Exhibit 10.2

Covidien Ltd.

2007 Stock and Incentive Plan

TERMS AND CONDITIONS

OF

RESTRICTED STOCK UNIT AWARD

[YEAR] DIRECTOR GRANT

RESTRICTED UNIT AWARD granted on [Date of Grant] (the “Grant Date”) to [Name of
Director] pursuant to Section 4.7 of the Covidien Ltd. 2007 Stock and Incentive
Plan (the “Plan”).

1. Grant of Restricted Units. Covidien Ltd. (the “Company”) has granted to you
[Number of Restricted Units Granted] Restricted Units, subject to the provisions
of these Terms and Conditions and the Plan. The Company will hold the Restricted
Units in a bookkeeping account on your behalf until such units become payable or
are forfeited or cancelled.

2. Amount and Form of Payment. Each Restricted Unit represents one (1) Share of
Common Stock and vested Restricted Units will be redeemed solely for Shares,
subject to Section 5.

3. Dividends. Each unvested Restricted Unit will be credited with a Dividend
Equivalent Unit (“DEU”) for any cash or stock dividends distributed by the
Company on a Share of Common Stock. DEUs will be calculated at the same dividend
rate paid to other holders of Common Stock and will vest in accordance with the
vesting schedule applicable to the underlying Restricted Units.

4. Vesting and Delivery of Shares. All Restricted Units will fully vest as of
the date of the Company’s [Year After Year of Grant] Annual General Meeting,
subject to forfeiture due to a Termination of Directorship for Cause (as
described in Section 5). Restricted Units will fully vest prior to the date set
forth in the previous sentence upon the first to occur of (i) 30 days following
a Termination of Directorship, except a Termination of Directorship for Cause,
or (ii) a Change in Control; provided, however, that in the event that the
Company is involved in a transaction in which the Shares will be exchanged for
cash, the Company shall issue to you immediately prior to the consummation of
such transaction the number of Shares that are equal to the aggregate number of
unvested Restricted Units (including attributable DEUs) subject to this Award.
Immediately after such issuance of Shares, this Award shall terminate and be of
no further force or effect. Except as provided in the previous sentence and
subject to Section 9, Shares representing Restricted Units that vest pursuant to
this section (including attributable DEUs) shall be delivered to you on the
vesting date.

5. Forfeiture of Award. You will forfeit all of the Restricted Units subject to
this Award if your Termination of Directorship is for Cause. As set forth in the
Plan, Termination of

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Directorship for “Cause” occurs when an individual ceases to be a Director by
reason of his or her removal by the Board due to the Director’s (i) substantial
failure or refusal to perform duties and responsibilities of his or her job,
(ii) violation of any fiduciary duty owed to the Company, (iii) conviction of a
felony or misdemeanor, (iv) dishonesty, (v) theft, (vi) violation of Company
rules or policy, or (vii) other egregious conduct, that has or could have a
serious and detrimental impact on the Company and its employees. The Nominating
Committee, in its sole and absolute discretion, shall determine whether a
Termination of Directorship is for Cause, provided, however, that if a Director
subject to such review is a member of the Nominating Committee, then such
determination shall be made by the full Board (excluding such Director).

6. Tax Treatment. Under United States tax law, the value of any Shares delivered
to you under this Award is includable in your gross income, for federal and
state income tax and for self-employment tax purposes, in the year in which such
Shares are delivered. The Company will not withhold any amount upon the delivery
of Shares subject to this Award or pay any taxes associated with such delivery
of Shares. You acknowledge and agree that you are responsible for the tax
consequences associated with this Award, including upon the delivery of Shares
hereunder.

7. Transfer of Award. You may not transfer this Award or any interest in
Restricted Units except by will or the laws of descent and distribution. Any
attempt to transfer this Award or any interest in Restricted Units other than by
will or the laws of descent and distribution is null and void.

8. Adjustments. In the event of any stock split, reverse stock split, dividend
or other distribution (whether in the form of cash, Shares, other securities or
other property), extraordinary cash dividend, recapitalization, merger,
consolidation, split-up, spin-off, reorganization, combination, repurchase or
exchange of Shares or other securities, the issuance of warrants or other rights
to purchase Shares or other securities, or other similar corporate transaction
or event, the Nominating Committee shall adjust the number and kind of Shares
covered by this Award and other relevant provisions to the extent necessary to
prevent dilution or enlargement of the benefits or potential benefits intended
to be provided by this Award. Any such determinations and adjustments made by
the Nominating Committee will be binding on all persons.

9. Restrictions on Payment of Shares. Payment of Shares for Restricted Units is
subject to the conditions that, to the extent required at the time of delivery
of such Shares:

 

  a. The Shares underlying the Restricted Units will be duly listed, upon
official notice of redemption, on the NYSE; and

 

  b. A Registration Statement under the Securities Act of 1933 with respect to
the Shares will be effective or an exemption from registration will apply.

The Company will not be required to deliver any Shares until all applicable
United States and state laws and regulations have been complied with and all
legal matters in connection with the issuance and delivery of the Shares have
been approved by the Company’s legal counsel.

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10. Disposition of Securities. By accepting this Award, you acknowledge that you
have read and understand the Company’s Insider Trading Policy and are aware of
and understand your obligations under United States securities laws with respect
to trading in the Company’s securities. If you remain an affiliate of the
Company after the Shares are issued, or were an affiliate of the Company within
the three month period prior to sale of the Shares, there may be certain
restrictions on the disposition of the Shares. If this is the case, the Company
should be notified if you desire to dispose of the Shares in order to determine
whether the disposition may be made without violating applicable law. The
Company has the right to recover, or receive reimbursement for, any compensation
or profit you realized upon the disposition of Shares received for Restricted
Units and DEUs to the extent that the Company has a right of recovery or
reimbursement under applicable United States securities laws.

11. Plan Terms Govern. The redemption of Restricted Units, the disposition of
any Shares received for Restricted Units and the treatment of any gain on the
disposition of these Shares are subject to the terms of the Plan and any rules
that the Nominating Committee prescribes. The Plan document, as amended from
time to time, is incorporated into this Terms and Conditions document.
Capitalized terms used herein are defined in the Plan. If there is any conflict
between the terms of the Plan and these Terms and Conditions, the Plan’s terms
govern. By accepting the Award, you hereby acknowledge receipt of the Plan, as
in effect on the Grant Date.

12. Entire Agreement and Amendment. These Terms and Conditions and the Plan
constitute the entire understanding between you and the Company regarding this
Award. These Terms and Conditions supersede any prior agreements, commitments or
negotiations concerning this Award. These Terms and Conditions may not be
modified, altered or changed except by the Nominating Committee in writing and
pursuant to the terms of the Plan.

13. Code Section 409A and 457A Compliance. Notwithstanding any other provision
of these Terms and Conditions to the contrary, in the event that all or a
portion of the Restricted Units subject to this Award become subject to Code
Section 409A or Code Section 457A, the provisions contained in Sections 7.12 or
7.13, respectively, of the Plan shall govern and shall supersede any applicable
provision of these Terms and Conditions.

14. Acceptance. By accepting this Award, you agree to the following:

(i) You have carefully read, fully understand and agree to all of the terms and
conditions contained in the Plan and these Terms and Conditions; and

(ii) You understand and agree that the Plan and these Terms and Conditions
constitute the entire understanding between you and the Company regarding this
Award, and that any prior agreements, commitments or negotiations concerning
this Award are replaced and superseded.

You will be deemed to consent to the application of the terms and conditions set
forth in the Plan and these Terms and Conditions unless you contact Covidien
Ltd., c/o John W. Kapples, Vice President and Secretary, 15 Hampshire Street,
Mansfield, MA 02048 in writing within 30 days of receiving the grant package.
Receipt by the Company of your non-consent will nullify this Award unless
otherwise agreed to in writing by you and the Company.