV

 

ADMINISTRATION AND INVESTMENT OF THE FUND

 

Section
4.1  -  ADMINISTRATIVE POWERS AND AUTHORITY OF TRUSTEE:  Except as otherwise provided herein, the
Trustee shall have the following powers and authority:

 

(a)  Exercise of
Owner’s Rights - To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion privileges,
subscription right or other options, and to make any payments incidental
thereto; to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and to
delegate discretionary powers, and to pay any assessments or charges in
connection therewith; to abandon any property determined by it to be worthless;
and generally to exercise any of the powers of an owner with respect to stocks,
bonds, securities or other property held as part of the Fund.

 

(b)  Settlement
of Claims and Debts - With the consent of the Committee, to settle,
compromise, or submit to arbitration any claims, debts or damages due or owing
to or from the Fund, to commence or defend suits of legal or administrative
proceedings, and to represent the Fund in all suits

 

11

 

and legal or administrative proceedings.

 

(c)  Registration
of Investments - To register any investment held as part of the Fund
in its own name or in the name of a nominee and to hold any investments in
bearer form, but the books and records of the Trustee shall at all times show
that all such investments are part of the Fund.

 

(d)  Employment
of Counsel and Consultants -To employ suitable legal counsel,
consultants, accountants, enrolled actuaries, investment managers and advisors,
and other experts or agents (all of whom may also be advisers to the
Committee), and to pay them reasonable expenses and compensation; provided,
however, that the Trustee shall provide advance written notice to the Committee
if it retains advisers other than those advisers retained by the Committee to
provide advice with respect to the Plan and an estimate of the fees expected to
be charged by those advisers, and the Committee shall identify in writing legal
counsel retained by it to provide advice with respect to the Plan; and further
provided that the foregoing shall not preclude the Trustee from employing legal
counsel, consultants, accountants, enrolled actuaries and other experts or
agents at Trustee’s discretion and sole expense.

 

(e)  Execution
of Instruments - To make, execute, acknowledge and deliver any and
all documents of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to carry out the powers herein granted.

 

12

 

(f)  Power to
Incorporate - To organize and incorporate under the laws of any state
one or more corporations it may deem advisable (and to acquire an interest
therein) in order to acquire and hold title to any property or interest in
property, that the Trustee is authorized to acquire.

 

(g)  Pooling of
Investments with Other Trusts - To pool all or any of the Fund, from
time to time, with assets belonging to any other qualified employee benefit
trust created by the Company, the Employer, the parent of the Company, or any
subsidiary or affiliated company of the Company, and to commingle such assets
and make joint or common investments and carry joint accounts on behalf of this
Fund and such other fund and such other trust or trusts, allocating undivided
shares or interest in such investments or accounts or any pooled assets of the
two or more trusts in accordance with their respective interest.

 

(h)  Power to
Appoint an Agent - To appoint the Agent of the Trustee (although the
exercise of such authority must be directed by the Committee) and to transfer
assets under the control of the Trustee to the Agent for investment purposes,
subject to the same powers, limitations and conditions imposed on the Trustee
herein.

 

(i)  Power to
Enter into Agency Agreements - To enter into one (1) or more agency
agreements for purposes of opening one (1) or more agency accounts and
transferring or depositing therein all or part

 

13

 

of the assets held by the Trustee that from time to time the Committee,
at its discretion, may require to be placed in the agency account for
investment purposes.

 

(j)  Power to
Enter into Co-Trustee Agreement - To enter into one (1) or more
co-trustee agreements with the approval of the Committee, which are necessary
or appropriate to carry out the powers herein granted.

 

(k)  Right to Borrow - After obtaining
approval from the Committee, to borrow or raise monies for the purposes of the
Trust in such amounts, and upon such terms and conditions, as the Trustee shall
deem advisable; and, for any sums so borrowed, to issue its promissory note,
and to secure the repayment thereof by pledging all, or any part of, the Trust;
and no persons lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity, expediency or
propriety of any such borrowing; provided, however, that the Trustee shall not
have the power to borrow from itself or any other party in interest (as such
term is defined in ERISA Section 3(14)) with respect to the Plan.

 

(l)  Power to
Enter into Custodial Account Agreements - As and when directed to do
so by the Committee, the Trustee may enter into one (1) or more custodial
account agreements.

 

(m) Purchase of Hospira Stock  - To contract or otherwise enter into
transactions between

 

14

 

itself, as Trustee, and Hospira, Inc. or any shareholder of Hospira,
Inc., as directed by the Committee, for the purpose of acquiring or selling
Hospira Stock.

 

(n)  Any
Necessary Act - To do all such acts, take all such proceedings,
enter into any such agreement, and exercise all such rights and privileges,
although not specifically mentioned herein, as may be necessary or proper for
the accomplishment of the purpose for which the Fund was established.

 

Section
4.2  -  INVESTMENT POWERS AND AUTHORITY OF THE TRUSTEE:  Subject to sections 4.3 and 4.4, the Trustee
shall have the following investment powers and authority.

 

(a)  General
Investment Powers - To invest and reinvest the principal and income
of the Fund and keep the Fund invested, without distinction between principal
and income, in such securities or in such property, real or personal wherever
situated, as the Trustee shall deem advisable, including, but not limited to
stocks, common or preferred, trust and participation certificates, mutual
funds, Commingled Trusts, bonds and mortgages (including part interests in
bonds and mortgages or notes and mortgages insured by the Federal Housing
Administration), including obligations and/or securities of the Employer and
any of its affiliates which are “qualifying employer securities” or “qualifying
employer real property” within the meaning of Section 407 of ERISA and

 

15

 

other evidences of indebtedness or ownership, provided that the Trustee
shall select and diversify the investments with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims, subject to the provisions
of ERISA Sections 404 and 406. 
Without limiting the generality of the foregoing, the Trustee shall, as
and when the Committee directs in writing, invest a portion of the Fund in the
insurance, annuity, and/or any other type of individual or group contracts any
qualified insurance company issues and the Committee selects and shall deal
with such contracts as and when the Committee directs in writing.

 

(b)  Power to
Participate in a Commingled Trust - To the extent of the Fund’s
participation in a Commingled Trust, the Declaration of Trust that creates such
Commingled Trust shall constitute a part of the Plan and of this Agreement, and
any such investment in said Commingled Trust shall be subject to all the
provisions of the Declaration of Trust as the same may be amended or
supplemented.

 

(c)  Purchase of
Property - To purchase, or subscribe for, any securities and to
retain the same in the Fund.

 

(d)  Sale,
Exchange, Conveyance and Transfer of Property - To sell, exchange,
convey, transfer, or otherwise dispose of, any securities it holds,

 

16

 

by private contract or at public auction, and no person who deals with
the Trustee shall be bound to see to the application of the purchase money or
to inquire into the validity, expediency or propriety of any such sale or other
disposition.

 

(e) Retention of Cash - To keep such minimum
portion of the Fund in cash or cash balances as the Trustee may deem to be in
the best interest of the Fund created hereby. 
It is understood that the Trustee shall make all reasonable efforts to
maintain such funds in an interest bearing account.

 

(f)  Retention
of Property Acquired - To accept and retain for such time as it may
deem advisable any securities it receives or acquires as Trustee hereunder,
whether or not such securities would normally be purchased as investments
hereunder.

 

(g)  Mortgage
Powers - To renew or extend, or to participate in the renewal or
extension of, any mortgage, upon such terms as may be deemed advisable, and to
agree to the reduction in the rate of interest on any mortgage or to any other
modification or change in the terms of any mortgage or of any guarantee that
pertains thereto, in any manner and to any extent that may be deemed advisable
for the protection of the Fund or the preservation of the value of the
investment; to waive any default, whether in the performance of any covenant or
condition of any mortgage or in the performance of any guarantee, or to enforce
any

 

17

 

such default, in such manner and to such extent as may be deemed
advisable; to exercise and enforce any and all rights of foreclosures; to bid
on property in foreclosure; to take a deed in lieu of foreclosure with or
without paying a consideration therefor and in connection therewith to release
the obligation on the bond secured by such mortgage; and to exercise and
enforce in any action, suit or proceeding at law or in equity any rights or
remedies in respect to any mortgage or guarantee.

 

(h)  Loans to Participants - To lend
to Participants such amounts and upon such terms and conditions as the Company,
through the Committee, may direct in writing, provided that such loans are in
accordance with the terms of the Plan, ERISA and the PR-Code.

 

(i)  Interest
Bearing Accounts - To invest idle funds in deposits in the banking
department of the Trustee which bear a reasonable rate of interest, including
but not limited to, demand deposits, certificates of deposit, savings
certificates, and savings accounts.

 

Section
4.3  -  INVESTMENT MANAGER DIRECTIONS:  The Committee may appoint an Investment
Manager or Investment Managers to carry out the investment responsibilities
provided in section 4.2 above.  If an
Investment Manager is appointed, the Trustee shall carry out its investment
responsibilities, as provided in section 4.2 above, with respect to all or any
part of the Fund, in accordance with the instructions delivered to it by the
Investment

 

18

 

Manager
appointed.  In the case that an
Investment Manager is appointed, notice of the appointment of the Investment
Manager shall be certified to the Trustee by the Committee, and shall remain in
effect until the Trustee is advised by the Committee of the termination of the
Investment Manager’s appointment.  If no
Investment Manager has been designated by the Committee with respect to all or
any part of the Fund, the Trustee shall exercise all of the powers as set forth
in section 4.2 hereof with respect to all or any such part of the Fund.

 

Section
4.4  -  SPECIFIC FUNDS OR ASSETS:  The Committee or such other individual or
entity as the Committee may designate for such purpose may direct the Trustee
to invest all or any specified portion of the Fund in particular funds
(including mutual funds, common, collective or group trust funds) or assets. In
such event, the Trustee shall have no discretion with respect to the investment
of the Fund or such portion of the Fund and shall be responsible only for the investment
of the Fund or any such portion of the assets of the Fund in accordance with
the written directions the Committee or designee communicated to the Trustee.
The Trustee shall have no responsibility whatsoever for monitoring any
investments the Committee or designee directs, nor shall the Trustee be
required to take any action with respect to such investments unless the Trustee
receives timely written notice that the Committee or designee, an issuer, or
any

 

19

 

of the national sources to which the Trustee
subscribes, require such action. Further, the Trustee shall incur no liability
whatever with respect to such investments (including, but not limited to,
liability for late collection on calls of securities when said calls are not
published in any of the national sources to which the Trustee subscribes)
except for the delay or failure to act after the receipt of timely written
notice of the need for such action that the Committee or designee, an issuer,
or a source described in this Section 4.4 delivered to the Trustee.

 

Since the Plan
permits a Participant or a Beneficiary to direct the investment of his or her
account, the Committee shall direct in writing the Trustee to establish such
investment accounts within the Fund as may be necessary to effectuate such
investment elections.  The Committee, in
consultation with the Trustee, shall establish such reasonable rules for said
investment elections as the Trustee deems necessary or appropriate and such rules
shall be applied in a uniform and nondiscriminatory manner. The Committee shall
communicate in writing all such investment elections to the Trustee. The
Committee shall designate how accounts shall be invested in the absence of a
proper affirmative direction from the Participant or Beneficiary.

 

The Trustee
shall (except as may be otherwise provided in ERISA) have no responsibility
whatsoever for any investment decisions a

 

20

 

Participant or Beneficiary makes or for the
investment of any portion of the Fund which is subject to the direction of a
Participant or Beneficiary.

 

Section 4.5  -  SPECIAL
PROVISIONS CONCERNING VOTING AND TENDER OF HOSPIRA STOCK:

 

(a) Voting Rights.  - For the purposes of voting shares of
Hospira Stock allocated to their individual accounts under the Plan, each
Participant and each Beneficiary shall be a “named fiduciary” within the
meaning of Section 403(a)(1) of ERISA. 
The Trustee shall follow the directions of the Participants and
Beneficiaries who are named fiduciaries, in the manner described below, with
respect to the shares of Hospira Stock allocated to their individual accounts.

 

Before each
annual or special meeting of the stockholders of Hospira, Inc., the Committee
shall cause to be sent to each Participant and Beneficiary to whose individual
account shares of Hospira Stock are allocated a form requesting confidential
instructions to the Trustee on how to vote the number of shares of Hospira
Stock allocated to each such Participant or Beneficiary.  Upon receipt of such instructions, the
Trustee shall vote the shares of Hospira Stock allocated to such Participant or
Beneficiary as instructed.  Instructions
received by the Trustee shall be held in the strictest confidence and shall not
be divulged or released to any person, including officers or employees of
Hospira, Inc., the

 

21

 

Company, the Employer, or any related
company.  The Committee shall review the
sufficiency of procedures established to safeguard the confidentiality of
Participants and Beneficiaries, and shall monitor compliance with those
procedures.  The Trustee shall have the
right to vote, in person or by proxy, any shares of Hospira Stock for which
voting instructions have been received therefor from the Participants or
Beneficiaries, provided, however, that any securities for which the Trustee
does not receive timely instructions shall be voted by the Trustee pro rata in
the same manner as those shares for which proper voting instructions have been
received.

 

(b) Tender Offers.  -  In
the case of a tender offer for shares of Hospira Stock, the Trustee and the
Company shall be bound by this Section 4.5(a), in addition to any other
provisions or requirements of this Agreement not inconsistent with this
Section.  As soon as practicable after
the commencement of such tender offer, the Committee and/or the Company shall
cause to be provided to each participant whose account holds Hospira Stock with
the identical written tender offer information provided to all other
shareholders of Hospira, Inc. and a tender offer instructions form for return
to the Trustee or its designee.  Such
form shall show the number of full shares of Hospira Stock attributable to the
employee’s account (whether or

 

22

 

not vested) and shall provide a means for him
or her to (a) instruct the Trustee whether or not to tender such shares and (b)
specify the investment fund under the plan in which the proceeds of any sale
shall be invested in the event such shares are sold pursuant to the tender
offer.  Such form shall also advise each
such participant that, in the event the Trustee is not provided with tender
instructions, the Trustee shall not tender any such shares as to which timely
instructions were not received by the Trustee. Except for the foregoing, the
Company shall not provide to participants any information or guidance not
provided to all shareholders.  Upon
receipt of such instructions, the Trustee shall tender or not tender (or
withdraw from tender) such shares in accordance with the instructions received
from the participants, and the Trustee shall not tender such shares as
to which timely instructions are not received by the Trustee.  Instruction forms received from participants
shall be retained by the Trustee and shall not be provided to Hospira, Inc. or
the Company or to any officer or employee thereof or to any other person.  In implementing the foregoing procedures, the
Company will act fairly, in the best interests of participants and in a manner
which will not impose undue pressure on any participant as to what tender offer
instructions he or she should give to the Trustee.  Specifically, the Company (a) shall assure
that all written information provided to all other shareholders of

 

23

 

Hospira, Inc. about the terms of the tender
offer is provided to participants on a timely basis and clearly false or
misleading information is not provided (or is corrected or it has been provided
to participants by other parties) and (b) shall not mislead participants or
exert pressure on participants with respect to tender offer instructions.  The Company shall certify to the Trustee in
writing upon the Trustee’s request that the Company has complied with the
provisions of this Section and the Company hereby agrees to indemnify the
Trustee against any and all loss, liability, claims and expenses resulting from
its non-compliance with such provisions. 
The giving of an instruction to the Trustee to tender shares shall not
be deemed to constitute a withdrawal or suspension from the Plan or forfeiture
of any portion of a participant’s interest in the Plan.  Proceeds resulting from the sale of any share
shall be re-invested in the investment funds selected by the participant in his
or her instructions to the Trustee. 
Proceeds of shares tendered at the direction of the participant for
which no re-investment instructions are given to the Trustee shall be invested
in the short-term investments as described in Section 4.2.  The Company shall give to the Trustee
re-investment instructions for such proceeds invested in the short term
investments within thirty (30) days after the expiration of the tender
offer.  If a Participant or a Beneficiary
has directed the tender or non-tender of shares of

 

24

 

Hospira Stock credited to his or her
individual account, such Participant or Beneficiary shall be a “named fiduciary”
within the meaning of Section 403(a)(1) of ERISA.

 

SECTION V

 

COMPENSATION AND EXPENSES

 

Section
5.1  -  TRUSTEE: COMPENSATION AND EXPENSES:
The expenses the Trustee incurs in the performance of its duties, including
fees for legal, actuarial, or consulting services rendered to the Trustee, such
compensation to the Trustee as may be agreed upon in writing from time to time
between the Committee and the Trustee, and all other proper charges and
disbursements of the Trustee, shall be paid by the Company, provided that such
costs and expenses are reasonable and proper expenses of the Plan and the Fund
within the meaning of Sections 403(c) and 404(a)(1)(A) of ERISA and that such
payment would not constitute a prohibited transaction within the meaning of
Section 406 of ERISA; and, further provided, that with respect to the fees of
legal counsel, consultants, accountants and other experts or agents employed by
the Trustee, the Committee consented to the employment of such experts or
agents.  The Trustee may send an invoice
to the Company and the Company may pay all or a portion of the fees and
expenses shown on such invoice, however, to the extent that any invoice sent by
the Trustee to the Company is not paid within a period of forty-five (45) days
from the date of receipt of

 

25

 

the invoice. 
The Trustee shall charge the unpaid total or partial amount of such
invoice to the Fund to the extent permissible under this Section 5.1.  Upon charging such unpaid fees (in whole or in
part) to the Fund, the Trustee shall notify the Company of such action and the
Committee shall have thirty (30) days from the receipt of said notice to refund
said amounts to the Fund.  The Company
shall have the right to be reimbursed by the Fund for any costs and expenses
paid by it which are properly payable by the Fund.  The Trustee shall retain earnings on the
Float attributable to outstanding benefit checks as part of its overall
compensation.  The Trustee shall reissue
a benefit check to the participant or beneficiary at the Committee’s direction.

 

Section
5.2  -  INVESTMENT EXPENSES:  Any expenses directly related to the
investment of the Fund, such as brokerage commissions, custody fees,
registration charges, etc., shall be paid from the Fund, except if any such
expenses are agreed to be paid by the Employer.

 

Section
5.3  -  CUSTODIAL EXPENSES:  Any expenses directly related to custody
fees, if any, shall be paid from the Fund and charged to the account of the
Participant on whose behalf such expenses were incurred.

 

SECTION VI

 

MAINTENANCE OF RECORDS AND ACCOUNTS

 

Section
6.1  -  MAINTENANCE OF RECORDS AND ACCOUNTS:  The Trustee shall keep accurate and

 

26

 

detailed accounts of all its receipts, investments,
disbursements and other transactions under this Agreement.

 

Notwithstanding
the foregoing, if the Committee has retained or directed the Trustee to retain
and appoint a Recordkeeper, Custodian or Agent, the Trustee shall only be
responsible for maintaining accounts in reliance on the information provided to
the Trustee by the Recordkeeper, the Custodian or the Agent, or their designees
based on a Net Total Amount Per Fund. 
Such person or persons as the Committee shall designate in writing shall
be allowed to inspect the books of accounts that relate to the Fund upon
request at any reasonable time during the business hours of the Trustee.  Within sixty (60) days after the close of
each Fiscal Year or the removal or resignation of the Trustee as provided in
Section 7 of this Agreement or the termination of the Plan or this Agreement,
and at such other times as agreed upon by the Committee and the Trustee, the
Trustee shall render to the Committee (and certify the accuracy of) a written
account of all its transactions related to the Fund during the period from the
last previous accounting to the close of the Fiscal Year or the date of
termination of the Plan or this Agreement or such other accounting date; such
account shall include a statement of assets and liabilities of the Fund at the
close of such period, and show the current market value of each asset at that
date, together with such additional information in the

 

27

 

Trustee’s possession as the Committee may
need to comply with the provisions of ERISA Section 103.

 

Notwithstanding
the foregoing, if the Committee has retained or directed the Trustee to retain
and appoint a Recordkeeper, Custodian or Agent, the Trustee shall only be
responsible for maintaining accounts in reliance on the information provided to
the Trustee by the Recordkeeper, the Custodian or the Agent, or their designees
based on a Net Total Amount Per Fund.

 

After the
Trustee mails such account, the Committee shall promptly notify the Trustee in
writing of its disapproval of any item thereon within one hundred eighty (180)
days of the receipt of such account.

 

The Trustee
shall not be responsible for the preparation or filing of any tax return or any
other report or form the Trust or the Plan shall file with any governmental
agency except for any such return, report or form which the Trustee is required
to file.  The Trustee, upon written
request, shall furnish to the Committee such additional information under its
control as the Committee may reasonably request to prepare such reports, tax
returns, and forms to be filed with governmental agencies or delivered to
Participants and their Beneficiaries.

 

Section
6.2  -  RIGHT TO JUDICIAL ACCOUNTING:
Nothing contained in this Agreement or in the Plan shall deprive the Trustee of
the right to have a judicial settlement of its accounts. In any

 

28

 

proceeding for a judicial settlement of the
Trustee’s accounts, or for instructions in connection with the Fund, the only
necessary parties thereto in addition to the Trustee shall be the Company and
the Committee.  If the Trustee so elects,
it may bring in any other person(s) as a defendant(s) party.

 

Section
6.3  -  PUERTO RICO INCOME TAX WITHHOLDING AND REPORTING:  The Trustee shall be responsible for the
withholding of any Puerto Rico income taxes, preparation, filing and delivery
of Puerto Rico Treasury Department Forms 480.5, 480.6A, 480.6(B), 480.6(B)(1),
480.9A and 480.70(OE) or any other forms which substitute those or are required
to be filed by the PR-Code in connection with any distribution or payment from
the Plan out of the Trust Fund, except to the extent that such responsibilities
are delegated in writing by the Trustee and the Company and/or the Committee to
the Custodian, the Agent, or the Recordkeeper. 
The Trustee upon request shall furnish to the Committee such additional
information under its control as the Committee may reasonably request for preparing
such other reports, tax returns and forms required to be filed with
governmental agencies or delivered to Participants and their Beneficiaries.

 

The Trustee
shall receive the information required to complete Puerto Rico Treasury
Department Forms 480.5, 4806A, 480.6B.1, 480.9A and 480.70(OE), or any other
forms which substitute

 

29

 

those or are required to be filed by the
PR-Code from the Recordkeeper, the Custodian, the Agent, or their
designees.  Except as otherwise required
by applicable law, the Trustee shall not be responsible for the accuracy or
correctness of the information provided by the Recordkeeper, the Custodian, the
Agent or their designees.  The
information provided to the Trustee shall be considered to be a representation
from the Company and/or the Committee that the information is correct and in
conformity with applicable law.

 

SECTION VII

REMOVAL, RESIGNATION AND APPOINTMENT

OF SUCCESSOR TRUSTEE

 

Section
7.1  -  REMOVAL OF TRUSTEE:  The Committee may remove the Trustee at any
time by written notice provided that the effective date of the removal and of
the appointment of a successor trustee(s) shall be at least thirty (30) days
from the date of receipt of said written notice. Except for in the case of a
breach in the Trustee’s fiduciary duties under ERISA, the removal and the
appointment of a successor trustee(s) shall be effective immediately.  Notwithstanding the above, the effective date
of said removal and appointment may be less than thirty (30) days if acceptable
to the Trustee and the Committee.

 

Section
7.2  -  RESIGNATION OF TRUSTEE:  The Trustee may resign at any time by written
notice to the Committee provided that the effective date of the resignation
shall be at least sixty (60) days

 

30

 

from the date of said written notice.  The effective date of said resignation may be
less than sixty (60) days if acceptable to the Committee and the Trustee.

 

Section
7.3  -  APPOINTMENT OF SUCCESSOR TRUSTEE:  The Company through the Committee shall
appoint a successor trustee to act hereunder after the effective date of such
removal or resignation.

 

Section
7.4  -  POWERS OF SUCCESSOR TRUSTEE:  Each successor trustee shall have the powers
and duties conferred upon the Trustee in this Agreement and the term “Trustee”
as used in this Agreement shall be deemed to include any successor trustee(s).

 

Section
7.5  -  DELIVERY OF ASSETS TO SUCCESSOR TRUSTEE:  The Trustee shall transfer and deliver the
Fund to the successor trustee on the effective date of the successor trustee’s
appointment.  Any part of the Fund then
held in any Commingled Trust which by its terms cannot be transferred to a
successor trustee or which the successor trustee is unwilling to accept shall
be withdrawn therefrom as of the valuation date (as defined in the Declaration
of Trust) immediately following such notice of removal or resignation and the
proceeds thereof shall be transferred and delivered to the successor trustee on
the effective date of the successor trustee’s appointment or on the earliest
date following said valuation date on which withdrawal may be effected,
whichever date is later.

 

31

 

Section
7.6  -  RESERVING FUNDS FOR EXPENSES:
The Trustee may reserve such sums it deems necessary to defray its reasonable
expenses to settle its accounts, to pay any of its compensation due and unpaid,
and to discharge any reasonable obligation of the Fund for which the Trustee
may be liable, unless the Committee had agreed to pay said sums; but if the
sums so reserved are not sufficient for those purposes, the Trustee shall be
entitled to recover the amount of any deficiency from either the Committee, the
successor trustee, or both.

 

Section
7.7  -  LIABILITY OF TRUSTEE:  When the Fund shall have been transferred and
delivered to the successor trustee and the accounts of the Trustee have been
settled as provided in Section 6 of this Agreement, the Trustee shall
(except as may be otherwise provided in ERISA) be released and discharged from
all further accountability or liability for the Fund and shall not be
responsible in any way for the further disposition of the Fund or any part
thereof.

 

SECTION VIII

 

RELIANCE, BONDING AND DIRECTIONS

 

Section
8.1  -  RELIANCE ON COUNSEL AND CONSULTANTS OR ACTUARIES:
The Trustee, in coordination with the Committee, may from time to time seek the
opinion of counsel (who may be counsel for the Committee), and/or consultants,
accountants, and actuaries and shall be fully protected in acting upon such
advice.

 

32

 

Section
8.2  -  BONDING OF THE TRUSTEE:  The Trustee shall not (except as may be
required by law) give any bond or other security for the faithful performance
of its duties under this Agreement.

 

Section
8.3  -  DIRECTIONS FROM THE COMPANY:
Except as otherwise herein specifically provided, any action by the Company
and/or the Board pursuant to any of the provisions of this Agreement shall be
evidenced by an appropriate written authorization by any person or Committee to
which the Board has delegated the authority to such action, and the Trustee
shall be fully protected in acting in accordance with any such written
instructions.

 

SECTION IX

 

TERMINATION AND AMENDMENTS

 

Section
9.1  -  TERMINATION OF TRUST:  This Agreement and the trust created hereby
may be terminated by the Company upon at last thirty (30) days prior notice in
writing to the Trustee (or upon shorter notice if acceptable to the Trustee),
as of the last business day of any month, and upon such termination or upon the
dissolution or liquidation of the Company, the Fund (after reserving such sums
as the Trustee shall deem necessary in settling its accounts and to discharge
any obligations of the Fund for which the Trustee may be liable) (a) shall be
applied or paid out by the Trustee, as and when directed by the Company or the
Committee, and (b) to the extent directed by the Company or the Committee,
shall be used to

 

33

 

purchase annuity or any other contracts
issued by any insurance companies selected by the Company or the Committee.

 

Section
9.2  -  DISCONTINUANCE OF PLAN:  In case the Plan is discontinued in whole or
in part or this trust is revoked or terminated, the Trustee (after reserving
such sums as Trustee shall deem necessary in settling its accounts and to
discharge any obligation of the Fund for which the Trustee may be liable) shall
apply or distribute the Fund in accordance with the written instructions of the
Committee.  Upon the discontinuance of
the Plan in whole or in part or revocation or termination of this Trust, the
Trustee shall have the right to settle its accounts as provided in
Section 6 of this Agreement.  When
the Fund shall have been so applied or distributed and the accounts of the
Trustee shall have been so settled, the Trustee shall (except as may be
otherwise provided in ERISA) be released and discharged from all further
accountability or liability respecting the Fund (or that part of the Fund so
applied or distributed if the Plan is terminated only in part) or any part
thereof so applied or distributed.  The
Trustee shall not be required to distribute or apply any part of the Fund until
the written approval of the termination has been received from the Puerto Rico
Treasury Department unless otherwise agreed upon by the Committee and the
Trustee.

 

Section
9.3  -  COMMITTEE’S AMENDMENT:  The Committee reserves the right at any time
to amend,

 

34

 

in whole or in part, any or all of the
provisions of this Agreement by notice thereof in writing delivered to the
Trustee, provided that no such amendment which affects the rights, duties or
responsibilities of the Trustee may be made without its consent.  It is intended that this Agreement and the
Plan to which it is related shall comply fully with the provisions of
ERISA.  Accordingly this Agreement may be
amended retroactively to its effective date in order to so comply.

 

SECTION X

 

MISCELLANEOUS PROVISIONS

 

Section
10.1  -  NON-ASSIGNABILITY OF INTEREST:  Except as may be provided in the Plan, a
benefit which is payable out of the Fund to any person (including any
Participant or any Beneficiary) shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be void; and no such benefit shall in
any manner be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any such person, nor shall it be subject to attachment
or legal process for or against such person.

 

Section
10.2  -  CONSTRUCTION OF AGREEMENT:  This Agreement and the Fund created hereby
shall be construed, administered and enforced in accordance with the provisions
of ERISA, and to the extent not inconsistent therewith, according to the laws
of

 

35

 

the Commonwealth of Puerto Rico.  Transfers of funds or other property to the
Trustee shall be deemed to take place in the Commonwealth of Puerto Rico.

 

Section
10.3  -  SEVERABILITY:  Should any provisions of this Agreement, or
rules and regulations adopted hereunder, be deemed or held to be unlawful or
invalid for any reason, such fact shall not adversely affect any of the other
provisions herein or therein contained unless such illegality shall make
impossible or impractical the functioning of this Agreement, and, in such case,
the appropriate parties shall immediately amend this Agreement.

 

Section
10.4  -  TITLES AND HEADINGS:  The titles and headings of the sections in
this Agreement are placed herein for convenience of reference only; in case of
any conflict, the text of this instrument, rather than such titles or headings,
shall control.

 

SECTION XI

 

IMMUNITY OF TRUSTEE

 

Section
11.1  -  INDEMNIFICATION OF TRUSTEE:  The Trustee shall not (except as may be
otherwise provided in ERISA) be held responsible for any loss to the Trust
Fund, or to a Participant, or a Beneficiary, resulting from a breach of duty
committed by any other fiduciary or party-in-interest unless the Trustee acted
negligently and had knowledge of or participated in any such breach of
duty.  The Trustee shall not be liable
for any

 

36

 

act or omission of an Investment Manager or
the Committee in connection with the Investment Manager’s or Administrator’s
discharge of its duties.  The Company
agrees to indemnify and to hold the Trustee harmless from any liability imposed
as a result of a claim asserted by any person or persons under the federal or
state law where the Trustee has acted in good faith or in reliance on the
written direction or participation of the Committee, the Company or an
Investment Manager duly appointed unless the Trustee’s action or inaction
results from its own negligence, error, mistake, bad faith, fraud, willful
misconduct, or breach of any applicable law, the Plan or this Agreement.  In addition, if the Committee has retained or
directed the Trustee to retain and appoint a Recordkeeper, Custodian or Agent,
the Trustee shall be fully protected in relying on all information supplied by
the Recordkeeper, the Custodian, or the Agent or their designees in performing
any of the obligations under this Agreement, unless the Trustee’s action or
inaction results from its negligence error, mistake, bad faith, fraud, willful
misconduct, or breach of any applicable law, the Plan or this Agreement.

 

ACCEPTANCE

 

The persons
appearing hereby on behalf of the appearing parties hereby accept, ratify and
confirm this Deed, and I, the Notary, do hereby certify that I have advised
them as to the pertinent legal warnings and of the legal effects of the present

 

37

 

document as well as of their right under the
Puerto Rico Notarial Act of 1987 to have witnesses appear herein and read and
sign this Deed together with them, which right they have waived.  After this Deed having been read by them, to
which fact I hereby certify, the said appearing representatives approve and
ratify its contents and sign the same before me, and affix their initials on
each and every page of this instrument, all before me, the Notary.

 

WHEREFORE, I,
the Notary, authorizing this instrument, upon my notarial faith and under my
signature, mark and seal, DO HEREBY ATTEST to all of which is hereinabove
stated.

 

38

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