10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 1-31946

HOSPIRA, INC.
(Exact name of registrant as specified in its charter)

Delaware	20-0504497
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

275 North Field Drive
Lake Forest, Illinois 60045
(Address of principal executive offices, including zip code)

(224) 212-2000
(Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:

Title of Class	Name of Exchange on which each class is registered
Common Stock, par value $0.01 per share	New York Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act: Common Stock: None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ý

         The aggregate market value of registrant's common stock held by non-affiliates of the registrant on June 30, 2009 (the last business day of the registrant's most recently completed second fiscal quarter), was approximately $6,201.4 million.

         Registrant had 163,850,606 shares of common stock outstanding as of February 5, 2010.

INCORPORATION OF DOCUMENTS BY REFERENCE

         Certain sections of the registrant's Proxy Statement to be filed in connection with the 2010 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K where indicated. The 2010 Proxy Statement will be filed on or about March 26, 2010.

HOSPIRA, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

		Page Number
PART I		1
Item 1	Business	1
Item 1A	Risk Factors	12
Item 1B	Unresolved Staff Comments	22
Item 2	Properties	23
Item 3	Legal Proceedings	24
Item 4	Submissions of Matters to a Vote of Security Holders	25
	Executive Officers of Hospira	25
PART II		27
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
Item 6	Selected Financial Data	29
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 7A	Qualitative and Quantitative Disclosures About Market Risk	48
Item 8	Financial Statements and Supplementary Data	50
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	98
Item 9A	Controls and Procedures	98
Item 9B	Other Information	98
PART III		99
Item 10	Directors, Executive Officers and Corporate Governance	99
Item 11	Executive Compensation	99
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	99
Item 13	Certain Relationships and Related Transactions, and Director Independence	100
Item 14	Principal Accounting Fees and Services	100
PART IV		101
Item 15	Exhibits and Financial Statement Schedules	101

FORWARD-LOOKING STATEMENTS

        This annual report contains forward-looking statements within the meaning of the federal securities laws. Hospira intends that these forward-looking statements be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as "may," "will," "should," "anticipate," "estimate," "expect," "plan," "believe," "predict," "potential," "project," "intend," "could" or similar expressions. In particular, statements regarding Hospira's plans, strategies, prospects and expectations regarding its business and industry are forward-looking statements. You should be aware that these statements and any other forward-looking statements in this document only reflect Hospira's expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Many of these risks, uncertainties and assumptions are beyond Hospira's control, and may cause actual results and performance to differ materially from its expectations. Important factors that could cause Hospira's actual results to be materially different from its expectations include (i) the risks and uncertainties described in "Item 1A. Risk Factors" and (ii) the factors described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." Accordingly, you should not place undue reliance on the forward-looking statements contained in this annual report. These forward-looking statements speak only as of the date on which the statements were made. Hospira undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I

Item 1.    Business

Overview

        Hospira, Inc. ("Hospira") is a global specialty pharmaceutical and medication delivery company that develops, manufactures and markets products that help improve the safety, cost and productivity of patient care. Hospira's portfolio includes generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems. Hospira's portfolio of products is used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities.

        Hospira conducts operations worldwide and is managed in three reportable segments: Americas; Europe, Middle East and Africa ("EMEA"); and Asia Pacific ("APAC"). The Americas segment includes the United States ("U.S."), Canada and Latin America; the EMEA segment includes Europe, the Middle East and Africa; and the APAC segment includes Asia, Japan, Australia and New Zealand. In all segments, Hospira sells a broad line of products, including specialty injectable and other pharmaceuticals and medication management systems and other devices. For financial information relating to Hospira's segments and the geographic areas, see Note 12 to the consolidated financial statements included in Item 8 of this document, which is incorporated herein by reference. Unless the context requires otherwise, the disclosures in Items 1 and 1A relate to all three reportable segments.

General Development of Business

        Hospira was incorporated in Delaware on September 16, 2003, as a wholly owned subsidiary of Abbott Laboratories ("Abbott"). Hospira's business first began operation as part of Abbott in the 1930s. As part of a plan to spin off its core hospital products business ("spin-off"), Abbott transferred the assets and liabilities relating to Hospira's business to Hospira and, on April 30, 2004, distributed Hospira's common stock to Abbott's shareholders. On that date, Hospira began operating as an independent company, and on May 3, 2004, Hospira's common stock began trading on the New York Stock Exchange under the symbol "HSP."

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        In February 2007, Hospira acquired Mayne Pharma Limited ("Mayne Pharma"), an Australia-based specialty injectable pharmaceutical company listed on the Australian Stock Exchange, for $2,055.0 million in cash. Hospira's financial statements included in this report do not include the financial results of Mayne Pharma for any of the periods or at any of the dates presented prior to February 2007. Hospira has completed integrating Mayne Pharma into its operations.

        In March 2009, Hospira announced details of a restructuring and optimization plan ("Project Fuel"), which would occur over the next 2 years from the date of announcement. Project Fuel includes the following activities: optimizing the product portfolio, evaluating non-strategic assets and streamlining the organizational structure. For further information related to Project Fuel, including the financial impact of the project, see the section captioned Project Fuel in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," which is incorporated herein by reference.

        In December 2009, Hospira announced an agreement to acquire a certain business of Orchid Chemicals & Pharmaceuticals Ltd. ("Orchid Pharma"), an Indian pharmaceutical company for approximately $400 million. The acquisition includes U.S. Food and Drug Administration ("FDA") approved facilities and equipment used for the manufacture of beta-lactam antibiotics, the site's pharmaceutical research and development facility, the generic injectable product portfolio and pipeline and the employees associated with the operation. The transaction is expected to close in the first quarter of 2010.

Products

        Hospira offers the following types of products and services:

Product Line	Description
Specialty Injectable Pharmaceuticals	•       Approximately 200 injectable generic drugs in multiple dosages and formulations
	•       Proprietary specialty injectables, including PrecedexTM (dexmedetomidine HCl), a proprietary drug for sedation
	•       RetacritTM (erythropoietin zeta), a biogeneric version of erythropoietin, used primarily in the treatment of anemia in dialysis and in certain oncology applications
Other Pharmaceuticals	•       Large volume intravenous ("I.V.") solutions and nutritional products
	•       Contract manufacturing services
Medication Management Systems	•       Infusion pumps and administration sets for the infusion pumps
	•       Hospira MedNetTM safety software system and related services
	•       Software applications and devices that support point of care medication administration
Other Devices	•       Gravity administration sets
	•       Other device products

Specialty Injectable Pharmaceuticals

        Hospira's specialty injectable pharmaceutical products primarily consist of generic injectable pharmaceuticals, which provide customers with a lower-cost alternative to branded products that are no longer patent protected. These drugs' therapeutic areas include analgesia, anesthesia, anti-infectives,

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cardiovascular, oncology, and other areas. All of Hospira's generic injectable pharmaceuticals in the U.S. include unit-of-use bar-code labels that can be used to support safer medication delivery. Hospira primarily procures the active pharmaceutical ingredients in these products from third-party suppliers.

        During 2009, Hospira broadened its global portfolio with the introduction into new markets of more than 23 drugs that the company had previously launched in other markets. In addition, Hospira launched several new generic injectable pharmaceutical products in the U.S. including oxaliplatin and azithromycin, both for injection, and expanded its offering of heparin to include high-dose flip-top vials. Hospira has launched its first biogeneric, Retacrit^TM, in 16 EMEA countries. Biogeneric products, also called biosimilars, are large complex molecules derived from cells that are demonstrated to be similar to an approved biologic product.

        Hospira believes that novel drug delivery formulations and formats are key points of product differentiation for generic injectable pharmaceuticals. Hospira offers a wide variety of drug delivery options, and believes that its products assist its customers' efforts to enhance safety, increase productivity and reduce waste. Hospira's drug delivery formats include standard offerings in ampoules and flip-top vials, which clinicians can use with standard syringes. Hospira's proprietary drug delivery options include Carpuject^TM and iSecure^TM prefilled syringes, Ansyr^TM prefilled needleless emergency syringe systems, First Choice^TM ready-to-use premixed formulations and the ADD-Vantage^TM system for preparing drug solutions from prepackaged drug powders or concentrates.

        Hospira's specialty injectable pharmaceutical product portfolio also includes Precedex^TM (dexmedetomidine HCl), a proprietary sedative. Precedex^TM is licensed to Hospira in the Americas and APAC segments, and in the Middle East and Africa. Hospira sells and markets Precedex^TM for use in non-intubated patients requiring sedation, as well as intubated and mechanically ventilated patients.

Other Pharmaceuticals

        Hospira's other pharmaceuticals primarily consist of large volume I.V. solutions, nutritionals and contract manufacturing services.

        Hospira offers infusion therapy solutions and related supplies that include I.V. solutions for general use, I.V. nutrition products, and solutions for the washing and cleansing of wounds or surgical sites. All of Hospira's injectable I.V. solutions in the U.S. include unit-of-use bar-code labels that can be used to support medication management efforts. Hospira also offers infusion therapy solutions in its VisIV^TM next-generation non-PVC, non- DEHP I.V. container, an I.V. bag with advanced safety and environmentally friendly features.

        Hospira's One2One^TM services group provides formulation development, filling and finishing of injectable and oral drugs worldwide. Hospira works with its proprietary pharmaceutical and biotechnology customers to develop stable injectable forms of their drugs, and Hospira fills and finishes those and other drugs into containers and packaging selected by the customer. The customer then sells the finished products under its own label. Hospira's One2One^TM manufacturing services group does not generally manufacture active pharmaceutical ingredients, but offers a wide range of filling and finishing services in a variety of delivery systems. As part of Project Fuel, in 2009 and early 2010, Hospira sold its facilities in Salisbury, Australia and Wasserburg, Germany which primarily performed contract manufacturing.

Medication Management Systems

        Medication management systems include electronic drug delivery pumps, safety software and disposable administration sets dedicated to Hospira pumps. These sets are used to deliver I.V. fluids and medications. Hospira also offers software maintenance agreements and other service offerings. Hospira estimates that approximately 550,000 of its electronic drug delivery pumps were in use on a

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global basis as of December 31, 2009. Hospira's electronic drug delivery pumps include Hospira's general infusion system, Symbiq^TM; the Plum A+^TM line of infusion pumps; Hospira's patient-controlled analgesia device, LifeCare PCA^TM; GemStar^TM ambulatory infusion pump; and Plum^TM XLD infusion pump.

        Hospira believes that electronic drug delivery pumps with enhanced systems capabilities have become a key contributor in efforts to improve medication management programs and reduce the incidence of medication errors. Some of Hospira's pumps use bar coding to read drug labels that are compatible with other Hospira products, reducing the opportunity for drug infusion errors. Hospira offers the Hospira MedNet^TM safety software system, which has been designed to enable hospitals to customize intravenous drug dosage limits and track drug delivery to prevent medication errors. Through its drug library and programmable drug dosage limits, the system can help ensure that medication is infused within hospital-defined dose guidelines and best practices. The wireless network version of the Hospira MedNet^TM system establishes real-time send-and-receive capability and can interface with select hospital and pharmacy information systems. Hospira continues to work with hospital information technology companies to integrate the Hospira MedNet^TM system with other systems.

        The Hospira MedNet^TM system is standard in the Symbiq^TM infusion system, and is also available as an additional feature for the Plum A+^TM line of infusion pumps, and LifeCare PCA^TM patient-controlled analgesia device, which, when aggregated represent the majority of Hospira's line of electronic drug delivery pumps. Hospira also offers safety software with its GemStar^TM ambulatory infusion pump.

        Medication management systems also include the VeriScan^TM Rx Medication Administration System, a software application that supports bar code medication administration at the point of care and the EndoTool^TM glucose management system, a software system that helps establish and maintain patient glycemic control in acute, critical care and operating room settings. Hospira has submitted a 510k application on the integration of its Symbiq^TM pump with the EndoTool^TM glucose management software system, while still offering EndoTool^TM on a stand-alone basis. In 2009, Hospira acquired TheraDoc, Inc. and its Infection Control Assistant^TM and Antibiotic Assistant^TM products, software applications that automate hospital-wide surveillance for infection-related events and optimize the utilization of antimicrobials.

Other Devices

        The other devices product line includes gravity administration sets and other devices products. Other devices also included the critical care product line until August 2009. As part of Project Fuel's evaluation of non-strategic assets, in August 2009, Hospira sold the commercial rights and the physical assets of its critical care product line to ICU Medical, Inc. ("ICU Medical").

        The devices products include needlestick safety products and programs to support Hospira's customers' needlestick prevention initiatives. LifeShield^TM, CLAVE^TM and MicroCLAVE^TM connectors are one-piece valves that directly connect syringes filled with medications to a patient's I.V. line without the use of needles. ICU Medical's CLAVE^TM connectors are a component of administration sets sold by Hospira to its customers in the U.S. and select markets outside the U.S.

Sales, Customers and Distribution

        Sales.    Net sales (gross sales less reductions for wholesaler chargebacks, rebates, returns and other allowances) in the Americas segment accounted for approximately 79% of Hospira's 2009 net sales. Net sales in the EMEA and APAC segments comprised approximately 14% and 7%, respectively, of 2009 net sales. Hospira's sales organizations include sales professionals who sell across its major product lines, as well as product specialists who detail and promote its medication management systems, or who market and sell Precedex^TM and select other products. Hospira also has extensive experience

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contracting with, marketing to and servicing members of the major group purchasing organizations ("GPOs") in the U.S.

        Customers.    Hospira's primary customers in the Americas segment include hospitals, wholesalers, integrated delivery networks ("IDN") and alternate site facilities. In the U.S., a substantial portion of Hospira's product is sold to GPO member hospitals and through wholesalers and distributors. Net sales through the largest four wholesalers that supply products to many end-users accounted for approximately 42% of global net sales during 2009. As end-users have multiple ways to access Hospira's products, including through more than one wholesaler or distributor, and, in some cases, from Hospira directly, Hospira believes that it is not dependent on any single wholesaler or distributor for distribution of its products. Hospira has no single end-use customer that accounts for more than 10% of net sales. Hospira has pricing agreements for specified products with the major GPOs in the United States, including Amerinet, Inc.; Broadlane Inc.; HealthTrust Purchasing Group LP; MedAssets, Inc.; Novation, LLC; PACT, LLC; and Premier Purchasing Partners, LP. The scope of products included in these agreements varies by GPO.

        Hospira's primary customers in the EMEA and APAC segments are hospitals and wholesalers that Hospira serves through its own sales force and its distributors. The majority of Hospira's business in the EMEA and APAC segments is conducted through contracting with individual hospitals or through regional or national tenders whereby Hospira submits bids to sell its products.

        Distribution.    In the America segment, Hospira's products are primarily distributed in the U.S. through a network of company-operated distribution facilities and public warehouses, as well as through external distributors. The U.S. distribution facilities Hospira operates are located in Atlanta, Georgia; Dallas, Texas; King of Prussia, Pennsylvania; Los Angeles, California; and Pleasant Prairie, Wisconsin. For the remainder of the Americas segment outside the U.S., Hospira utilizes third-party logistics providers, including operations in Toronto, Canada, and several smaller warehouses in Canada and Latin America.

        In the EMEA and APAC segments, Hospira manages its distribution operations mainly through third-party logistics providers. Hospira's regional headquarters are located in Royal Leamington Spa, United Kingdom, for EMEA and Melbourne, Australia, for APAC. Hospira has direct commercial infrastructure in some countries and operates through distributors in others.

Seasonal Aspects, Backlog and Renegotiation

        There are no significant seasonal aspects to Hospira's consolidated net sales. Hospira believes that backlogged orders do not represent a material portion of its sales or provide a meaningful indication of future sales. No material portion of Hospira's business is subject to renegotiation of profits or termination of contracts at the election of the government.

Product Development and Manufacturing

        Hospira's product development programs are concentrated in the areas of specialty injectable pharmaceuticals and medication management systems. Hospira also maintains an active development program to support its injectable pharmaceutical contract manufacturing relationships. Hospira engages in programs to bring new products to market that are unique or that enhance the effectiveness, ease of use, productivity, safety or reliability of existing product lines. Hospira also engages in programs to expand the use of products in new markets or new applications. Hospira operates significant product development facilities in Lake Forest, Illinois; McPherson, Kansas; San Diego, California; Mulgrave, Victoria, Australia; and Adelaide, South Australia, Australia.

        In Hospira's specialty injectable pharmaceuticals product line, Hospira is actively working to develop small molecule compounds. For certain of these compounds, Hospira is actively pursuing a

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strategy of challenging the intellectual property of proprietary pharmaceutical companies in an effort to be the first generic company to the market. Hospira is also actively working to develop and commercialize biosimilars products. In addition to the launch of Retacrit^TM in the European Union in 2008, Hospira has also accomplished other significant milestones with biogenerics, including the submission of a dossier for marketing authorization to the European Union for filgrastim and the initiation of a Phase 1 study for pegfilgrastim, the long-acting version of filgrastim. Filgrastim and pegfilgrastim are used primarily in the treatment of neutropenia (low white blood cells) in patients who have received a chemotherapeutic agent. In 2009, Hospira acquired worldwide rights to the biogeneric version of filgrastim and a biologic manufacturing facility from PLIVA Hrvatska d.o.o. This is in alignment with Hospira's biogenerics strategy, which is to expand its biogenerics portfolio and capabilities with measured investment and risk. In 2008, Hospira entered into a process development and bulk drug manufacturing relationship with Human Genome Sciences ("HGS") for biogeneric products for the U.S. market. In the fourth quarter of 2009, Hospira entered into an agreement with Celltrion, Inc. and Celltrion Healthcare, Inc. to develop and market eight biogeneric molecules, five of which are new to Hospira's biogeneric portfolio. With the addition of the five incremental Celltrion biogenerics, Hospira's biogeneric pipeline has been expanded to eleven biogeneric products.

        Hospira continues to invest in Precedex^TM for expansion of clinical use and is seeking opportunities to selectively invest in various other proprietary systems and molecules that align with its business strategy. In 2009, Hospira and ChemGenex Pharmaceuticals Limited ("ChemGenex") entered into a collaborative agreement to develop, license, and commercialize a ChemGenex proprietary oncology product candidate in EMEA.

        Hospira's key programs in the area of medication management systems include the development of advanced infusion platforms and systems, including its Hospira MedNet^TM safety software system, and systems that emphasize ease of use for clinicians, including its Symbiq^TM infusion pump. Hospira has entered into alliances with several leading information technology companies to develop interfaces that enable the Hospira MedNet^TM system to be used with a variety of hospital information systems and to improve cost efficiencies in patient management. Hospira expects to continue entering into strategic alliances as part of its "open architecture system" strategy for the Hospira MedNet^TM system. Hospira also has submitted a 510k application on the integration of its Symbiq^TM pump with the EndoTool^TM glucose management software system, while still offering the EndoTool^TM on a stand alone basis. In addition, in 2009, Hospira acquired TheraDoc, Inc. and its Infection Control Assistant^TM and Antibiotic Assistant^TM products, software applications that automate hospital-wide surveillance for infection-related events and optimize the utilization of antimicrobials.

        Hospira's research and development expenses were $240.5 million in 2009, $211.9 million in 2008 and $201.2 million in 2007.

        As of December 31, 2009, Hospira operated 13 manufacturing facilities globally. Hospira's principal manufacturing facilities are identified in Item 2 of this report. Hospira's largest facilities, located in Rocky Mount, North Carolina; Austin, Texas; LaAurora, Costa Rica; McPherson, Kansas; and Mulgrave, Victoria, Australia, account for a significant portion of Hospira's manufacturing output. While Hospira has not experienced a significant interruption of manufacturing at those facilities, such an interruption could materially and adversely affect Hospira's ability to manufacture and sell its products.

Raw Materials and Components

        While Hospira produces some raw materials, components and active pharmaceutical ingredients at its manufacturing sites, the majority are sourced on a global basis from third-party suppliers.

        Although many of the raw materials and components Hospira uses to produce its products are readily available from multiple suppliers, Hospira relies on supply from a single source for many raw

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materials and components. For example, Hospira relies on certain proprietary components available exclusively from ICU Medical. ICU Medical's CLAVE^TM and MicroCLAVE^TM connector products are components of administration sets that represented approximately 15% of Hospira's 2009 U.S. net sales. In addition, Hospira purchases some of its other raw materials and components from single suppliers for reasons of quality assurance, sole-source availability, cost effectiveness or constraints resulting from regulatory requirements.

        To manage risk, Hospira continually evaluates alternate-source suppliers, although it does not typically pursue regulatory qualification of alternative sources due to the strength of its existing supplier relationships, the reliability of its current supplier base, and the time and expense associated with the regulatory process. Although a change in suppliers could require significant effort or investment by Hospira in circumstances where the items supplied are integral to the performance of its products or incorporate unique technology, Hospira does not believe that the loss of any existing supply arrangement (other than its CLAVE^TM supply arrangement with ICU Medical, which continues through 2014) would have a material adverse effect on its business.

Quality Assurance

        Hospira has developed and implemented quality systems and concepts throughout its organization. Hospira is actively involved in setting quality policies and managing internal and external quality performance. Its quality assurance department provides quality leadership and supervises its quality systems. An active audit program, utilizing both internal and external auditors, monitors compliance with applicable regulations, standards and internal policies. In addition, Hospira's facilities are subject to periodic inspection by the FDA and other regulatory authorities. Hospira has received notices from regulatory authorities alleging violations of applicable regulations and standards, and Hospira has developed definitive action plans, implemented remedial programs and modified its practices to address these issues. During 2009, Hospira received a warning letter from the FDA related to Hospira's corrective action plans with respect to the failure of certain AC power cords manufactured by a third party. The affected power cords are used on certain infusion pumps and related products. Hospira initiated a voluntary recall of the affected power cords in August 2009. Hospira has responded to the warning letter and is working closely with the FDA to conclude this matter. Hospira initiated other voluntary recalls of certain other products and initiated field corrections and other remedial actions with respect to those products. Hospira continues to have an ongoing dialogue with the FDA. These matters have not materially impacted Hospira's ability to market and sell its products.

Competition

        Hospira's industry is highly competitive. Hospira believes that the most effective competitors in its industry are those focused on product quality and performance, breadth of product offering, and manufacturing efficiency as well as the ability to develop and deliver cost-effective products that help hospitals improve the safety of patient care, reduce medication errors and provide high quality care. These are increasingly important factors in a healthcare environment that requires increasing levels of efficiency and productivity.

        Hospira's most significant competitors in specialty injectable pharmaceuticals include Baxter International Inc. ("Baxter"), Bedford Laboratories (a division of Boehringer Ingelheim), Fresenius Medical Care AG, Sandoz, Teva Pharmaceuticals ("Teva"), as well as divisions of several multinational pharmaceutical companies. Local manufacturers of specialty injectable pharmaceuticals also compete with Hospira on a country-by-country basis. Hospira's most significant competitors in medication management systems include Baxter, B. Braun Melsungen AG, CareFusion and Fresenius Medical Care AG.

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        Hospira believes that it is one of the leading competitors, in terms of U.S. market share, in each of its major product lines, and believes that its size, scale, customer relationships and breadth of product line are significant contributors to its market positions. Hospira believes that to further its competitive position it must continue to invest significantly in, and successfully execute, its research and product development activities, and optimize its manufacturing efficiency and productivity. Particularly, within its specialty injectable product line, Hospira seeks to maximize its opportunity to establish a "first-to-market" position for its generic injectable drugs and, within its medication management systems product line, Hospira seeks to differentiate its products through technological innovation and an integrated approach to drug delivery. These efforts will depend heavily on the success of Hospira's research and development programs.

        In the EMEA segment, the use of generic pharmaceuticals is subject to variations in the structure of health care systems (including purchasing practices) and government policies regarding the use of generic products and pricing, which all lead to differing levels of customer acceptance. There are different policies and levels of generic penetration in each country in EMEA, causing the competition for generic pharmaceuticals to differ widely. In EMEA, competitors tend to vary by country and are often smaller in scale than those in the U.S., although some consolidation and geographic expansion is now occurring. Teva is the largest company that competes with Hospira in the generic oncology market across Europe. Hospira's other key competitors vary from country to country.

        The use of generic pharmaceuticals in the APAC segment is subject to variations in government policies and public perception. In Australia, generic penetration is moderate and growing primarily due to changes in government support. Competitors include Sandoz and Teva, a number of smaller competitors and the innovator companies. In Asia, Hospira sells its products primarily to public and private hospitals. Hospira's competition in Asia tends to be with the innovator companies and multinational companies such as Teva. In Japan, the market share of generic pharmaceutical products traditionally has been low because of quality perceptions, product format and other regulatory differences in comparison to other markets. The Japanese government is actively pursuing a program to double generic usage within the next three years. Laws in Japan have been introduced to allow for easier substitution of generics for branded pharmaceuticals and to change financial incentives for hospitals and clinics to use generics, in a government sponsored effort to reduce costs, which is believed to have resulted in an increased acceptance of generic pharmaceutical products.

Patents, Trademarks and Other Intellectual Property

        When possible, Hospira seeks patent and trademark protection for its products. Hospira owns, or has licenses under, a substantial number of patents, patent applications, trademarks and trademark applications. Hospira is in patent litigation concerning its proprietary product, Precedex^TM. The patents at issue in that litigation are detailed in Item 3 "Legal Proceedings."

Employees

        As of December 31, 2009, Hospira had approximately 13,500 employees. Approximately 7,400 employees were in the U.S. Hospira believes that it generally has a good relationship with its employees and the works councils and unions that represent certain employees.

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Governmental Regulation and Other Matters

        Hospira's operations and business activities are subject to extensive legal and regulatory requirements that are enforced by numerous governmental agencies in the countries in which it does business. If it were determined that Hospira was not in compliance with these laws and regulations, Hospira could be subject to criminal and/or civil liability and other material adverse effects. Hospira has compliance programs in place to ensure compliance with these laws and believes that it is in compliance in all material respects with applicable laws and regulations, including those described below.

Drug and Medical Device Laws

        Most of Hospira's products and facilities and those of Hospira's suppliers are subject to drug and medical device laws and regulations promulgated by the FDA and national and supranational regulatory authorities outside the U.S., including Health Canada's Health Products and Foods Branch, the U.K.'s Medicines and Healthcare Products Regulatory Agency, the European Medicines Agency for the Evaluation of Medicinal Products for Human Use and Australia's Therapeutics Goods Agency. These authorities regulate a range of activities including, among other matters, manufacturing, post-marketing studies in humans, advertising and promotion, product labeling, post-marketing surveillance and reporting of adverse events.

        All aspects of Hospira's manufacturing and distribution of regulated products and those of Hospira's suppliers are subject to substantial governmental oversight. Facilities used for the production, packaging, labeling, storage and distribution of drugs and medical devices must be registered with the FDA and other regulatory authorities. All manufacturing activities for these products must be conducted in compliance with current good manufacturing practices. Hospira's manufacturing facilities and those of Hospira's suppliers are subject to periodic, routine and for-cause inspections to verify compliance with current good manufacturing practices. New manufacturing facilities or the expansion of existing facilities require inspection and approval by the FDA and other regulatory authorities before products produced at that site can enter commercial distribution. If, upon inspection, the FDA or another regulatory agency finds that a manufacturer has failed to comply with current good manufacturing practices, it may take various enforcement actions, including, but not limited to, issuing a warning letter or similar correspondence, mandating a product recall, seizing violative product, imposing civil penalties, and referring the matter to a law enforcement authority for criminal prosecution. These actions could result in, among other things, substantial modifications to Hospira's business practices and operations; a total or partial shutdown of production in one or more of Hospira's facilities while Hospira or Hospira's suppliers remedy the alleged violation; the inability to obtain future pre-market clearances or approvals; and withdrawals or suspensions of current products from the market. Any of these events could disrupt Hospira's business and have a material adverse effect on Hospira's revenues, profitability and financial condition. For information related to the 2009 warning letter received by Hospira and other voluntary recalls and corrective actions in 2009, see the section captioned "Quality Assurance."

        Hospira continues to make improvements to our products to further reduce patient safety issues. Based upon our consultations with the FDA and other regulatory authorities, these improvements may require Hospira to initiate recalls or corrective actions if the improvement reduces the health risk posed by the product and not making the improvements to the on-market product is deemed a patient safety issue.

        Hospira's sales and marketing activities for its products, particularly its prescription drugs and medical devices, are also highly regulated. Regulatory authorities have the power to mandate the discontinuation of promotional materials, practices and programs that include information beyond the

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scope of the indications in the approved or cleared labeling or that are not in compliance with specific regulatory requirements.

        Some of Hospira's drug products are considered controlled substances and are subject to additional regulation by the U.S. Drug Enforcement Administration ("DEA") and various state and international authorities. These drugs, which have varying degrees of potential for abuse, require specialized controls for production, storage and distribution to prevent theft and diversion.

        Hospira has begun investing in the development of generic and/or similar versions of currently marketed biopharmaceuticals. In November 2005, the European Medicines Agency implemented guidelines which provided a pathway for the approval of certain biogenerics in the European Union. In the U.S., there is no specific regulatory pathway for abbreviated approval of the majority of biogenerics. The U.S. Congress and the FDA are considering legislation and regulatory proposals that would allow the FDA to approve and companies to market these products in the U.S. If adopted, the specific legislative or regulatory provisions could have a material impact on Hospira's business.

Healthcare Fraud and Abuse Laws

        As a manufacturer and distributor of prescription drugs and medical products to hospitals and other healthcare providers, Hospira and its customers are subject to laws which apply to Medicare, Medicaid, and other federal and state healthcare programs in the U.S. One such law, the Anti-kickback Statute, prohibits the solicitation, offer, payment or receipt of remuneration in return for referral or purchase, or in return for the recommending or arranging for the referral or purchase, of products covered by the programs. The Anti-kickback Statute provides a number of exceptions or "safe harbors" for particular types of transactions. While Hospira generally does not file claims for reimbursement from government payors, the U.S. federal government has asserted theories of liability against manufacturers under the Federal False Claims Act, which prohibits the submission of false claims to Medicare, Medicaid, and other state and federal programs. Many states have similar fraud and abuse laws which apply to Hospira.

Anti-bribery Laws

        Hospira's global activities are subject to the U.S. Foreign Corrupt Practices Act and other countries' anti-bribery laws that have been enacted in support of the Organization for Economic Cooperation and Development's Anti-bribery Convention. These laws prohibit companies and individuals from offering or providing anything of value to government officials with the intent of inappropriately gaining a business advantage. They also require companies to maintain accurate books and records and internal financial controls. The enforcement of such laws in the U.S. and elsewhere has increased dramatically in the past few years. Hospira has a compliance program in place to ensure compliance with these laws.

Environmental Laws

        Hospira's manufacturing operations are subject to many requirements under environmental laws. In the U.S., the Environmental Protection Agency and similar state agencies administer laws which restrict the emission of pollutants into the air, the discharge of pollutants into bodies of water and the disposal of hazardous substances. The failure to obtain a permit for certain activities may be a violation of environmental laws. Most environmental agencies also have the power to shut down an operation if it is operating in violation of environmental laws. U.S. laws also allow citizens to bring private enforcement actions in some situations. Outside the U.S., the environmental laws and their enforcement vary, and can be more burdensome. For example, in some European countries, there are environmental taxes and laws requiring manufacturers to take back used products at the end of their useful life. This does not currently have a significant impact on Hospira's products, but such laws are

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expanding rapidly in Europe. Hospira has management systems in place that are intended to minimize the potential for violation of these laws.

        Other environmental laws address the contamination of land and groundwater, and require the clean-up of such contamination. Hospira has been involved with a number of sites at which clean-up has been required, some as the sole owner and responsible party, and some as a contributor in conjunction with other parties. Hospira believes that environmental compliance has not had, and will not have, a material adverse effect on our operations, results or competitive position.

Safety and Health Laws

        In the U.S., the Occupational Safety and Health Act sets forth requirements for conditions of the workplace. Hospira's operations are subject to many of these requirements, particularly in connection with Hospira's employees' use of equipment and chemicals at manufacturing sites that pose a potential health or safety hazard.

Transportation Laws

        Hospira's operations include transporting materials defined as "hazardous" over land, sea and through the air. All of these activities are regulated under laws administered by the U.S. Department of Transportation and similar agencies outside the U.S. They include complex requirements for packing, labeling and recordkeeping.

Customs, Export and Anti-boycott Laws

        The import and export of products, technology, equipment and other business materials across national borders are subject to regulation by U.S. agencies, including the U.S. Customs and Border Protection, the Bureau of Industry and Security, Department of Commerce and the Office of Foreign Assets Control—Treasury Department, as well as other national and supranational regulatory authorities. As the importer and exporter of products and technologies, Hospira must comply with all applicable customs, export and anti-boycott laws and regulations and must pay fees and duties on certain shipments.

State Laws

        There are numerous legal and regulatory requirements imposed by individual states in the U.S. on pharmaceutical and medical device companies doing business in those states. For example, several states either require the tracking and reporting of specific types of interactions which pharmaceutical and medical device companies have with healthcare professionals or restrict such interactions.

        California has enacted Senate Bill ("SB") 1307, which provides for major changes to the California e-Pedigree laws. SB 1307 requires that drug manufacturers, like Hospira, implement unit serialization and e-pedigree processes by 2015 that provide track and trace technology for drugs dispensed to patients in the state of California. Some of Hospira's drug products, such as the I.V. solutions, are exempted from California's e-Pedigree requirements. Failure to comply could result in pharmacies and wholesalers not being allowed to distribute, dispense, or accept any non-pedigreed drugs for sale in California.

Other Laws

        Hospira is also subject to a variety of other laws, directives and regulations in and outside of the U.S., including income, value added and excise taxes. Hospira stays abreast of, and plans for, proposed legislation that could significantly affect our operations. For example, Hospira tracks laws that may impact Hospira's employees, like the U.S. Employee Free Choice Act, or laws that may impact our business and customers, such as the two U.S. healthcare reform bills: "The Affordable Health Care for

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America Act" in the House of Representatives and the "Patient Protection and Affordable Care Act" amendment in the Senate. In the U.S., Hospira could see material changes in certain areas such as medical device excise taxes, the 340B drug discount program, Medicaid drug rebates, medical device registry, reporting requirements for physician payments and reporting requirements for drug Average Manufacturer Price (AMP). Tax legislation being considered around the world could also have a significant impact on our financial results.

Internet Information

        Copies of Hospira's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge through the Investor Relations section of Hospira's Web site (www.hospira.com) as soon as Hospira electronically files the material with, or furnishes them to, the Securities and Exchange Commission ("SEC").

        Hospira's corporate governance guidelines, code of business conduct and the charters of its audit, compensation, governance and public policy, and science and technology committees are all available in the Investor Relations section of Hospira's Web site (www.hospira.com) or by sending a request to: Corporate Governance Materials Request, Hospira General Counsel and Secretary, Hospira, Inc., 275 North Field Drive, Dept. NLEG, Bldg. H1, Lake Forest, Illinois 60045.

        Hospira also routinely posts important information for investors on its Web site (www.hospira.com) in its Investor Relations section. Hospira may use this Web site as a means of disclosing material, non-public information and for complying with its disclosure obligations under SEC Regulation FD. Accordingly, investors should monitor the Investor Relations portion of Hospira's Web site, in addition to following Hospira's press releases, SEC filings, and public conference calls and webcasts.

Item 1A.    Risk Factors

        Hospira's business, financial condition, results of operations and cash flows are subject to various risks and uncertainties, including those described below. These risks and uncertainties may cause (1) Hospira's sales and results of operations to fluctuate significantly; (2) Hospira's past performance to not be indicative of future performance; and (3) Hospira's actual performance to differ materially from Hospira's expectations or projections. The risks described below may not be the only risks Hospira faces. Additional risks that Hospira does not yet know of or that Hospira currently thinks are immaterial may also impair its business operations. This Form 10-K also contains forward-looking statements that involve risks and uncertainties. Hospira's results could materially differ from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below. See the section captioned "Forward-Looking Statements."

Hospira faces significant competition and may not be able to compete effectively.

        The healthcare industry is highly competitive. Hospira competes with many companies that range from small, highly focused companies to large diversified healthcare manufacturers that have access to greater financial, marketing, technical and other resources. There has been consolidation by Hospira's competitors and customer base, which has resulted in pricing and sales pressures, causing competition to become more intense. Hospira's present or future products could be rendered obsolete or uneconomical by technological advances by competitors or by the introduction of competing products by one or more of its competitors. To remain competitive and bolster its competitive position, Hospira believes that it must successfully execute various strategic plans, including expanding its research and development initiatives, and lowering its operating costs. These initiatives may result in significant expenditures and ultimately may not be successful. Hospira's failure to compete effectively could cause it to lose market share to its competitors and have a material adverse effect on its sales and profitability.

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If Hospira does not successfully introduce new products in a timely manner, its sales and operating results may decline.

        A key component to Hospira's strategy is effective execution of its research and development activities. Without the timely introduction of new products and enhancements, Hospira's products may become obsolete over time, causing its sales and operating results to suffer. If Hospira does not continue to develop generic injectable pharmaceuticals in a timely manner, its competitors may develop products that are more competitive than Hospira's, and Hospira could find it more difficult to renew or expand GPO pricing agreements or to obtain new agreements. The ability to launch a generic pharmaceutical product at or before generic market formation is important to that product's profitability. Prices for generic products typically decline, sometimes dramatically, following market formation, as additional companies receive approvals to market that product and competition intensifies. If a company can be "first to market," such that the branded drug is the only other competition for a period of time, higher levels of sales and profitability can be achieved. With increasing competition in the generic product market, the timeliness with which Hospira can market new generic products will increase in importance. If Hospira is unable to bring its generic products to market on a timely basis, and secure "first to market" positions, its sales and profitability could be adversely impacted.

        Hospira is also actively working to develop and commercialize biogeneric products. Hospira has entered into several agreements described under "Product Development and Manufacturing" related to expanding its biogenerics portfolio and capabilities. The success of our biogenerics activities depends on several factors, including among other factors, the adoption of certain legislation and regulatory provisions, failure to obtain regulatory approvals, and the success of the arrangements with third parties.

        Hospira faces similar risks if it does not introduce new versions or upgrades to its medication management systems portfolio. Innovations generally require a substantial investment in product development before Hospira can determine their commercial viability, and Hospira may not have the financial resources necessary to fund these innovations. Even if Hospira succeeds in creating new product candidates from these innovations, such innovations may still fail to result in commercially successful products.

        The success of new product offerings will depend on several factors, including Hospira's ability to properly anticipate customer needs, obtain timely regulatory approvals, and manufacture products in an economic and timely manner. Even if Hospira is able to successfully develop new products or enhancements, they may not produce sales equal to or greater than the costs of development or may not avoid infringing the proprietary rights of third parties. They may be quickly rendered obsolete by changing customer preferences or the introduction by competitors of products embodying new technologies or features. Moreover, innovations may not become successful because of difficulties encountered in achieving positive clinical outcomes, meeting safety, efficacy or other regulatory requirements of government agencies, or obtaining favorable pricing on such products. Finally, innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice, and uncertainty over third-party reimbursement.

Failure to effectively manage efforts under product collaboration agreements may harm Hospira's business and profitability.

        Hospira collaborates with other companies for the development, regulatory approval, manufacturing and marketing of new products in both the specialty injectable pharmaceutical and medication management systems product lines. Hospira has entered into collaboration agreements relating to the long-term development and commercialization of biogeneric products, which Hospira views as an important long-term opportunity for its specialty injectable pharmaceutical product line.

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Hospira's ability to benefit from these arrangements will depend on its ability to successfully manage these arrangements and the performance of the other parties to these arrangements. Hospira and the other parties to these arrangements may not efficiently work together, leading to higher-than-anticipated costs and delays in important activities under the arrangements. The other parties to these arrangements may not devote the resources that are required for the arrangement to be successful. These arrangements are often governed by complex agreements that may be subject to differing interpretations by the parties, which may result in disputes. These factors are often beyond the control of Hospira, and could harm Hospira's sales, product development efforts and profitability.

The Company is increasingly dependent on its outsourcing and third-party provider arrangements.

        Hospira is becoming more dependent on its outsourcing arrangements, and if problems were to develop with respect to these arrangements, Hospira's business could be negatively impacted. Hospira is increasing its dependence on third-party providers for certain services, some of which include processes provided off-shore, including certain information technology, research and development, third party manufacturing, and finance and accounting outsourcing arrangements. The failure of these service providers to meet their obligations or the development of significant disagreements or other factors may materially disrupt Hospira's ongoing relationship with these providers or the services they provide could negatively affect operations.

Hospira is subject to the cost-containment efforts of wholesalers, distributors, third-party payors and government organizations.

        Hospira relies on drug wholesalers to assist in the distribution of its generic injectable pharmaceutical products. In general, drug wholesalers have been attempting to implement a fee-for-service model for the distribution of such products. While Hospira has business arrangements in place with its major drug wholesalers, if Hospira is required to pay fees not contemplated by its existing arrangements, Hospira will incur additional costs to distribute its products, which may harm Hospira's profitability.

        Hospira's products and services are sold to hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities which receive reimbursement for the healthcare services provided to their patients from third-party payors, such as government programs, private insurance plans and managed-care programs. These third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement for medical products and services. Levels of reimbursement, if any, may be decreased in the future, and future healthcare reform legislation, regulations or changes to reimbursement policies of third-party payors may otherwise adversely affect the demand for and price levels of Hospira's products, which could have a material adverse effect on Hospira's sales and profitability.

        In markets outside the U.S., Hospira's business has experienced downward pressure on product pricing as a result of the concentrated buying power of governments as principal customers and the use of bid-and-tender sales methods whereby Hospira is required to submit a bid for the sale of its products. Hospira's failure to offer acceptable prices to these customers could have a material adverse effect on its sales and profitability in these markets.

If Hospira is unable to obtain or maintain its GPO and IDN pricing agreements, sales of its products could decline.

        Many existing and potential customers for Hospira's products have combined to form GPOs, and IDNs in an effort to lower costs. A small number of GPOs influence a majority of sales to Hospira's hospital customers in the U.S. GPOs and IDNs negotiate pricing arrangements with medical supply manufacturers and distributors, and these negotiated prices are made available to a GPO's or an IDN's

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affiliated hospitals and other members. Failure to negotiate advantageous pricing and purchasing arrangements could cause Hospira to lose market share to its competitors and have a material adverse effect on its sales and profitability.

        Hospira has pricing agreements covering certain products with the major GPOs in the U.S., including Amerinet, Inc.; Broadlane Inc.; HealthTrust Purchasing Group LP; MedAssets, Inc.; Novation, LLC; PACT, LLC; and Premier Purchasing Partners, LP. It is important for Hospira to continue to maintain pricing arrangements with major GPOs. In order to maintain these relationships, Hospira must offer a reliable supply of high-quality, regulatory-compliant products. Hospira also needs to maintain a broad product line and be price-competitive. Several GPO contracts are up for renewal or extension each year. Moreover, some of the agreements may be terminated on 60 or 90 days' notice, while others may not be terminated without breach until the end of their contracted term. If Hospira is unable to renew or extend one or more of those contracts, or one or more of the contracts are terminated, and Hospira cannot replace lost business, Hospira's sales and profitability will decline. There has been consolidation among major GPOs, and further consolidation may occur. The effect of consolidation is uncertain, and consolidation may impair Hospira's ability to contract with GPOs in the future.

        The GPOs also have a variety of business relationships with Hospira's competitors and may decide to enter into pricing agreements for, or otherwise prefer, products other than Hospira's. While GPOs negotiate incentives for members to purchase specified products from a given manufacturer or distributor, GPO pricing agreements allow customers to choose between the products covered by the arrangement and another manufacturer's products, whether or not purchased under a negotiated pricing agreement. As a result, Hospira may face competition for its products even within the context of its GPO pricing agreements.

Changes in the buying patterns of Hospira's customers could adversely affect Hospira's operating results.

        During 2009, sales through the four largest wholesalers that supply products to many end-users accounted for approximately 42% of Hospira's global net sales. Hospira's profitability may be impacted by changes in the buying patterns of these wholesalers, or any other major distributor, or wholesale customer. Their buying patterns may change as a result of end-use buyer purchasing decisions, end-use customer demand, pricing, or other factors, which could adversely affect Hospira's results of operations.

Hospira and its suppliers and customers are subject to various governmental regulations, and it could be costly to comply with these regulations and to develop compliant products and processes. In addition, failure to comply with these regulations could subject us to sanctions which could adversely affect our business, results of operations and financial condition.

        Hospira's products are subject to rigorous regulation by the FDA, and numerous other national, supranational, federal and state governmental authorities. The process of obtaining regulatory approvals to market a drug or medical device, particularly from the FDA and governmental authorities outside the U.S., can be costly and time-consuming, and approvals might not be granted for future products on a timely basis, if at all. To ensure ongoing customer safety, regulatory agencies such as the FDA may re-evaluate their current approval processes and may impose additional requirements. In addition, the FDA and others may impose increased or enhanced regulatory inspections for domestic or foreign plants.

        The FDA, along with other regulatory agencies around the world, has been experiencing a backlog of generic drug and medical device applications, which has delayed approvals of new products. Those delays have become longer, and may continue to increase in the future. These delays can result in higher levels of unapproved inventory and increased costs due to excess and obsolescence exposures.

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        Existing regulations may also delay or prevent generic drug producers such as Hospira from offering certain products, such as biogeneric products in key territories, which could harm Hospira's ability to grow its business. If a clear regulatory pathway for the approval of biogeneric products is not fully developed in the U.S. and other jurisdictions, Hospira may not be able to generate future sales of such products in those jurisdictions and may not realize the anticipated benefits of its investments in the development, manufacture and sale of such products. Delays in receipt of, or failure to obtain, approvals for product candidates could result in delayed realization of product revenues and in substantial additional costs.

        Hospira and Hospira's suppliers may not be able to remain in compliance with applicable FDA and other material regulatory requirements once it has obtained clearance or approval for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, advertising and postmarketing reporting, including adverse event reports and field alerts, some of which are related to manufacturing quality concerns. Hospira may be required by regulatory authorities, or determine on its own, to temporarily cease production and sale of certain products to resolve manufacturing and product quality concerns, which would harm Hospira's sales, margins and profitability in the affected periods and may have a material adverse effect on Hospira's business. For information related to the 2009 warning letter received by Hospira and other voluntary recalls and corrective actions in 2009, see the section captioned "Quality Assurance."

        Hospira is also subject to various federal, state, and foreign laws pertaining to foreign corrupt practices and healthcare fraud and abuse, including anti-kickback and false claims laws. Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, substantial fines, imprisonment and exclusion from participation in national, federal and state healthcare programs, including Medicare, Medicaid, and Veterans' Administration health programs and health programs outside the U.S. These laws and regulations are broad in scope and are subject to evolving interpretations, which could require Hospira to alter one or more of its sales or marketing practices. In addition, violations of these laws, or allegations of such violations, could disrupt Hospira's business and result in a material adverse effect on Hospira's sales, profitability and financial condition.

        For a more detailed listing of the laws and regulations that significantly affect Hospira's business and operations, see the section captioned "Governmental Regulation and Other Matters." Any adverse regulatory action, or action taken by Hospira to maintain appropriate regulatory compliance, with respect to these laws and regulations could disrupt Hospira's business and have a material adverse effect on its sales, profitability and financial condition. Furthermore, an adverse regulatory action with respect to any Hospira product, operating procedure or manufacturing facility could materially harm Hospira's reputation in the marketplace.

Hospira may continue to acquire other businesses and assets, license rights to technologies or products from third parties, form alliances, or dispose of businesses and assets, and any of these actions may not be completed in a timely or cost-effective manner, or at all.

        As part of Hospira's business strategy, Hospira may continue to acquire other businesses and assets, license rights to technologies or products from third parties, form alliances, or dispose of businesses and assets, and any of these actions may not be completed in a timely or cost-effective manner, or at all. Hospira also may pursue strategic alliances to expand its product offerings and geographic presence. Hospira may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected benefits of any acquisition, license arrangement, strategic alliance, or disposition. Other companies, including those with substantially greater resources, may compete with Hospira for opportunities. If Hospira is successful in securing certain opportunities, the products and technologies that Hospira acquires may not be successful or may require significantly greater resources and investments than originally anticipated. Hospira may not be able to integrate acquisitions successfully into its existing business.

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        To finance acquisitions, Hospira has incurred, and may continue to incur or assume significant debt. This significant indebtedness may require Hospira to dedicate a substantial portion of its cash flow from operations to servicing its debt, thereby reducing the availability of cash flow to fund capital expenditures, to pursue other acquisitions or investments in new technologies, and for general corporate purposes. In addition, this significant indebtedness may increase Hospira's vulnerability to general adverse economic conditions, including increases in interest rates. In addition, this may limit Hospira's flexibility in planning for, or reacting to, changes in or challenges relating to its business and industry. Hospira may incur greater than expected costs in connection with these transactions if it encounters difficulties or issues not known to it at the time of entering into the transaction. In addition, Hospira may enter markets in which it has no or limited prior experience. Hospira could experience negative effects on its reported results of operations from acquisition or disposition-related charges. Any of these negative effects could cause a downgrade of Hospira's credit rating, which would affect Hospira's ability to obtain new financing and negatively impact Hospira's cost of financing and credit.

Current economic conditions could adversely affect our operations.

        The securities and credit markets have been experiencing volatility, and in some cases, have exerted negative pressure on the availability of liquidity and credit capacity for certain companies. Hospira's ability to access the credit and capital markets, and the related cost of borrowings, will depend on a variety of factors, including market conditions, the availability of credit and the strength of Hospira's credit rating. In addition, lending institutions, including those associated with Hospira's $700 million revolving credit facility which expires in 2012, may suffer losses due to their lending and other financial relationships, especially because of the general weakening of the global economy and increased financial instability of many borrowers. As a result, lenders may become insolvent, which could affect the actual availability of credit under Hospira's revolving credit facility, or Hospira's ability to obtain other financing on equally favorable terms. Moreover, insurance companies and other financial institutions may suffer losses, which could affect the cost and availability of insurance coverage. If one or more of these events occurred, Hospira's sources of liquidity may prove to be insufficient, cost of borrowing may increase and Hospira's financial condition or results of operations could be adversely affected.

        In addition, demand for Hospira's products may decrease due to these adverse economic conditions, resulting in the loss of jobs or healthcare coverage, thereby affecting an individual's ability to pay for elective healthcare. Interest rate fluctuations, changes in capital market conditions and adverse economic conditions may increase Hospira's customers' cost-containment efforts, and affect Hospira's customers' ability to obtain credit to finance their purchases of Hospira's products, which could reduce Hospira's revenue and cause a decrease in Hospira's profitability.

Acquisitions have increased Hospira's investment balances, intangible assets and goodwill balances, and a decline in the value of assets may adversely affect Hospira's financial position or results of operation.

        As a result of Hospira's acquisitions, intangible assets and goodwill have become significant. The values for these assets can be affected by factors, such as increased competition, changes in business strategies and the impact of restructurings, disposition transactions, and business combinations. As a result of these factors or other events, Hospira may have to impair these assets or change estimated useful lives, which may have a material adverse effect on Hospira's financial position or results of operations.

        In addition, Hospira regularly reviews its investments, including equity and cost-based investments, to determine when a significant event or change in circumstance has occurred that may have an adverse effect on the fair value of each investment. Hospira considers numerous factors, including factors affecting the investee, factors affecting the industry of the investee, and general equity market trends. Hospira also considers the length of time an investment's market value has been below carrying value

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and the near-term prospects for recovery to carrying value. The recent volatility in the global equity markets and other factors could adversely impact the fair value of Hospira's investments and, as a consequence, could result in a charge for an other than temporary decline in value, which could have an adverse effect on Hospira's financial position and results of operations.

The manufacture of Hospira's products is highly exacting and complex, and if Hospira or its suppliers encounter problems manufacturing, storing or distributing products, Hospira's business could suffer.

        The manufacture of Hospira's products and products Hospira produces for third parties is highly exacting and complex, due in part to strict regulatory requirements governing the manufacture of drugs and medical devices. Problems may arise during manufacturing, storage or distribution of Hospira's products and products Hospira manufactures for third parties for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, manufacturing quality concerns, or problems with raw materials, electromechanical, software and other components, supplier issues, and natural disaster related events or other environmental factors. If problems arise during the production, storage or distribution of a batch of product, that batch of product may have to be discarded. This could, among other things, lead to increased costs, lost sales, damage to customer relations, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other batches or products. If problems are not discovered before the product is released to the market, voluntary recalls, corrective actions or product liability related costs may also be incurred. Problems with respect to the manufacture, storage or distribution of its products could materially disrupt Hospira's business and harm its sales and profitability.

Hospira can experience higher costs to produce its products as a result of rising oil and gas prices.

        Hospira uses resins and other petroleum-based materials as raw materials in many of its products. Prices of oil, fuel, and other gases also significantly affect Hospira's costs for freight and utilities. Oil, fuel, and other gas prices are volatile. If costs increase and Hospira is unable to fully recover these costs through price increases or offset these increases through other cost reductions, Hospira could experience lower margins and profitability.

Hospira depends on third parties to supply raw materials, electromechanical and other components, and third party finished goods. Hospira may not be able to obtain sufficient quantities of these materials, which could limit Hospira's ability to manufacture or sell products on a timely basis and could harm its profitability.

        The manufacture of Hospira's products requires raw materials and electromechanical and other components that must meet stringent FDA and other regulatory requirements. Some of these raw materials and other components are currently available from a limited number of suppliers. For example, the LifeShield^TM, CLAVE^TM and MicroCLAVE^TM connector products, which are components of administration sets that represented approximately 15% of Hospira's 2009 U.S. net sales, rely on proprietary components that are available exclusively from ICU Medical. CLAVE^TM and MicroCLAVE^TM are registered trademarks of ICU Medical. In addition, Hospira purchases from single sources certain compounding material, polyvinyl-chloride resin and laminate film components for Hospira's production of certain flexible bags that it uses with its I.V. and pre-mixed solutions, as well as rubber components that it uses with some of its injectable pharmaceuticals. Hospira also obtains from single sources certain active pharmaceutical ingredients and finished products. Identifying alternative suppliers and obtaining approval to change or substitute a raw material or component, or the supplier of a finished product, raw material or component, can be time-consuming and expensive, as testing, validation and regulatory approval are necessary.

        In the past, Hospira's business has experienced shortages in some of the raw materials and components of its products. Continuous supply of petroleum-based products is especially risky due to

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the limited number of capable suppliers, limited production capacity and the effect of natural disasters. If suppliers are unable to deliver sufficient quantities of these materials on a timely basis or if supply is otherwise disrupted, including by suppliers exiting the market, the manufacture and sale of Hospira's products may be disrupted, and its sales and profitability could be adversely affected.

Hospira's cost-reduction and optimization activities have resulted, and may continue to result, in significant charges and cash expenditures. These activities may disrupt Hospira's business and may not result in the intended cost savings.

        Hospira's strategy, in part, relies on the establishment of a low-cost operating infrastructure to improve margins and cash flow to drive sustained growth. In addition to the several initiatives under Project Fuel, Hospira has taken various other actions to dispose of, or close, certain manufacturing, research and development, and other facilities. These actions have resulted in, and are expected to continue to result in, significant charges to Hospira's results of operations and cash expenditures. Cost-reduction and optimization activities are complex, and if Hospira does not successfully manage these activities, its operations and business could be disrupted and Hospira may incur more costs than anticipated. In connection with these activities, the company's failure to hire or retain personnel with the right expertise and experience in operations that are critical to its business functions could adversely impact the execution of its business strategy. Future cost reduction and optimization activities, if taken, may result in additional charges and cash expenditures, which may be material. If Hospira does not realize the expected savings from its cost-reduction and optimization efforts, its profitability may be adversely affected.

Hospira's manufacturing capacity could limit its ability to expand its business without significant capital investment.

        Although Hospira believes that it has adequate manufacturing capacity for its primary products, it may need to invest substantial capital resources to expand its manufacturing capacity if Hospira introduces new products, demand increases significantly for its products, or if it is successful in obtaining significant additional customers for its injectable pharmaceuticals contract manufacturing services business. Hospira may not be able to complete any such expansion projects in a timely manner or on a cost-effective basis, and may not realize the desired benefits of any such expansion.

        As a result of cost-reduction efforts, Hospira has announced the planned closing of, or has sold, certain of its facilities. While Hospira believes it will have available manufacturing capacity to absorb, or the ability to outsource, the production at these facilities, there may be less available capacity at Hospira's facilities. If Hospira experiences an interruption in manufacturing at any of its primary manufacturing facilities, it may not be able to produce sufficient products for its customers. As a result, Hospira's sales, margins and profitability may be adversely impacted.

Hospira relies on the performance of its information technology systems, the failure of which could have an adverse effect on Hospira's business and performance.

        Hospira operates in a highly regulated industry that requires the continued operation of sophisticated information technology systems and network infrastructure. These systems are vulnerable to interruption by fire, power loss, system malfunction and other such events, which are beyond Hospira's control. Systems interruptions could reduce Hospira's ability to manufacture its products, and could have a material adverse effect on Hospira's operations and financial performance. The level of Hospira's protection and disaster-recovery capability varies from site to site, and there can be no guarantee that any such plans, to the extent they are in place, will be totally effective.

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Hospira conducts sales activity outside of the U.S. and is subject to additional business risks, including fluctuations in foreign currency exchange rates, that may cause its sales and profitability to decline.

        Sales in markets outside the U.S. comprised approximately 29% of 2009 net sales. The additional risks associated with Hospira's operations outside the United States include: (i) fluctuations in foreign currency exchange rates; (ii) multiple regulatory requirements that are subject to change, which may delay or deter Hospira's international product commercialization efforts; (iii) differing local product preferences and product requirements; (iv) trade protection measures and import or export licensing requirements; (v) difficulty in establishing, staffing and managing operations outside the U.S.; (vi) differing labor regulations or work stoppages or strikes at Hospira's union facilities; (vii) complying with U.S. regulations that apply to international operations, including trade laws, the Foreign Corrupt Practices Act and anti-boycott laws; (viii) potentially negative consequences from changes in tax laws; (ix) political and economic instability; (x) natural disasters; and (xi) diminished protection of intellectual property in some countries outside of the U.S.

        In addition, Hospira operates in many countries outside the U.S. through distributors. Its success will depend on the efforts and performance of such distributors, which are beyond Hospira's control. These risks could have an adverse effect on Hospira's ability to distribute and sell its products in markets outside the U.S. and could adversely affect Hospira's profitability.

Hospira is involved in various lawsuits and proceedings that could negatively affect its business.

        Hospira is involved in various claims and legal proceedings, as well as product liability claims and proceedings related to Hospira's business, including in some instances when Hospira operated as part of Abbott. In some instances, these claims and proceedings could preclude the continued sale and marketing of Hospira's products or otherwise adversely affect operations, profitability or liquidity. These claims and proceedings include those described in Item 3 "Legal Proceedings." There can be no assurance that these matters would not have an adverse effect on Hospira's business, profitability or financial condition. In addition, there can be no assurance that there will not be an increase in scope of these matters or that there will not be additional lawsuits, claims, proceedings or investigations in the future.

        In the past, Hospira has been involved in investigations related to improper marketing and pricing practices with respect to certain Medicare and Medicaid reimbursable products. Hospira could be subject to these investigations or lawsuits again in the future, and there can be no assurance that these matters would not have an adverse impact on Hospira.

Income taxes can have an unpredictable effect on Hospira's results of operations and result in greater-than-anticipated liabilities.

        Hospira is subject to income taxes in a variety of jurisdictions, and its tax structure is subject to review by both domestic and foreign taxation authorities. Because Hospira's income tax expense for any period depends heavily on the mix of income derived from the various taxing jurisdictions during that period, which is inherently uncertain, its income tax expense and reported net income may fluctuate significantly, and may be materially different than forecasted. Moreover, changes in or interpretations of tax laws and regulations (including laws related to the remittance of foreign earnings), changes in investments in foreign countries with favorable tax rates, and settlements of federal, state and foreign tax audits, may affect Hospira's profitability and financial condition.

        Hospira is the beneficiary of tax exemptions in certain jurisdictions outside the U.S., where a portion of its income is earned. These tax exemptions have a significant impact on reducing Hospira's overall effective tax rate. If Hospira is unable to maintain these tax exemptions, Hospira's future profitability may be reduced. Changes in laws or governmental policies can affect the availability of these exemptions.

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        Significant judgment is required in determining the provision for income taxes and in evaluating tax positions that are subject to audits and adjustments. Liabilities for unrecognized tax benefits are established when, despite Hospira's belief that the tax return positions are fully supportable, positions taken by Hospira are likely to be challenged based on the applicable tax authority's determination of the positions. Although Hospira believes its tax provisions and related liability balances are reasonable, the ultimate tax outcome may differ from the amounts recorded in its financial statements and may materially affect its financial results in the period or periods for which such determination is made.

Hospira may incur product liability losses and insurance coverage could be inadequate or unavailable to cover these losses.

        Hospira's business is subject to potential product liability risks that are inherent in the design, development, manufacture and marketing of drugs and medical devices and products. In the ordinary course of business, Hospira is the subject of product liability claims and lawsuits, including those described in Item 3 "Legal Proceedings," alleging that its products have resulted or could result in an unsafe condition or injury to patients. Product liability claims and lawsuits, safety alerts, voluntary recalls or corrective actions, regardless of their ultimate outcome, could have a material adverse effect on Hospira's business and reputation and on its ability to attract and retain customers.

        Hospira is responsible for all liabilities, including liabilities for claims and lawsuits, related to its business, whether they arose before or after the spin-off, other than certain liabilities relating to allegations that it engaged in improper marketing and pricing practices in connection with federal, state or private reimbursement for its products. As part of Hospira's risk management policy, Hospira carries third-party product liability insurance coverage, which includes a substantial retention or deductible which provides that Hospira will not receive insurance proceeds until the losses incurred exceed the amount of that retention or deductible. To the extent that any losses are within these retentions or deductibles, Hospira will be responsible for the administration and payment of these losses. Product liability claims in excess of applicable insurance could have a material adverse effect on Hospira's profitability and financial condition.

If Hospira is unable to protect its intellectual property rights, its business and prospects could be harmed.

        Hospira relies on trade secrets, confidentiality agreements, continuing technological innovation and, in some cases, patent, trademark and service mark protection to preserve its competitive position. A failure to protect Hospira's intellectual property could harm its business and prospects, and its efforts to protect its proprietary rights may not be adequate.

        Most of Hospira's products are not protected by patents or other proprietary rights, and have limited or no market exclusivity. Patent filings by third parties could render Hospira's intellectual property less valuable. In addition, intellectual property rights may be unavailable or limited in certain countries outside the U.S., which could make it easier for competitors to capture market position. Competitors may also harm sales of Hospira's products by designing products that mirror the capabilities of those products or technology without infringing Hospira's intellectual property rights. If Hospira does not obtain sufficient international protection for its intellectual property, Hospira's competitiveness in international markets could be impaired, which could limit its growth and future sales.

If Hospira infringes the intellectual property rights of third parties, Hospira may face legal action, increased costs and delays in marketing new products.

        Hospira seeks to launch generic pharmaceutical products either where patent protection of equivalent branded products has expired, where patents have been declared invalid or where products do not infringe the patents of others. To achieve a "first-to-market" position for generic pharmaceutical

21

products, Hospira may take action, such as litigation, to seek to assert that its products do not infringe patents of existing products or that those patents are invalid or unenforceable. Hospira may also launch a product prior to the termination of the underlying litigation. These actions may result in increased litigation, which could be costly and time consuming, and may not be successful. Hospira has made abbreviated new drug applications and certifications (known as "Paragraph IV certifications" in the U.S.) that the relevant patents for existing products would not be infringed by a Hospira product, or were invalid or unenforceable, in the U.S. and equivalent filings in Canada. Claims filed by innovators challenging these Paragraph IV certifications may delay or prevent the launch of the relevant products and result in additional costs.

        Third parties may claim that Hospira's products are infringing their intellectual property rights. Claims of intellectual property infringement could be costly and time-consuming and might require Hospira to enter into costly royalty or license agreements, if Hospira is able to obtain royalty or license agreements on acceptable terms or at all. Hospira also may be subject to significant damages, which may be based on the lost profits from the sale of the branded product or an injunction preventing it from manufacturing, selling or using some of its products in the event of a successful claim of patent or other intellectual property infringement. Any of these adverse consequences could have a material adverse effect on Hospira's profitability and financial condition.

Changes in the funded status or costs of Hospira's pension or post-retirement benefit plans could adversely affect Hospira's financial position and results of operations.

        The funded status of Hospira's pension and post-retirement benefit plans is subject to developments and changes in actuarial and other related assumptions. Decreases in the valuation of plan assets, particularly with respect to equity securities, and a change in the actual rate of return on plan assets can result in significant changes to the expected return on plan assets in the following year and, as a consequence, could result in higher funding requirements and net periodic benefit costs. In addition, changes in assumptions, such as discount rates, mortality rates, retirement rates, healthcare cost trend rates and other factors, may lead to significant increases in the value of the respective obligations. Assumption changes could affect the reported funded status of Hospira's plans and, as a result, could result in higher funding requirements and net periodic benefit costs. All of these factors could have an adverse effect on Hospira's financial position and results of operations.

The stock market can be volatile and fluctuations in Hospira's operating results, as well as other factors, could cause its stock price to decline.

        During the past few years, the stock market has experienced fluctuations, which has significantly impacted the market prices of securities issued by many companies for reasons unrelated to their operating performance. Further, market fluctuations could adversely affect Hospira's stock price. Moreover, Hospira's sales and operating results may vary from quarter to quarter due to the risk factors set forth herein. Hospira's stock price could fluctuate significantly in response to its quarterly results and the impact of these risk factors on Hospira's operating results or financial position.

Item 1B.    Unresolved Staff Comments

        None.

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Item 2. Properties

        Hospira's corporate headquarters and the locations and uses of Hospira's principal manufacturing and research and development ("R&D") properties as of December 31, 2009, are as follows:

Location*	Use	Owned/Leased
Adelaide, South Australia, Australia	R&D	Owned
Austin, Texas	Manufacturing	Owned
Buffalo, New York	Manufacturing	Owned
Boulder, Colorado	R&D and Manufacturing	Leased (expires 2011)
Clayton, North Carolina	R&D and Manufacturing	Owned
Finisklin, Sligo, Ireland	Manufacturing	Leased (expires 2013)
La Aurora, Costa Rica	Manufacturing	Owned
Lake Forest, Illinois**	Corporate Headquarters and R&D	Owned/Leased (expires 2016)
Liscate, Italy	Manufacturing	Owned
McPherson, Kansas	R&D and Manufacturing	Owned
Morgan Hill, California	Manufacturing	Owned
Mulgrave, Victoria, Australia	R&D and Manufacturing	Owned
Rocky Mount, North Carolina	Manufacturing	Owned
San Cristobal, Dominican Republic	Manufacturing	Owned
San Diego, California	R&D	Leased (expires 2019)
Wasserburg, Germany***	Manufacturing	Owned

*

The locations listed above are generally used by all of Hospira's segments.

**

The Lake Forest facilities consist of four buildings, three of which are owned and one of which is leased.

***

In January 2010, Hospira completed the sale of the contract manufacturing facility in Wasserburg, Germany.

        Hospira phased out production at the North Chicago, Illinois manufacturing facility during the first half of 2009. Hospira is exiting manufacturing operations at its Morgan Hill, California plant and the transfer of product manufacturing will continue throughout 2010, but could extend into 2011. Production of the primary products at these facilities is moving to other Hospira facilities or is being outsourced to third-party suppliers. In 2008, Hospira began an expansion of manufacturing capacity at the LaAurora, Costa Rica facility, in part to accommodate some of the production being transferred from other Hospira facilities. The facility has not been completed, but has begun producing some limited incremental products in the currently existing space. For further details regarding the financial impact of these activities, see Note 4, to the consolidated financial statements included in Item 8.

        Hospira believes that its facilities and equipment are in good operating condition and are well maintained. Hospira believes that it has adequate capacity to meet its current business needs.

        As a result of the acquisition of Mayne Pharma, Hospira has a joint venture with Cadila Healthcare Limited, a pharmaceutical company located in India. The joint venture has been approved to begin manufacturing and commercial sales of injectable cytotoxic drugs for Europe, and has been inspected by the FDA. The FDA issued an approval letter in December 2009 related to these manufacturing facilities.

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Item 3. Legal Proceedings

        Hospira is involved in various claims and legal proceedings, as well as product liability claims and proceedings related to Hospira's business, including in some instances when Hospira operated as part of Abbott.

        Hospira has been named as a defendant in a lawsuit alleging generally that the spin-off of Hospira from Abbott resulted in a mass termination of employees so as to interfere with the future attainment of benefits in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). The lawsuit was filed on November 8, 2004 in the U.S. District Court for the Northern District of Illinois, and is captioned: Myla Nauman, Jane Roller and Michael Loughery v. Abbott Laboratories and Hospira, Inc. Plaintiffs generally seek reinstatement in Abbott benefit plans, disgorgement of profits and attorneys fees. On November 18, 2005, the complaint was amended to assert an additional claim against Abbott and Hospira for breach of fiduciary duty under ERISA. Hospira has been dismissed as a defendant with respect to the fiduciary duty claim. By Order dated December 30, 2005, the Court granted class action status to the lawsuit. As to the sole claim against Hospira, the court certified a class defined as: "all employees of Abbott who were participants in the Abbott Benefit Plans and whose employment with Abbott was terminated between August 22, 2003 and April 30, 2004, as a result of the spin-off of the HPD [Hospital Products Division] /creation of Hospira announced by Abbott on August 22, 2003, and who were eligible for retirement under the Abbott Benefit Plans on the date of their terminations." Hospira denies all material allegations asserted against it in the complaint. The trial of this matter has concluded, but the court has not rendered a decision. In 2008, Hospira received notice from Abbott requesting that Hospira indemnify Abbott for all liabilities that Abbott may incur in connection with this litigation. Hospira denies any obligation to indemnify Abbott for the claims asserted against Abbott in this litigation.

        On August 12, 2005, Retractable Technologies, Inc. ("RTI") filed a lawsuit against Abbott alleging breach of contract and fraud in connection with a National Marketing and Distribution Agreement ("Agreement") between Abbott and RTI signed in May 2000. Retractable Technologies, Inc. v. Abbott Laboratories, Inc., Case No. 505CV157 is pending in the U.S. District Court for the Eastern District of Texas. RTI purported to terminate the contract for breach in 2003. The lawsuit alleges that Abbott misled RTI and breached the Agreement in connection with Abbott's marketing efforts. RTI is seeking monetary damages which are alleged to be in excess of $300 million as well as punitive damages. Hospira has conditionally agreed to defend and indemnify Abbott in connection with this lawsuit, which involves a contract carried out by Abbott's former Hospital Products Division. Abbott denies all material allegations in the complaint. Abbott has brought counterclaims against RTI for breach of the Agreement, including failure to pay marketing fees owed to Abbott. Hospira is entitled, pursuant to its agreements with Abbott, to any amounts recovered due to RTI's breach of the Agreement. The case is proceeding in the U.S. District Court for the Eastern District of Texas.

        Hospira is involved in patent litigation in the U.S. and elsewhere concerning Hospira's attempts to market the generic oncology drug oxaliplatin. In the U.S., litigation is pending in the U.S. District Court for the District of New Jersey: Sanofi-Aventis, U.S., LLC, et al. v. Sandoz, Inc., et al. (D. N.J. 2007). In the lawsuit, plaintiffs allege that various generic oxaliplatin products infringe one or more patents held by plaintiffs. Hospira is currently marketing and selling its oxaliplatin products, and alleges that the single patent plaintiffs have asserted against Hospira is not valid and not infringed by Hospira's products. In June 2009, the District Court entered summary judgment of non-infringement in favor of Hospira. Plaintiffs appealed that decision and, in September 2009, the U.S. Court of Appeals for the Federal Circuit vacated the District Court's ruling. Trial is expected in 2010. Hospira denies all material allegations asserted against it in the complaint. The plaintiffs seek damages, injunctive relief and costs. If Hospira were required to pay damages in this case, the amount of damages would generally be based on a reasonable royalty or the plaintiffs' lost profits based on the sale of the branded product. Plaintiffs are also pursuing proceedings against the FDA in a separate legal action

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aimed at removing Hospira's products from the market and prohibiting future sales in advance of the trial.

        Hospira and Abbott are defendants in a number of lawsuits brought by individual plaintiffs alleging that plaintiffs developed Post-arthroscopic Glenohumeral Chondrolysis ("PAGCL") from the use of certain continuous infusion pain pumps to deliver local anesthetic into the intra-articular joint space following shoulder surgeries. In each case, Hospira and/or Abbott is alleged, singularly or with other anesthetic medication defendants, to have provided the medication delivered by continuous infusion pain pumps manufactured by other (non-Hospira/non-Abbott) defendants. The analgesic medications at issue include Marcaine^TM (bupivacaine) and lidocaine. As of December 31, 2009, there are a total of 123 cases, involving 313 plaintiffs, in which Hospira is a party. 62 cases are pending in federal court and 61 cases are pending in state court. Pursuant to its separation agreement with Abbott, Hospira is defending those lawsuits which relate to sales of products prior to Hospira's spin-off from Abbott. Hospira denies all material allegations asserted against it in the complaint. Generally, plaintiffs seek compensatory damages and, in some cases, punitive damages and costs.

        On September 4, 2009, Hospira brought suit against Sandoz International GmbH and Sandoz, Inc. for patent infringement. The lawsuit, which alleges infringement of U.S. Patents 4,910,214 (expires July 15, 2013) and 6,716,867 (expires March 31, 2019), is in the U.S. District Court for the District of New Jersey: Hospira, Inc. and Orion Corp. v. Sandoz International GmbH and Sandoz, Inc. (D. N.J. 2009). The lawsuit is based on Sandoz's "Paragraph IV" notice indicating that Sandoz has filed an abbreviated new drug application ("ANDA") with the FDA for a generic version of Hospira's Precedex^TM (dexmedetomidine hydrochloride). Hospira seeks a judgment of infringement, injunctive relief and costs.

        Hospira's litigation exposure, including product liability claims, is evaluated each reporting period. Hospira's reserves, which are not significant at December 31, 2009 and 2008, are the best estimate of loss, as defined by ASC Topic 450, "Contingencies." Based upon information that is currently available, management believes that the likelihood of a material loss in excess of recorded amounts is remote.

        Additional legal proceedings may occur that may result in a change in the estimated reserves recorded by Hospira. It is not feasible to predict the outcome of such proceedings with certainty and there can be no assurance that their ultimate disposition will not have a material adverse effect on Hospira's financial position, cash flows, or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

        None.

Executive Officers of Hospira

        The executive officers of Hospira are set forth below. Their ages as of February 18, 2010, and the positions and offices held by them in the past are also indicated. There are no family relationships between any corporate officers or directors.

Christopher B. Begley, age 57, is Hospira's Chairman of the Board and Chief Executive Officer. He has served as Chief Executive Officer and as a director since the spin-off in April 2004 and as the Chairman of the Board since May 2007. Mr. Begley provided 18 years of service to Abbott, a global broad-based healthcare company, and served as Senior Vice President and President, Hospital Products, from 2000 to April 2004. Prior to his appointment as Senior Vice President and President, Hospital Products, Mr. Begley served as Senior Vice President and President, Chemical and Agricultural Products from 1999 to 2000, Vice President, Abbott Health Systems, from 1998 to 1999, and Vice President, MediSense Operations, in 1998. Mr. Begley is a director of Sara Lee Corporation, AdvaMed and the National Center for Healthcare Leadership.

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Terrence C. Kearney, age 55, is Hospira's Chief Operating Officer. He has served in such position since April 2006. From April 2004 to April 2006, he served as Hospira's Senior Vice President, Finance, and Chief Financial Officer, and he served as Acting Chief Financial Officer through August 2006. Mr. Kearney served as Vice President and Treasurer of Abbott from 2001 to April 2004. From 1996 to 2001, Mr. Kearney was Divisional Vice President and Controller for Abbott's International Division. Mr. Kearney provided 24 years of service to Abbott.

Daphne E. Jones, age 52, is Hospira's Senior Vice President and Chief Information Officer. Ms. Jones has served in that position since November 2009. Ms. Jones served as the worldwide Vice President of information technology ("IT") and Chief Information Officer for Johnson & Johnson's Ortho-Clinical Diagnostics, Inc. from 2007 to 2009. Previously, from 1997 to 2006, she served in other IT global leadership roles at Johnson & Johnson.

Kenneth F. Meyers, age 48, is Hospira's Senior Vice President, Organizational Transformation and People Development. Mr. Meyers has served in that position since November 2008. Mr. Meyers served as a partner of Oliver-Wyman—Delta Executive Learning Center (a global management consulting firm) from 2004 to 2008. From 2002 to 2004, Mr. Meyers served as Senior Vice President, Human Resources, Starbucks Coffee International (a subsidiary of Starbucks Coffee Company). From 2000 to 2002, he founded and acted as managing director of KFM Consulting (a human resources consultancy).

Sumant Ramachandra, M.D., Ph.D., age 41, is Hospira's Senior Vice President and Chief Scientific Officer. Dr. Ramachandra has served in that position since July 2008. Dr. Ramachandra served as Vice President and Senior Project Leader, Global Development, at Schering-Plough, a global healthcare company, from 2005 to 2008. From 2003 to 2005, he served as Group Leader in the U.S. Medical Oncology Therapeutic Area at Pfizer Inc., a global pharmaceuticals company.

Brian J. Smith, age 58, is Hospira's Senior Vice President, General Counsel and Secretary. He has served in such position since the spin-off in April 2004. Mr. Smith served as Divisional Vice President, Domestic Legal Operations of Abbott from 1995 to April 2004 and served with Abbott for 25 years.

Ron Squarer, age 43, is Hospira's Senior Vice President, Global Marketing and Corporate Development. Mr. Squarer has served in that position since January 2009. Mr. Squarer served as Hospira's Corporate Vice President, Global Strategy and Business Development from 2007 to 2008, and as Senior Vice President, Global Corporate and Business Development at Mayne Pharma, Ltd. (an Australia-based specialty injectable pharmaceutical company) from 2006 to 2007. From 2004 to 2006, he served as the Oncology Therapy Area Commercial Development Leader at Pfizer Inc., a global pharmaceuticals company. Prior to 2004, Mr. Squarer supported other therapeutic areas at Pfizer and held various commercial and business development positions at SmithKline Beecham in the United States and Europe.

Thomas E. Werner, age 52, is Hospira's Senior Vice President, Finance and Chief Financial Officer. He has served in such position since August 2006. Mr. Werner served as Senior Vice President, Finance and Chief Financial Officer of Böwe Bell + Howell, a service, manufacturing and software company that provides document processing and postal solutions. Prior to joining Böwe Bell + Howell in late 2001, he served as Chief Financial Officer for Xpedior Incorporated (a software developer and integrator), for uBid, Inc., (an e-commerce company), and as Corporate Controller for Gateway, Inc. (a seller of personal computers and related products and services).

Richard J. Hoffman, age 43, is Hospira's Corporate Vice President, Controller and Chief Accounting Officer. He has served in such position since August 2009. From August 2007 to August 2009, he served as Hospira's Vice President, Corporate Controller and Chief Accounting Officer. From 2000 until his appointment by Hospira, Mr. Hoffman was employed by CNH Global N.V. (Case New Holland—a global agricultural and construction equipment manufacturer with a captive financial services company). His last position was Vice President, Corporate Controller and Chief Accounting Officer, which he held since July 2004. Prior to that time, he served as Assistant Corporate Controller and Chief Accounting Officer and in various other finance and reporting roles at Case New Holland.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Common Stock

        Hospira's common stock is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "HSP." The following table sets forth the high and low closing prices for Hospira's common stock on the NYSE for each period indicated.

	Market Price Per Share
	2009				2008
For the quarter ended:	High		Low		High		Low
March 31	$	30.86	$	21.38	$	43.80	$	39.90
June 30	$	38.82	$	30.44	$	43.56	$	39.32
September 30	$	44.87	$	36.12	$	40.36	$	36.96
December 31	$	51.11	$	43.25	$	38.34	$	25.36

        As of January 31, 2010, Hospira had approximately 38,671 shareholders of record. Hospira has not paid any dividends on its common stock.

Issuer Purchases of Equity Securities

        The following table gives information on a monthly basis regarding purchases made by Hospira of its common stock during the fourth quarter of 2009.

Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs(2)
October 1-October 31, 2009		72,206	$	46.38		—	$	100,233,606
November 1-November 30, 2009		16,526		47.22		—		100,233,606
December 1-December 31, 2009		4,354		50.58		—		100,233,606
Total		93,086	$	46.66		—	$	100,233,606

(1)

These shares represent the shares deemed surrendered to Hospira to pay the exercise price and to satisfy minimum statutory tax withholding obligations in connection with the exercise of employee stock options. For further details regarding employee stock options, see Note 15, to the consolidated financial statements included in Items 8. These shares include the shares purchased on the open market for the benefit of participants in the Hospira Healthcare Corporation Stock Purchase Plan—1,000 in October, 900 in November, and 1,500 in December.

(2)

In February 2006, Hospira's board of directors authorized the repurchase of up to $400.0 million of Hospira's common stock in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. The repurchase of shares commenced in early March 2006. As of December 31, 2009, Hospira had purchased 7.6 million shares for $299.8 million in aggregate under the 2006 board authorization, all of which were purchased during 2006.

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Performance Graph

        The following graph compares the performance of Hospira common stock for the periods indicated with the performance of the S&P 500 Stock Index and the S&P Health Care Index.

Comparison of Cumulative Total Return

        Assumes $100 was invested on December 31, 2004 in Hospira common stock and each index. Values are as of the close of the U.S. stock markets on December 31, 2005, 2006, 2007, 2008 and 2009, and assume dividends are reinvested. No cash dividends have been declared or paid on Hospira common stock. Returns over the indicated period may not be indicative of future returns.

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Item 6. Selected Financial Data

        The following table sets forth Hospira's selected financial information derived from its audited consolidated financial statements as of, and for the years ended, December 31, 2009, 2008, 2007, 2006 and 2005.

        The selected financial information should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and Hospira's audited financial statements included in Item 8.

		For the Years Ended December 31,
(dollars in millions, except per share amounts)		2009		2008		2007		2006		2005
Statements of Income Data:
Net sales(1)		$	3,879.3	$	3,629.5	$	3,436.2	$	2,688.5	$	2,626.7
Gross profit(2)			1,456.4		1,342.7		1,195.7		974.9		873.1
Income from operations(1)			502.9		517.8		302.6		339.6		336.6
Income before income taxes			384.8		407.5		187.8		324.7		322.1
Net income		$	403.9	$	320.9	$	136.8	$	237.7	$	235.6
Earnings per common share:
	Basic	$	2.51	$	2.02	$	0.87	$	1.51	$	1.48
	Diluted	$	2.47	$	1.99	$	0.85	$	1.48	$	1.46
Weighted average common shares outstanding:
	Basic		161.0		159.2		156.9		157.4		159.3
	Diluted		163.2		161.3		160.2		160.4		161.6

(1)

As Mayne Pharma was acquired in February 2007, there are no Mayne Pharma net sales in 2006 and 2005. Income from operations includes acquired in-process research and development charge of $0.5 million, $88.0 million and $10.0 million in 2008, 2007 and 2006, respectively.

(2)

Gross profit is defined as Net sales less Cost of products sold.

	December 31,
(dollars in millions)	2009		2008		2007		2006		2005
Balance Sheet Data:
Total assets	$	5,502.9	$	5,074.1	$	5,084.7	$	2,847.6	$	2,789.2
Long-term debt	$	1,707.3	$	1,834.0	$	2,184.4	$	702.0	$	695.3

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

        Hospira is a global specialty pharmaceutical and medication delivery company that develops, manufactures and markets products that help improve the safety, cost and productivity of patient care. Hospira's portfolio includes generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems. Hospira's portfolio of products is used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities. In February 2007, Hospira acquired Mayne Pharma to increase its global presence in specialty generic injectable pharmaceuticals.

        In 2009, Hospira reclassified costs that were previously reported in Cost of products sold and Research and development to Restructuring and impairment, a separate operating costs and expenses line item. The reclassifications did not affect net income or shareholders' equity.

Cost-Reduction and Optimization Activities

        As part of its strategy to improve margins and cash flows, Hospira has taken a number of actions to reduce operating costs and optimize operations. The costs related to these actions consist primarily of severance pay and other employee benefits, accelerated depreciation resulting from the decreased useful lives of buildings and certain equipment, impairments, relocation of production, process optimization implementation, other asset charges and exit costs. Hospira will transfer related operations and production of the primary products from some facilities to other Hospira facilities, outsource certain product components to third-party suppliers or cease activities entirely. For further details regarding the financial impact of these cost-reduction activities, see Note 4 to the consolidated financial statements included in Item 8.

Project Fuel

        2009 Actions.    In March 2009, Hospira announced details of Project Fuel which will occur over the next two years from the date of announcement. Project Fuel includes the following activities: optimizing the product portfolio, evaluating non-strategic assets and streamlining the organizational structure. Hospira expects to incur aggregate charges related to these actions in the range of $140 million to $160 million on a pre-tax basis, of which approximately $100 million to $110 million are expected to be reported as restructuring costs and other asset charges. During 2009, Hospira incurred aggregate charges of $83.7 million with $50.6 million recorded as restructuring and other asset charges.

        As part of Project Fuel initiatives, Hospira committed to dispose of certain non-strategic businesses and the underlying assets. As a result of these decisions and measurement of the fair value of these businesses, Hospira recognized non-cash, pre-tax impairment charges of $52.8 million in 2009. Hospira received cash of $46.6 million upon completion of the disposals of the critical care business and oral pharmaceutical contract manufacturing facility in Salisbury, Australia. In 2010, a disposal was completed for an estimated sales price of approximately $68 million related to the remaining assets and related liabilities held for sale associated with the facility in Wasserburg, Germany which primarily performed contract manufacturing. These disposals will reduce net sales in the Other Pharma and Other Devices product lines in periods subsequent to the disposals. As Hospira continues to consider each Project Fuel initiative, the amount, timing and recognition of charges will be affected by the occurrence of commitments and triggering events as defined under accounting principles generally accepted in the United States ("GAAP"), among other factors.

30

Facilities Optimization

        2008 Actions.    In April 2008, Hospira announced plans to exit manufacturing operations at its Morgan Hill, California, plant over the next two to three years. Hospira expects to incur aggregate charges through 2011 related to these actions in the range of $29 million to $35 million on a pre-tax basis, of which approximately $20 million to $24 million are expected to be reported as restructuring charges. During 2009 and 2008, Hospira incurred charges of $15.7 million and $8.8 million, respectively.

        2006 Actions.    In February 2006, Hospira announced plans to close plants in Ashland, Ohio, Montreal, Canada, and North Chicago, Illinois and completed these plans in 2007, 2008, and 2009, respectively. During 2009, 2008 and 2007, Hospira incurred charges of $12.7 million, $26.6 million and $37.6 million, respectively.

Other Actions

        2007 Actions.    In late 2007, Hospira made the decision to limit future research and development investments related to a non-strategic device product and recognized an intangible asset impairment charge of $7.5 million.

        Restructuring, impairment and optimization charges incurred for these cost reduction and optimization actions collectively were reported in the consolidated statements of income line items included in Item 8 as follows:

Years Ended December 31 (dollars in millions)	2009		2008		2007
Cost of products sold	$	40.7	$	12.4	$	23.3
Restructuring and impairment		94.2		22.4		21.8
Research and development		3.3		0.6		—
Selling, general and administrative		26.7		—		—
Total pre-tax Project Fuel, Facilities Optimization and Other Actions charges	$	164.9	$	35.4	$	45.1

        Hospira aims to achieve a culture of continuous improvement that will enhance its efficiency, effectiveness and competitiveness and substantially improve its cost base. Cost-reduction and optimization activities involve risks and uncertainties. Hospira may incur more charges and cash expenditures than estimated and may not realize the expected cost savings on its planned time frame or at all. See "Item 1A. Risk Factors—Hospira's cost-reduction and optimization activities have resulted, and may continue to result, in significant charges and cash expenditures. These activities may disrupt Hospira's business and may not result in the intended cost savings."

Acquisitions

Orchid Pharma

        In December 2009, Hospira announced an agreement to acquire a certain business of Orchid Chemicals & Pharmaceuticals Ltd. ("Orchid Pharma") for approximately $400 million. While Hospira has taken actions and incurred costs associated with the pending transaction that are reflected in Hospira's financial statements, the pending acquisition of Orchid Pharma will not be reflected in the financial statements until the transaction closes. The transaction has been unanimously approved by Hospira's and Orchid Pharma's boards of directors and Orchid Pharma's shareholders. The acquisition is subject to customary closing conditions. The transaction is expected to be completed in the first quarter of 2010.

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TheraDoc

        In December 2009, Hospira acquired TheraDoc, Inc. ("TheraDoc") and its Infection Control Assistant^TM and Antibiotic Assistant^TM products, software applications that automate hospital-wide surveillance for infection-related events and optimize the utilization of antimicrobials for cash of $63.3 million, net of cash acquired. The impact of this acquisition was not material to Hospira's results of operations in 2009.

Mayne Pharma

        On February 2, 2007, Hospira completed its acquisition of Mayne Pharma for $2,055.0 million. The acquisition broadened Hospira's specialty injectable pharmaceuticals product line. As Mayne Pharma had strong market positions in Europe and Australia and a significant commercial infrastructure outside the United States, the acquisition has also substantially increased Hospira's international presence. The results of operations of Mayne Pharma are included in Hospira's results for periods on and after February 2, 2007, which has affected comparability of the financial statements for the periods presented in this report. For further details, see Note 2 to the consolidated financial statements included in Item 8.

        Intangible assets amortization, inventory step-up, acquired in-process research and development and integration charges incurred for the Mayne Pharma acquisition were reported in the consolidated statements of income line items included in Item 8 as follows:

Years Ended December 31 (dollars in millions)	2009		2008		2007
Cost of products sold	$	54.2	$	71.4	$	107.7
Restructuring and impairment		—		—		—
Research and development		—		1.0		1.6
Acquired in-process research and development		—		0.5		88.0
Selling, general and administrative		—		21.0		36.2
Total pre-tax Mayne Pharma related charges	$	54.2	$	93.9	$	233.5

        Acquisitions and related transactions are subject to various risks and uncertainties, including risks relating to the integration and risks relating to incurring substantial indebtedness in connection with an acquisition. Please see "Item 1A. Risk Factors—Hospira may continue to acquire other businesses and assets, license rights to technologies or products from third parties, form alliances or dispose of businesses and assets, and any of these actions may not be completed in a timely or cost-effective manner, or at all."

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Results of Operations

Net Sales

        A comparison of product line sales is as follows:

								Percentage Change at Actual Currency Rates						Percentage Change at Constant Currency Rates(1)
Years Ended December 31 (dollars in millions)		2009		2008		2007		2009			2008			2009			2008
Americas—
Pharmaceuticals
	Specialty Injectables	$	1,589.9	$	1,328.9	$	1,240.9		19.6	%		7.1	%		20.3	%		7.1	%
	Other Pharma		556.4		522.0		549.2		6.6	%		(5.0	)%		7.8	%		(4.7	)%
			2,146.3		1,850.9		1,790.1		16.0	%		3.4	%		16.7	%		3.5	%
Devices
	Medication Management Systems		559.7		558.9		501.3		0.1	%		11.5	%		1.2	%		11.4	%
	Other Devices		357.3		368.5		367.5		(3.0	)%		0.3	%		(2.3	)%		0.1	%
			917.0		927.4		868.8		(1.1	)%		6.7	%		(0.2	)%		6.6	%
Total Americas			3,063.3		2,778.3		2,658.9		10.3	%		4.5	%		11.1	%		4.5	%
EMEA—
Pharmaceuticals
	Specialty Injectables		272.0		287.4		255.4		(5.4	)%		12.5	%		2.1	%		8.0	%
	Other Pharma		128.4		152.1		162.3		(15.6	)%		(6.3	)%		(8.8	)%		(8.1	)%
			400.4		439.5		417.7		(8.9	)%		5.2	%		(1.7	)%		1.8	%
Devices
	Medication Management Systems		77.8		75.9		66.4		2.5	%		14.3	%		8.6	%		7.6	%
	Other Devices		64.6		68.4		68.0		(5.6	)%		0.6	%		0.9	%		(4.6	)%
			142.4		144.3		134.4		(1.3	)%		7.4	%		4.9	%		1.4	%
Total EMEA			542.8		583.8		552.1		(7.0	)%		5.7	%		(0.1	)%		1.6	%
APAC—
Pharmaceuticals
	Specialty Injectables		211.4		205.4		168.9		2.9	%		21.6	%		7.2	%		19.6	%
	Other Pharma		16.4		15.2		14.1		7.9	%		7.8	%		17.8	%		4.8	%
			227.8		220.6		183.0		3.3	%		20.5	%		7.9	%		18.4	%
Devices
	Medication Management Systems		21.2		19.9		16.7		6.5	%		19.2	%		11.1	%		15.5	%
	Other Devices		24.2		26.9		25.5		(10.0	)%		5.5	%		(8.9	)%		(0.7	)%
			45.4		46.8		42.2		(3.0	)%		10.9	%		(0.4	)%		5.7	%
Total APAC			273.2		267.4		225.2		2.2	%		18.7	%		6.5	%		16.1	%
Net Sales		$	3,879.3	$	3,629.5	$	3,436.2		6.9	%		5.6	%		9.0	%		4.8	%

Specialty Injectables include generic injectables and proprietary specialty injectables. Other Pharmaceuticals include large volume I.V. solutions, nutritionals and contract manufacturing services. Medication Management Systems include infusion pumps, related software, services and administration sets. Other Devices include gravity administration sets, critical care products (through August 2009) and other device products.

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(1)

The comparisons at constant currency rates reflect comparative local currency balances at prior periods' foreign exchange rates. We have calculated these percentages by taking years ended net sales for the three years presented less the respective prior years ended reported net sales, divided by the respective prior years ended reported net sales, all at the respective prior years' foreign exchange rates. This measure provides information on the change in net sales assuming that foreign currency exchange rates have not changed between the prior and the current period. Management believes the use of this measure aids in the understanding of our change in net sales without the impact of foreign currency and provides greater transparency into Hospira's results of operations. Management uses these measures internally to monitor business unit performance and in evaluating management performance. These measures are intended to supplement the applicable GAAP measures and should not be considered in isolation from or a replacement for, financial measures prepared in accordance with GAAP.

Net sales for 2007 include eleven months of Mayne Pharma net sales.

2009 compared to 2008:

        Net sales increased 6.9%, or 9.0% excluding the impact of changes in foreign exchange rates. The decrease in Other Devices in all segments is due to the disposal of the critical care business in August 2009. The following discussion, except as noted, reflects changes from the prior period excluding the impact of changes in foreign exchange rates.

Americas

        Net sales in the Americas segment increased 10.3%, or 11.1% excluding the impact of changes in foreign exchange rates. Net sales of Specialty Injectable Pharmaceuticals increased primarily due to the product launch of generic oxaliplatin in the U.S. Despite the strong generic substitution rates achieved by oxaliplatin since the launch, the sales trend for this product is not expected to continue at this level as sales during a generic launch period have a higher degree of end customer price movement due to competitive market factors and reflect wholesalers' common practice of purchasing quantities of product at launch to assure adequate supply for end customer use. In addition, Specialty Injectable Pharmaceuticals net sales were higher due to other new product introductions and increased volume for Hospira's proprietary sedation drug Precedex^TM, partially offset by lower anti-infectives volume due to temporary capacity constraints. Other Pharma net sales increased due to higher demand from certain contract manufacturing customers and increased large volume I.V. solutions sales due to additional GPO contract awards. Net sales in Medication Management Systems were slightly higher with increased volumes in ambulatory and large volume infusion systems, primarily Plum A+^TM, and dedicated administration sets.

EMEA

        Net sales in the EMEA segment decreased (7.0)%, or (0.1)% excluding the impact of changes in foreign exchange rates. Specialty Injectable Pharmaceuticals net sales were slightly higher with increases from new product introductions, including a biogeneric, offset by lower price and volume declines on certain existing oncology products. Net sales of Other Pharma were lower due to a decline in demand from certain contract manufacturing customers and a decline in certain low margin compounding products. Net sales in Medication Management Systems increased due to higher sales volume of large volume infusion systems, primarily Plum A+^TM and GemStar^TM and dedicated administration sets.

APAC

        Net sales in the APAC segment increased 2.2%, or 6.5% excluding the impact of changes in foreign exchange rates. Specialty Injectable Pharmaceuticals net sales increased due to higher volume in Hospira's proprietary sedation drug Precedex^TM, cardiovascular-related products, a new oncology product launch and higher proprietary and differentiated product sales in Australia. Net sales in

34

Medication Management Systems increased due to higher sales volume of ambulatory infusion systems and dedicated administration sets.

2008 compared to 2007:

        Net sales increased 5.6%, or 4.8% excluding the impact of changes in foreign exchange rates.

Americas

        Net sales in the Americas segment increased 4.5%. The growth in net sales of Specialty Injectable Pharmaceuticals was due to increased volumes from GPO contract awards, new product introductions, increased volume for Precedex^TM and the impact of competitor supply issues. Other Pharma net sales decreased due to lower demand from certain contract manufacturing customers, partially offset by increased large volume I.V. solutions sales due to GPO contract awards. Net sales in Medication Management Systems increased due to strong demand, particularly for Symbiq^TM. Other Devices net sales increased due to volume growth in gravity administration sets.

EMEA

        Net sales in the EMEA segment increased 5.7%, or 1.6% excluding the impact of changes in foreign exchange rates. Specialty Injectable Pharmaceuticals net sales increased primarily due to an additional month of Mayne Pharma net sales in 2008 and sales of the newly launched biogeneric Retacrit^TM, partially offset by expected price decreases in oncology products. Net sales of Other Pharma were lower due to declines in demand from certain contract manufacturing customers. Net sales in Medication Management Systems increased due to higher sales volume of ambulatory and large volume infusion systems.

APAC

        Net sales in the APAC segment increased 18.7%, or 16.1% excluding the impact of changes in foreign exchange rates. The increase was primarily due to volume growth in Specialty Injectables anti-infectives and certain oncology products and an additional month of Mayne Pharma net sales in 2008. The remaining increase was due to higher volume growth in Medication Management Systems, Other Pharma and Devices.

Gross Profit (Net sales less Cost of products sold)

										Percent change
Years ended December 31 (dollars in millions)	2009			2008			2007			2009			2008
Gross profit	$	1,456.4		$	1,342.7		$	1,195.7			8.5	%		12.3	%
As a percent of net sales		37.5	%		37.0	%		34.8	%

2009 compared to 2008:

        Gross profit increased $113.7 million, or 8.5%, in 2009, compared to 2008.

        The gross profit increase is primarily the result of higher sales volume and favorable product mix including the impact of the U.S. product launch of generic oxaliplatin and higher anesthesia-related product sales, primarily Precedex^TM. In addition, higher production volume and cost reductions associated with Project Fuel and Facilities Optimization initiatives contributed to manufacturing efficiency gains. These increases were partially offset by the impact of changes in foreign exchange rates, costs associated with certain product corrective actions and inventory charges including those related with the Project Fuel product line complexity reduction initiative.

35

2008 compared to 2007:

        Gross profit increased $147.0 million, or 12.3%, in 2008 compared to 2007.

        The gross profit increase is primarily the result of higher sales volume, including an additional month of Mayne Pharma related gross profit in 2008, the impact of changes in foreign exchange rates, improved manufacturing performance and favorable product mix driven by Medication Management Systems. These increases were partially offset by higher freight and distribution expenses. A portion of the increase in gross profit results from the absence in 2008 of purchase accounting charges for Mayne Pharma, which in the prior year included inventory step-up charges of $53.1 million.

Restructuring and Impairment

										Percent change
Years ended December 31 (dollars in millions)	2009			2008			2007			2009			2008
Restructuring and impairment	$	94.2		$	22.4		$	21.8			320.5	%		2.8	%
As a percent of net sales		2.4	%		0.6	%		0.6	%

2009 compared to 2008:

        Restructuring and impairment charges were $94.2 million in 2009, compared with $22.4 million in 2008. The increase in Restructuring and impairment was due to non-cash, pre-tax impairment charges of $52.8 million related to property and equipment, allocated goodwill and intangible asset impairments associated with non-strategic businesses and related assets associated with Project Fuel initiatives. In addition to the impairment charges in 2009, restructuring charges of $41.4 million, primarily severance costs, relate to Project Fuel and Facilities Optimization. Restructuring incurred in 2008 was related to Facilities Optimization initiatives.

2008 compared to 2007:

        Restructuring and impairment charges were $22.4 million in 2008, compared with $21.8 million in 2007, primarily relating to severance costs associated with Facilities Optimization initiatives and in 2007 included an impairment of an intangible asset related to a non-strategic device product.

Research and Development

										Percent change
Years ended December 31 (dollars in millions)	2009			2008			2007			2009			2008
Research and development expense	$	240.5		$	211.9		$	201.2			13.5	%		5.3	%
As a percent of net sales		6.2	%		5.8	%		5.9	%

2009 compared to 2008:

        Research and development ("R&D") expenses increased $28.6 million, or 13.5%, in 2009, compared to 2008. The increase was primarily related to investments in various new product development programs, including biogenerics, and charges related to a third party agreement and corresponding milestone reached for development of an oncology product that has not yet reached regulatory approval. These increases were partially offset by the impact of changes in foreign exchange rates and productivity improvements associated with Project Fuel initiatives.

2008 compared to 2007:

        R&D expenses increased $10.7 million, or 5.3%, in 2008, compared to 2007. The increase was primarily related to higher spending on product development associated with new compounds in

36

Hospira's generic injectable drug pipeline, including biogenerics, and device pipeline, partially offset by lower proprietary clinical trial spending.

Acquired In-Process Research and Development

        In 2007, as part of the Mayne Pharma acquisition, Hospira allocated and expensed $84.8 million to acquired in-process research and development related to Mayne Pharma's pipeline products. Additionally in late 2007, Hospira purchased certain clinical studies related to a compound that will be used to file for expanded medical indications. The cost for these clinical studies was $3.2 million and was recorded as acquired in-process research and development expense in 2007 as the studies have no alternative future uses.

Selling, General and Administrative

										Percent change
Years ended December 31 (dollars in millions)	2009			2008			2007			2009			2008
Selling, general and administrative expense	$	618.8		$	590.1		$	582.1			4.9	%		1.4	%
As a percent of net sales		16.0	%		16.3	%		16.9	%

2009 compared to 2008:

        Selling, general and administrative ("SG&A") expenses increased $28.7 million, or 4.9%, in 2009, compared to 2008. The increase was primarily due to higher sales force and annual incentive compensation provisions and costs associated with Project Fuel initiatives offset by the impact of changes in foreign exchange rates. In 2008, SG&A includes costs related to Mayne Pharma integration.

2008 compared to 2007:

        SG&A expenses increased $8.0 million, or 1.4%, in 2008, compared to 2007. The increase was primarily due to sales and marketing support within the Americas and support costs for new product launches in the EMEA and APAC segments, partially offset by lower costs related to the integration of Mayne Pharma in 2008 compared to 2007.

Interest Expense

        Hospira incurred interest expense of $106.3 million in 2009, $116.2 million in 2008 and $134.5 million in 2007. The decrease in 2009 compared to 2008 was primarily due to lower debt outstanding in 2009 and lower interest rates on floating rate notes, including the impact of interest rate swaps on fixed rate notes. The decrease in 2008 compared to 2007 was primarily due to lower debt outstanding in 2008, the 2007 write-off of costs associated with the issuance of debt incurred related to the Mayne Pharma acquisition, and lower interest rates on floating rate notes. Refer to the Liquidity and Capital Resources section below, as well as Note 11 to the consolidated financial statements included in Item 8, for further information regarding Hospira's debt and credit facilities.

Other Expense (Income), Net

        Other expense (income) for 2009, 2008 and 2007 primarily includes amounts relating to foreign currency transaction gains and losses, interest income, and other items. Interest (income) for 2009, 2008 and 2007 was $(7.6) million, $(9.3) million and $(15.1) million, respectively. The decrease in 2009 compared to 2008 was primarily due to lower interest rates. In 2009, Hospira recognized an other-than-temporary impairment charge of $16.6 million on marketable equity securities. In 2007, Hospira also had net realized gains on the sale of investments of $(5.0) million.

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Income Tax (Benefit) Expense

        The effective tax rate was a benefit of 5.0% in 2009, compared to an expense of 21.3% in 2008 and 27.2% in 2007. In 2009, the Internal Revenue Service ("IRS") audit of Hospira's 2004 and 2005 tax returns was completed and the years were effectively settled. The outcome of the IRS audit settlement resulted in a $91.9 million discrete income tax benefit. Excluding the effect of the IRS audit settlement, the 2009 effective tax rate was an expense of 18.9%. The effective tax rate for 2007 included the impact of expensing non-deductible acquired in-process research and development of $84.8 million. Excluding the effect of this item, the 2007 effective tax rate was 18.7%. The effective tax rates for all three years include certain items such as purchase accounting, integration and restructuring charges and interest expense generating benefits in higher tax rate jurisdictions. The effective tax rates are less than the statutory U.S. federal income tax rate principally due to the benefit of tax exemptions, of varying durations, in certain jurisdictions outside the U.S. Additionally in 2009, the effective tax rate was impacted by income tax benefits recognized upon the expiration of statutes of limitation on certain unrecognized tax benefits and lower unrecognized tax benefit accruals. These benefits were partially offset by the establishment of a valuation allowance on certain deferred tax assets associated with the disposal of certain non-strategic assets, the impairment of non-deductible goodwill, as well as the impairment of marketable equity securities without the availability of a statutory tax benefit.

Liquidity and Capital Resources

        Net cash provided by operating activities continues to be Hospira's primary source of funds to finance operating needs, capital expenditures and repay debt. Other capital resources include cash on hand, borrowing availability under a revolving credit facility and access to the capital markets. Hospira believes that its current capital resources will be sufficient to finance its operations, including debt service obligations, capital expenditures, acquisitions, product development and investments in cost reduction and optimization activities for the foreseeable future. Specific to acquisitions, these capital resources will be used for the announced transaction to purchase Orchid Pharma in 2010.

Summary of Sources and (Uses) of Cash

Years ended December 31 (dollars in millions)	2009			2008			2007
Operating activities	$	944.9		$	584.1		$	551.1
Investing activities		(211.1	)		(264.9	)		(2,228.0	)
Financing activities		(308.6	)		(60.1	)		1,580.2

Operating Activities

        In 2009, Net Cash Provided by Operating Activities of $944.9 million was driven by net income of $403.9 million, adjusted for non-cash impairments and inventory charges of $95.8 million. Non-cash depreciation, amortization and stock-based compensation expense and tax-related adjustment totaled $204.3 million. Net cash provided by operating assets and liabilities and Other, net of $240.9 million was primarily associated with the timing of receipt and payments related to 2009 sales of oxaliplatin and lower inventories. Hospira also made a contribution of $30.0 million to the Hospira Annuity Retirement Plan.

        In 2008, Net Cash Provided by Operating Activities of $584.1 million was driven by net income of $320.9 million. Non-cash adjustments to net income primarily consisted of depreciation, amortization, the write-off of acquired in-process research and development, stock-based compensation expense and tax-related adjustments and the net gains on sales of assets and totaled $334.9 million. Net cash used in operating assets and liabilities and Other, net of $(71.7) million was driven by higher trade receivables and higher inventories for planned product launches and increased GPO contract awards, partially offset by higher trade payables.

38

        In 2007, Net Cash Provided by Operating Activities of $551.1 million was driven by net income of $136.8 million. Non-cash adjustments to net income primarily consisted of depreciation, amortization, the write-off of acquired in-process research and development, the step-up value of acquired inventories sold, and stock-based compensation expense and totaled $415.0 million. Net cash used in operating assets and liabilities and Other, net of $(0.7) million consist primarily of payments made on acquired Mayne Pharma current liabilities, including merger advisory fees, and higher trade receivables due to increased net sales, partially offset by lower inventory and higher trade payables.

Investing Activities

        In 2009, Net Cash Used in Investing Activities of $211.1 million includes capital expenditures of $159.4 million and $86.6 million of payments for acquisitions, contingent consideration on prior acquisitions and other investments, offset by $49.2 million of proceeds from dispositions of businesses and related assets.

        In 2008, Net Cash Used in Investing Activities of $264.9 million includes capital expenditures of $164.3 million and $50.8 million of payments for certain intangible assets including product rights, primarily acquired in 2007 but paid in 2008, and other investments. Hospira paid $26.1 million for acquisitions and deferred consideration related to acquisitions made by Mayne Pharma in prior years. Also, Hospira purchased $24.5 million of marketable equity securities.

        In 2007, Net Cash Used in Investing Activities of $2,228.0 million includes principally payments related to the acquisition of Mayne Pharma including the purchase price of $1,961.3 million, net of cash acquired. In addition, capital expenditures of $210.5 million were partially offset by proceeds from dispositions of certain product rights for $13.8 million and proceeds from the sales of marketable securities of $10.4 million.

Financing Activities

        Net Cash Used in Financing Activities totaled $308.6 million in 2009. During 2009, Hospira paid $300.0 million on the maturity of the notes due June 2009 and paid $375.0 million on the notes due in March 2010. Financing activities also include proceeds from the issuance of $250.0 million aggregate principal amount notes and employee stock option exercises and related tax benefits of $123.3 million.

        Net Cash Used in Financing Activities totaled $60.1 million in 2008. During 2008, Hospira prepaid $70.7 million in principal amount of the term loan, in addition to the revised required $24.3 million in principal, for a total of $95.0 million. Financing activities also include proceeds from employee stock option exercises and related tax benefits of $28.8 million.

        Net Cash Provided by Financing Activities totaled $1,580.2 million in 2007. Hospira incurred $1,925.0 million of bank debt to finance the Mayne Pharma acquisition. The bridge loan facility was completely refinanced in March through the issuance of long-term debt securities of varying maturities. During 2007, Hospira prepaid $400.0 million in principal amount of the term loan. In addition, financing activities include proceeds from employee stock option exercises and related tax benefits of $75.4 million.

Summary of Financial Position

As of Years ended December 31 (dollars in millions)	2009		2008
Cash and cash equivalents	$	946.0	$	483.8
Working capital		1,644.3		1,101.8
Short-term borrowings and long-term debt		1,730.9		2,172.3

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Working Capital

        The increase in working capital in 2009 was primarily due to an increase in cash and cash equivalents and decrease in short-term borrowings due to the payment of $300.0 million on the maturity of the notes due June 2009 and payment of $375.0 million on the notes due in March 2010. Higher collections of gross trade receivables were associated with the launch of generic oxaliplatin while related chargeback and rebate liabilities increased due to timing of end-use customer and claim submissions from wholesalers. In addition, lower inventory in 2009 was due to product portfolio optimization initiatives, higher volume throughput, and planned facility shutdowns in December. Assets held for sales, net and cash received to date also increased working capital in 2009 related to Hospira's commitment to dispose of non-strategic businesses and related assets.

        The increase in working capital in 2008 was primarily due to an increase in cash and cash equivalents offset by the reclassification of the $300.0 million principal notes due June 2009, to short term borrowings. In addition, trade receivables increased due to higher sales, inventories increased due to planned product launches and increased GPO contract awards, partially offset by increases in trade payables.

Debt and Capital

        Senior Notes.    Hospira has $1,700.0 million aggregate principal amount of senior unsecured notes outstanding, including $500.0 million principal amount of 5.55% notes due in March 2012, $400.0 million principal amount of 5.90% notes due in June 2014, $250.0 million principal amount of 6.40% notes due May 2015 and $550.0 million principal amount of 6.05% notes due in March 2017. In June 2009, Hospira repaid in full the $300.0 million aggregate principal amount of 4.95% notes upon maturity. In December 2009, the $375.0 million aggregate principal amount due in March 2010 plus accrued interest was fully paid.

        In 2009, Hospira entered into interest rate swap contracts whereby $200.0 million of the $400.0 million principal amount of 5.90% notes due June 2014 and $100.0 million of the $250.0 million principal amount of 6.40% notes due May 2015 were effectively converted from fixed to floating rate debt. In 2008, $300.0 million of the $400.0 million principal amount of 5.90% notes due in June 2014 were effectively converted to floating rate notes through interest rate swaps with various counterparties for approximately four months. Upon termination of these interest rate swaps in 2008, the senior unsecured notes were effectively converted back to the applicable fixed rate. As a result of the interest rate swap contract terminations, Hospira received $9.2 million in cash, excluding accrued interest. The corresponding gains related to the basis adjustment of the debt associated with the terminated swap contracts were deferred and are being amortized as a reduction of interest expense over the remaining term of the notes.

        The senior notes contain customary covenants that limit Hospira's ability to incur secured indebtedness and liens and merge or consolidate with other companies.

        Other Borrowings.    In connection with acquisitions, facility expansions, international capital structure optimization and equipment lease requirements, Hospira enters into other borrowings including mortgages, lease arrangements and promissory notes. These borrowings bear a weighted average interest rate of approximately 7.3%, with principle and interest due in various intervals, and are primarily unsecured. As of December 31, 2009 and 2008, Hospira had $26.5 million and $37.7 million, respectively, of other borrowings outstanding, of which $22.6 million and $32.4 million, respectively, were classified as short-term.

        Revolving Credit Facility.    In 2009, Hospira entered into a new $700.0 million unsecured revolving credit facility (the "Revolver") maturing in October 2012. The Revolver replaced Hospira's prior revolving credit agreement that was scheduled to expire in December 2010. The Revolver is available

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for general corporate purposes. Borrowings under the Revolver bear interest at LIBOR or a base rate plus, in each case, a margin. Hospira also pays a facility fee on the aggregate amount of the commitments under the Revolver. The annual percentage rates for the LIBOR margin, the base rate margin and the facility fee are 2.5%, 1.5% and 0.5%, respectively, and are subject to increase or decrease if there is a change in Hospira's credit ratings. The amount of available borrowings may be increased to a maximum of $825.0 million, under certain circumstances. As of December 31, 2009, Hospira has not borrowed any amounts under the Revolver.

        Debt Covenants.    The Revolver has financial covenants that require Hospira to maintain (i) a maximum leverage ratio (consolidated total debt to consolidated net earnings before financing expense, taxes and depreciation, amortization, adjusted for certain non-cash items and agreed-upon restructuring charges ("Adjusted EBITDA")) of not more than 3.25 to 1.0 and (ii) a minimum interest coverage ratio (Adjusted EDITDA to consolidated financing expense) of not less than 5.0 and 1.0. As of December 31, 2009, Hospira was in compliance with all applicable covenants.

        Credit Ratings.    During 2009, Hospira's credit rating and outlook were upgraded from BBB to BBB+ by Standard and Poor's Rating Services, and from Baa3 negative to Baa3 stable by Moody's Investor Service. Hospira's credit rating had been downgraded in 2007 from stable to negative by Moody's as a result of the increased debt associated with the Mayne Pharma acquisition.

        Share Repurchase.    In February 2006, Hospira's board of directors authorized the repurchase of $400.0 million of Hospira's common stock. The program authorizes Hospira to repurchase common shares from time to time through the open market in compliance with securities regulations and other legal requirements. The size and timing of any purchases are at the discretion of company management, based on factors such as alternative uses of cash and business and market conditions. The repurchase of shares commenced in early March 2006. As of December 31, 2009, Hospira repurchased 7.6 million shares for $299.8 million in the aggregate under the 2006 board authorization, all of which were purchased during 2006. Hospira does not expect to repurchase any shares in 2010.

Contractual Obligations and Off-Balance Sheet Arrangements

        The following table summarizes Hospira's estimated contractual obligations as of December 31, 2009:

	Payment Due by Period
(dollars in millions)	Total		2010		2011-2012		2013-2014		2015 and Thereafter
Debt and interest payments	$	2,225.1	$	113.7	$	691.7	$	534.5	$	885.2
Lease obligations		98.5		22.1		33.4		20.0		23.0
Purchase commitments(1)		1,374.3		746.3		389.8		238.2		—
Other long-term liabilities reflected on the consolidated balance sheet(2)		101.9		4.3		72.5		25.1		—
Pension funding requirements(3)		84.0		—		37.0		29.0		18.0
Total	$	3,883.8	$	886.4	$	1,224.4	$	846.8	$	926.2

(1)

Purchase obligations for purchases made in the normal course of business to meet operational and capital requirements. Hospira has committed to make potential future "milestone" payments to third parties as part of in-licensing and development agreements. Payments under these agreements are contingent upon achievement of certain developmental, regulatory and/or commercial milestones and are not included in the table above. For further details regarding the collaborative arrangements, see Note 5 to the consolidated financial statements included in Item 8.

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(2)

Includes liability of $73.6 million relating to unrecognized tax benefits, penalties and interest; excludes approximately $170.8 million of other long-term liabilities related primarily to pension and post-retirement benefit obligations.

(3)

While Hospira's funding policy requires contributions to Hospira's defined benefit plans equal to the amounts necessary to, at a minimum, satisfy the funding requirements as prescribed by the laws and regulations of each country, Hospira does make discretionary contributions when management determines it is prudent to do so.

        Hospira's other commercial commitments as of December 31, 2009, representing commitments not recorded on the balance sheet but potentially triggered by future events, primarily consist of non-debt letters of credit to provide credit support for certain transactions as requested by third parties. In the normal course of business, Hospira provides indemnification for guarantees it arranges in the form of bonds guaranteeing the payment of value added taxes, performance bonds, custom bonds and bid bonds. As of December 31, 2009, Hospira had $29.8 million of these commitments, with a majority expiring in 2010. No amounts have been drawn on these letters of credit or bonds.

        Hospira has no material exposures to off-balance sheet arrangements, no special purpose entities and no activities that include non-exchange-traded contracts accounted for at fair value.

Critical Accounting Policies

        Critical accounting policies are those policies that require management to make the most difficult, subjective or complex judgments, often because they must estimate the effects of matters that are inherently uncertain and may change in subsequent periods. Critical accounting policies involve judgments and uncertainties that are sufficiently sensitive to result in materially different results under different assumptions and conditions. Hospira believes its most critical accounting policies are those described below. For a detailed discussion of these and other accounting policies, see Note 1 to the consolidated financial statements included in Item 8.

        Revenue Recognition—Hospira recognizes revenues from product sales when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable and collectibility is reasonably assured. For other than certain drug delivery pumps and contract manufacturing, product revenue is recognized when products are delivered to customers and title passes. In certain circumstances, Hospira enters into arrangements in which it commits to provide multiple elements (deliverables) to its customers. In these cases, total revenue is divided among the separate deliverables based on their relative fair value and is recognized for each deliverable in accordance with the applicable revenue recognition criteria.

        For drug delivery pumps, revenue is typically derived under one of three types of arrangements: outright sales of the drug delivery pump; placements under lease arrangements; and placements under contracts that include associated disposable set purchases. For outright sales of the drug delivery pump and for related sales of disposable products (sets) revenue is recognized as the products are delivered, in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 605, "Revenue Recognition," including revenue recognition when right of return exists. Other arrangements (leases and contracts that included associated disposable set purchases) are assessed in accordance with the provisions of ASC Topic 840, "Leases," including determining whether an arrangement contains a lease and drug delivery pump revenue is recorded as a sales-type lease or operating lease. For arrangements that qualify as sales-type leases, the discounted sales value of the drug delivery pump is recorded as revenue upon delivery to the customer. For arrangements that qualify as operating leases, Hospira recognizes revenue over the lease term, and the related asset is depreciated over its estimated useful life on a straight-line basis.

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        Hospira markets a server-based suite of software applications designed to exchange data from a hospital's drug information library database to drug delivery pumps throughout the hospital. The arrangements related to such applications typically include a perpetual or subscription software license, software maintenance and implementation services, in addition to the drug delivery pump. Hospira recognizes revenue related to these arrangements in accordance with the provisions of ASC Topic 985, "Software." Drug delivery pump, perpetual software license and implementation service revenue are generally recognized as obligations are completed or upon customer acceptance. Software subscription license revenue and software maintenance revenue is recognized ratably over the contract period.

        Contract manufacturing involves filling customers' active pharmaceutical ingredients ("API") into delivery systems. Under these arrangements, customers' API is often consigned to Hospira and revenue is recorded for the materials and labor provided by Hospira, plus a profit, upon shipment to the customer.

        Upon recognizing revenue from a sale, Hospira records an estimate for certain items that reduce gross sales in arriving at its reported net sales for each period. These items include chargebacks, rebates and other items (such as cash discounts and returns). Provisions for chargebacks and rebates represent the most significant and complex of these estimates.

        Chargebacks—Hospira sells a significant portion of its specialty injectable pharmaceutical products through wholesalers, which maintain inventories of Hospira products and later sell those products to end customers. In connection with its sales and marketing efforts, Hospira negotiates prices with end customers for certain products under pricing agreements (including, for example, group purchasing organization contracts). Consistent with industry practice, the negotiated end customer prices are typically lower than the prices charged to the wholesalers. When an end customer purchases a Hospira product that is covered by a pricing agreement from a wholesaler, the end customer pays the wholesaler the price determined under the pricing agreement. The wholesaler is then entitled to charge Hospira back for the difference between the price the wholesaler paid Hospira and the contract price paid by the end customer (a "chargeback").

        Hospira records the initial sale to a wholesaler at the price invoiced to the wholesaler and at the same time, records a provision equal to the estimated amount the wholesaler will later charge back to Hospira, reducing gross sales and trade receivables. This provision must be estimated because the actual end customer and applicable pricing terms may vary at the time of the sale to the wholesaler. Accordingly, the most significant estimates inherent in the initial chargeback provision relate to the volume of sales to the wholesalers that will be subject to chargeback and the ultimate end customer contract price. These estimates are based primarily on an analysis of Hospira's product sales and most recent historical average chargeback credits by product, estimated wholesaler inventory levels, current contract pricing, anticipated future contract pricing changes and claims processing lag time. Hospira estimates the levels of inventory at the wholesalers through analysis of wholesaler purchases and inventory data obtained directly from certain of the wholesalers. Hospira regularly monitors the provision for chargebacks and makes adjustments when it believes the actual chargebacks may differ from earlier estimates. The methodology used to estimate and provide for chargebacks was consistent across all periods presented.

        Settlement of chargebacks, excluding generic oxaliplatin sales, generally occurs between 25 and 35 days after the sale to wholesalers. A one percent decrease in end customer contract prices for sales pending chargeback, excluding generic oxaliplatin sales, at December 31, 2009, would decrease net sales and income before income taxes by approximately $1.4 million. A one percent increase in wholesale units sold subject to chargebacks, excluding generic oxaliplatin sales, at December 31, 2009, would decrease net sales and income before income taxes by approximately $0.6 million.

        Hospira's generic oxaliplatin sales, launched in the U.S. in 2009, contributed to the increase in the chargebacks accrual from $60.2 million at December 31, 2008, to $177.0 million at December 31, 2009.

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Generally, sales during a generic launch period experience more rapid end customer price declines due to competitive market factors and reflect wholesalers' common practice of purchasing quantities of product at launch to assure adequate supply for end customer use. Due to these factors, settlement of chargebacks generally occur over a longer duration and at a higher per unit rate than with other Hospira products.

        The most significant variables that could affect Oxaliplatin chargeback related accruals are the rate of end customer price decline and the rate of end customer demand experienced by the wholesalers. A five percent decline in end customer prices would decrease net sales and income before income taxes by approximately $2.5 million. A five percent decrease in monthly end customer demand experienced by wholesalers would decrease net sales and income before income taxes by approximately $0.8 million.

        Rebates—Hospira primarily offers rebates to direct customers, customers who purchase from certain wholesalers at end customer contract prices and government agencies, which administer various programs such as Medicaid. Direct rebates are generally rebates paid to direct purchasing customers based on a contracted discount applied to the direct customer's purchases. Indirect rebates are rebates paid to "indirect customers" that have purchased Hospira products from a wholesaler under a pricing agreement with Hospira. Governmental agency rebates are amounts owed based on legal requirements with public sector benefit providers (such as Medicaid), after the final dispensing of the product by a pharmacy to a benefit plan participant. Rebate amounts are usually based upon the volume of purchases. Hospira estimates the amount of the rebate due at the time of sale, and records the liability and a reduction of gross sales at the same time the product sale is recorded. Settlement of the rebate generally occurs from one to fifteen months after sale.

        In determining provisions for rebates to direct customers, Hospira considers the volume of eligible purchases by these customers and the rebate terms. In determining rebates on sales through wholesalers, Hospira considers the volume of eligible contract purchases, the rebate terms and the estimated level of inventory at the wholesalers that would be subject to a rebate, which is estimated as described above under "Chargebacks." Upon receipt of a chargeback, due to the availability of product and customer specific information, Hospira can then establish a specific provision for fees or rebates based on the specific terms of each agreement. Rebates under governmental programs are based on the estimated volume of products sold subject to these programs. Each period the estimates are reviewed and revised, if necessary, in conjunction with a review of contract volumes within the period. Adjustments related to prior period sales have not been material in any period.

        Hospira regularly analyzes the historical rebate trends and makes adjustments to recorded reserves for changes in trends and terms of rebate programs. At December 31, 2009 and 2008, accrued rebates of $156.0 million and $107.4 million, respectively, are included in other accrued liabilities on the consolidated balance sheet. Hospira's generic oxaliplatin sales, launched in the U.S. in 2009, contributed to the increase in the rebate accrual. The methodology used to estimate and provide for rebates was consistent across all periods presented.

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        The following table is an analysis of chargebacks and rebates for years ended 2009 and 2008. In each year, the provisions for chargebacks and rebates relating to prior period sales were not material.

(dollars in millions)	Chargebacks			Rebates
Balance at January 1, 2008	$	73.6		$	106.5
Provisions		727.0			222.8
Payments		(740.4	)		(221.9	)
Balance at December 31, 2008		60.2			107.4
Provisions		1,041.1			269.2
Payments		(924.3	)		(220.6	)
Balance at December 31, 2009	$	177.0		$	156.0

        Returns—Provisions for returns are provided for at the time the related sales are recognized, and are reflected as a reduction of sales. The estimate of the provision for returns is primarily based on historical experience of actual returns. Additionally, Hospira considers other factors such as levels of inventory in the distribution channel, product dating and expiration period, whether products have been discontinued and entrance in the market of additional competition. This estimate is reviewed periodically and, if necessary, revised, with any revisions recognized immediately as adjustments to net sales.

        Inventories—Inventories are stated at the lower of cost (first-in, first-out basis) or market. Hospira monitors inventories for exposures related to obsolescence, excess and date expiration, non-conformance, corrective actions and loss and damage, and recognizes a charge to cost of products sold for the amount required to reduce the carrying value of inventory to estimated net realizable value. If conditions are less favorable than estimated, additional charges may be required. Such reserves were $110.7 million and $67.8 million at December 31, 2009 and 2008, respectively. The increase to the provision is primarily associated with product portfolio optimization charges and product corrective action related charges.

        Stock-Based Compensation—In accordance with the provisions of ASC Topic 718, "Compensation—Stock Compensation," ("ASC 718"), share-based payment transactions are recognized as compensation cost over the vesting period based on the fair value of the instrument on the date of grant. Hospira uses the Black-Scholes option valuation model and the Monte Carlo simulation model to determine the fair value of stock options and performance share awards, respectively. The fair value models include various assumptions, including the expected volatility and expected life of the awards. These assumptions reflect Hospira's best estimates, but they involve inherent uncertainties based on market conditions generally outside of Hospira's control. As a result, if other assumptions had been used, stock-based compensation expense, as calculated could have been materially impacted. Furthermore, if Hospira uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future periods. See Note 15 to the consolidated financial statements included in Item 8 for additional information regarding stock-based compensation.

        Pension and Post-Retirement Benefits—Hospira provides pension and post-retirement medical and dental benefits to certain of its active and retired employees based both in and outside of the U.S. For financial reporting purposes, Hospira develops assumptions, the most significant of which are the discount rate, the expected rate of return on plan assets and healthcare cost trend rate. For these assumptions, management consults with actuaries, monitors plan provisions and demographics and reviews public market data and general economic information. These assumptions reflect Hospira's best estimates, but they involve inherent uncertainties based on market conditions generally outside of Hospira's control. Assumption changes could affect the reported funded status of Hospira's plans and, as a result, could result in higher funding requirements and net periodic benefit costs.

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        The U.S. discount rate estimates were developed with the assistance of yield curves developed by third-party actuaries. For non-U.S. plans, benchmark yield data for high-quality fixed income investments for which the timing and amounts of payments match the timing and amounts of projected benefit payments is used to derive discount rate assumptions.

        The expected return on assets for the pension plan represents the average rate of return to be earned on plan assets over the period the benefits are expected to be paid. The expected return on assets is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. Hospira considers historical performance for the types of assets in which the plans invest, independent market forecasts and economic and capital market conditions.

        Sensitivity analysis for U.S. plans which represent the primary portion of obligations is as follows:

	Year Ended December 31, 2009 Net Benefit Cost (Income)/Expense						As of December 31, 2009 Benefit Obligation Increase/(Decrease)
(dollars in millions)	One Percentage- Point Increase			One Percentage- Point Decrease			One Percentage- Point Increase			One Percentage- Point Decrease
Pension Plans—U.S.
Discount rate	$	(3.0	)	$	3.5		$	(49.9	)	$	60.9
Expected long-term return on assets		(3.5	)		3.5			—			—
Medical and Dental Plan—U.S.
Discount rate		(0.1	)		0.2			(5.5	)		6.8
Expected health care cost trend rate (initial and ultimate)		0.6			(0.5	)		6.4			(5.3	)

        One provision of ASC Topic 715, "Compensation—Retirement Benefits" ("ASC 715") requires full recognition of the funded status of Hospira's defined benefit and post-retirement plans. Another provision of ASC 715 requires the measurement of Hospira's defined benefit plan's assets and its obligations to determine the funded status as of the end of the fiscal year. The incremental effect of the application of these provisions in 2008 is provided in Note 8 of the consolidated financial statements included in Item 8.

        Impairment of Long-Lived and Other Assets—In accordance with provision of ASC Subtopic 360-10, "Property, Plant, and Equipment: Overall" and ASC Topic 350, "Intangibles—Goodwill and Other," the carrying value of long-lived assets, including amortizable intangible assets and property and equipment, are reviewed whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is generally determined by comparing projected undiscounted cash flows to be generated by the asset, or appropriate grouping of assets, to its carrying value. If an impairment is identified, a loss is recorded equal to the excess of the asset's net book value over its fair value, and the cost basis is adjusted. Determining the extent of an impairment, if any, typically requires various estimates and assumptions including using management's judgment, cash flows directly attributable to the asset, the useful life of the asset and residual value, if any. When necessary, Hospira uses internal cash flow estimates, quoted market prices and appraisals as appropriate to determine fair value. Actual results could vary from these estimates. In addition, the remaining useful life of the impaired asset is revised, if necessary. Hospira reports assets and related liabilities held for sale at the lower of its carrying value or its estimated net realizable value.

        Hospira regularly reviews its investments to determine whether an other-than-temporary decline in market value exists. Hospira considers factors affecting the investee, factors affecting the industry the investee operates in, and general equity market trends. Hospira considers the length of time an

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investment's market value has been below carrying value and the prospects for recovery to carrying value. When Hospira determines that an other-than-temporary decline has occurred, the carrying basis of the investment is written down to fair value and the amount of the write-down is included in Other expense (income), net.

        Goodwill is not amortized but tested for impairment at least annually, or more frequently if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. Hospira's reporting units are U.S., Canada, Latin America, EMEA and APAC. The evaluation is based upon the estimated fair value of Hospira's reporting units compared to the net carrying value of assets and liabilities. Hospira uses internal discounted cash flow estimates and market value comparisons to determine estimated fair value. The annual assessment occurs in the third quarter of each year.

        Loss Contingencies—In accordance with the provisions of ASC Topic 450, "Contingencies," loss contingency provisions are recorded for probable losses at management's best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. These estimates are often initially developed substantially earlier than the ultimate loss is known, and the estimates are refined each accounting period, as additional information is known. Accordingly, if Hospira is initially unable to develop a best estimate of loss, the minimum amount, which could be zero, is recorded.

        Income Taxes—Hospira's provision for income taxes is based on taxable income at statutory tax rates in effect in the various jurisdictions in which Hospira operates. Significant judgment is required in determining the provision for income taxes and in evaluating tax positions that are subject to audits and adjustments. Liabilities for unrecognized tax benefits are established when, despite Hospira's belief that the tax return positions are fully supportable, certain positions are likely to be challenged based on the applicable tax authority's determination of the positions. Such liabilities are based on management's judgment, utilizing internal and external tax advisors and represent management's best estimate as to the likely outcome of tax audits. The provision for income taxes includes the impact of changes to unrecognized tax benefits. Each quarter, Hospira reviews the anticipated mix of income derived from the various taxing jurisdictions and its associated liabilities in accordance with the provisions of ASC Topic 740, "Income Taxes," ("ASC 740"), including the provisions of Accounting for Uncertainty in Income Taxes. ASC 740 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements at the enacted statutory rate expected to be in effect when the taxes are paid. Provision for income taxes and foreign withholding taxes are not provided for on undistributed earnings for certain foreign subsidiaries when Hospira intends to reinvest these earnings indefinitely to fund foreign acquisitions or meet working capital and plant and equipment acquisition needs.

Recently Issued and Adoption of New Accounting Standards

        The disclosure provided in Note 1 to the consolidated financial statements included in Part II Item 8 hereof is incorporated herein by reference.

Certain Regulatory Matters

        On August 13, 2009, Hospira received a Warning Letter, dated August 12, 2009, from the FDA related to Hospira's corrective action plans with respect to the failure of certain AC power cords manufactured by a third party. The affected power cords are used on certain infusion pumps and related products. Hospira initiated a voluntary recall of the affected power cords in August 2009. Hospira has responded to the Warning Letter and is working closely with the FDA to conclude this

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matter. Hospira cannot, however, give any assurances as to the expected date of resolution of the matters included in the Warning Letter.

        Hospira recognized costs related to the voluntary recall of the AC power cords and certain other products during 2009. Hospira has initiated field corrections and other remediation activities with respect to the impacted products. It is possible that additional costs related to these items may be required in future periods, based on modifications to the current remediation plans and changes in estimates as a result of ongoing dialogue with the FDA. While Hospira continues to work to resolve the remaining matters described above, there can be no assurance that additional costs or penalties will not be incurred, and that additional regulatory actions with respect to Hospira will not occur.

Private Securities Litigation Reform Act of 1995—A Caution Concerning Forward-Looking Statements

        Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Hospira cautions investors that any forward-looking statements or projections made by Hospira, including those made in this document, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Economic, competitive, governmental, legal, technological and other factors that may affect Hospira's operations are discussed in Item 1A. Risk Factors, to this Annual Report on Form 10-K.

Item 7A.    Qualitative and Quantitative Disclosures About Market Risk

Financial Instrument and Risk Management

        Hospira operates globally, and earnings and cash flows are exposed to market risk from changes in currency exchange rates and interest rates. Upon consideration of management objectives, costs and opportunities, Hospira uses derivative instruments, including foreign currency forward exchange contracts and interest rate swaps to manage these risks. Hospira enters into derivative instrument contracts with a diversified group of major financial institutions to limit the amount of credit exposure to nonperformance by any one institution. Hospira does not utilize derivative instruments for trading or speculative purposes.

Foreign Currency Sensitive Financial Instruments

        Hospira's operations are exposed to currency exchange-rate risk, which is mitigated by Hospira's use of foreign currency forward exchange contracts ("forward contracts"). The objective is to reduce volatility of earnings and cash flows associated with foreign currency exchange-rate changes. Currency exposures primarily in Euros, Australian dollars, and British pounds include foreign currency denominated assets and liabilities, commitments and anticipated foreign currency revenue and expenses, including inter-company payables, receivables and loans. These forward contracts are not designated as hedges in accordance with the provisions of ASC Topic 815, "Derivatives and Hedging", and, therefore, changes in the fair value are recognized in earnings in Other expense (income), net, during the term of the forward contract. As of December 31, 2009, Hospira has $32.2 million net notional value of forward contracts primarily dominated in Euros, Australian dollars, and British pounds that mature within one to six months. Net forward contract (income) expense for the years ended December 31, 2009, 2008 and 2007 was $(5.6) million, $(1.8) million and $3.4 million, respectively. The carrying value and fair value of forward contracts was a net receivable of $3.9 million and a net payable of $12.7 million as of December 31, 2009 and 2008, respectively.

Interest Rate Sensitive Financial Instruments

        Hospira's primary interest rate exposures relate to cash and cash equivalents, and fixed and variable rate debt. The objective in managing exposure to changes in interest rates is to reduce volatility on earnings and cash flows associated with these changes. Hospira utilizes a mix of debt

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maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. Hospira may use interest rate swap contracts on certain borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. In 2009, Hospira entered into $300.0 million notional amount interest rate swap contracts whereby $200.0 million of the $400.0 million senior unsecured notes due June 2014 and $100.0 million of the $250.0 million senior unsecured notes due May 2015 were effectively converted from fixed to floating rate debt. For these fair value hedges, changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed-rate debt due to changes in market interest rates. Interest rate swap contract gains and losses are included in Interest expense.

        Hospira's investment portfolio of $995.3 million at December 31, 2009, consists of cash and cash equivalents, equity investments in affiliated companies and fair value and cost investments. Fair value investments consist of marketable securities classified as available-for-sale. Any gains or losses on available-for-sale investments will not be recognized in Hospira's consolidated statements of income until the investment is sold or if there is a reduction in fair value that is determined to be an other-than-temporary impairment. In 2009, Hospira assessed the decline in the market value of marketable equity securities to be other-than-temporary, primarily due to the duration and severity of the investment's decline in market value and the near-term prospects for recovery to the original invested value. Accordingly, Hospira recognized a non-cash, impairment charge of $16.6 million in Other expense (income), net. The carrying value of the investment portfolio approximates fair market value at December 31, 2009, and the value at maturity, as the majority of investments consist of securities with maturities of less than three months. Because Hospira's investments consist principally of cash and cash equivalents, a hypothetical one percentage point increase/(decrease) in interest rates, based on average cash and cash equivalents during the year, would increase/(decrease) interest income by approximately $7.2 million.

        Hospira has a Revolver that allows borrowings up to $700.0 million for general corporate purposes at variable interest rates. The amount of available borrowings under the Revolver may be increased to a maximum of $825.0 million, under certain circumstances. As of December 31, 2009, Hospira has not borrowed any amounts under the Revolver.

        Refer to the Liquidity and Capital Resources section above, as well as Notes 3, 6, 7 and 11 to the consolidated financial statements included in this Annual Report on Form 10-K, for further information.

49

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Management Report On Internal Control Over Financial Reporting	51
Reports of Independent Registered Public Accounting Firm	52
Consolidated Statements of Income and Comprehensive Income (Loss) for the Years Ended December 31, 2009, 2008 and 2007	54
Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007	55
Consolidated Balance Sheets as of December 31, 2009 and 2008	56
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 2009, 2008 and 2007	57
Notes to Consolidated Financial Statements	58
Schedule II—Valuation and Qualifying Accounts	104

50

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        The management of Hospira, Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control system was designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation and fair presentation of published financial statements.

        All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

        Company management assessed the effectiveness of its internal control over financial reporting as of December 31, 2009. In making this assessment, it used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we believe that, as of December 31, 2009, the Company's internal control over financial reporting was effective based on those criteria.

        The Company's independent registered public accounting firm has issued an audit report on their assessment of the Company's internal control over financial reporting as of December 31, 2009, which is included herein.

/s/ CHRISTOPHER B. BEGLEY
Chairman of the Board and
Chief Executive Officer
February 18, 2010 /s/ THOMAS E. WERNER
Senior Vice President, Finance, and
Chief Financial Officer
February 18, 2010

51

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Hospira, Inc.
Lake Forest, Illinois

        We have audited the accompanying consolidated balance sheets of Hospira, Inc. and subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related consolidated statements of income and comprehensive income (loss), changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Hospira, Inc. and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2010 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
February 18, 2010

52

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Hospira, Inc.
Lake Forest, Illinois

        We have audited the internal control over financial reporting of Hospira, Inc. and subsidiaries (the "Company") as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2009 of the Company and our report dated February 18, 2010 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Chicago, Illinois
February 18, 2010

53

Hospira, Inc.

Consolidated Statements of Income and Comprehensive Income (Loss)

(dollars and shares in millions, except for per share amounts)

			Years Ended December 31,
			2009			2008			2007
Net sales			$	3,879.3		$	3,629.5		$	3,436.2
Cost of products sold				2,422.9			2,286.8			2,240.5
Restructuring and impairment				94.2			22.4			21.8
Research and development				240.5			211.9			201.2
Acquired in-process research and development				—			0.5			88.0
Selling, general and administrative				618.8			590.1			582.1
	Total operating costs and expenses			3,376.4			3,111.7			3,133.6
		Income From Operations		502.9			517.8			302.6
Interest expense				106.3			116.2			134.5
Other expense (income), net				11.8			(5.9	)		(19.7	)
		Income Before Income Taxes		384.8			407.5			187.8
Income tax (benefit) expense				(19.1	)		86.6			51.0
		Net Income	$	403.9		$	320.9		$	136.8
Earnings Per Common Share:
		Basic	$	2.51		$	2.02		$	0.87
		Diluted	$	2.47		$	1.99		$	0.85
Weighted Average Common Shares Outstanding:
		Basic		161.0			159.2			156.9
		Diluted		163.2			161.3			160.2
Comprehensive Income (Loss):
Foreign currency translation adjustments, net of taxes of $0.0			$	249.3		$	(307.6	)	$	116.8
Pension liability adjustments, net of taxes of $1.4, $25.3 and $(5.6), respectively				(5.4	)		(40.1	)		8.8
Unrealized gains (losses) on marketable equity securities, net of taxes of $0.0, $0.0 and $3.2, respectively				6.6			(16.5	)		(5.4	)
Reclassification of other-than-temporary impairment charge included in net income				16.6			—			—
Reclassification of losses on terminated cash flow hedges, net of taxes of $(0.6), $(0.4) and $1.1, respectively				1.0			0.7			(1.8	)
Other comprehensive income (loss)				268.1			(363.5	)		118.4
Net Income				403.9			320.9			136.8
Comprehensive Income (Loss)			$	672.0		$	(42.6	)	$	255.2

The accompanying notes are an integral part of these consolidated financial statements.

54

Hospira, Inc.

Consolidated Statements of Cash Flows

(dollars in millions)

			Years Ended December 31,
			2009			2008			2007
Cash Flow From Operating Activities:
	Net income		$	403.9		$	320.9		$	136.8
	Adjustments to reconcile net income to net cash from operating activities-
		Depreciation		168.6			183.2			183.0
		Amortization of intangible assets		61.5			68.7			52.1
		Write-off of acquired in-process research and development		—			0.5			88.0
		Step-up value of acquired inventories sold		—			—			53.1
		Stock-based compensation expense		40.5			42.0			39.4
		Deferred income tax and other tax adjustments		(66.3	)		43.5			(3.1	)
		Impairment and other asset charges		95.8			—			7.5
		Net gains on sales of assets		—			(3.0	)		(5.0	)
	Changes in assets and liabilities-
		Trade receivables		97.2			(55.4	)		(47.6	)
		Inventories		54.4			(117.9	)		34.4
		Prepaid expenses and other assets		8.2			12.9			17.7
		Trade accounts payable		(4.2	)		49.5			11.5
		Other liabilities		107.5			15.8			(40.3	)
	Other, net			(22.2	)		23.4			23.6
		Net Cash Provided by Operating Activities		944.9			584.1			551.1
Cash Flow From Investing Activities:
	Capital expenditures (including instruments placed with or leased to customers of $23.0, $30.5 and $36.7 in 2009, 2008 and 2007, respectively)			(159.4	)		(164.3	)		(210.5	)
	Acquisitions, net of cash acquired, and payments for contingent consideration			(86.6	)		(26.1	)		(1,980.5	)
	Purchases of intangibles and other investments			(14.3	)		(50.8	)		(5.5	)
	(Purchases) sales of marketable securities			—			(24.5	)		10.4
	Settlements of foreign currency contracts			—			—			(55.7	)
	Proceeds from disposition of businesses and assets			49.2			0.8			13.8
		Net Cash Used in Investing Activities		(211.1	)		(264.9	)		(2,228.0	)
Cash Flow From Financing Activities:
	Issuance of long-term debt, net of fees paid			246.7			—			3,336.2
	Repayment of long-term debt			(681.2	)		(95.2	)		(1,825.2	)
	Other borrowings, net			2.6			6.3			(6.2	)
	Excess tax benefit from stock-based compensation arrangements			0.8			1.0			2.3
	Proceeds from stock options exercised			122.5			27.8			73.1
		Net Cash (Used in) Provided by Financing Activities		(308.6	)		(60.1	)		1,580.2
Effect of exchange rate changes on cash and cash equivalents				37.0			(16.4	)		15.8
Net change in cash and cash equivalents				462.2			242.7			(80.9	)
Cash and cash equivalents at beginning of year				483.8			241.1			322.0
Cash and cash equivalents at end of year			$	946.0		$	483.8		$	241.1
Supplemental Cash Flow Information:
Cash paid during the year-
	Interest		$	108.7		$	120.8		$	127.4
	Income taxes, net of refunds		$	28.4		$	14.9		$	72.4

The accompanying notes are an integral part of these consolidated financial statements.

55

Hospira, Inc.

Consolidated Balance Sheets

(dollars in millions)

			December 31,
			2009			2008
Assets
Current Assets:
	Cash and cash equivalents		$	946.0		$	483.8
	Trade receivables, less allowances of $6.2 in 2009 and $6.7 in 2008			498.1			583.4
	Inventories			755.4			830.5
	Deferred income taxes			185.9			172.2
	Prepaid expenses			34.3			35.7
	Other receivables			41.5			43.7
	Assets held for sale			65.0			—
		Total Current Assets		2,526.2			2,149.3
Property and equipment, net				1,147.8			1,192.1
Intangible assets, net				406.5			404.4
Goodwill				1,243.4			1,167.4
Deferred income taxes				54.5			70.1
Investments				49.3			37.6
Other assets				75.2			53.2
		Total Assets	$	5,502.9		$	5,074.1
Liabilities and Shareholders' Equity
Current Liabilities:
	Short-term borrowings		$	23.6		$	338.3
	Trade accounts payable			229.5			231.5
	Salaries, wages and commissions			176.5			144.7
	Deferred income taxes			0.1			1.5
	Other accrued liabilities			438.3			331.5
	Liabilities related to assets held for sale			13.9			—
		Total Current Liabilities		881.9			1,047.5
Long-term debt				1,707.3			1,834.0
Deferred income taxes				18.6			25.2
Post-retirement obligations and other long-term liabilities				271.4			391.0
Commitments and Contingencies
Shareholders' Equity:
	Common stock			1.7			1.7
	Preferred stock			—			—
	Treasury stock, at cost			(299.8	)		(299.8	)
	Additional paid-in capital			1,409.5			1,234.2
	Retained earnings			1,540.1			1,136.2
	Accumulated other comprehensive loss			(27.8	)		(295.9	)
Total Shareholders' Equity				2,623.7			1,776.4
Total Liabilities and Shareholders' Equity			$	5,502.9		$	5,074.1

The accompanying notes are an integral part of these consolidated financial statements.

56

Hospira, Inc.

Consolidated Statements of Changes in Shareholders' Equity

(dollars and shares in millions)

	Common Stock												Accumulated Other Comprehensive (Loss) Income
					Treasury Stock, at cost			Additional Paid-in Capital		Retained Earnings
	Shares		Amount													Total
Balances at January 1, 2007		155.9	$	1.7	$	(299.8	)	$	1,033.3	$	676.6		$	(50.8	)	$	1,361.0
Net income		—		—		—			—		136.8			—			136.8
Other comprehensive income		—		—		—			—		—			118.4			118.4
Adoption of the provisions of ASC Topic 740, "Income Taxes"		—		—		—			—		2.1			—			2.1
Changes in shareholders' equity related to incentive stock programs		2.7		—		—			126.9		—			—			126.9
Balances at December 31, 2007		158.6		1.7		(299.8	)		1,160.2		815.5			67.6			1,745.2
Net income		—		—		—			—		320.9			—			320.9
Other comprehensive loss		—		—		—			—		—			(363.5	)		(363.5	)
ASC Topic 718, "Compensation—Retirement Benefits" transition amount, net of tax of $0.1		—		—		—			—		(0.2	)		—			(0.2	)
Changes in shareholders' equity related to incentive stock programs		1.0		—		—			74.0		—			—			74.0
Balances at December 31, 2008		159.6		1.7		(299.8	)		1,234.2		1,136.2			(295.9	)		1,776.4
Net income		—		—		—			—		403.9			—			403.9
Other comprehensive income		—		—		—			—		—			268.1			268.1
Changes in shareholders' equity related to incentive stock programs		3.9		—		—			175.3		—			—			175.3
Balances at December 31, 2009		163.5	$	1.7	$	(299.8	)	$	1,409.5	$	1,540.1		$	(27.8	)	$	2,623.7

The accompanying notes are an integral part of these consolidated financial statements.

57

Hospira, Inc.

Notes to Consolidated Financial Statements

Note 1—Summary of Significant Accounting Policies

Description of Business

        Hospira, Inc. ("Hospira") is a global specialty pharmaceutical and medication delivery company that develops, manufactures and markets products that help improve the safety, cost and productivity of patient care. Hospira's portfolio includes generic acute-care and oncology injectables, as well as integrated infusion therapy and medication management systems. Hospira's portfolio of products is used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities.

Basis of Presentation

        The consolidated financial statements, prepared in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP"), include the accounts of Hospira and all of its controlled majority-owned subsidiaries. All intercompany balances and transactions have been eliminated. Subsequent events that occurred after December 31, 2009, up until the filing with the Securities and Exchange Commission ("SEC") were considered in the preparation of these consolidated financial statements.

Reclassifications

        For comparative purposes, Hospira made certain reclassifications to prior year amounts. Hospira reclassified costs that were previously reported in Cost of products sold and Research and development to Restructuring and impairment, a separate operating costs and expenses line item. Hospira also reclassified deferred tax adjustments previously reported in Other liabilities and Other, net to Deferred income tax and other tax adjustments, a separate cash flow line item. The reclassifications did not affect net income, net cash provided by operating activities or shareholders' equity.

        In 2008, Hospira re-aligned its segment presentation to reflect how the business is managed. Hospira has three reportable segments: Americas; Europe, Middle East and Africa ("EMEA") and Asia Pacific ("APAC"). The 2007 segment disclosure has been reclassified to conform to the 2008 and 2009 presentation.

Use of Estimates

        The financial statements include amounts based on estimates and assumptions by management. Actual results could differ from those amounts. Significant estimates include, but are not limited to, provisions for chargebacks and rebates, inventory exposure reserves, income tax liabilities, pension and other post-retirement benefits liabilities and loss contingencies.

Revenue Recognition

        Hospira recognizes revenues from product sales when persuasive evidence of an arrangement exists, delivery has occurred (or services have been rendered), the price is fixed or determinable and collectibility is reasonably assured. For other than certain drug delivery pumps and contract manufacturing, product revenue is recognized when products are delivered to customers and title passes. In certain circumstances, Hospira enters into arrangements in which it commits to provide multiple elements (deliverables) to its customers. In these cases, total revenue is divided among the separate deliverables based on their relative fair value and is recognized for each deliverable in accordance with the applicable revenue recognition criteria.

58

        For drug delivery pumps, revenue is typically derived under one of three types of arrangements: outright sales of the drug delivery pump; placements under lease arrangements; and placements under contracts that include associated disposable set purchases. For outright sales of the drug delivery pump and for related sales of disposable products (sets) revenue is recognized as the products are delivered, in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 605, "Revenue Recognition," including revenue recognition when right of return exists. Other arrangements (leases and contracts that included associated disposable set purchases) are assessed in accordance with the provisions of ASC Topic 840, "Leases," including determining whether an arrangement contains a lease and drug delivery pump revenue is recorded as a sales-type or operating lease. For arrangements that qualify as sales-type leases, the discounted sales value of the drug delivery pump is recorded as revenue upon delivery to the customer. For arrangements that qualify as operating leases, Hospira recognizes revenue over the lease term, and the related asset is depreciated over its estimated useful life on a straight-line basis.

        Hospira markets a server-based suite of software applications designed to exchange data from a hospital's drug information library database to drug delivery pumps throughout the hospital. The arrangements related to such applications typically include a perpetual or subscription software license, software maintenance and implementation services, in addition to the drug delivery pump. Hospira recognizes revenue related to these arrangements in accordance with the provisions of ASC Topic 985, "Software." Drug delivery pump, perpetual software license revenue and implementation service revenue are generally recognized as obligations are completed or upon customer acceptance. Software subscription license and software maintenance revenue is recognized ratably over the contract period.

        Contract manufacturing involves filling customers' active pharmaceutical ingredients ("API") into delivery systems. Under these arrangements, customers' API is often consigned to Hospira and revenue is recorded for the materials and labor provided by Hospira, plus a profit, upon shipment to the customer.

        Upon recognizing revenue from a sale, Hospira records an estimate for certain items that reduce gross sales in arriving at its reported net sales for each period. These items include chargebacks, rebates and other items (such as cash discounts and returns). Provisions for chargebacks and rebates represent the most significant and complex of these estimates.

Chargebacks—Hospira sells a significant portion of its specialty injectable pharmaceutical products through wholesalers, which maintain inventories of Hospira products and later sell those products to end customers. In connection with its sales and marketing efforts, Hospira negotiates prices with end customers for certain products under pricing agreements (including, for example, group purchasing organization contracts). Consistent with industry practice, the negotiated end customer prices are typically lower than the prices charged to the wholesalers. When an end customer purchases a Hospira product that is covered by a pricing agreement from a wholesaler, the end customer pays the wholesaler the price determined under the pricing agreement. The wholesaler is then entitled to charge Hospira back for the difference between the price the wholesaler paid Hospira and the contract price paid by the end customer (a "chargeback").

        Hospira records the initial sale to a wholesaler at the price invoiced to the wholesaler and at the same time, records a provision equal to the estimated amount the wholesaler will later charge back to Hospira, reducing gross sales and trade receivables. This provision must be estimated because the actual end customer and applicable pricing terms may vary at the time of the sale to the wholesaler. Accordingly, the most significant estimates inherent in the initial chargeback provision relate to the volume of sales to the wholesalers that will be subject to chargeback and the ultimate end customer contract price. These estimates are based primarily on an analysis of Hospira's product sales and most recent historical average chargeback credits by product, estimated wholesaler inventory levels, current contract pricing, anticipated future contract pricing changes and claims processing lag time. Hospira

59

estimates the levels of inventory at the wholesalers through analysis of wholesaler purchases and inventory data obtained directly from certain of the wholesalers. Hospira regularly monitors the provision for chargebacks and makes adjustments when it believes the actual chargebacks may differ from earlier estimates. The methodology used to estimate and provide for chargebacks was consistent across all periods presented.

        Settlement of chargebacks, excluding generic oxaliplatin sales, generally occurs between 25 and 35 days after the sale to wholesalers. A one percent decrease in end customer contract prices for sales pending chargeback, excluding generic oxaliplatin sales, at December 31, 2009, would decrease net sales and income before income taxes by approximately $1.4 million. A one percent increase in wholesale units sold subject to chargebacks, excluding generic oxaliplatin sales, at December 31, 2009, would decrease net sales and income before income taxes by approximately $0.6 million.

        Hospira's generic oxaliplatin sales, launched in the U.S. in 2009, contributed to the increase in the chargebacks accrual from $60.2 million at December 31, 2008, to $177.0 million at December 31, 2009. Generally, sales during a generic launch period experience more rapid end customer price declines due to competitive market factors and reflect wholesalers' common practice of purchasing quantities of product at launch to assure adequate supply for end customer use. Due to these factors, settlement of chargebacks generally occurs over a longer duration and at a higher per unit rate than with other Hospira products.

        The most significant variables that could affect Oxaliplatin chargeback related accruals are the rate of end customer price decline and the rate of end customer demand experienced by the wholesalers. A five percent decline in end customer prices would decrease net sales and income before income taxes by approximately $2.5 million. A five percent decrease in monthly end customer demand experienced by wholesalers would decrease net sales and income before income taxes by approximately $0.8 million.

Rebates—Hospira primarily offers rebates to direct customers, customers who purchase from certain wholesalers at end customer contract prices and government agencies, which administer various programs such as Medicaid. Direct rebates are generally rebates paid to direct purchasing customers based on a contracted discount applied to the direct customer's purchases. Indirect rebates are rebates paid to "indirect customers" that have purchased Hospira products from a wholesaler under a pricing agreement with Hospira. Governmental agency rebates are amounts owed based on legal requirements with public sector benefit providers (such as Medicaid), after the final dispensing of the product by a pharmacy to a benefit plan participant. Rebate amounts are usually based upon the volume of purchases. Hospira estimates the amount of the rebate due at the time of sale, and records the liability and a reduction of gross sales at the same time the product sale is recorded. Settlement of the rebate generally occurs from one to fifteen months after sale.

        In determining provisions for rebates to direct customers, Hospira considers the volume of eligible purchases by these customers and the rebate terms. In determining rebates on sales through wholesalers, Hospira considers the volume of eligible contract purchases, the rebate terms and the estimated level of inventory at the wholesalers that would be subject to a rebate, which is estimated as described above under "Chargebacks." Upon receipt of a chargeback, due to the availability of product and customer specific information, Hospira can then establish a specific provision for fees or rebates based on the specific terms of each agreement. Rebates under governmental programs are based on the estimated volume of products sold subject to these programs. Each period the estimates are reviewed and revised, if necessary, in conjunction with a review of contract volumes within the period. Adjustments related to prior period sales have not been material in any period.

        Hospira regularly analyzes the historical rebate trends and makes adjustments to recorded reserves for changes in trends and terms of rebate programs. At December 31, 2009 and 2008, accrued rebates of $156.0 million and $107.4 million, respectively, are included in other accrued liabilities on the consolidated balance sheet. Hospira's generic oxaliplatin sales, launched in the U.S. in 2009,

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contributed to the increase in the rebate accrual. The methodology used to estimate and provide for rebates was consistent across all periods presented.

Returns—Provisions for returns are provided for at the time the related net sales are recognized, and are reflected as a reduction of sales. The estimate of the provision for returns is primarily based on historical experience of actual returns. Additionally, Hospira considers other factors such as levels of inventory in the distribution channel, product dating and expiration period, whether products have been discontinued, and entrance in the market of additional competition. This estimate is reviewed periodically and, if necessary, revised, with any revisions recognized immediately as adjustments to net sales. Returns reserves were $18.5 million and $19.5 million as of December 31, 2009 and 2008, respectively, and included in other accrued liabilities on the consolidated balance sheet.

Concentration of Risk

        Financial instruments that are subject to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade receivables. Hospira holds cash and invests in cash equivalents and marketable securities with a diversified group of major financial institutions to limit the amount of credit exposure to non-performance by any one institution.

        In 2009, 2008 and 2007, no end use customer accounted for more than 10% of net sales (gross sales less reductions for wholesaler chargebacks, rebates, returns and other allowances). For 2009 and 2008, the largest four wholesalers accounted for approximately 40% and 30%, respectively, of net trade receivables. Net sales through the same four wholesalers noted above accounted for approximately 42%, 38% and 37% of global net sales in 2009, 2008 and 2007, respectively. Global net sales related to group purchasing organizations ("GPO") contracts amounted to $1,705.1 million in 2009, $1,564.7 million in 2008 and $1,380.2 million in 2007.

Loss Contingencies

        In accordance with the provisions of ASC Topic 450, "Contingencies" ("ASC 450"), loss contingency provisions are recorded for probable losses at management's best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. These estimates are often initially developed substantially earlier than the ultimate loss is known, and the estimates are refined each accounting period, as additional information is known. Accordingly, if Hospira is initially unable to develop a best estimate of loss, the minimum amount, which could be zero, is recorded.

Income Taxes

        Hospira's provision for income taxes is based on taxable income at statutory tax rates in effect in the various jurisdictions in which Hospira operates. Significant judgment is required in determining the provision for income taxes and in evaluating tax positions that are subject to audits and adjustments. Liabilities for unrecognized tax benefits are established when, despite Hospira's belief that the tax return positions are fully supportable, certain positions are likely to be challenged based on the applicable tax authority's determination of the positions. Such liabilities are based on management's judgment, utilizing internal and external tax advisors and represent management's best estimate as to the likely outcome of tax audits. The provision for income taxes includes the impact of changes to unrecognized tax benefits. Each quarter, Hospira reviews the anticipated mix of income derived from the various taxing jurisdictions and its associated liabilities in accordance with the provisions of ASC Topic 740, "Income Taxes," ("ASC 740"), including the provisions of Accounting for Uncertainty in Income Taxes. ASC 740 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of

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assets and liabilities and their reported amounts in the financial statements at the enacted statutory rate expected to be in effect when the taxes are paid. Provision for income taxes and foreign withholding taxes are not provided for on undistributed earnings for certain foreign subsidiaries when Hospira intends to reinvest these earnings indefinitely to fund foreign investments or meet working capital and plant and equipment acquisition needs.

Cash and Cash Equivalents

        Hospira considers all cash investments purchased with an original maturity of three months or less to be cash equivalents.

Inventories

        Inventories are stated at the lower of cost (first-in, first-out basis) or market. Hospira monitors inventories for exposures related to obsolescence, excess and date expiration, non-conformance, corrective actions and loss and damage, and recognizes a charge to cost of products sold for the amount required to reduce the carrying value of inventory to estimated net realizable value. If conditions are less favorable than estimated, additional charges may be required. Such reserves were $110.7 million and $67.8 million at December 31, 2009 and 2008, respectively. The increase to the provision is primarily associated with product portfolio optimization charges and product corrective action related charges. Inventory cost includes material and conversion costs.

Goodwill and Intangible Assets, Net

        The following summarizes goodwill and intangible assets, net activity:

(dollars in millions)		Goodwill			Intangible Assets, Net
Balances at January 1, 2008		$	1,240.9		$	554.0
	Acquisitions		23.3			11.9
	Amortization		—			(68.7	)
	Currency translation effect and other		(96.8	)		(92.8	)
Balances at December 31, 2008			1,167.4			404.4
	Acquisitions		47.9			22.1
	Amortization		—			(61.5	)
	Impairments		(7.6	)		(22.5	)
	Re-classified as held for sale		(17.9	)		—
	Currency translation effect and other		53.6			64.0
Balances at December 31, 2009		$	1,243.4		$	406.5

2009 Activity. The impairments are related to the disposal of certain non-strategic businesses and the underlying assets. See Note 4 for more information on the circumstances leading to the impairments. The additions to goodwill and intangible assets, net are primarily related to the acquisition in the Americas segment. See Note 2 for more details.

2008 Activity. The additions to goodwill and intangible assets, net are primarily related to the acquisitions in the Americas segment. See Note 2 for more details. Currency translation effect and other includes a $35.3 million reduction in goodwill in the APAC segment related to Mayne Pharma deferred tax liabilities for pre-acquisition tax return settlements and the adjusted tax basis of certain acquired Mayne Pharma assets. There were no reductions from goodwill or intangible assets, net relating to impairments or disposal of all or a portion of a business in 2008.

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        In accordance with the provisions of ASC Topic 350, "Intangibles—Goodwill and Other" ("ASC 350"), goodwill is not amortized but is tested for impairment at least annually, or more frequently if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. Hospira's reporting units are the U.S., Canada, Latin America, EMEA and APAC. The evaluation is based upon the estimated fair value of Hospira's reporting units compared to the net carrying value of assets and liabilities. Hospira uses internal discounted cash flow estimates and market value comparisons to determine estimated fair value. The annual assessment occurs in the third quarter of each year. As of the latest assessment, no additional impairment was indicated.

        Additionally, intangible assets, net as of December 31, consist of the following:

	2009							2008
(dollars in millions)	Gross Carrying Amount		Accumulated Amortization			Net Intangible Assets		Gross Carrying Amount		Accumulated Amortization			Net Intangible Assets
Product rights	$	524.6	$	(159.0	)	$	365.6	$	464.3	$	(92.0	)	$	372.3
Customer relationships		27.6		(7.1	)		20.5		28.1		(7.5	)		20.6
Technology		26.7		(6.3	)		20.4		15.1		(3.6	)		11.5
	$	578.9	$	(172.4	)	$	406.5	$	507.5	$	(103.1	)	$	404.4

        Intangible assets have definite lives and are amortized on a straight-line basis over their estimated useful lives (1 to 16 years, weighted average 10 years). Intangible asset amortization expense was $61.5 million, $68.7 million and $52.1 million in 2009, 2008 and 2007, respectively. Intangible asset amortization for each of the five succeeding fiscal years is estimated at $70 million for 2010, $62 million for 2011, $51 million for 2012, $50 million for 2013, and $48 million for 2014.

Investments

        Investments in companies in which Hospira has significant influence, but less than a majority-owned controlling interest, are accounted for using the equity method. Significant influence is generally deemed to exist if Hospira has an ownership interest in the voting stock of the investee of between 20% and 50%, although other factors, such as representations on the investee's Board of Directors, are considered in determining whether the equity method of accounting is appropriate.

        Investments in companies in which Hospira does not have a controlling interest or is unable to exert significant influence are accounted for at market value if the investments have readily determinable fair values ("available-for-sale investments") or using the cost method if not practicable to estimate the fair value of the investment. Unrealized gains and losses on available-for-sale investments accounted for at market value are reported, net-of-tax, in accumulated other comprehensive income (loss) until the investment is sold or considered other-than-temporarily impaired, at which time the realized gain or loss is charged to Other expense (income), net.

        Hospira regularly reviews its investments to determine whether an other-than-temporary decline in market value exists. Hospira considers factors affecting the investee, factors affecting the industry the investee operates in and general equity market trends. Hospira considers the length of time an investment's market value has been below carrying value and the prospects for recovery to carrying value. When Hospira determines that an other-than-temporary decline has occurred, the carrying basis of the investment is written down to fair value and the amount of the write-down is included in Other expense (income), net. See Note 3 for more details.

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Property and Equipment

        Depreciation is provided on a straight-line basis over the estimated useful lives of the assets.

        Property and equipment at cost as of December 31, consists of the following:

Classification (dollars in millions)	2009			2008			Estimated Useful Life
Land	$	44.2		$	51.3		N/A
Buildings		490.5			498.1		10 to 50 years (weighted average 29 years)
Equipment		1,557.1			1,593.5		3 to 20 years (weighted average 8 years)
Construction in progress		117.2			106.7		N/A
Instruments placed with customers		256.2			290.9		3 to 7 years (weighted average 5 years)
Property and equipment at cost		2,465.2			2,540.5
Less: accumulated depreciation		(1,317.4	)		(1,348.4	)
Property and equipment, net	$	1,147.8		$	1,192.1

        Instruments placed with customers are drug delivery systems placed with or leased to customers under operating leases.

Impairment of Long-Lived Assets

        In accordance with provision of ASC Subtopic 360-10, "Property, Plant, and Equipment: Overall" and ASC 350, the carrying value of long-lived assets, including amortizable intangible assets and property and equipment, are reviewed whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is generally determined by comparing projected undiscounted cash flows to be generated by the asset, or appropriate grouping of assets, to its carrying value. If an impairment is identified, a loss is recorded equal to the excess of the asset's net book value over its fair value, and the cost basis is adjusted. Determining the extent of an impairment, if any, typically requires various estimates and assumptions including using management's judgment, cash flows directly attributable to the asset, the useful life of the asset and residual value, if any. When necessary, Hospira uses internal cash flow estimates, quoted market prices and appraisals as appropriate to determine fair value. Actual results could vary from these estimates. In addition, the remaining useful life of the impaired asset is revised, if necessary. Hospira reports assets and related liabilities held for sale at the lower of its carrying value or its estimated net realizable value.

Capitalized Software Costs

        Costs incurred during the application development stage of software projects that are developed or obtained for internal use are capitalized. At December 31, 2009 and 2008, unamortized capitalized software costs totaled $78.1 million and $87.6 million, respectively. Such capitalized amounts will be amortized ratably over the expected useful lives of the projects when they become operational, not to exceed 10 years. Amortization was $19.4 million, $16.1 million and $15.5 million for the years ended 2009, 2008 and 2007, respectively, and is included in Depreciation in the consolidated statements of cash flows.

Capitalized Interest

        Hospira follows the provisions of ASC Subtopic 835-20, "Interest: Capitalization of Interest," to determine the interest to be capitalized during the construction period for projects under construction. Hospira recorded capitalized interest of $5.8 million, $8.0 million and $11.1 million in 2009, 2008 and 2007, respectively.

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Collaborative Arrangements

        Hospira enters into collaborative arrangements with third parties for product development and commercialization of products. These arrangements typically involve two (or more) parties who are active participants in the collaboration and are exposed to significant risks and rewards dependent on the commercial success of the activities. Hospira's rights and obligations under these collaborative arrangements vary. These collaborations usually involve various activities including research and development, marketing and selling, and distribution.

        In general, the income statement presentation for these collaborations is as follows:

Nature / Type of Collaboration	Consolidated Statement of Income Presentation
Third party sale of product	Net sales
Royalties / milestones paid to collaborative partner (post-regulatory approval)(1)	Cost of products sold
Royalties received from collaborative partner	Net sales
Upfront payments and milestones paid to collaborative partner (pre-regulatory approval)	Research and development
Refundable upfront payments paid to collaborative partner (pre-regulatory approval)(2)	Research and development or Cost of products sold
Research and development payments to collaborative partner	Research and development
Research and development payments received from collaborative partner	Reduction of Research and development

(1)

Milestones are capitalized as intangible assets and amortized to Cost of products sold over the useful life.

(2)

Refundable payments for which the contingency is resolved prior to regulatory approval are expensed to Research and development as the contingency becomes probable of being resolved. For refundable payments for which the contingency is regulatory approval, payments are capitalized as intangible assets and amortized to Cost of products sold over the useful life upon receiving regulatory approval.

        Each arrangement tends to be unique in nature and Hospira's most significant arrangements are discussed in Note 5.

Research and Development Costs

        Internal research and development costs are expensed as incurred. Clinical trial costs incurred by third parties are expensed as the contracted work is performed. Services provided to third parties for research and development is recorded upon completion of all obligations under the contract in Research and development for products in development. Revenue from third-party research and development is not significant.

Translation Adjustments

        For foreign operations in highly inflationary economies, translation gains and losses are included in net foreign exchange (gain) loss. For remaining foreign operations, translation adjustments are included as a component of accumulated other comprehensive (loss) income.

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Stock-Based Compensation

        In accordance with the provisions of ASC Topic 718, "Compensation—Stock Compensation," ("ASC 718"), share-based payment transactions are recognized as compensation cost over the vesting period based on the fair value of the instrument on the date of grant. Hospira uses the Black-Scholes option valuation model and the Monte Carlo simulation model to determine the fair value of stock options and performance share awards, respectively. The fair value models include various assumptions, including the expected volatility and expected life of the awards. These assumptions reflect Hospira's best estimates, but they involve inherent uncertainties based on market conditions generally outside of Hospira's control. As a result, if other assumptions had been used, stock-based compensation expense, as calculated could have been materially impacted. Furthermore, if Hospira uses different assumptions in future periods, stock-based compensation expense could be materially impacted in future periods.

Pension and Post-Retirement Benefits

        Hospira develops assumptions, the most significant of which are the discount rate, the expected return on plan assets and healthcare cost trend rate. For these assumptions, management consults with actuaries, monitors plan provisions and demographics and reviews public market data and general economic information.

        The U.S. discount rate estimates were developed with the assistance of yield curves developed by third-party actuaries. For non-U.S. plans, benchmark yield data for high-quality fixed income investments for which the timing and amounts of payments match the timing and amounts of projected benefit payments is used to derive discount rate assumptions.

        The expected return on assets for the pension plan represents the average rate of return to be earned on plan assets over the period the benefits are expected to be paid. The expected return on assets is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. Hospira considers historical performance for the types of assets in which the plans invest, independent market forecasts and economic and capital market conditions.

Recently Issued Accounting Standards

        In October 2009, the FASB codified and issued Accounting Standards Updated ("ASU") No. 2009-13, Revenue Recognition (Topic 605), "Multiple-Deliverable Revenue Arrangements" ("ASU No. 2009-13"). ASU No. 2009-13 amends the guidance that in the absence of vendor-specific objective and third-party evidence for deliverables in multiple-deliverable arrangements, companies will be required to develop a best estimate of the selling price to separate deliverables and allocate arrangements consideration using the relative selling price method. ASU No. 2009-13 expands the disclosure requirements for multiple-deliverable revenue arrangements. The guidance will be effective for financial statements issued for fiscal years beginning after June 15, 2010. Early adoption is permitted. Hospira plans to early adopt the guidance on March 31, 2010, with retrospective application to the beginning of the fiscal year. Hospira is currently evaluating the potential impact of ASU 2009-13 on the financial statements and related disclosures.

        In October 2009, the FASB codified and issued ASU No. 2009-14, Software (Topic 985), "Certain Revenue Arrangements That Include Software Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends the guidance to exclude from the scope of software revenue accounting requirements tangible products if the product contains both software and non-software components that function together to deliver a product's essential functionality and factors to consider in determining whether a product is within the scope of the guidance. The guidance will be effective for financial statements issued for fiscal years beginning after June 15, 2010. Early adoption is permitted. Hospira plans to early adopt the guidance on March 31, 2010, with retrospective application to the beginning of the fiscal year. Hospira

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is currently evaluating the potential impact of ASU No. 2009-14 on the financial statements and related disclosures.

Adoption of New Accounting Standards

        Hospira adopted the provisions of FASB ASU No. 2009-05, "Measuring Liabilities at Fair Value" ("ASU No. 2009-05"), for interim periods ending after August 28, 2009. ASU No. 2009-05 provides guidance on measuring liabilities at fair value when a quoted price in an active market for the identical liability is not available. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon initial adoption of this guidance.

        Effective July 1, 2009, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 168, "The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162" ("SFAS No. 168"). SFAS No. 168 reduces the U.S. GAAP hierarchy to two levels, one that is authoritative and one that is not. Hospira began to use the new guidance and reflect the new accounting guidance references when referring to GAAP for the quarterly period ended September 30, 2009, and all subsequent periods. As the guidance was not intended to change or alter existing GAAP, adoption of this pronouncement did not have an effect on Hospira's consolidated financial statements.

        Hospira adopted the provisions of ASC Topic 855, "Subsequent Events," for the interim periods ending after June 15, 2009. ASC Topic 855 establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or available to be issued. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

        Hospira adopted the provisions of ASC 825-10-65-1 for the interim periods ending after March 15, 2009. ASC 825-10-65-1 expands the fair value disclosures required for all financial instruments within the scope of ASC 825-10-65-1 to include interim periods. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

        Hospira adopted the provisions of ASC 715-20-65-2 on January 1, 2009. ASC 715-20-65-2 requires more detailed disclosures about Hospira's plan assets, including investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. Additional disclosures are required beginning with the year-end 2009 consolidated financial statements. There was no impact to Hospira's consolidated financial position, results of operations or cash flow upon adoption of this guidance.

        Hospira adopted the provisions of ASC 350-30-55-1C on January 1, 2009. ASC 350-30-55-1C amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under ASC Topic 350. This guidance was applied prospectively to intangible assets acquired on or after January 1, 2009. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

        Hospira adopted the provisions of ASC 815-10-65-1 on January 1, 2009. ASC 815-10-65-1 expands the disclosure requirements for derivative instruments and hedging activities. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

        Hospira adopted the provisions of ASC 808-10-10-1 on January 1, 2009. ASC 808-10-10-1 provides guidance on how to determine whether an arrangement constitutes a collaborative arrangement, how costs incurred and revenue generated on sales to third parties should be reported by the participants in a collaborative arrangement, how payments made between participants in a collaborative arrangement should be characterized and what participants should disclose in the notes to the financial statements

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about a collaborative arrangement. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

        Hospira adopted the provisions of ASC 805-10-65-1 on January 1, 2009. ASC 805-10-65-1 establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree. This statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. ASC 805-10-65-1 is effective for business combinations that close in years beginning on or after December 15, 2008. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

        Hospira adopted the provisions of ASC 805-20-25-18A on April 1, 2009. ASC 805-20-25-18A amends the provision for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. ASC 805-20-25-18A is effective for contingent assets or contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. There was no impact to Hospira's consolidated financial position, results of operations or cash flows upon adoption of this guidance.

Note 2—Business Acquisitions

2009 Acquisition

        In December 2009, Hospira acquired TheraDoc, Inc. and its Infection Control Assistant^TM and Antibiotic Assistant^TM products, software applications that automate hospital-wide surveillance for infection-related events and optimize the utilization of antimicrobials. The purchase price was $63.3 million, net of cash acquired. The purchase price was allocated to the Americas segment as follows: intangible assets of $17.1 million, mostly technology based, that will be amortized over their estimated useful lives (5 to 8 years, weighted average 6 years); non-tax deductible goodwill of $47.9 million; and other assets, net of $5.1 million. The impact of this acquisition was not material to Hospira's results of operations in 2009.

        In 2009, Hospira announced an agreement to acquire a certain business of Orchid Chemicals & Pharmaceuticals Ltd. ("Orchid Pharma") for approximately $400 million. While Hospira has taken actions and incurred costs associated with the pending transaction that are reflected in Hospira's financial statements, the pending acquisition of Orchid Pharma will not be reflected in the financial statements until the closing of the transaction. The transaction has been unanimously approved by Hospira's and Orchid Pharma's Boards of Directors and approved by Orchid Pharma's shareholders. The acquisition is subject to customary closing conditions. The transaction is expected to be completed in the first quarter of 2010.

2008 Acquisitions

        Hospira acquired Sculptor Developmental Technologies and its VeriScan^TM Rx product, a software application that supports bar code medication administration at the point of care. Additionally, Hospira acquired the EndoTool^TM glucose management system, a software system that helps establish and maintain patient glycemic control in acute, critical care and operating room settings. The purchase price for the acquisitions combined was allocated to the Americas segment as follows: intangible assets of $10.4 million, mostly technology based, that will be amortized over their estimated useful lives (3 to 7 years, weighted average 5 years); acquired in-process research and development of $0.5 million that was expensed at the date of acquisition; non-tax deductible goodwill of $23.3 million; and other assets and (liabilities), net of $(1.7) million. Approximately $15.0 million of deferred consideration related to

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one of the 2008 acquisitions was paid in 2009. The impact of these acquisitions was not material to Hospira's results of operations in 2008.

2007 Acquisition

        On February 2, 2007, Hospira acquired all the outstanding ordinary shares of Mayne Pharma (including those shares issuable pursuant to stock options) for $2,055.0 million. The $2,055.0 million purchase price includes the cash purchase price and direct acquisition costs. Mayne Pharma primarily manufactures and sells specialty injectable pharmaceuticals. The results of operations of Mayne Pharma are included in Hospira's results for periods on and after February 2, 2007.

        The following allocation of the purchase price, which was finalized as of December 31, 2007, has been allocated to the tangible and intangible assets acquired and liabilities assumed on the basis of their respective estimated fair values on the acquisition date. The allocation is as follows:

(dollars in millions)
Current assets		$	468.8
Property and equipment			192.7
Intangible assets			603.0
Goodwill			1,083.6
Deferred income taxes			30.1
Other assets			6.6
Current liabilities			(233.6	)
Long-term debt			(4.5	)
Post-retirement obligations, deferred income taxes and other long-term liabilities			(91.7	)
	Total allocation of purchase price	$	2,055.0

        Of the $603.0 million of acquired intangible assets, $84.8 million relates to acquired in-process research and development that was expensed at the date of acquisition. Of the remaining $518.2 million, $486.6 million relates to developed product rights that will be amortized over their estimated useful lives (9 to 12 years, weighted average 11 years), including $13.8 million of product rights disposed of as a result of the acquisition, and $31.6 million relates to customer relationships that will be amortized over their estimated useful lives (4 to 12 years, weighted average 10 years). Of the $1,083.6 million of goodwill, approximately $659.8 million was assigned to the Americas, $228.7 million was assigned to the EMEA, and approximately $195.1 million was assigned to the APAC. Goodwill is not expected to be deductible for tax purposes.

        As Hospira took certain actions in connection with the integration that give rise to restructuring charges, such as termination of employees and exiting certain activities and facilities, certain of those charges were recorded as goodwill as part of the purchase price allocation. The overall impact to goodwill associated with restructuring charges for these activities is $14.5 million, net of taxes, and is included in current liabilities in the table above.

        The total purchase price of $2,055.0 million was comprised of $2,042.3 million of cash purchase price and $12.7 million of direct acquisition costs. On February 1, 2007, Hospira incurred $1,925.0 million of bank debt to finance the Mayne Pharma acquisition. The remainder of the purchase price was funded with cash on hand. The bank facilities included a $500.0 million, three-year term loan facility and a $1,425.0 million one-year bridge loan facility. The bridge loan facility was completely refinanced on March 23, 2007, through the issuance of long-term debt securities. See Note 11 for more details. In connection with the acquisition, Hospira entered into certain foreign currency forward exchange contracts to limit its exposure from currency movements of the Australian dollar. Forward

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contract gains and losses of this exposure substantially offset the remeasurement of the related asset and both are included in Other expense (income), net. During 2007, Hospira paid $55.7 million upon the settlements relating to these foreign currency contracts.

        Supplemental information on an unaudited pro forma basis for the 12 months ended December 31, 2007, as if the Mayne Pharma acquisition had taken place on January 1, 2007, is as follows:

(dollars in millions)	Twelve Months Ended December 31, 2007
Net sales	$	3,487.5
Net income	$	127.3
Diluted earnings per share	$	0.79

        Unaudited pro forma supplemental information is based on accounting estimates and judgments, which Hospira believes are reasonable. The unaudited pro forma supplemental information also includes purchase accounting adjustments (including inventories step-up charges, adjustments to depreciation on acquired property and equipment, and a charge for in-process research and development), amortization charges from acquired intangible assets, adjustments to interest expense and related tax effects. The unaudited pro forma supplemental information is not necessarily indicative of the results of operations in future periods or the results that actually would have been realized had Hospira and Mayne Pharma been combined at the beginning of the period presented.

Note 3—Investments

        Investments as of December 31, consist of the following:

(dollars in millions)	2009		2008
Investments, at cost(1)	$	19.2	$	16.1
Investments, at fair value(2)		12.7		6.1
Investments, at equity(3)		17.4		15.4
	$	49.3	$	37.6

(1)

Cost investments consist of investments in companies over which Hospira does not have significant influence or ownership of more than 20%.

(2)

Fair value investments consist of marketable securities classified as available-for-sale.

(3)

Equity investments consist of investments in affiliated companies over which Hospira has significant influence but not the majority of the equity or risks and rewards. As a result of the Mayne Pharma acquisition, Hospira has a joint venture with Cadila Healthcare Limited, a pharmaceutical company located in India, which began commercial manufacturing of injectable cytotoxic drugs in the first half of 2009. Hospira's share of (earnings) or losses of the investees included in Other expense (income), net was $(1.9) million, $4.7 million, and $1.2 million for 2009, 2008 and 2007, respectively.

        In 2009, Hospira assessed the decline in the market value of marketable equity securities to be other-than-temporary, primarily due to the duration and severity of the investment's decline in market value and the near-term prospects for recovery to the original invested value. Accordingly, Hospira recognized a non-cash, impairment charge of $16.6 million in Other expense (income), net. The changes in market value are reported, net-of-tax, in accumulated other comprehensive income (loss) until the investment is sold or considered other-than-temporarily impaired in periods subsequent to the

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2009 impairment. The fair value of the investment may continue to be impacted by the volatility in the global equity markets, Hospira's ability and intent to remain invested among other factors.

        In 2007, Hospira recorded an impairment loss of $1.4 million on a portion of the portfolio of marketable equity securities classified as available-for-sale and realized a gain of $6.4 million as most of these investments were sold.

Note 4—Restructuring Actions and Asset Impairments

        As part of its strategy to improve margins and cash flows, Hospira has taken a number of actions to reduce operating costs and optimize operations. The costs related to these actions consist primarily of severance and other employee benefits, accelerated depreciation resulting from the decreased useful lives of the buildings and certain equipment, impairments, other asset charges and other exit costs.

Project Fuel

2009 Actions. In 2009, Hospira announced details of a restructuring and optimization plan, ("Project Fuel,"), which will occur over the next two years from the date of the announcement. Project Fuel includes the following activities: optimizing the product portfolio, evaluating non-strategic assets and streamlining the organizational structure. Hospira expects to incur aggregate restructuring costs and other asset charges related to these actions in the range of $100 million to $110 million on a pre-tax basis. During 2009, Hospira incurred in the Americas, EMEA and APAC segment pre-tax restructuring costs of $22.7 million, $1.8 million and $2.8 million, respectively; $27.3 million, pre-tax, in aggregate to date. During 2009, inventory charges of $18.7 million and $4.6 million related to product portfolio optimization, impacting the Americas and EMEA segments, respectively, are included in Cost of products sold.

        As part of the Project Fuel initiatives, Hospira committed to dispose of certain non-strategic businesses and the underlying assets over the next succeeding twelve months from the date of commitment. In some instances, the range of proceeds received from these disposals was less than the historical carrying value. As a result of these commitments, non-cash, pre-tax impairment charges of $52.8 million were recognized in Restructuring and impairment during 2009. Hospira incurred $42.9 million, $7.6 million and $2.3 million of impairment charges in the Americas, EMEA and APAC segment, respectively. Additionally, pre-tax inventory charges of $3.1 million were recognized in Cost of products sold. The impairment charges recognized during 2009 reduced property and equipment, net for these businesses by $22.7 million, allocated goodwill by $7.6 million and intangible assets by $22.5 million. Hospira received cash of $46.6 million upon completion of the disposal of the critical care business and the oral pharmaceutical contract manufacturing facility in Salisbury, Australia ("Salisbury"), and will provide certain limited transition services related to critical care products through 2010. Subsequent to the Salisbury transaction close, Hospira will receive contingent consideration based on sales for each of the next six years.

        As of December 31, 2009, the remaining assets held for sale included $26.2 million of property and equipment, $17.9 million of goodwill and $20.9 million of other assets, net and liabilities related to assets held for sale included $7.1 million of post-retirement obligations and $6.8 million of other liabilities. These assets held for sale, net related to a facility in Wasserburg, Germany ("Wasserburg") which primarily performed contract manufacturing in the EMEA segment. In 2010, the Wasserburg disposal was completed for an estimated sales price of approximately $68 million.

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        The following summarizes the Project Fuel restructuring and asset impairment activity for the year ended December 31, 2009:

(dollars in millions)	Employee-Related Benefit Costs			Accelerated Depreciation			Impairment Charges			Other		Total
Balance at January 1, 2009	$	—		$	—		$	—		$	—	$	—
Costs incurred		21.1			2.3			52.8			3.9		80.1
Payments		(12.0	)		—			—			—		(12.0	)
Non cash items		—			(2.3	)		(52.8	)		—		(55.1	)
Balance at December 31, 2009	$	9.1		$	—		$	—		$	3.9	$	13.0

Facilities Optimization

2008 Actions. In April 2008, Hospira announced a plan to exit manufacturing operations at its Morgan Hill, California, plant over the next two to three years. Hospira expects to incur aggregate restructuring charges through 2011 related to these actions in the range of $20 million to $24 million on a pre-tax basis. Hospira is in the process of transferring related operations and production of the primary products to other Hospira facilities, or outsourcing certain product components to third-party suppliers, or ceasing activities entirely. Hospira has incurred $20.4 million, pre-tax, to date for restructuring costs, primarily employee-related, associated with this action. During 2009 and 2008, Hospira incurred in the Americas segment pre-tax Restructuring costs of $11.6 million and $8.8 million, respectively.

2006 Actions. In February 2006, Hospira announced plans to close plants in Ashland, Ohio, Montreal, Canada and North Chicago, Illinois, and completed these plans in 2007, 2008, and in 2009, respectively. Hospira incurred $51.5 million, pre-tax, in aggregate for restructuring costs associated with these actions. During 2009, 2008 and 2007, Hospira incurred in the Americas segment pre-tax Restructuring costs of $2.5 million, $13.6 million and $13.6 million, respectively.

        The following summarizes the Facilities Optimization (Morgan Hill, California; Ashland, Ohio; Montreal, Canada; North Chicago, Illinois) restructuring activity for the years ended December 31:

(dollars in millions)	Employee-Related Benefit Costs			Accelerated Depreciation			Other			Total
Balance at January 1, 2007	$	16.5		$	—		$	1.3		$	17.8
Costs incurred		4.8			5.9			3.6			14.3
Payments		(10.3	)		—			(4.3	)		(14.6	)
Non cash items		6.8			(5.9	)		—			0.9
Balance at December 31, 2007		17.8			—			0.6			18.4
Costs incurred		15.2			4.2			3.0			22.4
Payments		(13.9	)		—			(5.1	)		(19.0	)
Non cash items		(1.7	)		(4.2	)		2.5			(3.4	)
Balance at December 31, 2008		17.4			—			1.0			18.4
Costs incurred		11.8			2.3			—			14.1
Payments		(15.3	)		—			(0.1	)		(15.4	)
Non cash items		—			(2.3	)		(0.4	)		(2.7	)
Balance at December 31, 2009	$	13.9		$	—		$	0.5		$	14.4

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Other Actions

2007 Actions. In late 2007, Hospira made the decision to limit future research and development investments related to a non-strategic device product. As a result of this decision, Hospira recorded an intangible asset impairment charge in the Americas segment of $7.5 million, which is reported in Restructuring and impairment.

Note 5—Collaborative Arrangements

        Hospira enters into collaborative arrangements with third parties for product development and commercialization. These arrangements typically involve two (or more) parties who are active participants in the collaboration and are exposed to significant risks and rewards dependent on the commercial success of the activities. Hospira's rights and obligations under these collaborative arrangements vary. These collaborations usually involve various activities including research and development, marketing and selling, and distribution. Hospira has numerous collaborative arrangements, none of which are in the aggregate or individually significant or exceed 5.0% of annual Research and development costs, except for the following.

        Hospira and ChemGenex Pharmaceuticals Limited ("ChemGenex") entered into a collaborative agreement to develop, license, and commercialize ChemGenex's oncology product candidate in EMEA. Hospira will be responsible for sales and marketing. ChemGenex is responsible for development, regulatory approval and manufacturing. In 2009, Hospira recorded a charge of $16.0 million in Research and development related to an initial payment and development milestone charge. Hospira may be required to pay up to approximately $12.0 million upon reaching regulatory approval and up to approximately $87.0 million of commercial sales milestones. Hospira will also make royalty payments based upon commercial sales.

        Hospira and Altea Therapeutics Corporation ("Altea") have a collaborative agreement to develop, license, and commercialize a new delivery system for a hematology related product. Hospira will be responsible for global sales and marketing. Altea is responsible for development, regulatory approval, and manufacturing. Hospira may be obligated to pay $4.5 million upon reaching a development milestone and $9.5 million upon reaching a regulatory approval milestone. Hospira also may be required to pay up to $95.0 million for milestones based upon achieving certain commercial sales targets. During 2009 and 2008, Hospira recognized milestone payments of $0.0 million and $1.5 million, respectively, in Research and development.

        Hospira and Bioceuticals Arzneimittel AG ("Bioceuticals") have a licensing and marketing agreement for Retacrit^TM, a biogeneric version of erythropoietin, to be sold in certain countries in Europe and the U.S. Hospira is responsible for global sales and marketing. Bioceuticals is responsible for development, regulatory approval, and manufacturing. In 2006, Hospira recorded a charge of $20.6 million related to an initial payment primarily for EMEA segment-related development milestones. In 2007, Hospira recognized a product right intangible of $16.8 million upon reaching an EMEA segment regulatory approval milestone. Upon U.S. regulatory pathway approval, among other factors, Hospira could be required to pay milestones of up to approximately $22 million. In addition, Hospira will make royalty payments based upon commercial sales. During 2009, 2008 and 2007, Hospira recognized $1.6 million, $1.6 million and $0.0 million, respectively, in Cost of products sold.

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Note 6—Fair Value Measures

        The following table summarizes the basis used to measure certain assets and liabilities at fair value, under the provisions of ASC Topic 820, "Fair Value Measurements and Disclosures," as of December 31, in the balance sheet:

			Fair Value Measurements at Reporting Date, Using:
Description (dollars in millions)	2009		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Interest rate swap contracts	$	2.5	$	—	$	2.5	$	—
Available-for-sale marketable equity securities		12.7		12.7		—		—
Foreign currency forward exchange contracts		5.4		—		5.4		—
Financial Liabilities:
Foreign currency forward exchange contracts		1.4		—		1.4		—

			Fair Value Measurements at Reporting Date, Using:
Description (dollars in millions)	2008		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Available-for-sale marketable equity securities	$	6.1	$	6.1	$	—	$	—
Financial Liabilities:
Foreign currency forward exchange contracts		12.7		—		12.7		—

        The fair value of the Level 1 assets is based on quoted market prices of the identical underlying security in an active market. The fair value of the Level 2 assets and liabilities is primarily based on market observable inputs to quoted market prices, benchmark yields and broker/dealer quotes. Level 3 inputs, as applicable, are unobservable inputs which reflect assumptions developed by management to measure assets and liabilities at fair value.

        The carrying values of certain financial instruments, including primarily cash and cash equivalents, accounts receivable, accounts payable and short term borrowings, approximate their estimated fair values due to their short-term nature. The carrying value and estimated aggregate fair value, based primarily on market prices (Level 1), of the senior unsecured notes as of December 31, are as follows:

	2009				2008
(dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior unsecured notes	$	1,700.0	$	1,838.4	$	2,125.0	$	1,924.5

Note 7—Financial Instruments and Derivatives

        Hospira accounts for derivatives in accordance with ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). Hospira's operations are exposed to currency exchange-rate risk, which is mitigated by Hospira's use of foreign currency forward exchange contracts ("forward contracts"). The objective is to reduce volatility of earnings and cash flows associated with foreign currency exchange-rate changes. Currency exposures primarily in Euros, Australian dollars, and British pounds include foreign currency

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denominated assets and liabilities, commitments and anticipated foreign currency revenue and expenses, including inter-company payables, receivables and loans. These forward contracts are not designated as hedges in accordance with the provisions of ASC 815, and, therefore, changes in the fair value are recognized in earnings in Other expense (income), net, during the term of the forward contract. As of December 31, 2009, Hospira has $32.2 million net notional value of forward contracts primarily denominated in Euros, Australian dollars, and British pounds that mature within one to six months.

        Hospira is exposed to the impact of interest rate changes. Hospira's objective is to manage interest rate changes on cash flows and reduce volatility on earnings. Hospira utilizes a mix of debt maturities along with both fixed-rate and variable-rate debt to manage changes in interest rates. Hospira may use interest rate swap contracts on certain borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. In 2009, Hospira entered into $300.0 million notional amount interest rate swap contracts whereby $200.0 million of the $400.0 million senior unsecured notes due June 2014 and $100.0 million of the $250.0 million senior unsecured notes due May 2015 were effectively converted from fixed to floating-rate debt. For these fair value hedges, changes in the fair value of the interest rate swaps offset changes in the fair value of the fixed-rate debt due to changes in market interest rates. Interest rate swap contract gains and losses are included in Interest expense. There was no ineffectiveness during the calendar year ended December 31, 2009.

        The following table summarizes Hospira's fair value of outstanding derivatives as of December 31:

(dollars in millions)	Consolidated Balance Sheet Presentation	2009		2008
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts:	Other receivables	$	5.4	$	—
	Other accrued liabilities		1.4		12.7
Derivatives designated as hedging instruments
Interest rate swap contracts:	Other receivables		0.6		—
	Other assets		1.9		—

        The impact on earnings for the years ended December 31 from derivative activity was as follows:

(dollars in millions)	Presentation of (Gain) Loss Recognized on Derivatives	2009		2008		2007
Derivatives not designated as hedging instruments
Foreign currency forward exchange contracts	Other expense (income), net	$	5.6	$	1.8	$	(3.4	)
Derivatives designated as hedging instruments
Interest rate swap contracts	Interest expense		3.4		0.4		4.5

Note 8—Pension and Post-Retirement Benefits

        Retirement plans consist of defined benefit and legislated obligations such as employee severance indemnity plans ("pension plans"), post-retirement medical and dental plans ("medical and dental plans") and defined contribution plans. Plans cover certain employees both in and outside of the U.S.

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Net Pension and Medical and Dental Benefit Cost

        Net cost recognized for the years ended December 31, for Hospira's pension and post-retirement medical and dental benefit plans, is as follows:

	Pension Plans									Medical and Dental Plans
(dollars in millions)	2009			2008			2007			2009		2008		2007
Service cost for benefits earned during the year	$	1.2		$	1.2		$	3.0		$	0.1	$	0.2	$	0.6
Interest cost on projected benefit obligations		26.3			25.5			25.3			3.3		3.7		3.5
Expected return on plans' assets		(27.7	)		(28.9	)		(29.4	)		—		—		—
Net amortization		3.6			2.4			4.7			0.5		1.3		0.9
Curtailment of benefits(1)		—			1.7			(1.7	)		—		0.6		(5.0	)
Net cost	$	3.4		$	1.9		$	1.9		$	3.9	$	5.8	$	—

(1)

The curtailment charge for pension plans in 2008 relates to the shutdown of the Montreal, Canada, manufacturing plant. The net curtailment income for pension plans and post-retirement medical and dental plans in 2007 relate to the planned shutdown of the Montreal, Canada; Ashland, Ohio; and Donegal, Ireland plants.

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Changes in Benefit Obligations and Plan Assets

        Information about the changes in benefit obligations and plan assets for the years ended December 31, and the funded status as of December 31, for Hospira's U.S. and international plans is as follows:

	Pension Plans						Medical and Dental Plans
(dollars in millions)	2009			2008			2009			2008
Projected benefit obligations at beginning of year	$	429.0		$	445.2		$	53.9		$	66.9
Service cost		1.2			1.2			0.1			0.2
Interest cost		26.3			25.5			3.3			3.7
(Gains) losses, primarily changes in discount rates and medical trend rates, plan design changes, and differences between actual and estimated health care costs		27.1			(18.6	)		3.2			(12.5	)
Benefits paid		(19.7	)		(27.2	)		(3.1	)		(3.9	)
Other(1)		(7.2	)		2.9			0.6			(0.5	)
Projected benefit obligations at end of year	$	456.7		$	429.0		$	58.0		$	53.9
Plans' assets at fair value at beginning of year	$	282.3		$	376.7		$	—		$	—
Actual return on plans' assets		45.8			(67.4	)		—			—
Company contributions		31.7			6.9			3.1			3.9
Benefits paid		(19.7	)		(27.2	)		(3.1	)		(3.9	)
Other(1)		—			(6.7	)		—			—
Plans' assets at fair value at end of year	$	340.1		$	282.3		$	—		$	—
Funded status	$	(116.6	)	$	(146.7	)	$	(58.0	)	$	(53.9	)
Amount recognized in the consolidated balance sheet:
Prepaid benefit cost	$	—		$	—		$	—		$	—
Accrued benefit cost		(116.6	)		(146.7	)		(58.0	)		(53.9	)
Net accrued benefit cost	$	(116.6	)	$	(146.7	)	$	(58.0	)	$	(53.9	)
Recognized in accumulated other comprehensive income (loss):
Net actuarial loss	$	156.6		$	151.3		$	15.0		$	12.5
Net prior service cost		—			—			(0.4	)		(0.3	)
Transitional asset		(0.4	)		(0.4	)		—			—
Total recognized	$	156.2		$	150.9		$	14.6		$	12.2

(1)

Includes addition of other plans, the adoption of ASC Topic 715, "Compensation—Retirement Benefits" ("ASC 715") measurement date amount, foreign currency translation and reclassification to liabilities related to assets held for sale. See Note 4 for information regarding liabilities related to assets held for sale.

        The estimated actuarial loss that will be amortized from accumulated other comprehensive income (loss) into net periodic pension cost and medical and dental benefit cost during 2010 is $6.4 million and $0.8 million, respectively.

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        Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income (Loss) under the provisions of ASC 715 for the years ended December 31, for Hospira's pension and post-retirement medical and dental benefit plans, are as follows:

	2009						2008
(dollars in millions)	Pension Plans			Medical and Dental Plans			Pension Plans			Medical and Dental Plans
Net loss (gain) arising during the year(1)	$	8.9		$	3.3		$	82.7		$	(13.1	)
Prior service credit during the year		—			—			—			(0.4	)
Net amortization		(3.6	)		(0.5	)		(4.0	)		(1.3	)
Net charge to retained earnings due to adoption of ASC 715 measurement date change		—			—			(0.2	)		(0.1	)
Exchange rate (loss) gain recognized during the year		—			(0.4	)		(1.2	)		0.6
Net cost (benefit)	$	5.3		$	2.4		$	77.3		$	(14.3	)

(1)

Pension plans net loss for the year ended December 31, 2008, is principally related to adverse investment returns on plan assets.

Actuarial Assumptions

        Actuarial weighted average assumptions for Hospira's plans used in determining pension and medical and dental plan information, using a measurement date of December 31, 2009 and 2008 and November 30, 2007, are as follows:

	2009						2008						2007
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Weighted average assumptions used to determine benefit obligations at the measurement date:
Discount rate		5.8	%		6.2	%		6.2	%		7.2	%		5.9	%		5.5	%
Expected aggregate average long-term change in compensation		0.0	%		4.3	%		0.0	%		3.2	%		0.0	%		1.6	%
Weighted average assumptions used to determine net benefit cost for the year:
Discount rate		6.2	%		7.2	%		5.9	%		5.4	%		5.8	%		4.9	%
Expected aggregate average long-term change in compensation		0.0	%		4.0	%		0.0	%		1.0	%		0.0	%		3.6	%
Expected long-term rate of return on plan assets		8.3	%		5.4	%		8.3	%		4.3	%		8.3	%		5.6	%

        The overall expected long-term rate of return on plan assets is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. Hospira considers historical performance for the types of assets in which the plans invest, independent market forecasts, and economic and capital market conditions.

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        The assumed healthcare cost trend rates for the years ended December 31, for Hospira's major medical and dental plans are as follows:

		2009			2008			2007
Healthcare cost trend rate assumed for the next year (initial):
	Pre-65 years of age		7.5	%		7.5	%		7.5	%
	Post-65 years of age		8.5	%		8.5	%		9.0	%
Rate that the cost trend rate gradually declines to (ultimate):
	Pre-65 years of age		5.0	%		5.0	%		5.0	%
	Post-65 years of age		5.0	%		5.0	%		5.0	%
Year that rate reaches the assumed ultimate rate:
	Pre-65 years of age		2015			2013			2013
	Post-65 years of age		2017			2015			2016

        Sensitivity analysis for the U.S. plans which represent the primary portion of obligations is as follows:

	Year Ended December 31, 2009 Net Benefit Cost (Income)/Expense						As of December 31, 2009 Benefit Obligation Increase/(Decrease)
(dollars in millions)	One Percentage- Point Increase			One Percentage- Point Decrease			One Percentage- Point Increase			One Percentage- Point Decrease
Pension Plans—U.S.
Discount rate	$	(3.0	)	$	3.5		$	(49.9	)	$	60.9
Expected long-term return on assets		(3.5	)		3.5			—			—
Medical and Dental Plan—U.S.
Discount rate		(0.1	)		0.2			(5.5	)		6.8
Expected health care cost trend rate (initial and ultimate)		0.6			(0.5	)		6.4			(5.3	)

Pension Plan Assets

        The weighted average asset allocation for Hospira's U.S. pension plan as of December 31, and target allocation by asset category are as follows:

				Percentage of Plan Assets
	Target Allocation
Asset Category				2009			2008
U.S. Government debt securities		0	%		0	%		12	%
Corporate debt securities		40	%		44	%		35	%
Equity securities		60	%		55	%		53	%
Other and Cash and cash equivalents		0	%		1	%		0	%
Total		100	%		100	%		100	%

        The investment mix between U.S. Government debt securities, corporate debt securities, equity securities, and other securities is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile U.S. Government and corporate debt securities. In addition, the mix is consistent with the long-term nature of the plans' benefit obligations. Investment allocations are made across a range of markets, industry sectors, capitalization sizes, and, in the case of debt securities, maturities and credit quality. The plans hold no direct investments in securities of

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Hospira. Due to fluctuations in market conditions, allocation percentages may temporarily deviate from target allocation percentages, particularly before a rebalancing occurs. The plan holds a significant concentration of plan assets in equity securities which are subject to fluctuations in market condition. Investment risks and returns are measured and monitored on an on-going basis through annual liability measurements and no less than quarterly investment portfolio reviews to determine whether the asset allocation targets continue to represent an appropriate balance of expected risk and reward.

Fair Value Measurements of Plan Assets

        The following table presents the basis used to measure Hospira's pension plans' assets at fair value as of December 31, 2009:

			Fair Value Measurements at Reporting Date, Using:
Description (dollars in millions)	December 31, 2009		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
U.S. Government debt securities	$	—	$	—	$	—	$	—
Corporate debt securities		149.1		149.1		—		—
Equity securities		187.9		184.3		3.6		—
Other and Cash and cash equivalents		3.1		3.1		—		—
	$	340.1		336.5	$	3.6	$	—

        The fair value of the Level 1 assets is based on quoted market prices of the identical underlying security in an active market. The fair value of the Level 2 assets is primarily based on market-observable inputs to quoted market prices, benchmark yields and broker/dealer quotes. Specific to equity securities, the fair value is based on the net asset value ("NAV") unit price, redeemable at the measurement date, as quoted on a private market that is not active and provided by the administrator of the trust. Level 3 inputs, as applicable, are unobservable inputs which reflect assumptions developed by management to measure assets at fair value.

Cash Funding and Benefit Payments

        Hospira has no estimated minimum required contribution for 2010 to meet the funding rules of the Pension Protection Act of 2006, giving consideration to the Worker, Retiree, and Employer Recovery Act of 2008, and adverse investment returns in 2008 on the main U.S. pension plan assets. While Hospira's funding policy requires contributions to our defined benefit plans equal to the amounts necessary to, at a minimum, satisfy the funding requirements as prescribed by Federal laws and regulations, Hospira does make discretionary contributions when management deem it is prudent to do so. During 2009 and 2008, Hospira made a discretionary funding contribution of $30.0 million and $5.5 million, respectively, to the main U.S. pension plan. Hospira did not contribute any amounts to the main U.S. pension plan in 2007.

        The U.S. pension plans are subject to the Employee Retirement Income Security Act of 1974 ("ERISA"). Under ERISA, the Pension Benefit Guaranty Corporation ("PBGC") has the authority to terminate underfunded pension plans under limited circumstances. In the event our U.S. pension plans are terminated for any reason, while the plans are underfunded, we will incur a liability to the PBGC that may be equal to the entire amount of the U.S. plans underfunding.

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        Total benefit payments expected to be paid to participants for the next ten years, which include payments funded from company assets for medical and dental benefits as well as paid from the trusts which hold the pension plan assets, are as follows:

(dollars in millions)	Pension Plans		Medical and Dental Plans(1)
2010	$	26.3	$	4.0
2011		24.6		4.2
2012		25.3		4.2
2013		26.5		4.2
2014		27.0		4.2
Years 2015 through 2019		149.2		20.8

(1)

Excludes Medicare Prescription Drug Improvement and Modernization Act of 2003 subsidy of approximately $0.2 million to $0.4 million for each of the next 10 years.

Defined Contribution Plans

        Hospira's employees in the U.S. and Puerto Rico participate in the Hospira 401(k) Retirement Savings Plan. For the years ended December 31, 2009, 2008 and 2007, Hospira's expenses were $35.5 million, $37.4 million and $36.1 million, respectively.

Non-qualified Deferred Compensation Plan

        Hospira's non-qualified deferred compensation plan went into effect on January 1, 2008. Certain executive officers and other employees are eligible to participate in the plan. The plan allows participants to defer amounts in excess of the limits imposed on 401(k) plans by the Internal Revenue Code. This plan is not funded. Hospira's expenses were not significant in the years ended December 31, 2009 and 2008.

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Note 9—Taxes on Earnings

        Earnings before taxes, and the related provisions for taxes on earnings, for the years ended December 31, were as follows:

(dollars in millions)				2009			2008		2007
Earnings Before Taxes
	Domestic			$	74.8		$	190.5	$	54.9
	Foreign				310.0			217.0		132.9
		Total		$	384.8		$	407.5	$	187.8
Taxes on Earnings
Current:
	U.S. Federal			$	(104.5	)	$	13.3	$	11.4
	State				4.0			6.0		2.4
	Foreign				21.3			8.0		(11.5	)
		Total current			(79.2	)		27.3		2.3
Deferred:
	Domestic				33.4			49.5		29.4
	Foreign				26.7			9.8		19.3
		Total deferred			60.1			59.3		48.7
			Total	$	(19.1	)	$	86.6	$	51.0

        Operating loss carryforwards at December 31, 2009 amounted to $79.0 million, which are subject to expiration in periods from 2014 through 2026, or are unlimited.

        Hospira adopted the provisions of ASC 740 on Accounting for Uncertainty in Income Taxes on January 1, 2007. As a result of the implementation of ASC 740, Hospira recognized a $2.1 million decrease in the liability for unrecognized tax benefits. This decrease in the liability resulted in an increase in the January 1, 2007 balance of retained earnings of $2.1 million. The gross amount of unrecognized tax benefits at December 31, 2009 and 2008 was $73.6 million and $174.9 million, respectively. The amount, if recognized, that would affect the effective tax rate was $65.5 million and $157.3 million at December 31, 2009 and 2008, respectively. Hospira recognizes interest and penalties accrued in relation to unrecognized tax benefits in income tax expense, which is consistent with the reporting in prior periods. As of December 31, 2009 and 2008, Hospira has recorded liabilities of $5.7 million and $18.7 million, respectively, for the payment of interest and penalties.

        In 2009, the Internal Revenue Service ("IRS") audit of Hospira's 2004 and 2005 tax returns was concluded and the years were effectively settled. The outcome of the audit settlement is a reduction in the gross unrecognized tax benefits for both the audit years settled and resultant impact on tax years 2006 through 2008 in aggregate totaling $100.7 million, of which $91.9 million is recognized in the results for year ended December 31, 2009, as a discrete income tax benefit.

        The U.S. federal tax returns for Hospira for 2006 and 2007 are currently under examination by the IRS. Hospira expects the audit fieldwork and the issuance of the initial IRS audit report to be completed within the next twelve months. However, ultimate resolution of the IRS audit is dependent on a number of factors and procedures that cannot be predicted at this time. In addition, other tax jurisdictions are in various audit stages for certain Hospira subsidiaries and certain tax statutes are expected to close within the next 12 months. Accordingly, it is reasonably possible that a change in unrecognized tax benefits will occur within the next 12 months; however, quantification of a range cannot be made at this time.

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        Hospira remains open to tax examination in major tax-paying jurisdictions for post-May 1, 2004 periods in Australia, Ireland and Italy, for years 2005 forward in Canada, for years 2006 forward for the U.S., and for years 2007 forward for the United Kingdom.

        The following table summarizes the activity for the years ended December 31, related to Hospira's unrecognized tax benefits:

(dollars in millions)
Balance at January 1, 2008	$	144.5
Current year increases		30.5
Audit settlements		(0.1	)
Balance at December 31, 2008		174.9
Current year increases		20.4
Audit settlements		(110.1	)
Statute lapses		(15.9	)
Adjustments to prior amounts		4.3
Balance at December 31, 2009	$	73.6

        U.S. income taxes and foreign withholding taxes were not provided for on undistributed earnings of certain foreign subsidiaries of $1,036.9 million, $612.7 million and $316.2 million at December 31, 2009, 2008 and 2007, respectively. These undistributed earnings, which are considered to be permanently invested, would be subject to taxes if they were remitted as dividends.

        Differences between the effective income tax rate and the U.S. statutory tax rate for the years ended December 31, are as follows:

	2009			2008			2007
Statutory tax rate		35.0	%		35.0	%		35.0	%
Benefit of tax exemptions in Costa Rica and the Dominican Republic		(11.2	)%		(9.9	)%		(19.6	)%
State taxes, net of federal benefit		1.4	%		0.9	%		3.5	%
Foreign rate differential		(6.7	)%		(4.7	)%		(1.7	)%
Non-Deductible In-Process Research and Development		—	%		—	%		15.9	%
Capital loss valuation allowance (benefit)		1.6	%		(1.3	)%		2.4	%
Research credit		(0.8	)%		(1.0	)%		(2.5	)%
Resolution of certain tax positions		(23.9	)%		—	%		—	%
All other, net		(0.4	)%		2.3	%		(5.8	)%
Effective tax rate		(5.0	)%		21.3	%		27.2	%

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        The temporary differences that give rise to deferred tax assets and liabilities as of December 31, are as follows:

	2009					2008
(dollars in millions)	Assets			Liabilities		Assets			Liabilities
Compensation, employee benefits and benefit plan liabilities	$	92.9		$	—	$	94.4		$	—
Trade receivable reserves and chargeback accruals		38.6			—		42.7			—
Inventories		85.1			—		107.4			—
State income taxes		9.7			—		4.3			—
Property and equipment		—			88.9		—			76.3
Intangibles		19.2			—		—			22.2
Investments		0.6			—		—			0.7
Net operating losses		24.8			—		46.2			—
Capital losses		19.1			—		—			—
Other accruals, carryforwards, and reserves not currently deductible		48.4			—		24.5			—
Valuation allowance		(26.4	)		—		(4.7	)		—
Total	$	312.0		$	88.9	$	314.8		$	99.2

        Valuation allowance consists of $26.4 million and $4.7 million for certain tax credits and capital losses at December 31, 2009 and 2008, respectively.

Note 10—Sales-Type Leases

        The net investment in sales-type leases of certain medication management systems as of December 31, consists of the following:

(dollars in millions)	2009			2008
Minimum lease payments receivable	$	31.7		$	36.4
Unearned interest income		(3.8	)		(3.9	)
Net investment in sales-type leases		27.9			32.5
Current portion(1)		(11.4	)		(13.8	)
Net investment in sales-type leases, less current portion(1)	$	16.5		$	18.7

(1)

The current and long-term portions are recorded in Trade receivables and Other assets, respectively, in the consolidated balance sheets.

        Future minimum amounts due under customer agreements accounted for as sales-type leases as of December 31, 2009 are as follows:

(dollars in millions)	Sales-Type Leases
2010	$	12.9
2011		8.6
2012		4.3
2013		2.8
2014 and thereafter		3.1
	$	31.7

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Note 11—Short-term Borrowings and Long-term Debt

        Hospira's debt as of December 31, consists of the following:

(dollars in millions)			2009			2008
Long-term debt:
	Term loan due March 2010 (weighted-average floating interest rate of 5.74% at December 31, 2008)		$	—		$	1.2
	Floating rate notes due March 2010 (weighted-average floating interest rate of 4.77% at December 31, 2008)			—			375.0
	5.55% Notes due March 2012			500.0			500.0
	5.90% Notes due June 2014			400.0			400.0
	6.40% Notes due May 2015			250.0			—
	6.05% Notes due March 2017			550.0			550.0
	Other, due 2015			3.9			5.3
	Deferred gains on terminated interest rate swap instruments			3.5			4.4
	Fair value of interest rate swap instruments			1.9			—
	Unamortized debt discount			(2.0	)		(1.9	)
		Total long-term debt		1,707.3			1,834.0
Short-term borrowings:
	4.95% Notes due June 2009			—			300.0
	Current portion of Term loan due March 2010			—			3.8
	Deferred gains on terminated interest rate swap instruments			1.0			2.1
	Other			22.6			32.4
		Total short-term borrowings		23.6			338.3
Total debt			$	1,730.9		$	2,172.3

        The aggregate maturities of debt, excluding deferred gains on terminated interest rate swap instruments and unamortized debt discount, for each of the next five years are as follows: $22.6 million in 2010, $0.0 million in 2011, $500.0 million in 2012, $0.0 million in 2013, $400.0 million in 2014 and $803.9 million thereafter.

Senior Unsecured Notes and Other Borrowings

        In January 2009, the remaining $5.0 million in principal outstanding as of December 31, 2008, under the $500.0 million three-year term loan facility due in March 2010, was paid.

        In May 2009, Hospira issued $250.0 million aggregate principal amount of 6.40% notes which are due May 15, 2015, with interest due semi-annually, for general corporate purposes. This issuance contains covenants consistent with other existing borrowings.

        In June 2009, Hospira repaid in full the $300.0 million aggregate principal amount of 4.95% notes upon maturity. In December 2009, Hospira redeemed $375.0 million aggregate principal amount and accrued interest of floating rate notes due March 2010.

        In connection with acquisitions, facility expansions, international capital structure optimization and equipment lease requirements, Hospira enters into other borrowings including mortgages, lease arrangements and promissory notes. These borrowings bear a weighted average interest rate of approximately 7.3% and 4.1% in 2009 and 2008, respectively, with principal and interest due in various intervals, and are primarily unsecured. As of December 31, 2009 and 2008, Hospira had $26.5 million and $37.7 million, respectively, of other borrowings outstanding, of which $22.6 million and $32.4 million, respectively, were classified as short-term.

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        During 2008, Hospira terminated $300.0 million notional amount of its fixed-to-floating interest rate swap agreements related to its $300.0 million 4.95% senior unsecured notes due in 2009 and $300.0 million notional amount of its fixed-to-floating interest rate swap agreements related to its $400.0 million 5.90% senior unsecured notes due in 2014 and received proceeds of $9.2 million. These proceeds are being recognized against interest expense over the remaining term of the underlining notes, of which approximately $2.1 million and $0.8 million, pre-tax, was recognized in 2009 and 2008.

        See Note 7 for information regarding active interest rate swap contracts activity.

Unsecured Revolving Credit Facility

        On October 14, 2009, Hospira entered into a new $700.0 million unsecured revolving credit facility (the "Revolver") maturing in October 2012. The Revolver replaced Hospira's prior revolving credit agreement that was scheduled to expire in December 2010. The Revolver is available for general corporate purposes. Borrowings under the Revolver bear interest at LIBOR or a base rate plus, in each case, a margin. Hospira also pays a facility fee on the aggregate amount of the commitments under the Revolver. The annual percentage rates for the LIBOR margin, the base rate margin and the facility fee are 2.5%, 1.5% and 0.5%, respectively, and are subject to increase or decrease if there is a change in Hospira's credit ratings. The amount of available borrowings may be increased to a maximum of $825.0 million, under certain circumstances. As of December 31, 2009, Hospira had no amounts borrowed or otherwise outstanding under the Revolver.

Debt Covenants

        The Revolver and the indenture governing Hospira's senior unsecured notes contain, among other provisions, covenants with which Hospira must comply while they are in force. The covenants in the Revolver limit Hospira's ability to, among other things, sell assets, incur secured indebtedness and liens, incur indebtedness at the subsidiary level and merge or consolidate with other companies. The covenants in the indenture governing Hospira's senior unsecured notes limit Hospira's ability, among other things, to incur secured indebtedness, enter into certain sales and lease transactions and merge or consolidate with other companies. Hospira's debt instruments also include customary events of default, which would permit amounts borrowed to be accelerated and would permit the lenders under the revolving credit agreement to terminate their lending commitments. A description of certain covenants is set forth below.

Change of Control. The senior unsecured notes include covenants that require Hospira to offer to repurchase those notes at 101% of their principal amount if: (1) there is a change of control of Hospira and (2) Hospira is rated below investment grade by both Moody's and Standard & Poor's at or within a specified time after the time of announcement of the change-of-control transaction. A change of control, as described above, would constitute an event of cross default under the term loan agreement and Hospira's revolving credit agreement.

Financial Covenants. The Revolver has financial covenants that require Hospira to maintain (i) a maximum leverage ratio of not more than 3.25 to 1.0 and (ii) a minimum interest coverage of not less than 5.0 and 1.0. As of December 31, 2009, Hospira was in compliance with all applicable covenants.

Note 12—Segment and Geographic Information

        Hospira conducts operations worldwide and is managed in three reportable segments: Americas, EMEA and APAC. The Americas segment includes the U.S., Canada and Latin America; the EMEA segment includes Europe, the Middle East and Africa; and the APAC segment includes Asia, Japan and Australia. Hospira has five operating segments: U.S., Canada, Latin America, EMEA and APAC. Hospira has aggregated U.S., Canada, and Latin America within the America's reportable segment in accordance with the provisions of ASC Topic 280 "Segment Reporting." In all segments, Hospira sells a

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broad line of products, including specialty injectable pharmaceuticals, other pharmaceuticals, medication management systems and other devices. Specialty Injectable Pharmaceuticals include generic injectables and proprietary specialty injectables. Other Pharmaceuticals include large volume intravenous solutions, nutritionals and contract manufacturing services. Medication Management Systems include infusion pumps, related software, services and administration sets. Other Devices include gravity administration sets, critical care products (through August 2009) and other device products.

        Hospira's underlying accounting records are maintained on a legal-entity basis for government and public reporting requirements. Segment disclosures are on a performance basis consistent with internal management reporting. For internal management reporting, intersegment transfers of inventory are recorded at standard cost and are not a measure of segment income from operations. The costs of certain corporate functions, stock-based compensation, interest expense, and other expense (income), net that benefit the entire organization are not allocated. The following segment information has been prepared in accordance with the internal accounting policies of Hospira, as described above.

Reportable segment information:

		Net Sales for the Years Ended December 31,						Income (Loss) from Operations for the Years Ended December 31,
(dollars in millions)		2009		2008		2007		2009			2008			2007
Americas		$	3,063.3	$	2,778.3	$	2,658.9	$	625.5		$	598.0		$	445.3
EMEA			542.8		583.8		552.1		1.8			12.8			(16.6	)
APAC			273.2		267.4		225.2		7.0			23.0			(4.2	)
	Total reportable segments	$	3,879.3	$	3,629.5	$	3,436.2		634.3			633.8			424.5
Corporate functions									(90.9	)		(74.0	)		(82.5	)
Stock-based compensation									(40.5	)		(42.0	)		(39.4	)
Income from operations									502.9			517.8			302.6
Interest expense and other expense, net									(118.1	)		(110.3	)		(114.8	)
Income before income taxes								$	384.8		$	407.5		$	187.8

	Depreciation and Amortization for the Years Ended December 31,						Additions to Long-Term Assets for the Years Ended December 31,
(dollars in millions)	2009		2008		2007		2009		2008		2007
Americas	$	153.8	$	162.1	$	153.9	$	135.0	$	137.4	$	190.5
EMEA		42.4		50.9		40.2		13.6		16.0		8.0
APAC		33.9		38.9		41.0		9.8		9.4		9.7
Total reportable segments	$	230.1	$	251.9	$	235.1	$	158.4	$	162.8	$	208.2

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	Goodwill as of December 31,				Total Assets as of December 31,
(dollars in millions)	2009		2008		2009		2008
Americas	$	817.2	$	772.2	$	3,633.0	$	3,576.6
EMEA		228.8		242.0		1,050.6		861.2
APAC		197.4		153.2		819.3		636.3
Total reportable segments	$	1,243.4	$	1,167.4	$	5,502.9	$	5,074.1

Enterprise-wide information:

	Net Sales for the Years Ended December 31,						Long-Lived Asset as of December 31,
(dollars in millions)	2009		2008		2007		2009		2008
U.S.	$	2,740.0	$	2,470.7	$	2,374.8	$	1,019.9	$	1,030.6
Non-U.S.		1,139.3		1,158.8		1,061.4		306.9		322.4
Total	$	3,879.3	$	3,629.5	$	3,436.2		1,326.8		1,353.0
Goodwill and intangible assets, net								1,649.9		1,571.8
Total							$	2,976.7	$	2,924.8

	Net Sales by Product Line for the Years Ended December 31,
(dollars in millions)	2009		2008		2007
Specialty Injectables	$	2,073.3	$	1,821.7	$	1,665.2
Other Pharma		701.2		689.3		725.6
Medication Management Systems		658.7		654.7		584.4
Other Devices		446.1		463.8		461.0
Total	$	3,879.3	$	3,629.5	$	3,436.2

Note 13—Shareholders' Equity

Common Stock

        Hospira is authorized to issue 400.0 million shares of common stock, par value $0.01 per share, and 50.0 million shares of preferred stock, par value $0.01 per share, of which four million shares are designated as Series A Junior Participating Preferred Stock for issuance in connection with the exercise of preferred share purchase rights as described below. At December 31, 2009 and 2008, approximately 15.0 million and 5.5 million shares of common stock were reserved for issuance under various employee incentive programs, respectively. As of December 31, 2009 and 2008, 171.1 million and 167.2 million shares are issued and 163.5 million and 159.6 million shares are outstanding, respectively.

Treasury Stock

        In February 2006, Hospira's Board of Directors authorized the repurchase of up to $400.0 million of Hospira's common stock in accordance with Rule 10b-18 under the Securities Exchange Act of 1934. The repurchase of shares commenced in early March 2006. As of December 31, 2009, Hospira had repurchased 7.6 million shares for $299.8 million in the aggregate under the 2006 board authorization, all of which were purchased during 2006. Hospira does not expect to repurchase any shares in 2010 under this program.

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Preferred Share Purchase Rights

        Each outstanding share of common stock provides the holder with one Preferred Share Purchase Right ("Right"). Upon exercise, each Right entitles the holder to purchase 1/100^th of a share of Series A Junior Participating Preferred Stock of Hospira at a price initially set at $100, subject to amendment or adjustment. The Rights will become exercisable only if a person or group (an "acquirer") acquires, or obtains the rights to acquire, without prior approval of the Board of Directors, more than 15% of Hospira's common stock, or an acquirer announces a tender offer that may result in the acquisition of such percentage (a "Triggering Event"). After a Triggering Event, Rights held by an acquirer are not exercisable or exchangeable as described below.

        If a Triggering Event occurs, each Right will generally be exercisable for common stock of Hospira having a value equal to twice the exercise price of the Right. If the Triggering Event involves an acquisition of Hospira or over 50% of its assets or earning power, each Right will be exercisable for common stock of the acquirer having a value equal to twice the exercise price of the Right. If a Triggering Event occurs in which the acquirer acquires or obtains the right to acquire less than 50% of Hospira's common stock, Hospira's Board of Directors, in its discretion, may require that each Right be exchanged for one share of Hospira's common stock or for preferred stock having a value equal to one share of common stock.

        The Rights will expire on April 11, 2014, unless earlier exchanged or redeemed at $0.01 per Right or unless that date is extended by the Board of Directors. The Board of Directors may amend the rights agreement, and may approve acquisitions of Hospira or its securities such that the Rights would not apply to such approved acquisitions. The Rights are intended to have anti-takeover effects and may have the effect of substantially increasing the cost of acquiring Hospira in a transaction not approved by the Board of Directors.

Accumulated Other Comprehensive Loss

        Accumulated other comprehensive loss, net of taxes as of December 31, consisted of the following:

(dollars in millions)	2009			2008
Cumulative foreign currency translation adjustments, net of taxes of $0.0	$	71.4		$	(177.9	)
Cumulative retirement plans unrealized loss, net of taxes $65.3 million and $63.9 million, respectively		(105.4	)		(100.1	)
Cumulative unrealized gain/(loss) on marketable equity securities, net of taxes $0.0		6.4			(16.8	)
Cumulative losses on terminated cash flow hedges, net of taxes $0.1 million and $0.7 million, respectively		(0.2	)		(1.1	)
Accumulated Other Comprehensive Loss	$	(27.8	)	$	(295.9	)

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Note 14—Earnings Per Share

        Basic earnings per share are computed by dividing net income by the number of weighted average common shares outstanding during the reporting period. Diluted earnings per share are calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The following table shows basic and diluted earnings per share and the effect of stock options on the weighted average number of shares outstanding used in calculating diluted earnings per share as of December 31:

(shares in millions, except per share amounts)		2009		2008		2007
Weighted average basic common shares outstanding			161.0		159.2		156.9
Assumed exercise of stock options			2.2		2.1		3.3
Weighted average dilutive common shares outstanding			163.2		161.3		160.2
Earnings Per Common Share:
	Basic	$	2.51	$	2.02	$	0.87
	Diluted	$	2.47	$	1.99	$	0.85

        For 2009, 2008 and 2007, there were outstanding options to purchase approximately 5.3 million, 7.5 million and 2.5 million shares of Hospira stock, respectively, for which the exercise price of the options exceeded the average stock price. Accordingly, these options are excluded from the diluted earnings per share calculation for these periods.

Note 15—Incentive Stock Program

Plan Overview

        Hospira's 2004 Long-Term Stock Incentive Plan ("2004 Plan"), as amended, provides for the grant of shares of stock options, stock appreciation rights, stock awards (restricted stock, restricted stock units, performance shares, and performance units) and cash-based awards to employees and non-employee directors. In May 2009, shareholders approved amendments primarily to extend the Plan by ten years to May 14, 2019, and to increase the number of shares that may be granted during the life of the 2004 Plan by 13.0 million shares. The option exercise price generally may not be less than the underlying stock's fair market value at the date of grant, and the maximum term of an option is ten years. The amounts granted each calendar year to any one employee or non-employee director is limited depending on the type of award. Stock options comprise the majority of awards granted since inception of the 2004 Plan. As of December 31, 2009, approximately 15.0 million shares remain available for grant.

        In March 2009 and 2008, and May 2007, 3.5 million, 2.3 million and 2.7 million options were granted to certain employees for the annual stock option grants, respectively. These options were awarded at the fair market value at the time of grant, generally vest over three years and have either a seven or a ten-year term.

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Option Activity and Outstanding Options

        A summary of information related to stock options for the years ended is as follows:

Hospira Stock Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Aggregate Intrinsic Value (dollars in millions)
Outstanding at January 1, 2008		13,133,815		$	34.84
Granted		2,527,445			43.51
Exercised		(1,073,124	)		29.39
Lapsed		(494,881	)		43.19
Outstanding at December 31, 2008		14,093,255			36.52
Granted		3,754,732			23.54
Exercised		(3,987,623	)		32.89
Lapsed		(742,528	)		37.03
Outstanding at December 31, 2009(1)		13,117,836		$	33.87		5.1	$	224.7
Exercisable at December 31, 2009		7,153,661		$	36.63		2.4	$	102.8

(1)

The difference between options outstanding and those expected to vest is not significant.

        The total intrinsic value of options exercised during 2009, 2008 and 2007 was $31.7 million, $12.9 million and $35.6 million, respectively.

        Summarized information about Hospira stock options outstanding and exercisable as of December 31, 2009, is as follows:

	Options Outstanding						Exercisable Options
Range of Exercise Prices	Shares		Weighted Average Remaining Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
$12.01 - $25.00		3,595,060		6.0	$	22.19		198,897	$	22.90
$25.01 - $30.00		1,129,964		4.3		27.06		1,116,132		27.07
$30.01 - $35.00		1,421,163		4.9		32.28		1,356,813		32.35
$35.01 - $40.00		2,906,740		4.0		39.32		1,986,703		39.11
$40.01 - $51.00		4,064,909		5.4		42.76		2,495,116		42.35
$12.01 - $51.00		13,117,836		5.1	$	33.87		7,153,661	$	36.63

Stock-Based Compensation

        Stock-based compensation expense of $40.5 million, $42.0 million and $39.4 million was recognized under ASC 718 for the years ended December 31, 2009, 2008 and 2007, respectively. The related income tax benefit recognized was $14.0 million, $15.6 million and $14.6 million for the years ended December 31, 2009, 2008 and 2007, respectively. For options exercised during 2009, 2008 and 2007, excess tax benefit was $0.8 million, $1.0 million and $2.3 million, respectively.

        As of December 31, 2009, there was $42.0 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements. That cost is expected to be recognized over a weighted average period of 1.7 years. The total fair value of shares that became fully vested during 2009, 2008 and 2007 was $23.5 million, $9.9 million and $10.7 million, respectively.

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        The fair value was estimated using the Black-Scholes option-pricing model, based on the average market price at the grant date and the weighted average assumptions specific to the underlying options. For 2009 and 2008, expected volatility assumptions are based on historical volatility of Hospira's stock. For 2007, expected volatility assumptions are based on a combination of historical volatility of Hospira's stock and historical volatility of peer companies. Expected life assumptions are based on the "simplified" method as described in ASC 718, which is the midpoint between the vesting date and the end of the contractual term. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued. The weighted average assumptions utilized for option grants during the years ended December 31, are as follows:

	2009			2008			2007
Hospira Stock Options Black-Scholes assumptions (weighted average):
Expected volatility		30.2	%		28.0	%		33.8	%
Expected life (years)		4.4			4.5			4.4
Risk-free interest rate		1.9	%		2.3	%		4.6	%
Expected dividend yield		0.0	%		0.0	%		0.0	%
Fair value per stock option	$	6.54		$	11.64		$	13.93

Restricted Stock and Units

        Hospira issues restricted stock and units with a vesting period range from one to three years. A summary of restricted stock and unit activity for the years ended is as follows:

Hospira Restricted Stock and Units	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2008		120,200		$	39.80
Granted		63,642			37.71
Vested		(12,232	)		39.76
Lapsed		—			—
Outstanding at December 31, 2008		171,610			39.03
Granted		114,210			32.70
Vested		(22,240	)		39.84
Lapsed		(15,000	)		35.91
Outstanding at December 31, 2009		248,580		$	36.24

        The fair value of restricted stock awards and units vested in 2009, 2008 and 2007 was $0.9 million, $0.5 million and $0.4 million, respectively. Compensation expense recognized for the years ended December 31, 2009, 2008 and 2007 was $3.8 million, $2.0 million and $1.2 million, respectively.

Performance Share Awards

        The performance share award is based on a formula that measures performance using relative total shareholder return over the three-year performance cycle compared to an industry peer group. Based on the actual performance, at interim periods, and at the end of the performance cycle, the number of performance share awards earned, which can range between 0% and 200% of the target awards granted, will be satisfied with Hospira common stock. The performance share awards vest at the end of the three-year performance cycle.

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        A summary of performance share awards activity for the years ended is as follows:

Hospira Performance Stock and Units	Shares			Weighted Average Grant Date Fair Value
Outstanding at January 1, 2008		—		$	—
Granted		216,050			63.29
Lapsed		(8,700	)		63.29
Outstanding at December 31, 2008		207,350			63.29
Granted		545,866			26.13
Lapsed		(35,475	)		45.54
Outstanding at December 31, 2009		717,741		$	35.64

        The weighted average fair value using the Monte Carlo simulation model and the corresponding weighted average assumptions for the performance share award grants are as follows:

	2009			2008
Weighted-average expected volatility		37.2	%		27.9	%
Risk-free interest rate		1.2	%		2.0	%
Expected dividend yield		0.0	%		0.0	%
Fair value per performance share award	$	24.98		$	62.39

Note 16—Commitments and Contingencies

Other Commercial Commitments

        Hospira's other commercial commitments as of December 31, 2009, representing commitments not recorded on the balance sheet, but potentially triggered by future events, primarily consist of non-debt letters of credit to provide credit support for certain transactions as requested by third parties. In the normal course of business, Hospira provides indemnification for guarantees it arranges in the form of bonds guaranteeing the payment of value added taxes, performance bonds, custom bonds and bid bonds. As of December 31, 2009, Hospira had $29.8 million of these commitments, with a majority expiring in 2010. No amounts have been drawn under these letters of credit or bonds.

Leases

        Minimum future operating lease payments, including lease payments for real estate, vehicles, computers and office equipment, as of December 31, 2009, are:

(dollars in millions)
2010	$	22.1
2011		18.9
2012		14.5
2013		10.6
2014		9.4
Remaining Years		23.0
Total minimum future lease payments	$	98.5

        Lease expense under operating leases totaled $30.0 million, $26.3 million and $26.9 million for the years ended December 31, 2009, 2008 and 2007, respectively.

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Litigation

        Hospira is involved in various claims and legal proceedings, as well as product liability claims and proceedings related to Hospira's business, including in some instances when Hospira operated as part of Abbott Laboratories ("Abbott").

        Hospira has been named as a defendant in a lawsuit alleging generally that the spin-off of Hospira from Abbott resulted in a mass termination of employees so as to interfere with the future attainment of benefits in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). The lawsuit was filed on November 8, 2004, in the U.S. District Court for the Northern District of Illinois, and is captioned: Myla Nauman, Jane Roller and Michael Loughery v. Abbott Laboratories and Hospira, Inc. Plaintiffs generally seek reinstatement in Abbott benefit plans, disgorgement of profits and attorneys fees. On November 18, 2005, the complaint was amended to assert an additional claim against Abbott and Hospira for breach of fiduciary duty under ERISA. Hospira has been dismissed as a defendant with respect to the fiduciary duty claim. By Order dated December 30, 2005, the Court granted class action status to the lawsuit. As to the sole claim against Hospira, the court certified a class defined as: "all employees of Abbott who were participants in the Abbott Benefit Plans and whose employment with Abbott was terminated between August 22, 2003, and April 30, 2004, as a result of the spin-off of the HPD [Hospital Products Division] /creation of Hospira announced by Abbott on August 22, 2003, and who were eligible for retirement under the Abbott Benefit Plans on the date of their terminations." Hospira denies all material allegations asserted against it in the complaint. Trial of this matter has concluded, but the court has not rendered a decision. In 2008, Hospira received notice from Abbott requesting that Hospira indemnify Abbott for all liabilities that Abbott may incur in connection with this litigation. Hospira denies any obligation to indemnify Abbott for the claims asserted against Abbott in this litigation.

        On August 12, 2005, Retractable Technologies, Inc. ("RTI") filed a lawsuit against Abbott alleging breach of contract and fraud in connection with a National Marketing and Distribution Agreement ("Agreement") between Abbott and RTI signed in May 2000. Retractable Technologies, Inc. v. Abbott Laboratories, Inc., Case No. 505CV157 pending in U.S. District Court for the Eastern District of Texas. RTI purported to terminate the contract for breach in 2003. The lawsuit alleges that Abbott misled RTI and breached the Agreement in connection with Abbott's marketing efforts. RTI is seeking monetary damages which are alleged to be in excess of $300.0 million as well as punitive damages. Hospira has conditionally agreed to defend and indemnify Abbott in connection with this lawsuit, which involves a contract carried out by Abbott's former Hospital Products Division. Abbott denies all material allegations in the complaint. Abbott has brought counterclaims against RTI for breach of the Agreement, including failure to pay marketing fees owed to Abbott. Hospira is entitled, pursuant to its agreements with Abbott, to any amounts recovered due to RTI's breach of the Agreement. The case is proceeding in the U.S. District Court for the Eastern District of Texas.

        Hospira is involved in patent litigation in the U.S. and elsewhere concerning Hospira's attempts to market the generic oncology drug oxaliplatin. In the U.S., litigation is pending in the U.S. District Court for the District of New Jersey: Sanofi-Aventis, U.S., LLC, et al. v. Sandoz, Inc., et al. (D. N.J. 2007). In the lawsuit, plaintiffs allege that various generic oxaliplatin products infringe one or more patents held by plaintiffs. Hospira is currently marketing and selling its oxaliplatin products, and alleges that the single patent plaintiffs have asserted against Hospira is not valid and not infringed by Hospira's product. In June 2009, the District Court entered summary judgment of non-infringement in favor of Hospira. Plaintiffs appealed that decision and, in September 2009, the U.S. Court of Appeals for the Federal Circuit vacated the District Court's ruling. Trial is expected in 2010. Hospira denies all material allegations asserted against it in the complaint. The plaintiffs seek damages, injunctive relief and costs. If Hospira were required to pay damages in this case, the amount of damages would generally be based on a reasonable royalty or the plaintiffs' lost profits based on the sale of the branded product. Plaintiffs are also pursuing proceedings against the FDA in a separate legal action

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aimed at removing Hospira's products from the market and prohibiting future sales in advance of the trial.

        Hospira and Abbott are defendants in a number of lawsuits brought by individual plaintiffs alleging that plaintiffs developed Post-arthroscopic Glenohumeral Chondrolysis ("PAGCL") from the use of certain continuous infusion pain pumps to deliver local anesthetic into the intra-articular joint space following shoulder surgeries. In each case, Hospira and/or Abbott is alleged, singularly or with other anesthetic medication defendants, to have provided the medication delivered by continuous infusion pain pumps manufactured by other (non-Hospira/non-Abbott) defendants. The analgesic medications at issue include Marcaine^TM (bupivacaine) and lidocaine. As of December 31, 2009, there are a total of 123 cases, involving 313 plaintiffs, in which Hospira is a party. 62 cases are pending in federal court and 61 cases are pending in state court. Pursuant to its separation agreement with Abbott, Hospira is defending those lawsuits which relate to sales of products prior to Hospira's spin-off from Abbott. Hospira denies all material allegations asserted against it in the complaint. Generally, plaintiffs seek compensatory damages and, in some cases, punitive damages and costs.

        On September 4, 2009, Hospira brought suit against Sandoz International GmbH and Sandoz, Inc. for patent infringement. The lawsuit, which alleges infringement of U.S. Patents 4,910,214 (expires July 15, 2013) and 6,716,867 (expires March 31, 2019), is pending in the U.S. District Court for the District of New Jersey: Hospira, Inc. and Orion Corp. v. Sandoz International GmbH and Sandoz, Inc. (D. N.J. 2009). The lawsuit is based on Sandoz's "Paragraph IV" notice indicating that Sandoz had filed an abbreviated new drug application ("ANDA") with the FDA for a generic version of Hospira's Precedex^TM (dexmedetomidine hydrochloride). Hospira seeks a judgment of infringement, injunctive relief and costs.

        Hospira's litigation exposure, including product liability claims, is evaluated each reporting period. Hospira's reserves, which are not significant at December 31, 2009 and 2008, are the best estimate of loss, as defined by ASC 450. Based upon information that is currently available, management believes that the likelihood of a material loss in excess of recorded amounts is remote.

        Additional legal proceedings may occur that may result in a change in the estimated reserves recorded by Hospira. It is not feasible to predict the outcome of such proceedings with certainty and there can be no assurance that their ultimate disposition will not have a material adverse effect on Hospira's financial position, cash flows, or results of operations.

Note 17—Other Expense (Income), Net

		Years Ended December 31,
(dollars in millions)		2009			2008			2007
Interest income		$	(7.6	)	$	(9.3	)	$	(15.1	)
Foreign exchange			1.0			(2.1	)		(1.6	)
All other expense (income)(1)			18.4			5.5			(3.0	)
	Total	$	11.8		$	(5.9	)	$	(19.7	)

(1)

Includes impairment and (gains) on the sale of marketable equity securities.

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Note 18—Inventories

		As of December 31,
(dollars in millions)		2009		2008
Finished products		$	405.3	$	510.1
Work in process			143.9		130.6
Materials			206.2		189.8
	Total	$	755.4	$	830.5

Note 19—Other Accrued Liabilities

		As of December 31,
(dollars in millions)		2009		2008
Accrued rebates(1)		$	156.0	$	107.4
Income taxes payable			29.1		14.1
All other			253.2		210.0
	Total	$	438.3	$	331.5

(1)

Hospira's generic oxaliplatin sales, launched in the U.S. in 2009, contributed to the increase.

Note 20—Post-retirement Obligations and Other Long-term Liabilities

		As of December 31,
(dollars in millions)		2009		2008
Accrued post-retirement medical and dental costs(1)		$	54.2	$	49.8
Pension liabilities(1)			115.3		145.7
Unrecognized tax benefits, penalties and interest(2)			73.6		174.9
All other			28.3		20.6
	Total	$	271.4	$	391.0

(1)

See Note 8 regarding changes in accrued post-retirement medical and dental costs and pension liabilities.

(2)

Decrease in 2009 reflects conclusion and effective settlement of the IRS audit of Hospira's 2004 and 2005 U.S. tax returns.

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Note 21—Quarterly Data (Unaudited)

(dollars in millions, except for per share amounts)		1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
2009
	Net Sales	$	859.7	$	956.9	$	1,007.5	$	1,055.2
	Gross Profit(1)		319.6		346.2		395.6		395.0
	Income From Operations		114.7		91.1		161.5		135.6
	Net Income		165.5		25.5		116.2		96.7
	Earnings per common share, basic	$	1.04	$	0.16	$	0.72	$	0.59
	Earnings per common share, diluted	$	1.03	$	0.16	$	0.71	$	0.58
	Weighted average common shares outstanding, basic		159.5		160.5		161.1		162.6
	Weighted average common shares outstanding, diluted		160.6		162.4		163.7		165.9

		1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
2008
	Net Sales	$	888.7	$	901.6	$	925.5	$	913.7
	Gross Profit(1)		317.0		335.2		333.8		356.7
	Income From Operations		111.7		117.7		132.7		155.7
	Net Income		65.4		69.1		81.8		104.6
	Earnings per common share, basic	$	0.41	$	0.43	$	0.51	$	0.66
	Earnings per common share, diluted	$	0.41	$	0.43	$	0.51	$	0.65
	Weighted average common shares outstanding, basic		158.7		159.1		159.4		159.5
	Weighted average common shares outstanding, diluted		161.0		161.5		161.6		160.9

(1)

Gross profit is defined as Net sales less Cost of products sold.

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Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

        Not applicable.

Item 9A.    Controls and Procedures

        Evaluation of disclosure controls and procedures.    The Chairman of the Board and Chief Executive Officer, Christopher B. Begley, and Chief Financial Officer, Thomas E. Werner, evaluated the effectiveness of Hospira's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and concluded that Hospira's disclosure controls and procedures were effective.

        Internal control over financial reporting.    Management's report on our internal control over financial reporting is included on page 51 hereof, and the related report of our independent registered public accounting firm is included on page 53 hereof. Both reports are incorporated herein by reference.

        Changes in internal controls.    During the fourth quarter of 2009, Hospira entered into certain information technology and accounting outsourcing arrangements, which include services for processes provided off-shore, including various purchase to payment processes as well as information technology application and infrastructure processes. Internal controls over financial reporting related to these areas have been added or modified accordingly. There have been no other changes in internal control over financial reporting that have materially affected or are reasonably likely to materially affect Hospira's internal control over financial reporting.

Item 9B.    Other Information

None

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

        Incorporated herein by reference is the text to be included under the captions "Election of Directors—Our Board of Directors" (including all sub-captions thereunder), "Election of Directors—Corporate Governance—Committees of the Board of Directors—Audit Committee" and "Election of Directors—Section 16(a) Beneficial Ownership Reporting Compliance" to be included in the 2010 Hospira Proxy Statement. The 2010 Proxy Statement will be filed on or about March 26, 2010. Also incorporated herein by reference is the text found under the caption, "Executive Officers of Hospira," in Part I of this Form 10-K.

        Hospira has adopted a code of ethics (as defined in Item 406(b) of Regulation S-K) that applies to its principal executive officer, principal financial officer, principal accounting officer and controller. That code is part of Hospira's Code of Business Conduct, which is available free of charge on Hospira's Web site (www.hospira.com) or by sending a request to: Corporate Governance Materials Request, Hospira General Counsel and Secretary, Hospira, Inc., 275 North Field Drive, Dept. NLEG, Bldg. H1, Lake Forest, Illinois 60045. Hospira intends to include on its Web site any amendment to, or waiver from, a provision of its code of ethics that applies to Hospira's principal executive officer, principal financial officer or principal accounting officer and controller.

Item 11.    Executive Compensation

        Incorporated herein by reference is the text to be included under the captions "Election of Directors—Director Compensation," "Election of Directors—2009 Compensation Discussion and Analysis," (including all sub-captions thereunder), "Election of Directors—Executive Compensation" (including all sub-captions thereunder and tables and accompanying text and notes included therein) and "Election of Directors—Compensation Committee Report" in the 2010 Proxy Statement.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

        Incorporated herein by reference is the text to be included under the caption "Ownership of our Stock" in the 2010 Proxy Statement.

Equity Compensation Plan Information

        The following table gives information, as of December 31, 2009, about Hospira's common stock that may be issued upon the exercise of options and other equity awards under the Hospira 2004

99

Long-Term Stock Incentive Plan, as amended, which is the only equity compensation plan pursuant to which Hospira's equity securities are authorized for issuance.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)(1)		Weighted-average exercise price of outstanding options, warrants and rights ($)(2)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) (#)(3)
Equity compensation plans approved by security holders		14,801,898	$	33.87		14,961,742
Equity compensation plans not approved by security holders(4)(5)		—		—		250,000
Total		14,801,898	$	33.87		15,211,742

(1)

Includes 157,169 shares of restricted stock, 91,411 stock units, and 1,435,482 shares of performance share awards (which assume maximum payouts on 717,741 shares) under Hospira's 2004 Long-Term Stock Incentive Plan.

(2)

The weighted average exercise price does not take restricted stock, stock units, and performance share awards into account.

(3)

This number reflects a target payout of 717,741 performance share awards.

(4)

Hospira Equity-Based Award/Recognition Plan.    Hospira may use this plan to motivate and reward non-officer employee performance. If Hospira make awards under this plan Hospira will purchase the shares on the open market.

(5)

Hospira Stock Purchase Plan.    Eligible Employees of Hospira Healthcare Corporation ("Hospira Canada") may participate in the plan. Each eligible employee may contribute an amount equal to 2% of eligible compensation up to an annual maximum of $4,000 (Canadian). Hospira Canada matches the employee contributions using a formula that takes into account employee contributions. In addition, the employee can also contribute to a supplementary plan in an amount up to 8% of eligible compensation. There is no matching of employee supplementary contributions. All contributions are combined and used to make monthly purchases of Hospira common shares on the open market based on individual contributions and the average open market purchase price for a given year. The plan is managed by the Hospira Canada Regional Director, Director of Human resources and Director of Finance.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

        Incorporated herein by reference is the text to be included under the captions "Election of Directors—Our Board of Directors," "Election of Directors—Corporate Governance—Independence," "Election of Directors—Corporate Governance—Committees of the Board of Directors," and "Policy Regarding Approval of Related Person Transactions" in the 2010 Proxy Statement.

Item 14.    Principal Accounting Fees and Services

        Incorporated herein by reference is the text to be included under the caption "Ratification of Independent Registered Public Accountants—Accounting Matters—Fees to Independent Registered Public Accountants" (including all sub-captions thereunder) in the 2010 Proxy Statement.

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PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)

Documents filed as part of this Form 10-K.



1.

Financial Statements:    See Item 8, "Financial Statements and Supplementary Data," for a list of financial statements.



2.

Financial Statement Schedules:

Item	Page
Schedule II (Valuation and Qualifying Accounts)		104
Schedules I, III, IV and V are not included because they are not required

3.

Exhibits Required by Item 601 of Regulation S-K:    The information called for by this paragraph is incorporated herein by reference to the Exhibit Index included on pages 105 through 109.



(b)

Exhibits filed:    See Exhibit Index from pages 105 through 109.



(c)

Financial Statement Schedules filed:    See page 104.

101

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Hospira, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HOSPIRA, INC.
By:	/s/ CHRISTOPHER B. BEGLEY Christopher B. Begley Chairman of the Board of Directors and Chief Executive Officer Date: February 18, 2010

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Hospira, Inc. on February 18, 2010 in the capacities indicated below.

/s/ CHRISTOPHER B. BEGLEY
Christopher B. Begley
Chairman and Chief Executive Officer
(Principal Executive Officer)

/s/ THOMAS E. WERNER
Thomas E. Werner
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial Officer)

/s/ RICHARD J. HOFFMAN
Richard J. Hoffman
Corporate Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)

/s/ IRVING W. BAILEY, II
Irving W. Bailey, II
Director

/s/ BARBARA L. BOWLES
Barbara L. Bowles
Director

/s/ CONNIE R. CURRAN
Connie R. Curran
Director

102

/s/ ROGER W. HALE
Roger W. Hale
Director

/s/ RONALD A. MATRICARIA
Ronald A. Matricaria
Director

/s/ JACQUE J. SOKOLOV M.D.
Jacque J. Sokolov M.D.
Director

/s/ JOHN C. STALEY
John C. Staley
Director

/s/ MARK F. WHEELER M.D.
Mark F. Wheeler M.D.
Director

/s/ HEINO VON PRONDZYNSKI
Heino von Prondzynski
Director

103

Hospira, Inc.
Schedule II—Valuation and Qualifying Accounts
For the Three Years Ended December 31, 2009
(dollars in millions)

Allowance for doubtful accounts:

Column A	Column B		Column C		Column D			Column E
Description	Balance at beginning of year		Additions charged to costs and expenses(1)		Deductions(2)			Balance at end of year
Year ended December 31, 2009	$	6.7	$	2.2	$	(2.7	)	$	6.2
Year ended December 31, 2008		14.1		7.9		(15.3	)		6.7
Year ended December 31, 2007		13.7		8.1		(7.7	)		14.1

(1)

2007 includes $1.5 million related to the Mayne Pharma acquisition.

(2)

Represents accounts written off as uncollectible, net of collections on accounts previously written off. 2008 includes $4.0 million of certain reclassifications.

Inventory reserves:

Column A	Column B		Column C		Column D			Column E
Description	Balance at beginning of year		Additions charged to costs and expenses(1)		Deductions			Balance at end of year
Year ended December 31, 2009	$	67.8	$	125.1	$	(82.2	)		110.7
Year ended December 31, 2008		64.8		62.3		(59.3	)		67.8
Year ended December 31, 2007		48.2		54.3		(37.7	)		64.8

(1)

The increase in 2009 relates to product portfolio optimization charges associated with Project Fuel and product corrective action related charges. Includes $15.1 million related to the 2007 Mayne Pharma acquisition.

104

EXHIBIT INDEX

Exhibit No.		Exhibit
	2.1	Separation and Distribution Agreement, dated as of April 12, 2004, between Abbott Laboratories and Hospira, Inc. (filed as Exhibit 2.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference).
	3.1	Restated Certificate of Incorporation of Hospira, Inc. (filed as Exhibit 3.1 to Hospira, Inc.'s Annual Report on Form 10-K filed on February 25, 2009 and incorporated herein by reference).
	3.2	Amended and Restated Bylaws of Hospira, Inc. (filed as Exhibit 3.1 to Hospira, Inc.'s Current Report on Form 8-K filed on February 11, 2010 and incorporated herein by reference).
	4.1	Rights Agreement, effective as of April 12, 2004, between Hospira, Inc. and EquiServe Trust Company, N.A., as Rights Agent (filed as Exhibit 4.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
	4.1(a)	Form of Certificate of Designations of Series A Junior Participating Preferred Stock (attached as Exhibit A to the Rights Agreement filed as Exhibit 4.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
	4.1(b)	Form of Rights Certificate (attached as Exhibit B to the Rights Agreement filed as Exhibit 4.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).
	4.2	Indenture, dated as of June 14, 2004, between Hospira, Inc. and LaSalle Bank National Association, as Trustee (filed as Exhibit 4.2 to Hospira, Inc.'s Registration Statement on Form S-4 (File No. 333-117379) filed with the SEC on July 15, 2004, and incorporated herein by reference).
	4.3	Supplemental Indenture No. 1, dated as of June 14, 2004, between Hospira, Inc. and LaSalle Bank National Association, as Trustee (filed as Exhibit 4.3 to Hospira, Inc.'s Registration Statement on Form S-4 (File No. 333-117379) filed with the SEC on July 15, 2004, and incorporated herein by reference).
	4.4	Second Supplemental Indenture, dated as of April 30, 2009 between Hospira, Inc. and Union Bank, N.A., as Successor Trustee and Bank of America, N.A., as successor by merger to LaSalle Bank National Association, as Resigning Trustee (filed as Exhibit 4.2 to Hospira, Inc.'s Registration Statement on Form S-3 (File No. 333-158939) filed with the SEC on May 1, 2009, and incorporated herein by reference).
	4.5	Form of 5.55% Notes Due 2012 (filed as Exhibit 4.2 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, and incorporated herein by reference).
	4.6	Form of 5.90% Notes due 2014 (attached as Exhibit A2 to the Supplemental Indenture filed as Exhibit 4.3 to Hospira, Inc.'s Registration Statement on Form S-4 (File No. 333-117379) filed with the SEC on July 15, 2004, and incorporated herein by reference).

105

Exhibit No.		Exhibit
	4.7	Form of 6.40% Notes Due 2015 (filed as Exhibit 99.3 to the Hospira, Inc. Current Report on Form 8-K filed on May 7, 2009, and incorporated herein by reference).
	4.8	Form of 6.05% Notes Due 2017 (filed as Exhibit 4.3 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, and incorporated herein by reference).
	4.9	Actions of Authorized Officers with respect to the 2012 and 2017 Notes (filed as Exhibit 4.4 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, and incorporated herein by reference).
	4.10	Officer Certificate and Company Order with respect to the 2012 and 2017 Notes (filed as Exhibit 4.5 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, and incorporated herein by reference).
	4.11	Actions of Authorized Officers with respect to the 2015 Notes (filed as Exhibit 99.2 to the Hospira, Inc. Current Report on Form 8-K filed on May 7, 2009, and incorporated herein by reference).
	4.12	Officers' Certificate and Company Order with respect to the 2015 Notes (filed as Exhibit 4.3 to the Hospira, Inc. Quarterly Report on Form 10-Q filed on July 29, 2009, and incorporated herein by reference).
	4.13	Underwriting Agreement with respect to the 2015 Notes (filed as Exhibit 99.1 to the Hospira, Inc. Current Report on Form 8-K filed on May 7, 2009, and incorporated herein by reference).
	10.1	Summary of Terms of Employment for Named Executive Officers (filed as Exhibit 10.1 to the Hospira, Inc. Annual Report on Form 10-K filed on February 25, 2009, and incorporated herein by reference).*
	10.2	Hospira 2004 Long-Term Stock Incentive Plan, as amended (filed as Exhibit A to the Hospira, Inc. Definitive Proxy Statement on Schedule 14A filed with the SEC on March 30, 2009, and incorporated herein by reference).*
	10.3(a)	Form of Conversion Incentive Option Terms (filed as Exhibit 10.8(a) to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.3(b)	Form of Conversion Non-Qualified Stock Option Terms (filed as Exhibit 10.8(b) to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.3(c)	Form of Conversion Replacement Non-Qualified Stock Option Terms (filed as Exhibit 10.8(c) to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.3(d)	Form of Non-Qualified Stock Option Terms for awards made prior to May 9, 2005 (10-year term) (filed as Exhibit 10.8(d) to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.3(d)(i)	Form of Non-Qualified Stock Option Terms for awards made on or after May 9, 2005 (filed as Exhibit 10.1 to the Hospira, Inc. Current Report on Form 8-K filed on May 12, 2005, and incorporated herein by reference).*

106

Exhibit No.		Exhibit
	10.3(e)	Form of Non-Qualified Stock Option Terms (five-year term) (filed as Exhibit 10.8(e) to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.3(f)	Form of Non-Employee Director Restricted Stock Award Agreement (filed as Exhibit 10.2 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference).*
	10.3(f)(i)	Form of Amendment of Non-Employee Director Restricted Stock Award Agreement (filed as Exhibit 10.8(f)(i) to the Hospira, Inc. Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference).*
	10.3(g)	Form of Non-Employee Director Non-Qualified Stock Option Terms (filed as Exhibit 10.8(g) to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.3(h)	Form of Non-Qualified Stock Option Terms for awards made on or after March 6, 2008 (filed as Exhibit 10.2 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, and incorporated herein by reference).*
	10.3(h)(i)	Form of Non-Qualified Option Terms for awards made to those officers subject to the Executive Compensation Recovery Policy on or after February 11, 2010.*
	10.3(i)(i)	Form of Notice of Award and Award Agreement for Restricted Stock Units and Election Deferral Form (filed as Exhibit 10.3 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, and incorporated herein by reference).*
	10.3(i)(ii)	Form of Notice of Award and Award Agreement for Restricted Stock Units and Election Deferral Form for awards made on or after March 5, 2009 (filed as Exhibit 10.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, and incorporated herein by reference).*
	10.3(i)(iii)	Form of Notice of Award and Award Agreement for Restricted Stock Units and Election Deferral Form for awards made to those officers subject to the Executive Compensation Recovery Policy on or after February 11, 2010.*
	10.4	Hospira, Inc. 2004 Performance Incentive Plan as amended.*
	10.5	Hospira, Inc. Non-Employee Directors' Fee Plan (filed as Exhibit 10.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference).*
	10.6(a)	Form of Agreement between Hospira, Inc. and each of Christopher B. Begley, Terrence C. Kearney and Brian J. Smith, regarding Change in Control (filed as Exhibit 10.12 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.6(a)(i)	Form of Agreement between Hospira, Inc. and each of Christopher B. Begley, Terrence C. Kearney and Brian J. Smith, regarding Amendment to Change in Control (filed as Exhibit 10.12(a)(i) to the Hospira, Inc. Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference).*
	10.6(b)	Form of Agreement between Hospira, Inc. and Thomas E. Werner regarding Change in Control (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on August 11, 2006, and incorporated herein by reference).*

107

Exhibit No.		Exhibit
	10.6(b)(i)	Form of Agreement between Hospira, Inc. and Thomas E. Werner regarding Amendment to Change in Control (filed as Exhibit 10.12(b)(i) to the Hospira, Inc. Annual Report on Form 10-K for the year ended December 31, 2007, and incorporated herein by reference).*
	10.6(c)	Form of Agreement between Hospira, Inc. and Sumant Ramachandra regarding Change in Control (filed as Exhibit 10.6(c) to the Hospira, Inc. Annual Report on Form 10-K filed on February 25, 2009 and incorporated by reference).*
	10.6(d)	Form of Restricted Stock Agreement between Hospira, Inc. and Sumant Ramachandra (filed as Exhibit 10.6(d) to the Hospira, Inc. Annual Report on Form 10-K filed on February 25, 2009 and incorporated herein by reference).*
	10.6(e)	Form of Agreement between Hospira, Inc. and Ron Squarer regarding Change in Control.*
	10.6(f)	Form of Restricted Stock Agreement between Hospira, Inc. and Ron Squarer.*
	10.7	Form of Grantor Trust Arrangement by and among Abbott Laboratories, Hospira, Inc. and each of Christopher B. Begley and Terrence C. Kearney (filed as Exhibit 10.13 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and incorporated herein by reference).*
	10.8	The Hospira Supplemental Pension Plan, as amended (filed as Exhibit 10.8 to the Hospira, Inc. Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference).*
	10.9	Hospira Non-Qualified Savings and Investment Plan (filed as Exhibit 10.2 to the Hospira, Inc. Current Report on Form 8-K, filed on December 14, 2009, and incorporated herein by reference).*
	10.10	Hospira Corporate Officer Severance Plan, as amended (filed as Exhibit 10.3 to the Hospira, Inc. Current Report on Form 8-K, filed on December 14, 2009, and incorporated herein by reference).*
	10.11	Form of Agreement regarding Executive Compensation Recovery Policy.*
	10.12	Credit Agreement and Guaranty, dated October 14, 2009, between Hospira and the Lenders and Agents named therein (filed as Exhibit 10.1 to the Hospira, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, and incorporated herein by reference).
	10.13	Business Transfer Agreement, dated December 15, 2009, by and among Orchid Chemicals & Pharmaceuticals Ltd., Mr. K. Raghavendra Rao and Ojas Pharmaceuticals India Private Limited (to be renamed Hospira Healthcare India Private Limited).**
	12.1	Computation of Ratio of Earnings to Fixed Charges.
	21.1	List of Subsidiaries of Hospira, Inc.
	23.1	Consent of Deloitte & Touche LLP.
	31.1	Certification of Christopher B. Begley under Rule 13a-14(a) under the 1934 Act.
	31.2	Certification of Thomas E. Werner under Rule 13a-14(a) under the 1934 Act.
	32.1	Certification of Christopher B. Begley under 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).

108

Exhibit No.		Exhibit
	32.2	Certification of Thomas E. Werner under 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
	101	The following financial statements from the Hospira, Inc. Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 18, 2010, formatted in Extensive Business Reporting Language (XBRL): (i) consolidated statements of income, (ii) consolidated statements of cash flows, (iii) consolidated balance sheets, (iv) consolidated statement of changes in shareholders' equity, (v) the notes to the consolidated financial statements and (vi) Schedule II—Valuation and Qualifying Accounts.

*

Management compensatory plan or arrangement.

**

Confidential treatment requested for portions of this exhibit.

        Hospira will furnish copies of any of the above exhibits to a shareholder upon written request to the Corporate Secretary, Hospira, Hospira, Inc., 275 N. Field Drive, Department NLEG, Building H1, Lake Forest, Illinois 60045.

109

EX-10.3(H)(I)

Exhibit 10.3(h)(i)

HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN

NQSO TERMS

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

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

(a)The “Participant” is                                   .

(b)The “Grant Date” is                                         .

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

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

Except where the context clearly implies to the contrary, any capitalized term in this award shall have the meaning ascribed to that term under the Plan.

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

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

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

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

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

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

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

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

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

(b)if the termination of employment occurs for reasons other than death, Disability (as defined in Section 10) or Retirement (as defined in Section 10), the three-month anniversary of the Date of Termination (as defined in Section 10); provided, however, that if the Participant dies during such three month period following the Date of Termination, then the three-month anniversary of the date of death;

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

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

(e)as provided under Restricted Activity in Section 5; or

(f)as provided under Other Right to Correct Payments in Section 6.

5.Restricted Activity.

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

(i)without the prior written consent of the Committee, directly or indirectly engage or assist any person engaging in any Competitive Business (as defined in Section 10), individually, or as an officer, director, employee, agent, consultant, owner, partner, lender, manager, member, principal, or in any other capacity, or render any services to any entity that is engaged in any Competitive Business; provided, however, that the Participant’s ownership of 1% of any class of equity security of any entity engaged in any Competitive Business shall not be deemed a breach of this Section 5(a) provided such securities are listed on a national securities exchange or quotation system or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended; or

(ii)directly or indirectly divert, take away, solicit, or assist others in soliciting any current or prospective customer, supplier, independent contractor or service provider of the Company or any affiliate or otherwise interfere with the

2

relationship between the Company or any affiliate and any current or prospective customer, service provider, supplier, independent contractor or stockholder.

(b)The Participant shall not, while employed by the Company and for a period of two years following the termination of employment for any reason: directly or indirectly induce any person to leave employment with the Company, or solicit for employment other than on behalf of the Company, offer employment to, or employ, any person who was an employee of the Company, in each case within six months of such inducement, solicitation, or offer.

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

6.Other Right to Correct Payments.  Subject to the Company’s Executive Compensation Recovery Policy, and notwithstanding anything in the Option Terms to the contrary, if the Committee determines, in its sole discretion, that the number of Covered Shares determined to be delivered under the Option Terms or the value of such Options was based on the Company’s published financial statements that have been restated then, at the Committee’s direction, the Company may, but in no case later than 60 months of such restatement:

(a)cancel all unexercised, unexpired or unpaid Options (whether vested or unvested) under the Plan that were based upon the financial performance in the published financial statements that was subsequently restated;

(b)rescind any exercise, payment or delivery under any Option that were based upon the financial performance in the published financial statements that was subsequently restated; and

(c)if any amount has been realized from exercised Options that would have been lower had the financial results been properly reported, recover all or any gain realized by the Participant, as determined by the Committee in its sole discretion, under the Option Terms that resulted from the financial results that were subsequently restated, and the Participant agrees to repay and return any such gain realized to the Company.

3

The Committee may, in its sole discretion, effect any such recovery by obtaining repayment directly from the Participant, setting off the amount owed to the Company against any amount or award that would otherwise be granted by the Company to the Participant, reducing any future compensation or benefit to the Participant or any combination thereof.  “Gain realized” shall be as determined under Section 5(c).

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

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

9.Transferability.  The Option is not transferable by the Participant other than by will or by the laws of descent and distribution, and during the Participant’s life, may be exercised only by the Participant.  It may not be assigned, transferred (except as aforesaid), pledged or

4

hypothecated by the Participant in any way whether by operation of law or otherwise, and shall not be subject to execution, attachment or similar process.  Any attempt at assignment, transfer, pledge or hypothecation, or other disposition of this Option contrary to the provisions hereof, and the levy of any attachment or similar process upon this option, shall be null and void and without effect.

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

(a)Cause.  The term “Cause” shall mean, in the sole opinion and discretion of the Committee, the Participant has (i) engaged in a material breach of the Company’s code of business conduct, (ii) committed an act of fraud, embezzlement or theft in connection with the Participant’s duties or in the course of employment, or (iii) wrongfully disclosed secret processes or confidential information of the Company or its subsidiaries.

(b)Competitive Business.  The term “Competitive Business” means any business activity in which the Company or any Subsidiary is actively engaged at the time the Participant’s employment terminates.  For these purposes, entities deemed to be engaged in Competitive Business include, by way of example and not limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva Pharmaceuticals, Becton, Dickinson and Company, B. Braun Melsungen AG, Cardinal Healthcare Inc., Fresenius Medical Care AG, Terumo Medical Corporation, Patheon, Inc., and Edwards Lifesciences Corporation.

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

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

(e)Retirement.  “Retirement” of the Participant means, the occurrence of the Participant’s Date of Termination on or after the date that the Participant reaches the age of 55 and has 10 years of combined service with the Company or its subsidiaries (or with Abbott Laboratories and its affiliates, provided that the Participant transitioned

5

employment from Abbott to the Company in conjunction with the distribution of the Company’s common stock to the Abbott shareholders) (as determined by the Committee).

11.Heirs and Successors.  The Option Terms shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business.

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

13.Plan Governs. Notwithstanding anything in the Option Terms to the contrary, the Option Terms shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and the Option Terms is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan.

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

15.Notices.  Any written notices provided for in the Option Terms or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.

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

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

18.Amendment.  The Option Terms may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.

6

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

Hospira, Inc.

By:

Its:

7

EX-10.3(I)(III)

Exhibit 10.3(i)(iii)

	Hospira, Inc.
Notice of Grant of	ID: 20-0504497
Award and Award Agreement	275 N. Field Drive
	Lake Forest, IL 60045
	Award Number:
	Plan: Hospira 2004 Long-Term Stock Incentive Plan
	ID:

Effective February            , 2010, you have been granted Restricted Stock Units with respect to                shares of Hospira, Inc. (the Company) stock.

The Restricted Stock Units are subject to the attainment of performance goals described in the attached Term Sheet and will become fully vested on the date shown.

Units	Vest Type	Full Vest
	On Vest Date	December 31, 2012

By your signature and the Company’s signature below, you and the Company agree that these Restricted Stock Units are granted under and governed by the terms and conditions of the Hospira 2004 Long-Term Stock Incentive Plan, the Restricted Stock Unit Award Agreement and the administrative rules governing the Restricted Stock Agreement, all of which are attached and made a part of this document.

	February         , 2010
Hospira, Inc.	Date
Name: Christopher B. Begley
Title: Chairman & Chief Executive Officer
Employee Name	Date

RESTRICTED STOCK UNIT AWARD AGREEMENT

You have been selected to be a Participant in the Hospira, Inc. 2004 Long-Term Stock Incentive Plan (the “Plan”), as specified in the attached Notice of Grant of Award and Award Agreement (the “Notice”):

THIS AGREEMENT (“Agreement”), effective as of the date set forth in the attached Notice, is between Hospira, Inc., a Delaware corporation (the “Company”) and the Grantee named in the Notice, pursuant to the provisions of the Plan. Except where the context clearly implies to the contrary, any capitalized term not defined in this Agreement shall have the meaning ascribed to that term under the Plan.

The parties hereto agree as follows:

1.   Award of Restricted Stock Units.  The Company hereby grants to Grantee the number of restricted stock units (the “Units”) set forth in the attached Notice subject to the terms and conditions set forth below and in the attached Term Sheet.  The term “Units” shall include “Earned Units” as defined in Section 2(a) below.

2.Restrictions.  The Units are being awarded to Grantee subject to the forfeiture conditions set forth below (the “Restrictions”) which shall, unless otherwise stated, lapse, if at all, as set forth in the attached Term Sheet.

(a)The Units are subject to the attainment of performance goals during the performance period, as described in the attached Term Sheet.  The number of Units earned upon the attainment of the performance goals (the “Earned Units”) shall be determined by the Compensation Committee of the Board of Directors (the “Committee”) upon completion of the performance period.

(b)Any Units subject to the Restrictions shall be automatically forfeited upon the earliest to occur of the following: (i) except as provided in Section 7, the date of the Grantee’s termination of employment with the Company or a subsidiary for any reason other than death, Disability or Retirement; (ii) subject to the provisions of Section 3, the date the Grantee engages in conduct which constitutes Restricted Activity; or (iii) as provided in Section 4.

3.Restricted Activity.

(a)Without the prior written consent of the Committee, the Grantee shall not, while employed by the Company and for a period of one year following the termination of employment for any reason:

(i)directly or indirectly engage or assist any person engaging in any Competitive Business, individually, or as an officer, director, employee, agent, consultant, owner, partner, lender, manager, member, principal, or in any other capacity, or render any services to any entity that is engaged in any Competitive Business; provided, however, that the Grantee’s ownership of 1% of any class of equity security of any entity engaged in any Competitive Business shall not be deemed a breach of this paragraph 3(a) provided such securities are listed on a national securities exchange or quotation system or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended;

(ii)directly or indirectly divert, take away, solicit, or assist others in soliciting any current or prospective customer, supplier, independent contractor or service provider

of the Company or any affiliate or otherwise interfere with the relationship between the Company or any affiliate and any current or prospective customer, service provider, supplier, independent contractor or stockholder;

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

(iv)engage in conduct which constitutes Cause.

(b)If the Grantee engages in any activity described in paragraph 3(a) above without the written consent of the Committee, the Company, as determined by the Committee in its sole discretion, may terminate the Agreement as of the date on which the Grantee engaged in such Restricted Activity, and (i) the Grantee shall pay to the Company in cash any Financial Gain the Grantee realized from the vesting of the Units, provided that such vesting occurred within one year from the date that the Grantee engaged in such Restricted Activity, and (ii) if the Restricted Activity occurs prior to the delivery of the Earned Units, the Grantee shall forfeit the Units and this Agreement shall terminate as of the date on which the Grantee first engaged in such Restricted Activity.

4.Other Right to Correct Payments.  Subject to the Company’s Executive Compensation Recover Policy, and notwithstanding anything in the Agreement to the contrary, if the Committee determines, in its sole discretion, that the number of Units determined to be delivered under the Agreement or the value of such Units was based on the Company’s published financial statements that have been restated then, at the Committee’s discretion, the Company may, but in no case later than 60 months of such restatement:

(a)cancel all Units (whether vested or unvested) that were based upon the financial performance in the published financial statements that was subsequently restated;

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

(c)if any amount has been realized from the vesting of the Units that would have been lower had the financial results been properly reported, recover all or any Financial Gain realized by the Grantee, as determined by the Committee in its sole discretion, that resulted from the financial results that were subsequently restated, and the Grantee agrees to repay and return any such Financial Gain to the Company.

The Committee may, in its sole discretion, effect any such recovery by obtaining repayment directly from the Grantee, setting off the amount owed to the Company against any amount or award that would otherwise be granted by the Company to the Grantee, reducing any future compensation or benefit to the Grantee or any combination thereof.

5.Death, Disability or Retirement.  In the event of the death, Disability or Retirement of the Grantee at any time during the performance period, the a number of shares of Common Stock equal to the number of Earned Units (or cash equal to the value of the shares) will be delivered to the Grantee or the Grantee’s personal representative, upon the determination of the number of Earned Units after the end of the performance period, but no later than 90 days following the end of such performance period.

6.Change in Control.  In the event of a Change in Control of the Company during the performance period, the Grantee will be deemed to have earned an award based on the target performance goal established by the Committee and a number of shares of Common Stock equal to the number of deemed Earned Units (or cash equal to the value of the shares) will be delivered to the Grantee no later than 90 days following such Change in Control.

7.Termination of Employment.  In the event of the Grantee’s Involuntary Termination of Employment during the performance period, the number of shares of Common Stock equal to the number of Earned Units as of the date of such Involuntary Termination of Employment will be delivered to the Grantee, upon the determination of the number of Earned Units after the end of the performance period, but no later than 90 days following the end of such performance period. If Grantee’s termination of employment during the performance period for reasons other than death, Disability or Retirement does not constitute an Involuntary Termination of Employment, all Units shall be forfeited.  The Company will not be obligated to pay Grantee any consideration whatsoever for forfeited Units (whether or not earned).

8.Dividend Equivalents.  Neither dividends nor Dividend Equivalents will be paid or accrued on unvested Units.

9.Adjustments.  If the number of outstanding shares of Common Stock is changed as a result of stock dividend, stock split or the like without additional consideration to the Company, the number of Units subject to this Award shall be adjusted in accordance with the applicable provisions of the Plan pertaining to such adjustments.

10.Delivery of Certificate.  Subject to withholding of taxes as provided in Section 11 below, the Company shall deliver to the Grantee a certificate representing a number of shares of Common Stock equal to the number of Earned Units on which Restrictions have lapsed plus a cash payment equal to the value of any fractional Earned Unit then credited to the Grantee’s account, upon the lapse of Restrictions, or at a later date specified by the Grantee in a Notice of Deferral Election filed with the Committee within rules established to comply with section 409A of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (“Section 409A”) and in conformance with such deferral option forms under the Notice of Deferral Election provided by the Company.

11.Withholding Taxes.  The Company is entitled to withhold an amount equal to the Company’s required statutory withholding taxes for the respective tax jurisdiction attributable to any share of Common Stock or property deliverable in connection with the Earned Units.  Subject to such limitations as the Company may establish from time to time, Grantee may satisfy any withholding obligation in whole or in part by making a cash payment equal to the amount required to be withheld.

12.Nontransferability.  Grantee may not directly or indirectly, by operation of law or otherwise, voluntarily or involuntarily, sell, assign, pledge, encumber, charge or otherwise transfer any of the Units subject to this Award.

13.Voting and Other Rights.

(a)Grantee shall have no rights as a stockholder of the Company in respect of the Earned Units, including the right to vote and to receive dividends and other distributions, until delivery of certificates representing shares of Common Stock in satisfaction of the Earned Units.

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

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

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

14.Funding.  No assets or shares of Common Stock shall be segregated or earmarked by the Company in respect of any Units awarded hereunder.  The grant of Units hereunder shall not constitute a trust and shall be solely for the purpose of recording an unsecured contractual obligation of the Company.

15.Definitions.  For purposes of this Agreement, the following words shall have the meaning provided below:

(a)Cause.  The term “Cause” shall mean, in the sole opinion and discretion of the Committee, the Grantee has (i) engaged in a material breach of the Company’s code of business conduct, (ii) committed an act of fraud, embezzlement or theft in connection with the Grantee’s duties or in the course of employment, or (iii) wrongfully disclosed secret processes or confidential information of the Company or its subsidiaries.

(b)Competitive Business.  The term “Competitive Business” means any business activity in which the Company or any subsidiary is actively engaged at the time the Grantee’s employment terminates.  For these purposes, entities deemed to be engaged in Competitive Business include, by way of example and not limitation, Abraxis BioScience, Inc., Baxter International Inc., Teva Pharmaceuticals, Becton, Dickinson and Company, B. Braun Melsungen AG, Cardinal Healthcare Inc., Fresenius Medical Care AG, Terumo Medical Corporation, Patheon, Inc., and Edwards Lifesciences Corporation.

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

(d)Disability.  The term “Disability” means the Grantee either is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months;  or by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than

12 months, the Grantee is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or a subsidiary.

(e)Dividend Equivalent. “Dividend Equivalent” means, with respect to any shares of Hospira common stock that are to be issued pursuant to an award at the end of the performance period, an amount equal to cash dividends that are payable to stockholders of record during the performance period on a like number of shares of Hospira common stock.

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

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

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

16.Notices.  Any written notice under this Award shall be deemed given on the date that is two business days after it is sent in writing, delivered either in hand, by certified mail, return receipt requested, postage prepaid, or by Federal Express or other recognized delivery service, which provides proof of delivery, all delivery charges prepaid, and addressed as follows:

To the Company:	Hospira, Inc.
	275 N. Field Drive
	Lake Forest, IL 60045
	Attention: Corporate Secretary

To the Grantee or his or her representative at the address of the Grantee at the time appearing in the employment records of the Company, currently as shown in the attached Notice or

At such other address as either party may designate by notice given to the other in accordance with these provisions.

17.Governing Law.  All questions concerning the construction, validity and interpretation of this Award shall be governed by and construed according to the internal law and not the law of conflicts of the State of Illinois.

18.Amendment.  This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Grantee and the Company without the

consent of any other person; provided that the Committee may amend by the Company as it shall deem necessary and appropriate in its sole discretion to comply with the requirements of Section 409A.

19.Plan Documents.  The Plan and the Prospectus for the Hospira, Inc. 2004 Long Term Incentive Plan are available at:

http://www.UBS.com/

or from:

Ms. Pam Hannon

Corporate Compensation, Hospira, Inc.

Mail Stop H1 South, 275 N. Field Drive, Lake Forest, IL 60045

phone:  224-212-2661 fax:  224-212-3358; e-mail:  pam.hannon@Hospira.com

GRANTEE’S INITIALS INITIALS OF HOSPIRA, INC.’S
General Counsel and Secretary

2010 — 2012 Total Shareholder Return (TSR) TERM SHEET

PERFORMANCE PERIOD:	Beginning January 1, 2010, and ending December 31, 2012.
PERFORMANCE GOAL:	·	Relative Total Shareholder Return (“RTSR”) compared to peer companies (identified in Appendix I) is the FY09-11 performance measure. Relative Total Shareholder Return is defined as the percentile rank of Hospira’s Total Shareholder Return compared to the Total Shareholder Return of Hospira’s peer companies over the Performance Period. Total Shareholder Return is the total rate of return on a share of common stock, reflecting stock price appreciation plus reinvestment of dividends and the compounding effect of dividends, adjusted appropriately to reflect stock splits, spin-offs and similar transactions.

The Base Price of Hospira’s common stock, and each peer company’s common stock, is the average of the closing prices for the last 30 trading days before the start of Performance Period. The average closing price for the last 30 trading days of FY08 preceding the FY09-11 Performance Period is $               and serves as the base for relative comparisons over the Performance Period.

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

HOSPIRA %Percentile Rank	% of UnitsEarned
75th	200%
70th	180%
65th	160%
60th	140%
55th	120%
50th	100%
45th	85%
40th	70%
35th	55%
30th	40%
25th	25%
<25th	0%

·With linear interpolation between percentiles

·Percentile rank includes HOSPIRA

VESTING: Subject to the terms of the Restricted Stock Unit Award Agreement, restrictions on the restricted stock units earned during the performance period, as determined above, will lapse on December 31, 2012, if the Grantee is a full-time active employee of the Company on that date. Final determination and distribution of the number of restricted stock units earned will be made after the actual TSR growth during the performance period has been certified by Hospira, Inc.’s independent auditor and the Audit Committee of the Company’s Board of Directors.

Appendix I

Peer Companies for Relative TSR Comparison

Ticker	Company Name	Sector
ABT	Abbott Labs	Health Care
AGN	Allergan Inc.	Health Care
ABC	AmerisourceBergen Corp.	Health Care
AMGN	Amgen	Health Care
BCR	Bard (C.R.) Inc.	Health Care
BAX	Baxter International Inc.	Health Care
BDX	Becton Dickinson	Health Care
BIIB	BIOGEN IDEC Inc.	Health Care
BSX	Boston Scientific	Health Care
BMY	Bristol-Myers Squibb	Health Care
CAH	Cardinal Health Inc.	Health Care
CFN	Carefusion Corp.	Health Care
CELG	Celgene Corp.	Health Care
CEPH	Cephalon Inc	Health Care
DVA	Davita Inc.	Health Care
XRAY	Dentsply International	Health Care
ESRX	Express Scripts	Health Care
FRX	Forest Laboratories	Health Care
GENZ	Genzyme Corp.	Health Care
GILD	Gilead Sciences	Health Care
HSP	Hospira Inc.	Health Care
RX	IMS Health Inc.	Health Care
ISRG	Intuitive Surgical Inc.	Health Care
JNJ	Johnson & Johnson	Health Care
KG	King Pharmaceuticals	Health Care
LH	Laboratory Corp. of America Holdings	Health Care
LIFE	Life Technologies Corp.	Health Care
LLY	Lilly (Eli) & Co.	Health Care
MCK	McKesson Corp. (New)	Health Care
MHS	Medco Health Solutions Inc.	Health Care
MDT	Medtronic Inc.	Health Care
MRK	Merck & Co.	Health Care
MIL	Millipore Corp.	Health Care
MYL	Mylan Inc.	Health Care
PDCO	Patterson Cos. Inc.	Health Care
PKI	PerkinElmer	Health Care
PFE	Pfizer Inc.	Health Care
DGX	Quest Diagnostics	Health Care
STJ	St Jude Medical	Health Care
SYK	Stryker Corp.	Health Care
THC	Tenet Healthcare Corp.	Health Care
TMO	Thermo Fisher Scientific	Health Care
VAR	Varian Medical Systems	Health Care

WAT	Waters Corporation	Health Care
WPI	Watson Pharmaceuticals	Health Care
ZMH	Zimmer Holdings	Health Care

EX-10.4

Exhibit 10.4

HOSPIRA, INC.

2004 PERFORMANCE INCENTIVE PLAN

(Effective April 30, 2004, as amended effective January 1, 2010)

HOSPIRA, INC.

2004 PERFORMANCE INCENTIVE PLAN

SECTION 1.           Establishment and Purposes

1.1           Establishment of the Plan.  Hospira, Inc. (“Hospira”) hereby establishes the “Hospira, Inc. Performance Incentive Plan” the (“Plan”), as set forth in this document.  The Plan shall become effective as of April 30, 2004 (the “Effective Date”) and shall remain in effect as provided in Section 6.1 hereof.

1.2           Purposes of the Plan.  The purposes of the Plan are to:

(a)           Provide flexibility to Hospira in its ability to attract, motivate, and retain the services of participants in the Plan (“Participants”) who make significant contributions to Hospira’s success and to allow Participants to share in the success of Hospira;

(b)           Optimize the profitability and growth of Hospira through incentives which are consistent with Hospira’s goals and which link the performance objectives of Participants to those of Hospira’s shareholders; and

(c)           Provide Participants with an incentive for excellence in individual performance.

SECTION 2.           Administration

2.1           General.  The Plan shall be administered by the Compensation Committee (the “Committee”) of the Board of Directors of Hospira (the “Board”).

2.2           Authority of the Committee.  The Committee will have full authority to administer the Plan, including the authority to interpret and construe any provision of the Plan, and to establish and amend rules pertaining thereto.  All rules, regulations and interpretations shall be conclusive and binding on all persons.  The Committee has sole responsibility for selecting Participants, establishing performance objectives, setting award targets, and determining award amounts.

2.3           Delegation by the Committee.  The Committee from time to time may delegate the performance of certain ministerial functions in connection with the Plan, such as the keeping of records, to such person or persons as the Committee may select.  The cost of administration of the Plan will be paid by Hospira.

SECTION 3.           Eligibility and Participation

3.1           Eligibility and Participation.  Eligibility for participation in the Plan shall be limited to officers of Hospira and its subsidiaries.  Participants in the Plan will be determined annually by the Committee from those officers eligible to participate in the Plan.

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SECTION 4.           Performance Objectives.

4.1           Performance Objectives.  The Plan’s performance objectives (the “Performance Objectives”) shall be determined with reference to Hospira’s Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”).

4.2           Individual Base Award Allocation — Defined.

(a)           For the performance period beginning on the Effective Date and ending on December 31, 2004 (the “2004 Period”), the base award allocation for the Chief Executive Officer, if a Participant for such period, shall be .020 of Hospira’s EBITDA for the 2004 Period.  The base award allocation for the Chief Operating Officer, if a participant for such period, shall be .015 of Hospira’s EBITDA for the 2004 Period.  The base award allocation for any other Participant shall be .010 of Hospira’s EBITDA for the 2004 Period.

(b)           For all fiscal years beginning after December 31, 2004, the base award allocation for the Chief Executive Officer, if a Participant for such fiscal year, shall be .020 of Hospira’s EBITDA for that fiscal year.  The base award allocation for the Chief Operating Officer, if a participant for such fiscal year, shall be .015 of Hospira’s EBITDA for that fiscal year.  The base award allocation for any other Participant shall be .010 of Hospira’s EBITDA for that fiscal year.

SECTION 5.           Final Awards

5.1           Final Award Allocation.  As soon as practical after the close of each fiscal year, a Participant’s final award allocation will be determined solely on the basis of the Performance Objectives.  In determining a Participant’s final award allocation, the Committee will have the discretion to reduce, but not increase, a Participant’s base award allocation, provided that a Participant’s individual performance will be considered by the Committee in exercising that discretion.

5.2           Payment of Awards.  A Participant’s final award allocation will be paid or deferred in the manner and at the time(s) established by the Committee but no later than 2 ½ months after the end of the fiscal year to which the award relates.

5.3           Right to Correct Payments.  Subject to Hospira’s Executive Compensation Recovery Policy, and notwithstanding anything in the Plan to the contrary, if the Committee determines, in its sole discretion, that an award was based on Hospira’s published financial statements that have been restated then, at the Committee’s direction, Hospira may, but in no case later than 60 months of such restatement:

(a)           correct any payment that was based upon the financial performance in the published financial statements that was subsequently restated; and

(b)           if any payment would have been lower had the financial results been properly reported, recover any payment to the Participant under the Plan that was calculated based upon the achievement of the financial results that were subsequently restated.

The Committee may, in its sole discretion, effect any recovery by obtaining repayment directly from the Participant, setting off the amount owed to the Company against any amount or award that

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would otherwise be granted by the Company to the Participant, reducing any future compensation or benefit to the Participant or any combination thereof.

SECTION 6.           Duration, Amendment and Termination

6.1           Duration of the Plan.  The Plan shall commence on the Effective Date, as described in Section 1.1 hereof, and shall remain in effect until terminated by the Board.

6.2           Amendment and Termination.  The Board, in its sole discretion, may modify or amend any or all of the provisions of the Plan at any time and, without notice, may suspend or terminate it entirely.  However, no such modification may, without the consent of the Participant, reduce the right of a Participant to a payment or distribution to which the Participant is entitled by reason of an outstanding award allocation.

SECTION 7.           Successors

7.1           Obligations.  All obligations of Hospira under the Plan with respect to awards granted hereunder shall be binding on any successor to Hospira, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of Hospira.

SECTION 8.           Grantor Trusts

8.1           2004 Payments.  With respect to the final award allocation for the 2004 Period, based on elections previously filed with Abbott Laboratories for the 2004 calendar year, solely with respect to participants who have grantor trusts that were established under a similar Abbott Laboratories incentive program, Hospira shall distribute such 2004 Period award to the participant in a manner that facilitates the contribution of such amounts to such participant’s grantor trust in a manner prescribed under the 1986 Abbott Laboratories Management Incentive Plan.  Hospira shall have no obligation to maintain or make any future contributions to such grantor trusts, other than as herein provided.

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EX-10.6(E)

Exhibit 10.6(e)

AGREEMENT REGARDING

CHANGE IN CONTROL

THIS AGREEMENT (“Agreement”), is made and entered into as of the 15th day of June 2007 (the “Effective Date”) by and between Hospira, Inc. (the “Company”) and                                (the “Executive”).

WITNESSETH THAT:

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel, and the Board of Directors of the Company (the “Board”) recognizes that, as is the case with many publicly held corporations, a change in control might occur and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company;

NOW, THEREFORE, to induce the Executive to remain in the employ of the Company and in consideration of the premises and mutual covenants set forth herein, IT IS HEREBY AGREED by and between the parties as follows:

1.AGREEMENT TERM. THE INITIAL “AGREEMENT TERM” SHALL BEGIN ON THE EFFECTIVE DATE AND SHALL CONTINUE THROUGH DECEMBER 31, 2010. AS OF DECEMBER 31, 2007, AND AS OF EACH DECEMBER 31 THEREAFTER, THE AGREEMENT TERM SHALL EXTEND AUTOMATICALLY TO THE THIRD ANNIVERSARY THEREOF UNLESS THE COMPANY GIVES NOTICE TO THE EXECUTIVE PRIOR TO THE DATE OF SUCH EXTENSION THAT THE AGREEMENT TERM WILL NOT BE EXTENDED. NOTWITHSTANDING THE FOREGOING, IF A CHANGE IN CONTROL (AS DEFINED IN SECTION 7 BELOW), OCCURS DURING THE AGREEMENT TERM, THE AGREEMENT TERM SHALL CONTINUE THROUGH AND TERMINATE ON THE SECOND ANNIVERSARY OF THE DATE ON WHICH THE CHANGE IN CONTROL OCCURS.

2.ENTITLEMENT TO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled to the Change in Control Benefits described in Section 3 hereof if the Executive’s employment by the Company is terminated during the Agreement Term but after a Change in Control (i) by the Company for any reason other than Permanent Disability or Cause, or (ii) by the Executive for Good Reason.  For purposes of this Agreement:

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(a)A termination of the Executive’s employment shall be treated as a termination by reason of “Permanent Disability” only if, due to a mental or physical disability, the Executive is absent from the full time performance of duties with the Company for a period of at least twelve consecutive months and fails to return to the full time performance of duties within 30 days after receipt of a demand by the Company to do so.

(b)The term “Cause” shall mean the willful engaging by the Executive in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company. For purposes of this Agreement, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth above and specifying the particulars thereof in detail.

(c)The term “Good Reason” shall mean the occurrence of any of the following circumstances without the Executive’s express written consent:

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

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

(iii)a reduction in the Executive’s annual base salary (or a material change in the frequency of payment) as in

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effect immediately prior to the Change in Control as the same may be increased from time to time;

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

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

(vi)the failure by the Company to continue to provide the Executive with the welfare benefits, fringe benefits and perquisites enjoyed by the Executive immediately prior to the Change in Control under any of the Company’s plans or policies, including, but not limited to, those plans and policies providing pension, life insurance, medical, dental, prescription, health and accident, disability, vacation, and other executive perquisites;

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

(viii)the failure of the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform this Agreement as contemplated by Section 16.

For purposes of any determination regarding the existence of Good Reason, any good faith determination by the Executive that Good Reason exists shall be conclusive.

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3.CHANGE IN CONTROL BENEFITS. In the event of a termination of employment entitling the Executive to benefits in accordance with Section 2, the Executive shall, subject to the provisions of the last paragraph of this Section 3, receive the following:

(a)The Executive shall be entitled to receive the following employee welfare benefits: medical, health and accident, dental, prescription, disability, and life insurance coverage for the Executive (and, where applicable under the Company’s welfare benefit plans, the Executive’s family) through the second anniversary of the Executive’s date of termination of employment, or, if earlier, the date on which the Executive becomes employed by another employer. The benefits provided by the Company shall be no less favorable in terms of coverage and cost to the Executive than those provided under the Company’s welfare benefit plans applicable to the Executive (and, where applicable, the Executive’s family) prior to the Change in Control, determined as if the Executive remained in the employ of the Company through such second anniversary.

(b)If the Executive’s date of termination occurs after the end of a performance period applicable to an annual incentive (bonus) award, and prior to the payment of the award for the period, the Executive shall be entitled to a lump sum payment in cash no later than twenty (20) business days after the date of termination equal to the greatest of (i) the Executive’s annual incentive (bonus) award for that period, as determined under the terms of that incentive award arrangement, (ii) the Executive’s annual incentive (bonus) award for that period, with the determination of the amount of such award based on an assumption that the target level of performance had been achieved or (iii) the Executive’s average annual incentive (bonus) award for the three annual performance periods preceding that period (provided that if the Executive was not a participant in the incentive award arrangement for any of those three prior years, the averaging period shall be reduced from three years to the number of years during the three year period in which the Executive was a participant; and further provided that if the Executive’s award for any such year was reduced because the Executive was not a participant for the full year, such amount shall be annualized for purposes of the computation in this clause (iii)).

(c)For any annual incentive (bonus) plan or arrangement in which the Executive participates for the performance period

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in which the Executive’s termination of employment occurs, the Executive shall be entitled to a lump sum payment in cash no later than twenty (20) business days after the date of termination equal to the greater of (i) the Executive’s annual incentive (bonus) award for the performance period that includes the date of termination, with the determination of the amount of such award based on an assumption that the target level of performance has been achieved or (ii) the Executive’s average annual incentive (bonus) award for the three annual performance periods preceding the performance period that includes the date of termination (provided that if the Executive was not a participant in the incentive award arrangement for any of those three prior years, the averaging period shall be reduced from three years to the number of years during the three year period in which the Executive was a participant; and further provided that if the Executive’s award for any such year was reduced because the Executive was not a participant for the full year, such amount shall be annualized for purposes of the computation in this clause (ii)); provided that such payment shall be subject to a pro-rata reduction to reflect the number of days in the performance period following the date of termination. The amount payable under this paragraph (c) shall be in lieu of any amounts that may otherwise be due to the Executive with respect to any annual incentive (bonus) plan or arrangement in which the Executive participates for the performance period in which the Executive’s date of termination occurs.

(d)The Executive shall be entitled to a lump sum payment in cash no later than twenty (20) business days after the Executive’s date of termination equal to the sum of:

(i)an amount equal to two times the Executive’s annual salary rate in effect on the date of the Change in Control or, if greater, as in effect immediately prior to the date of termination; plus

(ii)an amount equal to two times the greater of (x) the Executive’s annual incentive (bonus) award for the performance period that includes the date of the Executive’s termination of employment, with the determination of the amount of such award based on an assumption that the target level of performance has been achieved or (y) the Executive’s average annual incentive (bonus) award for the three annual performance periods preceding the performance

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period that includes the date of termination (provided that if the Executive was not a participant in the incentive award arrangement for any of those three prior years, the averaging period shall be reduced from three years to the number of years during the three year period in which the Executive was a participant; and further provided that if the Executive’s award for any such year was reduced because the Executive was not a participant for the full year, such amount shall be annualized for purposes of the computation in this clause (y)).

The amount payable under this paragraph (d) shall be inclusive of the amounts, if any, to which the Executive would otherwise be entitled as severance pay under any severance pay plan, or by law and shall be in addition to (and not inclusive of) any amount payable under any written agreement(s) directly between the Executive and the Company or any of its subsidiaries.

(e)The Company shall provide the Executive with outplacement services suitable to the Executive’s position through the second anniversary of the date of the Executive’s termination of employment, or, if earlier, the date on which the Executive becomes employed by another employer.

If the Executive is a participant in the Hospira Performance Incentive Plan, the Hospira 2004 Long-Term Stock Incentive Plan, or any successor thereto, the Executive’s annual incentive (bonus) award for the performance period which includes the date of termination under paragraphs (c) and (d)(ii) above and, if applicable, for the period preceding the date of termination under paragraph (b) shall, be determined under the bonus levels communicated in writing to the Executive by the Company for such year.

For purposes of this Agreement, the Executive is deemed a “key employee” within the meaning of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder (“Specified Employee”). As a Specified Employee, notwithstanding any provision in this Agreement, any payments or benefits under Sections 3(b), (c) or (d) (“Restricted Payments”) shall be provided to the Executive on the first day of the seventh month following the date of the Executive’s termination of employment (the “Delay Period”).  After the Delay Period, any Restricted Payments that constitute reimbursements to the Executive shall be made in accordance with their payment terms under this Agreement but no later than the end of the calendar year following the year in which the expense was incurred.

4.MITIGATION. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or

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otherwise. Except as set forth in paragraph 3(a) with respect to benefits, the Company shall not be entitled to set off against the amounts payable to the Executive under this Agreement any amounts owed to the Company by the Executive, any amounts earned by the Executive in other employment after the Executive’s termination of employment with the Company, or any amounts which might have been earned by the Executive in other employment had the Executive sought such other employment.

5.MAKE-WHOLE PAYMENTS. If any payment or benefit to which the Executive (or any person on account of the Executive) is entitled, whether under this Agreement or otherwise, in connection with a Change in Control or the Executive’s termination of employment (a “Payment”) constitutes a “parachute payment” within the meaning of section 280G of the Code, and as a result thereof the Executive is subject to a tax under section 4999 of the Code, or any successor thereto, (an “Excise Tax”), the Company shall pay to the Executive an additional amount (the “Make-Whole Amount”) which is intended to make the Executive whole for such Excise Tax. The Make-Whole Amount shall be equal to (i) the amount of the Excise Tax, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such Excise Tax, plus (iii) all income, excise and other applicable taxes imposed on the Executive under the laws of any Federal, state or local government or taxing authority by reason of the payments required under clauses (i) and (ii) and this clause (iii).

(a)For purposes of determining the Make-Whole Amount, the Executive shall be deemed to be taxed at the highest marginal rate under all applicable local, state, federal and foreign income tax laws for the year in which the Make-Whole Amount is paid. The Make-Whole Amount payable with respect to an Excise Tax shall be paid by the Company coincident with the Payment with respect to which such Excise Tax relates.

(b)All calculations under this Section 5 shall be made initially by the Company and the Company shall provide prompt written notice thereof to the Executive to enable the Executive to timely file all applicable tax returns. Upon request of the Executive, the Company shall provide the Executive with sufficient tax and compensation data to enable the Executive or the Executive’s tax advisor to independently make the calculations described in subparagraph (a) above and the Company shall reimburse the Executive for reasonable fees and expenses incurred for any such verification.

(c)If the Executive gives written notice to the Company of any objection to the results of the Company’s calculations within 60 days of the Executive’s receipt of written notice thereof, the dispute shall be referred for determination to

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independent tax counsel selected by the Company and reasonably acceptable to the Executive (“Tax Counsel”). The Company shall pay all fees and expenses of such Tax Counsel. Pending such determination by Tax Counsel, the Company shall pay the Executive the Make-Whole Amount as determined by it in good faith. The Company shall pay the Executive any additional amount determined by Tax Counsel to be due under this Section 5 (together with interest thereon at a rate equal to 120% of the Federal short-term rate determined under section 1274(d) of the Code) promptly after such determination.

(d)The determination by Tax Counsel shall be conclusive and binding upon all parties unless the Internal Revenue Service, a court of competent jurisdiction, or such other duly empowered governmental body or agency (a “Tax Authority”) determines that the Executive owes a greater or lesser amount of Excise Tax with respect to any Payment than the amount determined by Tax Counsel.

(e)If a Taxing Authority makes a claim against the Executive which, if successful, would require the Company to make a payment under this Section 5, the Executive agrees to contest the claim with counsel reasonably satisfactory to the Company, on request of the Company subject to the following conditions:

(i)The Executive shall notify the Company of any such claim within 10 days of becoming aware thereof. In the event that the Company desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from the Executive or such shorter time as the Taxing Authority may specify for responding to such claim) request the Executive to contest the claim. The Executive shall not make any payment of any tax which is the subject of the claim before the Executive has given the notice or during the 30-day period thereafter unless the Executive receives written instructions from the Company to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts payable under this Section 5 determined as if such advance were an Excise Tax, in which case the Executive will act promptly in accordance with such instructions.

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(ii)If the Company so requests, the Executive will contest the claim by either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court or other appropriate court, as directed by the Company; PROVIDED, HOWEVER, that any request by the Company for the Executive to pay the tax shall be accompanied by an advance from the Company to the Executive of funds sufficient to make the requested payment plus any amounts payable under this Section 5 determined as if such advance were an Excise Tax. If directed by the Company in writing the Executive will take all action necessary to compromise or settle the claim, but in no event will the Executive compromise or settle the claim or cease to contest the claim without the written consent of the Company; PROVIDED, HOWEVER, that the Executive may take any such action if the Executive waives in writing the Executive’s right to a payment under this Section 5 for any amounts payable in connection with such claim. The Executive agrees to cooperate in good faith with the Company in contesting the claim and to comply with any reasonable request from the Company concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceedings, and the legal basis for contesting the claim. Upon request of the Company, the Executive shall take appropriate appeals of any judgment or decision that would require the Company to make a payment under this Section 5. Provided that the Executive is in compliance with the provisions of this section, the Company shall be liable for and indemnify the Executive against any loss in connection with, and all costs and expenses, including attorneys’ fees, which may be incurred as a result of, contesting the claim, and shall provide to the Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim.

(f)Should a Tax Authority finally determine that an additional Excise Tax is owed, then the Company shall pay an additional Make-Whole Amount to the Executive in a

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manner consistent with this Section 5 with respect to any additional Excise Tax and any assessed interest, fines, or penalties. If any Excise Tax as calculated by the Company or Tax Counsel, as the case may be, is finally determined by a Tax Authority to exceed the amount required to be paid under applicable law, then the Executive shall repay such excess to the Company within 30 days of such determination; provided that such repayment shall be reduced by the amount of any taxes paid by the Executive on such excess which is not offset by the tax benefit attributable to the repayment.

(g)Notwithstanding the foregoing, the payment of any Make-Whole Amount to an Executive shall be made no later than the end of the calendar year following the calendar year in which the Excise Tax is paid.”

6.TERMINATION DURING POTENTIAL CHANGE IN CONTROL. If a Potential Change in Control (as defined in Section 8) occurs during the Agreement Term, and the Company terminates the Executive’s employment for reasons other than Permanent Disability or Cause during such Potential Change in Control, the Executive shall be entitled to receive the benefits that the Executive would have received under Section 3, such benefits to be calculated based upon the Executive’s compensation prior to the actual termination of employment but paid within 20 business days of the date of such termination.

7.CHANGE IN CONTROL.  For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred on the earliest of a Change in Ownership, a Change in Effective Control, or a Change in Ownership of Assets, each as defined below.

(a)Change in Ownership

(i)In general. Except as provided in paragraph (b)(ii) of this Section, a Change in Ownership of the Company occurs on the date that any one person, or more than one person acting as a group (as defined in paragraph (a)(ii) of this Section), acquires ownership of the Company’s stock that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the Company’s stock. However, if any one person, or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the Company’s stock, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Ownership of the Company (or to cause a Change in Effective Control of the Company (within the meaning of paragraph (b) of this Section)). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an

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acquisition of stock for purposes of this Section. This paragraph (a)(i) applies only when there is a transfer of the Company’s stock (or issuance of stock of the Company) and stock in the Company remains outstanding after the transaction.

(ii) Persons acting as a group. For purposes of paragraph (a)(i) above, persons will not be considered to be acting as a group solely because they purchase or own stock of the Company at the same time. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders only with respect to the ownership in that corporation before the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(b)Change in Effective Control

(i) In general. Notwithstanding that the Company has not undergone a Change in Ownership under paragraph (a) of this Section, a Change in Effective Control of the Company occurs only on either of the following dates:

(1) The date any one person, or more than one person acting as a group (as determined under paragraph (a)(ii) of this Section), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company.

(2) The date a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election.

(ii) Acquisition of additional control. If any one person, or more than one person acting as a group, is considered to effectively control the Company (within the meaning of this paragraph (b)), the acquisition of additional control of the Company by the same person or persons is not considered to cause a Change in Effective Control of the Company (or to cause a Change in Ownership of the Company within the meaning of paragraph (a) of this Section).

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(c)Change in Ownership of Assets

(i)In general. A Change in Ownership of Assets occurs on the date that any one person, or more than one person acting as a group (as determined in paragraph (a)(ii) of this Section), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the Company’s assets immediately before such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

(ii)Transfers to a related person—There is no Change in Control event under this paragraph (c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer, as provided in this paragraph (c)(ii). A transfer of assets by the Company is not treated as a Change in Ownership of Assets if the assets are transferred to—

(1) A shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock;

(2) An entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company;

(3) A person, or more than one person acting as a group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company; or

(4) An entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (c)(ii)(3) above.

For purposes of this paragraph (c)(ii) and except as otherwise provided above, a person’s status is determined immediately after the transfer of the assets.

(iii)Persons acting as a group. Persons will not be considered to be acting as a group solely because they purchase assets of the Company at the same time. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of assets, or similar business transaction with the Company. If a person, including an entity shareholder, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of assets, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership in that corporation before the transaction giving rise to the

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change and not with respect to the ownership interest in the other corporation.

8.POTENTIAL CHANGE IN CONTROL. A “Potential Change in Control” shall exist during any period in which the circumstances described in paragraphs (a), (b), (c) or (d), below, exist (provided, however, that a Potential Change in Control shall cease to exist not later than the occurrence of a Change in Control):

(a)The Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control, provided that a Potential Change in Control described in this paragraph (a) shall cease to exist upon the expiration or other termination of all such agreements;

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

(c)Any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates);

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

9.STOCK AND OPTION AWARDS. With respect to any award granted to the Executive under any of the Company’s stock incentive plans, including the Company’s 2004 Long-Term Stock Incentive Plan or any successor program, the following shall apply:

(a)if the award includes a provision substantially similar to the provision contained in the first paragraph in Appendix A,

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then after a Change in Control no forfeiture shall be effected pursuant to such provision unless the Executive shall have been terminated for “Cause” within the meaning of paragraph 2(b) above; and

(b)if the award includes a provision substantially similar to the provision contained in the second paragraph in Appendix A, then after a Change in Control no forfeiture shall be effected pursuant to such provision unless the Executive shall have been terminated for “Cause” within the meaning of paragraph 2(b) above; and

10.WITHHOLDING. All payments to the Executive under this Agreement will be subject to withholding of applicable taxes. The Company shall withhold the applicable taxes in an amount calculated at the minimum statutory rate and shall pay the amount so withheld to the appropriate tax authority.

11.NONALIENATION. The interests of the Executive under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive’s beneficiary.

12.AMENDMENT. This Agreement may be amended or canceled only by mutual agreement of the parties in writing without the consent of any other person. So long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.  Any amendment or cancellation of this Agreement shall not accelerate the payment of any compensation or benefit hereunder and shall not otherwise modify or change the time or times when compensation or benefits are payable hereunder.

13.APPLICABLE LAW. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois, without regard to the conflict of law provisions of any state.

14.SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified).

15.WAIVER OF BREACH. No waiver by any party hereto of a breach of any provision of this Agreement by any other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party of any similar or dissimilar provisions and conditions at the same or any prior or subsequent time. The failure of any party hereto to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues.

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16.SUCCESSORS, ASSUMPTION OF CONTRACT. This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place. This Agreement is personal to the Executive and may not be assigned by the Executive without the written consent of the Company. However, to the extent that rights or benefits under this Agreement otherwise survive the Executive’s death, the Executive’s heirs and estate shall succeed to such rights and benefits pursuant to the Executive’s will or the laws of descent and distribution; provided that the Executive shall have the right at any time and from time to time, by notice delivered to the Company, to designate or to change the beneficiary or beneficiaries with respect to such benefits.

17.NOTICES. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the parties at the addresses set forth below. Such notices, demands, claims and other communications shall be deemed given:

(a)in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery;

(b)in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; or

(c)in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received. Communications that are to be delivered by the U.S. mail or by overnight service or two-day delivery service are to be delivered to the addresses set forth below:

to the Company:

Corporate Vice President of Human Resources

Hospira, Inc.

275 North Field Drive

Lake Forest, Illinois 60064

with a copy (which shall not constitute notice) to:

General Counsel and Secretary

Hospira, Inc.

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275 North Field Drive

Lake Forest, Illinois 60064

or to the Executive:

Each party, by written notice furnished to the other party, may modify the applicable delivery address, except that notice of change of address shall be effective only upon receipt.

18.RESOLUTION OF ALL DISPUTES. Any controversy or claim arising out of or relating to this Agreement (or the breach thereof) (a “Dispute”) shall be settled by alternative dispute resolution procedures in accordance with Appendix B hereto.  During the pendency of any Dispute, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the Dispute was given (including, but not limited to, salary) and continue the Executive (and, where applicable, the Executive’s family) as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the Dispute was given, until such Dispute is resolved.

19.LEGAL AND ENFORCEMENT COSTS. The provisions of this Section 19 shall apply if it becomes necessary or desirable for the Executive to retain legal counsel or incur other costs and expenses in connection with enforcing any and all rights under this Agreement or any other compensation plan maintained by the Company, including, but not limited to, Hospira 2004 Long-Term Stock Incentive Plan, the Hospira, Inc. Incentive Plan, or, in each case, any trust adopted pursuant thereto:

(a)The Executive shall be entitled to recover from the Company reasonable attorneys’ fees, costs and expenses incurred in connection with such enforcement or defense.

(b)Payments required under this Section 19 shall be made by the Company to the Executive (or directly to the Executive’s attorney) promptly following submission to the Company of appropriate documentation evidencing the incurrence of such attorneys’ fees, costs, and expenses.

(c)The Executive shall be entitled to select legal counsel; provided, however, that such right of selection shall not affect the requirement that any costs and expenses reimbursable under this Section 19 be reasonable.

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(d)The Executive’s rights to payments under this Section 19 shall not be affected by the final outcome of any dispute with the Company.

20.SURVIVAL OF AGREEMENT. Except as otherwise expressly provided in this Agreement, the rights and obligations of the parties to this Agreement shall survive the termination of the Executive’s employment with the Company.

21.ENTIRE AGREEMENT. Except as otherwise provided herein, this Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior or contemporaneous agreements, between the parties relating to the subject matter hereof; provided, however, that nothing in this Agreement shall be construed to limit any policy or agreement that is otherwise applicable relating to confidentiality, rights to inventions, copyrightable material, business and/or technical information, trade secrets, solicitation of employees, interference with relationships with other businesses, competition, and other similar policies or agreement for the protection of the business and operations of the Company and the subsidiaries.

22.COUNTERPARTS. This Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to the others.

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IN WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has caused these presents to be executed in its name and on its behalf, and its corporate seal to be hereunto affixed on this            day of                       , 2007, all as of the Effective Date.

	Ron Squarer
	HOSPIRA, INC.
	By
	Christopher B. Begley
	Its: Chief Executive Officer
ATTEST:
Brian J. Smith
Secretary

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APPENDIX A

AGREEMENT REGARDING CHANGE IN CONTROL

FORFEITURE PROVISION REFERENCED IN SECTION 9

Notwithstanding paragraphs (x*), (y*) and (z*), these options (this restricted stock award, etc.) shall immediately terminate (be forfeited), if in the sole opinion and discretion of the Compensation Committee or its delegate, the employee (a) engages in a material breach of the company’s Code of Business Conduct; (b) commits an act of fraud, embezzlement or theft in connection with the employee’s duties or in the course of employment; or (c) wrongfully discloses secret processes or confidential information of the company or its subsidiaries.

Notwithstanding paragraphs (x*), (y*) and (z*), these options shall immediately terminate in the event the employee engages directly or indirectly, for the benefit of the employee or others, in any activity, employment or business during employment or within twelve (12) months after the date of termination or retirement which, in the sole opinion and discretion of the compensation committee or its delegate, is competitive with the company or any of its subsidiaries.

* Provisions contained in the agreements pertaining to nonforfeiture for death, disability, etc.

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APPENDIX B

AGREEMENT REGARDING CHANGE IN CONTROL

ALTERNATIVE DISPUTE RESOLUTION PROCEDURES

The parties to the Agreement Regarding Change in Control dated as of the        day of                         , 2007 (the “Agreement”) recognize that a bona fide dispute as to certain matters may arise from time to time during the term of the Agreement which relates to either party’s rights and/or obligations. To have such a dispute resolved by this Alternative Dispute Resolution (“ADR”) provision, a party first must send written notice of the dispute to the other party for attempted resolution by good faith negotiations between the Executive and the Company within twenty-eight (28) days after such notice is received (all references to “days” in the ADR provision are to calendar days).

If the matter has not been resolved within twenty-eight (28) days of the notice of dispute, or if the parties fail to meet within such twenty-eight (28) days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by counsel in such a proceeding.

23.   To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR.

24.   Within twenty-one (21) days following receipt of the original ADR notice, the parties shall select a mutually acceptable neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, either party may request the President of the CPR Institute for Dispute Resolution (“CPR”), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures:

(a)The CPR shall submit to the parties a list of not less than five (5) candidates within fourteen (14) days after receipt of the request, along with a Curriculum Vitae for each candidate.  No candidate shall be an employee, director or shareholder of either party or any of their subsidiaries or affiliates.

(b)Such list shall include a statement of disclosure by each candidate of any circumstances likely to affect his or her impartiality.

(c)Each party shall number the candidates in order of preference (with the number one (1) signifying the greatest preference) and shall deliver the list to the CPR within seven (7) days following receipt of the list of candidates. If a party believes a conflict of interest exists regarding any of the candidates, that party shall provide a written explanation of the conflict to the CPR along with its list showing its order

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of preference for the candidates. Any party failing to return a list of preferences on time shall be deemed to have no order of preference.

(d)If the parties collectively have identified fewer than three (3) candidates deemed to have conflicts, the CPR immediately shall designate as the neutral the candidate for whom the parties collectively have indicated the greatest preference. If a tie should result between two candidates, the CPR may designate either candidate. If the parties collectively have identified three (3) or more candidates deemed to have conflicts, the CPR shall review the explanations regarding conflicts and, in its sole discretion, may either (i) immediately designate as the neutral the candidate for whom the parties collectively have indicated the greatest preference, or (ii) issue a new list of not less than five (5) candidates, in which case the procedures set forth in subparagraphs 2(a)-2(d) shall be repeated.

25.   No earlier than twenty-eight (28) days or later than fifty-six (56) days after selection, the neutral shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree, the neutral shall designate a location other than the principal place of business of either party or any of the subsidiaries or affiliates.

26.   At least seven (7) days prior to the hearing, each party shall submit the following to the other party and the neutral:

(a)a copy of all exhibits on which such party intends to rely in any oral or written presentation to the neutral;

(b)a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness;

(c)a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any legal arguments and shall not exceed one (1) page per issue.

(d)a brief in support of such party’s proposed rulings and remedies, provided that the brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall be required or permitted by any means, including

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deposition, interrogatories, requests for admissions or production of documents.

27.   The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules:

(a)Each party shall be entitled to five (5) hours of hearing time to present its case. The neutral shall determine whether each party has had the five (5) hours to which it is entitled.

(b)Each party shall be entitled, but not required, to make an opening statement, to present regular or rebuttal testimony, documents or other evidence, to cross-examine witnesses and to make a closing argument. Cross-examination of witnesses shall occur immediately after their direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination.

(c)The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised, but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence and closing arguments shall proceed in the same sequence.

(d)Except when testifying, witnesses shall be excluded from the hearing until closing arguments.

(e)Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral shall have sole discretion regarding the admissibility of any evidence.

28.   Within seven (7) days following completion of the hearing, each party may submit to the other party and the neutral a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding.

29.   The neutral shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party’s proposed rulings and remedies on some issues and the other party’s proposed rulings and

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remedies on other issues. The neutral shall not issue any written opinion or otherwise explain the basis of the ruling.

30.   The neutral shall be paid a reasonable fee plus expenses by the Company. The Company shall bear its own fees and expenses. The Executive’s fees and expenses shall be paid or reimbursed by the Company to the extent provided by the Agreement.

31.   The rulings of the neutral and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction.

32.   Except as provided in Section 9 or as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information.

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EX-10.6(F)

Exhibit 10.6(f)

HOSPIRA 2004 LONG-TERM STOCK INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement (“Agreement”) is made between Hospira, Inc., a Delaware corporation (the “Company”), and the Participant specified below.  The Agreement is subject to the provisions of the Hospira 2004 Long-Term Stock Incentive Plan (the “Plan”), the terms of which are incorporated herein by reference.

1.Terms of Award.  The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:

(a)The “Participant” is                                             .

(b)The “Grant Date” is                             .

(c)The number of shares of “Covered Shares” awarded under this Agreement is                     .  “Covered Shares” are shares of Stock granted under this Agreement and are subject to the terms of this Agreement and the Plan.

Except where the context clearly implies to the contrary, any capitalized term in this award shall have the meaning ascribed to that term under the Plan.  Other words and phrases used in this Agreement are defined pursuant to paragraph 8 or elsewhere in this Agreement.

2.Award.  The Participant is hereby granted the number of Covered Shares set forth in paragraph 1.

3.Dividends and Voting Rights.  The Participant shall be entitled to receive any dividends paid with respect to the Covered Shares that become payable during the Restricted Period (defined below); provided, however, that no dividends shall be payable to or for the benefit of the Participant for Covered Shares with respect to record dates occurring prior to the Grant Date, or with respect to record dates occurring on or after the date, if any, on which the Participant has forfeited those Covered Shares.  Any such dividends paid with respect to the Covered Shares during the Restricted Period shall be paid at the same time as they are paid to other shareholders of common shares of the Company.  The Participant shall be entitled to vote the Covered Shares during the Restricted Period to the same extent as would have been applicable to the Participant if the Participant was then vested in the shares; provided, however, that the Participant shall not be entitled to vote the shares with respect to record dates for such voting rights arising prior to the Grant Date, or with respect to record dates occurring on or after the date, if any, on which the Participant has forfeited those Covered Shares. Any additional common shares of the Company issued with respect to the Covered Shares as a result of any stock dividend, stock split or reorganization, shall be subject to the restrictions and other provisions of paragraphs 5, 6 and 7.

4.Issuance of Certificate.  Each certificate issued in respect of the Covered Shares granted under this Agreement shall be registered in the name of the Participant and shall be deposited in a bank designated by the Committee or retained by the Company.  The

certification of Covered Shares is conditioned upon the Participant endorsing in blank a stock power for the Covered Shares.  During the Restricted Period, all certificates evidencing the Restricted Stock will be imprinted with the following legend: “The securities evidenced by this certificate are subject to the transfer restrictions, forfeiture restrictions and other provisions of the Restricted Stock Agreement dated                      between Hospira and .”  Upon lapse of the Restriction Period, the Participant shall be entitled to have the legend removed from the certificate representing the Covered Shares.

5.Restricted Period.  The Covered Shares shall be subject to forfeiture pursuant to Section 6 for a period (the “Forfeiture Period”) commencing with the date of the award and ending on the earliest of the following events:

(a)The three-year anniversary of the Grant Date;

(b)The date of a Change in Control that occurs on or before the Date of Termination; or

(c)The Date of Termination which occurs due to the Participant’s death or Disability.

6.Forfeiture of Shares.  If the Date of Termination (as defined below) occurs during the Restricted Period, the Participant will forfeit any and all rights with respect to such unvested Covered Shares and the Company shall have the right to cancel any such certificates evidencing such Covered Shares.

7.Restriction on Sale.  All Covered Shares shall be subject to the following restrictions on sale beginning on the Grant Date and continuing for all periods during the Forfeiture Period (the “Restricted Period”):

(a)The shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of.

(b)Any additional common shares of the Company issued with respect to the Covered Shares as a result of any stock dividend, stock split or reorganization, shall be subject to the restrictions and other provisions of this Agreement.

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

8.Definitions.  For purposes of this Agreement, the terms used in this Agreement shall be subject to the following:

(a)Date of Termination.  The term “Date of Termination” means the first day occurring on or after the Grant Date on which the Participant is not employed by the Company or any of its subsidiaries, regardless of the reason for the termination of employment.

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

9.Heirs and Successors.  This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business.  If any rights of the Participant or benefits distributable to the Participant under this Agreement have not been exercised or distributed, respectively, at the time of the Participant’s death, such rights shall be exercisable by the Designated Beneficiary, and such benefits shall be distributed to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan.  The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require.  If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be exercised by or distributed to the legal representative of the estate of the Participant.  If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the Designated Beneficiary’s exercise of all rights under this Agreement or before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any rights that would have been exercisable by the Designated Beneficiary shall be exercised by the legal representative of the estate of the Designated Beneficiary, and any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.

10.Administration.  The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan.  Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement is final and binding.

11.Plan Governs.  Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company.

12.Amendment.  This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.  Notwithstanding the foregoing, the terms of the Agreement may be amended by Hospira as it shall deem necessary and appropriate in order to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and any proposed, temporary or final regulations promulgated thereunder.

* * * * * * *

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

Participant
Hospira, Inc.
By:
Its:	Chief Executive Officer

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EX-10.11

Exhibit 10.11

Agreement

This Agreement is made as of February 8, 2010, by and between Hospira, Inc., a Delaware corporation (the “Company”), and                         ,                                                  (“Officer”).

In exchange for the grant of stock options and performance based share units under the Hospira 2004 Long-Term Stock Incentive Plan (“LTIP”) and for eligibility for a cash incentive bonus under the Hospira, Inc. Performance Incentive Plan (“PIP) for the 2010 fiscal year, the parties hereby agree as follows:

1.Officer agrees to be bound fully by the terms of the Company’s Executive Compensation Recovery Policy (as it may be amended and in effect from time to time), a copy of the present form of which is attached hereto in respect of any grants or awards previously made or to be made in the future (including, without limitation, the aforementioned grants for the 2010 fiscal year) under the LTIP, the PIP or any respective predecessor or successor plan thereto.

2.The laws of the State of Illinois, without regard to its conflict of law provisions, shall govern the interpretation and validity of the provisions of this Agreement and all questions relating to this Agreement.

3.This Agreement shall be binding on the Officer and his heirs, successors and legal representatives, and on the Company and its successors.

4.In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement shall continue in full force and effect and shall be interpreted so as reasonably to effect the intent of the parties hereto.

This Agreement sets forth the entire understanding of the parties and supersedes all prior agreements, arrangements, and other communications, whether oral or written, pertaining to the subject matter hereof; and this Agreement shall not be modified or amended except by written agreement of the Company and the Officer.

IN WITNESS WHEREOF, the Company and the Officer have executed this Agreement as of the day and year first above written.

Hospira, Inc.

By:

Its:

Executive Compensation Recovery Policy

In the event of a restatement of Hospira’s published financial results, the Committee will review the facts and circumstance that led to the restatement.  If the Committee determines that any bonus, equity-based award or other compensation was made to a current or former executive officer based on the original financial statements, the Committee may at its discretion, but in no case later than 60 months of such restatement, adjust such compensation negatively or positively.  The committee may seek to recover from such executive officer the part of any bonus, equity-based award or other compensation that was paid based upon the financial performance in the published financial statements that was subsequently restated.

In exercising its discretion, the Committee shall consider and weigh all factors that it deems appropriate and relevant, such as the degree to which the restatement was material as measured by the injury suffered by Hospira and its shareholders due to the restatement, the degree to which the restatement is due to misconduct or malfeasance and the degree to which the executive officer was involved in misconduct or malfeasance.  The decision of the Committee may be the same for all executive officers or may vary among the executive officers, but in any event shall be final and binding on all executive officers.

In the case of cash compensation, if the amount of the payment would have been lower than the amount actually awarded had the financial results been properly reported, the Committee may require repayment of all or any portion of a payment that was calculated based upon the achievement of the financial results that were subsequently restated.

In the case of equity-based compensation, if the amount realized by the executive officer (i.e., from the exercise of stock options or the granting of stock based upon the vesting of performance share units) would have been lower had the financial results been properly reported, the Committee may require payment of all or any portion of the gains realized by the executive officer that resulted from the financial results that were subsequently restated.  For stock options,  “gain realized” shall be the excess of the “fair market value” of the shares on the date of exercise, as determined by the Committee in its sole discretion,  over the exercise price, multiplied by the number of shares purchased.  For performance share units, “gain realized” shall be the “fair market value” of the shares on the date they are deemed vested, as determined by the Committee in its sole discretion, multiplied by the number of shares actually distributed to the executive officer, reduced by any taxes paid in countries other than the United States, to the extent that such taxes are not otherwise eligible for refund from the taxing authorities.

In the event that the executive officer does not repay any sums required by the Committee due to any restatement of the financial results, the Committee may pursue such legal remedies as may be appropriate to recoup any such sums that the individual fails to repay as required by the Committee under this Policy regardless of whether the affected individual is still employed by Hospira.  In addition to all other available remedies, the Committee may set off the amount owed by any such executive officer against any amount or award that would otherwise be granted by Hospira to the executive officer, reduce any future compensation or benefit to such executive officer or any combination thereof.

For purposes of this Policy, the term “executive officer” means any individual: designated by the Company as an “officer” for purposes of Section 16 of the Securities Exchange Act of 1934; or elected a corporate officer of Hospira by its Board of Directors, but not including assistant officers.  This Policy shall apply to all published financial statements, including those published prior to its adoption and shall apply to individuals who were executive officers during the periods covered by the published financial statement regardless of whether such individual is still employed by Hospira at such time as the published financial statements are restated or at such time as the Committee seeks to adjust any previously paid compensation under this Policy.

EX-10.13

Exhibit 10.13

CONFIDENTIAL TREATMENT

[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

Execution Copy

DATED DECEMBER 15, 2009

BUSINESS TRANSFER AGREEMENT

BY AND AMONG

ORCHID CHEMICALS & PHARMACEUTICALS LTD

Mr. K. RAGHAVENDRA RAO

AND

OJAS PHARMACEUTICALS INDIA PRIVATE LIMITED

(TO BE RENAMED HOSPIRA HEALTHCARE INDIA PRIVATE LIMITED)

Khaitan & Co.
Advocates, Solicitors, Notaries, Patent & Trademark Attorneys
One Indiabulls Centre, 13th Floor
841 Senapati Bapat Marg

Elphinstone Road
Mumbai 400 013, India
T: +91 22 6636 5000
F: +91 22 6636 5050
Ref: HK/2009

CONFIDENTIAL TREATMENT

[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

TABLE OF CONTENTS

1	DEFINITIONS AND INTERPRETATION		6
	1.1	Definitions	6
	1.2	Additional Defined Terms	15
	1.3	Interpretation	17
2	AGREEMENT TO SELL AND PURCHASE TRANSFERRED ASSETS OF THE BUSINESS		19
	2.1	Transfer of the Transferred Assets of the Business	19
	2.2	Excluded Assets	22
	2.3	Assumed Liabilities	23
	2.4	Excluded Liabilities	24
3	PURCHASE PRICE		26
	3.1	Consideration	26
	3.2	Adjustment of Cash Consideration	26
	3.3	Tax Treatment of Allocation of Cash Consideration	29
4	EMPLOYEES AND EMPLOYEE BENEFIT FUNDS		29
	4.1	Transfer of Employment	29
	4.2	Prior Service	30
	4.3	Accrued Vacation	30
	4.4	Benefit Plans	30
	4.5	Purchaser Plans	31
	4.6	Closing Transferred Employee Liability	32
5	CONDITIONS PRECEDENT		32
	5.1	Conditions to the Obligation of the Purchaser	32
	5.2	Conditions to the Obligation of the Seller	34
6	PRE-CLOSING COVENANTS		35
	6.1	Access and Investigation	35
	6.2	Operation of the Business by the Seller	35
	6.3	Consents and Filings; Reasonable Efforts	38
	6.4	Notification	39
	6.5	Shareholder Approval	40
	6.6	No Negotiation	40
	6.7	Intercompany Arrangements	41
	6.8	Mixed Contracts and Mixed Accounts	41
	6.9	Satisfaction of Obligations to Lenders	42
	6.10	Real Property	42
	6.11	Financial Statements	42
	6.12	Contact with Customers and Suppliers	43
	6.13	Replacement of Guarantees	43
	6.14	Review of Closing Deliveries	43
	6.15	Vizag Land	44
	6.16	Additional Fill/Finish Manufacturing	44
	6.17	Currency Conversion	44
	6.18	Purchaser Parent Guarantee	44
	6.19	Formulation/Fill/Finish NCE	44
7	CLOSING		45
	7.1	Closing	45
	7.2	Closing Deliveries	45

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

	7.3	Escrow Amount	47
	7.4	Possession	48
8	POST COMPLETION COVENANTS		48
	8.1	Tax Matters	48
	8.2	Excluded Liabilities	49
	8.3	Public Announcements	49
	8.4	Assistance in Proceedings	50
	8.5	Privileges	50
	8.6	Non-competition; Non-solicitation	50
	8.7	Use of Trademarks	54
	8.8	Reports and Returns	54
	8.9	Access to Records	54
	8.10	Returns of Products	55
	8.11	Refunds	55
	8.12	Inquiries	55
	8.13	Product Complaints	55
	8.14	Use of Corporate Name	56
	8.15	Seller Mixed-Use Intellectual Property Licenses	56
	8.16	Manufacture of Non-Business Products	57
	8.17	Transition Services	57
	8.18	Further Action	57
	8.19 Proposed Transaction Notice and Exercise of Right of First Negotiation Regarding the Business and the Transferred Assets of the Business		59
	8.20	Offer Notice and Exercise of Right of First Negotiation Regarding the Seller’s Beta-Lactam API Business	60
	8.21	Pharmaceutical Research and Development Employees	61
9	REPRESENTATIONS AND WARRANTIES OF SELLER		61
	9.1	Organization and Good Standing	61
	9.2	Authority and Enforceability	62
	9.3	No Conflict	62
	9.4	Financial Statements	63
	9.5	Books and Records	63
	9.6	Inventory	64
	9.7	No Undisclosed Liabilities	64
	9.8	Absence of Certain Changes and Events	64
	9.9	Assets	66
	9.10	Real Property	67
	9.11	Intellectual Property	69
	9.12	Software	71
	9.13	Contracts	72
	9.14	Indebtedness Contracts	75
	9.15	Tax Matters	76
	9.16	Employee Benefit Matters	78
	9.17	Employment and Labour Matters	80
	9.18	Environmental, Health and Safety Matters	82
	9.19	Compliance with Laws, Judgments and Governmental Authorizations	83
	9.20	Regulatory Compliance	84
	9.21	Promotional Practices	86

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

	9.22	Information and Disclosure	87
	9.23	Legal Proceedings	88
	9.24	Customers and Suppliers	88
	9.25	Products; Product Warranty	89
	9.26	Product Liability	89
	9.27	Insurance	89
	9.28	Related Party Transactions	90
	9.29	Brokers or Finders	90
	9.30	Solvency	91
	9.31	No Business Assets	91
10	REPRESENTATIONS AND WARRANTIES OF PURCHASER		91
	10.1	Organization and Good Standing	91
	10.2	Authority and Enforceability	91
	10.3	No Conflict	92
	10.4	Legal Proceedings	92
	10.5	Brokers or Finders	92
	10.6	Financing	92
11	INDEMNITY		92
	11.1	Indemnification by the Seller	92
	11.2	Indemnification by the Purchaser	93
	11.3	Claim Procedure	94
	11.4	Third Party Claims	95
	11.5	Survival of Representations and Warranties	97
	11.6	Limitations on Liability	98
	11.7	Treatment	100
	11.8	Currency Conversion	100
	11.9	Exclusive Remedy	100
	11.10	Knowledge	100
12	TERMINATION		101
	12.1	Termination Events	101
	12.2	Effect of Termination	102
	12.3	Effect of Termination under Clause 12.1.2(e)	102
13	CONFIDENTIALITY		103
	13.1	General Obligation	103
	13.2	Exceptions	103
14	GOVERNING LAW AND ARBITRATION		104
	14.1	Governing Law	104
	14.2	Arbitration	104
15	MISCELLANEOUS		105
	15.1	Notices	105
	15.2	Further Assurances	106
	15.3	Amendments	106
	15.4	Waiver and Remedies	107
	15.5	Assignment and Successors and No Third Party Rights	107
	15.6	Specific Performance	107
	15.7	Expenses	108
	15.8	Entire Agreement	108
	15.9	Partial Invalidity	108

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CONFIDENTIAL TREATMENT

[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

15.10	Schedules and Exhibits	108
15.11	Counterparts	108
15.12	Performance of Obligations by Affiliates	109
15.13	No Joint Venture	109
15.14	Mutual Goodwill	109

List of Exhibits

Exhibit A	API Supply Agreement
Exhibit B	Oral Ceph Contract Manufacturing Agreement
Exhibit C	Fill/Finish NCE Contract Manufacturing Agreement
Exhibit D	Escrow Agreement
Exhibit E	IP Assignment
Exhibit F	[Intentionally Omitted]
Exhibit G	Closing Certificate
Exhibit H	Form of Press Release
Exhibit I	Transition Services Agreement
Exhibit J	Purchaser Parent Guarantee
List of Schedules
1.1	Promoter Group
1.1(a)	Leased Business Real Property
1.1(b)	Permitted Encumbrances
1.1(c)	Seller Mixed-Use Intellectual Property
1.1(d)	Key Employees
2.1.6	List of Contracts of the Business
2.2.9	Excluded Assets in India
2.3.6	Scheduled Assumed Liabilities
3.3	Cash Consideration Allocation
5.1.3	Government Authorizations
5.1.4	Registrations
5.1.5	Competition / Investment Law Jurisdictions
5.1.6	Consents
6.8	Mixed Contracts
6.19	Fill/Finish NCE Contract Manufacturing Agreement Principles
8.17	Transition Services Agreement
8.18.4	Governmental Authorizations and Registrations Remaining with Seller
9	Seller Disclosure Schedule

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CONFIDENTIAL TREATMENT

[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

This BUSINESS TRANSFER AGREEMENT (this “Agreement”) is made on this 15th day of December 2009:

BY AND AMONG:

ORCHID CHEMICALS & PHARMACEUTICALS LTD, a company incorporated under the Act and having its registered office at Orchid Towers, No 313, Valluvar Koddam High Road, Nungambakkam, Chennai 600034, India (hereinafter referred to as the “Seller”, which expression shall, unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns) of the FIRST PART;

Solely for purposes of Clause 8.6.1 through and including Clause 8.6.4, Mr. K. RAGHAVENDRA RAO, an individual and the founder, managing director and one of the members of Promoter Group of the Seller (hereinafter referred to as the “KRR”, which expression shall, unless repugnant to the context or meaning thereof, mean and include his heirs, executors, administrators, successors and permitted assigns);

AND

OJAS PHARMACEUTICALS INDIA PRIVATE LIMITED (to be renamed Hospira Healthcare India Private Limited), a company incorporated under the Act and having its registered office at Unit G, Hotel Dreamz Park Office Complex, 571/2, Anna Salai, Teynampet, Chennai — 600018, Tamil Nadu, India (hereinafter referred to as the “Purchaser”, which expression shall, unless repugnant to the context or meaning thereof, mean and include its successors and permitted assigns) of the SECOND PART;

WHEREAS:

In addition to their other activities, the Seller and its Affiliates are engaged in the Business (as hereinafter defined).

The Seller desires to sell, assign, transfer, convey and deliver, and/or cause its Affiliates to sell, assign, transfer, convey and deliver, to the Purchaser or one of its Affiliates, and the Purchaser desires to purchase and acquire, or cause its Affiliates to purchase and acquire, from the Seller and its Affiliates the Transferred Assets of the Business as a going concern on a slump sale basis (as defined in Section 2(42C) of the Tax Act) and in connection therewith the Purchaser is willing to assume the Assumed Liabilities, all upon the terms and subject to the conditions set forth in this Agreement.

Concurrently with the execution of this Agreement, the shareholders of the Seller listed on Schedule 1.1, who hold, in the aggregate, 14,912,172 shares of the Seller, which represent approximately 21.17% of the issued and outstanding share capital of Seller (the “Promoter Group”), have delivered a letter agreement to the Purchaser and the Seller pursuant to which (a) they consent to, and agree to vote all of their shares of the Seller in favour of, the entering into of this Agreement by the Seller and the transactions contemplated hereby and (b) agree to be bound by the covenant set forth in Clause 6.6.

Concurrently with the execution of this Agreement, Hospira, Inc., a Delaware corporation and the parent company of the Purchaser, has executed and delivered to the Seller the Purchaser Parent Guarantee set forth in Exhibit J.

NOW, THEREFORE, in consideration of mutual agreements, covenants, representations and warranties set forth in this Agreement, and for other good and valuable consideration, the sufficiency of which is acknowledged by the Parties, the Parties hereby agree as follows:

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CONFIDENTIAL TREATMENT

[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

1DEFINITIONS AND INTERPRETATION

1.1Definitions

In this Agreement, (a) capitalized terms defined by inclusion in quotations and/or parenthesis have the meanings so ascribed; and (b) the following terms shall have the following meanings assigned to them herein below:

“Accounts Receivable” means all accounts, notes and other receivables, including any value added Taxes or similar Taxes levied on such accounts receivable, any unpaid interest accrued on any such accounts receivable and any security or collateral related thereto, all file documentation related to such accounts, notes and other receivables, including invoices, shipping documents, communications and correspondence submitted to or received from customers related to such sales;

“Act” means the (Indian) Companies Act, 1956;

“Affiliate” in relation to any Party means in case of a natural Person, the Relative of such Person, and in case of a Person other than a natural Person, any Person, which, directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under the Common Control of that Person;

“Ancillary Agreements” means, collectively, (a) the Lease Deeds, (b) the IP Assignment, (c) the API Supply Agreement, (d) the Oral Ceph Contract Manufacturing Agreement, (e) the Transition Services Agreement, (f) the Fill/Finish NCE Contract Manufacturing Agreement (if executed), (g) the Escrow Agreement, (h) the Purchaser Parent Guarantee and (i) any other instruments of sale, conveyance, transfer and assignment between the Seller or any of its Affiliates, on the one hand, and the Purchaser or any of its Affiliates, on the other hand, in form and substance reasonably satisfactory to the Purchaser and the Seller, as may be reasonably necessary or advisable under applicable Law to effect the transactions contemplated by this Agreement and the Ancillary Agreements;

“API” means active pharmaceutical ingredients;

“API Supply Agreement” means the API Supply Agreement to be entered into by and between the Purchaser and the Seller at the Closing in the form of Exhibit A;

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“Benchmark Net Working Capital” means USD 30,000,000 (United States Dollar Thirty Million);

“Beta-Lactam” means the class of compounds containing a ß-lactam nucleus in their molecular structure, including penicillins, cephalosporins, penems and aztreonam;

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

“Business” means the business of researching, evaluating and litigating originator Intellectual Property as permitted under Law for, developing, testing, obtaining regulatory approval for, manufacturing, negotiating third party contracts for, procuring materials for, performing fill and finish services for, marketing, distributing and selling injectable pharmaceutical products for all human and animal prophylactic and therapeutic uses in all formulations and dosage forms and for any and all indications, as such business is conducted anywhere in the world by the Seller and its Affiliates immediately prior to the date of this Agreement, subject to any changes on or prior to the Closing permitted in accordance with Clause 6.2, but specifically excluding the Other Businesses. It is agreed and understood that the Business does not include any Excluded Assets and Excluded Liabilities;

“Business Day” means any day other than a Saturday, a Sunday or any day on which banks in Chennai, Tamil Nadu and Mumbai, Maharashtra in India are required or authorized to be closed;

“Change of Control” means the acquisition by a third party of more than 50% (fifty percent) of the outstanding shares of voting capital stock of the Seller.

“Closing” means the closing of the purchase and sale of the Transferred Assets of the Business and the assignment and assumption of the Assumed Liabilities, each as contemplated by this Agreement and the Ancillary Agreements;

“Closing Net Working Capital” means the difference between: (a) the sum of the current assets of the Business listed in Clause 3.2.2 minus (b) the sum of the current liabilities of the Business listed in Clause 3.2.2 in each case, (a) and (b), as of the close of business on the date immediately prior to the Closing Date and as determined in accordance with GAAP applied on a basis consistent with the Financial Statements;

“Competition/Investment Law” means any Law that is designed or intended to prohibit, restrict or regulate: (a) foreign investment; or (b) antitrust, monopolization, restraint of trade or competition, including the HSR Act;

“Consent” means any license, permission, approval, clearance, franchise, permit, notice, consent, authorization, waiver, grant, concession, agreement, certificate, exemption, order or registration from any Government Authority or any other third party;

“Contract” means any contract, agreement, lease, license, commitment, understanding, franchise, warranty, guaranty, mortgage, note, indenture, bond, debenture, letter of credit, option, pledge, security agreement, warrant, right or other instrument or consensual obligation, whether written or oral;

“Controlling”, “Controlled by” or “Control”, with respect to any Person, means (i) the ownership of 50% (fifty percent) or more of the equity shares or other voting securities of such entity; or (ii) possession of the power to direct the management and policies of such entity; or (iii) the power to nominate for appointment the majority of the directors, managers, partners or other individuals exercising similar authority with respect to such Person by virtue of ownership of voting securities or management or contract or in any other manner whatsoever, directly or indirectly, including through one or more other entities; and the term “Common Control” shall be construed accordingly;

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

“Corporate Name” means the trademarks, trade names or corporate logos “Orchid Chemicals & Pharmaceuticals Ltd.,” “Orchid Healthcare (A Division of Orchid Chemicals & Pharmaceuticals Ltd.),” “Orgenus Pharma, Inc. (Subsidiary of Orchid Pharmaceuticals, Inc.)”, “Orchid Europe Limited,” “Orchid Pharmaceuticals SA (Proprietary) Limited,” “Orchid Pharma Japan KK,” “Health Orchid,” “Orchidpharma.com” and the “flower logo” and any variants and derivatives of any of the foregoing, including any applicable domain names, in each case used prior to the Closing in connection with the Business;

“Dollars”, “USD” or “$” means United States Dollars or the lawful currency of the United States;

“Effective Date” means the date of execution of this Agreement;

“Employee Plan” means any bonus, incentive compensation, performance award, deferred compensation, cash allowance, employee state tax contribution, pension, deposit link insurance, profit sharing, retirement, provident, superannuation, gratuity, stock purchase, stock option, stock ownership, stock appreciation right, phantom stock, leave of absence, layoff, severance, retrenchment, redundancy, retention, vacation, holiday, annual leave, day or dependent care, legal services, cafeteria, life, health, accident, disability, fringe benefit, loans, club memberships, company accommodation (owned or leased), company product purchase plan, house rent or other housing allowance, conveyance, car, driver or other transport allowance, education assistance or allowance (including scholarships and grants), transfer and new employee joining relocation plan, field work daily allowances, medical allowance or insurance, maternity benefits, lunch coupons or other comparable allowance, leave travel allowance, reimbursement, sales or other performance incentives or allowances, company sponsored health plans or other welfare benefit or employee benefit plan, practice, policy, scheme, allowance or arrangement, whether written or oral, of the Seller or any of its Affiliates;

“Encumbrance” means any charge, claim, mortgage, servitude, easement, right of way, community or other marital property interest, adverse ownership claim, title defect, covenant, equitable interest, license, lease, sub-lease or other possessory interest, lien, Tax lien, option, pledge, security interest, preference, priority, right of first refusal, option, restriction, obligation or other encumbrance of any kind or nature whatsoever (whether absolute or contingent);

“Environmental Law” means any Law relating to the environment (including ambient air, surface water, ground water, land surface, and subsurface strata), natural resources, pollutants, contaminants, wastes, chemicals or public health and safety, including any Law pertaining to: (a) treatment, storage, disposal, generation and transportation of Hazardous Materials; (b) air, water, land and noise pollution; (c) groundwater, surface water, or soil contamination; (d) the release or threatened release into the environment of Hazardous Materials, including intentional or accidental emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (e) the manufacture, processing, use, distribution, treatment, storage, disposal, transportation or handling of Hazardous Materials; (f) underground and aboveground tanks and other storage tanks or vessels, abandoned, disposed or discarded barrels, containers and other closed receptacles; (g) public health and safety; (h) the registration, evaluation, authorization, or restriction of Hazardous Materials; or (i) the protection of wild life, plants, habitat, marine sanctuaries and wetlands, including all endangered and threatened species;

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

“Escrow Agent” means Standard Chartered Bank, or such other bank or trust mutually agreed in writing by the Parties.

“Escrow Agreement” means the Escrow Agreement to be entered into by and among the Seller, the Purchaser and the Escrow Agent at the Closing in the form of Exhibit D;

“Excluded Countries” means Myanmar, Yemen, Russia, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, Georgia, and Ukraine;

“Finished API” means API used in the manufacture of the products of the Business that (a) has passed all quality inspection tests such that a document certifying that the API conforms to the specifications therefor has been or could be signed and dated by a duly authorized representative of the Seller and (b) has been or may be released for transfer to the manufacturing facility included in the Leased Business Real Property located in Irungattukottai, India.

“Fill/Finish NCE Contract Manufacturing Agreement” means the Fill/Finish NCE Contract Manufacturing Agreement for [***] developed by [***], utilizing the Transferred Assets of the Business referred to in Clause 6.19;

“GAAP” means generally accepted accounting principles for financial reporting in India as in effect as of the date of this Agreement;

“Governmental Authority” means any (a) nation, region, state, county, city, town, village, district or other jurisdiction; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department or other entity and any court or other tribunal); (d) multinational organization; or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature;

“Governmental Authorization” means, other than the Registrations, all filings and applications with any Governmental Authority, and all Consents, registrations, re-registrations, and declarations issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any Law;

“Hazardous Material” means any raw material, intermediate product, byproduct, pollutant, contaminant, chemical, solvent, waste or any other substance or material (whether solids, liquids or gases) that is infectious, carcinogenic, persistent, ignitable, corrosive, reactive, explosive, poisonous, toxic or otherwise hazardous or that is listed, defined, designated or classified, or otherwise regulated under any Environmental Law, including any admixture or solution thereof, and including petroleum and all byproducts and derivatives thereof or synthetic substitutes therefor, asbestos or asbestos-containing materials in any form or condition, radioactive materials, urea-formaldehyde, lead and lead-based paints, polychlorinated biphenyls and any other material or substance that is or that may present a threat to human health or the environment;

“Hedging Obligations” means, with respect to any Person, all Liability of such Person under any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or

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option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing;

“Hospira Agreements” means, collectively, (i) the In License Distribution Agreement, dated September 23, 2005, between Mayne Pharma Pty Ltd. and the Seller, (ii) the Manufacture, Supply and Distribution Agreement, dated December 21, 2007, between Hospira UK Limited and the Seller, (iii) the Manufacture and Supply Agreement, dated December 11, 2008, between Hospira Inc. and the Seller and (iv) the Manufacture and Supply Agreement, dated September 16, 2009, between Hospira Inc. and the Seller, in each case as amended;

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 of the United States;

“Indebtedness” of any Person means, without duplication: (a) all indebtedness of such Person, whether or not contingent, for borrowed money; (b) all obligations of such Person evidenced by credit agreements, notes, mortgages, bonds, letters of credit, Hedging Obligations, debentures or other similar instruments or debt securities and warrants or other rights to acquire any such instruments or securities, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses (including capital lease obligations); and (c) all indebtedness of others referred to in clauses (a) and (b) hereof guaranteed, directly or indirectly, in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement, undertaking or arrangement by which such Person guarantees, endorses or otherwise becomes or is contingently liable for the indebtedness referred to in clauses (a) and (b) of any other Person: (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness; (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss; (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered); (iv) to grant an Encumbrance on existing or future property owned or acquired by such Person (including Contracts), whether or not the obligation secured thereby has been assumed or (v) otherwise to assure a creditor against loss. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor;

“India” means the Republic of India and shall include special economic zones, ports and airports within the geographical area of the Republic of India;

“Intellectual Property” means all of the following anywhere in the world and all legal rights, title or interest in, under or in respect of the following arising under Law, whether or not filed, perfected, registered or recorded and whether now or later existing, filed, issued or acquired, including all renewals: (a) all national, regional and international patents, patent applications, patent disclosures, utility models, utility model applications, petty patents, design patents and

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

certificates of inventions, and all related re-issues, re-examinations, divisions, revisions, restorations, renewals, extensions, provisionals, continuations and continuations in part; (b) all copyrights, copyright registrations and copyright applications, copyrightable works and all other corresponding rights; (c) all mask works, mask work registrations and mask work applications and all other corresponding rights; (d) all Trademarks; (e) all inventions (whether patentable, patented or unpatentable and whether or not reduced to practice, any said patents, including any extensions, reissues, reexaminations, renewals, divisions, continuations, continuations-in-part, or design patents); (f) know-how, including technical know-how, process know-how, technology, technical data, trade secrets, confidential business information, manufacturing and production processes and techniques, regulatory requirements and information, clinical data and protocols, research and development information (including all research and development data, experimental and project plans and pipeline product information), storing and shipping information, financial, marketing and business data, pricing and cost information, business and marketing plans, advertising and promotional materials, customer, distributor, third party manufacturer and supplier lists and information, correspondence, records, and other documentation, and other proprietary documentation and information of every kind; (g) all databases, data collections and data exclusivity; (h) all other proprietary rights; and (i) all copies and tangible embodiments of any of the foregoing (in whatever form or medium); including the right to sue for past, present or future infringement, misappropriation or dilution of any of the foregoing;

“Judgment” means any order, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Authority or arbitrator;

“Key Employees” means those Business Employees listed in Schedule 1.1(d).

“Knowledge” means, with respect to the Seller, the information that any Key Employee is actually aware of following a reasonable investigation concerning the existence of the relevant fact or matter;

“Law” means any federal, national, regional, state, local, county, city, municipal, town, village, district, foreign or other constitution, law, statute, treaty, rule, regulation, ordinance, order, code, binding case law or principle of common law or any condition or term imposed pursuant to any Governmental Approvals;

“Leased Business Real Property” means the parcels of Real Property that are leased by the Seller as tenant, all of which are set forth on Schedule 1.1(a);

“Liability” means liabilities, debts or other obligations of any kind or nature, whether known or unknown, absolute, accrued, contingent, liquidated, unliquidated or otherwise, due or to become due or otherwise, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP;

“Loss” means any loss, Proceeding, Judgment, damage, fine, penalty, expense (including reasonable attorneys’ or other professional fees and expenses and court costs), injury, diminution of value, Liability, Tax, Encumbrance or other cost or expense;

“Material Adverse Effect” means any event, change, circumstance, effect or other matter that has, or could reasonably be expected to have, either individually or in the aggregate with all

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other events, changes, circumstances, effects or other matters, with or without notice, lapse of time or both, a material adverse effect on: (a) the business, assets, Liabilities, properties, condition (financial or otherwise), operating results or operations or prospects of the Business taken as a whole; or (b) the ability of the Seller or any of its respective Affiliates to perform its material obligations under this Agreement, the Ancillary Agreements or to consummate timely the transactions contemplated by this Agreement or the Ancillary Agreements; provided, however, that a “Material Adverse Effect” shall exclude any event, circumstance, change or other matter that generally affects Persons engaged in the business of developing, manufacturing, marketing or selling generic injectable pharmaceutical products, except to the extent such event, circumstance, change or other matter has a materially disproportionate effect on the Business, taken as a whole, relative to other businesses engaged in the generic injectable pharmaceutical business;

“NCE’s” and/or “NBE’s” means a pharmaceutical product containing (a) a new, novel and innovator chemical compound (“NCE”) or (b) a new, novel and innovator biological substance derived from a living organism or a DNA or RNA mechanism (“NBE”), in each case, (a) and (b), (i) in any therapeutic class and for all human and animal prophylactic and therapeutic uses in all formulations and dosage forms and for any and all indications, (ii) which have not been developed as of the Closing Date and which could not be commercialized in the United States without first filing a New Drug Application (“NDA”) or a new therapeutic Biologic License Application (“BLA”), as the case may be, and obtaining the approval of the FDA to such NDA or BLA, as the case may be, and (iii) which upon obtaining such approval of the FDA to such NDA or BLA, as the case may be, has been granted, or could reasonably be expected to be granted, at least 3 (three) years of data or market exclusivity from the appropriate Governmental Authority.

“NPNC” means non-penicillin, non-cephalosporin;

“Occupational Safety and Health Law” means any Law designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (such as those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions;

“Oral Ceph Contract Manufacturing Agreement” means the Oral Ceph Contract Manufacturing Agreement for the manufacture of the Seller’s oral cephalosporin formulation products utilizing the Transferred Assets of the Business, to be entered into by and between the Purchaser and the Seller at the Closing in the form of Exhibit B;

“Ordinary Course of Business” means the usual, regular and ordinary course of business of the Business, consistent with Seller’s past custom and practice, but only to the extent consistent with applicable Law; provided that a series of related transactions which taken together is not in the Ordinary Course of Business shall not be deemed to be in the Ordinary Course of Business;

“Other Businesses” means all businesses conducted as of the Effective Date by the Seller and its Affiliates (other than the Business), including (i) the business of researching, developing, testing, manufacturing, selling, marketing and distributing API, (ii) the business of researching, developing, testing, manufacturing, selling, marketing and distributing oral pharmaceutical products anywhere in the world, (iii) the business of performing drug discovery, research,

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development work and/or manufacturing for Seller’s own requirements or a third party’s requirements with respect to NCE’s and/or NBE’s, and (iv) the business of (1) purchasing generic injectable pharmaceutical products from one or more third parties for resale in the Excluded Countries and India pursuant to a supply agreement or toll manufacturing agreement and (2) selling, marketing or distributing such generic injectable pharmaceutical products in the Excluded Countries and India;

“Owned Business Real Property” means any Real Property in which the Seller or any Affiliate of the Seller has a freehold title (or equivalent) interest;

“Parties” means collectively the Seller, the Purchaser and, solely for the purposes of Clause 8.6.1 through and including Clause 8.6.4, KRR, and “Party” means each of them individually;

“Permitted Encumbrances” means (a) Encumbrances for Taxes not yet due and payable, or being contested in good faith, and for which appropriate reserves have been established in the Balance Sheet or since the date of the Balance Sheet, have been incurred in the Ordinary Course of Business, (b) Encumbrances in respect of property or assets imposed by Law that were incurred in the Ordinary Course of Business, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar liens, (c) with respect to the Real Property, (i) reciprocal easement agreements, utility easements and other customary encumbrances on title, and (ii) zoning, ordinances, building codes, regulations and enactments of any Governmental Authority having jurisdiction over the Real Property; provided, that such matters described in clauses (i) and (ii) do not, individually or in the aggregate, materially impair the present use of the Real Property in the operation of the Business or the value of the Real Property, affected thereby and (d) Encumbrances set forth on Schedule 1.1(b).

“Person” means any natural person, firm, corporation, limited company, private limited company, limited liability company, Governmental Authority, joint venture, general or limited partnership, trust, association or other entity (whether or not having separate legal personality);

“Pip-Tazo Litigation” means the Proceeding in the matter of Wyeth Pharmaceuticals Plaintiff, U.S. Food and Drug Administration et al., Defendant; and Orchid Chemicals & Pharmaceuticals Ltd., and Apotex Corp., Interventors , Case No. 1:09-cv-1810 filed in the United States District Court of the District of Columbia pursuant to which Wyeth Pharmaceuticals is seeking an order to withdraw or suspend the approval of the ANDAs granted to the Seller for a generic form of Wyeth’s piperacillin-tazobactam injections or to modify such ANDA and any appeals with respect to such remedies;

“Proceeding” means any action, arbitration, audit, examination, investigation, hearing, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, and whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator;

“Planning and Zoning Laws” means all Laws intended to control or regulate the construction, demolition, alteration or use of land or buildings or to preserve or protect national heritage;

“Prime Rate” means a rate per annum equal to Twelve Month LIBOR plus two percent (2%), as set by the British Bankers Association;

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[***] Indicates that text has been omitted which is the subject of a confidential treatment request. This text has been separately filed with the SEC.

“Product Laws” means any Laws related to the manufacture, research, sales, marketing, development or distribution of the products of the Business, including the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945, the Standard Weights and Measures Act, 1976 and Bureau of Indian Standards Act, 1986 (or similar Laws in other countries);

“Real Property” means all land and all buildings and other structures, facilities or Improvements located thereon, capital work in progress and all easements, licenses, rights and appurtenances relating to the foregoing;

“Registrations” means the authorizations, approvals, licenses, permits, certificates, or exemptions issued by any Governmental Authority (including investigational new drug applications (INDs), new drug applications (NDAs), supplemental new drug applications, abbreviated new drug applications (ANDAs), pre-market approval applications, 510(k) notifications, pre-market notifications, investigational device exemptions, product recertifications, manufacturing approvals and authorizations, the European Union Conformity Marketing (CE Marks) issued by the European Notified Body, pricing and reimbursement approvals, labeling approvals or their foreign equivalent) held by the Seller or its Affiliates immediately prior to the Closing that are (i) specific to Persons engaged in the business of developing, manufacturing, marketing or selling generic injectable pharmaceutical products and (ii) required for the research, development, clinical testing, manufacture, sale, marketing, distribution, storing, transportation, importation, exportation or use of the products of the Business as currently conducted;

“Relative” shall bear the meaning assigned to the term in the Act;

“Related Party” in relation to a Person includes: (i) any company under the same management (as defined by Section 370(1B) of the Act) of such Person; (ii) any Controlling shareholder of such Person, (iii) any director of such Person, (iv) any officer of such Person, (v) any Person in which any Controlling shareholder, director or officer of such Person has any interest, other than a passive shareholding of less than 5% in a publicly listed company, (vi) any firm or unlisted company in which such Person, is a partner, Controlling shareholder or director, and (vii) any other Affiliate of such Person or of a Controlling shareholder or director of such Affiliate;

“Rupees”, “Rs” or “INR” means Indian rupees, the lawful currency of India;

“Seller Mixed-Use Intellectual Property” means all Intellectual Property that is not included in the Purchased Intellectual Property and that is used in connection with, or related to, both the Business and the Other Businesses and is owned by or licensed to the Seller or its Affiliates at the Closing, in each case as is set forth on Schedule 1.1(c);

“SEZ” means the special economic zone in Visakhapatnam, India;

“Software” means all computer software (including source and object code) and other applications on all hardware (including the distributed control system), firmware, development tools, algorithms, files, records, technical drawings and related documentation, data and manuals, together with proof of ownership;

“Tax” means: (a) any and all taxes, duties, imposts, levies, premiums, impositions, transfer charges, cess, surcharge, charges in the nature of tax and any fine, cost, penalty or interest

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connected therewith, including corporate tax, income tax, dividend distribution tax, interest tax, withholding taxes, capital gains tax, value added tax, gift tax, wealth tax, sales tax, service tax, stamp duty, registration fees, foreign travel tax, octroi, turnover tax, excise duty, customs duty, import duty, development cess, rates, property tax or other tax of whatever kind (including any fee, assessment or other charges in the nature of or in lieu of any tax) that is imposed by any Governmental Authority; (b) any interest, fines, penalties or additions resulting from, attributable to, or incurred in connection with any items described in this paragraph or any related contest or dispute; and (c) any items described in this paragraph that are attributable to another Person but that the Seller is liable to pay and/or withhold by Law, by Contract or otherwise, whether or not disputed;

“Tax Act” means the (Indian) Income Tax Act, 1961;

“Tax Return” means any report, return, declaration, claim for refund, or information return or statement related to Taxes, including any schedule or attachment thereto, and including any amendment thereof;

“Trademarks” means all trade dress and trade names, logos, trademarks and service marks and related registrations and applications, including any intent to use applications, supplemental registrations and any renewals or extensions, all other indicia of commercial source or origin and all goodwill associated with any of the foregoing; and

“Transfer Taxes” means any and all Taxes relating to or arising on the transfer of the Transferred Assets of the Business, including stamp duty, registration charges, notarial fees and all applicable indirect Taxes and related amounts (including any penalties, interest and additions to Transfer Taxes).

1.2Additional Defined Terms

For purposes of this Agreement, the following terms have the meanings specified in the indicated Clause of this Agreement:

Defined Term	Clause
Accounting Firm	3.2.4
Acquired Business	8.6.5
Acquired Competing Business	8.6.5
Additional Due Diligence	6.1.1
Agreement	Preamble
API Exclusivity Period	8.20.1
[                 *                 *             *            ]	[***]
[                 *                 *               *                 ]	[***]
[                 *                 *             *            ]	[***]
Assumed Liabilities	2.3
Balance Sheet	9.4.1(a)
Beta-Lactam API Business	8.20.1
Business Balance Sheet	9.4.1(c)

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Business Employees	9.17.1
Business Employee Plan	9.16.1
Cash Consideration	3.1
Certain Nations	9.21.4
Claim Notice	11.3.1
Closing Date	7.1
Closing Net Working Capital Statement	3.2.2
Competing Acquiring Persons	8.6.1
Confidential Information	13.1
Controlling Party	11.4.3
Deductible	11.6.1
Deeds	7.2.1(c)
Dispute	14.2.1
Dispute Notice	14.2.1
Escrow Amount	7.3
Estimated Net Working Capital	3.2.1
Excluded Assets	2.2
Excluded Liabilities	2.4
Exclusivity Period	8.19.1
Field of Use	8.15.1
Final Statement of Closing Net Working Capital	3.2.5
Financial Statements	9.4.1
Goodwill	2.1.18
Gratuity Fund	4.4.1(c)
Improvements	9.10.6
Indebtedness Contracts	9.14.1
Indemnified Party	11.3.1
Indemnifying Party	11.3.1
Interim Balance Sheet	9.4.1(b)
Interim Business Balance Sheet	9.4.1(d)
Inventory	2.1.1
IP Assignment	7.2.1(b)
KRR	Preamble
Lease Deeds	7.2.1(c)
Material Contracts	9.13.1
Material Purchased Software	9.12.1
Mixed Account	6.8.2
Mixed Contract	6.8.1
NOC	9.10.11
Non-controlling Party	11.4.3
Objection	3.2.3
Objection Notice	11.3.2(b)
Owned Intellectual Property	9.11.1
Promoter Group	Recital C
Proposed Beta-Lactam API Transaction	8.20.1
Proposed Beta-Lactam API Purchase Consideration	8.20.1

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Proposed Beta-Lactam API Transaction Notice	8.20.1
Proposed Transaction	8.19.1
Proposed Transaction Notice	8.19.1
Provident Fund	4.4.1(a)
Purchase Price	3.1
Purchased Intellectual Property	2.1.9
Purchased Software	2.1.11
Purchaser	Preamble
Purchaser Competing Activities	8.6.2
Purchaser Indemnified Parties	11.1
Purchaser Restricted Period	8.6.5
Real Property Permits	9.10.8
Registered Owned Intellectual Property	9.11.6
Release	5.1.10
Representatives	13.1
Research and Development Employees	8.21
Response	3.2.4
Restricted Period	8.6.1
Returns	8.10.1
Seller	Preamble
Seller Competing Activities	8.6.6
Seller Disclosure Schedule	9
Seller Indemnified Parties	11.2
Special Claims	11.4.2
Subsequent Monthly Financial Statements	6.11.1
Superannuation Fund	4.4.1(b)
Third Party Claim	11.4.1
Transferred Assets of the Business	2.1
Transferred Employee	4.1.4
Transferred Employment Liabilities	4.6.1
Transition Services Agreement	8.17
Vaccine Business	8.6.1
Vizag Lease	6.15

1.3Interpretation

1.3.1The terms referred to in this Agreement shall, unless defined otherwise or inconsistent with the context or meaning thereof, bear the meaning ascribed to them under the relevant statute/legislation.

1.3.2Reference to statutory provisions shall be construed as meaning and including references also to any amendment or re-enactment (whether before or after the date of this Agreement) for the time being in force and to all statutory instruments or orders made pursuant to such statutory provisions.

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1.3.3Any reference to a Contract or other document as of a given date means the Contract or other document as amended, supplemented and modified from time to time through such date.

1.3.4Any reference to a document in “Agreed Form” is to a document in a form agreed between the Parties initialed for the purpose of identification by or on behalf of each of them (in each case with such amendments as may be agreed by or on behalf of the Parties).

1.3.5Words denoting the singular shall include the plural and words denoting any gender shall include all genders.

1.3.6Headings, subheadings, titles, subtitles to clauses, subclauses and paragraphs are for information only and shall not form part of the operative provisions of this Agreement or the annexure hereto and shall be ignored in construing the same.

1.3.7The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto) and not to any particular provision of this Agreement, Clause, Schedule and Exhibit references are to the Clauses, Schedules and Exhibits to this Agreement unless otherwise specified.

1.3.8Unless otherwise specified in a particular case, reference to days, months and years are to calendar days, calendar months and calendar years, respectively.

1.3.9Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day if the last day of such period is not a Business Day; and whenever any payment is to be made or action to be taken under this Agreement is required to be made or taken on a day other than a Business Day, such payment shall be made or action taken on the next Business Day.

1.3.10Words “directly or indirectly” mean directly or indirectly through one or more intermediary persons or through contractual or other legal arrangements, and “direct or indirect” have the correlative meanings.

1.3.11Any reference to “writing” shall include printing, typing, lithography and other means of reproducing words in visible form but shall exclude text messages via mobile phones.

1.3.12The words “include” and “including” are to be construed without limitation unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive.

1.3.13Any use of “material adverse effect” without the use of initial capital letters is an intentional use of such words by the Parties.

1.3.14No provisions shall be interpreted in favour of, or against, any Party by reason of the extent to which such Party or its counsel participated in the drafting hereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof.

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1.3.15If there is any conflict or inconsistency between a term in the body of this Agreement and a term in any of the schedules or any Ancillary Agreement, the term in the body of this Agreement shall take precedence. References herein to this Agreement or any Ancillary Agreement shall be deemed to refer to this Agreement or such Ancillary Agreement as of the date of such agreement and as it may be amended thereafter, unless otherwise specified.

1.3.16Wherever used herein, the words “Seller” and “Purchaser” include their respective Affiliates whenever the context requires or to the extent applicable.

2AGREEMENT TO SELL AND PURCHASE TRANSFERRED ASSETS OF THE BUSINESS

2.1Transfer of the Transferred Assets of the Business

Subject to the terms and conditions of this Agreement, at the Closing, the Seller shall sell, convey, assign, transfer and deliver, or cause its Affiliates to sell, convey, assign, transfer and deliver to, the Purchaser or one or more of its Affiliates, free and clear of all Encumbrances (other than Permitted Encumbrances), and the Purchaser or one or more of its Affiliates shall purchase and acquire: (a) the Leased Business Real Property; and (b) all of the assets, rights and properties of the Seller and its Affiliates, located anywhere in the world (except for (i) those held by the Affiliates of the Seller in the Excluded Countries, (ii) other than as set forth in Clause 2.1.7, those held by the Affiliates of the Seller in the United States, the United Kingdom, South Africa, China and Japan and (iii) the contracts, assets and properties related to the Business in India which are expressly listed in Schedule 2.2.9), whether tangible or intangible, real, personal or mixed, related to the Business (except as otherwise expressly set forth below or otherwise in this Agreement or the Ancillary Agreements) ((a) and (b), collectively, the “Transferred Assets of the Business”), including the following:

2.1.1(a) all inventories used in, held for use in, or related to the Business, wherever located, including all semi-finished and finished goods, work in process, raw materials, samples, packaging materials and all other materials and supplies to be used in the production of finished goods and (b) any Finished API (the “Inventory”);

2.1.2except as expressly set forth in Clause 2.2.3, all third party Accounts Receivable of the Business,

[***]

2.1.3all rights in and to products under research and development as part of, or contemplated to be a part of, the Business;

2.1.4except as expressly set forth in Clause 2.2.2, all furniture, fixtures, office equipment, laboratory equipment, all other moveable assets, properties, resources, facilities, utilities and services, including machinery, equipment, systems, implements, apparatus, instruments, mechanical and spare parts, tools, tooling, dyes, production supplies, storage tanks, pipes and fittings, utilities, vehicles, utensils, communication facilities and capital work-in-progress, training materials and equipment, supplies, owned and leased

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motor vehicles, mobile phones and personal digital assistants used by the Transferred Employees, and other tangible property of any kind located at the Leased Business Real Property;

2.1.5all furniture, fixtures, office equipment, laboratory equipment, all other moveable assets, properties, resources, facilities, utilities and services, including machinery, equipment, systems, implements, apparatus, instruments, mechanical and spare parts, tools, tooling, dyes, production supplies, storage tanks, pipes and fittings, utilities, vehicles, utensils. communication facilities and capital work-in-progress, training materials and equipment, supplies, owned and leased motor vehicles, mobile phones and personal digital assistants used by the Transferred Employees, and other tangible property of any kind, in each case that are not located at the Leased Business Real Property and are primarily related to the Business;

2.1.6subject to Clause 6.8, and except as set forth in Clause 2.2, all rights under all Contracts to the extent used in the Business, including those listed on Schedule 2.1.6;

2.1.7except as otherwise expressly provided in Clause 2.2.8 and Schedule 2.2.9, the Registrations to the extent used in, or related to, the Business (including the Registrations held by the Affiliates of Seller in the United States, the United Kingdom, South Africa and, if applicable, Japan and China to the extent used in, or related to, the Business) supported by and including: (a) the original documents and all related data, records, and correspondence under the possession of the Seller or its Affiliates (or that are accessible to the Seller or its Affiliates using commercially reasonable efforts) evidencing the Registrations issued to the Seller or its Affiliates by a Governmental Authority in any country of the world, in each case to the extent assignable with or without the Consent of the issuing Governmental Authority; and (b) all related Registration applications, clinical research and trial agreements, data results and records of clinical trials and marketing research, design history files, technical files, drawings, manufacturing, packaging and labeling specifications, validation documentation, packaging specifications, quality control standards and other documentation, research tools, laboratory notebooks, files and correspondence with regulatory agencies and quality reports, and all relevant pricing information and correspondence with Governmental Authorities with respect to such pricing matters;

2.1.8subject to Clause 8.14, all product labeling, advertising, marketing and promotional materials and all other printed or written materials used primarily in connection with, or related primarily to, the Business;

2.1.9subject to Clause 8.14, all Intellectual Property that is used primarily in connection with, or related primarily to, the Business and is owned by or licensed to the Seller or its Affiliates at the Closing (collectively, the “Purchased Intellectual Property”), and all other intangible rights in the Business;

2.1.10the rights granted to Purchaser and its Affiliates to the Seller Mixed-Use Intellectual Property pursuant to Clause 8.15;

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2.1.11all Software owned, created, acquired, licensed to or used primarily in the Business by the Seller or its Affiliates at any time prior to and through the Closing (the “Purchased Software”);

2.1.12all Governmental Authorizations primarily related to the Business or any Transferred Asset of the Business or required for the ownership or use of any Transferred Asset of the Business or the operation of the Business;

2.1.13all books, records, files, studies, manuals, reports and other materials (in any form or medium) used in or related to the Business, including all catalogues, price lists, mailing lists, distribution lists, client and customer lists, referral sources, supplier and vendor lists, purchase orders, sales and purchase invoices, correspondence, clinical data and protocols, production data, purchasing materials and records, research and development files, records, data books, Intellectual Property disclosures and records, manufacturing and quality control records and procedures, product shipping or storing requirements, service and warranty records, equipment logs, operating guides and manuals, product specifications, product processes, engineering specifications, financial and accounting records, litigation files, personnel and employee benefits records to the extent transferable under applicable Law, and copies of all other personnel records of the Transferred Employees to the extent the Seller is legally permitted to provide copies of such records to the Purchaser (provided that (i) if foregoing is related to both the Business and the Other Businesses, the Seller shall be entitled to maintain copies of such materials or (ii) if the foregoing is solely related to the Business, the Seller may request to maintain copies of such materials, such request not to be unreasonably denied by the Purchaser);

2.1.14all claims, rights, credits, causes of actions, defenses and rights of set-off of any kind (including the right to sue for past, present or future infringement, misappropriation or dilution of any Purchased Intellectual Property or, to the extent related to the Business, the Seller Mixed-Use Intellectual Property), in each case to the extent arising from, or related to, the Business or any of the Transferred Assets of the Business or Assumed Liabilities, in each case, whether accruing before or after the Closing, and including all attorney work-product protections, attorney-client privileges and other legal protections and privileges to which the Seller or its Affiliates may be entitled in connection with the Business or any of the Transferred Assets of the Business or Assumed Liabilities that are not excluded under Clause 2.2.14 or Clause 2.2.15;

2.1.15all claims or benefits in, to or under any express or implied warranties from suppliers of goods or services relating to Inventory sold or delivered to the Seller or any of its Affiliates prior to the Closing;

2.1.16copies of Tax Returns; provided, however, that the Seller may redact any information to the extent used in, or related to, the Excluded Assets or the Other Businesses from Tax Returns conveyed pursuant to this Clause 2.1.16; provided, further, that such redaction shall not impair any information related to the Business contained in such Tax Returns;

2.1.17all rights relating to deposits and prepaid expenses of the Business, claims for refunds and rights of offset of the Business that are not excluded under Clause 2.2.14 or Clause 2.2.15;

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2.1.18the goodwill of the Seller and its Affiliates associated with the Business and the Transferred Assets of the Business (the “Goodwill”); and

2.1.19all rights of the Purchaser and its Affiliates arising under this Agreement, the Ancillary Agreements or from the consummation of the transactions contemplated hereby or thereby.

Notwithstanding the foregoing, the transfer of the Transferred Assets of the Business as a going concern on a slump sale basis pursuant to this Agreement does not include the assumption of any Liability related to the Transferred Assets of the Business and/or the Business unless the Purchaser or one or more of its Affiliates expressly assumes that Liability pursuant to Clause 2.3.

2.2Excluded Assets

Notwithstanding anything to the contrary in Clause 2.1 or elsewhere in this Agreement, the following assets of the Seller (collectively, the “Excluded Assets”) are excluded from the Transferred Assets of the Business, and are to be retained by the Seller as of the Closing:

2.2.1all cash, cash equivalents and liquid investments of the Seller and its Affiliates;

2.2.2all furniture, fixtures, office equipment, laboratory equipment, all other moveable assets, properties, resources, facilities, utilities and services, including machinery, equipment, systems, implements, apparatus, instruments, mechanical and spare parts, tools, tooling, dyes, production supplies, storage tanks, pipes and fittings, utilities, vehicles, utensils, communication facilities and capital work-in-progress, training materials and equipment, supplies, owned and leased motor vehicles, mobile phones and personal digital assistants, and other tangible property of any kind which are located at the Leased Business Real Property and could be used solely for research and development of oral pharmaceutical products;

2.2.3

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2.2.4all intercompany Accounts Receivable;

2.2.5the Corporate Name;

2.2.6except for the Leased Business Real Property, any Real Property owned or leased or subleased by the Seller or its Affiliates, as tenant;

2.2.7all raw materials and work in process used for the manufacture of Finished API for use in the manufacture of generic injectable pharmaceutical products;

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2.2.8any Registrations solely related to the selling, marketing or distribution of the products of the Business in the Excluded Countries;

2.2.9those Contracts, assets, rights and properties related to the selling, marketing or distribution of the products of the Business in India expressly set forth on Schedule 2.2.9;

2.2.10other than as set forth in Clause 2.1.7, those assets and properties held by the Affiliates of the Seller in the United States, the United Kingdom, South Africa, China and Japan;

2.2.11original copies of all minute books, records, stock ledgers, Tax records and other materials that the Seller is required by Law to retain;

2.2.12the shares of the share capital stock of the Seller or any of its Affiliates held in treasury;

2.2.13all certificates for insurance, binders for insurance policies and insurance, and claims and rights thereunder and proceeds thereof;

2.2.14all claims for refund of Taxes and other governmental charges of whatever nature arising out of the Seller’s operation of the Business or ownership of the Transferred Assets of the Business prior to the Closing;

2.2.15all rights, title and interest of the Seller and its Affiliates to assets used in connection with the Other Businesses, except to the extent that such assets are included in the Transferred Assets of the Business;

2.2.16all intercompany Contracts between the Seller and any of its Affiliates or between one Affiliate of the Seller and another Affiliate of the Seller;

2.2.17all claims, rights, credits, causes of actions, defenses and rights of set-off of any kind, in each case to the extent arising from, or related to, the Excluded Assets or the Excluded Liabilities before or after the Closing, and including all attorney work-product protections, attorney-client privileges and other legal protections and privileges to which the Seller or its Affiliates may be entitled in connection with the Excluded Assets or the Excluded Liabilities; and

2.2.18all rights of the Seller and its Affiliates arising under this Agreement, the Ancillary Agreements or from the consummation of the transactions contemplated hereby or thereby.

2.3Assumed Liabilities

Subject to the terms and conditions of this Agreement, at the Closing, the Purchaser shall assume and pay or perform when due only the following Liabilities to the extent relating to the Business (collectively, the “Assumed Liabilities”):

2.3.1all trade accounts payable to third party creditors of the Business for goods and services purchased, ordered or received by the Business and which are reflected in line items on the Interim Business Balance Sheet or incurred by the Seller in the Ordinary Course of Business and in accordance with the provisions of this Agreement, including Clause 6.2,

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between the date of the Interim Business Balance Sheet and the Closing (other than trade accounts payable to any shareholder or any Affiliates of the Seller), in each case that are not delinquent as of the Closing;

2.3.2all Liabilities of the Seller or its Affiliates arising after the Closing under the Contracts included in the Transferred Assets of the Business or that are entered into by the Seller after the date of this Agreement in accordance with Clause 6.2;

2.3.3all Liabilities assumed by the Purchaser under Clause 6.8 relating to Mixed Contracts and Mixed Accounts;

2.3.4the Transferred Employment Liabilities;

2.3.5all Liabilities arising out of, relating to or incurred in connection with the operation of the Business or the ownership of the Transferred Assets of the Business after the Closing;

2.3.6all Liabilities described on Schedule 2.3.6;

2.3.7Liabilities arising from product liability, warranty or similar claims by any Person in connection with any finished product of the Business manufactured after the Closing; and

2.3.8all Liabilities arising out of, relating to, or incurred in connection with the Pip-Tazo Litigation before, on or after the Closing (other than any attorney fees and other costs and expenses of the Seller arising on or before the Closing).

2.4Excluded Liabilities

Notwithstanding any other provision of this Agreement or any other writing to the contrary, and regardless of any information disclosed to the Purchaser, the Purchaser does not assume and has no responsibility for any Liabilities of the Seller or any of its Affiliates (whether or not related to the Business) other than the Assumed Liabilities specifically listed in Clause 2.3 (such unassumed Liabilities, the “Excluded Liabilities”). Without limiting the preceding sentence, the following is a non-exclusive list of Excluded Liabilities that the Purchaser does not assume and that the Seller and its Affiliates shall remain bound by and liable for, and shall pay, discharge or perform when due:

2.4.1all Liabilities arising out of or relating to any Excluded Asset;

2.4.2all Liabilities under any Contract not assumed by the Purchaser under Clause 2.1.6, including any Liability arising out of or relating to the Seller’s or its Affiliates’ credit facilities, the Indebtedness Contracts or any security interest related thereto;

2.4.3except for Liabilities arising from warranties provided by the Purchaser or arising as a result of any mishandling of product of the Business after such product has been accepted for delivery by the Purchaser, all Liabilities arising from product liability, warranty or similar claims by any Person in connection with any finished product of the Business manufactured on or prior to the Closing;

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2.4.4all Liabilities arising out of or relating to Indebtedness incurred by the Seller or its Affiliates;

2.4.5except as provided in Clause 8.1.1 and except for any apportionment provided for in this Agreement, all Liabilities for Taxes arising as a result of the operation of the Business or ownership of the Transferred Assets of the Business on or prior to the Closing, including any Taxes that arise as a result of the sale of the Transferred Assets of the Business pursuant to this Agreement and any deferred Taxes of any nature;

2.4.6all Liabilities arising from or under any Environmental Law or Occupational Safety and Health Law based upon the operation of, relating to, or arising out of acts, omissions or events occurring in connection with, the Business on or prior to the Closing or the Seller’s or its Affiliates’ leasing, ownership, occupation or operation of any Real Property;

2.4.7all Liabilities arising under claims by or with respect to employees of the Seller or its Affiliates (whether current employees or related to the former employment by the Seller or its Affiliates) relating in any way to wages, salaries, remuneration, compensation, allowances, bonuses, ex-gratia payments, reimbursements, service benefits, benefits (including workers’ compensation and unemployment benefits) and all other entitlements and all Tax deductions and other contributions relating to the foregoing, termination or continuation of its employment, or lack or delay of any notice relating to its employment, in all cases relating to the period on or prior to the Closing, except to the extent of any Transferred Employment Liabilities which are being deducted from the Cash Consideration under Clause 3.1 hereof;

2.4.8all Liabilities arising under any claim by or with respect to any employees of the Seller or its Affiliates for any severance, redundancy, retrenchment or similar termination payments or benefits (including payments for or in respect to the resignation of a Business Employee on or prior to the Closing) that may become payable to any employees of the Seller or its Affiliates in connection with the transactions contemplated by this Agreement and the Ancillary Agreements, in all cases relating to the period on or prior to the Closing;

2.4.9all Liabilities arising under or in connection with the Employee Plans (including the Business Employee Plans), or any termination, continuation, amendment or other acts or omissions in connection with the Employee Plans (including the Business Employee Plans), in all cases relating to the period on or prior to the Closing, except to the extent of any Transferred Employment Liabilities which are being deducted from the Cash Consideration under Clause 3.1 hereof;

2.4.10all Liabilities arising under claims by or with respect to any officer, director, employee or agent of the Seller and its Affiliates for indemnification, reimbursement or advancement of amounts during their term of office, directorship, employment or agency with the Seller or its Affiliates, except to the extent of any Transferred Employment Liabilities which are being deducted from the Cash Consideration under Clause 3.1 hereof;

2.4.11all Liabilities arising from any failure to comply with any fraudulent transfer Law in connection with this Agreement or any Ancillary Agreement (whether compliance would

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have been required by the Seller, the Purchaser or some or all of them, by applicable Law);

2.4.12all Liabilities relating to any negotiations, agreements or other transactions, if any, by the Seller and its Affiliates with any third party that relate to the acquisition of the Seller and its Affiliates or any of its respective assets or businesses or any termination of related negotiations or arrangements;

2.4.13all professional, financial advisory, broker, finder or other fees of any kind incurred by the Seller and its Affiliates;

2.4.14other than any Liability assumed by the Purchaser pursuant to Clause 2.3.6, all Liabilities of the Seller and its Affiliates arising out of or incurred in connection with this Agreement, any Ancillary Agreements, the transactions contemplated hereby or thereby, or any other document executed in connection with the transactions contemplated hereby or thereby, including disclosures to or negotiations with creditors or shareholders by Seller and its Affiliates, solicitations of proxies or written Consents from any Persons, or other legal obligations of the Seller and its Affiliates;

2.4.15all Liabilities of the Seller and its Affiliates arising out of acts, omissions or events, or relating to, or occurring in connection with, the Other Businesses;

2.4.16all Liabilities of the Seller and its Affiliates with respect to the corporate services or activities of the Seller and its Affiliates used by or made available to the Business; and

2.4.17all other Liabilities arising out of acts, omissions or events, or relating to, or occurring in connection with, the operation of the Business or the Transferred Assets of the Business or otherwise on or prior to the completion of the Closing, except as expressly provided for under Clause 2.3 hereof.

3PURCHASE PRICE

3.1Consideration

The cash consideration for the Transferred Assets of the Business, exclusive of all applicable Transfer Taxes resulting from the transfer of the Transferred Assets of the Business, is USD 400,000,000 (United States Dollar Four Hundred Million) (the “Cash Consideration”), subject to adjustment in accordance with Clause 3.2. At the Closing, the Purchaser shall assume the Assumed Liabilities. The Cash Consideration as adjusted pursuant to Clause 3.2, Clause 6.15, Clause 8.10 and Clause 11.7, and the Assumed Liabilities are collectively referred to herein as the “Purchase Price.”

3.2Adjustment of Cash Consideration

3.2.1At least 5 (five) Business Days but no more than 10 (ten) days prior to the Closing Date, the Seller shall provide to the Purchaser a certificate setting forth a good faith estimate as of the close of business on the day immediately prior to the Closing Date of the Closing Net Working Capital (the “Estimated Net Working Capital”) showing the Seller’s calculation in reasonable detail, which calculation of the Estimated Net Working Capital shall be in accordance with GAAP applied on a basis consistent with the Financial

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Statements and shall include only those Accounts Receivable included in Clause 2.1.2 that have remained outstanding as of the Closing Date for less than 180 (one hundred eighty days).  If the Estimated Net Working Capital is greater than the Benchmark Net Working Capital, the difference between the Estimated Net Working Capital and the Benchmark Net Working Capital shall be added to the Cash Consideration paid at the Closing.  If the Benchmark Net Working Capital is greater than the Estimated Net Working Capital, the difference between the Benchmark Net Working Capital and the Estimated Net Working Capital shall be deducted from the Cash Consideration paid at the Closing.

3.2.2Not earlier than 185 (one hundred eighty five) days and no later than 210 (two hundred ten) days after the Closing Date, the Purchaser shall prepare, in cooperation with the Seller and its representatives, and shall deliver to the Seller a calculation of the Closing Net Working Capital together with reasonably supporting documentation (the “Closing Net Working Capital Statement”). The Closing Net Working Capital Statement shall be prepared on a combined basis in accordance with GAAP applied on a basis consistent with the Financial Statements.  The Closing Net Working Capital Statement shall include only:

(a) as current assets: (i) except for any [        *        *        *        ] all other third party Accounts Receivable which are collected by the Purchaser within 180 (one hundred eighty) days following the Closing Date (it being agreed and understood that the Purchaser shall deliver to the Seller the amount of any proceeds from any such other third party Accounts Receivable that are collected by the Purchaser after 180 (one hundred eighty) days following the Closing Date and not in the calculation contained in the Final Statement of Closing Net Working Capital), (ii) Inventory and (iii) deposits and prepaid expenses of the Business (other than for Taxes or under insurance policies); and

(b) as current liabilities, trade accounts payable (other than trade accounts payable to any shareholder or any Affiliates of the Seller) that are not delinquent as of the Closing.

3.2.3The Seller shall complete its review of the Closing Net Working Capital Statement within 30 (thirty) days of the Seller’s receipt thereof. In connection with such review, the Seller and its accountants shall be provided with full access to the working papers and other records of the Purchaser and its accountants used in the preparation of the Closing Net Working Capital Statement; provided, however, that the Seller and its accountants have signed any customary release letters requested in connection therewith. If the Seller determines that the Closing Net Working Capital Statement has not been prepared on a basis consistent with the requirements of Clause 3.2.2, the Seller may, on or before the last day of such 30 (thirty) day period, inform the Purchaser in writing (the “Objection”), setting forth a description containing reasonable detail of the basis of the Seller’s objection, the adjustments to the Closing Net Working Capital Statement which the Seller believes should be made, and the Seller’s calculation of the Closing Net Working Capital. The Seller shall be deemed to have accepted any items not specifically disputed in the Objection. Failure by the Seller to deliver an Objection in accordance with this Clause 3.2.3 to the Purchaser shall constitute acceptance and approval by the Seller of the Purchaser’s calculation of the Closing Net Working Capital.

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3.2.4If the Purchaser receives an Objection from the Seller, it shall have 30 (thirty) days following receipt to review and respond in writing to such Objection (the “Response”). During the 20 (twenty) days immediately following a delivery of the Purchaser’s Response, the Seller and the Purchaser shall seek in good faith to resolve in writing any differences which they may have with respect to any matter specified in the Seller’s Objection. If the Seller and the Purchaser are unable to resolve all of such differences within such 20 (twenty) day period, either or both Parties may refer the remaining differences to KPMG LLP or another internationally or nationally recognized firm of independent public accountants as to which the Seller and the Purchaser mutually agree in writing (the “Accounting Firm”) for review and resolution of all matters which remain in dispute and which were indicated in the Seller’s Objection. The Accounting Firm shall act as an expert in accounting and not as an arbitrator and shall determine on a basis consistent with the requirements set forth in Clause 3.2.2, and only with respect to the specific remaining accounting related differences so submitted, whether and to what extent, if any, the Closing Net Working Capital Statement requires any adjustments. The Seller and the Purchaser shall request the Accounting Firm to use its reasonable best efforts to render its determination within 30 (thirty) days. The Accounting Firm’s determination shall be conclusive and binding upon the Seller and the Purchaser. Subject to the execution of a confidentiality agreement by the Accounting Firm on terms and conditions reasonably acceptable to the Parties, the Seller and the Purchaser shall make available to the Accounting Firm all relevant personnel, books and records, any working papers (including those of the Parties’ respective accountants) and supporting documentation relating to the Closing Net Working Capital Statement and all other items and support reasonably requested by the Accounting Firm. The fees and expenses of the Accounting Firm shall be shared equally between the Seller and the Purchaser.

3.2.5The “Final Statement of Closing Net Working Capital” shall be the calculation of the Closing Net Working Capital contained: (a) in the Closing Net Working Capital Statement in the event that, (i) no Objection is delivered by the Seller to the Purchaser within the 30 (thirty) day period specified in Clause 3.2.3, or (ii) the Seller and the Purchaser so agree, (b) in the Closing Net Working Capital Statement, as adjusted in accordance with the Seller’s Objection, in the event that (i) the Purchaser does not deliver a Response to the Seller’s Objection during the 30 (thirty) day period specified in Clause 3.2.4 following receipt by the Purchaser of the Seller Objection, or (ii) the Seller and the Purchaser so agree, or (c) in the Closing Net Working Capital Statement, as adjusted pursuant to the mutual agreement of the Purchaser and the Seller, or as adjusted by the Accounting Firm, together with any other modifications to the Closing Net Working Capital Statement mutually agreed upon by the Purchaser and the Seller.

3.2.6If the calculation of the amount of the Closing Net Working Capital contained in the Final Statement of Closing Net Working Capital is less than the Estimated Net Working Capital, the Seller shall pay to the Purchaser an amount in cash in Rupees equal to the amount of such deficiency plus interest on the amount paid computed at the Prime Rate for the period from the Closing Date to the date of such payment. If, by contrast, the calculation of the Closing Net Working Capital contained in the Final Statement of Closing Net Working Capital is greater than the Estimated Net Working Capital, the Purchaser shall pay to the Seller an amount in cash in Rupees equal to the amount of such deficiency plus interest on the amount paid computed at the Prime Rate for the

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period from the Closing Date to the date of such payment. All payments made pursuant to this Clause 3.2.6 shall be made to the applicable Party by means of a wire transfer of immediately available funds in Rupees within 3 (three) Business Days after the ultimate determination of the Final Statement of Closing Net Working Capital as provided in this Clause 3.2.

3.2.7The Parties agree to treat any amounts payable pursuant to this Section 3.2 as an adjustment to the Cash Consideration.

3.3Tax Treatment of Allocation of Cash Consideration

The Seller and the Purchaser shall sign and submit all necessary forms to report the transactions contemplated by this Agreement for federal, national, regional, state, local, county, city, municipal, town, village, district, foreign or other income Tax purposes consistent with the allocation of the Cash Consideration delivered by the Purchaser to the Seller between the Effective Date and the Closing (which allocation shall be attached as Schedule 3.3), any allocation schedule set forth in an Ancillary Agreement and any adjustments to such amounts or allocation schedules following the Closing (including as required by Clause 3.2) and shall not take a position for Tax purposes inconsistent therewith. The Parties shall treat the transactions contemplated by this Agreement in all filings with Governmental Authorities for all Tax purposes (including consumption Taxes) consistent with the amount of the Cash Consideration to be paid to the Seller in accordance with Clause 7.2.2, any allocation schedule set forth in an Ancillary Agreement and this Clause 3.3.

4EMPLOYEES AND EMPLOYEE BENEFIT FUNDS

4.1Transfer of Employment

4.1.1Prior to and on the Closing Date, as periodically requested by the Purchaser, the Seller shall provide an updated list of the Business Employees and contract labourers set forth on Clause 9.17.1(a) of the Seller Disclosure Schedule. The list of Business Employees and contract labourers set forth on Clause 9.17.1(a) of the Seller Disclosure Schedule shall be updated prior to the Closing Date to additionally include or delete any Persons as may be mutually agreed in writing by the Seller and the Purchaser.

4.1.2No later than thirty (30) days prior to the estimated date for the Closing, the Purchaser shall make an offer of employment effective as of the Closing Date to each Business Employee, on terms and conditions that are no less favourable on an aggregate basis to those paid or provided to each such Business Employee prior to the Closing.

4.1.3The Seller shall use all commercially reasonable efforts to cause all Business Employees to accept employment with the Purchaser. Subject to applicable Law, the Purchaser shall have reasonable access to the facilities and personnel records (to the extent available) (including employee name, date of birth, hire date, compensation (base, bonus, incentives and allowances), employment and compensation history, participation status in benefit plans, dependents covered, beneficiaries, performance appraisals, disciplinary actions, grievances and medical records occupational health and safety records and any other employee specific information as would be needed to administer

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payroll, employee benefits, polices and other programs) of the Seller. Access shall be provided by the Seller as may be reasonably requested by the Purchaser.

4.1.4At the Closing, the Purchaser shall provide the Seller with a list of the Business Employees to whom it has made an offer of employment who has accepted such offer of employment effective as of the Closing Date (each such Business Employee, a “Transferred Employee” and collectively, the “Transferred Employees”). On the Closing Date the Seller shall notify the Transferred Employees of the termination of their employment with the Seller, such termination effective immediately prior to the Closing.

4.2Prior Service

To the extent required by applicable Law, the Transferred Employees shall be deemed to have been in the employment of the Purchaser from the date of their commencement of employment with the Seller.

4.3Accrued Vacation

The Seller shall pay out to each Transferred Employee on the Closing Date, at the Purchaser’s election, all or part of the accrued and unused vacation entitlement and any personal and sickness days accrued by such Transferred Employee as of the Closing Date; provided, however, that if any Transferred Employee elects not to accept any such amounts, then the Purchaser shall credit each Transferred Employee with the accrued and unused vacation entitlement and any personal and sick days accrued by such Transferred Employee as of the Closing Date and the amount of such Liability shall be included as a Transferred Employment Liability.

4.4Benefit Plans

4.4.1The Seller has established the following funds to provide for the payment of retirement benefits and gratuity benefits to the Business Employees:

4.4.1(a)a contributory provident fund, in accordance with applicable Laws to provide for the payment of provident fund benefits to the Business Employees and other employees (the “Provident Fund”);

4.4.1(b)a superannuation fund pursuant to the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 to provide for the payment of superannuation benefits to its Business Employees and other employees who are covered under such scheme (the “Superannuation Fund”); and

4.4.1(c)a gratuity fund pursuant to the Payment of Gratuity Act, 1972, for the payment of gratuity benefits to its Business Employees and other employees (the “Gratuity Fund”).

4.4.2Prior to the Closing Date, the Seller shall make all contributions required to be made to any Business Employee Plan by applicable Law and the terms of such Business Employee Plan, and shall pay all premiums due or payable with respect to all Business Employee Plans so as to ensure that all the Business Employee Plans are fully funded as of the

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Closing and no payment, contribution or premium is required to be paid with respect to the said Business Employee Plans for the period prior to the Closing.

4.4.3The Seller and its Affiliates shall provide the statutory auditor of the Seller with all reasonable documentation and information requested by the statutory auditor in the preparation of the certificate required pursuant to Clause 7.2.1(k). The Purchaser or any representative or professional advisor of the Purchaser may, at the Purchaser’s sole cost and expense and during normal working hours, examine the work papers and the methodology employed by the statutory auditor of the Seller with respect to the preparation of such certificate.

4.4.4The Seller and its Affiliates shall provide the actuary selected by the Purchaser with all reasonable documentation and information requested by such actuary in the preparation of the actuarial valuation report required pursuant to Clause 7.2.1(l).

4.5Purchaser Plans

4.5.1The Purchaser shall, as soon as reasonably practicable after the Closing Date, at its own cost, establish its own provident fund. The Purchaser shall also, as soon as reasonably practicable following the Closing Date, at its own cost, obtain a new policy from an insurer determined by the Purchaser or its Affiliates for extending superannuation benefits to the Transferred Employees for the period on and from the Closing Date. Until the establishment of such funds, on and following the Closing Date:

4.5.1(a)the Purchaser shall pay or cause to be paid all contributions due and payable on and following the Closing Date in respect of the Provident Fund for the Transferred Employees in accordance with the terms of the Provident Fund until the same are transferred to the provident fund of the Purchaser, provided the same is not prohibited by Law;

4.5.1(b)if the Purchaser is prohibited by Law from making contributions as set forth in Clause 4.5.1, the Seller shall, prior to the Closing Date, advance an amount equal to the contributions payable to the Provident Fund in respect of the Transferred Employees, for a period of 4 (four) months following the Closing Date, as if the Seller continued to employ the Transferred Employees for such period, provided the same is not prohibited by Law. The Purchaser shall reimburse the Seller in respect of such advances within a period of 14 (fourteen) days from the date of the Seller making such advances; and

4.5.1(c)the Purchaser shall, as soon as practicable following the Closing Date, at its own cost, obtain a new policy from an insurer selected by the Purchaser or its Affiliates for extending superannuation benefits to the Transferred Employees for the period on and from the Closing Date.

4.5.2Upon the establishment of the funds as provided in Clause 4.5.1, the Seller shall take all steps as may be necessary to transfer the balances, including interest under each of the Business Employee Plans in respect of the Transferred Employees (which accumulations are held by the trustees of each of the Business Employee Plans) to the funds to be

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established by the Purchaser. The Seller shall provide to the Purchaser all necessary documentation and other information providing the amounts transferred under each such fund for each Transferred Employee.

4.6Closing Transferred Employee Liability

4.6.1At Closing, the Purchaser shall assume and pay or perform when due the Liabilities related to (a) the leave travel assistance, medical reimbursement and accrued bonus, solely as they relate to the Transferred Employees, in the amount for each such Liability included in the certificate of statutory auditor or the actuarial valuation report, as applicable, to be delivered to the Purchaser pursuant to Clause 7.2.1(l) and (b) to the extent any Transferred Employee does not accept encashment for accrued and unused vacation entitlement and any personal and sick days accrued by such Transferred Employee as of the Closing Date, accrued and unused vacation entitlement and any personal and sick days accrued by such Transferred Employee as of the Closing Date (collectively, (a) and (b), the “Transferred Employment Liabilities”). The Seller hereby agrees and acknowledges that the Purchaser shall have the right to deduct and offset at the Closing the amount of the Transferred Employment Liabilities from the Cash Consideration.

5CONDITIONS PRECEDENT

5.1Conditions to the Obligation of the Purchaser

The obligations of the Purchaser to consummate the transactions contemplated by this Agreement are subject to the satisfaction, on or before the Closing Date, of each of the following conditions (any of which may be waived in writing by the Purchaser, in whole or in part):

5.1.1Accuracy of Representations and Warranties. Each of the representations and warranties of Seller contained in Clause 9 that are qualified by materiality shall be true and correct in all respects, and the representations and warranties contained in Clause 9 that are not so qualified shall be true and correct in all material respects, in each case as of the Effective Date and as if made as of the Closing Date;

5.1.2Performance of Covenants. All of the covenants and obligations that the Seller or its Affiliates is required to perform or comply with under this Agreement on or before the Closing Date must have been duly performed and complied with in all material respects;

5.1.3Governmental Authorizations. Each of the Governmental Authorizations listed in Schedule 5.1.3 must have been obtained and must be in full force and effect;

5.1.4Registrations. All of the Registrations listed on Schedule 5.1.4 must have been either: (a) transferred to the Purchaser or its nominee in accordance with applicable Law on their existing terms and conditions; or (b) issued to the Purchaser or its nominee in a form identical to that upon which they had been issued to the Seller.

5.1.5Consent Under Competition / Investment Laws. All applicable waiting periods (and any extensions thereof) under the HSR Act and under the applicable Competition/Investment Laws of the jurisdictions set forth on Schedule 5.1.5 (in accordance with the provisions

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of Clause 6.3.2) must have expired or terminated, and, to the extent the Parties are required to make a filing under the Competition / Investment Laws of India in accordance with the provisions of Clause 6.3.3, all applicable waiting periods (and any extensions thereof) under such Competition / Investment Laws must have expired or otherwise been terminated;

5.1.6Consents. Each of the Consents listed in Schedule 5.1.6 must have been obtained and must be in full force and effect;

5.1.7Shareholder Approval. The Seller shall have secured the approval of the shareholders of the Seller pursuant to Section 293(1)(a) of the Act and all other applicable Laws to effect the transactions contemplated by this Agreement and any applicable Ancillary Agreements to which it is a party (with the notice to the shareholders of the Seller seeking such approval being in an Agreed Form) and such approvals must be in full force and effect;

5.1.8No Action. There must not be in effect, published, introduced or otherwise formally proposed any Law or Judgment, and there must not have been commenced or threatened any Proceeding, that in any case could: (a) prevent, make illegal or restrain the consummation of, or otherwise materially alter, any of the transactions contemplated by this Agreement or any Ancillary Agreement; or (b) cause any of the transactions contemplated by this Agreement or any Ancillary Agreement to be rescinded following consummation of the same; or, as to any Law, prevent, make illegal, restrict, impair or otherwise materially alter the Purchaser’s ability to operate the Business or own the Transferred Assets of the Business following the Closing substantially as the Business has been operated and the assets had been owned prior to the Closing;

5.1.9No Material Adverse Effect. Since the date of this Agreement, there must not have been any Material Adverse Effect;

5.1.10Lender Releases and Consents. Each Person that holds an Encumbrance (other than Permitted Encumbrances) with respect to any Transferred Asset of the Business must have delivered to the Purchaser a release letter in form and substance satisfactory to the Purchaser, providing for the full release of any such Encumbrance (each, a “Release”) and such Releases must be in full force and effect. Each Person that is a party to an Indebtedness Contract that contains a provision pursuant to which the consummation of the transaction contemplated by this Agreement and the Ancillary Agreement would result in a default or an event of default under such Indebtedness Contract without the prior consent of such Person must have delivered to the Purchaser a Consent in form and substance reasonably satisfactory to the Purchaser, providing for the Consent of such Person to the transactions contemplated by this Agreement and the Ancillary Agreement, and such Consents must be in full force and effect;

5.1.11Consent of [      *      *      *      ]. The Seller shall have secured the consent of (a) at least [          *             *          *      ] of the [      *      *      *      ] and (b) all of the [   *   *   *   ] in each case, to the termination of their [   *   *   *   ] with the Seller and their [   *   *   *   ] by the Purchaser on the terms and conditions in accordance with Clause [***] of this Agreement;

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5.1.12Transaction Documents. The Seller must have delivered or caused to be delivered each other document that Clause 7.2.1 requires it to deliver, each in form and substance satisfactory to the Purchaser and each such document must be in full force and effect.

5.2Conditions to the Obligation of the Seller

The obligations of the Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction, on or before the Closing Date, of each of the following conditions (any of which may be waived in writing by the Seller, in whole or in part):

5.2.1Accuracy of Representations and Warranties. Each of the representations and warranties of the Purchaser contained in Clause 10 that are qualified by materiality shall be true and correct in all respects, and the representations and warranties contained in Clause 10 that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and as if made as of the Closing Date;

5.2.2Performance of Covenants. All of the covenants and obligations that the Purchaser are required to perform or comply with under this Agreement on or before the Closing Date must have been duly performed and complied with in all material respects;

5.2.3Consent under Competition / Investment Laws. All applicable waiting periods (and any extensions thereof) under the HSR Act and under the applicable Competition/Investment Laws of the jurisdictions set forth on Schedule 5.1.5 (in accordance with the provisions of Clause 6.3.2) must have expired or terminated, and, to the extent the Parties are required to make a filing under the Competition / Investment Laws of India in accordance with the provisions of Clause 6.3.3, all applicable waiting periods (and any extensions thereof) under such Competition/Investment Laws must have expired or otherwise been terminated;

5.2.4No Action. There must not be in effect any Law or Judgment that would prohibit or make illegal the consummation of any of the transactions contemplated by this Agreement;

5.2.5Shareholder Approval.  The Seller shall have secured the approval of the shareholders of the Seller pursuant to Section 293(1)(a) of the Act and all other applicable Laws to effect the transactions contemplated by this Agreement and any applicable Ancillary Agreements to which it is a party (with the notice to the shareholders of the Seller seeking such approval being in an Agreed Form) and such approvals must be in full force and effect; and

5.2.6Transaction Documents. The Purchaser must have delivered or caused to be delivered to the Seller each document that Clause 7.2.2 requires it to deliver, each in form and substance satisfactory to the Seller and each such document must be in full force and effect.

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6PRE-CLOSING COVENANTS

6.1Access and Investigation

6.1.1Between the Effective Date and the Closing Date, the Seller shall subject to any applicable Law and the terms of any Contract, afford the Purchaser and its directors, employees, agents, prospective financing sources, third party consultants and other advisors and representatives, access, during regular business hours and upon reasonable agreed-upon times, to Seller’s personnel and any properties related to any Business, the Contracts, the Inventory, books and records and all other information and materials pertaining to the Business, provided that such access shall not unreasonably interfere with the Seller’s business and operations, shall be subject to the requirements of all applicable Competition/Investment Laws, and shall, at all times, be subject to any other applicable legal requirements imposed by applicable Law.

6.1.2other than for matters related to Competition/Investment Laws which are provided for in Clause 6.3.4, until the Closing, the Seller shall allow the Purchaser and its directors, officers, employees, agents, prospective financing sources, third party consultants and other advisors and representatives, to the extent permitted by Law, to: (a) attend with the Seller any meeting between the Seller and any Governmental Authority on a matter regarding the Business, the Transferred Assets of the Business or the transactions contemplated by this Agreement and the Ancillary Agreements; and (b) consult with the Seller with respect to any matters discussed at any such meeting; and the Seller shall provide the Purchaser with at least 3 (three) Business Days notice prior to any such meeting. All requests and inquiries from any Governmental Authority prior to the Closing shall be dealt with by the Seller and the Purchaser in consultation with each other and the Seller and the Purchaser shall promptly co-operate with and provide all necessary information and assistance reasonably required by such Governmental Authority upon being requested to do so by the other.

6.2Operation of the Business by the Seller

6.2.1Affirmative Covenants. Until the Closing, except as expressly consented to by the Purchaser in writing, the Seller shall, and shall cause each of its Affiliates to:

6.2.1(a)conduct the Business only in the Ordinary Course of Business and in compliance in all respects with all applicable Laws;

6.2.1(b)use commercially reasonable efforts to preserve and protect the Business and the Transferred Assets of the Business and its present relationships with customers, suppliers, distributors and other Persons with which the Seller or its Affiliates have significant business relations in order to preserve and not impair the Goodwill of the Business;

6.2.1(c)manufacture, test, certify and release Finished API only in the Ordinary Course of Business; and

6.2.1(d)perform its obligations under all Contracts applicable to the Business or the Transferred Assets of the Business to which they are a party, by

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which it or any of the Transferred Assets of the Business are bound or affected or pursuant to which the Seller is an obligor or beneficiary, and comply with all Laws, Judgments, Registrations and Governmental Authorizations applicable to the Business or the Transferred Assets of the Business.

6.2.2Negative Covenants. Without limitation of the covenants contained in Clause 6.2.1, until the Closing, except as expressly permitted by this Agreement or as otherwise expressly consented to by the Purchaser in writing (it being agreed and understood that actions taken by the Seller or its Affiliates that are specifically consented to in writing by the Purchaser pursuant to this Clause 6.2.2 shall not constitute breaches of representations and warranties under this Agreement), the Seller shall not and shall not cause or permit any of its Affiliates to:

6.2.2(a)take any action to change accounting policies or procedures (including procedures with respect to revenue recognition), change any material assumption underlying, or method of calculating, any bad debt contingency or other reserve, except in each case required to conform to GAAP or applicable Laws;

6.2.2(b)enter into, amend or assume any Contract related to, impacting or otherwise affecting the Business, any of the Transferred Assets of the Business or Assumed Liabilities or the Seller’s performance of its obligations under this Agreement or any of the Ancillary Agreements, including Contracts for insurance, other than in the Ordinary Course of Business;

6.2.2(c)transfer, assign, sell, pledge, mortgage, dispose, lease, or encumber any assets, tangible or intangible included in the Transferred Assets of the Business, including any Leased Business Real Property, or suffer to exist any Encumbrance thereon other than Encumbrances in existence on the Effective Date, other than sales of products of the Business in the Ordinary Course of Business;

6.2.2(d)with respect to the Purchased Intellectual Property and with respect to any rights to the Purchased Intellectual Property granted under any Contract, (i) transfer, assign or license to any Person any rights to such Purchased Intellectual Property; (ii) abandon, permit to lapse or otherwise dispose of any Purchased Intellectual Property; (iii) grant any Encumbrance on any Purchased Intellectual Property; or (iv) make any material changes in or to the Purchased Intellectual Property that reasonably could be expected to impair such Purchased Intellectual Property or the Seller’s or its Affiliates rights with respect thereto;

6.2.2(e)terminate the employment of any Key Employee except in accordance with the terms of such Key Employee’s employment Contract or pursuant to applicable Law;

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6.2.2(f)increase the total number of Business Employees by more than 5% (five percent) of the total number included on Clause 9.17.1(a) of the Seller Disclosure Schedule provided that any increase in the number of Business Employees effected at the specific request of the Purchaser or effected upon the written mutual agreement of the Seller and the Purchaser shall not be considered to be a part of such increase;

6.2.2(g)amend the terms and conditions of employment (including remuneration, pension entitlements and other benefits) of any Key Employees (other than increases in the Ordinary Course of Business which the Seller shall notify the Purchaser of as soon as reasonably possible thereafter);

6.2.2(h)except for merit increases or bonus payments made in the Ordinary Course of Business, grant (or commit to grant) any increase in the compensation (including incentive or bonus compensation) of any employee engaged in the Business, or institute, adopt or amend (or commit to institute, adopt or amend) any Business Employee Plan;

6.2.2(i)act or omit to act in a manner that would impair or otherwise adversely affect in a material respect the Business, any of the Transferred Assets of the Business or Assumed Liabilities or the Seller’s performance of their obligations under this Agreement or any of the Ancillary Agreements;

6.2.2(j)encourage customers of the Business to return products outside of the Ordinary Course of Business;

6.2.2(k)make sales of products of the Business to customers or distributors other than in the Ordinary Course of Business;

6.2.2(l)fail to pay accounts payable and other obligations of the Business other than those disputed in good faith;

6.2.2(m)accelerate the collection of Accounts Receivable or modify the payment terms of any Accounts Receivable;

6.2.2(n)adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or the reorganization of the Seller or its Affiliates;

6.2.2(o)change the location of any collateral under any Indebtedness Contract identified in Clause 9.14.1 of the Seller Disclosure Schedule, other than inventories and supplies of raw materials in the Ordinary Course of Business;

6.2.2(p)enter into any guarantee, indemnity or other agreement to secure anyobligation of a third party or create any Encumbrance over any of the Transferred Assets of the Business;

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6.2.2(q)agree to settle, compromise or otherwise resolve in whole or in part any actual, potential or threatened claims or Proceedings in connection with or involving the Business or Transferred Assets of the Business; or

6.2.2(r)agree, whether in writing or otherwise, to do any of the foregoing or take, or commit to take, any action that would result in the occurrence of any of the foregoing.

6.3Consents and Filings; Reasonable Efforts

6.3.1The Seller shall use and shall cause its Affiliates to use commercially reasonable efforts: (i) to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement; (ii) to take promptly, or cause to be taken, all actions to assign and transfer to the Purchaser (other than assistance in preparing new applications for), Governmental Authorizations and Registrations used in or related to the Business or any Transferred Asset of the Business or required for the ownership or use of any Transferred Asset of the Business or the operation of the Business; and (iii) as promptly as practicable after the date of this Agreement, to obtain all Governmental Authorizations and Registrations from, give all notices to, and make all filings with, all Governmental Authorities, and to obtain all other Consents, Releases, substitutions or amendments from, and give all other notices to, all other Persons, that are necessary or advisable in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement, including those listed in Clause 9.3(a)(ii), Clause 9.3(b), Clause 9.12.8 and Clause 9.19.2 of the Seller Disclosure Schedule, Schedule 5.1.4 and Schedule 5.1.6, provided, however, that, subject to Clause 6.3.5, any costs, fees, expenses or other charges relating to obtaining such Consents or making such filings shall be borne by the Seller. The Seller shall not knowingly enter into any acquisition or other agreement, make any announcements with respect to any transaction or take any other action that could reasonably be expected to have the effect of materially delaying, impairing or impeding the receipt of any Consents of any Governmental Authorities or other Persons.

6.3.2As soon as reasonably practicable following the Effective Date, the Seller and the Purchaser shall (a) each file a Notification and Report Form and related material with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act, (b) (i) complete Schedule 5.1.5 to include all jurisdictions in which, based on the applicable Competition/Investment Laws, a filing under such Competition/Investment Laws is required in connection with the transactions contemplated by this Agreement and (ii) make all necessary filings under the applicable Competition/Investment Laws of the jurisdictions set forth on Schedule 5.1.5, and (c) use their commercially respective reasonable endeavors to obtain early termination of the applicable waiting period and shall make all further filings pursuant thereto that may be necessary, proper or advisable. The foregoing shall not be deemed to require the Purchaser or any of its Affiliates to enter into any agreement, consent decree or other commitment requiring the Purchaser or any of its Affiliates to divest (including through the granting of any license rights) or hold separate any businesses, assets or properties of the Business, the Purchaser or any of its

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Affiliates; provided, however, that the Purchaser shall be required to accept a remedy (other than a remedy to divest (including through the granting of any license rights) or hold separate any businesses, assets or properties of the Business, the Purchaser or any of its Affiliates) required by the United States Federal Trade Commission or the Antitrust Division of the United States Department of Justice provided that, in the reasonable determination of the Purchaser, such remedy could not have a material adverse effect on the business, assets, properties, liabilities, condition (financial or otherwise), operating results, operations or prospects of the Business, the Purchaser or any of its Affiliates, and neither the Seller nor any of its Affiliates shall, without prior written consent of Purchaser, take or commit to take any such actions with respect to the Business, the Purchaser or its Affiliates.

6.3.3If, prior to the Closing Date, there is a requirement under the Competition/Investment Laws of India for any Party or the Parties to make a filing with respect to the transactions contemplated by this Agreement, then as soon as reasonably practicable following the effective date of such requirement pursuant to the Competition/Investment Laws of India, the Seller and the Purchaser, as applicable, shall each file or shall jointly file, as required, all necessary documentation with the applicable Governmental Authorities under such Competition/Investment Laws, and the Parties shall use their respective commercially reasonable efforts to obtain early termination of any applicable waiting period and shall make all further filings pursuant thereto that may be necessary, proper or advisable.

6.3.4Subject to appropriate confidentiality protections, each Party shall: (i) promptly notify the other Party of any written communication to that Party from any Governmental Authority and, subject to Law, permit the other Party to review in advance any proposed written communication to any such Governmental Authority and shall consult with counsel for the other Party, consider in good faith the views of the other and, if appropriate, incorporate the other Party’s reasonable comments, and (ii) furnish the other Party with copies of all correspondence, filings and written communications with any Governmental Authority with respect to this Agreement or the transactions contemplated hereby; provided, however that if Seller or Purchaser believes that any such communication to or from a Governmental Authority contains (or in the case of a meeting is likely to involve discussion of) commercially sensitive information that it is unwilling to provide to the other Party, it shall be sufficient for Seller or Purchaser, as the case may be, to provide a copy of such communication (or an opportunity to attend such meeting) to the other Party’s outside counsel.

6.3.5All filing fees under the HSR Act, other applicable Competition/Investment Laws or other applicable Laws shall be borne solely by the Purchaser. Subject to Clause 6.3.1, each Party shall bear its own costs (including the cost of any advisers appointed by it) incurred in connection with the clearances or any notification to Governmental Authorities.

6.4Notification

Until the Closing, the Seller shall give prompt written notice to the Purchaser of (a) the occurrence, or non-occurrence, of any event, the occurrence or non-occurrence of which would reasonably be expected to cause any representation or warranty of the Seller contained in this

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Agreement to be untrue or inaccurate, in each case at any time from and after the Effective Date until the Closing; (b) any failure to comply with or satisfy any covenant or agreement to be complied with or satisfied by the Seller or any of its Affiliates under this Agreement; and (c) the failure of any condition precedent to the Purchaser’s obligations under this Agreement. No notification pursuant to this Clause 6.4 shall be deemed to amend or supplement the Seller Disclosure Schedule, prevent or cure any misrepresentation, breach of warranty or breach of covenant, or limit or otherwise affect any rights or remedies available to the Purchaser, including pursuant to Clause 11 or Clause 12.

6.5Shareholder Approval

6.5.1The Seller, acting through its board of directors, shall, in accordance with Section 293(1)(a) of the Act and all other applicable Laws and the articles of association and memorandum of association of the Seller:

6.5.1(a)as soon as reasonably practicable, duly set a record date for, call and give notice of the meeting of the shareholders (or a postal ballot as permitted under applicable Law) of the Seller for the purpose of considering and taking action with respect to the transactions contemplated by this Agreement and any Ancillary Agreements to which it is a party; and

6.5.1(b)as soon as reasonably practicable following the record date, (i) cause the ballot to be dispatched to the shareholders of the Seller in an Agreed Form; and (ii) take all other action reasonably necessary or advisable to secure the approval of the shareholders of the Seller required by applicable Law to effect the transactions contemplated by this Agreement and any Ancillary Agreements to which it is a party.

6.6No Negotiation

6.6.1Until the Closing, the Seller shall not, and the Seller shall cause its Affiliates, directors, officers, employees, agents, consultants and other advisors and representatives not to, directly or indirectly: (a) solicit, initiate, encourage, knowingly facilitate, or entertain any inquiry or the making of any proposal or offer; (b) enter into, continue or otherwise participate in any discussions or negotiations; (c) furnish to any Person any non-public information or grant any Person access to their properties, assets, books, Contracts, personnel or records; or; (d) approve or recommend, or propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principal, merger agreement, acquisition agreement, option agreement or other Contract or propose, whether publicly or to any director or shareholder, or agree to do any of the foregoing for the purpose of encouraging or facilitating any proposal, offer, discussions or negotiations; in each case regarding any business combination transaction involving the Seller or its Affiliates in any other transaction that would result in a Person other than the Purchaser or its Affiliates acquiring all or any part of the Business, whether by merger, business transfer agreements, purchase of assets, purchase of stock, tender offer, lease, license or otherwise. Each of the Seller and the Seller’s Affiliates shall immediately cease and cause to be terminated any such negotiations, discussion or Contracts (other than with the Purchaser) that are the subject of clauses (a), (b) or (d)

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above and shall immediately cease providing and secure the return of any non-public information and terminate any access of the type referenced in clause (c) above. If any of the Seller or any of its Affiliates, directors, officers, employees, agents, consultants or other advisors and representatives receive, prior to the Closing, any offer, proposal or request, directly or indirectly, of the type referenced in clause (a), (b) or (d) above or any request for disclosure or access as referenced in clause (c) above, the Seller and its Affiliates shall immediately suspend or cause to be suspended any discussions with such offeror or Person with regard to such offers, proposals or requests and notify the Purchaser thereof, including, unless prohibited by applicable Law, information as to the identity of the offeror or Person making any such offer or proposal and the specific terms of such offer or proposal, as the case may be, and such other information related thereto as the Purchaser may reasonably request.  It is agreed and understood that the terms of this Clause 6.6.1 shall not prevent the Seller from: (i) issuing or selling any shares of capital stock of the Seller to third parties in one or more transactions provided that such issuances or sales do not result in a Change of Control of the Seller or (ii) selling or divesting assets of the Other Businesses, in each case of (i) or (ii) for the purposes of raising funds for the Seller from third parties.

6.6.2Until the Closing, neither the Purchaser nor any of its Affiliates shall enter into any agreements which could reasonably be expected to adversely affect the Purchaser’s ability to consummate the transactions contemplated by this Agreement.

6.7Intercompany Arrangements

Prior to the Closing, the Seller shall, and shall cause its Affiliates to, terminate all agreements or arrangements, written or unwritten, of any kind (other than this Agreement and any Ancillary Agreements), between the Seller and any of its Affiliates with respect to the Business, such termination to have effect as of immediately prior to the Closing.

6.8Mixed Contracts and Mixed Accounts

6.8.1Except as may otherwise be agreed by the Parties in writing, any Contract (other than (a) Contracts related exclusively to the Business; (b) licenses of Seller Mixed Use Intellectual Property; or (c) Contracts that expressly constitute Excluded Assets) that inures to the benefit or burden of the Business and the Other Businesses (a “Mixed Contract”), including those Contracts set forth on Schedule 6.8, shall, to the extent commercially reasonable, be separated as of or as soon as practicable after the Closing, so that each of the Purchaser and the Seller shall be entitled to the rights and benefits and shall assume the related portion of any Liabilities inuring to their respective businesses for the period after the Closing. If any Mixed Contract cannot be so separated, the Purchaser and the Seller shall, and shall cause each of their respective Affiliates to, take such other commercially reasonable efforts to cause: (i) the rights and benefits associated with that portion of each Mixed Contract that relates to the Business to be enjoyed by the Purchaser; (ii) the Liabilities associated with that portion of each Mixed Contract that relates to the operation of the Business following the Closing to be borne by the Purchaser; (iii) the rights and benefits associated with that portion of each Mixed Contract that relates to the Other Businesses to be enjoyed by the Seller; (iv) the Liabilities associated with that

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portion of each Mixed Contract that relates to the Seller’s Other Businesses to be borne by the Seller; and (v) the Liabilities associated with that portion of each Mixed Contract that relates to the operation of the Business prior to the Closing to be borne by the Seller. The Seller shall provide the Purchaser with a copy of each Mixed Contract (it being understood that the Parties shall use commercially reasonable efforts to comply, where practicable, with any applicable confidentiality provisions contained in such Mixed Contracts), and the Parties shall cooperate with each other to effect such separation. The costs of such separation shall be borne by the Parties in proportion to the rights and benefits inuring to each of them under the Mixed Contract; provided; however, that the Purchaser shall have no Liability with respect to any cost, expense, charge, fee, penalty or other amount related to such separation unless the Purchaser consents in writing to such payment.

6.8.2Except as may otherwise be agreed by the Parties, the Parties shall not assign any Accounts Receivable or payable relating to both the Business and the Other Businesses (a “Mixed Account”). In the event of any such Mixed Account, the Purchaser and the Seller shall take such reasonable and permissible actions to cause: (i) the Transferred Assets of the Business associated with that portion of each Mixed Account that relates to the Business to be enjoyed by the Purchaser; (ii) the Assumed Liabilities related with that portion of each Mixed Account that relates to the Business to be borne by the Purchaser; (iii) the assets associated with that portion of each Mixed Account that relates to the Excluded Assets to be enjoyed by the Seller; and (iv) the Liabilities (other than Assumed Liabilities) related with that portion of each Mixed Account that relates to the Excluded Assets to be borne by the Seller.

6.9Satisfaction of Obligations to Lenders

The Seller shall satisfy or cause to be satisfied all requirements of its lenders pursuant to the Indebtedness Contracts and shall take all actions necessary to obtain all Releases and Consents required pursuant to Clause 5.1.10.

6.10Real Property

Except as set forth in Clause 8.1, prior to the Closing, at the Seller’s sole cost and expense, the Seller shall take such steps as are necessary to pay in full all Taxes and outgoings due and payable in respect of the Leased Business Real Property to the extent the related lease so requires the Seller, including property Taxes, electricity and water charges prior to the Closing Date, subject to appropriate proration to the extent such payments relate to the period after the Closing.  The Purchaser agrees to cooperate with the Seller in reimbursing the Seller for any amounts paid by the Seller to the extent relating to the period after the Closing.

6.11Financial Statements

6.11.1Until the Closing, on or before the tenth (10th) day of each month, the Seller shall deliver to the Purchaser: (a) unaudited unconsolidated financial statements of the Seller; and (b) unaudited carve-out financial statements of the Business for the Seller and its Affiliates engaged in the Business as at and for the monthly period ending on the last day of the preceding month (the “Subsequent Monthly Financial Statements”), which shall include a balance sheet and profit and loss account. At the time that the Subsequent Monthly Financial Statements are delivered to the Purchaser, the Seller shall by such delivery be deemed to have made the representations and warranties to

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the Purchaser with respect to such Subsequent Monthly Financial Statements as set forth in Clause 9.4.

6.11.2From the Effective Date, the Seller shall cooperate in good faith with the Purchaser with respect to the Purchaser’s preparation of: (a) any audited balance sheets for the Business in accordance with generally accepted accounting principles for financial reporting in the United States and the related statements of income, changes in equity and cash flows that may be required by the Purchaser to satisfy the reporting requirements of the United States Securities and Exchange Commission following the Closing (including the Purchaser’s 2010 audited financial statements); and (b) an unaudited opening balance sheet as of the Closing Date in accordance with GAAP.

6.12Contact with Customers and Suppliers

Until the Closing, the Purchaser and the Seller shall cooperate in communicating with any Business Employees, customers, suppliers, licensors, licensees, partners or distributors of the Business concerning the transactions contemplated hereby, including the Purchaser’s intentions concerning the operation of the Business following the Closing. Until the Closing, the Purchaser and their representatives shall contact or communicate with the Business Employees, customers, suppliers, licensors, licensees, partners or distributors of the Business in connection with the transactions contemplated hereby only with the prior written consent of the Seller, which shall not be unreasonably withheld or delayed and may be conditioned upon a designee of the Seller being present at any meeting or conference. Nothing in this Clause 6.12 shall prohibit the Purchaser and their representatives from contacting the customers, suppliers, licensors, licensees, partners or distributors of the Business in the ordinary course of the Purchaser’s businesses for the purpose of selling products of the Purchaser’s businesses or for any other purpose unrelated to the Business or the transactions contemplated by this Agreement, so long as the Purchaser does not use the Seller’s Confidential Information in making such contacts.

6.13Replacement of Guarantees

The Purchaser and the Seller shall cooperate with each other with a view to entering into arrangements effective as of the Closing whereby the Purchaser or one of its Affiliates would be substituted for the Seller or its Affiliates in any guarantees, letters of comfort, indemnities or similar arrangements entered into by the Seller or its Affiliates in respect of the Business (but only to the extent such guarantees, letters of comfort, indemnities or arrangements constitute Assumed Liabilities). If the Purchaser or its Affiliates cannot enter into the arrangements referred to above, the Seller or its Affiliates shall not terminate such guaranty arrangements without the Purchaser’s consent; provided, however, that the Purchaser shall enter into a separate guaranty with the Seller to guarantee the performance of the obligations of the relevant Person pursuant to the Contract underlying such guaranty arrangements.

6.14Review of Closing Deliveries

Prior to the Seller submitting to any Person for review and comment any draft of a closing delivery that Clause 7.2 requires the Seller to obtain from such Person in order to deliver at the Closing, the Seller shall: (a) provide the Purchaser an opportunity to review and comment on such document, from a form and substance viewpoint; (b) include in such document all

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comments reasonably proposed by the Purchaser; and (c) not finalize the form of such document prior to receiving the Purchaser’s approval, which approval shall not be unreasonably withheld or delayed.

6.15Vizag Land

Prior to the Closing, the Seller shall use its best efforts to assign to the Purchaser, effective as of the Closing, all of the rights of the Seller in that certain lease agreement with Ramky Pharma City (India) Limited dated 20 February 2009 with respect to the approximately 27 (twenty-seven) acres of land located inside the SEZ (the “Vizag Lease”).  If, prior to or on the Closing Date, the Seller has not been able to assign all of the rights of the Seller in the Vizag Lease effective as of the Closing Date, then the Cash Consideration payable by the Purchaser as of the Closing Date shall be reduced by [                *                *                *                ]; provided, however, that if the Seller assigns all of its rights in the Vizag Lease to the Purchaser within 1 (one) month following the Closing Date, the withheld amount of [                *                *                *                ] shall be paid by the Purchaser to the Seller on the date such assignment of the Vizag Lease occurs.  If all of the rights of the Seller in the Vizag Lease are assigned to the Purchaser effective as of the Closing Date or during the 1 (one) month period thereafter pursuant to the proviso in the immediately preceding sentence, then the Real Property leased pursuant to the Vizag Lease shall be deemed Leased Business Real Property for all purposes under this Agreement.

6.16Additional Fill/Finish Manufacturing

Following the Closing, the Purchaser shall consider in good faith and not unreasonably deny any requests made by the Seller for the Purchaser to provide fill/finish services for one injectable penem dosage form of NCE developed by the Seller or contracted by the Seller for manufacture of such NCE’s for an innovator company.

6.17Currency Conversion

The Purchaser hereby agrees and acknowledges that it shall not convert the Cash Consideration into Indian Rupees more than 3 (three) Business Days (or as otherwise mutually agreed in writing by the Seller and the Purchaser) prior to the estimated Closing Date.

6.18Purchaser Parent Guarantee

Concurrently with the execution of this Agreement, Hospira, Inc., a Delaware corporation and the parent company of the Purchaser, has executed and delivered to the Seller the Purchaser Parent Guarantee set forth in Exhibit J

6.19Formulation/Fill/Finish NCE

Schedule 6.19 sets forth the general principles for the Fill/Finish NCE Contract Manufacturing Agreement to be negotiated in good faith by the Seller and the Purchaser between the Effective Date and the Closing Date on terms and conditions to be mutually agreed by the Parties.  If the Seller and the Purchaser mutually agree upon and execute the Fill/Finish NCE Contract Manufacturing Agreement prior to the Closing, such Fill/Finish NCE Contract Manufacturing Agreement shall be attached as Exhibit C to this Agreement.

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7CLOSING

7.1Closing

On the terms and subject to the conditions of this Agreement, the Closing shall take place at the offices of Khaitan & Co., Mumbai, India or at the offices of the Seller in Chennai, as may be mutually agreed in writing, on the earlier of (i) the 5th (fifth) Business Day following the day on which the last to be fulfilled or waived of the conditions set forth in Clause 5 shall be fulfilled or waived in accordance with this Agreement, (ii) if each of the conditions set forth in Clause 5 shall be fulfilled or waived in accordance with this Agreement prior to such date, on March 31, 2010 or (iii) at such other time, date or place as the Parties may mutually agree in writing (“Closing Date”). The parties shall use reasonable efforts to schedule the Closing Date for the last day of a calendar month. Unless the Parties otherwise agree in writing, the Closing shall be deemed to have occurred at 00:01 a.m. local time in India on the Closing Date.

7.2Closing Deliveries

7.2.1At the Closing, the Seller shall deliver or cause to be delivered to the Purchaser:

7.2.1(a)copies of the resolutions of the board of directors and shareholders of the Seller, authorizing and approving the transactions contemplated by this Agreement and the Ancillary Agreements certified by the company secretary or a director of the Seller to be true and complete and in full force and effect and unmodified as of the Closing;

7.2.1(b)a deed of assignments in respect of all Purchased Intellectual Property in the form of Exhibit E (collectively, the “IP Assignment”) duly stamped executed by the Seller or its Affiliates and the originals of all prior deeds of assignment and other documents pursuant to which the Seller or its Affiliate has derived its title to the Purchased Intellectual Property;

7.2.1(c)for each parcel of Leased Business Real Property, a lease deed and any novations, assignments and Consents as may be necessary to transfer the right, title and interest in the Leased Business Real Property in favour of the Purchaser in form and substance reasonably acceptable to the Purchaser (the “Lease Deeds”) duly stamped and executed by the Seller and the applicable third party to the applicable rental or lease Contract;

7.2.1(d)for each Contract listed on Schedule 5.1.6, such documents, including novations and Consents, as may be necessary to transfer the rights and obligations of the Seller under such Contracts;

7.2.1(e)the Escrow Agreement duly stamped and executed by the Seller and the Escrow Agent;

7.2.1(f)the Transition Services Agreement duly stamped and executed by the Seller;

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7.2.1(g)the Oral Ceph Contract Manufacturing Agreement duly stamped and executed by the Seller;

7.2.1(h)the API Supply Agreement duly stamped and executed by the Seller;

7.2.1(i)a receipt from the Seller in a form reasonably satisfactory to the Purchaser for the amount of the Cash Consideration less the sum of (i) the Escrow Amount plus (ii) any withholding required under applicable Law;

7.2.1(j)a “consent and no objection certificate” for the Seller from the concerned Assessing Officer of Income Tax pursuant to Section 281 of the Tax Act for the sale of the Business and the Transferred Assets of the Business, as contemplated hereunder;

7.2.1(k)a certificate executed by the statutory auditor of the Seller in Agreed Form certifying that: (i) all contributions required to be made in respect of the Transferred Employees to any Business Employee Plan by applicable Law and the terms of such Business Employee Plan for all periods up to the Closing Date have been timely made or paid in full; and (ii) specifying the balances that would be required to be transferred to the Purchaser or in respect of which the applicable insurance policy would need to be assigned or for which the Purchaser would be required to obtain an insurance policy;

7.2.1(l)an actuarial valuation report of gratuity Liability for the Seller with respect to the Business Employees of the Seller prepared by an actuary selected by the Purchaser;

7.2.1(m)the Lender Releases and Consents required pursuant to Clause 5.1.10;

7.2.1(n)a certificate in the form of Exhibit G, dated as of the Closing Date, executed by the Seller confirming the satisfaction of the conditions specified in Clause 5.1.1 — 5.1.12 (insofar as Clause 5.1.8 relates to Proceedings involving the Seller or its Affiliates);

7.2.1(o)the Fill/Finish NCE Contract Manufacturing Agreement duly stamped and executed by the Seller (if executed by the Seller and the Purchaser prior to the Closing Date) ; and

7.2.1(p)such other documents, instruments and agreements as the Purchaser reasonably requests for the purpose of consummating the transactions contemplated by this Agreement.

7.2.2At the Closing, the Purchaser shall deliver or cause to be delivered to the Seller or, in the case of Clause 7.2.2(b) the Escrow Agent:

7.2.2(a)the Indian Rupee equivalent of the Cash Consideration converted by the Purchaser in accordance with Clause 6.17 (as adjusted pursuant to Clause 3.2.1), less (i) the Escrow Amount, (ii) an amount equal to the

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Transferred Employment Liabilities, (iii) if applicable, [                *                 *                *                ] pursuant to Clause 6.15 and (iv) any Taxes required to be withheld under applicable Law, by wire transfer to an account or accounts of the Seller designated in writing by the Seller;

7.2.2(b)the Indian Rupee equivalent of [                *                *                *                ] converted by the Purchaser in accordance with Clause 6.17 corresponding to the Escrow Amount, to the Escrow Agent by wire transfer to an account specified by the Escrow Agent;

7.2.2(c)the Escrow Agreement executed by the Purchaser and the Escrow Agent;

7.2.2(d)the IP Assignments, if any, that require execution by the Purchaser;

7.2.2(e)the Lease Deeds executed by the Purchaser;

7.2.2(f)the Transition Services Agreement executed by Purchaser;

7.2.2(g)the Oral Ceph Contract Manufacturing Agreement executed by the Purchaser;

7.2.2(h)the API Supply Agreement executed by the Purchaser;

7.2.2(i)a certificate in the form of Exhibit G, dated as of the Closing Date, executed by the Purchaser confirming the satisfaction of the conditions specified in Clause 5.2.1 — 5.2.6 (insofar as Clause 5.2.4 relates to Proceedings involving the Purchaser);

7.2.2(j)the Fill/Finish NCE Contract Manufacturing Agreement duly stamped and executed by the Purchaser (if executed by the Seller and the Purchaser prior to the Closing Date); and

7.2.2(k)such other documents, instruments and agreements as the Seller reasonably requests for the purpose of consummating the transactions contemplated by this Agreement.

7.3Escrow Amount

As security for any amounts payable by the Seller to the Purchaser pursuant to the terms of this Agreement at the Closing, the Purchaser shall retain out of the Cash Consideration payable pursuant to Clause 3.1 and Clause 7.2.2(a) and deposit with the Escrow Agent in accordance with the terms of the Escrow Agreement an amount equal to the Indian Rupee equivalent of [                *                *                *                ] converted by the Purchaser in accordance with Clause 6.17 (the “Escrow Amount”). The Purchaser shall have a full right to apply all or any part of the Escrow Amount to pay, or to provide for the payment of, any amount required to be paid by the Seller to the Purchaser under the terms of this Agreement and the Escrow Agreement. Subject to the provisions of the Escrow Agreement, the Purchaser shall instruct the Escrow Agent to release the unapplied Escrow Amount to the Seller in the following installments: [    ***    ] within 5 (five) days of the [ *** ] yearly anniversary of the Closing Date and

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the remaining [***] within 5 (five) days of the [***] yearly anniversary of the Closing Date. If any Claim Notice has been delivered by the Purchaser to the Seller and the Parties have not reached an agreement with respect to the Purchaser’s entitlement to receive the Losses at issue in such Claim Notice, then the Purchaser’s obligation to instruct the Escrow Agent to release any installment of the unapplied Escrow Agreement shall be suspended with respect to Purchaser’s good faith estimate of the amount owed by the Seller under the Claim Notice until a final determination as to the Purchaser’s entitlement to receive the Losses covered by the applicable Claim Notice has been reached. These payments shall be reduced, in the order of their maturities, by any amounts payable by the Seller pursuant to the terms of this Agreement and the Escrow Agreement.

7.4Possession

At the Closing, the Seller shall transfer and convey to the Purchaser title, free and clear of all Encumbrances (other than Permitted Encumbrances), to those Transferred Assets of the Business, the title to which may be effectively transferred by delivery of possession thereof, by delivering possession thereof, wherever they are currently located, to the Purchaser or the Purchaser’s agent. At the Closing, the Purchaser shall enter into possession of the Business of the Seller and shall take delivery of all the Transferred Assets of the Business capable of being effectively transferred by delivery of possession thereof.

8POST COMPLETION COVENANTS

8.1Tax Matters

8.1.1All Transfer Taxes pertaining to or arising out of or in connection with or attributable to the transactions contemplated by this Agreement and the Ancillary Agreements, regardless of whether such Transfer Taxes, expenses and fees are imposed by Law on the Purchaser, the Transferred Assets of the Business or the Seller shall be borne as follows: (i) the Indian Rupee equivalent of [                       *                        *                       *                       ], by the Purchaser and (ii) any amounts in excess of the Indian Rupee equivalent of the first [                       *                        *                       *                       ] by the Purchaser [***] by the Seller. The Purchaser shall withhold from: (a) the Cash Consideration any withholding Tax described in Clause 7.2.2(a) and the Seller’s portion of any Transfer Taxes and (b) any other payment required to be made to the Seller under this Agreement, in accordance with applicable Law. The Purchaser shall deposit any such withholding Tax with the relevant Governmental Authority. The Purchaser shall prepare, subject to the Seller’s reasonable approval (which approval shall not be unreasonably withheld or delayed), and timely file all Tax Returns required to be filed in respect of Transfer Taxes. The Seller and the Purchaser shall reasonably cooperate with each other to share information reasonably needed for the preparation of those Tax Returns and any Tax clearance certificates that either the Seller or the Purchaser may request.

8.1.2With respect to any Taxes based on the value of property assessed against any of the Transferred Assets of the Business, the Seller shall pay those Taxes attributable to periods or partial periods ending on or prior to the Closing Date, and the Purchaser shall pay those Taxes attributable to periods or partial periods beginning after the Closing Date, with a daily allocation for any period that begins on or before the Closing Date and

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ends after the Closing Date. Each Party agrees to cooperate with the other Parties in paying or reimbursing Tax obligations described in this Clause 8.1.2. Nothing in this Agreement makes a Party liable for the income or franchise Taxes of the other Party. This Clause 8.1.2 does not apply to Transfer Taxes which shall be allocated under the provisions of Clause 8.1.1.

8.1.3The Seller or Seller’s Affiliates shall, at Purchaser’s sole cost and expense, apply to each of the relevant Regulatory Authorities and provide all other necessary assistance for the transfer of, or issuance of new, Tax Governmental Authorizations included in the Transferred Assets of the Business to the Purchaser or an Affiliate of the Purchaser.  If the applicable Laws permit election between the transfer of an existing Tax Governmental Authorization or the cancellation and issuance of a new Tax Governmental Authorization, the Purchaser shall be entitled to make such election at its sole discretion.  Provided that the Seller is not in breach of its obligations set forth in this Clause 8.1.3, the Seller shall not be liable for any duty or Tax Liability that could arise if the Purchaser does not, following the Closing Date, register the Transferred Assets of the Business as an export oriented unit under applicable Indian Laws.

8.1.4As soon as reasonably practicable following the Closing Date, the Seller shall make all filings to Tax authorities required under applicable Tax Laws in order to (a) notify such Tax authorities of the sale of the Transferred Assets of the Business to the Purchaser and the assumption of the Assumed Liabilities by the Purchaser (including the transfer of any Leased Business Real Property located inside the SEZ to the Purchaser), (b) transfer all unutilized indirect tax credits to the Purchaser and (c) transfer and change the registered holder of the Export Promotion Capital Goods Governmental Authorizations.

8.1.5The transfer of the Business is on going-concern basis and any determination of the value of an asset or liability for the sole purpose of payment of stamp duty, registration fees or other similar Transfer Taxes shall not be regarded as assignment of values to individual assets or liability.

8.2Excluded Liabilities

The Seller agrees to pay and perform when due all Excluded Liabilities.

8.3Public Announcements.

Except for the press releases of the Seller and the Purchaser attached hereto as Exhibit H, which shall be released by the Seller and the Purchaser upon the execution of this Agreement, neither Party shall issue or make any public announcement, press release or other public disclosure regarding this Agreement or the Ancillary Agreements or their subject matter without the other Party’s prior written Consent, except for: (a) any public announcements, press releases or other public disclosures which repeat the text contained on Exhibit H regarding this Agreement or the Ancillary Agreements or their subject matter; and (b) any such disclosure that is, in the opinion of the disclosing Party’s counsel, required by Law or the rules of a stock exchange on which the securities of the disclosing Party are listed with respect to this Agreement or any Ancillary Agreement. In the event a Party is, in the opinion of its counsel, required to make a public disclosure by Law or the rules of a stock exchange on which its securities are listed regarding this

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Agreement or the Ancillary Agreements or their subject matter, such Party shall submit the proposed disclosure in writing to the other Party at least: (i) 3 (three) days prior to the date of disclosure in connection with an extraordinary event that occurred without advance warning to either Party; or (ii) 5 (five) days prior to the date of disclosure in connection with an ordinary course disclosure or in connection with the closing of the transaction contemplated herein, for an opportunity to provide comments thereon and shall incorporate the reasonable comments provided by the other Party.

8.4Assistance in Proceedings

From and after the Closing, at the reasonable request of the Purchaser and subject to customary confidentiality restrictions, the Seller shall, and shall cause its Affiliates to, and, unless the Purchaser is entitled to indemnification therefor under the provisions of Clause 11.1, the Purchaser shall reimburse the Seller and its Affiliates for all reasonable out-of-pocket costs and expenses incurred by the Seller and its Affiliates therefor, reasonably cooperate with the Purchaser and its counsel in the contest or defense of, and make available its personnel and provide any testimony and access to its books and records in connection with, any Proceeding involving or relating to: (a) any of the transactions contemplated by this Agreement; or (b) any action, activity, circumstance, condition, conduct, event, fact, failure to act, incident, occurrence, plan, practice, situation, status or transaction on or before the Closing Date involving the Seller or the Business.

8.5Privileges

The Seller acknowledges that the Transferred Assets of the Business include all attorney work-product protections, attorney-client privileges and other legal protections and privileges to which the Seller may be entitled in connection with any of the Transferred Assets of the Business or Assumed Liabilities. The Seller is not waiving, and shall not be deemed to have waived or diminished, any of its attorney work-product protections, attorney-client privileges or similar protections or privileges as a result of the disclosure of information to the Purchaser and its representatives in connection with this Agreement and the transactions contemplated by this Agreement. The Seller and the Purchaser: (a) share a common legal and commercial interest in all of the information and communications that may be subject to such protections and privileges; (b) are or may become joint defendants in Proceedings to which such protections and privileges may relate; and (c) intend that such protections and privileges remain intact should any of the Parties become subject to any actual or threatened Proceeding to which such information or communications relate. The Seller agrees that the Seller and its Affiliates shall have no right or power after the Closing Date to assert or waive any such protections or privileges included in the Transferred Assets of the Business. The Seller shall take any actions reasonably requested by the Purchaser, in order to permit the Purchaser to preserve and assert any such protections or privileges included in the Transferred Assets of the Business; provided, however, that unless the Purchaser is entitled to indemnification therefor under the provisions of Clause 11, the Purchaser shall reimburse Seller for all reasonable out-of-pocket costs and expenses incurred by the Seller and its Affiliates.

8.6Non-competition; Non-solicitation.

8.6.1In view of the transactions contemplated by the terms of this Agreement and the acquisition by the Purchaser of the Goodwill, during the period commencing on the

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Closing Date and ending on the [***] anniversary of the Closing Date (or, if not enforceable for such period in any country under the Competition/Investment Laws of such country, for such shorter period as shall be enforceable in such country under the Competition/Investment Laws of such country) (the “Restricted Period”), neither KRR (for so long as he is a director or officer of the Seller or any of its Affiliates) nor the Seller shall, and KRR (for so long as he is a director or officer of the Seller or any of its Affiliates) and the Seller shall cause their respective Affiliates (and their respective successors and assigns, including any Person that acquires a majority of the Other Businesses (regardless of whether the transaction is structured as an asset or share transaction)) not to, directly or indirectly: (a) engage in any business anywhere in the world that conducts any Purchaser Competing Activities; or (b) own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as a partner, stockholder, co-venturer, consultant or otherwise, any Person that is engaged or planning to become engaged in the business of conducting any Purchaser Competing Activities anywhere in the world, provided, however, that, for the purposes of this Clause 8.6.1, none of the following shall be deemed to be in violation of this Clause 8.6.1: (i) ownership of securities having no more than 5% (five percent) of the outstanding voting power of any Person which are listed on any national securities exchange as long as the Person owning such securities has no other connection or relationship with such Person, (ii) performing activities intended to enable KRR, the Seller or their respective Affiliates to engage in a business that conducts the Purchaser Competing Activities following the expiration of the Restricted Period provided that the performance of such activities does not constitute, directly or indirectly, a breach of (a) or (b) of this Clause 8.6.1 as contrasted to the preparation therefor following the expiration of the Restricted Period, (iii) if the Seller is acquired in a single transaction or series of related transaction by any Person whose turnover in the last accounting year exceeded [                       *                        *                       *                       ] (measured in terms of the consolidated turnover of such Person and its Affiliates) that conducts (or whose Affiliates conduct) any Purchaser Competing Activities anywhere in the world (taken together with its Affiliates, the “Competing Acquiring Persons”) if both (A) the Purchaser Competing Activities of the Competing Acquiring Persons represent not more than 50% (fifty percent) of the business of the Competing Acquiring Persons (measured in terms of turnover and/or assets in the last accounting year of the Competing Acquiring Persons) and (B) the Seller does not engage in any business anywhere in the world that conducts any Purchaser Competing Activities following the consummation of such acquisition (it is being agreed and understood that for purposes of this subclause (iii) the Seller shall not be deemed an Affiliate of the Competing Acquiring Person) or (iv) the Seller engaging in the business of researching, developing, manufacturing, selling, marketing or distributing vaccines anywhere in the world (the “Vaccine Business”). If requested by the Purchaser at any time during the Restricted Period, the Seller shall promptly (and not later than 10 (ten) days following receipt of such request from the Purchaser) deliver to the Purchaser a certificate executed by an officer of the Seller in form and substance reasonably satisfactory to the Purchaser certifying the compliance of KRR, the Seller and their respective Affiliates with the terms of this Clause 8.6.1.  The Seller acknowledges and agrees that, as of the Effective Date, the Seller and its Affiliates are not engaged in the Vaccine Business.  The Parties agree that, during the period from the Effective Date to the Closing Date, the Seller and any of its Affiliates may engage in the Vaccine Business provided that the

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activities of such Vaccine Business are maintained completely separate from the activities of the Business, such separation to include that (i) the activities of such Vaccine Business (A) do not utilize any Transferred Assets, (B) are not conducted at any of the Leased Real Properties and (C) do not impair or otherwise adversely affect the performance by the Seller and its Affiliates of their obligations under this Agreement or any Ancillary Agreement and (ii) none of the Business Employees are engaged in such Vaccine Business.

8.6.2“Purchaser Competing Activities” means the business of researching, evaluating and litigating originator Intellectual Property for, developing, testing, obtaining regulatory approval for, manufacturing, negotiating third party contracts for, procuring materials for, performing fill and finish services for, marketing, distributing and selling injectable pharmaceutical products for all human and animal prophylactic and therapeutic uses in all formulations and dosage forms and for any and all indications; provided, however, that the Purchaser Competing Activities shall expressly exclude (a) selling, marketing or distributing generic injectable pharmaceutical products in the Excluded Countries and India, (b) subject to the exclusivity provisions of the API Supply Agreement, the business of researching, manufacturing and testing API for use in generic injectable pharmaceutical products, and (c) the business of performing drug discovery, research, development work and/or manufacturing for Seller’s own requirements or a third party’s requirements with respect to NCE’s and/or NBE’s.

8.6.3The Restricted Period shall be extended by the length of any period during which any Party or an Affiliate of any Party is in material breach of the terms of this Clause 8.6.

8.6.4Unless otherwise agreed to in writing by the Purchaser, during the Restricted Period, neither KRR (for so long as he is a director or officer of the Seller or any of its Affiliates) nor the Seller shall, directly or indirectly, for itself or on behalf of or in conjunction with any other Person, and the Seller shall cause its Affiliates not to, directly or indirectly call upon any Transferred Employee or any individual who is, at the time the individual is called upon, an employee of the Purchaser or any of its Affiliates for the purpose or with the intent of soliciting such employee away from or out of the employ of the Purchaser or any of its Affiliates, or employ or offer employment to any individual who was or is employed by the Purchaser or any of its Affiliates unless such individual shall have ceased to be employed by the Purchaser or any of its Affiliates for a period of at least 12 (twelve) months prior thereto.  This Clause 8.6.4 shall not be deemed to prohibit either KRR, the Seller or its Affiliates from engaging in general media advertising or solicitation that may be targeted to a particular geographic or technical area but that is not specifically targeted towards employees of the Purchaser or any of its Affiliates..

8.6.5In view of the transactions contemplated by the terms of this Agreement and the retention by the Seller of the Other Businesses, during the period commencing on the Closing Date and ending on the earlier of (i) the [***] anniversary of the Closing Date (or, if not enforceable for such period in any country under the Competition/Investment Laws of such country, for such period as shall be enforceable in such country under the Competition/Investment Laws of such country) or (ii) the date of the expiration or early termination of the API Supply Agreement (the “Purchaser Restricted Period”), provided, however, that such early termination is not attributable

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to a breach of a material obligation by Purchaser pursuant to such API Supply Agreement, the Purchaser shall, and the Purchaser shall cause its Affiliates not to, directly or indirectly, to engage in any business anywhere in the world that conducts any Seller Competing Activities, providedthat, for the purposes of this Clause 8.6.5, the Purchaser or any of their Affiliates shall not be prevented from (i) being the holder or beneficial owner by way of bona fide investment purposes only of any units of an authorized unit trust and/or any securities in any company carrying on any Seller Competing Activities which are listed or traded on any recognized stock exchange, regulated market or trading facility provided that Purchaser and its Affiliates do not have directly or indirectly any management functions or any material influence in such a company, or (ii) acquiring in a single transaction or a series of related transactions any one or more companies and/or businesses (taken together, the “Acquired Business”) and carrying on that Acquired Business although its activities include any Seller Competing Activities (the “Acquired Competing Business”), if the Acquired Competing Business represents 50% (fifty percent) or less of the Acquired Business (measured in terms of turnover in its last accounting year) and the Purchaser does not build up or utilize the Acquired Competing Business for purposes of competing with Seller’s business of supplying Beta-Lactam API to Purchaser.  The sole and exclusive remedy of the Seller and its Affiliates for any breach by the Purchaser or any of its Affiliates shall be the termination of the obligations of KRR, the Seller and their respective Affiliates pursuant to Clause 8.6.1 (provided that such termination shall not effect the obligations of KRR, the Seller or their respective Affiliates pursuant to Clause 8.6.1 prior to such termination or the remedies of the Purchaser and its Affiliates for any breach of Clause 8.6.1 resulting from any events, actions or circumstances occurring prior to such termination whether or not known to the Purchaser or its Affiliates prior to such termination). If requested by the Seller at any time during the Purchaser Restricted Period, the Purchaser shall promptly (and not later than 10 (ten) days following receipt of such request from the Seller) deliver to the Seller a certificate executed by an officer of the Purchaser in form and substance reasonably satisfactory to the Seller certifying the compliance of the Purchaser and its Affiliates with the terms of this Clause 8.6.5.

8.6.6“Seller Competing Activities” means the business of researching, developing, testing, manufacturing, selling, marketing and distributing Beta-Lactam API.

8.6.7Unless otherwise agreed to in writing by the Seller, during the Purchaser Restricted Period, the Purchaser shall not, directly or indirectly, for itself or on behalf of or in conjunction with any other Person, and the Purchaser shall cause its Affiliates not to, directly or indirectly call upon any individual who is, at the time the individual is called upon, an employee of the Seller or any of its Affiliates engaged in any Other Businesses for the purpose or with the intent of soliciting such employee away from or out of the employ of the Seller or any of its Affiliates, or employ or offer employment to any individual who was or is employed by the Seller or any of its Affiliates unless such individual shall have ceased to be employed by the Seller or any of its Affiliates for a period of at least 12 (twelve) months prior thereto.  This Clause 8.6.7 shall not be deemed to prohibit the Purchaser or its Affiliates from engaging in general media advertising or solicitation that may be targeted to a particular geographic or technical area but that is not specifically targeted towards employees of the Seller.

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8.6.8If a final Judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Clause 8.6.1 to 8.6.7 is invalid or unenforceable, then the Parties agree that the court or tribunal shall have the power to reduce the scope, duration, or geographic area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Clause 8.6 shall be enforceable as so modified after the expiration of the time within which the Judgment may be appealed. The Parties agree that this Clause 8.6 is reasonable and necessary to protect and preserve each Party’s legitimate business interests, the value of the Transferred Assets of the Business, the Goodwill being purchased by the Purchaser hereunder and the value of the Other Businesses being retained by the Seller and to prevent any unfair advantage being conferred on either Party.

8.6.9The Parties agree that the covenants of non-competition and non-solicitation contained in this Clause 8.6 are reasonable covenants under the circumstances.

8.7Use of Trademarks

From and after the Closing, the Seller shall not, and shall cause its Affiliates not to, directly or indirectly, use or do business, or assist any Person in using or doing business, under the product specific Trademarks used in the Business.  It is agreed and understood that the Purchaser shall only use the Corporate Names in accordance with the provisions of Clause 8.14.

8.8Reports and Returns

The Seller shall promptly after the Closing prepare and file all reports and returns required by applicable Laws relating to the Business as conducted using the Transferred Assets of the Business for the period prior to the Closing Date.

8.9Access to Records

8.9.1After the Closing, the Purchaser shall retain for a period consistent with the Purchaser’s record retention policies and practices those records included in the Transferred Assets of the Business delivered to the Purchaser. The Purchaser also shall provide the Seller and their employees, agents, consultants and other advisors and representatives reasonable access thereto as may be reasonably requested to enable them to prepare financial statements or Tax Returns, deal with Tax audits or pay, discharge or perform the Excluded Liabilities.

8.9.2The Seller shall preserve all books of account, records and files in respect of the Business, of which the Purchaser have not been given possession, for the longer of such period as may be specified under any applicable Law or as requested by the Purchaser. The Seller shall and shall cause each of its Affiliates and their respective employees, agents, consultants and other advisors and representatives to, allow the Purchaser, its employees, officers, advisers and agents access and to make copies thereof, as may be reasonably requested by the Purchaser, to the books, records and files relating to the Business for the period prior to and up to the Closing Date. The Seller agrees with the Purchaser to provide all reasonable assistance, co-operation and support including

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declarations, forms and documents to enable the Purchaser to adequately deal with all litigation, Tax claims, Proceedings and assessments.

8.10Returns of Products

8.10.1The Seller shall be responsible for and shall indemnify and hold harmless the Purchaser in accordance with the provisions of Clause 7.3 and Clause 11 against any and all Losses that the Purchaser or any of its Affiliates may suffer (including the cost of replacement or returns of products of the Business), arising out of, relating to or resulting from products of the Business that were sold prior to the Closing and returned or claimed for credit by any customer or distributor within the first 12 (twelve) months after the Closing Date (collectively, “Returns”).  All indemnification payments made pursuant to this Clause 8.10 shall be treated by the Parties as adjustments to the Cash Consideration.  The Parties agree that the Purchaser shall first seek reimbursement from amounts remaining in the Escrow Amount for any indemnification payments made pursuant to this Clause 8.10.

8.10.2During the 12 (twelve) month period following the Closing Date, neither the Purchaser nor the Seller (nor any Affiliates of the Parties) shall initiate or encourage customers or distributors of the Business to return products, except as the Purchaser reasonably deems prudent or necessary due to quality, health or safety reasons or as required by Law.

8.10.3If the Purchaser takes any actions in breach of its obligations set forth in Clause 8.10.2, the Seller shall not be bound by Clauses 8.10.1 and 8.10.2 above.

8.11Refunds

If the Seller (or any of its Affiliates), on the one hand, or the Purchaser (or any of its Affiliates), on the other hand, after the Closing Date receive any funds properly belonging to the other Party in accordance with the terms of this Agreement, the receiving Party shall promptly so advise such other Party, shall segregate and hold such funds in trust for the benefit of such other Party and shall promptly deliver such funds, together with any interest earned thereon, to an account or accounts designated in writing by such other Party.

8.12Inquiries

After the Closing, the Seller shall refer to the Purchaser any inquiry that the Seller or any of its Affiliates receive relating to the Business or the Transferred Assets of the Business; provided, however, that the Seller shall not refer (but shall provide the Purchaser with prompt written notice thereof pursuant to Clause 15.1) to the Purchaser any inquiry related to any Proceeding or any claim with respect to the operation of the Business prior to the Closing.

8.13Product Complaints

Within 5 (five) days of the Seller receiving any notice or other communication from any Governmental Authority or any other Person regarding any actual, alleged or potential safety, contamination, adulteration or misbranding issues with respect to the products related to the Business or becoming aware of any fact or circumstance reasonably likely to lead to a recall, withdrawal, field correction, field action or field alert report related to any products of the

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Business, the Seller shall notify the Purchaser in writing pursuant to Clause 15.1 of such notice, communication, fact or circumstance.

8.14Use of Corporate Name

8.14.1Except as specifically provided in this Clause 8.14 or the Ancillary Agreements, from and after the Closing, neither the Purchaser nor any of its Affiliates shall use or permit their distributors to use the Corporate Name.

8.14.2Within 3 (three) months after the Closing Date, the Purchaser shall, and shall cause its Affiliates to, cease to use and remove or cover the Corporate Name from all signs and billboards.

8.14.3Within 3 (three) months after the Closing Date, the Purchaser shall, and shall cause its Affiliates to, cease to use and remove or cover the Corporate Name from all signs sales invoices, printed forms, documents, stationery, office supplies or other similar materials.

8.14.4The Purchaser and its Affiliates and designees shall have the right to market, promote, sell and distribute all Inventory existing as of the Closing bearing the Corporate Name until the expiration (on a product by product of the Business basis) of the relevant stock.

8.14.5The Purchaser and its Affiliates and designees shall have the right to manufacture, assemble and package (or have manufactured, assembled and packaged) products of the Business bearing the Corporate Name, to the same extent as such products are manufactured, assembled, packaged and sold as of the date of this Agreement, for up to 24 (twenty four) months following the Closing Date.

8.14.6The Purchaser and its Affiliates and designees may use product literature that bears the Corporate Name for up to 3 (three) months after the Closing Date. No product literature used after 3 (three) months after the Closing Date may include a reference to the Corporate Name.

8.15Seller Mixed-Use Intellectual Property Licenses

8.15.1At the Closing, the Seller shall, and shall cause its Affiliates to, grant to the Purchaser and its Affiliates (to the extent that the Seller and its Affiliates have the right to make such grant), a perpetual, irrevocable, worldwide, sole and exclusive (even with respect to the Seller and its Affiliates, except with respect to researching, developing, manufacturing, selling, marketing or distributing vaccines anywhere in the world in which case the license granted pursuant to this Clause 8.15.1 shall be co-exclusive with the Seller and its Affiliates) and royalty-free right and license (with the right to grant sublicenses) under the Seller Mixed-Use Intellectual Property, solely within the Field of Use; provided, however that the foregoing grant shall not limit the ability of the Seller and its Affiliates from using the Seller Mixed-Use Intellectual Property to conduct the Seller’s Other Businesses and all activities related thereto. For the purposes of this Agreement, the term “Field of Use” means the business of researching, evaluating and litigating originator Intellectual Property permitted under applicable Law for, developing, testing, obtaining regulatory approval for, manufacturing, negotiating third

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party contracts for, procuring materials for, performing fill and finish services for, marketing, distributing and selling injectable pharmaceutical products for all human and animal prophylactic and therapeutic uses in all formulations and dosage forms and for any and all indications, as such business is conducted anywhere in the world by the Seller and its Affiliates immediately prior to the date of this Agreement.

8.15.2The Seller and its Affiliates shall have the first right, but not the obligation, to commence, prosecute any and defend any Proceedings involving the Seller Mixed-Use Intellectual Property. In addition, the Purchaser and its Affiliates shall be entitled to join in any such Proceeding at their own expense. Each Party shall be entitled to retain any and all amounts awarded to it in any such Proceeding.

8.15.3The Purchaser agrees to comply with the terms and conditions of any underlying license to the Seller with respect to any Seller Mixed-Use Intellectual Property sublicensed to the Purchaser pursuant to this Clause 8.15.

8.16Manufacture of Non-Business Products

Following the Closing, except as specifically contemplated by the Oral Ceph Contract Manufacturing Agreement, the Fill/Finish NCE Contract Manufacturing Agreement (if executed) or the Transition Services Agreement, neither the Purchaser nor its Affiliates shall be obligated to manufacture or produce any products at the Leased Business Real Property sites that are not included in the Business or the Transferred Assets of the Business and the Seller shall transfer on or prior to the Closing Date, or the expiration or termination of the Oral Ceph Contract Manufacturing Agreement, the Fill/Finish NCE Contract Manufacturing Agreement (if executed) or the Transition Services Agreement, as applicable, the manufacture and production of such products or services to an alternate location.

8.17Transition Services

Prior to the Closing, the Parties shall negotiate in good faith and enter into a Transition Services Agreement (the “Transition Services Agreement”), the terms of which shall be in accordance with the terms and principles contained in Schedule 8.17.  Upon execution of the Transition Services Agreement by the Seller and the Purchaser, such Transition Services Agreement shall be attached as Exhibit I to this Agreement

8.18Further Action

8.18.1Subject to the other express provisions of this Agreement, the Parties shall cooperate reasonably with each other and with their respective representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement, and the Parties agree: (a) to furnish, or cause to be furnished, upon request to each other such further information; (b) to execute and deliver, or cause to be executed and delivered, to each other such other documents; and (c) to do, or cause to be done, such other acts and things, all as the other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby. Without limitation of the foregoing, the Seller shall cooperate with the Purchaser following the Closing and provide all necessary assistance, take all necessary actions as may be required and

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execute such documents to: (i) register the IP Assignments; and (ii) fully vest the Purchased Intellectual Property in the name of the Purchaser.

8.18.2Notwithstanding any other provision of this Agreement, this Agreement does not constitute an agreement to sell, convey, assign, assume, transfer or deliver any interest in any Transferred Asset of the Business, or any claim, right, benefit or obligation arising thereunder or resulting therefrom if a sale, conveyance, assignment, assumption, transfer or delivery, or an attempt to make such a sale, conveyance, assignment, assumption, transfer or delivery, without the Consent of a third party would: (a) constitute a breach or other contravention of the rights of such third party; (b) would be ineffective with respect to any party to a Contract concerning such Transferred Asset of the Business; or (c) would, upon transfer, in any way adversely affect the rights of the Purchaser under such Contract or with respect to such Transferred Asset of the Business. If the sale, conveyance, assignment, transfer or delivery by the Seller to the Purchaser of any interest in, or assumption by the Purchaser of any Liability under, any Transferred Asset of the Business requires the Consent of a third party, then such sale, conveyance, assignment, transfer, delivery or assumption shall be subject to such Consent being obtained. Without limiting Clause 8.18.3, if any Contract included in the Transferred Assets of the Business may not be assigned to the Purchaser by reason of the absence of any such Consent, the Seller shall not be required to assign such Contract.  The Purchaser shall not be required to assume any Assumed Liability arising under such Contract.

8.18.3If any Consent in respect of a Transferred Asset of the Business has not been obtained on or before the Closing Date, the Seller shall continue to use commercially reasonable efforts to obtain such Consent as promptly as practicable after the Closing until such time as such Consent has been obtained, and to cooperate in any lawful and reasonable arrangement which shall provide the Purchaser the benefits of any such Transferred Asset of the Business, including subcontracting, licensing or sublicensing to the Purchaser any or all of the Seller’s rights with respect to such Transferred Asset of the Business and including the enforcement for the benefit of the Purchaser of any and all rights of the Seller against a third party thereunder. Once a Consent for the sale, conveyance, assignment, transfer and delivery of a Transferred Asset of the Business is obtained, the Seller shall promptly assign, transfer, convey and deliver such Transferred Asset of the Business to the Purchaser, and the Purchaser shall assume the obligations under such Transferred Asset of the Business assigned, transferred, conveyed and delivered to the Purchaser from and after the date of sale, conveyance, assignment, transfer and delivery to the Purchaser pursuant to a transfer agreement which the Parties shall prepare, execute and deliver in good faith at the time of such transfer, all at no additional cost to the Purchaser. The Seller shall pay and discharge any and all out-of-pocket costs of seeking to obtain or obtaining any such Consent whether before or after the Closing Date. If and when such Consents are obtained or such other required actions have been taken, the transfer of such Transferred Asset of the Business shall be effected in accordance with the terms of this Agreement.

8.18.4The Purchaser and the Seller acknowledge that, on the Closing Date, legal title to the Governmental Authorizations and Registrations set forth on Schedule 8.18.4 shall remain with the Seller or the Seller’s Affiliates or nominees due to the requirements of

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applicable regulatory local Laws and, to the extent such Governmental Authorizations and Registrations can be transferred to the Purchaser or the Purchaser’s Affiliates, the need for the Consent of the Governmental Authorities to such transfer. Following the Closing, the Seller shall promptly provide the Purchaser or the Purchaser’s Affiliates with all reasonable assistance and support for the preparation, notarization and legalization of the documents required for, and take all actions to assign and transfer to the Purchaser or its Affiliates, Governmental Authorizations and Registrations used in or related to the Business or any Transferred Asset of the Business or required for the ownership or use of any Transferred Asset of the Business or the operation of the Business.

8.18.5Nothing in this Clause 8.18 shall be deemed a waiver by the Purchaser of its rights to have received on or before the Closing an effective assignment of all of the Transferred Assets of the Business or of the covenant of the Seller to obtain all Consents, nor shall this Clause 8.18 be deemed to constitute an agreement to exclude from the Transferred Assets of the Business any of the assets described under Clause 2.1.

8.18.6If the Parties determine that an asset, right or property that is a Transferred Asset of the Business pursuant to the terms of Clause 2.1 was not transferred to the Purchaser pursuant to Clause 2.1 and the Ancillary Agreements or licensed to the Purchaser pursuant to Clause 8.14, then the Seller shall immediately, or shall cause its Affiliates as necessary, to assign, at no additional consideration, all right, title and interest in and to such Transferred Asset of the Business to the Purchaser and take all necessary actions to obtain any necessary Consents to do so.

8.19Proposed Transaction Notice and Exercise of Right of First Negotiation Regarding the Business and the Transferred Assets of the Business.

8.19.1Proposed Transaction Notice.  If at any time during the period five (5) years after the Closing either the Purchaser desires to (a) sell or transfer the Business or the majority of the Transferred Assets of the Business to one or more third parties (whether through one transaction or a series of transactions) in a transaction or transactions where the Transferred Assets represent a majority of the assets being sold or transferred by the Purchaser in such transaction or series of transactions or (b) set up a new joint venture in India for generic NPNC and biosimilar injectable dosage forms (excluding oncology) (the “Proposed Transaction”), then the Purchaser shall, prior to holding discussions with or soliciting offers from any third party, give written notice of its desire to enter into such Proposed Transaction (the “Proposed Transaction Notice”) to the Seller, and provide the Seller (or an Affiliate of the Seller to be designated by Seller) with the right to exclusively negotiate with Purchaser during a period of 90 (ninety) days (the “Exclusivity Period”).  The Seller hereby agrees and acknowledges that the right of first negotiation of the Seller set forth in this Clause 8.19 shall not include any companies (or partial equity investments therein) or businesses in India which may be acquired after the Effective Date by the Purchaser or any of its Affiliates or any joint venture (other than for generic NPNC or biosimilar injectable forms) that the Purchaser or any of its Affiliates may establish after the Effective Date with any Person in India.

8.19.2Exercise of Right of First Negotiation.  The Seller may exercise its right to enter into the Exclusivity Period by notifying the Purchaser in writing of its election within fourteen

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(14) days of the Seller’s receipt of the Proposed Transaction Notice.  If Seller exercises its right to enter into the Exclusivity Period, (i) each of the Parties shall negotiate in good faith the terms of the Proposed Transaction, and (ii) if reaching agreement of such terms each of the Purchaser and the Seller (and its designee) shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Proposed Transaction.

8.19.3Negotiation with a Third Party.  If the Seller fails to exercise its right to enter into the Exclusivity Period or the Parties are unable, despite using good faith efforts, to agree upon the terms of the Proposed Transaction within the Exclusivity Period, the Purchaser shall be free to enter into the Proposed Transaction with a third party; provided, however, that such third party transaction shall be for a price of not less than the consideration last offered by the Seller.  In no event shall the Purchaser consummate a Proposed Transaction until after the expiration of the period during which the Seller may exercise its right to enter into the Proposed Transaction and during which the Seller has failed to exercise such right.

8.20Offer Notice and Exercise of Right of First Negotiation Regarding the Seller’s Beta-Lactam API Business.

8.20.1Offer Notice.  If at any time during the period five (5) years after the Closing, and providedthat the Purchaser is not in breach of the terms of the API Supply Agreement, the Seller desires to sell or transfer the business of researching, developing, testing, manufacturing, selling, marketing and distributing Beta-Lactam API (the “Beta-Lactam API Business”) (whether through one transaction or a series of transactions) in a transaction or transactions where the Beta-Lactam API Business represents a majority of the assets being sold or transferred by the Seller in such transaction or series of transactions (the “Proposed Beta-Lactam API Transaction”), then the Seller shall, prior to holding discussions with or soliciting offers from any third party, give written notice of its desire to enter into such API Proposed Transaction (the “Proposed Beta-Lactam API Transaction Notice”) to the Purchaser, which notice shall identify the proposed purchase price or other consideration payable to the Seller in connection with such API Proposed Transaction (the “Proposed Beta-Lactam API Purchase Consideration”) and the other material terms and conditions with respect to the API Proposed Transaction and to exclusively provide to the Purchaser (or an Affiliate of the Purchaser to be designated by Purchaser) with the right to exclusively negotiate with the Seller during a period of 90 (ninety) days (the “API Exclusivity Period”).

8.20.2Exercise of Right of First Negotiation.  The Purchaser may exercise its right to enter into the API Exclusivity Period by notifying the Seller in writing of its election within fourteen (14) days of the Purchaser’s receipt of the Proposed Beta-Lactam API Transaction Notice.  If Purchaser exercises its right to enter into the API Exclusivity Period, (i) each of the Parties shall negotiate in good faith the terms of the Proposed Beta-Lactam API Transaction, and (ii) if reaching agreement of such terms each of the Seller and the Purchaser (and its designee) shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws

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and regulations to consummate and make effective the Proposed Beta-Lactam API Transaction.

8.20.3Sale to Third Party.  If the Purchaser fails to exercise its right to enter into the API Exclusivity Period or the Parties are unable, despite using good faith efforts, to agree upon the terms of the Proposed Beta-Lactam API Transaction within the API Exclusivity Period, the Seller shall be free to enter into the Proposed Beta-Lactam API Transaction with a third party; provided, however, that such third party transaction shall be for a price of not less than the consideration last offered by the Purchaser.  In no event shall the Seller consummate a Proposed Beta-Lactam API Transaction until after the expiration of the period during which the Purchaser may exercise its right to enter into the Proposed Beta-Lactam API Transaction and during which the Purchaser has failed to exercise such right.

8.21Pharmaceutical Research and Development Employees.

During the period starting as of the Closing Date and ending as of the earlier of (i) the 2nd (second) anniversary of the Closing Date or (ii) the date that the Seller has relocated those employees engaged in research and development activities for the Other Businesses to a new facility of the Seller, the Purchaser shall allow such employees of the Other Businesses to use a portion of the first floor of the pharmaceutical research and development facility included in the Leased Business Real Property for purposes of conducting research and development activities for the Other Businesses, subject to the terms and conditions to be set forth in the Transition Services Agreement.  Notwithstanding the foregoing, provided that the Seller has used its best efforts to relocate those employees engaged in research and development activities for the Other Businesses to a new facility of the Seller prior to the expiration of such 2 (two) year period and any failure to relocate such employees of the Other Businesses to such new facility of the Seller is not attributable to the action or inaction of the Seller, the Seller shall have the right to extend the use of such portion of the first floor of the pharmaceutical research and development facility included in the Leased Business Real Property for an additional period of 1 (one) year.

9REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to the exceptions specifically set forth on the disclosure schedule delivered by the Seller to the Purchaser concurrently with the execution and delivery of this Agreement (the “Seller Disclosure Schedule”), the Seller represents and warrants to the Purchaser as of the Effective Date and as of the Closing Date as follows:

9.1Organization and Good Standing

The Seller is a company duly organized and validly existing under the Laws of India, and the Seller has all requisite company power and authority to own, lease and operate the Transferred Assets of the Business and to conduct the Business. The Seller is duly qualified or licensed to do business in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification or licensure necessary, except to the extent that the failure to be so qualified or licensed has not had or would not reasonably be expected to have a Material Adverse Effect.  Clause 9.1 of the Seller Disclosure Schedule sets forth an accurate and complete list of the Seller’s current directors and officers. The Seller has made available to the Purchaser

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accurate and complete copies of the articles of association, memorandum of association or other constituent documents of the Seller, as currently in effect, and the Seller is not in default under or in violation of any provision thereof.

9.2Authority and Enforceability

The Seller has all requisite company power and authority to execute and deliver this Agreement and each Ancillary Agreement to which the Seller is a party and to perform its obligations under this Agreement and each such Ancillary Agreement, subject to obtaining the shareholder approval contemplated in Clause 6.5. The execution, delivery and performance of this Agreement and each Ancillary Agreement to which the Seller is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Seller and the Seller has made available to the Purchaser an accurate and complete copy of the approval of the board of the directors of the Seller containing such authorization. The Seller has duly and validly executed and delivered this Agreement and, on or prior to the Closing, the Seller shall have duly and validly executed and delivered each Ancillary Agreement to which it is a party. This Agreement constitutes, and upon execution and delivery, each Ancillary Agreement to which the Seller is a party shall constitute, the valid and binding obligations of the Seller, enforceable against the Seller in accordance with their terms, except as enforceability may be limited or affected by applicable bankruptcy, insolvency, moratorium, reorganization or other Law of general application relating to or affecting creditors’ rights generally.

9.3No Conflict

Neither the execution, delivery and performance of this Agreement or any Ancillary Agreement by the Seller, nor the consummation of the transactions contemplated hereby or thereby, shall (a) directly or indirectly (with or without notice, lapse of time, or both) conflict with, result in a breach or violation of, constitute a default under, give rise to any right of revocation, withdrawal, suspension, acceleration, cancellation, termination, modification, imposition of additional obligations or loss of rights under, result in any payment becoming due under, or result in the imposition of any Encumbrances (other than Permitted Encumbrances) on any of the properties or assets of the Seller (including the Transferred Assets of the Business) under, or otherwise give rise to any right on the part of any Person to exercise any remedy or obtain any relief under: (i) the articles of association or memorandum of association of the Seller or any resolution adopted by the board of directors or shareholders of the Seller; (ii) except as set forth in Clause 9.3(a)(ii) of the Seller Disclosure Schedule, any Material Contract (as disclosed on Clause 9.13.1 of the Seller Disclosure Schedule) to which the Seller is a party, by which the Seller or its properties or assets (including the Transferred Assets of the Business) is bound or affected or pursuant to which the Seller is an obligor or a beneficiary; or, (iii) any Law, Judgment or Governmental Authorization applicable to the Seller or any of its businesses, properties or assets (including the Transferred Assets of the Business) or (b) except as set forth on Clause 9.3(b) of the Seller Disclosure Schedule, require the Seller to obtain any Consent or Governmental Authorization of, give any notice to, or make any filing or registration with, any Governmental Authority or other Person.

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9.4Financial Statements

9.4.1Attached as Clause 9.4.1 of the Seller Disclosure Schedule are the following financial statements (collectively, the “Financial Statements”):

9.4.1(a)audited consolidated and consolidating balance sheets of the Seller as of 31 March 2007, 31 March 2008 and 31 March 2009 and the related audited consolidated and consolidating profit and loss account and statements of cash flows for each of the fiscal years then ended, including in each case any notes thereto, together with the report thereon of SNB Associates, independent certified public accountants (the most recent of which, the “Balance Sheet”);

9.4.1(b)an unaudited unconsolidated balance sheet of the Seller as of 30 September 2009 (the “Interim Balance Sheet”) and the related unaudited unconsolidated profit and loss account for the 6 (six) months then ended;

9.4.1(c)unaudited carve-out balance sheets of the Business as of 31 March 2007, 31 March 2008 and 31 March 2009 (the most recent of which, the “Business Balance Sheet”) and the related unaudited profit and loss account for each of the fiscal years then ended; and

9.4.1(d)an unaudited carve-out balance sheet of the Business as of 30 September 2009 (the “Interim Business Balance Sheet”) and the related unaudited profit and loss account for 6 (six) months then ended.

9.4.2To the extent related to the Business, the Financial Statements (including the notes thereto) are correct and complete in all material respects and are consistent with the books and records of each of the Seller and the Business, as applicable. To the extent related to the Business, the Financial Statements (including the notes thereto) have been prepared in accordance with GAAP, consistently applied throughout the periods involved (except that the interim financial statements are subject to normal recurring year-end adjustments, the effect of which shall not, individually or in the aggregate, be material, and the absence of notes that, if presented, would not differ materially from the notes to the Balance Sheet or the Business Balance Sheet, as applicable). To the extent related to the Business, the Financial Statements fairly present in all material respects the financial condition, results of operations, changes in shareholders’ equity and cash flows of the Seller and the Business as of the respective dates and for the periods indicated therein.

9.5Books and Records

To the extent related to the Business, the books of account, minute books, share record books and other records of the Seller, all of which have been made available to the Purchaser, are accurate and complete in all material respects, and have been maintained in accordance with sound business practices and an adequate system of internal controls. The minute books of the Seller contain accurate and complete records of all meetings held of, and corporate action taken by, the Seller’s shareholders, directors and directors’ committees, and no such meeting has

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been held for which minutes have not been prepared and are not contained in such minute books. At the time of the Closing, all of such books and records shall be in the possession of the Seller.

9.6Inventory

All Inventory is of a quality and quantity usable and, with respect to finished goods, salable in the Ordinary Course of Business. None of such Inventory is obsolete, damaged, defective, distressed, out of specification as set forth in the Registrations, or of below-standard quality, except that which has been or shall be written off or written down to net realizable value on the Balance Sheet, the Business Balance Sheet, the Interim Balance Sheet, the Interim Business Balance Sheet and the accounting records of the Seller as of the Closing Date in accordance with the past custom and practice of the Seller. The values at which such Inventory is carried are in accordance with GAAP. The quantities of Inventory are reasonable in the Ordinary Course of Business. Since the date of the Balance Sheet, the Seller has continued to replenish Inventory in the Ordinary Course of Business and at a cost not exceeding market prices prevailing at the time of manufacture. Except as set forth on Clause 9.6 of the Seller Disclosure Schedule, all Inventory is maintained at the Leased Business Real Property and no Inventory is held on a consignment basis. The Seller does not have any commitments to purchase raw materials other than in the Ordinary Course of Business.

9.7No Undisclosed Liabilities

Except as set forth in the Financial Statements, there are no Liabilities of the Business that are required to be reflected in a balance sheet of the Business prepared in accordance with GAAP, other than Liabilities (a) arising after the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practices or (b) that constitute Excluded Liabilities.

9.8Absence of Certain Changes and Events

Since the date of the Balance Sheet: (a) the Seller has conducted the Business only in the Ordinary Course of Business; and (b) there has not been any Material Adverse Effect. Without limiting the generality of the foregoing, since the date of the Balance Sheet, with respect to the Business or the Transferred Assets of the Business, as applicable, there has not been any:

9.8.1amendment or authorization of any amendment to the Seller’s articles of association or memorandum of association;

9.8.2except as set forth on Clause 9.8.2 of the Seller Disclosure Schedule, (i) issuance, incurrence, assumption, guarantee or amendment of any Indebtedness; (ii) loans, advances (other than routine advances to the Seller’s employees in the Ordinary Course of Business) or capital contributions to, or investment in, any other Person, other than in accordance with the Seller’s cash investment policy as described in Clause 9.8.2(ii) of the Seller Disclosure Schedule; or (iii) entry into any hedging Contract or other financial agreement or arrangement designed to protect the Seller against fluctuations in commodities prices or exchange rates;

9.8.3except as set forth in Clause 9.8.3 of the Seller Disclosure Schedule, sale, lease, license, pledge or other disposition of, or Encumbrance (other than a Permitted Encumbrance)

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on, any of the Transferred Assets of the Business (other than sales of inventory for fair consideration and in the Ordinary Course of Business);

9.8.4acquisition, (i) by merger or consolidation with, or by purchase of all or a substantial portion of the assets or any stock of, or by any other manner, any business or Person; or (ii) of any properties or assets related to or in connection with the operation of the Business that are material to the Seller individually or in the aggregate, except purchases of inventory for fair consideration and in the Ordinary Course of Business;

9.8.5damage to, or destruction or loss of, any Transferred Assets of the Business with an aggregate value to the Seller or any of its Affiliates in excess of INR 12,500,000 (Indian Rupee Twelve Million Five Hundred Thousand), whether or not covered by insurance;

9.8.6entry into, modification, acceleration, cancellation, termination, default under, or receipt of notice of an event or circumstance that (with or without the lapse of time) would give rise to an acceleration, cancellation, termination or default under, any Material Contract (or series of related Material Contracts) related to the Business, which involves a total remaining commitment by or to the Seller or any of its Affiliates of at least INR 25,000,000 (Indian Rupee Twenty Five Million) or otherwise outside the Ordinary Course of Business;

9.8.7(i) except as required by Law, adoption, entry into, termination or amendment of any Business Employee Plan, and with respect to the Business Employees, any collective bargaining agreement or employment, severance or similar Contract; (ii) material increase in the compensation, allowances or fringe benefits of, or payment of any bonus to, any director, officer, Business Employee or consultant or other independent contractor hired or retained by the Seller or any of its Affiliates in connection with the Business; (iii) amendment or acceleration by the Seller or any of its Affiliates of the payment, right to payment or vesting of any compensation or benefits in respect of the Business Employees; (iv) payment by the Seller or any of its Affiliates of any benefit not provided for as of the date of this Agreement under any Business Employee Plan; (v) except for merit increases or bonus payments made in the Ordinary Course of Business, grant by the Seller or any of its Affiliates of any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, or the removal of existing restrictions in any Business Employee Plan or Contract or awards made thereunder; or (vi) any action by the Seller or any of its Affiliates other than in the Ordinary Course of Business to fund or in any other way secure the payment of compensation or benefits under any Business Employee Plan;

9.8.8cancellation, compromise, release or waiver of any claims or rights (or series of related claims or rights) related to the Business or the Transferred Assets of the Business with a value to the Seller or any of its Affiliates exceeding INR 12,500,000 (Indian Rupee Twelve Million Five Hundred Thousand)or otherwise outside of the Ordinary Course of Business;

9.8.9settlement or compromise in connection with any Proceeding involving the Business or the Transferred Assets of the Business exceeding INR 12,500,000 (Indian Rupee Twelve Million Five Hundred Thousand);

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9.8.10capital expenditure or other expenditure by the Seller or any of its Affiliates with respect to property, plant or equipment for use in the Business in excess of INR 150,000,000 (Indian Rupee One Hundred Fifty Million) in the aggregate or in excess of INR 75,000,000 (Indian Rupee Seventy Five Million) in the aggregate for the period between the Effective Date and the Closing;

9.8.11change in the Seller’s accounting principles, methods or practices or investment practices, including any changes as were necessary to conform with GAAP;

9.8.12acceleration or delay in the payment of accounts payable or other Liabilities or in the collection of notes or accounts receivable;

9.8.13increase in the level of the delinquent accounts payable beyond that which is incurred in the Ordinary Course of Business and is consistent with the level in the Financial Statements;

9.8.14making or rescission by the Seller of any Tax election, settlement or compromise of any Tax Liability or amendment of any Tax Return;

9.8.15act or omission that would impair or otherwise adversely affect the Business, any of the Transferred Assets of the Business or Assumed Liabilities or the performance by the Seller and its Affiliates of their obligations under this Agreement or any Ancillary Agreement; or

9.8.16agreement by the Seller or any of its Affiliates, whether in writing or otherwise, to do any of the foregoing.

9.9Assets

Clause 9.9 of the Seller Disclosure Schedule sets forth a complete and accurate description of the ownership, use, type and location of the Transferred Assets of the Business. Except as set forth on Clause 9.9 of the Seller Disclosure Schedule, the Seller has good and marketable title to all of the Transferred Assets of the Business, free and clear of all Encumbrances (other than the Permitted Encumbrances), or in the case of leased properties and assets, valid leasehold interests or licenses in such leased or licensed properties or assets. Except as set forth on Clause 9.9 of the Seller Disclosure Schedule, the Seller is in possession of all of the Transferred Assets of the Business. Except as set forth on Clause 9.9 of the Seller Disclosure Schedule, the Transferred Assets of the Business constitute all of the properties and assets used in or necessary to conduct the Business as currently conducted by the Seller and its Affiliates.  Each tangible asset included in the Transferred Assets of the Business is in good operating condition and repair, ordinary wear and tear excepted, is free from latent and patent defects, is suitable for the purposes for which it is being used and is currently planned to be used by the Seller or its Affiliates and has been maintained in accordance with normal industry practice. The Seller or its Affiliates have in full force and effect maintenance Contracts with independent specialist contractors in respect of all Transferred Assets of the Business for which it is normal or prudent to have maintenance Contracts and in respect of all Transferred Assets of the Business for which the Seller or any of its Affiliates are obliged to maintain or repair such Transferred Assets of the Business under a leasing or similar Contract.

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9.10Real Property

9.10.1The Seller has no Owned Business Real Property, nor any outstanding options, rights of first offer or rights of first refusal to purchase Real Property which is used, or to be used, in the conduct of the Business.

9.10.2Clause 9.10.2 of the Seller Disclosure Schedule sets forth an accurate and complete description, by street address, of the subject leased real property, the date and term of the lease, sublease or other occupancy right, the names of the parties thereto, each amendment thereto and the aggregate annual rent payable thereunder, of the Leased Business Real Property. The Seller has delivered to the Purchaser accurate and complete copies of all leases relating to the Leased Business Real Property. With respect to each such lease, neither the Seller nor any of its Affiliates has exercised or given any notice of exercise of, nor has any lessor or landlord exercised or given any notice of exercise by such party of, any option, right of first offer or right of first refusal contained in any such lease. The rental set forth in each lease of the Leased Business Real Property is the actual rental being paid, and there are no separate agreements or understandings with respect to the same. Each lease of the Leased Business Real Property grants the Seller or one of its Affiliates the exclusive right to use, occupy and/or collect and store raw materials at, the demised premises thereunder, as applicable.

9.10.3The Seller or one of its Affiliates has valid leasehold interests in the Leased Business Real Property, in each case, free and clear of all Encumbrances (other than Permitted Encumbrances) except as described in Clause 9.10.3 of the Seller Disclosure Schedule.

9.10.4Except as set forth on Clause 9.10.4 of the Seller Disclosure Schedule, the Seller or its Affiliate, as applicable, is in peaceful and undisturbed possession of the Leased Business Real Property. There are no contractual or legal restrictions that preclude or restrict the ability of the Seller or its Affiliates to use such Leased Business Real Property for the purposes for which they are currently being used and currently planned to be used by the Seller or its Affiliates. Immediately following the Closing, subject to the Seller’s paying the transfer charges levied by any landlord of the Leased Business Real Property, the Purchaser or its Affiliates shall have the ability to use the Leased Business Real Property for the purposes that the Seller or its Affiliates are currently using and are permitted to use the Leased Business Real Property and the purposes for which the Seller or its Affiliates is currently planning on using the Leased Business Real Property.

9.10.5Neither the Seller nor any of its Affiliates has subleased, licensed or otherwise granted to any Person the right to use or occupy any portion of the Leased Business Real Property, and neither Seller nor any of its Affiliates has received notice, and the Seller and each applicable Affiliate has no Knowledge of any claim of any Person to the contrary. Except as set forth on Clause 9.10.5 of the Seller Disclosure Schedule, there are no Contracts outstanding for the sale, exchange, Encumbrance, lease or transfer of any of the Leased Business Real Property, or any portion thereof.

9.10.6Use of the Leased Business Real Property for the various purposes for which they are presently being used is permitted as of right under all applicable Laws, including Planning and Zoning Laws. All buildings, structures, fixtures and other improvements included in the Leased Business Real Property (collectively, the “Improvements”) are in

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compliance in all material respects with all applicable Laws, including those pertaining to health and safety, zoning, building and the disabled. No part of any Improvement encroaches on any Real Property not included in the Leased Business Real Property, and there are no Improvements primarily situated on adjoining Real Property which encroach on any part of the Leased Business Real Property. Each parcel of Leased Business Real Property (a) abuts on and has direct vehicular access to an improved public road or has access to an improved public or municipal road via a permanent, irrevocable, appurtenant easement improved with a road benefiting such parcel of Leased Business Real Property and comprising a part of the Leased Business Real Property; (b) is supplied with public or municipal or quasi-public utilities and other services appropriate for the operation of the Improvement located on such parcel and the operation of the Business thereon; (c) is not located within any flood plain or area subject to wetlands regulation or any similar restriction; and (d) is contiguous. To the Knowledge of the Seller, there is no existing plan to modify or realign any street or highway or, to the Knowledge of the Seller, any proposed plan to modify or realign any street or highway or any proposed or threatened eminent domain or other Proceeding that, in any case would result in the taking of all or any part of any Leased Business Real Property or that would prevent or hinder the continued use and enjoyment of any Leased Business Real Property as used in the conduct of the Business.

9.10.7The Improvements have been constructed in all material respects in accordance with applicable Laws and are structurally sound, are in good operating condition and repair, ordinary wear and tear excepted, are free from latent and patent defects, are suitable for the purposes for which they are being used and are currently planned to be used by the Seller or its Affiliates and have been maintained in accordance with normal industry practice. The Leased Business Real Property constitutes all of the Real Property necessary to conduct the manufacture of the products of the Business (other than those products of the Business which are manufactured by third parties pursuant to Contracts) as conducted and as currently planned to be conducted by the Seller and its Affiliates.

9.10.8All certificates of occupancy and completion and other Consents (collectively, the “Real Property Permits”) of all Governmental Authorities, or any other Person having jurisdiction over the Leased Business Real Property that are required or appropriate for the Purchaser or its Affiliates to use or occupy the Leased Business Real Property or operate the Business as currently conducted thereon, have been issued and are in full force and effect. Clause 9.10.8 of the Seller Disclosure Schedule sets forth an accurate and complete list of all Real Property Permits held by the Seller or its Affiliates with respect to each parcel of the Leased Business Real Property. The Seller has made available to the Purchaser accurate and complete copies of all Real Property Permits. Neither the Seller not any of its Affiliates has received any notice from any Governmental Authority or other Person having jurisdiction over the Leased Business Real Property threatening a suspension, revocation, modification or cancellation of any Real Property Permit and no event has occurred or circumstance exists that could reasonably be expected to give rise to the issuance of any such notice or the taking of any such action. Except as set forth on Clause 9.10.8 of the Seller Disclosure Schedule, the Real Property Permits are transferable to the Purchaser or its Affiliates without the Consent of the issuing Governmental Authority or any other Person, no disclosure, filing or other action by the Seller or any of its Affiliates is required in connection with such

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transfer and neither the Purchaser nor any of its Affiliates shall be required to assume any additional Liabilities under the Real Property Permits as a result of such transfer.

9.10.9The parcels constituting the Leased Business Real Property are assessed separately from all other adjacent property not constituting the Leased Business Real Property for purposes of real estate Taxes assessed to, or paid by, the Seller or any of its Affiliates. There are no Taxes, assessments, fees, charges or similar costs or expenses imposed by any Governmental Authority, association or other Person having jurisdiction over the Leased Business Real Property with respect to any Leased Business Real Property or portion thereof that are delinquent and there is no pending or, to the Knowledge of the Seller, threatened increase or special assessment or reassessment of any such Taxes, costs or expenses.

9.10.10The Leased Business Real Property is not reserved for any public purpose.

9.10.11The Seller has received all Consents and no objection certificates (each, an “NOC”) required for the use of the Leased Business Real Property for industrial purposes including Change of Land Use Certificates from the appropriate Governmental Authority, factory Consents, environmental Consents, Consents from the Gram Panchayat and other local statutory and municipal bodies as may be required from time to time and has performed all conditions imposed by such NOC’s and Consents and the NOC’s and Consents are valid and subsisting.

9.10.12There are no pending Proceedings against the Seller or any Person on behalf of the Seller, by any Governmental Authority with respect to the use of the Leased Business Real Property or any part thereof for non-agricultural purposes, or with respect to the non-payment of conversion fees for non-agricultural use or with respect to the conversion of the Leased Business Real Property from agricultural land to non-agricultural land.

9.10.13No notices are pending against the Seller or any Person on behalf of the Seller relating to the Leased Business Real Property either from any Governmental Authority under the provisions of the Municipal Corporation Act, the Epidemic Diseases Act, the Land Acquisition Act, the Town Planning Act, the Defence of India Act, the Factories Act, the Industrial Disputes Act or other applicable Laws (including any notice for acquisition or requisition of the Leased Business Real Property or any part thereof).

9.10.14All Taxes, outgoings and all other payments due and payable in respect of the Leased Business Real Property, including property Taxes and electricity and water charges, have been paid in full.

9.11Intellectual Property

9.11.1The Purchased Intellectual Property, together with the rights granted to the Purchaser pursuant to Clause 8.15, includes all material rights to Intellectual Property owned by the Seller or any of its Affiliates (the “Owned Intellectual Property”) for the conduct of the Business as conducted as of the date of this Agreement.

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9.11.2The Seller or one of its Affiliates owns all right, title and interest in and to or otherwise possesses valid rights in the Purchased Intellectual Property.  To the Seller’s Knowledge, the Purchased Intellectual Property shall not be lost, or rendered liable to termination, by virtue of the transactions contemplated by this Agreement.

9.11.3To the Seller’s Knowledge, the Seller or its Affiliates are the sole and exclusive owners of, and have valid title to, free and clear of all Encumbrances (other than Permitted Encumbrances), the Owned Intellectual Property.  Immediately following the Closing, the Purchaser or its Affiliates shall be the sole and absolute owners of, and shall have valid title to, free and clear of all Encumbrances (other than Permitted Encumbrances), the Owned Intellectual Property, and shall have the full right to use, license, assign and transfer the Owned Intellectual Property in the same manner and on the same terms and conditions that the Seller or its Affiliates had immediately prior to the Closing.

9.11.4Except as set forth on Clause 9.11.4 of the Seller Disclosure Schedule, the Seller has not licensed or otherwise granted any rights in any material Owned Intellectual Property to any Person.

9.11.5There are no patents licensed by the Seller which are used in the Business.

9.11.6Clause 9.11.6 of the Seller Disclosure Schedule sets forth an accurate and complete list of all patent, copyright and trademark registrations and applications with any Governmental Authority included in the Purchased Intellectual Property which are in Seller’s name or that of any of Seller’s Affiliates (the “Registered Owned Intellectual Property”).  To the Knowledge of Seller, (a) all registrations and applications with any Governmental Authority with respect to the Registered Owned Intellectual Property have been timely and duly filed, prosecution for such applications has been attended to and all maintenance and related fees have been paid and (b) no event has occurred or circumstance exists that could render the ownership rights of the Seller or any of its Affiliates in and to any of the Registered Owned Intellectual Property null, void, invalid or unenforceable.  The Registered Owned Intellectual Property is registered in or assigned to the legal name of the Seller or the applicable Affiliate of the Seller owning such Registered Owned Intellectual Property in accordance with applicable Laws.

9.11.7Neither Seller nor any of its Affiliates has agreed to indemnify, defend or otherwise hold harmless any other Person with respect to Losses resulting or arising from the ownership or use of the Purchased Intellectual Property, except pursuant to those Contracts listed on Clause 9.11.7 of the Seller Disclosure Schedule.

9.11.8Except as specified in Clause 9.11.8 of the Seller Disclosure Schedule:

9.11.8(a)no Proceedings have been instituted or, to the Seller’s Knowledge are pending or threatened in writing against the Seller or any of its Affiliates, that challenge the right of the Seller or any of its Affiliates with respect to the use or ownership of the Purchased Intellectual Property;

9.11.8(b)no opposition, re-examination, revocation, nullity suit or other Proceeding is or has been pending involving the Seller or any of its

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Affiliates with respect to the Purchased Intellectual Property or, to the Seller’s Knowledge, threatened in writing, in which the scope, validity, or enforceability of any of Purchased Intellectual Property is being or has been challenged;

9.11.8(c)neither the Seller nor any of its Affiliates have received any written notice in the last 3 (three) years alleging, and otherwise have no Knowledge, that the Seller or any of its Affiliates with respect to the conduct of the Business infringes the Intellectual Property rights of any other Person anywhere in the world.

9.11.8(d)to the Seller’s Knowledge, no legal or natural Person has infringed any of the Purchased Intellectual Property in the last 3 (three) years, or is currently doing so, except to the extent such infringement would not have a material adverse effect.

9.11.8(e)to the Seller’s Knowledge, there has been no misappropriation of any trade secrets or other material confidential Intellectual Property rights used in connection with the Business by any Person, except to the extent such misappropriation would not have a material adverse effect.

9.11.9The Seller and each of its applicable Affiliates has taken commercially reasonable steps necessary to protect and preserve each item of material Owned Intellectual Property, including the know-how, trade secrets and other confidential business information included in any material Owned Intellectual Property. The Seller has taken commercially reasonable steps necessary to comply with all applicable obligations to protect the confidentiality of information provided to the Seller or any of its Affiliates by any other Person. To the Knowledge of the Seller, no current or former employees, consultants, third party manufacturers or other independent contractors of the Business have violated any trade secrets or confidential business information included in the material Owned Intellectual Property.

9.11.10Neither the Seller nor any of its Affiliates is currently required to pay any royalty or similar charge to any Person in respect of Seller’s use of any of the Purchased Intellectual Property.

9.11.11To the Seller’s Knowledge, none of the Purchased Intellectual Property was developed using any Governmental Authority or university funding or facilities, nor was it obtained from a Governmental Authority or university, except to the extent it would not have a Material Adverse Effect. Neither the Seller nor any of its Affiliates is a member of, and neither the Seller nor any of its Affiliates is obligated to license or disclose any Material Purchased Intellectual Property to any official or de facto standards setting or similar organization or to any such organization’s members.

9.12Software

9.12.1Clause 9.12.1 of the Seller Disclosure Schedule sets forth an accurate and complete list of all material Purchased Software necessary to conduct the Business, excluding any off-

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the-shelf software and/or other commercially available Software which can be licensed or procured by Purchaser for less than $25,000 (the “Material Purchased Software”).

9.12.2The Seller has taken commercially reasonable steps to assure that all Software and data residing on its computer networks is free of viruses and other disruptive technological means, except to the extent it would not have a material adverse effect. To the Seller’s Knowledge, the Material Purchased Software does not contain any computer code or other mechanism of any kind designed to disrupt, disable or harm in any manner the operation of any Software or hardware or other business processes or to misuse, gain unauthorized access to or misappropriate any business or personal information, including worms, bombs, backdoors, clocks, timers, or other disabling device code, or designs or routines that cause the Software or information to be erased, inoperable, or otherwise incapable of being used, either automatically or with passage of time or upon command, except in each case to the extent it would not have a material adverse effect.

9.13Contracts

9.13.1Clause 9.13.1 of the Seller Disclosure Schedule, which such Schedule is arranged and denotes the subclauses corresponding to the numbered subclauses in this Clause 9.13.1, sets forth an accurate and complete list of each of the following Contracts (or group of related Contracts) to which the Seller or any of its Affiliates is a party, by which the Seller, any of its Affiliates, or any of the Transferred Assets of the Business is bound or affected or pursuant to which the Seller or any of its Affiliates is an obligor or a beneficiary, that is related to the Business (collectively, the “Material Contracts”):

9.13.1(a)is for the purchase of materials, supplies, goods, services, equipment or other assets, the performance of which extends over a period of more than 1 (one) year or that otherwise involves an amount or value in excess of INR 5,000,000 (Indian Rupee Five Million);

9.13.1(b)is for the sale of products or other assets, the performance of which extends over a period of more than 1 (one) year or that otherwise involves an amount or value in excess of INR 5,000,000 (Indian Rupee Five Million) and is (a) exclusively related to the Business or (b) used in the Business;

9.13.1(c)is for capital expenditures in excess of INR 5,000,000 (Indian Rupee Five Million);

9.13.1(d)is a lease or sublease of any Real Property or personal property, or that otherwise affects the ownership of, leasing of, title to, or use of, any Real Property or personal property (other than personal property leases and conditional sales agreements having a value per item or aggregate payments of less than INR 1,000,000 (Indian Rupee One Million) and a term of less than 1 (one) year);

9.13.1(e)is a license or other Contract listed on Clause 9.11.4 of the Seller Disclosure Schedule under which the Seller or any of its Affiliates has

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licensed or otherwise granted rights in any Purchased Intellectual Property to any Person;

9.13.1(f)is for the employment of, or receipt of any services from, any Business Employee, or any other Person whose services relate directly to the Business, on a full-time, part-time, consulting or other basis providing annual compensation in excess of INR 500,000 (Indian Rupee Five Hundred Thousand);

9.13.1(g)is for benefits provided to Business Employees of the Seller, including insurance funded pensions and third party administration Contracts;

9.13.1(h)provides for severance, termination or similar pay to the Business Employees;

9.13.1(i)provides for a loan or advance of any amount to any Business Employee, other than advances for travel and other appropriate business expenses in the Ordinary Course of Business;

9.13.1(j)is a joint venture, partnership or other Contract involving any joint conduct or sharing of any business, venture or enterprise, or a sharing of profits or losses or pursuant to which the Seller or any of its Affiliates has any ownership interest in any other Person or business enterprise;

9.13.1(k)contains any covenant limiting the right of the Seller or any of its Affiliates to engage in the Business or to compete (geographically or otherwise) with any Person in conducting the Business, granting any exclusive rights to make, sell or distribute the products of the Business, granting any “most favoured nations” or similar rights with respect to the products of the Business, or otherwise prohibiting or limiting the right of the Seller or any of its Affiliates to make, sell or distribute any products of the Business;

9.13.1(l)contains an agreement by the Seller or any of its Affiliates to indemnify, defend or otherwise hold harmless any Person with respect to any Losses resulting or arising from the operation of the Business;

9.13.1(m)involves payments based, in whole or in part, on profits, revenues, fee income or other financial performance measures of the Seller or the Business;

9.13.1(n)involves a power of attorney granted by or on behalf of the Seller or any of its Affiliates;

9.13.1(o)is a written warranty, guaranty or other similar undertaking with respect to contractual performance extended by the Seller or any of its Affiliates other than in the Ordinary Course of Business;

9.13.1(p)is a settlement agreement with respect to any pending or threatened Proceeding entered into by the Seller or any of its Affiliates within 3

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(three) years prior to the date of this Agreement exceeding INR 1,000,000 (Indian Rupee One Million);

9.13.1(q)was entered into other than in the Ordinary Course of Business and that involves an amount or value in excess of INR 1,000,000 (Indian Rupee One Million) or contains or provides for an express undertaking by the Seller or any of its Affiliates to be responsible for consequential damages; or

9.13.1(r)is otherwise material to the Business, the Transferred Assets of the Business or the Assumed Liabilities or under which the consequences of a default or termination could impair the ability of the Seller or any of its Affiliates to perform any of its obligations under this Agreement or any Ancillary Agreement or otherwise have a material adverse affect on the Business, any of the Transferred Assets of the Business or Assumed Liabilities.

9.13.2The Seller has made available to the Purchaser an accurate and complete copy (in the case of each written Material Contract) or an accurate and complete written summary (in the case of each oral Material Contract) of each Material Contract required to be listed in Clause 9.13.1 of the Seller Disclosure Schedule. With respect to each such Material Contract required to be listed:

9.13.2(a)to the Knowledge of Seller, each Material Contract is legal, valid, binding, enforceable and in full force and effect except to the extent it has previously expired in accordance with its terms or its enforceability may be limited or affected by applicable bankruptcy, insolvency, moratorium, reorganization or other Law of general application relating to or affecting creditors’ rights generally;

9.13.2(b)the Seller, its Affiliates, and, to the Knowledge of the Seller, the other party to the Material Contract have performed all of their respective obligations in all material respects required to be performed under the Material Contract;

9.13.2(c)except as set forth on Clause 9.13.2(c) of the Seller Disclosure Schedule, neither the Seller, any of its Affiliates nor, to the Knowledge of the Seller, any other party to the Material Contract, is in material breach or default under the Material Contract and no event has occurred or circumstance exists that (with or without notice, lapse of time, or both) would constitute a material breach or default by the Seller, any of its Affiliates, or, to the Knowledge of the Seller, by any such other party, or give rise to any right of revocation, withdrawal, suspension, acceleration, cancellation, termination, modification, imposition of additional obligations or loss of rights under, result in any payment becoming due under, result in the imposition of any Encumbrances (other than Permitted Encumbrances) on any of the Transferred Assets of the Business under, or otherwise give rise to any right on the part of any Person to exercise any remedy or obtain any relief under the

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Material Contract nor has the Seller or any of its Affiliates given or received notice or other communication alleging the same; and

9.13.2(d)the Material Contract is not under negotiation (nor has written demand for any renegotiation been made), to the Knowledge of Seller, no party has repudiated any portion of the Material Contract.

9.13.3To the Knowledge of the Seller, neither the Seller nor any director, agent, employee or consultant or other independent contractor of the Seller or any of its Affiliates is a party to, or is otherwise bound by, any Contract, including any confidentiality, non-competition or proprietary rights agreement, with any other Person that in any way would materially affect (a) the performance of his or her duties for the Seller or its Affiliates in connection with the Business; (b) his or her ability to assign to the Seller or its Affiliates rights to any invention, improvement, discovery or information relating to the Business; or (c) the ability of the Seller or its Affiliates to conduct the Business as currently conducted or as currently proposed to be conducted.

9.13.4Except as set forth in Clause 9.13.4 of the Seller Disclosure Schedule, neither the Seller nor any of its Affiliates is, nor has the Seller or any of its Affiliates at any time within the past 3 (three) years, been party to any Contract with or derived any revenue from (a) any Governmental Authority; (b) any prime contractor to any Governmental Authority; or (c) any subcontractor with respect to any Contract described in clause (a) or (b).

9.14Indebtedness Contracts

9.14.1Clause 9.14.1 of the Seller Disclosure Schedule sets forth an accurate and complete list of each Contract which is a mortgage, indenture, guarantee, loan or credit agreement, note, intercreditor agreement, security agreement, deed of hypothecation, pledge agreement, bilateral agreement, debenture, bond, letter of credit or other Contract relating to Indebtedness of the Seller or its Affiliates, other than accounts receivables and payables in the Ordinary Course of Business (the “Indebtedness Contracts”), including: (a) the Seller or Seller Affiliate party thereto; (b) all other Persons party to such Indebtedness Contract; (c) the respective principal amounts currently outstanding thereunder; (d) any Transferred Assets of the Business which form any part of the collateral under such Indebtedness Contracts and the location of such collateral; and (e) any Releases or Consents that must be obtained or notices given under such Indebtedness Contracts in connection with the transactions contemplated by this Agreement or the Ancillary Agreements. The Seller has made available to the Purchaser accurate, complete and final executed versions of all the Indebtedness Contracts of the Seller and its Affiliates for review.

9.14.2With respect to each Indebtedness Contract: (a) the Indebtedness Contract is legal, valid, binding, enforceable and in full force and effect except to the extent it has previously expired in accordance with its terms or as enforceability may be limited or affected by applicable bankruptcy, insolvency, moratorium, reorganization or other Law of general application relating to or affecting creditors’ rights generally; (b) the Seller and its Affiliates, and, to the Knowledge of the Seller, the other parties to the Indebtedness Contract have performed all of their respective obligations in all material respects required to be performed under the Indebtedness Contract; and (c) except as

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set forth on Clause 9.14.2(c) of the Seller Disclosure Schedule, none of the Seller, any of its Affiliates, nor, to the Knowledge of the Seller, any other party to the Indebtedness Contract is in breach or default under the Indebtedness Contract and no event has occurred or circumstance exists that (with or without notice, lapse of time or both) would constitute a breach or default by the Seller, any of its Affiliates, or, to the Knowledge of the Seller, by any such other party, or give rise to any right of revocation, withdrawal, suspension, acceleration, cancellation, termination, modification, imposition of additional obligations or loss of rights under, result in any payment becoming due under, result in the imposition of any Encumbrances (other than Permitted Encumbrances) on any of the Transferred Assets of the Business under, or otherwise give rise to any right on the part of any Person to exercise any remedy or obtain any relief under, the Indebtedness Contract, nor has the Seller, any of its Affiliates, nor to the Knowledge of the Seller, has any other party to the Indebtedness Contracts given or received notice or other communication alleging the same.

9.14.3The funds made available to the Seller or its Affiliates pursuant to the Indebtedness Contracts have been applied or utilized for the purpose for which they were raised or obtained.

9.14.4Except as set forth on Clause 9.14.4 of the Seller Disclosure Schedule, none of the Indebtedness Contracts affect or shall affect the transactions contemplated by this Agreement or the Ancillary Agreements or the rights of the Purchaser to the Transferred Assets of the Business pursuant to the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

9.14.5No event or circumstance has occurred or circumstance exists that (with or without notice, lapse of time, or both) would or could lead to an event of default or breach under the Indebtedness Contracts which would affect the transactions contemplated by this Agreement or the Ancillary Agreements or the rights of the Purchaser to the Transferred Assets of the Business following the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

9.14.6Neither the Seller nor any of its Affiliates has materially defaulted in any payment obligations, including repayment of amounts due to any lenders or other providers of funds provided pursuant to the Indebtedness Contracts, including financial institutions, banks and debenture holders.

9.14.7Except as set forth on Clause 9.14.7 of the Seller Disclosure Schedule, neither the Seller not any of its Affiliates has been required to provide or agreed to provide or provided any of the Transferred Assets of the Business as security in respect of the loans availed by them.

9.15Tax Matters

9.15.1The Seller has timely filed all Tax Returns that it was required to file in accordance with applicable Laws, and each such Tax Return is accurate and complete in all material respects. The Seller has timely paid all Taxes due with respect to the taxable periods covered by such Tax Returns and all other Taxes (whether or not shown on any Tax Return). Except as set forth in Clause 9.15.1 of the Seller Disclosure Schedule, no claim

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has ever been made by a Governmental Authority in a jurisdiction where the Seller does not file a Tax Return that it is or may be subject to taxation by that jurisdiction. The Seller has not requested an extension of time within which to file any Tax Return which has not since been filed. The Seller has made available to the Purchaser accurate and complete copies of all Tax Returns of the Seller (and their predecessors) for the financial years ended March 31 2007, 2008 and 2009.

9.15.2The Seller does not have and nor shall it have additional Liability for Taxes with respect to any Tax Return which was required by applicable Laws to be filed on or before the Closing Date, other than those reflected as Liabilities in line items on the Balance Sheet. The amounts reflected as Liabilities in line items on the Balance Sheet and in the notes to accounts under the head “contingent liabilities” for all Taxes are adequate to cover all unpaid Liabilities for all Taxes, whether or not disputed, that have accrued with respect to, or are applicable to, the period ended on and including the Closing Date. Since the date of the Balance Sheet, the Seller has not incurred any Liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP.

9.15.3All Taxes that the Seller is required by Law to withhold or collect and amounts required to be withheld or collected in connection with any amount paid or owing to any employee, independent contractor, creditor, shareholder, or other Person, have been duly withheld or collected. To the extent required by applicable Law, all such amounts have been paid over to the proper Governmental Authority.

9.15.4To the Knowledge of the Seller, no Governmental Authority shall assess any additional Taxes for any period for which Tax Returns have been filed. Except as set forth in Clause 9.15.4 of the Seller Disclosure Schedule, no federal, state, local or other Proceedings are pending or being conducted, nor has the Seller received any: (a) notice from any Governmental Authority that any such audit or other Proceeding is pending, threatened or contemplated; (b) request for information related to Tax matters; or (c) notice of Tax dues or proposed adjustment for any amount of Tax proposed, asserted or assessed by any Governmental Authority against the Seller, with respect to any Taxes due from or with respect to the Seller or any Tax Return filed by or with respect to the Seller. The Seller has not granted or been requested to grant any waiver of any statutes of limitations applicable to any material claim for Taxes or with respect to any material Tax assessment or Tax dues (including Tax demands raised, whether on completion or assessment, including interest and penalty, if any). The Seller has delivered to the Purchaser accurate and complete copies of all examination reports and statements of dues assessed against or agreed to by the Seller since last day of tax year 6 (six) years prior.

9.15.5All Tax deficiencies that have been claimed, proposed or asserted in writing against the Seller has been fully paid or finally settled, and no issue has been raised in writing in any examination which, by application of similar principles, could be expected to result in the proposal or assertion of a Tax deficiency for any other year not so examined.

9.15.6No position has been taken on any Tax Return with respect to the Business or the operations of the Seller for a taxable period for which the statute of limitations for the assessment of any Taxes with respect thereto has not expired that is contrary to any publicly announced position of a taxing authority or that is substantially similar to any

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position which a taxing authority has successfully challenged in the course of an examination of a Tax Return of the Seller. The Seller has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of income Tax.

9.15.7Except as set forth on Clause 9.15.7 of the Seller Disclosure Schedule, none of the Transferred Assets of the Business are subject to any prior agreement or arrangement, the effect of which: (a) results in the Seller or any of its Affiliates, as applicable, not being treated as the owner of such Transferred Assets of the Business for income Tax purposes, or (b) shall or may result in the denial or withdrawal of benefits or exemptions being availed of by the Purchaser following the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

9.15.8Except as set forth in Clause 9.15.8 of the Seller Disclosure Schedule, there are no Encumbrances (other than Permitted Encumbrances) upon any of the Transferred Assets of the Business arising from any failure or alleged failure to pay any Tax.

9.15.9Clause 9.15.9 of the Seller Disclosure Schedule sets forth an accurate and complete list of all material elections with respect to Taxes affecting the Seller or any of the Transferred Assets of the Business. There are no outstanding rulings of, or requests for rulings with, any Tax authority expressly addressed to the Seller or any Affiliate of the Seller that are, or if issued would be, binding upon the Purchaser for any Tax period or portion thereof beginning after the Closing Date.

9.16Employee Benefit Matters

9.16.1Clause 9.16.1 of the Seller Disclosure Schedule sets forth an accurate and complete list of all Employee Plans maintained by or participated in by the Seller with respect to the Business Employees, including the applicable Person with whom the Seller maintains each Employee Plan (each, a “Business Employee Plan”).

9.16.2No Business Employee has been granted stock options, restricted stock, restricted stock units or other forms of equity compensation by the Seller or its Affiliates as part of its employee benefits.

9.16.3The Seller has made available to the Purchaser an accurate and complete copy of: (a) each writing that sets forth the terms of each Business Employee Plan, including plan documents, plan amendments, any related trusts, all summary plan descriptions and other summaries and descriptions furnished to participants and beneficiaries; (b) all personnel, payroll and employment manuals and policies of the Seller relating to or covering the Business Employees; (c) a written description of any Business Employee Plan that is not otherwise in writing; (d) all insurance policies purchased by or to provide benefits under any Business Employee Plan; (e) all third party administrative programs or agreements related to any Business Employee Plan; (f) all reports submitted for the past 3 (three) years by third party administrators, actuaries, investment managers, trustees, consultants or other independent contractors with respect to any Business Employee Plan and financial statements disclosing Liability for all obligations owed under any Business Employee Plan; (g) all notices that were given by the Seller or any Business Employee Plan to any Governmental Authority or any participant or beneficiary

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pursuant to any applicable Laws for the past 3 (three) years; and (h) all notices that were given by any Governmental Authority to the Seller or any Business Employee Plan for the past 3 (three) years.

9.16.4The Seller does not provide health or welfare benefits for any retired or former employee, or their beneficiaries or dependents, nor is it obligated to provide health or welfare benefits to any active employee following such employee’s retirement or other termination of service.

9.16.5Each Business Employee Plan is and at all times has been maintained, funded, operated and administered, and the Seller has performed all of its obligations under each Business Employee Plan, in each case in accordance with the terms of such Business Employee Plan and in compliance with all applicable Laws. The Seller has complied with all applicable labour Laws, including the Factories Act, 1948, the Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959, the Equal Remuneration Act, 1976, the Industrial Employment (Standing Orders) Act, 1946, the Minimum Wages Act, 1948, the Employee Provident Funds and Miscellaneous Provisions Act, 1952, the Contract Labour (Regulation and Abolition) Act, 1970, the Employee’s State Insurance Act, 1948, the Payment of Bonus Act, 1965, the Payment of Gratuity Act, 1972 and the Workmen’s Compensation Act, 1923. All contributions required to be made to any Business Employee Plan by applicable Law or the terms of such Business Employee Plan, and all premiums due or payable with respect to insurance policies or other Contracts funding any Business Employee Plan, for any period through the Closing Date, have been timely made or paid in full. All returns, reports and filings required by any Governmental Authority or which must be furnished to any Person have been filed or furnished with respect to any Business Employee Plan and pursuant to the provisions of any Law.

9.16.6There is no unfunded Liability under any Business Employee Plan. No event has occurred or circumstance exists that could reasonably be expected to result: (a) in a material increase in premium costs of any Business Employee Plan that is insured; or (b) a material increase in the cost of any Business Employee Plan that is self-insured. Other than routine claims for benefits submitted by participants or beneficiaries, no claim against, or Proceeding involving, any Business Employee Plan or any fiduciary thereof is pending or, to the Knowledge of the Seller, is threatened, which could reasonably be expected to result in any material Liability, direct or indirect (by indemnification or otherwise) of the Seller to any Person, and no event has occurred or circumstance exists that could reasonably be expected to give rise to any such Liability. No Proceeding involving any Business Employee Plan or any fiduciary thereof has been concluded that resulted in any Liability of the Seller.

9.16.7No individual who performs services for or on behalf of the Business, other than the Business Employees (such as an independent contractor, leased employee, consultant or special consultant), is eligible to participate in or receive benefits under any Business Employee Plan.

9.16.8The consummation of the transactions contemplated by this Agreement (either alone or in conjunction with any other event) shall not cause accelerated vesting, payment or delivery of, or increase the amount or value of, any payment or benefit under or in connection with any Business Employee Plan or constitute a “deemed severance”,

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“deemed retrenchment” or “deemed termination” under any Business Employee Plan or otherwise with respect to any director, officer, employee, former director, former officer or former employee of the Seller. The Seller has not made or become obligated to make, and neither the Business Employee Plans nor the Purchaser shall, as a result of the consummation of the transactions contemplated by this Agreement, become obligated to make, any payments that could be non-deductible, nor shall the Seller or the Purchaser be required to “gross up” or otherwise compensate any individual because of the imposition of any excise Tax on such a payment to the individual.

9.16.9The market value of the assets of each funded Business Employee Plan, the Liability of each insurer for any Business Employee Plan funded through insurance or the book reserve established for any Business Employee Plan, together with any accrued contributions, is sufficient to procure or provide for the projected benefit obligations, determined as of the Closing Date, with respect to all current and former participants in such plan according to the actuarial assumptions and valuations most recently used to determine employer contributions to such Business Employee Plan and none of the transactions contemplated hereby or under this Agreement shall cause such assets or insurance obligations to be less than such benefit obligations.

9.16.10Each Business Employee Plan required to be registered with a Governmental Authority has been registered and maintained in good standing with such applicable Government Authority.

9.16.11No outstanding Liability has been incurred with respect to any employee engaged in the Business by the Seller for breach of any Contract of employment or for services or redundancy payments, protective awards, compensation for wrongful dismissal or unfair dismissal or for failure to comply with any Judgment for the reinstatement or re-engagement of any employee or for any other Liability accruing from the termination of any Contract of employment or for services.

9.16.12No gratuitous payment has been made or benefit given (or promised to be made or given) by the Seller in connection with the actual or proposed termination or suspension of employment or variation of any Contract of employment of any Business Employee or any former employee who engaged in the Business.

9.16.13All base salary merit increases due to the Business Employees in 2009 have been implemented and all bonus payments due for periods ending prior to the Closing Date have been paid to the Business Employees.

9.16.14No Business Employee, and no beneficiary or transferee thereof, has or holds any outstanding stock option, stock appreciation right, restricted stock award, or other award or grant based on or related to any equity security of the Seller or any of its Affiliates.

9.17Employment and Labour Matters

9.17.1Clause 9.17.1(a) of the Seller Disclosure Schedule sets forth an accurate and complete list of the employees of the Seller primarily and actively engaged in the Business or otherwise included upon the written mutual agreement of the Seller and the Purchaser

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(the “Business Employees”) and contract labourers engaged in the Business or otherwise included upon the written mutual agreement of the Seller and the Purchaser, along with, to the extent applicable, the position, date of hire, engagement or seniority, compensation and benefits, scheduled or contemplated increases in compensation and benefits, scheduled or contemplated promotions, accrued but unused sick and vacation leave or paid time off and service credited for purposes of vesting and eligibility to participate under any Business Employee Plan with respect to such Persons. To the Knowledge of the Seller, no Key Employee or group of employees of the Seller engaged in the Business intends to terminate his, her or their employment with the Seller.

9.17.2The Seller is not, nor has the Seller been, since 1 January 2006, a party to or bound by any collective bargaining, works council, employee representative or other Contract with any labour union, works council or representative of any employee group with respect to any employees engaged in the Business, nor is any such Contract being negotiated by the Seller. The Seller has no Knowledge of any organizing, election or other activities made or threatened at any time within the past 3 (three) years by or on behalf of any union, works council, employee representative or other labour organization or group of employees with respect to any employees engaged in the Business. There is no union, works council, employee representative or other labour organization, which, pursuant to applicable Law, must be notified, consulted or with which negotiations need to be conducted and Consent obtained in connection with the transactions contemplated by this Agreement.

9.17.3Since 1 January 2006, with respect to the employees engaged in the Business, the Seller has not experienced any labour strike, picketing, slowdown, lockout, employee grievance process or other work stoppage or labour dispute, nor to the Knowledge of the Seller is any such action threatened. To the Knowledge of the Seller, no event has occurred or circumstance exists that could reasonably be expected to give rise to any such action, nor does the Seller contemplate a lockout of any employees engaged in the Business.

9.17.4With respect to all employees engaged in the Business, the Seller has complied with all applicable Laws and its own policies relating to labour and employment matters, including fair employment practices, terms and conditions of employment, contractual obligations, equal employment opportunity, non-discrimination, immigration, wages, hours, benefits, workers’ compensation, the payment of social security and similar Taxes and occupational safety.

9.17.5Except as set forth on Clause 9.17.5 of the Seller Disclosure Schedule, there is no Proceeding pending or, to the Knowledge of the Seller, threatened against or affecting the Seller relating to the alleged violation by the Seller (or its directors or officers) of any Law pertaining to labour relations or employment matters with respect to employees engaged in the Business. With respect to employees engaged in the Business, the Seller has not committed any unfair labour practice, nor has there has been any charge, complaint or Proceeding of unfair labour practice filed or, to the Knowledge of the Seller, threatened against the Seller before any Governmental Authority or elsewhere. There has been no complaint, claim or charge of discrimination filed or, to the Knowledge of the Seller, threatened, against the Seller with any arbitrator,

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Governmental Authority or elsewhere with respect to employees engaged in the Business.

9.17.6Since 1 January 2006, no employee engaged in the Business has been laid off, retrenched or made redundant by the Seller and no such action shall be implemented without advance notification to the Purchaser. Clause 9.17.6 of the Seller Disclosure Schedule sets forth an accurate and complete list of all employees of the Seller engaged in the Business, who have been terminated or laid off, or whose hours of work have been reduced by more than 50% (fifty percent) by the Seller, in the 6 (six) months prior to the date of this Agreement.

9.17.7There is not in existence any Contract of employment with any Business Employee (or any Contract for services with any Person) which cannot be terminated by 3 (three) months’ notice or less without giving rise to a claim for damages or compensation (other than a statutory redundancy payment or statutory compensation for unfair dismissal).

9.17.8Within the last year, no employee engaged in the Business has been transferred from the Business to the Other Businesses.

9.17.9There are no Contracts or Government Authorizations pursuant to which the Seller, as a result of the Seller’s operation of the Business, any portion of the Business or the Transferred Assets of the Business, is required to employ Persons located in a particular geographical location.

9.18Environmental, Health and Safety Matters

9.18.1The occupation of the facilities or the properties of the Business and the operation of the Business is, and at all times has been, in compliance with all, and not subject to any Liability under any, Environmental Laws and Occupational Safety and Health Laws. Without limiting the generality of the foregoing, the Seller and its Affiliates have obtained and complied in all respects with all Governmental Authorizations that are required pursuant to Environmental Laws and Occupational Safety and Health Laws for the occupation of the properties or the facilities of the Business and the operation of the Business. An accurate and complete list of all such Governmental Authorizations is set forth in Clause 9.18.1 of the Seller Disclosure Schedule.

9.18.2Neither the Seller nor any of its Affiliates has not received any notice, report or other written communication or information from any Governmental Authority or other Person, and there are no unresolved, pending or threatened claims, suits, demands or other actions regarding: (a) any actual, alleged or potential violation of, or failure to comply with, any Environmental Law, Occupational Safety and Health Law or Governmental Authorization; (b) any Liability or potential Liability, including any investigatory, monitoring, remedial or corrective obligation, relating to the Business or any Leased Business Real Property arising under any Environmental Law or Occupational Safety and Health Law; or (c) the presence or release into the environment of any Hazardous Material related to the Business or any Leased Business Real Property.

9.18.3No contamination, landfill, dump, surface impoundment, wastewater, lagoon, disposal area, underground storage tank, underground injection well, groundwater monitoring

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well, drinking water well or production water well or Hazardous Material in such character and extent that would subject the Seller to any Liability or require any expenditure for investigation, monitoring, remediation or corrective action to meet any standards under any Environmental Law, is present or, to the Knowledge of the Seller, has ever been present at, in, on, under or adjacent to any Leased Business Real Property.

9.18.4In occupying the Leased Business Real Property and with respect to the operation of the Business, neither the Seller nor any of its Affiliates has, directly or through any third party, treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, generated, manufactured, distributed, exposed any Person to or released any substance, including any Hazardous Material, or owned or operated any property or facility, in violation of any Environmental Law or Occupational Safety and Health Law, or in a manner that has given rise to, or could reasonably be expected to give rise to, any Liability.

9.18.5Neither the Seller nor any of its Affiliates has, relating to the Business or the Leased Business Real Property, either expressly or by operation of Law, assumed, undertaken, provided an indemnity with respect to or otherwise become subject to any Liability, including any obligation for investigatory, monitoring, or corrective or remedial action, of any other Person relating to any Environmental Law or Occupational Safety and Health Law.

9.18.6No event has occurred or circumstance exists relating to the operations of the Business or the Leased Business Real Property that could reasonably be expected to: (a) prevent, hinder or limit continued compliance with any Environmental Law, Occupational Safety and Health Law or Governmental Authorization; (b) give rise to any investigatory, monitoring, remedial or corrective obligations pursuant to any Environmental Law or Occupational Safety and Health Law; or (c) give rise to any other Liability pursuant to any Environmental Law or Occupational Safety and Health Law, including any Liability relating to onsite or offsite releases of, or exposure to, Hazardous Materials, personal injury, property damage or natural resources damage.

9.18.7Clause 9.18.7 of the Seller Disclosure Schedule sets forth an accurate and complete list of, and the Seller has made available to the Purchaser accurate and complete copies of, all environmental reports, investigations, audits, correspondence and other documents relating to environmental or occupational safety and health matters, possessed or initiated by the Seller that were obtained from, requested by, or conducted by or on behalf of the Seller or any of its Affiliates, any Governmental Authority or any other third party during the past 5 (five) years and relating to the Business or the Leased Business Real Property.

9.19Compliance with Laws, Judgments and Governmental Authorizations

9.19.1Without limiting the scope of any other representation in this Agreement, the Seller and each of its Affiliates is in compliance in all material respects and have not violated in any material respect any, Laws, Judgments, Registrations or Governmental Authorizations applicable to the research, development, clinical testing, manufacture, sale, labeling, testing, distributing, handling of prescription samples, record-keeping, reporting,

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importing, exporting, advertising or promoting of the products of the Business or the ownership or use of the Transferred Assets of the Business. During the last 3 (five) years, none of the Seller or any of its Affiliates has received with respect to the Business, the Transferred Assets of the Business, or the Assumed Liabilities any notice or other communication from any Governmental Authority or any other Person regarding any actual, alleged or potential violation of, or failure to comply with, any applicable Law, Judgment, Registration or Governmental Authorization, any actual or threatened revocation, withdrawal, suspension, cancellation, termination or modification of any Registration or Governmental Authorization, or any actual, alleged or potential obligation on the part of the Seller or any of its Affiliates to undertake, or to bear all or any portion of the cost of, any remedial action of any nature or any actual or potential obligation on the part of the Seller or any of its Affiliates to perform a sample collection.

9.19.2The Registrations and the Governmental Authorizations listed on Clause 9.19.2 of the Seller Disclosure Schedule sets forth all of the Registrations and the Governmental Authorizations necessary to conduct the Business lawfully in the manner in which the Seller and its Affiliates currently conduct the Business and to permit the Seller and its Affiliates to own and use the Transferred Assets of the Business in the manner in which they currently own and use such assets. The Seller and its Affiliates collectively hold all of the Registrations and Governmental Authorizations listed on such Clause 9.19.2 of the Seller Disclosure Schedule, and all of such Registrations and Governmental Authorizations are valid and in full force and effect. Except as set forth on Clause 9.19.2 of the Disclosure Schedule, neither the Seller nor any of its Affiliates has been informed in writing by any Governmental Authority that it intends to limit, suspend or revoke any of such Registrations and Governmental Authorizations or change the marketing classification or labeling of any products of the Business. Except as set forth on Clause 9.19.2 of the Seller Disclosure Schedule, each such Registration and Governmental Authorization, subject to applicable Law, may be assigned and transferred to the Purchaser in accordance with the provisions of this Agreement.

9.19.3Clause 9.19.3 of the Seller Disclosure Schedule sets forth an accurate and complete list of all Judgments to which the Business or any of the Transferred Assets of the Business, is or has been subject. To the Knowledge of the Seller, no director, officer, employee or agent of the Seller or any of its Affiliates is subject to any Judgment that prohibits such director, officer, employee or agent from engaging in or continuing any conduct, activity or practice relating to the Business.

9.20Regulatory Compliance

9.20.1The products of the Business that are subject to the jurisdiction of the Product Laws have been and are being developed, tested, manufactured, stored and transported in compliance in all material respects with all applicable Product Laws.

9.20.2The Seller is not subject to, nor does the Seller have Knowledge of facts or circumstances reasonably likely to cause, any obligation arising under an administrative or regulatory action status, warning letter, notice of violation letter, or other written notice from any Governmental Authority with respect to the Business, the Transferred Assets of the Business or the Assumed Liabilities.

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9.20.3The operation of the Business is in compliance with all applicable Laws in which the product is sold, marketed or distributed relating to the promotion of pharmaceutical products, and the Seller has not received any written or oral notice of any violation of any Law applicable to the operation of the Business or the ownership of the Transferred Assets of the Business or applicable Laws relating to the promotion of pharmaceutical products in those jurisdictions in which the products of the Business are sold, marketed or distributed.

9.20.4The Seller, its Affiliates and to the Knowledge of Seller, their respective distributors selling or marketing the products of the Business (whether in their own name or on behalf of the Seller), hold all Registrations required to sell or market such products pursuant to the applicable Laws of all jurisdictions in which the products of the Business are sold or marketed by such parties.

9.20.5Except as set forth on Clause 9.20.5 of the Seller Disclosure Schedule, within the last three (3) years, neither the Seller nor its Affiliates have been notified in writing of any material failure (or any material investigation with respect thereto) by them or any licensor, licensee, partner or distributor to comply with, or maintain systems and programs to ensure compliance with, any applicable Laws, including pertaining to programs or systems regarding product quality (including Good Manufacturing Practices requirements), notification of facilities and products, corporate integrity, advertising, sales and marketing, pharmacovigilance and conflict of interest, Good Laboratory Practices requirements, Good Clinical Practices requirements, establishment registration and product listing requirements, requirements applicable to the debarment of individuals, requirements applicable to the conflict of interest of clinical investigators and adverse drug reaction reporting and medical device reporting requirements, in each case with respect to any products of the Business. This includes without limitation FDA Form 483s, warning letters, untitled letters, consent decrees, seizures, injunctions, and criminal prosecutions, and similar notifications and actions by any Governmental Authority.

9.20.6To the Knowledge of Seller, neither the Seller nor the Affiliates have been notified in writing of any material failure (or any material investigation with respect thereto) by them or any licensor, licensee, partner or distributor to have at all times complied with their obligations to report accurate pricing information for the products of the Business to a Governmental Authority and to pricing services relied upon by a Governmental Authority or other payors for such products.

9.20.7No product or product candidate manufactured, tested, distributed, held and/or marketed by the Seller or its Affiliates with respect to the Business has been recalled, withdrawn, suspended or discontinued (whether voluntarily or otherwise) since 1 January 2006. No Proceedings (whether completed or pending) seeking the recall, withdrawal, suspension or seizure of any such product or product candidate or pre-market approvals or marketing authorizations are pending, or to the Knowledge of Seller, threatened, against the Seller and its Affiliates, nor have any such Proceedings been pending at any time since 1 January 2006. Seller, prior to the execution of this Agreement, have provided or made available to Purchaser all current reports and all information about adverse drug experiences and medical device reportsin the

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possession of the Seller and its Affiliates (or to which Seller and its Affiliates has access), in each case since 1 January 2006 obtained or otherwise received by Seller and its Affiliates from any source in the United States or outside the United States, including information derived from clinical investigations prior to any market authorization approvals, commercial marketing experience, postmarketing clinical investigations, postmarketing epidemiological/ surveillance studies, reports in the scientific literature, and unpublished scientific papers relating to any product or product candidate manufactured, tested, distributed, held and/or marketed by the Seller or its Affiliates in respect of the Business or any of their licensors or licensees.

9.20.8To the Knowledge of Seller, since 1 January 2006 neither Seller nor its Affiliates nor any of their respective directors, officers, Business Employees or agents has with respect to any product that is manufactured, tested, distributed, held and/or marketed by the Seller or its Affiliates in respect of the Business made an untrue statement of a material fact or fraudulent statement to any Governmental Authority, failed to disclose a material fact required to be disclosed to any Governmental Authority, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, could reasonably be expected to provide a basis for a Governmental Authority to take any action or initiate any Proceeding pertaining to the provision of fraudulent, untrue or other similarly inappropriate statements or information to such Governmental Authority (e.g., the FDA’s policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (10 September 1991)) or any similar policy or Law outside the United States.

9.20.9Neither the Seller nor its Affiliates has received, since 1 January 2006, any written notification, that remains unresolved, from any Government Authorities indicating that any product of the Business is unapproved, misbranded or adulterated. The Seller and its Affiliates have manufactured, processed, packaged, labeled, stored, shipped and otherwise handled all products of the Business in compliance in all material respects with all applicable Laws and none of such products is unapproved, misbranded or adulterated.

9.20.10To the Knowledge of Seller, the third party contractors manufacturing products of the Business have all of the material Registrations necessary for the manufacture of such products and are not in breach of or default under any such material Registrations.

9.21Promotional Practices

9.21.1The Seller and its Affiliates have not in connection with the Business, to obtain or retain business, directly or indirectly offered, paid, or promised to pay, or authorized the payment of, any commission payment or any other money or other thing of value (including any fee, gift, sample, travel expense, or entertainment) payable, to:

9.21.1(a)any Person who is an official, officer, agent, employee or representative of any Governmental Authority, or any existing or prospective customer (whether government-owned or non-government-owned);

9.21.1(b)any political party or official thereof;

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9.21.1(c)any candidate for political or political party office; or

9.21.1(d)any other individual or entity;

while knowing or having reason to believe that all or any portion of such money or thing of value would be offered, given, or promised, directly or indirectly, to any such official, officer, agent, employee, representative, political party, political party official, candidate, individual or any entity affiliated with such customer, political party or official, or political office.

9.21.2Each transaction related to the Business or the Transferred Assets of the Business is, in all material respects, properly and accurately recorded on the books and records of the Seller and its Affiliates, as applicable, and each document on which entries in the Seller’s and its Affiliates’ books and records are based is complete and accurate in all material respects. The Seller and its Affiliates maintain a system of internal accounting controls adequate to ensure that the Seller and its Affiliates maintain no off-the-books accounts and that the Seller’s and its Affiliates’ assets are used only in accordance with the Seller’s management directives.

9.21.3In respect of the Business, none of the Seller, the Seller’s Affiliates or, to the Knowledge of the Seller, any of their respective directors, officers, Business Employees or agents (acting on behalf of the Seller or any Affiliate of the Seller in respect of the Business) is currently, or has been, excluded or debarred under any Law or otherwise been deemed ineligible to participate in any United States federal health care programs or similar programs outside the United States. To the Knowledge of the Seller, there are no facts concerning the Seller or any of its Affiliates in respect of the Business or any of their respective directors, officers, Business Employees or agents (acting on behalf of the Seller or any Affiliate of the Seller in respect of the Business) that are reasonably likely to form the basis for any such exclusion or debarment of any such Persons.

9.21.4Except as set forth on Clause 9.21.4 of the Seller Disclosure Schedule, in respect of the Business, neither the Seller nor any of its Affiliates has at any time since 1 January 2006 engaged in the sale, purchase, import, export, re-export or transfer of products or services, either directly or indirectly, to or from Myanmar, Cuba, Iran, North Korea, Sudan or Syria (the “Certain Nations”) or been a party to or beneficiary of any franchise, license, management or other Contract with any Person, either public or private, in the Certain Nations or been a party to any investment, deposit, loan, borrowing or credit arrangement or involved in any other financial dealings, with any Person, either public or private, in the Certain Nations.

9.22Information and Disclosure

9.22.1No representation or warranty of the Seller in this Agreement, and no statement made by the Seller in the Seller Disclosure Schedule, the Ancillary Agreements, or any certificate, instrument or other document delivered by or on behalf of the Seller or its Affiliates pursuant to this Agreement or any Ancillary Agreement, contains or shall contain any untrue statement of a material fact or omits or shall omit to state a material fact necessary to make the statements contained herein or therein, when read together and in light of the circumstances in which they were made, not misleading. The Seller

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does not have any Knowledge of any fact or circumstance that has specific application to the Seller or the Business that could have a Material Adverse Effect that has not been set forth in this Agreement, the Ancillary Agreements or the Seller Disclosure Schedule.

9.23Legal Proceedings

Clause 9.23 of the Seller Disclosure Schedule sets forth an accurate and complete list of all pending Proceedings: (a) by or against the Seller or any of its Affiliates or that otherwise relate to or could reasonably be expected to materially impact or affect the Business or the Transferred Assets of the Business; (b) to the Seller’s Knowledge, by or against any of the directors or officers of the Seller in their capacities as such; or (c) that challenge, or that may materially prevent, delay, make illegal or otherwise materially interfere with, any of the transactions contemplated by this Agreement and the Ancillary Agreements. To the Knowledge of the Seller, no other such Proceeding has been threatened, and no event has occurred or circumstance exists that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Proceeding. The Seller has delivered to the Purchaser accurate and complete copies of all pleadings relating to such Proceedings. Such Proceedings shall not, in the aggregate, have a Material Adverse Effect. To the Seller’s Knowledge, no official investigation or inquiry, by a Governmental Authority or otherwise, concerning the Seller or any of its Affiliates is in progress or is pending and the Seller is not aware of any circumstances which are likely to give rise to any such Proceeding. There is no Judgment impacting or affecting the Business or the Transferred Assets of the Business.

9.24Customers and Suppliers

9.24.1Clause 9.24.1 of the Seller Disclosure Schedule sets forth an accurate and complete list of: (a) the names and addresses of all customers and distributors that ordered products of the Business from the Seller or any of its Affiliates with an aggregate value for each such customer or distributor of INR 5,000,000 (Indian Rupee Five Million) or more during the 12 (twelve) month period ended 30 September 2009; and (b) the amount for which each such customer or distributor was invoiced during such period. The Seller has not received any written notice that, and to the Seller’s Knowledge, no significant customer or distributor of the Seller: (A) has ceased, or shall cease, to buy the products of the Business; (B) has substantially reduced, or shall substantially reduce, the purchase of products of the Business; or (C) has sought, or is seeking, to reduce the price it shall pay for products of the Business, including in each case after the consummation of the transactions contemplated by this Agreement. To the Knowledge of the Seller, no customer or distributor described in clause (a) of the first sentence of this subclause 9.24.1 has threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement.  All sales made to customers and distributors in the past year have been made in the Ordinary Course of Business and the Seller has not increased its level of sales during such period in such a manner as to increase the amount of accounts receivable for conversion into cash prior to the Closing or decrease the demand for the products of the Business in the distribution chain of customers or distributors following the Closing.

9.24.2Clause 9.24.2 of the Seller Disclosure Schedule sets forth an accurate and complete list of: (a) the names and addresses of all suppliers from which the Seller ordered raw materials, supplies, merchandise and other goods and services for the Business with an

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aggregate purchase price for each such supplier of INR 2,500,000 (Indian Rupee Two Million Five Hundred Thousand) or more during the 12 (twelve) month period ended 30 September 2009; and (b) the amount for which each such supplier invoiced the Seller during such period. The Seller has not received any written notice of, and to the Seller’s Knowledge, there have not been any material adverse changes in the price of such raw materials, supplies, merchandise or other goods or services. The Seller does not have any reason to believe that any supplier would not sell raw materials, supplies, merchandise and other goods and services to the Purchaser at any time after the Closing on terms and conditions similar to those used in its current sales to the Seller, subject to general and customary price increases. To the Knowledge of the Seller, no supplier described in clause (a) of the first sentence of this subclause 9.25.2 has threatened to take any action described in the preceding sentence as a result of the consummation of the transactions contemplated by this Agreement.

9.25Products; Product Warranty

9.25.1Clause 9.25.1 of the Seller Disclosure Schedule sets forth a list of all products of the Business that have been, currently are being, or for which the Seller plans on being researched, developed, manufactured, sold, marketed or distributed by the Seller, its third party manufacturers or other agents.

9.25.2Clause 9.25.2 of the Seller Disclosure Schedule sets forth all forms of guaranty, warranty, right of return, right of credit or other indemnity that legally bind the Seller in connection with the products of the Business manufactured, sold or delivered by the Seller or its agents. No product of the Business manufactured, sold or delivered by the Seller is subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale set forth in Clause 9.25.2 of the Seller Disclosure Schedule. Each product of the Business manufactured, sold or delivered by the Seller has been in conformity, in all material respects, with all applicable contractual commitments and all express and implied warranties, and the Seller has no Liability (and, to the Seller’s Knowledge, no event has occurred or circumstance exists that could reasonably be expected to give rise to any Proceeding, claim or demand against the Seller giving rise to any Liability) for damages in connection therewith.

9.25.3In no rolling 12 (twelve) month period since January 1, 2006, have the returns of the products of the Business ever exceeded 3% (three percent) of gross sales of the products of the Business.

9.26Product Liability

To the Seller’s Knowledge, except as set forth in Clause 9.26 of the Seller Disclosure Schedule, the Seller does not have any Liability arising out of any injury to individuals or property as a result of the ownership, possession or use of any product of the Business manufactured, sold or delivered by the Seller or the Seller’s third party manufacturers.

9.27Insurance

Clause 9.27 of the Seller Disclosure Schedule sets forth an accurate and complete list of all certificates of insurance, binders for insurance policies and insurance maintained by the Seller

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related to the Business, including under third party manufacturing agreements, or under which the Seller has been the beneficiary of coverage at any time within the past 5 (five) years. The Seller maintains, with reputable and financially sound insurance companies authorized to do business in India, commercial general liability insurance with a combined single limit of liability not less than the Indian Rupee equivalent of USD 5,000,000 (United States Dollar Five Million) and has made available to the Purchaser certificates of such insurance from each insurance carrier showing that such insurance is in full force and effect. The Seller is not in default under any provision contained in any such insurance policy relating to the Business which would have a material adverse effect upon the ability of the insured to collect insurance proceeds under such policy. The Seller has no Knowledge of any threatened termination of, or material premium increase with respect to, any such certificate of insurance, binder or policy. Clause 9.27 of the Seller Disclosure Schedule further sets forth an accurate and complete list of all claims asserted by the Seller pursuant to any such certificate of insurance, binder or policy within the past 5 (five) years, and describes the nature and status of the claims. The Seller has not failed to give in a timely manner any notice of any claim that may be insured under any certificate of insurance, binder or policy required to be listed on Clause 9.27 of the Seller Disclosure Schedule and there are no outstanding claims which have been denied or disputed by the insurer. The Seller maintains, and at all times during the past 5 (five) years has maintained, in full force and effect, certificates of insurance, binders and policies of such types and in such amounts and for such risks, casualties and contingencies as is reasonably adequate to fully insure the Seller against insurable losses, damages, claims and risks to or in connection with their businesses, properties, assets and operations, including policies related to the funding of the Business Employee Plans. The Seller has never maintained, established, sponsored, participated in or contributed to any self-insurance program, retrospective premium program or captive insurance program.

9.28Related Party Transactions

Except as set forth on Clause 9.28 of the Seller Disclosure Schedule, to the Seller’s Knowledge, no shareholder, director, officer or employee of the Seller, or Affiliate of any such shareholder, director, officer or employee, or Affiliate of the Seller, (a) owns, or during the past 3 (three) years has owned, directly or indirectly, whether on an individual, joint or other basis, any interest in: (i) any property or asset, real, personal or mixed, tangible or intangible, used in or pertaining to the Business; (ii) any Person that has had business dealings or a financial interest in any transaction with the Seller; or (iii) any Person that is a supplier, customer, distributor or competitor of the Seller except for securities having no more than 1% (one percent) of the outstanding voting power of any such supplier, customer, distributor, or competing business which are listed on any national securities exchange; (b) has had, during the past 3 (three) years, business dealings or a financial interest in any transaction with the Seller, other than, in the case of the Seller’s employees, salaries and employee benefits and other transactions pursuant to the Employee Plans in the Ordinary Course of Business; or (c) serves as an officer, director or employee of any Person that is a supplier, customer, distributor, or competitor of the Seller.

9.29Brokers or Finders

Neither the Seller nor any Person acting on behalf of the Seller or its Affiliates has incurred any Liability to pay any fees or commissions to any broker, finder or agent or any other similar payment in connection with any of the transactions contemplated by this Agreement or the Ancillary Agreements.

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9.30Solvency

The Seller is not insolvent and shall not be rendered insolvent by any of the transactions contemplated by this Agreement or the Ancillary Agreements. As used in this Clause, “insolvent” means that the sum of the debts and other probable Liabilities of the Seller exceed the present fair saleable value of the Seller’s assets.  Immediately after giving effect to the consummation of the transactions contemplated by this Agreement, the Seller: (a) shall be able to pay its Liabilities as they become due in the usual course of its business; (b) shall not have unreasonably small capital with which to conduct its present or proposed business; (c) shall have assets (calculated at fair market value) that exceed its Liabilities; and (d) shall, taking into account all pending and threatened litigation, have no final Judgments against the Seller in actions for money damages that are reasonably anticipated to be rendered at a time when, or in amounts such that, the Seller shall be unable to satisfy any such Judgments promptly in accordance with their terms (taking into account the maximum probable amount of such Judgments in any such actions and the earliest reasonable time at which such Judgments might be rendered) as well as all other obligations of the Seller. The cash available to the Seller, after taking into account all other anticipated uses of the cash, shall be sufficient to pay all such Liabilities and Judgments promptly in accordance with their terms.

9.31No Business Assets

No Affiliate of the Seller in the United States of America, the United Kingdom, South Africa, China or Japan owns any inventory or products of the Business or is a party to any Contract related to the Business, other than any Contracts for intercompany services by and among the Seller and its Affiliates.

10REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser represents and warrants to the Seller that as of the date of this Agreement and as of the Closing Date the statements set forth in this Clause 10 are true and correct.

10.1Organization and Good Standing

The Purchaser is a company duly organized and validly existing under the Laws of India.

10.2Authority and Enforceability

The Purchaser has all requisite company power and authority to execute and deliver this Agreement and each Ancillary Agreement to which the Purchaser is a party and to perform its obligations under this Agreement and each such Ancillary Agreement. The execution, delivery and performance of this Agreement and each Ancillary Agreement to which the Purchaser is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Purchaser. The Purchaser has duly and validly executed and delivered this Agreement and, on or prior to the Closing, the Purchaser shall have duly and validly executed and delivered each Ancillary Agreement to which it is a party and the Purchaser has made available to the Seller an accurate and complete copy of the approval of the Board of Directors of the Purchaser containing such authorization. This Agreement constitutes, and upon execution and delivery, each Ancillary Agreement to which

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the Purchaser is a party shall constitute, the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms.

10.3No Conflict

Neither the execution, delivery and performance of this Agreement or any Ancillary Agreement by the Purchaser, nor the consummation of the transactions contemplated hereby or thereby, shall: (a) directly or indirectly (with or without notice, lapse of time or both), conflict with, result in a breach or violation of, constitute a default under, give rise to any right of revocation, withdrawal, suspension, acceleration, cancellation, termination, modification, imposition of additional obligations or loss of rights under, result in any payment becoming due under, or result in the imposition of any Encumbrances (other than Permitted Encumbrances) on any of the properties or assets of the Purchaser under, or otherwise give rise to any right on the part of any Person to exercise any remedy or obtain any relief under: (i) the articles of association or memorandum of association of the Purchaser or any resolutions adopted by the shareholders or board of directors of the Purchaser; (ii) any Contract to which the Purchaser is a party, by which the Purchaser is bound or to which any of its properties or assets is bound or affected or pursuant to which the Purchaser is an obligor or beneficiary; or (iii) any Law, Judgment or Governmental Authorization applicable to the Purchaser or any of its properties or assets or (b) require the Purchaser to obtain any Consent or Governmental Authorization of, give any notice to, or make any filing or registration with, any Governmental Authority or other Person, except with respect to clauses (a) and (b) in any case that would not reasonably be expected to have, either individually or in the aggregate, a material adverse effect on the ability of the Purchaser to perform its obligations under this Agreement or on the ability of the Purchaser to consummate the transactions contemplated by this Agreement.

10.4Legal Proceedings

To the knowledge of the Purchaser, there is no Proceeding pending or threatened against the Purchaser that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated by this Agreement or any Ancillary Agreement.

10.5Brokers or Finders

Neither the Purchaser nor any Person acting on its behalf has incurred any Liability to pay any fees or commissions to any broker, finder or agent or any other similar payment in connection with any of the transactions contemplated by this Agreement or the Ancillary Agreements.

10.6Financing

The Purchaser has the necessary financial resources available to it to consummate the transactions contemplated hereby when and as contemplated by this Agreement.

11INDEMNITY

11.1Indemnification by the Seller

Subject to the limitations expressly set forth in Clause 11.6, the Seller indemnifies and holds harmless the Purchaser and its Affiliates and their respective directors, officers, equity owners,

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employees, agents, consultants and other advisors and representatives (collectively, the “Purchaser Indemnified Parties”) from and against, and shall pay to the Purchaser the monetary value of, any and all Losses incurred or suffered by the Purchaser Indemnified Parties directly or indirectly arising out of, relating to or resulting from any of the following:

11.1.1any inaccuracy in or breach of any representation or warranty or other statement of the Seller contained in this Agreement, the Seller Disclosure Schedule, any Ancillary Agreement or in any certificate, instrument or other document delivered by or on behalf of the Seller or its Affiliates pursuant to this Agreement or any Ancillary Agreement;

11.1.2any non-fulfillment, non-performance or other breach of any covenant or agreement of the Seller or any of its Affiliates contained in this Agreement, the Seller Disclosure Schedule, any Ancillary Agreement or in any certificate, instrument or other document delivered by or on behalf of the Seller or any of its Affiliates pursuant to this Agreement or any Ancillary Agreement;

11.1.3any Excluded Liability;

11.1.4other than any Liability assumed by the Purchaser pursuant to Clause 2.3.6, any deficiency of or failure by the Seller or its Affiliates to obtain a complete and effective Consent and/or Release of any Encumbrance (as applicable) from any of the lenders to the Seller or its Affiliates or other third parties with respect to Contracts in connection with the transactions contemplated by this Agreement or any Ancillary Agreement; and

11.1.5other than any Liability assumed by the Purchaser pursuant to Clause 2.3.6, any Liability under any Contract assumed by the Purchaser pursuant to Clause 2.1.6 that arises out of or is related to: (i) any breach of, or failure to comply with, prior to the Closing, any covenant or obligation in any such Contract; (ii) any event that occurred prior to the Closing which, with or without notice, lapse of time or both, would constitute such a breach or failure; or (iii) any obligation which was required to be fulfilled by the Seller or any of its Affiliates prior to the Closing.

For purposes of this Clause 11.1, any inaccuracy in, or breach of any representation or warranty, or non-fulfillment, non-performance or other breach of any covenant or agreement by the Seller, and the amount of any Losses associated therewith, shall be determined without regard for any materiality, a “Material Adverse Effect” or similar qualification.

11.2Indemnification by the Purchaser

Subject to the limitations expressly set forth in Clause 11.6, the Purchaser, jointly and severally, indemnifies and holds harmless the Seller and its Affiliates and their respective directors, officers, equity owners, employees, agents, consultants and other advisors and representatives (collectively, the “Seller Indemnified Parties”) from and against, and shall pay to the Seller the monetary value of, any and all Losses incurred or suffered by the Seller Indemnified Parties directly or indirectly arising out of, relating to or resulting from any of the following:

11.2.1any inaccuracy in or breach of any representation or warranty or other statement of the Purchaser contained in this Agreement, any Ancillary Agreement or in any certificate,

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instrument or other document delivered by the Purchaser or its Affiliates pursuant to this Agreement or any Ancillary Agreement;

11.2.2any non-fulfillment, non-performance or other breach of any covenant or agreement of the Purchaser contained in this Agreement, any Ancillary Agreement or in any certificate, instrument or other document delivered by the Purchaser or its Affiliates pursuant to this Agreement or any Ancillary Agreement; and

11.2.3any of the Assumed Liabilities.

For purposes of this Clause 11.2, any inaccuracy in, or breach of any representation or warranty, or non-fulfillment, non-performance or other breach of any covenant or agreement by the Purchaser, and the amount of any Losses associated therewith, shall be determined without regard for any materiality, material adverse effect or similar qualification.

11.3Claim Procedure.

11.3.1A Party that seeks indemnity under this Clause 11 (an “Indemnified Party”) shall give written notice (a “Claim Notice”) to the Party from whom indemnification is sought (an “Indemnifying Party”) containing: (a) a description and, if known, the estimated amount of any Losses incurred or reasonably expected to be incurred by the Indemnified Party; (b) a reasonable explanation of the basis for the Claim Notice to the extent of the facts then known by the Indemnified Party; and (c) a demand for payment of those Losses.

11.3.2Within 30 (thirty) days after delivery of a Claim Notice, the Indemnifying Party shall deliver to the Indemnified Party a written response in which the Indemnifying Party shall either:

11.3.2(a)agree that the Indemnified Party is entitled to receive all of the Losses at issue in the Claim Notice; or

11.3.2(b)dispute the Indemnified Party’s entitlement to indemnification by delivering to the Indemnified Party a written notice (an “Objection Notice”) setting forth in reasonable detail each disputed item, the basis for each such disputed item and certifying that all such disputed items are being disputed in good faith.

11.3.3If the Indemnifying Party fails to take either of the foregoing actions within 30 (thirty) days after delivery of the Claim Notice, then the Indemnifying Party shall be deemed to have irrevocably accepted the Claim Notice and the Indemnifying Party shall be deemed to have irrevocably agreed to pay the Losses at issue in the Claim Notice.

11.3.4If the Indemnifying Party delivers an Objection Notice within 30 (thirty) days of the delivery of the Claim Notice, the Indemnified Party and the Indemnifying Party shall attempt in good faith, for a period of at least 30 (thirty) days, to agree upon the rights of the respective parties with respect to each of such claims and the Losses at issue. If no such agreement can be reached after good faith negotiation and after 30 (thirty) days from the date of delivery of an Objection Notice, then either the Purchaser or the Seller may demand arbitration of the matter unless the amount of the Losses is at issue in a pending Third Party Claim, in which event arbitration shall not be commenced until

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either such amount is finally determined pursuant to a final, non-appealable Judgment, or both the Purchaser and the Seller agree to arbitration, and in either such event the matter shall be settled by binding arbitration in accordance with the provisions of Clause 14.2 (but excluding any obligation in Clause 13.2.1).

11.3.5Any indemnification of the Purchaser Indemnified Parties pursuant to this Clause 11 shall be effected as contemplated in Clause 7.3 or by wire transfer of immediately available funds to an account designated by the Purchaser. The Parties agree that the Purchaser shall first seek reimbursement from amounts remaining in the Escrow Amount for any indemnification payments made pursuant to this Clause 11.  Any indemnification of the Seller Indemnified Parties pursuant to this Clause 11 shall be effected by wire transfer of immediately available funds to an account designated by the Seller.

11.3.6The foregoing indemnification payments shall be made within 5 (five) Business Days after the date on which: (a) the amount of such payments are determined by mutual agreement of the Parties; (b) the amount of such payments are determined pursuant to Clause 11.3.3 if an Objection Notice has not been timely delivered in accordance with Clause 11.3.2; or (c) both such amount and the Indemnifying Party’s obligation to pay such amount have been finally determined by a final Judgment of a court or other tribunal having jurisdiction over such Proceeding as permitted by Clause 11.3.4 if an Objection Notice has been timely delivered in accordance with Clause 11.3.2.

11.4Third Party Claims

11.4.1Without limiting the general application of the other provisions of this Clause 11, if another Person not a party to this Agreement alleges facts that, if true, would mean that a Party has breached its representations and warranties in this Agreement, the Party for whose benefit the representations and warranties are made shall be entitled to indemnity for those allegations and demands and related Losses under and pursuant to this Clause 11. If the Indemnified Party seeks indemnity under this Clause 11 in respect of, arising out of or involving a claim or demand, whether or not involving a Proceeding, by another Person not a party to this Agreement (a “Third Party Claim”), then the Indemnified Party shall include in the Claim Notice: (a) notice of the commencement or allegation of any Proceeding relating to such Third Party Claim within 30 (thirty) days after the Indemnified Party has received written notice of the commencement of the Third Party Claim; and (b) the allegation constituting the basis for such Third Party Claim and the amount of the damages claimed by the other Person, in each case to the extent known to the Indemnified Party. Notwithstanding the foregoing, no delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party shall relieve the Indemnifying Party of any Liability or obligation under this Agreement except to the extent the Indemnifying Party has suffered actual Losses directly caused by the delay or other deficiency.

11.4.2Subject to the provisions of Clause 11.4.3, within 30 (thirty) days after the Indemnified Party’s delivery of a Claim Notice under this Clause 11.4, the Indemnifying Party may assume control of the defense of such Third Party Claim by giving to the Indemnified Party written notice of the intention to assume such defense, but if and only if the Indemnifying Party further:

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11.4.2(a)acknowledges in writing to the Indemnified Party that any Losses that may be assessed in connection with the Third Party Claim constitute Losses for which the Indemnified Party shall be indemnified pursuant to this Clause 11 without contest or objection and that the Indemnifying Party shall advance all expenses and costs of defense; and

11.4.2(b)retains counsel for the defense of the Third Party Claim reasonably satisfactory to the Indemnified Party and furnishes to the Indemnified Party evidence reasonably satisfactory to the Indemnified Party that the Indemnifying Party has and shall have sufficient financial resources to fund on a current basis the cost of such defense and pay all Losses that may arise under the Third Party Claim.

However, in no event may the Indemnifying Party assume or maintain control of the defense of any Third Party Claim: (i) involving criminal liability of the Indemnified Party, (ii) in which an order, injunction or other equitable relief for other than monetary damages against the Indemnified Party is sought which the Indemnified Party reasonably determines, after conferring with its counsel, cannot be separated from any related claim for monetary damages; or (iii) in which the outcome of any Judgment or settlement in the matter could adversely affect the Indemnified Party’s Tax Liability or is reasonably likely, in the good faith judgment of the Indemnified Party, to establish a precedential custom or practice adverse to the continuing business interests of the Indemnified Party (collectively, clauses (i) — (iii), the “Special Claims”). An Indemnifying Party shall lose any previously acquired right to control the defense of any Third Party Claim if for any reason the Indemnifying Party ceases to actively, competently and diligently conduct the defense.

11.4.3The Indemnified Party shall have the right to (a) participate in the defense of a Third Party Claim if the Indemnified Party notifies the Indemnifying Party that the Indemnified Party desires for any reason to participate in the defense of a Third Party Claim or; (b) control the defense of a Third Party Claim if the Indemnifying Party does not, or is not able to, assume or maintain control of the defense of a Third Party Claim in compliance with Clause 11.4.2. If the Indemnified Party controls the defense of the Third Party Claim (including any Special Claim) pursuant to Clause 11.4.3, the Indemnifying Party agrees to pay to the Indemnified Party promptly upon demand from time to time all reasonable attorneys’ fees and other costs and expenses of defending the Third Party Claim. If the Indemnified Party participates in the defense of the Third Party Claim (including any Special Claim) pursuant to Clause 11.4.3(a), the Indemnified Party shall participate at its own expense and the Indemnified Party’s attorneys’ fees and other costs and expenses of defending the Third Party Claim shall not be considered Losses. To the extent that the Third Party Claim does not constitute a Special Claim, the Party not controlling the defense (the “Non-controlling Party”) may participate therein at its own expense. However, if the Indemnifying Party assumes control of such defense as permitted above and the Indemnified Party reasonably concludes that the Indemnifying Party and the Indemnified Party have conflicting interests or different defenses available with respect to the Third Party Claim, then the reasonable fees and expenses of counsel to the Indemnified Party shall be considered and included as “Losses” for purposes of this Agreement. The Party controlling the defense (the “Controlling Party”) shall reasonably

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advise the Non-controlling Party of the status of the Third Party Claim and the defense thereof and, with respect to any Third Party Claim that does not relate to a Special Claim, the Controlling Party shall consider in good faith recommendations made by the Non-controlling Party. The Non-controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third Party Claim and related Proceedings (including copies of any summons, complaint or other pleading which may have been served on such Party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist in the defense of the Third Party Claim.

11.4.4If the Indemnified Party is controlling the defense of a Third Party Claim, the Indemnified Party shall not agree to any compromise or settlement of, or the entry of any Judgment arising from, the Third Party Claim without prior notice to and Consent of the Indemnifying Party, which Consent shall not be unreasonably withheld, delayed or conditioned. All amounts paid or payable under such settlement or Judgment are Losses that the Indemnifying Party owes to the Indemnified Party under this Clause 11. The Indemnifying Party shall not agree to any compromise or settlement of, or the entry of any Judgment (other than monetary damages only) arising from, or the admission of any Liability regarding the Third Party Claim without the prior written Consent of the Indemnified Party, which Consent the Indemnified Party shall not unreasonably withhold, delay or condition. The Indemnified Party shall have no Liability with respect to any compromise or settlement of, or the entry of any Judgment arising from, any Third Party Claim effected without its Consent.

11.4.5Notwithstanding the other provisions of this Clause 11, if a Person not a party to this Agreement asserts that a Purchaser Indemnified Party is liable to such Person for a monetary or other obligation which individually may constitute or result in Losses not to exceed INR 5,000,000 (Indian Rupee Five Million) (unless such Person is a Business Employee in which case no such monetary limitation shall apply) for which the Purchaser Indemnified Party may be entitled to indemnification pursuant to this Clause 11, and the Purchaser Indemnified Party reasonably determines that it has a business reason to fulfill such obligation, then: (a) the Purchaser Indemnified Party shall be entitled to satisfy such obligation, without prior notice to or Consent from the Indemnifying Party; (b) the Purchaser Indemnified Party may subsequently make a claim for indemnification in accordance with the provisions of this Clause 11; and (c) the Purchaser Indemnified Party shall be reimbursed, in accordance with the provisions of this Clause 11, for any such Losses for which it is entitled to indemnification pursuant to this Clause 11, subject to the right of the Indemnifying Party to dispute the Purchaser Indemnified Party’s entitlement to indemnification, or the amount for which it is entitled to indemnification, under the provisions of this Clause 11.

11.5Survival of Representations and Warranties

11.5.1All representations and warranties contained in this Agreement, any Ancillary Agreement or in any certificate, instrument or other document delivered pursuant to this Agreement or Ancillary Agreement shall survive the Closing, irrespective of any facts known to any Indemnified Party at or prior to the Closing or any investigation at any time made by or on behalf of any Indemnified Party, for a period of 24 (twenty-four)

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months from the Closing Date; provided, however, that: (i) the representations and warranties set forth in the second sentence of Clause 9.9 (Assets), Clause 9.15 (Tax Matters), Clause 9.16 (Employee Benefit Matters) and Clause 9.18 (Environmental, Health and Safety Matters) shall survive until 180 (one hundred and eighty) days following the expiration of the statute of limitations applicable to the underlying matters covered by such provisions; and (ii) the representations and warranties set forth in Clause 9.1 (Organization and Good Standing), Clause 9.2 (Authority and Enforceability), Clause 9.3(a) (No Conflict), Clause 9.29 (Brokers or Finders), Clause 9.30 (Solvency), Clause 10.1 (Organization and Good Standing), Clause 10.2 (Authority and Enforceability), Clause 10.3 (No Conflict), Clause 10.5 (Brokers or Finders) and Clause 10.6 (Financing) shall survive indefinitely.

11.5.2All claims for indemnification under Clause 11.1.1 or Clause 11.2.1 must be asserted prior to the expiration of the applicable survival period set forth in Clause 11.5.1; provided, however, that if an Indemnified Party delivers to an Indemnifying Party, before expiration of the applicable survival period of a representation or warranty as set forth Clause 11.5.1, either a Claim Notice based upon a breach of any such representation or warranty, or a notice that, as a result of a claim or demand made by a Person not a party to this Agreement, the Indemnified Party reasonably expects to incur Losses, then the applicable representation or warranty shall survive until, but only for purposes of, the resolution of the matter covered by such notice. If the claim with respect to which such notice has been given is definitively withdrawn or resolved in favor of the Indemnified Party, the Indemnified Party shall promptly so notify the Indemnifying Party.

11.6Limitations on Liability

11.6.1Neither the Seller nor the Purchaser is liable under this Clause 11 unless and until the aggregate amount of Losses for any claims (other than for which they, respectively, would otherwise be liable under this Agreement exceed USD 1,000,000 (United States Dollar One Million) (the “Deductible”), in which case the Indemnifying Party shall, subject to the other limitations contained herein, be liable for such indemnified Losses in excess of the Deductible; provided, however, that the foregoing limitation does not apply to the following:

11.6.1(a)claims under Clause 11.1.1 relating to a breach of the representations and warranties set forth in Clause 9.1 (Organization and Good Standing), Clause 9.2 (Authority and Enforceability), the second sentence of Clause 9.9 (Assets), Clause 9.15 (Tax Matters), Clause 9.29 (Brokers or Finders) or Clause 9.30 (Solvency);

11.6.1(b)claims under Clause 11.2.1 relating to a breach of the representations and warranties set forth in Clause 10.1 (Organization and Good Standing), Clause 10.2 (Authority and Enforceability), Clause 10.5 (Brokers or Finders) or Clause 10.6 (Financing);

11.6.1(c)claims with respect to any Excluded Liability or Assumed Liability;

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11.6.1(d)claims with respect to any deficiency of or failure by the Seller or its Affiliates to obtain a complete and effective Consent and/or Release of any Encumbrance (as applicable) from any of the lenders to the Seller or their respective Affiliates in connection with the transactions contemplated by this Agreement or any Ancillary Agreement

11.6.1(e)claims for Returns within the first 12 (twelve) months after the Closing Date; or

11.6.1(f)claims under Clause 11.1.2, Clause 11.1.4, Clause 11.1.5 or Clause 11.2.2 relating to any of the foregoing.

11.6.2Except as provided under this Clause 11.6.2, in no event shall the Seller, on the one hand, or the Purchaser, on the other hand, be liable for Losses for claims made pursuant to Clause 11.1.1 or 11.2.1 in an amount in excess of [                       *                       *                       *                       ] for any and all indemnified Losses hereunder (the “Liability Cap”).  Notwithstanding the foregoing, the limitations set forth in this Clause 11.6.2 shall not be applicable to Losses related to Taxes.

11.6.3Nothing in this Agreement shall limit the Liability of a Party to the other Party for common law fraud or willful misconduct.

11.6.4The amount of any Losses recoverable by a party under Clause 11 shall be reduced by the amount of any insurance proceeds paid to the Indemnified Party relating to such claim.

11.6.5EXCEPT WITH RESPECT TO LOSSES (I) INCURRED AS THE RESULT OF COMMON LAW FRAUD OR (II) INCLUDED IN A THIRD PARTY CLAIM, THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES HERETO SHALL NOT EXTEND TO SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION, LOST PROFITS, PUNITIVE DAMAGES, DIMINUTION OF VALUE, OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY.

11.6.6Notwithstanding any provision in this Agreement to the contrary, subject to the terms of Clause 11.6.7, the Parties agree that (A) if at any time following the Effective Date, any Person files a Proceeding alleging that the research, development, manufacturing, use, import or sale of a product of the Business infringes the Intellectual Property rights of such Person, (i) the Seller shall be responsible for the portion of any damages awarded in any Judgment (or agreed in any settlement of such Proceeding) that correspond to the amount of any sales of the applicable product of the Business made by the Seller or any of its Affiliates, distributors or licensees on or prior to the Closing, (ii) the Purchaser shall be responsible for the portion of any damages awarded in any Judgment (or agreed in any settlement of such Proceeding) that correspond to the amount of any sales of the applicable product of the Business made by the Purchaser or any of its Affiliates, distributors or licensees after the Closing, and (iii) the costs and expenses of defending such Proceeding shall be allocated between the Seller and the Purchaser in proportion to the amount of damages allocated between the Seller and the Purchaser pursuant to this Clause 11.6.6 and (B) the Purchaser shall not be entitled to any indemnification by the Seller for any the breaches of the representations and

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warranties made by the Seller in this Agreement which relate to the facts underlying such Proceeding.

11.6.7Notwithstanding any provision in this Agreement to the contrary, the Parties agree that if at any time following the Effective Date, (i) a product of the Business covered under the Hospira Agreements is commercially launched (a “Joint Launched Product”) and (ii) any Person files a Proceeding alleging that the research, development, manufacturing, use, import or sale of such Joint Launched Product infringes the Intellectual Property rights of such Person, (a) any damages awarded in any Judgment of such Proceeding (or agreed in any settlement of such Proceeding) and any costs and expenses incurred in defending such Proceeding that correspond to the amount of any sales of the applicable Joint Launched Product made prior to the Closing shall be allocated between the Seller and the Purchaser in accordance with the allocation of indemnification for such matters pursuant to the terms of the Hospira Agreements as in effect as of the Effective Date and (b) any damages awarded in any Judgment of such Proceeding (or agreed in any settlement of such Proceeding) and any costs and expenses incurred in defending such Proceeding that correspond to the amount of any sales of the applicable Joint Launched Product made after the Closing shall be allocated to the Purchaser.

11.7Treatment

All indemnification payments made pursuant to this Clause 11 shall be treated by the Parties as adjustments to the Cash Consideration.

11.8Currency Conversion

If an Indemnified Party has incurred or suffered Losses in a currency other than Rupees, any amounts expressed in Rupees in this Clause 11 shall be converted from Rupees to the applicable currency in which the Indemnified Party has incurred or suffered Losses using the exchange rate between the applicable currency and the Rupee published in the Wall Street Journal 3 (three) Business Days prior to the date upon which a final determination as to the payment of such Losses to the Indemnified Party is made.

11.9Exclusive Remedy

Following the Closing, (a) claims for indemnification pursuant to this Clause 11 and (b) claims for specific performance or any other equitable remedies of the covenants and obligations of the other Party under this Agreement and the Ancillary Agreements, shall, collectively, be the sole and exclusive remedies for claims and damages available to the Parties and their respective Affiliates for breach of this Agreement; provided, however, that the limitations set forth in this Clause 11.9 shall not apply to claims for common law fraud or willful misconduct.

11.10Knowledge

Each representation and warranty contained in Clause 9 is made by the Seller subject to the matters disclosed in the Seller Disclosure Schedule with respect to such representation and warranty, and no other information relating to the Seller (including the Business) of which the Purchaser or any of its Affiliates has actual knowledge and no investigation by or on behalf of the Purchaser or its Affiliates or any of their respective agents, representatives, officers,

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employees or advisors, shall prejudice any Claim made by the Purchaser under Clause 11 or operate to reduce any amount recoverable thereunder.

12TERMINATION

12.1Termination Events

This Agreement may, by written notice given before or at the Closing, be terminated:

12.1.1by mutual Consent of the Purchaser and the Seller;

12.1.2by the Purchaser if:

12.1.2(a)there has been a breach of any of the Seller’s representations, warranties, covenants or agreements contained in this Agreement, which would result in the failure of a condition set forth in Clause 5.1, and which breach has not been cured or cannot be cured within 30 (thirty) days after the notice of the breach from the Purchaser and the Purchaser is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement;

12.1.2(b)there has been a Material Adverse Effect;

12.1.2(c)the Seller or any of its Affiliates is declared insolvent, or has filed any petition to initiate bankruptcy proceedings, suspension of payments, creditor’s arrangement or any other similar insolvency proceedings;

12.1.2(d)the Seller has violated or breached any of its obligations under Clause 6.6;

12.1.2(e)if at any time following the Effective Date and prior to the Closing a Judgment (regardless of whether such Judgment is final and non-appealable) is rendered in the Pip-Tazo Litigation ordering the withdrawal or revocation of the ANDA granted to the Seller for a generic form of Wyeth’s piperacillin-tazobactam injections;

12.1.2(f)the Closing has not occurred (other than through the failure of the Purchaser to comply fully with its obligations under this Agreement) on or before the date that is six (6) months following the Effective Date (or, if the Parties are required to make a filing under the Competition/Investments Laws of India, and the Closing has not occurred because the approval has not been obtained or the waiting period under such Laws has not expired by such date, the date on which the waiting period for clearance expires or approval under such Laws is declined;

12.1.3by the Seller if:

12.1.3(a)there has been a breach of any of the Purchaser’s representations, warranties, covenants or agreements contained in this Agreement,

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which would result in the failure of a condition set forth in Clause 5.2, and which breach has not been cured or cannot be cured within 30 (thirty) days after the notice of breach from the Seller and the Seller is not then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement; or

12.1.3(b)the Closing has not occurred (other than through the failure of the Seller to comply fully with its obligations under this Agreement) on or before the date that is six (6) months following the Effective Date (or, if the Parties are required to make a filing under the Competition/Investments Laws of India, and the Closing has not occurred because the approval has not been obtained or the waiting period under such Laws has not expired by such date, the date on which the waiting period for clearance expires or approval under such Laws is declined); provided, however, that if the Closing has not occurred solely because the Seller has not complied fully with its obligations under Clause 5.1.9, then such date may be extended upon the written notice of the Purchaser;

12.1.4by either the Purchaser or the Seller if any Governmental Authority has issued a non-appealable final Judgment or taken any other non-appealable final action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement.

12.2Effect of Termination

Subject to Clause 12.3, the Parties’ rights of termination under Clause 12.1 are in addition to any other rights they may have under this Agreement or otherwise, and the exercise of such rights of termination is not an election of remedies. Other than with respect to any termination of this Agreement by the Purchaser pursuant to Clause 12.1.2(e), if this Agreement is terminated pursuant to Clause 12.1, this Agreement and all rights and obligations of the Parties under this Agreement automatically end without Liability against any of the Parties or its Affiliates, except that: (a) Clause 9.30 (Brokers or Finders), Clause 8.4 (Public Announcements), Clause 13 (Confidentiality), Clause 14 (Governing Law and Arbitration), Clause 15 (Miscellaneous) (except for Clause 15.6 (Specific Performance)), and this Clause 12.2 shall remain in full force and survive any termination of this Agreement; and (b) except as otherwise provided in Clause 3.3, if this Agreement is terminated by a Party because of the breach of this Agreement by another Party or because one or more of the conditions to the terminating Party’s obligations under this Agreement is not satisfied as a result of the other Party’s failure to comply with its obligations under this Agreement, the terminating Party’s right to pursue all legal remedies shall survive such termination unimpaired.

12.3Effect of Termination under Clause 12.1.2(e)

12.3.1If this Agreement is terminated pursuant to Clause 12.1.2(e), this Agreement and all rights and obligations of the Parties under this Agreement automatically end without Liability against any of the Parties or its Affiliates, except that (a) Clause 9.30 (Brokers or Finders), Clause 8.4 (Public Announcements), Clause 13 (Confidentiality), Clause 14 (Governing Law and Arbitration), Clause 15 (Miscellaneous) (except for Clause 15.6

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(Specific Performance)), and this Clause 12.3 shall remain in full force and survive any termination of this Agreement.

12.3.2The Parties agree that, notwithstanding any other provision in this Agreement to the contrary, if at any time following the Effective Date a Judgment (regardless of whether such Judgment is final and non-appealable) is rendered in the Pip-Tazo Litigation ordering the withdrawal, revocation or modification of one or more of the ANDAs granted to the Seller for a generic form of Wyeth’s piperacillin-tazobactam injections, the unilateral termination right of the Purchaser under Clause 12.1.2(e) and the rights set forth in this Clause 12.3 shall be the sole remedy of the Purchaser and the Purchaser shall not be entitled to any indemnification for any the breaches of the representations and warranties hereunder made by the Seller which relate to the Pip-Tazo Litigation.

12.3.3At its sole option, prior to exercising its right to terminate this Agreement pursuant to Clause 12.1.2(e), the Purchaser may notify the Seller in writing (a “Clause 12.1.2(e) Notice”) that it intends to exercise such termination right pursuant to Clause 12.1.2(e).  In such case, the Seller agrees to negotiate exclusively for 21 (twenty one) days with the Purchaser for any modifications in the terms of this Agreement that the Purchaser deems to be necessary.

13CONFIDENTIALITY

13.1General Obligation

Beginning on the date of this Agreement, each Party agrees and undertakes that it shall not reveal, and shall use its reasonable efforts to ensure that its directors, officers, managers, employees (including those on secondment), Affiliates, legal, financial and professional advisors, bankers and sources of funding (collectively, “Representatives”) to whom Confidential Information is made available do not reveal, to any third party any Confidential Information nor use such Confidential Information for any purpose other than the express reason such Confidential Information was provided without the prior written consent of the concerned disclosing Party. The term “Confidential Information” as used in this Agreement means: (a) any information concerning the organization, business, Intellectual Property, technology, trade secrets, know-how, finance, transactions or affairs of the disclosing Party or any of their respective Representatives (whether conveyed in written, oral or in any other form and whether such information is furnished before, on or after the Closing Date); (b) any information whatsoever concerning or relating to: (i) any dispute or Claim arising out of or in connection with this Agreement; or (ii) the resolution of such Claim or dispute; and (c) any information or materials prepared by or for a Party or its Representatives that contain or otherwise reflect, or are generated from, Confidential Information.

13.2Exceptions

The provisions of Clause 13.1 above shall not apply to:

13.2.1disclosure of Confidential Information that is or comes into the public domain or becomes generally available to the public other than through the act or omission of or as a result of disclosure by or at the direction of a Party or any of its Representatives in breach of this Agreement;

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13.2.2disclosure, after giving prior notice to the other Parties to the extent practicable under the circumstances or permissible by Law and subject to any practicable arrangements to protect confidentiality, to the extent required under applicable Laws or governmental regulations or judicial process or generally accepted accounting principles applicable to any Party;

13.2.3Confidential Information acquired independently by a Party from a third party source not obligated to the Party disclosing Confidential Information to keep such information confidential;

13.2.4Confidential Information already known or already in the lawful possession of the Party receiving Confidential Information as of the date of its disclosure by the Person disclosing such Confidential Information;

13.2.5Disclosure to a Governmental Authority, mediator or arbitrator solely to the extent necessary to enforce its rights (including remedies) under this Agreement; and

13.2.6disclosure by a Party to any of its Representatives, provided that such Representative is bound by confidentiality obligations no less restrictive than those set forth herein.

14GOVERNING LAW AND ARBITRATION

14.1Governing Law

The internal laws of India (without giving effect to any choice or conflict of law provision or rule (whether of India or any other jurisdiction) that would cause the application of laws of any other jurisdiction) govern all matters arising out of or relating to this Agreement and its Schedules and Exhibits and all of the transactions it contemplates, including its validity, interpretation, construction, performance and enforcement and any disputes or controversies arising therefrom or related thereto.

14.2Arbitration

14.2.1All controversies, disputes or claims arising out of or relating in any way to this Agreement, the Ancillary Agreements or the transactions contemplated hereunder or thereunder, including any dispute as to the existence, validity, performance, breach or termination hereof or thereof, (each, a “Dispute”) that cannot be resolved among such Parties within 30 (thirty) days from the date that such Dispute arose, or such extended period as such Parties may agree, shall be referred to binding arbitration at the written request of any Party (a “Dispute Notice”) in accordance with the (Indian) Arbitration and Conciliation Act, 1996.

14.2.2The arbitrators shall have power to award and/or enforce specific performance.

14.2.3The location of the arbitration shall be in Singapore and the arbitration shall be conducted in the English language.

14.2.4The arbitrators’ award shall be in writing and shall contain reasons for the decision.

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14.2.5The arbitrators’ award shall be binding on the Parties and the award shall be enforceable in any competent court of law. The non-prevailing party shall be required to bear the costs of the arbitration proceedings.

14.2.6Neither the existence of any Dispute nor the fact that any arbitration is pending hereunder shall relieve any of the Parties of their respective obligations under this Agreement. The pendency of Dispute in any arbitration proceeding shall not affect the performance of the obligations under this Agreement.

15MISCELLANEOUS

15.1Notices

15.1.1All notices and other communications under this Agreement must be in writing and are deemed duly delivered when: (a) delivered if delivered personally or by nationally recognized overnight courier service (costs prepaid); or (b) sent by facsimile with confirmation of transmission by the transmitting equipment (or, the first Business Day following such transmission if the date of transmission is not a Business Day); in each  case to the following addresses or facsimile numbers and marked to the attention of the individual (by name or title) designated below (or to such other address, facsimile number or individual as a Party may designate by notice to the other Parties):

In the case of notices to the Seller or KRR:

Address	: Orchid Towers
	No. 313, Valluvar Koddam High Road
	Nungambakkam, Chennai 600 034, India
Facsimile	: + 91 44 2827 5150
Attention	: Dr. C.B. Rao

with copies to (which shall not constitute notice):

Address	: Latham & Watkins LLP
	12636 High Bluff Drive
	Suite 400
	San Diego, CA 92130-2071
Facsimile	: + 1 858-523-5450
Attention	: Steven T. Chinowsky, Esq.

and

Address	: Crawford Bayley & Co.
	Advocates & Solicitors
	State Bank Buildings
	N.G. N. Vaidya Marg
	Fort, Mumbai 400 023, India
Facsimile	: + 91 22 2266 3978
Attention	: Sanjay Asher, Esq.

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In the case of notices to the Purchaser:

Address	: 275 North Field Drive
	Dept. NLEG; Bldg. H-1
	Lake Forest, Illinois 60045
Facsimile	: + 1 224-212-2088
Attention	: General Counsel

with a copy to (which shall not constitute notice):

Address	: Khaitan & Co.
	One Indiabulls Centre, 13th Floor
	841 Senapati Bapat Marg
	Elphinstone Road
	Mumbai 400 013, India
Facsimile	: +91 22 6636 5050
Attention	: Haigreve Khaitan

and with a copy to (which shall not constitute notice):

Address	: Baker & McKenzie LLP
	One Prudential Plaza
	130 East Randolph Drive
	Chicago, Illinois 60601
Facsimile	: +1 312 861 2899
Attention	: Pablo Garcia-Moreno
	Olivia Tyrrell
	Michael F. DeFranco

15.1.2Either Party may, from time to time, change its address or representative for receipt of notices provided for in this Agreement by giving to notice to the other Party.

15.2Further Assurances

The Parties to this Agreement shall from time to time execute and deliver all such further documents and do all acts and things as the other Party may reasonably require to effectively carry on the full intent and meaning of the Agreement and to the complete the transactions contemplated hereunder.

15.3Amendments

No modification or amendment to this Agreement shall be valid or binding unless made in writing and duly executed by or on behalf of the Seller and the Purchaser and, in the case of amendments to any of Clauses 8.6.1 through and including Clause 8.6.4 that would affect KRR, KRR.

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15.4Waiver and Remedies

The Parties may: (a) extend the time for performance of any of the obligations or other acts of the other Party; (b) waive any inaccuracies in the representations and warranties of the other Party contained in this Agreement or in any certificate, instrument or document delivered pursuant to this Agreement; or (c) waive compliance with any of the covenants, agreements or conditions for the benefit of such Party contained in this Agreement. Any such extension or waiver by any Party shall be valid only if set forth in a written document signed on behalf of the other Parties against whom the waiver or extension is to be effective. No extension or waiver shall apply at any time for performance, inaccuracy in any representation or warranty, or non-compliance with any covenant, agreement or condition, as the case may be, other than that which is specified in the written extension or waiver. No failure or delay by any Party in exercising any right or remedy under this Agreement or any of the documents delivered pursuant to this Agreement, and no course of dealing between the Parties, operates as a waiver of such right or remedy, and no single or partial exercise of any such right or remedy precludes any other or further exercise of such right or remedy or the exercise of any other right or remedy. Any enumeration of a Party’s rights and remedies in this Agreement is not intended to be exclusive, and a Party’s rights and remedies are intended to be cumulative to the extent permitted by law and include any rights and remedies authorized in law or in equity.

15.5Assignment and Successors and No Third Party Rights

This Agreement binds and benefits the Parties and their respective heirs, executors, administrators, successors and assigns; provided, however, that (i) neither the Seller nor KRR may assign any of their respective rights under this Agreement without the prior written Consent of the Purchaser other than, following the Closing, in connection with a sale or transfer of all or substantially all of the assets of the Seller and (ii) prior to the Closing, the Purchaser may not assign any of its rights under this Agreement without the prior written Consent of the Seller other to one or more of its Affiliates.  Nothing expressed or referred to in this Agreement shall be construed to give any Person (including any Business Employees), other than the Parties, any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement except such rights as may inure to a successor or permitted assignee under this Clause 15.5.  Following the Closing, the Purchaser shall be entitled to assign any of its rights and/or obligations (including the benefit or any representations, warranties or indemnities) to any other Person and to hold the representations and warranties hereunder for the benefit of any other Person.

15.6Specific Performance

The Parties agree that damages may not be an adequate remedy and the Purchaser shall be entitled to an injunction, restraining order, right for recovery, suit for specific performance or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the Seller from committing any violation or enforce the performance of the covenants, representations and obligations contained in this Agreement. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Parties may have at law or in equity, including a right for damages.

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15.7Expenses

Except as otherwise provided in this Agreement, each Party shall pay its respective direct and indirect expenses incurred by it in connection with the preparation and negotiation of this Agreement and the consummation of the transactions contemplated by this Agreement, including all fees and expenses of its advisors and representatives. If this Agreement is terminated, the obligation of each Party to pay its own expenses shall be subject to any rights of such Party arising from any breach of this Agreement by the other Party.

15.8Entire Agreement

This Agreement (including the Schedules and Exhibits hereto and the documents and instruments referred to in this Agreement that are to be delivered at the Closing) constitutes the entire agreement of the Parties and KRR relating to the subject matter hereof and supersedes any and all prior agreements, including letters of intent and term sheets, either oral or in writing, between the Parties and KRR with respect to the subject matter herein.

15.9Partial Invalidity

If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid, illegal or unenforceable to any extent for any reason, including by reason of any law or regulation or government policy, the remainder of this Agreement and the application of such provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable shall not be affected thereby, and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. Any invalid, illegal or unenforceable provision of this Agreement shall be replaced with a provision, which is valid and enforceable and most nearly reflects the original intent of the invalid, illegal or unenforceable provision.

15.10Schedules and Exhibits

The Schedules (including the Seller Disclosure Schedule) and Exhibits to this Agreement are incorporated herein by reference and made a part of this Agreement. The Seller Disclosure Schedule is arranged in sections and paragraphs corresponding to the numbered and lettered sections and paragraphs of Clause 9. The disclosure in any section or paragraph of the Seller Disclosure Schedule qualifies other sections and paragraphs in this Agreement only to the extent it is clear by appropriate cross-references that a given disclosure is applicable to such other sections and paragraphs. The listing or inclusion of a copy of a document or other item is not adequate to disclose an exception to any representation or warranty in this Agreement unless the representation or warranty relates to the existence of the document or item itself.

15.11Counterparts

This Agreement may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original but all of which together shall constitute one and the same instrument and any Party may execute this Agreement by signing any one or more of such originals or counterparts. The delivery of signed counterparts by facsimile transmission or electronic mail in “portable document format” (“.pdf”) shall be as effective as signing and delivering the counterpart in person.

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15.12Performance of Obligations by Affiliates

Any obligation of a Party under or pursuant to this Agreement may be satisfied, met or fulfilled, in whole or in part, at the Party’s sole and exclusive option, either by such Party directly or by any Affiliates of such Party that the Party cause to satisfy, meet or fulfill such obligation in whole or in part. With respect to any particular action, the use of the words “Purchaser shall” also means “Purchaser shall cause” the particular action to be performed, the use of the words “Seller shall” also means “Seller shall cause” the particular action to be performed. Each of the Purchaser and the Seller guarantee the performance of all actions, agreements and obligations to be performed by any of their respective Affiliates under the terms and conditions of this Agreement.

15.13No Joint Venture

Nothing in this Agreement creates a joint venture or partnership between the Parties. This Agreement does not authorize any Party: (a) to bind or commit, or to act as an agent, employee or legal representative of, any other Party, except as may be specifically set forth in other provisions of this Agreement; or (b) to have the power to control the activities and operations of any other Party. The Parties are independent contractors with respect to each other under this Agreement. Each Party agrees not to hold itself out as having any authority or relationship contrary to this Clause 15.13.

15.14Mutual Goodwill

This Agreement is entered into in a spirit of goodwill and the Parties covenant with each other that each Party shall render at all times all reasonable assistance in its power to facilitate successful implementation of this Agreement and/or provide any information or document in its possession, which the other Party may reasonably require for the purpose of this Agreement.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered by their duly authorized representatives as of the day and year hereinabove written.

Signed and delivered for and on behalf of the Seller

/s/ K. Raghavendra Rao
By:	K. Raghavendra Rao
Title:	Managing Director

Authorized by resolution of the board of directors of the Seller dated December 15, 2009

Signed and delivered, solely for purposes of Clause 8.6.1 through and including Clause 8.6.4 by KRR

/s/ K. Raghavendra Rao

Mr. K. RAGHAVENDRA RAO

Signed and delivered for and on behalf of the Purchaser

/s/ Christopher B. Begley
By:	Christopher B. Begley
Title:	Authorized Signatory

Authorized by resolution of the board of directors of the Purchaser dated December 15, 2009

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EXHIBIT G

FORM OF CLOSING CERTIFICATE

[Insert Date]

To [                               ]

Sub:Certificate under Clause [·] of the Business Transfer Agreement dated [·] among [insert name of the parties] (“Agreement”)

Dear Sirs

In fulfillment of all the conditions mentioned in Clause [·] (Conditions Precedent) of the Agreement, we hereby confirm as under and enclose herewith the following documents as evidence of the fulfillment of the Conditions Precedent thereof:

Clause No. in the Agreement	Confirmation Given / Documentary Proof Enclosed
[·]	[·]
[·]	[·]

We therefore certify and confirm that all of the Conditions Precedent have been complied with.

Terms used but not defined herein shall have the meaning attributed to them under the Agreement.

Yours faithfully

For and on behalf of
Insert name of [                                            ]

Authorized Signatory

EX-12.1

Exhibit 12.1

Hospira, Inc.

Computation of Ratio of Earnings to Fixed Charges

(Unaudited)

(dollars in millions except ratios)

	For the Years Ended December 31,
	2009		2008		2007		2006			2005
Income from Continuing Operations Before Taxes	$	384.8	$	407.5	$	187.8	$	324.7		$	322.1
Add (Subtract):
One-third of rents	10.0		8.8		9.0		7.3			8.2
Interest on long-term and short-term debt	106.3		116.2		134.5		31.0			28.3
Interest capitalized, net of amortization	0.5		3.0		6.9		(10.0		)	(7.9		)
Earnings from Continuing Operations	$	501.6	$	535.5	$	338.2	$	353.0		$	350.7
Fixed charges:
One-third of rents	$	10.0	$	8.8	$	9.0	$	7.3		$	8.2
Interest on long-term and short-term debt	106.3		116.2		134.5		31.0			28.3
Interest capitalized	5.8		8.0		11.1		13.4			10.5
Fixed Charges from Continuing Operations	$	122.1	$	133.0	$	154.6	$	51.7		$	47.0
Ratio of Earnings to Fixed Charges from Continuing Operations	4.1		4.0		2.2		6.8			7.4

For purposes of computing this ratio, “earnings” consist of income from continuing operations before taxes, one-third of rents (deemed by Hospira to be representative of the interest factor inherent in rents), interest expense and interest capitalized, net of amortization.  “Fixed charges” consist of one-third of rents, interest expense and interest capitalized.

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EX-21.1

Exhibit 21.1

Subsidiaries of Hospira, Inc.

The following is a list of subsidiaries of the Company.  Hospira, Inc. is not a subsidiary of any other corporation. 

Subsidiary Name	State/County Incorporated
DOMESTIC:
Hospira Worldwide, Inc.	Delaware
Hospira Boulder, Inc.	Delaware
Hospira Puerto Rico, LLC	Delaware
Hospira Keystone, Inc.	Delaware
Mayne Pharma (PR) Inc.	Delaware
Hospira Fleet Services, LLC	Delaware
Hospira PAC LLC	Delaware
TheraDoc, Inc.	Delaware
Novocell, Inc.	Delaware
Hospira Foundation	Illinois
INTERNATIONAL:
NORTH AMERICA
Hospira Ltd.	Bahamas
Hospira Holding Ltd.	Bahamas
Hospira Bahamas (Irish Manufacturing) Ltd.	Bahamas
Hospira Bahamas (Donegal) Corp.	Bahamas
Hospira Bahamas International Holdings Ltd.	Bahamas
Hospira Bahamas (Ireland) Corp.	Bahamas
Hospira Costa Rica Ltd.	Bahamas
Hospira Bahamas (Australia) Holdings Ltd.	Bahamas
HBAF Ltd.	Bahamas
Hospira Healthcare Corporation	Canada
LATIN AMERICA
Hospira Produtos Hospitalares Limitada	Brazil
Hospira Chile Limitada	Chile
Hospira Limitada	Colombia
Hospira, S. de R.L. de C.V.	Mexico
Mayne Pharma (Mexico) S.A. de C.V.	Mexico
ASIA PACIFIC
Hospira Pty Limited	Australia
Hospira Holdings (S.A.) Pty Ltd	Australia
Hospira Australia Pty Ltd	Australia
Mayne Pharma IP Holdings (Euro) Pty Ltd	Australia
Hospira Adelaide Pty Ltd	Australia
Shanghai Hospira Distribution Co., Ltd.	China

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Hospira Limited	Hong Kong
Hospira Hong Kong Limited	Hong Kong
Hospira Healthcare India Private Limited	India
Zydus Hospira Oncology Private Ltd – Joint Venture	India
Hospira Japan Co., Ltd. / Hospira Japan K.K.	Japan
Hospira Korea Co. Ltd.	Korea
Hospira Malaysia Sdn Bhd	Malaysia
Hospira NZ Limited	New Zealand
Hospira Philippines, Inc.	Philippines
Mayne Pharma (Philippines), Inc.	Philippines
Hospira Singapore Pte Ltd	Singapore
Hospira Pte. Ltd.	Singapore (H)
Global Pharmaceuticals Limited	Thailand
Indochina Healthcare Limited – Joint Venture	Thailand
EUROPE/MIDDLE EAST
Hospira Healthcare SPRL	Belgium
Hospira Benelux BVBA	Belgium
Hospira Zagreb d.o.o.	Croatia
Hospira Czech Republic s.r.o	Czech Republic
Hospira Finland Oy	Finland
Hospira France SAS	France
Hospira Deutschland GmbH	Germany
Hospira Deutschland Holding GmbH	Germany
Wasserburger Arzneimittel-werk GmbH	Germany
Hospira (non Resident Limited Co.)	Ireland
Hospira Ireland Sales Limited	Ireland
Hospira Ireland Limited	Ireland
Central Laboratories (Ire) Limited	Ireland
Hospira Ireland Holdings	Ireland (H)
Hospira S.p.A.	Italy
Hospira Italia S.r.l.	Italy
Hospira Healthcare B.V.	Netherlands
Hospira Enterprises B.V.	Netherlands
Hospira Portugal LDA	Portugal
Hospria Slovakia s.r.o.	Slovak Republic
Hospira Productos Farmaceuticos y Hospitalarios, S.L.	Spain
Hospira Nordic AB	Sweden
Hospira Schweiz GmbH	Switzerland
Hospira Limited	UK
Hospira UK Limited	UK
Mayne Pharma Euro Finance Co., Ltd.	UK
Hospira Aseptic Services Limited	UK

2

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statements No. 333-115056 for the Hospira Long-Term Stock Incentive Plan, Nos. 333-115058 and 333-120074 for the Hospira 401(k) Retirement Savings Plan and the Hospira Ashland Union 401(k) Plan and Trust, No. 333-127844 for the Hospira Puerto Rico Retirement Savings Plan, and No. 333-153169 for the Hospira Non-Qualified Savings and Investment Plan, on Form S-8; and Registration Statement No. 333-158939 on Form S-3 of our reports dated February 18, 2010, relating to the financial statements and financial statement schedule of Hospira, Inc., and the effectiveness of Hospira, Inc.’s internal control over financial reporting, appearing in the Annual Report on Form 10-K of Hospira, Inc., for the year ended December 31, 2009.

/s/ Deloitte & Touche LLP

Chicago, Illinois

February 18, 2010

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))

I, Christopher B. Begley, certify that:

1. I have reviewed this Annual Report on Form 10-K of Hospira, Inc. (“Hospira”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Hospira as of, and for, the periods presented in this report;

4. Hospira’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Hospira and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Hospira, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of Hospira’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in Hospira’s internal control over financial reporting that occurred during Hospira’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Hospira’s internal control over financial reporting; and

5. Hospira’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Hospira’s auditors and the audit committee of Hospira’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Hospira’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Hospira’s internal control over financial reporting.

/s/  CHRISTOPHER B. BEGLEY

Christopher B. Begley,

Chairman and Chief Executive Officer

Date: February 18, 2010

1

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))

I, Thomas E. Werner, certify that:

1. I have reviewed this Annual Report on Form 10-K of Hospira, Inc. (“Hospira”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Hospira as of, and for, the periods presented in this report;

4. Hospira’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Hospira and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Hospira, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of Hospira’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in Hospira’s internal control over financial reporting that occurred during Hospira’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Hospira’s internal control over financial reporting; and

5. Hospira’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Hospira’s auditors and the audit committee of Hospira’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over  financial reporting which are reasonably likely to adversely affect Hospira’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in Hospira’s internal control over financial reporting.

/s/  THOMAS E. WERNER

Thomas E. Werner,

Senior Vice President, Finance andChief Financial Officer

Date: February 18, 2010

1

EX-32.1

Exhibit 32.1

Certification Pursuant To

18 U.S.C. Section 1350

As Adopted Pursuant To

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Hospira, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission (the “Report”), I, Christopher B. Begley, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  CHRISTOPHER B. BEGLEY

Christopher B. Begley

Chairman and Chief Executive Officer

February 18, 2010

1

EX-32.2

Exhibit 32.2

Certification Pursuant To

18 U.S.C. Section 1350

As Adopted Pursuant To

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Hospira, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission (the “Report”), I, Thomas E. Werner, Senior Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  THOMAS E. WERNER

Thomas E. Werner

Senior Vice President, Finance and Chief Financial Officer

February 18, 2010

1