Exhibit 10.6(c)
AGREEMENT REGARDING
CHANGE IN CONTROL
THIS AGREEMENT
(“Agreement”), is made and entered into as of the
day of
,
2008 (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, 2011. AS OF DECEMBER 31, 2008, 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 third 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 2.99 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 2.99 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 third 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
