Document:

f8k12301010ii_aivtech.htm

Exhibit 10.2

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

SERIES A WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

AIVTECH INTERNATIONAL GROUP CO.

Expires December 28, 2015

 

	No.: [______]	 Number of Shares: [__________]

Date of Issuance: December 29, 2010

FOR VALUE RECEIVED, the undersigned, AIVtech International Group Co., a Nevada corporation (together with its successors and assigns, the “Issuer” or the “Company”), hereby certifies that [____________________] or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), up to [__________________________] ([_______]) shares (subject to adjustment as hereinafter provided) of the duly authorized, validly issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise price per share equal to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. Capitalized terms used in this Warrant and not otherwise defined herein shall have the respective meanings specified in Section 8 hereof.

1.           Term. The term of this Warrant shall commence on December 29, 2010 and shall expire at 6:00 p.m., Eastern Time, on December 28, 2015 (such period being the “Term”).

 

2.           Method of Exercise; Payment; Issuance of New Warrant; Transfer and Exchange.

(a)           Time of Exercise. The purchase rights represented by this Warrant may be exercised in whole or in part during the Term.

 

  

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(b)           Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by delivery to the Company (or such other office or agency of the Issuer as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Issuers) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (“Notice of Exercise Form”); and, within three (3) Trading Days of the date said Notice of Exercise Form is delivered to the Company, the Company shall have received payment of an amount of consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Issuer, (ii) by “cashless exercise” in accordance with the provisions of subsection (c) of this Section 2, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant, or an indemnification reasonably acceptable to the Issuer undertaking with respect to such Warrant in the case of its loss, theft or destruction, to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise Form is delivered to the Company.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.  The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business Day of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error.

(c)           Cashless Exercise. Notwithstanding any provision herein to the contrary, in lieu of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless exercise (“Cashless Exercise”) by surrender of this Warrant at the principal office of the Issuer together with the properly endorsed Notice of Exercise, in which event the Issuer shall issue to the Holder a number of shares of Common Stock computed using the following formula:

X = Y - (A)(Y)

                 B

	
Where

	
X =

	
the number of shares of Common Stock to be issued to the Holder.

	
  

	
Y =

	
the number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised.

	
  

	
A =

	
the Warrant Price.

B =           the Per Share Market Value of one share of Common Stock.

 

(d)           Issuance of Stock Certificates. In the event of any exercise of this Warrant in accordance with and subject to the terms and conditions hereof, certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the Holder’s Prime Broker as specified in the Holder’s exercise form within a reasonable time, not exceeding three (3) Trading Days after such exercise (the “Delivery Date”) or, at the request of the Holder (provided that a registration statement under the Securities Act providing for the resale of the Warrant Stock is then in effect or that the shares of Warrant Stock are otherwise exempt from registration), issued and delivered to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal Agent Commission System (“DWAC”) within a reasonable time, not exceeding three (3) Trading Days after such exercise, and the Holder hereof shall be deemed for all purposes to be the holder of the shares of Warrant Stock so purchased as of the date of such exercise. Notwithstanding the foregoing to the contrary, the Issuer or its transfer agent shall only be obligated to issue and deliver the shares to the DTC on a holder’s behalf via DWAC if such exercise is in connection with sale in reliance upon an effective Registration Statement or other exemption from registration by which the shares may be issued without a restrictive legend and the Issuer and its transfer agent are participating in DTC through the DWAC system.

 

  

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(e)           Transferability of Warrant. Subject to Section 2(g) hereof, this Warrant may be transferred by a Holder, in whole or in part, without the consent of the Issuer. If transferred pursuant to this paragraph, this Warrant may be transferred on the books of the Issuer by the Holder upon surrender of this Warrant at the principal office of the Issuer or its designated agent, properly endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is exchangeable for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable pursuant thereto.

 

(f)           Continuing Rights of Holder. The Issuer shall, at the time of or at any time after each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the extent, if any, of its continuing obligation to afford to such Holder all rights to which such Holder shall continue to be entitled after such exercise in accordance with the terms of this Warrant, provided that if any such Holder shall fail to make any such request, the failure shall not affect the continuing obligation of the Issuer to afford such rights to such Holder.

(g)           Compliance with Securities Laws.

 

(i)           The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Securities Act and any applicable state securities laws.

 

(ii)           Except as provided in paragraph (iii) below, this Warrant and all certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form:

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

 

  

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(iii)           The Issuer agrees to reissue this Warrant or certificates representing any of the Warrant Stock, without the legend set forth above, if at such time, prior to making any transfer of any such securities, the Holder shall give written notice to the Issuer describing the manner and terms of such transfer and demonstrating that the following conditions are satisfied. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that the registration of such securities under the Securities Act is not required in connection with such proposed transfer, or (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the Securities and Exchange Commission and has become and remains effective under the Securities Act, or (b) either (i) the Issuer has received an opinion of counsel reasonably satisfactory to the Issuer, to the effect that registration or qualification under the securities or “blue sky” laws of any state is not required in connection with such proposed disposition, or (ii) compliance with applicable state securities or “blue sky” laws has been effected or a valid exemption exists with respect thereto. The Issuer shall respond to any such notice from a holder within three (3) Trading Days. In the case of any proposed transfer under this Section 2(g), the Issuer shall use reasonable efforts to comply with any such applicable state securities or “blue sky” laws, but shall in no event be required, (x) to qualify to do business in any state where it is not then qualified, (y) to take any action that would subject it to tax or to the general service of process in any state where it is not then subject, or (z) to comply with state securities or “blue sky” laws of any state for which registration by coordination is unavailable to the Issuer. Whenever a certificate representing the Warrant Stock is required to be issued to the Holder without a legend, in lieu of delivering physical certificates representing the Warrant Stock, the Issuer shall cause its transfer agent to electronically transmit the Warrant Stock to the Holder by crediting the account of the Holder or Holder’s Prime Broker with DTC through its DWAC system (to the extent not inconsistent with any provisions of this Warrant or the Subscription Agreement).

 

(h)           Accredited Investor Status. At the time of the exercise of this Warrant, the Holder (1) shall be an “accredited investor” as defined in Regulation D under the Securities Act, or (2) shall exercise this Warrant by means of a Cashless Exercise as provided for in Section 2(c), subject to any applicable restrictions.

 

3.           Adjustment of Warrant Price. The Warrant Price shall be subject to adjustment from time to time as set forth in this Section 3. The Issuer shall give the Holder written notice of any event described below which requires an adjustment pursuant to this Section 3 in accordance with the notice provisions set forth in Section 10.

 

(a)           Adjustments for Stock Splits, Combinations, Certain Dividends and Distributions.  If the Issuer shall, at any time or from time to time after the Original Issue Date, effect a split of the outstanding Common Stock (or any other subdivision of its shares of Common Stock into a larger number of shares of Common Stock), combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, or make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, in each event (i) the number of shares of Common Stock for which this Warrant shall be exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock that a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Warrant Price then in effect shall be adjusted to equal (A) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment.

 

  

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(b)           Adjustment for Other Dividends and Distributions. If the Issuer shall, at any time or from time to time after the Original Issue Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in (i) cash, (ii) any evidences of indebtedness, or any other securities of the Company or any property of any nature whatsoever, other than, in each case, shares of Common Stock; or (iii) any warrants or other rights to subscribe for or purchase any evidences of indebtedness, or any other securities of the Company or any property of any nature whatsoever, other than, in each case, shares of Common Stock, then, and in each event, (A) the number of shares of Common Stock for which this Warrant shall be exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (1) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (2) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (B) the Warrant Price then in effect shall be adjusted to equal (1) the Warrant Price then in effect multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares of Common Stock for which this Warrant is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 3(b) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 3(a).

 

(c)           ­Adjustments for Reclassification, Exchange or Substitution. If the Common Stock for which this Warrant is exercisable at any time or from time to time after the Original Issue Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Section 3(a), Section 3(b), or a reorganization, merger, consolidation, or sale of assets provided for in Section 3(d)), then, and in each event, an appropriate revision to the Warrant Price shall be made and provisions shall be made (by adjustments of the Warrant Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock for which this Warrant was exercisable immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein.

 

  

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(d)           ­Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Original Issue Date there shall be (i) a capital reorganization of the Issuer (other than by way of a stock split or combination of shares or stock dividends or distributions provided for in Section 3(a), and Section 3(b), or a reclassification, exchange or substitution of shares provided for in Section 3(c)), or (ii) a merger or consolidation of the Issuer with or into another corporation, where the holders of the Issuer’s outstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or (iii) the sale of all or substantially all of the Issuer’s properties or assets to any other person (an “Organic Change”), then, as a part of such Organic Change an appropriate revision to the Warrant Price shall be made if necessary and provision shall be made if necessary (by adjustments of the Warrant Price or otherwise) so that, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, in lieu of Warrant Stock, the kind and amount of shares of stock and other securities or property of the Issuer or any successor corporation resulting from the Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3(d) with respect to the rights of the Holder after the Organic Change to the end that the provisions of this Section 3(d) (including any adjustment in the Warrant Price then in effect and the number of shares of stock or other securities deliverable upon exercise of this Warrant) shall be applied after that event in as nearly an equivalent manner as may be practicable.  In any such case, the resulting or surviving corporation (if not the Issuer) shall expressly assume the obligations to deliver, upon the exercise of this Warrant, such securities or property as the Holder shall be entitled to receive pursuant to the provisions hereof, and to make provisions for the protection of the rights of the Holder as provided above.

(e)           Adjustments for Issuance of Additional Shares of Common Stock. In the event the Company shall issue or sell any additional shares of Common Stock (otherwise than as provided in the foregoing subsections (a) through (d) of this Section 3) granted or issued prior to the Issuance Date (the “Additional Shares of Common Stock”) at a price per share less than the then-applicable Warrant Price or without consideration, (i) for the first year following the issuance of the Warrant, then the Warrant Price upon each such issuance shall be reduced to that price; and (ii) for the remaining four years of the Term, then the Warrant Price upon each such issuance shall be reduced to that price (rounded to the nearest cent) determined by multiplying the Warrant Price by a fraction: (1) the numerator of which shall be equal to the sum of (A) the number of shares of Outstanding Common Stock immediately prior to the issuance of such Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at a price per share equal to the outstanding Warrant Price in effect immediately prior to such issuance; and (2) the denominator of which shall be equal to the number of shares of Outstanding Common Stock immediately after the issuance of such Additional Shares of Common Stock. No adjustment of the Warrant Price shall be made upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of shares in accordance with the Excepted Issuances.

 

(f)           Record Date. In case the Issuer shall take record of the holders of its Common Stock or any other preferred stock for the purpose of entitling them to subscribe for or purchase Common Stock or securities convertible into or exchangeable for, directly or indirectly, Common Stock, then the date of the issue or sale of the shares of Common Stock shall be deemed to be such record date.

 

  

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(g)           No Impairment. The Issuer shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, but shall at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect against impairment the right of the Holder to exercise this Warrant. In the event the Holder shall elect to exercise this Warrant, in whole or in part, as provided herein, the Issuer cannot refuse exercise based on any claim that the Holder or anyone associated or affiliated with such holder has been engaged in any violation of law, unless (i) the Issuer receives an order from the Securities and Exchange Commission prohibiting such exercise or (ii) an injunction from a court, on notice, restraining and/or adjoining exercise of this Warrant.

 

(h)           Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Warrant Price or number of shares of Common Stock for which this Warrant is exercisable pursuant to this Section 3, the Issuer at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Issuer shall, upon written request of the Holder, at any time, furnish or cause to be furnished to the Holder a like certificate setting forth such adjustments and readjustments, the Warrant Price in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the exercise of this Warrant. Notwithstanding the foregoing, the Issuer shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent of such adjusted amount; if the Issuer so postpones delivering a certificate, such prior adjustment shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 3 and not previously made, would result in an adjustment of one percent or more.

 

(i)           Issue Taxes. The Issuer shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be payable in respect of any issue or delivery of shares of Common Stock on exercise of this Warrant; provided, however, that the Issuer shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion.

 

(j)           Fractional Shares. No fractional shares of Common Stock shall be issued upon exercise of this Warrant. In lieu of any fractional shares to which the Holder would otherwise be entitled, the Holder shall round the number of shares to be issued upon exercise up to the nearest whole number of shares.

 

(k)           Reservation of Common Stock. The Issuer shall, during the period within which this Warrant may be exercised, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of this Warrant, such number of shares of Common Stock equal to at least one hundred percent (100%) of the aggregate number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant.

 

(l)           Retirement of this Warrant. Exercise of this Warrant shall be deemed to have been effected on the date of exercise hereof. Upon exercise of this Warrant only in part, the Issuer shall issue and deliver to the Holder, at the expense of the Issuer, a new Warrant covering the unexercised balance of the Warrant Shares.

 

(m)           Regulatory Compliance. If any shares of Common Stock to be reserved for the purpose of exercise of this Warrant require registration or listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Issuer shall, at its sole cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as the case may be.

 

  

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4.           No Preemptive Rights. The Holder shall not be entitled to rights to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class, or any bond, debentures or other evidences of indebtedness convertible into or exchangeable for shares, may be issued and disposed of by the Board on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the Board in its absolute discretion may deem advisable.

 

5.           Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder exercise this Warrant, in whole or in part, if the number of shares of Common Stock to be issued pursuant to such exercise would cause the number of shares of Common Stock beneficially owned by the Holder and its affiliates at such time, when aggregated with all other shares of Common Stock beneficially owned by the Holder and its affiliates at such time, result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock outstanding at such time; provided, however, that upon the Holder providing the Issuer with sixty-one (61) days notice (pursuant to Section 10 hereof) (the “Waiver Notice”) that the Holder would like to waive Section 5 of this Warrant with regard to any or all shares of Common Stock for which this Warrant is exercisable, this Section 5 shall be of no force or effect with regard to those shares referenced in the Waiver Notice.

 

6.           Registration Rights.  The Holder of this Warrant is entitled to the benefit of certain registration rights with respect to this Warrant and the shares of Warrant Stock issuable upon the exercise of this Warrant, pursuant to the Subscription Agreement.

7.           Definitions. For the purposes of this Warrant, the following terms have the following meanings:

“Board” shall mean the Board of Directors of the Issuer.

“Capital Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

“Articles of Incorporation” means the Articles of Incorporation of the Issuer, as amended, as in effect on the Original Issue Date, and as hereafter from time to time amended, modified, supplemented or restated in accordance with the terms hereof and thereof and pursuant to applicable law.

“Common Stock” means the Common Stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock may hereafter be changed.

 

  

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“Excepted Issuance” means (i) full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, (ii) the Company’s issuance of securities in connection with a bona fide strategic license agreements and other partnering arrangements with an independent third party in a similar business as the Company so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, (iii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock of up to 10% of the Company’s outstanding shares to employees, directors, and consultants, pursuant to an approved employee benefit plan, and (iv) as a result of the exercise of Warrants which are issued or granted pursuant to this Agreement on the unamended terms in effect on the Closing Date.

“Governmental Authority” means any governmental, regulatory or self-regulatory entity, department, body, official, authority, commission, board, agency or instrumentality, whether federal, state or local, and whether domestic or foreign.

“Holders” mean the Persons who shall from time to time own any Warrant. The term “Holder” means one of the Holders.

 

“Independent Appraiser” means a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Issuer) that is regularly engaged in the business of appraising the Capital Stock or assets of corporations or other entities as going concerns, and which is not affiliated with either the Issuer or the Holder of any Warrant.

“Issuer” means AIVtech International Group Co., a Nevada corporation, and its successors.

“Original Issue Date” means December 29, 2010.

“OTC Bulletin Board” means the over-the-counter electronic bulletin board.

 

“Other Common” means any other Capital Stock of the Issuer of any class which shall be authorized at any time after the date of this Warrant (other than Common Stock) and which shall have the right to participate in the distribution of earnings and assets of the Issuer without limitation as to amount.

 

“Outstanding Common Stock” means, at any given time, the aggregate amount of outstanding shares of Common Stock, assuming full exercise, conversion or exchange (as applicable) of all right, warrants or options to purchase shares of Common Stock that are outstanding at such time.

 

“Person” means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or other entity of whatever nature.

“Per Share Market Value” means on any particular date (a) the last closing bid price per share of the Common Stock on such date on the OTC Bulletin Board or any registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on the OTC Bulletin Board or any registered national stock exchange, the last closing bid price for a share of Common Stock in the over-the-counter market, as reported by the OTC Bulletin Board or by Pink OTC Markets Inc. or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or by Pink OTC Markets Inc. (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by the Board.

 

  

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“Purchasers” means the purchasers of the Common Stock and the Warrants issued by the Issuer pursuant to the Subscription Agreement.

“Securities” means any debt or equity securities of the Issuer, whether now or hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security” means one of the Securities.

“Securities Act” means the Securities Act of 1933, as amended.

“Subscription Agreement” means the Subscription Agreement dated as of December 29, 2010, among the Issuer and the Purchasers.

“Subsidiary” means any corporation at least 50% of whose outstanding Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

“Term” has the meaning specified in Section 1 hereof.

 

“Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board or a registered national stock exchange, or (b) if the Common Stock is not traded on the OTC Bulletin Board or a registered national stock exchange, a day on which the Common Stock is quoted in the over-the-counter market as reported by Pink OTC Markets Inc. (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“Voting Stock” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) having ordinary voting power for the election of a majority of the members of the Board (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

“Warrants” means the Warrants issued and sold pursuant to the Subscription Agreement, including, without limitation, this Warrant and the Series B Warrants (as defined in the Subscription Agreement), and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(e) or 2(f) hereof or of any of such other Warrants.

“Warrant Price” initially means $4.00, as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 3 hereto.

 

  

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“Warrant Share Number” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon exercise of a Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

8.           Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant may be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), by a written instrument or written instruments executed by (a) the Issuer and (b) the Holders of a majority of the Warrants then outstanding; provided, however, that no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price, shorten the period during which this Warrant may be exercised or modify any provision of this Section 8 without the consent of the Holder of this Warrant. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all holders of the Warrants.

9.           Governing Law; Jurisdiction. This Warrant shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Warrant shall not be interpreted or construed with any presumption against the party causing this Warrant to be drafted. The Issuer and the Holder agree that venue for any dispute arising under this Warrant will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue. The Issuer and the Holder irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York. The Issuer and the Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 9 shall affect or limit any right to serve process in any other manner permitted by law. The Issuer and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Warrant or the Subscription Agreement, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party. The parties hereby waive all rights to a trial by jury.

10.           Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile or three (3) business days following being mailed by certified or registered mail, postage prepaid, return-receipt requested, addressed to the holder of record at its address appearing on the books of the Issuer. The Issuer shall give written notice to the Holder at least twenty (20) calendar days prior to the date on which the Issuer closes its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for determining rights to vote with respect to any Organic Change, dissolution, liquidation or winding-up and in no event shall such notice be provided to such holder prior to such information being made known to the public. The Issuer shall also give written notice to the Holder at least twenty (20) days prior to the date on which any Organic Change, dissolution, liquidation or winding-up will take place and in no event shall such notice be provided to such holder prior to such information being made known to the public. The addresses for such communications shall be:

 

  

11

  

 

	
If to the Issuer: 

	
AIVtech International Group Co.

1305 East, Hightech Plaza, Phase 2, Tian’An Cyber Park

Futian District, Shenzhen, Guangdong Province, PRC 518034

Attn: Mr. Jinlin Guo, President

Tel No.: +86 755-88353133

Fax No.: +86 755-88353122

	  	  
	
with copies (which copies shall not constitute notice)

to:

	
Anslow & Jaclin LLP

195 Route 9 South, Suite 204

Manalapan, NJ 07726

Attn: Gregg E. Jaclin, Esq.

Tel. No.: (732) 409-1212

Fax No.:  (732) 577-1188

	  	  
	
If to any Holder:

	
At the address of such Holder set forth on Exhibit A to the Subscription Agreement, with copies to Holder’s counsel as set forth on Exhibit A or as specified in writing by such Holder.

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.

 

11.           Warrant Agent. The Issuer may, by written notice to each Holder of this Warrant, appoint an agent having an office in New York, New York for the purpose of issuing shares of Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to Section 12 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

12.           Lost or Stolen Warrant. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver new Warrant of like tenor and date; provided, however, that the Company shall not be obligated to re-issue warrant(s) if the Holder contemporaneously exercise this Warrant to purchase shares of Common Stock.

13.           Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

  

12

  

 

14.           Specific Shall Not Limit General; Construction. No specific provision contained in this Warrant shall limit or modify any more general provision contained herein. This Warrant shall be deemed to be jointly drafted by the Company and all initial purchasers of the Warrant and shall not be construed against any person as the drafter hereof.

15.           Successors and Assigns. This Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.

16.           Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision contained herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability of such provision shall not affect the other provisions of this Warrant, but this Warrant shall be construed as if such unenforceable provision had never been contained herein.

17.           Headings. The headings of the Sections of this Warrant are for convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

13

  

 

IN WITNESS WHEREOF, the Issuer has executed this Series A Warrant as of the day and year first above written.

	
  

	
AIVTECH INTERNATIONAL GROUP CO.

By: /s/ Jinlin Guo                                                                      

 Name: Jinlin Guo

 Title: Chief Executive Officer

  

14

  

EXERCISE FORM

SERIES A WARRANT

AIVTECH INTERNATIONAL GROUP CO.

The undersigned _______________, pursuant to the provisions of the accompanying Series A Warrant, hereby elects to purchase _____ shares of Common Stock (the “Warrant Shares”) of AIVtech International Group Co. covered by the accompanying Series A Warrant.

 

	 Dated: _________________       	 Signature               ___________________________
	 	 Address                 _____________________
	 	                                 _____________________
	 	 

 

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of Exercise: _________________________

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.o Yeso No

 

The undersigned is a not a U.S. person and certifies that the warrant is not being exercised on behalf of a U.S. person.o Yeso No

 

The undersigned intends that payment of the Warrant Price shall be made as (check one):

 

Cash Exercise_______

 

Cashless Exercise_______

 

If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $________ by certified or official bank check (or via wire transfer) to the Issuer in accordance with the terms of the Warrant.

 

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is ___________. The Issuer shall pay a cash adjustment in respect of the fractional portion of the product of the calculation set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is ____________.

 

X = Y - (A)(Y)

                                     B

Where:

The number of shares of Common Stock to be issued to the Holder is (“X”).

The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised is (“Y”).

The Warrant Price is (“A”).

 

  

15

  

 

The Per Share Market Value of one share of Common Stock is (“B”).

The certificate(s) representing the Warrant Shares shall be delivered by

	
(a)  

	
certified mail to the above address, or

	
(b)  

	
certified mail to the prime broker of the Holder at

Name: _____________________________________

Address:___________________________________

Attention: __________________________________

Tel. No.: ___________________________________

	
(c)  

	
electronically (DWAC Instructions: ____________________), or

	
(d)  

	
other (specify) _____________________________________

If the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.

 

 

	

Dated: _________________

 

Note:  The signature must correspond with the name of the Holder as written on the first page of the Warrant in every particular, without alteration or enlargement  

or any change whatever, unless the Warrant has been assigned.   

	
Signature:______________________

 

______________________________

Name (please print)

 

______________________________

______________________________

Address

______________________________

Email

______________________________

Federal Identification or SSN.

 

Assignee:

Signature:______________________

 

______________________________

Name (please print)

 

______________________________

______________________________

Address

______________________________

Email

______________________________

Federal Identification or SSN

 

 

  

16

  

ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the accompanying Series A Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer said Series A Warrant on the books of the corporation named therein.

 

	 Dated: _________________       	 Signature               ___________________________
	 	 Address                 _____________________
	 	                                 _____________________
	 	 

 

  

17

  

 

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the accompanying Series A Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of said Series A Warrant on the books of the corporation named therein.

 

	 Dated: _________________       	 Signature               ___________________________
	 	 Address                 _____________________
	 	                                 _____________________
	 	 

 

  

18

  

 

FOR USE BY THE ISSUER ONLY:

This Warrant No. ________ canceled (or transferred or exchanged) this _____ day of ___________, _____, shares of Common Stock issued therefor in the name of _______________, Warrant No. ________ issued for ____ shares of Common Stock in the name of _______________.

  

19

  

 

EXHIBIT A

 

	
Holder’s Name

	
Holder’s Address

	
Name and Address

of Holder’s Counsel

	  	  	  

 

 

 

20exhibit10-1.htm

 

 

Exhibit 10.1

 

December 28, 2010

William A. Hawkins

 

 

Dear Bill:

We have sincerely appreciated your dedication and commitment to Medtronic’s mission and success.  You have informed the Board of Directors of your decision to retire from Medtronic, and we wish you the best as you plan for such retirement and appreciate your efforts to facilitate a smooth transition of your responsibilities to a successor.

 

This Letter Agreement and Attached Exhibit A (“Agreement”) sets forth the terms and conditions of your retirement from Medtronic effective April 27, 2012 (or earlier in accordance with this Agreement).  This Agreement also sets forth the terms and treatment of certain of your benefits acquired during your employment.  In consideration of the provisions and agreements set forth below and for good and valuable consideration, the sufficiency and receipt of which are acknowledged by both parties, we have agreed as follows.

Article 1.  Agreement.

1.1  Transition Terms.  This Agreement sets forth the terms and conditions, including the amount, timing, and method of payments, as well as the terms and benefits of your transition of employment.  You will be entitled to receive the benefits and payments set forth below, provided that you have signed and not revoked this Agreement.

 

Article 2.  Transition of Employment.

2.1  Separation and Retirement Dates.  Your last day as Chief Executive Officer of Medtronic shall be April 29, 2011, or such earlier or later date as Medtronic’s Board of Directors (“Board”) determines is appropriate to facilitate a smooth transition.  Such date that you step down as Chief Executive Officer shall be referred to as the “Separation Date.”  Thereafter, your employment with Medtronic shall terminate on the “Retirement Date,” which is defined as the earliest to occur of:  (a) April 27, 2012, or (b) the date of an Event of Default (as defined in Section 2.11 below).

2.2  Continued CEO Salary, MIP and Benefits.  From the date of this Agreement through the Separation Date, your current base salary, incentive compensation (including under the Medtronic Management Incentive Program (“MIP”)), and perquisites shall continue on the same terms and at such levels as currently in effect, and your benefit plan participation shall continue under such terms and conditions as generally apply to senior executive officers of Medtronic.

  

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Payment of the actual FY11 MIP amount based on business results will be made in accordance with the customary terms of the MIP, and consistent with Medtronic’s customary payroll dates and practices.  For the avoidance of doubt, if the Separation Date occurs before April 29, 2011, the commencement of the Transition Period prior to the end of FY11 shall have no effect on your FY11 MIP payment.

2.3  Board Resignation.  You will resign from Medtronic’s Board of Directors effective upon the Separation Date.

2.4  Transition Period.  The period from the Separation Date through the Retirement Date shall be defined as the Transition Period.  During the Transition Period, you will not be required to report to work.  However, you agree to make yourself available (as is mutually convenient) until the Retirement Date as a Medtronic employee for consultation regarding the transition of your duties as well as appropriate matters in litigation, talent retention, regulatory affairs, community affairs and employee engagement.  You will also continue to provide advice and counsel on matters relating to Industry Leadership. Although you will remain in regular employment through the end of the Transition Period, you are expected to have a Separation from Service on the Separation Date (as that term is defined for purposes of Medtronic’s deferred compensation arrangements subject to Code Section 409A) due to your decreased work commitment.  Upon the Retirement Date, you will be treated as retirement eligible for purposes of all Medtronic plans and programs.

2.5  Transition Period Salary, MIP and Benefits.  During this Transition Period, your current base salary, incentive compensation (MIP), and perquisites shall continue on the same terms and at such levels as currently in effect during your regular employment prior to the Transition Period, and your benefit plan participation shall continue under such plan terms and conditions as generally apply to senior executive officers of Medtronic.  During the Transition Period, subject to the terms and conditions of this Agreement, Medtronic will pay your current base salary at a gross monthly amount of One Hundred Four Thousand One Hundred Sixty Seven Dollars ($104,167) (less withholdings for applicable taxes and authorized deductions).  During the Transition Period, you will be paid incentive bonuses under the MIP for FY11 and FY12 based upon actual MIP business results, and in accordance with the customary terms of MIP.  For the purposes of this Transition Period, benefits plans shall include medical, dental and vision coverage, basic and optional life insurance, the Medtronic Retirement Plan, the Medtronic 401(k) plan, salary continuation, long term disability, executive physical, business allowance, and matching charitable gifts.  Additional benefit accrual under the Supplemental Executive Retirement Program (“SERP”) will not occur during the transition period.  Payment of this transition salary and benefits will commence after expiration of the revocation period set forth in Article 4 consistent with Medtronic’s customary payroll dates and practices, provided you have signed and not revoked this Agreement.

For avoidance of doubt, we confirm that you will be permitted to rescind your 2011 deferral election under the CAP on or before December 31, 2010 and that all voluntary deferrals you have made in prior years are included in the compensation used in the calculation of the SERP.

  

-2-

  

2.6  Long Term Performance Plan (PSP/LTPP).  You will be paid the LTPP payouts for grants awarded to you for the performance periods FY09 - FY11, FY10 - FY12 and FY11 - FY13, as calculated from corporate financial objectives and as approved by the Compensation Committee of the Board.  Payment of the actual amount based on business results will be made to you in accordance with the terms of the LTPP and consistent with Medtronic’s customary payroll dates and practices, including your status as a retiree.

2.7  FY12 Long Term Incentive award (LTI).  Notwithstanding Sections 2.2 or 2.5, you will not be eligible for a new LTI (including LTPP, stock options and  Restricted Stock Units)  award for FY12 – FY14 unless your Separation Date occurs more than 60 days after the commencement of Medtronic’s FY12, in which case the Compensation Committee of the Board will consider you for a FY12 LTPP award at a level consistent with prior years based on your extended service as Chief Executive Officer.

2.8  Deferred Compensation Payout.  You will receive distribution of funds in your Capital Accumulation Plan consistent with Plan provisions and subject to the requirements of Code Section 409A.

2.9  Stock Options and Restricted Stock.  During the Transition Period and upon Retirement, your stock options and restricted stock grants will continue to vest in accordance with the terms of the applicable option and/or restricted stock agreement.  The exercise of any such option must occur no later than the last date on which exercise is permitted under the applicable option agreement, including terms applicable to your status as a retiree. You agree that you are solely responsible for determining the date on which your options expire per the terms of your option agreement(s).

2.10  No Further Rights and Benefits.  Effective on the Separation Date, you shall have no duties and no authority to make any representations or commitments on behalf of Medtronic or in any capacity whatsoever, except as provided by this Agreement.  After expiration of Transition Period, you shall have no further rights deriving from your employment by Medtronic, and shall not be entitled to any further compensation or non-vested benefits, except as provided in this Agreement or under the terms of any employee benefit plan in which you are then a participant.

2.11  Event of Default.  In the event you materially breach any of your material obligations under Sections 5.5, 5.6, 5.10 or 5.11 of this Agreement, Medtronic will give you written notice of your alleged material breach and you will have a reasonable time (not less than 10 days and not more than 30 days) to cure such breach after you receive such written notice. If you fail to cure a material breach of your obligations under this Agreement within such time period, Medtronic may, upon written notice to you, declare an “Event of Default” and thereupon terminate your Transition Period salary and benefits under Section 2.5 and your right to receive the payments under Section 3.2. If Medtronic gives notice of an Event of Default and you dispute such notice and commence arbitration pursuant to Section 5.5.3, there will be no action to terminate your status as an employee of Medtronic prior to April 27, 2012 unless and until an Event of Default is determined by the arbitrator.

  

-3-

  

Article 3.  Separation Payment.

3.1  Exhibit A Execution.  Exhibit A: Release (“Release”) of this Agreement will be valid and enforceable, provided you sign Exhibit A no earlier than April 27, 2012. Any execution of  Exhibit A prior to April 27, 2012 or after  May 18, 2012 shall render the Release null and void and unenforceable.

3.2  Additional Consideration: Lump Sum and Annual MIP Payments.  Subject to the terms and conditions of this Agreement, if the Retirement Date occurs on April 27, 2012, Medtronic will pay to you a lump sum separation amount of: (a) One Million Five Hundred Sixty Two Thousand Five Hundred Dollars ($1,562,500), which is an amount equal to one and one-fourth (1-1/4) years of your current base salary, plus (b) Two Million One Hundred Eighty-Seven Thousand Five Hundred Dollars ($2,187,500), which is an amount equal to one and one-fourth (1-1/4) times your Annual MIP target amount for FY11.  Subject to the terms and conditions of this Agreement, if the Retirement Date occurs on April 27, 2012, Medtronic will also pay to you a lump sum equal to twenty four (24) times the monthly COBRA premiums then in effect for continuation of your health and dental benefits.  Provided you have signed and not revoked this Agreement, these lump sum amounts (less withholdings for taxes) will be paid to you on June 8, 2012.

3.3  References.  All requests for information for your prospective future employer relative to your employment at Medtronic will be forwarded to the Lead independent Director of the Medtronic Board, who  will make a good faith response to such requests with confirmation of your title, dates of employment, salary, and performance.  In addition, you may use as references other current or former Medtronic executives or directors who have agreed to provide you a reference to your prospective employer.

3.4 Regarding COBRA Benefits.  As provided by COBRA, you shall have the right to continue coverage in the medical plan(s) in which you are presently participating, in accordance with state and federal law, for a period of 18 months following the Retirement Date at a cost to you as specified by such plans, or for such longer period as may be provided by law.

3.5 Non-Required Benefits.  You acknowledge that by accepting the provisions of this Agreement, you are receiving certain benefits to which you would not otherwise be entitled.

Article 4.  Release.

4.1  Your Release. In consideration of the provisions of this Agreement, you, for yourself and your heirs and executors, fully and completely release and forever discharge Medtronic, its officers, directors, shareholders, board members, representatives, divisions, parents, subsidiaries, successors and assigns, employees and agents, of and from any all claims, complaints, causes of action, demands, sums of money, covenants, contracts, agreements, promises, liabilities, damages or judgments, whatsoever in law or in equity, which you, ever had, now have against Medtronic or which you, hereafter, can, shall, or may have for or by reason of or in connection with any actions, conduct, decisions, behavior, events, transactions, omissions or accounts, occurring to the date of this Agreement.

  

-4-

  

You acknowledge that this Release specifically covers, but is not limited to, any and all claims, complaints, causes of action or demands (including related attorneys’ fees and costs) which you have or may have against Medtronic relating in any way to the terms, conditions and circumstances of your employment and the termination, resignation and/or Retirement thereof, or of your service as an officer or director of Medtronic; whether based on statutory or common law claims for wrongful discharge, breach of contract, breach of any express or implied promise, misrepresentation, fraud, retaliation, breach of public policy, infliction of emotional distress, defamation, promissory estoppels, invasion of privacy, or employment discrimination, including but not limited to claims under the Federal Age Discrimination in Employment Act (29 U.S.C. Sec. 621, et seq.), the Older Workers Benefit Protection Act (“OWBPA”), the Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act, the Sarbanes-Oxley Act of 2002 and state statutes, if any, addressing the same subject matters or any other theory or basis, whether legal or equitable.

Notwithstanding the forgoing, nothing in this Section 4.1 or elsewhere in this Agreement shall be interpreted to affect or impair any right that you have to salary or benefits under this Agreement, any right to any vested benefit under any Medtronic employee benefit plan or program, or any right to indemnification pursuant to Medtronic’s bylaws and certificate of incorporation or applicable law.

4.2  Medtronic Release. In consideration of the provisions of this Agreement, Medtronic, for itself and its officers, directors, shareholders, board members, representatives, divisions, parents, subsidiaries, successors and assigns, employees and agents (“Medtronic Parties”), fully and completely releases and forever discharges you, your heirs and executors, of and from any all claims, complaints, causes of action, demands, sums of money, covenants, contracts, agreements, promises, liabilities, damages or judgments, whatsoever in law or in equity, which any Medtronic Parties, ever had, now have against you or which any Medtronic Parties, hereafter, can, shall, or may have for or by reason of or in connection with any actions, conduct, decisions, behavior, events, transactions, omissions or accounts, occurring to the date of this Agreement.

Medtronic Parties acknowledge that this Release specifically covers, but is not limited to, any and all claims, complaints, causes of action or demands (including related attorneys’ fees and costs) which any Medtronic Parties have or may have against you relating in any way to the terms, conditions and circumstances of your employment and the termination, resignation and/or Retirement thereof, or of your service as an officer or director of Medtronic; whether based on statutory or common law claims for breach of contract, breach of any express or implied promise, misrepresentation, fraud, breach of public policy, defamation, or promissory estoppels, or any other theory or basis, whether legal or equitable.

 

4.3  Notice of Rights of Review and Revocation.  You acknowledge receipt of this Agreement as notice in writing from Medtronic advising you to consult with an attorney prior to executing this Agreement and further acknowledges that you have been provided the right to consider this Agreement for a period of at least twenty-one (21) days prior to executing same. The parties acknowledge that you have fifteen (15) days from the date of execution of this Agreement to revoke same, and that this entire Agreement shall not be effective or enforceable in whole or in part until the revocation period has expired.  If you choose to revoke this Agreement within

  

-5-

  

fifteen (15) days of execution, such revocation shall apply to the entire Agreement, and it is understood and agreed that such revocation shall render this entire Agreement null and void. To be effective, the revocation must be in writing and delivered by hand or mailed to Caroline Stockdale, Senior Vice President, Human Resources, Medtronic, Inc., 710 Medtronic Parkway, MS: LC400, Minneapolis, MN 55432.  If mailed, the revocation must be (a) postmarked within the fifteen-day revocation period; (b) properly addressed to Caroline Stockdale; and (c) sent by certified mail, return receipt requested.  If you accept this Agreement, the signed Agreement should be postmarked or returned by the fifteenth day following your execution hereof to Caroline Stockdale at the address stated herein.

Article 5.  General Provisions.

5.1  Vacation Pay.  You shall receive compensation for accrued and unused vacation through April 27, 2012 in a lump sum (less withholdings for taxes) in accordance with standard policy within five (5) business days thereafter.

5.2   Executive Placement Services.  Medtronic will make available to you senior executive level outplacement services through a mutually acceptable vendor during the Transition Period and for a period of one year following the Retirement Date.  Payments for such services will be paid directly to the vendor and will be deemed includable income.

5.3  Professional Fees.  Medtronic will reimburse you for your legal fees incurred in connection with the review and negotiation of this agreement, and tax planning fees in connection with your retirement, the sum total of these fees is subject to a maximum amount of Fifty Thousand Dollars ($50,000).

5.4  Office and Secretarial Support.  During the Transition Period and for three years thereafter, Medtronic will provide you with access to secretarial and IT support as appropriate  and office space in a mutually acceptable location.

5.5 Post-Employment Restrictions.   For purposes of this Agreement, terms that are CAPITALIZED have the following defined meanings with respect to those businesses:

	  	
COMPETITIVE PRODUCT means any good, product, product line or service developed, designed, produced, manufactured, marketed, promoted, sold, supported, serviced, or in development or the subject of research by anyone other than Medtronic that is the same as or similar to, or performs any of the same or similar functions as, may be substituted for, or is intended or used for any of the purposes as any good, product, product line or service you (or other PERSONS at or on behalf of Medtronic) researched, developed, designed, produced, manufactured, marketed, sold, solicited the sale of, or supported as of the Separation Date or about which at any time you received or otherwise obtained or learned CONFIDENTIAL INFORMATION.

	  	
COMPETITIVE RESEARCH AND SUPPORT means any research, development, analysis, planning or support services of any kind or nature, including without limitation theoretical and applied research, or business, technical, regulatory or systems research, analysis, planning or

  

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support, that assists, improves or enhances any aspect of the development, design, production, manufacture, marketing, promotion, sale, support or service of a COMPETITIVE PRODUCT.

	  	
CONFIDENTIAL INFORMATION means any information relating to Medtronic’s business that you learned during the course of your employment by Medtronic that derives independent economic value from not being generally known, or readily ascertainable by proper means, by other PERSONS who can obtain economic value from its disclosure or use. CONFIDENTIAL INFORMATION includes but is not limited to trade secrets and inventions and, without limitation, may relate to research; development; experiments; clinical investigations; clinical trials; clinical and product development results and data; engineering; product specifications; computer programs; computer software; hardware configurations; manufacturing processes; compositions; algorithms; know-how; methods; machines; management systems and techniques; strategic plans; long-range plans; operating plans; organizational plans; financial plans; financial models; financial projections; nonpublic financial information; business, financial, planning, and strategic systems and methods; operating systems; information systems; acquisition and divestiture goals, plans, strategies or targets; regulatory strategies, plans and approaches; quality control systems and techniques; patent and intellectual property strategies, plans and approaches; vendor and customer data; employee and personnel data; human resources goals, plans and strategies; human resource management techniques; sales volumes; pricing strategies; sales and marketing plans and strategies, contracts and bids; and any business management techniques that are being planned or developed, utilized or executed by Medtronic; provided that CONFIDENTIAL INFORMATION does not include information that has been publicly disclosed by Medtronic or is otherwise publicly available.

CONFLICTING ORGANIZATION means any PERSON or entity, and any parent, subsidiary, partner or affiliate of any PERSON or entity, that engages in, or is intended to become engaged in, the development, design, production, manufacture, promotion, marketing, sale, support or service of a COMPETITIVE PRODUCT or in COMPETITIVE RESEARCH AND SUPPORT.

 

PERSON means any natural or judicial person or entity of any kind.

5.5.1  From the Separation Date and for 24 months thereafter, you will not engage in any of the following activities:

	  	
·

	
Be employed by or affiliated in any capacity with, become an independent contractor or consultant for, a director or advisor to, or render any services, directly or indirectly, on behalf of or in support of, any CONFLICTING ORGANIZATION.

	  	
·

	
Use, disclose, or rely upon any CONFIDENTIAL INFORMATION to or for the benefit of anyone other than Medtronic, for as long as the information retains the characteristics described in the definition above.

	  	
·

	
Encourage or induce any PERSON to stop or refrain from doing business with Medtronic.

	  	
·

	
On behalf of a CONFLICTING ORGANIZATION, solicit, cause to be solicited, or participate in or promote the solicitation of any PERSON to purchase, use, recommend or prescribe a COMPETITIVE PRODUCT.

  

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·

	
On behalf of a CONFLICTING ORGANIZATION, solicit, cause to be solicited, or participate in or promote the solicitation of any PERSON to participate in, evaluate, comment on or otherwise be engaged in COMPETITIVE RESEARCH AND SUPPORT.

5.5.2  Notification Process for Waiver Request.

	  	
·

	
You will provide to Medtronic advance written notice of your intention to engage in any activity that, if accepted or undertaken by you, would constitute a breach of the provisions of Section 5.5.1 of this Agreement.  Such advance notice will include a description of the company and your proposed position, scope of duties and responsibilities.

	  	
·

	
Medtronic will evaluate the nature and scope of the position and determine, in the exercise of good faith, whether the opportunity as described in your notice would constitute a violation of Section 5.5.1 of this Agreement.  If Medtronic makes a determination that the opportunity would constitute a breach of Section 5.5.1, Medtronic may, in the exercise of its reasonable discretion, grant an appropriate waiver of the provisions of Section 5.5.1.  If Medtronic grants an appropriate waiver of the provisions of Section 5.5.1, such waiver shall be limited to the opportunity as described, and may contain such conditions and terms as Medtronic considers appropriate under the circumstances.

	  	
·

	
If the waiver is granted, Medtronic will request assurances of protection of Medtronic trade secret information from your new employer.

	  	
·

	
In exercising its reasonable discretion hereunder, Medtronic will act in a manner reasonably consistent with past practices, including favorable consideration of opportunities you may have with private equity or venture capital companies, or with companies primarily engaged in the pharmaceuticals business, so long as such companies are not competitive with any material business of Medtronic.

	  	
·

	
If you believe that Medtronic’s determination that an opportunity would constitute a breach of Section 5.5.1 was not made in good faith or that Medtronic did not exercise its reasonable discretion in withholding a waiver, you may fully engage the Arbitration process set forth in Section 5.5.3 set forth below.

 

5.5.3  Arbitration.   To the fullest extent permitted by law, all claims that you may have against Medtronic or any other Released Party, or which Medtronic may have against you, in any way related to the subject matter, interpretation, application, or alleged breach of this Agreement (“Arbitrable Claims”) shall be resolved by binding arbitration in the state of Minnesota. The Arbitration will be held before a single arbitrator pursuant to the rules of Arbitration of the Center for Public Resources for employment disputes. The decision of the arbitrator shall be in writing and shall include a statement of the essential conclusions and findings upon which the decision is based.

Arbitration shall be final and binding upon the parties and shall be the exclusive remedy for all Arbitrable Claims. Either party may bring an action in a Minnesota or federal court of competent jurisdiction to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. Notwithstanding the foregoing, either party may, in the

  

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event of an actual or threatened breach of this Agreement, seek a temporary restraining order or injunction in a Minnesota or federal court of competent jurisdiction restraining breach pending a determination on the merits by the arbitrator.

	  	
THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS, INCLUDING WITHOUT LIMITATION ANY RIGHT TO TRIAL BY JURY AS TO THE MAKING, EXISTENCE, VALIDITY, OR ENFORCEABILITY OF THE AGREEMENT TO ARBITRATE.

5.6  Non-Solicitation of Employees.   Unless given prior consent by the Chief Executive Officer of Medtronic, Inc, you shall not at any time prior to the date 24 months following the Separation Date, solicit, participate in or promote the solicitation of any person who is employed by Medtronic, Inc. as of the Separation Date or at any time during six months preceding the Separation Date to leave the employ of Medtronic, Inc. to take employment with any company you are then employed by or serve in any advisory or managerial capacity (including, without limitation, as a member of a board of directors). You further shall not, on your own behalf or behalf of any company you are then employed by or serve in any advisory or managerial capacity (including, without limitation, as a member of a board of directors), hire, employ or engage any such person or entity. You further agree that, during such time, if an employee of Medtronic, Inc. contacts you about prospective employment with any company you are then employed by or serve in any advisory or managerial capacity (including, without limitation, as a member of a board of directors), you will inform such individual that you cannot discuss the matter further without informing the CEO of Medtronic. If a Medtronic employee asks you provide reference to a prospective employer, you may provide such information if you have no current employment, consultative or advisory relationship with that prospective employer. Medtronic acknowledges that you may not be directly and specifically involved with the recruitment and hiring of a Medtronic employee by your employer. In such a case, you agree that, upon Medtronic’s request, you will provide, and will use reasonable efforts to cause your employer to provide, evidence that this provision has not been breached with respect to such recruitment and hiring.

5.7  Agreement Not to Affect Benefits.   This Agreement shall not in any way impair any of your existing rights with respect to pension, retirement and/or other employee benefit plans of Medtronic applicable to former employees.

5.8  Assignment.   The parties represent and warrant that they have not assigned or transferred to any PERSON or entity, any claim or right released, granted or conveyed pursuant to this Agreement, and the parties covenant and agree that neither party may assign any rights or benefits under this Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld.

5.9  Company Property.   You will return all proprietary or confidential information and documents, and company property including but not limited to credit cards, calling cards, keys, employment badges and any company provided hardware and software no later than the Separation Date; provided that you may retain the cellular phone, iPad and laptop computer

  

-9-

  

issued to you by Medtronic so long as all Medtronic information is preserved and removed for retention by Medtronic.

5.10  Cooperation with Employer.   During the Transition Period, you agree to cooperate with Medtronic and provide consulting as reasonably requested regarding the transition of your duties; provided that such cooperation and consulting shall not unreasonably interfere with any employment or business pursuits, including consulting, that you may be engaged in from time to time. You represent that you have fully and truthfully disclosed to Medtronic any and all concerns you may have related to your employment and/or any alleged or perceived violation by Medtronic, its agents or employees of Medtronic’s Code of Conduct, its Business Conduct Standards, or any applicable legal, regulatory or quality requirements.

 

In addition, you agree to cooperate fully with Medtronic, including its attorneys or accountants, in connection with any potential or actual litigation, or other real or potential disputes, which directly or indirectly involves Medtronic; provided that such cooperation shall not unreasonably interfere with any employment or business pursuits, including consulting, that you may be engaged in from time to time. You agree to appear as a witness and be available to attend depositions, consultations or meetings regarding litigation or potential litigation as requested by Medtronic. Medtronic acknowledges that these efforts, if necessary, will impose on your time and would likely interfere with other commitments you may have in the future. Consequently, Medtronic shall attempt to schedule such depositions, consultations or meetings in coordination with your schedule, but you recognize that scheduling of certain court proceedings, including depositions, may be beyond Medtronic’s control. Likewise, following the Transition Period, Medtronic agrees to compensate you for your time hereunder at a mutually agreeable per hour rate of Six Hundred Dollars ($600.00) for actual time spent traveling to and from and attending such depositions, consultations or meetings, not to include ancillary time spent at hotels and related locations during evenings between proceedings. Medtronic also agrees to reimburse you for the out-of-pocket expenditures actually and reasonably incurred by you in connection with the performance of the services contemplated by this Section 5.10, including hotel accommodations, air fare transportation and meals consistent with Medtronic’s generally applicable expense reimbursement policies. It is expressly understood by the parties that any compensation paid by Medtronic to you under this Section 5.10 shall be in exchange for your time and is not intended or understood to be dependent upon the character or content of any information you disclose in good faith in any such proceedings, meetings or consultation.

 

5.11  Future Conduct.   You agree not to engage in any form of conduct, or make any statements or representations, that disparage or otherwise harm the reputation, goodwill or commercial interests of Medtronic or its management. You will refrain from making any statements including disparaging, derogatory or otherwise negative comments or statements about Medtronic to any person, including specifically but not limited to, any person affiliated in any way with any actual or potential employee, customer, vendor or competitor of Medtronic or any member of the medical, business, professional or scientific community with whom Medtronic has had or, to your knowledge, has contemplated a business, professional, or scientific relationship.

Medtronic, its officers and directors agree not to engage in any form of conduct, or make any

  

-10-

  

statements or representations, that disparage or otherwise harm you or your reputation. Medtronic will refrain from making any statements including disparaging, derogatory or otherwise negative comments or statements about you to any person.

5.12  Indemnification.  In the event that any payments, benefits or other amounts provided to you under this agreement are subject to the excise tax imposed by Code Section 409A, Medtronic will indemnify and hold you harmless on a net after-tax basis from such excise tax and all interest and penalties imposed upon you with respect to such tax as well as all expenses incurred by you in contesting such tax. In the event of a claim is made against you for an excise tax under Code Section 409A, you agree that Medtronic may contest such claim, at its expense, with counsel appointed by Medtronic and reasonably acceptable to you. In addition, in the event that you are named as a defendant in litigation, or are otherwise subject to threatened or asserted claims against you, related to your employment or service with Medtronic, Medtronic will indemnify and provide legal defense for you in accordance with the law and subject to the terms and conditions of Medtronic’s directors and officer’s liability insurance coverage. Medtronic acknowledges its continuing obligation to defend and indemnify you in connection with acts and omissions performed in the course of your service with Medtronic, in the same manner as other current and former officers and directors.  The foregoing indemnification shall be provided subject to the requirements of Treasury Regulation Section 1.409A-3(i)(l)(v).

5.13  Confidentiality, Non-Disclosure.   The parties agree that they will not reveal, publish, disseminate or discuss any or all of the background, negotiations or terms and conditions of this Agreement except to one’s spouse, attorney, accountant or as may be required by law.

5.14  Voluntary Agreement.   The parties acknowledge that they have been provided a full opportunity to review and reflect upon the terms of this Agreement and to seek advice of legal counsel of their choice and that their signatures are freely, voluntarily and knowingly given.  The undersigned officer of Medtronic represents and warrants that she has full authority to enter into this Agreement on behalf of Medtronic.

5.15 Entire Agreement.   The parties agree that, except as it relates to the provisions of any agreements related to the grant of any stock option, other equity grant or employee benefit plan in which you participate, this Agreement supersedes any prior arrangements, agreements or contracts whether written, oral or implied (in law or fact), between them (including, without limitation, your Change of Control Agreement with Medtronic) and contains the entire understanding and agreement between the parties and cannot be amended, modified or supplemented in any respect, except by a subsequent written agreement executed by both parties.

 

5.16 Choice of Law.   This Agreement shall be governed by the laws of the State of Minnesota.

5.17  Limited Severability.   If any Article or provision(s) of this Agreement are found by a court of competent jurisdiction to be invalid or unenforceable, in whole or in part, then those provisions shall be deemed to be modified or restricted in the manner necessary to render them valid and enforceable, and this Agreement shall be construed and enforced to the maximum extent permitted by law, if any.

  

-11-

  

 

5.18  Headings.   The titles and subtitles of the various sections and paragraphs of this Agreement are inserted for convenience and shall not be deemed to affect the meaning or construction of any of the terms, provisions, covenants and conditions of this Agreement.

5.19  Payments to Estate. In the event of your death prior to the Retirement Date or before payment has been made of all amounts provided under this Agreement, the remaining payments to you under this Agreement shall be made to your estate .

5.20  Right to Pursue Other Activities and Employment During the Transition Period.   Subject to your compliance with the provisions of this Agreement, you may seek and accept other employment and otherwise engage in gainful employment, including consulting services, during the Transition Period. You shall continue to be paid the amounts under this Agreement and have the benefits set forth in this Agreement during the Transition Period.  If you are required to continue to perform CEO duties beyond the anticipated Separation Date of April 29, 2011 and you notify the Board of your intent to accept a material employment opportunity (subject to the provisions of section 5.5 of this Agreement) after April 29, 2011, the Board will endeavor to complete the transition of CEO duties as expeditiously as possible.

5.21  Public Announcements.  Medtronic agrees to consult with you on all public announcements regarding your employment, retirement, the transition of your employment, or your service or the completion of your service on the Board.

5.22 No Mitigation.   Medtronic agrees you are not required to seek other employment or to attempt in any way to reduce any amounts payable to you by Medtronic pursuant to this Agreement. Furthermore, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by you as a result of employment by another employer or otherwise.

5.23 Section 409A of the IRS Code (“the Code”).  The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code to the extent subject thereto or be exempt therefrom and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith.  Notwithstanding anything contained herein to the contrary, to the extent required to avoid the application of an accelerated or additional tax under section 409A of the Code, each amount to be paid or benefit to be provided under this Agreement shall be construed as a separately identified payment for purposes of section 409A of the Code, and any payments that are due within the "short term deferral period" as defined in section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise.  To the extent required to avoid the application of an accelerated or additional tax under section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following your "separation from service" (within the meaning of section 409A) shall instead be paid on the first business day after the date that is six months following your "separation from service" (or upon your death, if earlier).  To the extent required to avoid an accelerated or additional tax under section 409A of the Code, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the

  

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amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not affect amounts reimbursable or provided in any subsequent year.

WHEREFORE, the parties execute this Agreement in counterparts effective the date set forth below.

 

	
  

	 

	
MEDTRONIC, INC.

	  
	  	  
	  /s/ Caroline Stockdale	  	  /s/ William A. Hawkins	  
	
Caroline Stockdale

	
William A. Hawkins

	
Senior Vice President, Human Resources

	  
	  	  
	
Date:

	  12/28/10	  	
Date:

	  12/28/10	  

 

 

  

-13-

  

Exhibit A

SEPARATION AGREEMENT AND RELEASE

 

This Separation Agreement and Release (“Release”) is made and entered into by and between Medtronic, Inc. (“Medtronic”), and William A. Hawkins ("You"), whose residence is 2650 Marshland Road, Wayzata, MN 55391.

 

WHEREAS, You are Chairman and Chief Executive Officer of Medtronic, Inc.;

WHEREAS, You and Medtronic have executed a Separation Agreement and Release dated December 28, 2010 (the “Agreement”) relating to your termination of employment by reason of retirement;

 

WHEREAS, the Agreement contemplated the execution (and non-revocation) of this Release before You would be provided with additional benefits in connection with your termination of employment;

 

WHEREAS, neither the Agreement nor this Release constitutes any admission of any kind by either party; and

 

WHEREAS, the parties wish to document their understanding and agreement with respect to the terms of your separation from employment with Medtronic.

 

NOW, THEREFORE, in consideration of the provisions and agreements set forth hereinafter, and for good and valuable consideration, the sufficiency of which is acknowledged by both parties, the parties agree as follows:

 

 

Article 1.        Separation Pay Award.

 

	
1.1

	
Separation Pay Award.  You have been granted a Separation Pay Award as set forth in Section 3.2 of the Agreement ("Award").

Article 2.         Termination of Employment.

	
2.1

	
Termination Date.  For purposes of the Agreement, your employment with Medtronic terminated by reason of retirement effective April 27, 2012 (“Retirement Date”).

Article 3         Separation Package.

	
3.1

	
Exhibit A Execution.  This Release will be valid and enforceable, provided You sign this Exhibit A: Release no earlier than April 27, 2012. Any execution of  Exhibit A prior to April 27, 2012 or after May 18, 2012 shall render this Release null and void and unenforceable.

	
3.2

	
Additional Consideration: Lump Sum and Annual MIP Payments.  Subject to the terms and conditions of the Agreement, if the Retirement Date occurs on April 27, 2012,

  

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Medtronic will pay to you a lump sum separation amount of: (a) One Million Five Hundred Sixty Two Thousand Five Hundred Dollars ($1,562,500), which is an amount equal to one and one-fourth (1-1/4) years of your current base salary, plus (b) Two Million One Hundred Eighty-Seven Thousand Five Hundred Dollars ($2,187,500), which is an amount equal to one and one-fourth (1-1/4) times your Annual MIP target amount for FY11.  Subject to the terms and conditions of the Agreement, if the Retirement Date occurs on April 27, 2012, Medtronic will also pay to you a lump sum equal to twenty four (24) times the monthly COBRA premiums then in effect for continuation of your health and dental benefits.  Provided you have signed and not revoked this Release, these lump sum amounts (less withholdings for taxes) will be paid to you on June 8, 2012.

	
3.3

	
Non-Required Benefits.  You acknowledge that by accepting the provisions of the Agreement and this Release, You are receiving certain benefits to which You would not otherwise be entitled.

Article 4.         Releases.

 

	
4.1

	
Your Release. In consideration of the provisions of this Release, You, for yourself and your  heirs and executors, fully and completely release and forever discharge Medtronic, its officers, directors, shareholders, board members, representatives, divisions, parents, subsidiaries, successors and assigns, employees and agents, of and from any and all claims, complaints, causes of action, demands, sums of money, covenants, contracts, agreements, promises, liabilities, damages or judgments, whatsoever in law or in equity, which You ever had, now has against Medtronic or which You hereafter, can, shall, or may have for or by reason of or in connection with any actions, conduct, decisions, behavior, events, transactions, omissions or accounts, occurring to the date of this Agreement, except (i) obligations of Medtronic under this Release and under the Agreement and (ii) indemnity obligations of Medtronic under its articles of incorporation, bylaws, directors’ and officers’ liability trust, and applicable laws with respect to actions taken by You as an officer and employee of Medtronic and/or any of its subsidiaries.

	  	  
	  	
You acknowledge that this Release specifically covers, but is not limited to, any and all claims, complaints, causes of action or demands (including related attorneys' fees and costs) which You have or may have against Medtronic relating in any way to the terms, conditions and circumstances of his employment and the termination, resignation and/or retirement thereof, whether based on statutory or common law claims for wrongful discharge, breach of contract, breach of any express or implied promise, misrepresentation, fraud, retaliation, breach of public policy, infliction of emotional distress, defamation, promissory estoppel, invasion of privacy, or employment discrimination, including but not limited to claims under the Federal Age Discrimination in Employment Act (29 U.S.C. Sec. 621, et seq.), the Older Workers Benefit Protection Act ("OWBPA"), the Family Medical Leave Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (“ADA”), Employee Retirement Income Security Act, the Sarbanes-Oxley Act of 2002 and federal and state statutes, if any, addressing the same subject matters or any other theory or basis, whether legal or equitable, except nothing in this Release shall constitute a waiver of your right to make

  

-15-

  

	  	
claims to enforce the Agreement or include any claim that, as a matter of law, cannot be released by private agreement.

	 	 
	  	
Notwithstanding the forgoing, nothing in this Section 4.1 or elsewhere in this Release shall be interpreted to affect or impair any right that you have to salary or benefits under the Agreement, any right to any vested benefit under any Medtronic employee benefit plan or program, or any right to indemnification pursuant to Medtronic’s bylaws and certificate of incorporation or applicable law.

	  	  
	
4.2

	
Protected Rights.  You expressly acknowledge that this Release does not relinquish any protected rights You may have under Title VII of the Civil Rights Act of 1964, the Equal Pay Act (“EPA”), the Americans with Disabilities Act (“ADA”), OWBPA or the Age Discrimination in Employment Act (“ADEA”) to file a charge, testify, assist or participate in any manner in an investigation, hearing or proceeding conducted by the Equal Employment Opportunity Commission or the Office of Federal Contract Compliance.  However, You may not recover additional compensation or damages as a result of that participation.

	  	  
	
4.3

	
Medtronic Release.  In consideration of the provisions of this Release, Medtronic, for itself and its officers, directors, shareholders, board members, representatives, divisions, parents, subsidiaries, successors and assigns, employees and agents (“Medtronic Parties”), fully and completely releases and forever discharges You, your heirs and executors, of and from any all claims, complaints, causes of action, demands, sums of money, covenants, contracts, agreements, promises, liabilities, damages or judgments, whatsoever in law or in equity, which any Medtronic Parties, ever had, now have against You or which any Medtronic Parties, hereafter, can, shall, or may have for or by reason of or in connection with any actions, conduct, decisions, behavior, events, transactions, omissions or accounts, occurring to the date of this Release.

	  	  
	  	
Medtronic Parties acknowledge that this Release specifically covers, but is not limited to, any and all claims, complaints, causes of action or demands (including related attorneys’ fees and costs) which any Medtronic Parties have or may have against You relating in any way to the terms, conditions and circumstances of your employment and the termination, resignation and/or Retirement thereof, or of your service as an officer or director of Medtronic; whether based on statutory or common law claims for breach of contract, breach of any express or implied promise, misrepresentation, fraud, breach of public policy, defamation, or promissory estoppels, or any other theory or basis, whether legal or equitable.

	  	  
	
4.4

	
Notice of Rights of Review and Revocation.  You acknowledge receipt of this Release as notice in writing from Medtronic advising You to consult with an attorney prior to executing this Release and further acknowledges that You have been provided the right to consider this Release for a period of at least twenty-one (21) days prior to executing same. The parties acknowledge that You have fifteen (15) days from the date of execution of this Release to revoke same, and that this entire Release shall not be effective or enforceable in whole or in part until the revocation period has expired.  If You choose to revoke this Release within fifteen (15) days of execution, such revocation

  

-16-

  

	  	
shall apply to the entire Release, and it is understood and agreed that such revocation shall render this entire Release null and void. To be effective, the revocation must be in writing and delivered by hand or mailed to Caroline Stockdale, Senior Vice President, Human Resources, Medtronic, Inc., 710 Medtronic Parkway, MS: LC400, Minneapolis, MN 55432.  If mailed, the revocation must be (a) postmarked within the fifteen-day revocation period; (b) properly addressed to Caroline Stockdale; and (c) sent by certified mail, return receipt requested.  If You accept this Release, the signed Release should be postmarked or returned by the fifteenth day following your execution hereof to Caroline Stockdale at the address stated herein.

Article 5.         General Provisions.

 

	
5.1

	
Agreement Not to Affect Benefits.  This Release shall not in any way impair any existing rights You have with respect to pension, retirement and/or other employee benefit plans of Medtronic applicable to former employees.

	  	  
	
5.2

	
Regarding COBRA Benefits.  As provided by COBRA, You shall have the right to continue coverage in the medical plan(s) in which You are presently participating for a period of 18 months following the Termination Date, or for such longer period as may be provided by law.

	  	  
	
5.3

	
Stock Options and Restricted Stock.  During the Transition Period and upon Retirement, your stock options and restricted stock grants will continue to vest in accordance with the terms of the applicable option and/or restricted stock agreement.  The exercise of any such option must occur no later than the last date on which exercise is permitted under the applicable option agreement, including terms applicable to your status as a retiree. You agree that You are solely responsible for determining the date on which his options expire per the terms of your option agreement(s).

	  	  
	
5.4

	
Assignment.   The parties represent and warrant that they have not assigned or transferred to any person or entity, any claim or right released, granted or conveyed pursuant to this Release, and the parties covenant and agree that neither party may assign any rights or benefits under this Release without the prior written consent of the other party, which consent shall not be unreasonably withheld.

	  	  
	
5.5

	
Voluntary Agreement.  The parties acknowledge that they have been provided a full opportunity to review and reflect upon the terms of this Release and to seek advice of legal counsel of their choice and that their signatures are freely, voluntarily and knowingly given.  The undersigned officer of Medtronic represents and warrants that she has full authority to enter into this Agreement on behalf of Medtronic.

	  	  
	
5.6

	
Entire Agreement.  This Release, together with the Agreement, except as otherwise provided herein, and except as it relates to those agreements for stock option grants, restricted stock units and any other equity awards, and any other agreements related to benefit plans, supersedes any prior arrangements, agreements or contracts, whether written, oral or implied (in law or fact), between them (including, without limitation, your Change of Control Agreement with Medtronic) and contains the entire understanding and

  

-17-

  

	  	
agreement between the parties and cannot be amended, modified or supplemented in any respect, except by a subsequent written agreement executed by both parties and expressly stating that it is intended to modify this Agreement.

	  	  
	
5.8

	
Choice of Law.   This Release shall be governed by the laws of the State of Minnesota.

	  	  
	
5.9

	
Headings.   The titles and subtitles of the various sections and paragraphs of this Release are inserted for convenience and shall not be deemed to affect the meaning or construction of any of the terms, provisions, covenants and conditions of this Release.

	  	  
	
5.10

	
Section 409A of the IRS Code (“the Code”).  The intent of the parties is that payments and benefits under this Release comply with Section 409A of the Code to the extent subject thereto or be exempt therefrom and, accordingly, to the maximum extent permitted, this Release shall be interpreted and administered to be in compliance therewith.  Notwithstanding anything contained herein to the contrary, to the extent required to avoid the application of an accelerated or additional tax under section 409A of the Code, each amount to be paid or benefit to be provided under this Release shall be construed as a separately identified payment for purposes of section 409A of the Code, and any payments that are due within the "short term deferral period" as defined in section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise.  To the extent required to avoid the application of an accelerated or additional tax under section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Release during the six-month period immediately following your "separation from service" (within the meaning of section 409A) shall instead be paid on the first business day after the date that is six months following your "separation from service" (or upon your death, if earlier).  To the extent required to avoid an accelerated or additional tax under section 409A of the Code, amounts reimbursable to you under this Release shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not affect amounts reimbursable or provided in any subsequent year.

	  	  
	  	
WHEREFORE, the parties execute this Release on the date set forth below.

 

	
  

	 

	
MEDTRONIC, INC.

	  
	  	  
	  /s/ Caroline Stockdale	  	  /s/ William A. Hawkins	  
	
Caroline Stockdale

	
William A. Hawkins

	
Senior Vice President, Human Resources

	  
	  	  
	
Date:

	  12/28/10	  	
Date:

	  12/28/10	  

-18-

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