Document:

exv10w1

 

Exhibit 10.1

Protected by Fed. R. Evid. 408

SETTLEMENT, LICENSE AND RELEASE AGREEMENT

     This Settlement, License and Release Agreement (the “Agreement”) is made by and between Sutura,
Inc., a corporation organized under the laws of Delaware, having a principal place of business at
17080 Newhope Street, Fountain Valley, California 92078 (“Sutura”); Abbott Laboratories, a
corporation organized and existing under the laws of Illinois, having a principal place of business
at 100 Abbott Park Road, Abbott Park, Illinois 60064-6057 (“Abbott Laboratories”); and Abbott
Vascular Inc., a corporation organized and existing under the laws of Delaware, and a wholly owned
subsidiary of Abbott Laboratories, having a principal place of business at 400 Saginaw Drive,
Redwood City, California 94063 (“AVI”).

     WHEREAS, Sutura is the current assignee and owner of all right, title and interest in United States
Letters Patent Nos. 5,860,990; 6,117,144; 6,245,079; 6,551,331; 6,562,052; and 7,004,952 (the
“Nobles Patents”).

     WHEREAS, Abbott and its subsidiary, AVI, currently hold an exclusive license in United States
Letters Patent Nos. 5,720,757; 5,810,850; and 6,348,059 (the “Hathaway Patents”), by virtue of a
March 28, 1995 License Agreement between the Indiana University Foundation (“IUF”) and Perclose,
Inc. (the “Hathaway License”), in which Abbott and AVI now hold all the rights of Perclose, Inc.

     WHEREAS, Sutura has asserted, in a suit styled Sutura, Inc. v. Abbott Laboratories and Perclose,
Inc., Civil No. 2:06-CV-536 (TJW) (the “Patent Litigation”), that Abbott and Perclose, Inc.,
infringe the Nobles Patents by making, using, marketing, selling and/or offering for sale products
sold as The Closer, The Closer S, ProGlide and Perclose A-T.

     WHEREAS, Abbott and AVI have asserted counterclaims in the Patent Litigation alleging that Sutura
infringe the Hathaway Patents by making, using, marketing, selling and/or offering for sale the
SuperStitch.

     WHEREAS, Abbott and AVI deny infringing the Nobles Patents and raise other defenses to Sutura’s
claims including, but not limited to defenses relating to the alleged invalidity of the Nobles
Patents, and Sutura denies infringing the Hathaway Patents and raises other defenses to Abbott’s
claims including, but not limited to defenses relating to the alleged invalidity of the Hathaway
Patents.

     WHEREAS, the Parties hereto have mutually agreed to amicably settle their differences and the
dispute between them on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the promises and covenants set forth herein, the receipt and
sufficiency of which are hereby acknowledged, the Parties do hereby agree and covenant as follows:

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1.0 DEFINITIONS

     As used herein, the following terms shall have the meanings set forth below:

     “Abbott” means Abbott Laboratories, together with its parents, subsidiaries, including
without limitation Abbott Vascular Inc. and Perclose Inc., predecessors, successors, affiliates,
divisions, assigns, present and former directors, officers, shareholders, partners, principals,
agents, employees, representatives, attorneys, indemnitors, and insurers.

     “Abbott Patents” means (a) the Hathaway Patents; (b) all foreign counterparts, divisions,
continuations, continuations-in-part, patents of addition, substitution, registrations, reissues,
reexaminations or extensions of any kind with respect to any of the Hathaway Patents, and any other
patents that claim priority to or provide priority for any patent application from which any of the
Hathaway Patents derived. The titles, filing dates, and patent or serial numbers of the foregoing
are set forth on Exhibit A; provided, however, that the failure to list a patent or counterpart on
Exhibit A shall not exclude the omitted patent or counterpart from the Abbott Patent Rights.
“Abbott Patents” shall not include any rights in any patents that Abbott acquires after the
Effective Date of this Agreement with a right to license or sublicense unless they are presently
pending and will automatically fall under the terms of the Hathaway License.

     “Effective Date” means the date of execution by the last Party hereto.

     “Field Of Use” means the field of closure of femoral vascular access sites.

     “Hathaway License” means the certain License Agreement dated March 28, 1995, by and between
the Indiana University Foundation on behalf of Indiana University and Perclose, as amended and as
assigned to ARTI, now known as IURTC. A copy of the Hathaway License is annexed hereto as “Exhibit
C.”

     “IURTC” means the Indiana University Research & Technology Corporation, together with its
parents, subsidiaries, predecessors, successors, affiliates, divisions, assigns, present and former
directors, officers, shareholders, partners, principals, agents, employees, representatives,
attorneys, indemnitors, and insurers.

     “Minor Modification” means in reference to an existing device a change in the dimensions,
proportions, materials, or the general location of existing features of the existing device,
provided that such change(s) do not alter the basic configuration or operation of the device. A
change that extends the use of a device outside the Field of Use is not a Minor Modification.

     “Parties” means Sutura, Abbott Laboratories and Abbott Vascular Inc., each individually
referred to as a “Party.”

     “Sutura” means Sutura, Inc., together with its parents, subsidiaries, predecessors,
successors, affiliates, divisions, assigns, present and former directors, officers, shareholders,
partners, principals, agents, employees, representatives, attorneys, indemnitors, and insurers.

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     “Sutura Patents” means (a) the Nobles Patents; (b) all foreign counterparts,
divisions, continuations, continuations-in-part, patents of addition, substitution, registrations,
reissues, reexaminations or extensions of any kind with respect to any of the Nobles Patents, and
any other patents that claim priority to or provide priority for any patent application from which
any of the Nobles Patents derived. The titles, filing dates, and patent or serial numbers of the
foregoing are set forth on Exhibit B; provided, however, that the failure to list a patent or
counterpart on Exhibit B shall not exclude the omitted patent or counterpart from the Sutura Patent
Rights. “Sutura Patents” shall not include any rights in any patents that Sutura acquires after the
Effective Date of this Agreement with a right to license or sublicense.

     “Net Sales” shall have the meaning ascribed to it in the Hathaway license, and that meaning
shall be the gross revenues actually received by Sutura upon sales of a Licensed Product, which
sales would, but for the license granted hereunder, infringe a Valid Claim in the country for which
the Licensed Product is sold, less (a) normal and customary rebates, and cash and trade discounts,
(b) sales, use and/or other excise taxes or duties actually paid, (c) outbound shipping and
insurance charges paid or allowed, (d) import and/or export duties actually paid, and (e) amounts
allowed or credited due to returns or retroactive price decrease.

2.0 CROSS LICENSES

     2.1 License to Abbott. Sutura hereby grants to Abbott a nonexclusive, paid-up, worldwide
license under the Sutura Patents to make, have made, use, market, offer for sale, sell and
have-sold, devices in the Field Of Use. The rights granted under this License do not include the
right to grant sublicenses.

     2.2 License to Sutura. Abbott hereby grants to Sutura a nonexclusive, royalty bearing,
worldwide license and sublicense under the Abbott Patents to make, have made, use, market, offer
for sale, sell and have-sold, devices in the Field Of Use. The rights granted under this License
do not include the right to grant sublicenses.

     2.3 No Knock-Offs. The licenses and sublicense granted under Sections 2.1 and 2.2 above do
not extend to any product made by either Party that is a copy of or is otherwise substantially
identical to a product of the other Party.

     2.4 Retained Rights. This Agreement shall not be construed as granting a license under
any intellectual property rights of Sutura, on the one hand, and Abbott, on the other hand, other
than as expressly set forth hereunder.

3.0 ROYALTIES

     3.1 Royalties Payable by Sutura. Beginning with the first accrual of Net Sales on which a
royalty is due hereunder, Sutura shall provide to Abbott a quarterly royalty report as follows:
Within fifteen (15) days after the end of each calendar quarter, Sutura shall deliver to Abbott a
true and accurate report, giving such particulars of the business conducted by Sutura, if any,
during such calendar quarter as are pertinent to an account for payments hereunder. Such report
shall include at least (a) the total of Net Sales by Sutura; (b) the calculation of royalties; and
(c) the total royalties so calculated and due Abbott. Simultaneously with the delivery of each
such report, Sutura shall pay to Abbott the total royalties, if any, due to Abbott for the

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period of such report. If no royalties are due, Sutura shall so report. The requirements
and obligations of this Section apply only to the manufacture, use, marketing, offer for sale or
sale of products, in the Field Of Use, following the Effective Date of this Agreement. If the
Hathaway License is amended to provide Abbott with royalty terms that are more advantageous to
Abbott without Abbott having provided additional consideration to secure such advantageous terms,
Abbott shall notify Sutura and shall offer to Sutura the option to amend its royalty obligations in
this Agreement to coincide with such more favorable royalty; provided, however, that Sutura agrees
to accept any additional terms in such amended Hathaway License that are financially more onerous
than those provided for in this Agreement. The report and payment under this section shall be
delivered to the address below or such other address as Abbott shall from time to time inform
Sutura:

Division Finance, Dept. AV42

Attn: Jill Tallman

Abbott Vascular Inc.

3200 Lakeside Drive

Santa Clara, CA 95054

     3.2 Indemnity For Royalties. Sutura takes full responsibility for royalties owed under the
Hathaway License, pursuant to Section 3.1. To the extent IURTC, under any circumstances, seeks
payment from Abbott for royalties due under the Hathaway License as a result of any sales of
devices made pursuant to the license grant of Section 2.2, Sutura agrees to take full
responsibility for any such amounts owed and agrees to, at Sutura’s election, defend Abbott and (if
unsuccessful) fully indemnify Abbott for any such claims by IURTC. If Sutura elects not to defend
Abbott, Sutura likewise agrees to reimburse and indemnify Abbott to the extent that Abbott is ever
required by the order of either a court or an arbitrator to pay IURTC for any royalties due as a
result of any sales of devices made pursuant to the license grant of Section 2.2, in which case
Sutura would also pay for Abbott’s reasonable attorneys’ fees and costs associated with any such
action.

     3.3 Payments by Abbott. Abbott shall make a one time payment to Sutura of Twenty Three
Million and 00/100 Dollars ($23,000,000.00) in return for the rights granted in this Agreement and
its Exhibits, such payment to be made by wire transfer within ten (10) days of the Effective Date
of this Agreement to the following account:

FARMERS AND MERCHANTS BANK OF LONG BEACH CA

ABA: 122201198

ACCOUNT NAME: SUTURA INC.

A/C # 20001711

Street Address:

302 Pine Avenue

Long Beach, California 90802

U.S.A.

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     3.4 Books of Account and Audit. During the term of the license under Section 2.2
and for one year after the expiration of said license, Sutura shall keep full and accurate books of
account sufficient to record the number of devices sold during each royalty period, as well as the
total revenues and the country-by-country breakdown of those revenues. During the term of the
license under Section 2.2 and for one year thereafter, Abbott, or an authorized agent of Abbott,
upon twenty (20) calendar days prior written notice, shall have the right, at its own expense and
at reasonable times during business hours, to have the aforesaid records of Sutura examined by a
duly accredited public accountant or a representative of Abbott for the sole purpose of, and only
to the extent necessary for, verifying the number of devices sold during each royalty period, as
well as the total revenues and the country-by-country breakdown of those revenues. Such audits
shall be permitted no more than once each calendar year, and said accountants or representatives
shall hold information learned in the course of any and all audits hereunder in strictest
confidence.

4.0 REPRESENTATIONS AND WARRANTIES; DISCLAIMERS

     4.1 Right to Grant License. Abbott represents and warrants that it has the legal power to
grant the rights and licenses to Sutura to the Abbott Patent Rights as set forth in Section 2.2.
Sutura represents and warrants that it has the legal power to grant the rights and licenses to
Abbott to the Sutura Patent Rights as set forth in Section 2.1.

     4.2 No Conflicting Agreements. Each Party represents and warrants that it neither has
entered into nor will it enter into any agreement with any third party which conflicts in any way
with their respective obligations under this Agreement.

     4.3 Disclaimer of Warranties. THE EXPRESS WARRANTIES IN THIS SECTION 4 ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     4.4 No Other Claims. Each Party represents and warrants that as of the Effective Date of
this Agreement it has no other claims or causes of action against any other Party to this
Agreement, except those that are the subject of the mutual release of Section 5.1 and the dismissal
of Section 5.2.

5.0 MUTUAL RELEASES AND DISMISSAL OF ACTION

     5.1 Releases. Within ten (10) days following the Effective Date, Sutura shall execute the
release attached hereto as Exhibit D, and Abbott shall execute the release attached hereto as
Exhibit E.

     5.2 Stipulation of Dismissal. Within ten (10) days following the Effective Date, the
Parties shall jointly execute the Stipulation of Dismissal attached hereto as Exhibit F, where
Sutura’s and Abbott’s claims are dismissed with prejudice. Upon the full delivery of the fully
executed releases as set forth under Section 5.1, the Parties shall file the fully executed
Stipulation of Dismissal with the United States District Court for the Eastern District of Texas.

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6.0. COVENANT NOT TO SUE

     6.1 Sutura’s Covenant Not to Sue Abbott. With respect to any issued or pending patent
rights owned or controlled by Sutura as of the Effective Date of this Agreement, Sutura covenants
not to sue Abbott for infringement of such rights based on the manufacture, use, offer to sell, or
sale of Abbott’s The Closer, Closer S, Perclose AT, and Proglide products as they existed as of or
prior to the Effective Date or any Abbott product which is a Minor Modification of such products.

     6.2 Abbott’s Covenant Not to Sue Sutura. With respect to any issued or pending patent
rights owned or controlled by Abbott as of the Effective Date of this Agreement, Abbott covenants
not to sue Sutura for infringement of such rights based on the manufacture, use, offer to sell, or
sale of Sutura’s SuperStitch product as it existed as of or prior to the Effective Date or any
Sutura product which is a Minor Modification of such product.

7.0 CONFIDENTIALITY

     7.1 The Parties agree that the amount, terms and conditions of the Agreement are confidential. The
Parties further agree not to issue any press releases or otherwise disclose the amounts of any
payments made hereunder to any entity; provided, however, that the Parties may disclose such and
only such information relating to the settlement as required by the following circumstances,
together with such other information as it may deem necessary:

     7.1.1 To the extent that such disclosure is required under the terms of a pre-existing agreement
between any Party and a third-party, including the Hathaway License;

     7.1.2 To the extent that such disclosure is necessary under the laws or regulations of the United
States (including without limitation the rules and regulations of the SEC relating to the public
disclosure of material information), the laws or regulations of any of the several states or
territories, or the laws or regulations of any other country;

     7.1.3 To any third-party representing or otherwise assisting a Party in the preparation, filing or
dissemination of financial information, including without limitation to taxing authorities; and

     7.1.4 To any third-party during negotiations for the sale, license, assignment or transfer of an
interest in or to some or all of the assets, stock, or either, of any Party, to a third-party.

     7.2 In each instance where disclosure is allowed under Section 6.1, the disclosing Party shall, to
the extent permitted by applicable law, regulation or practice, redact the financial terms of this
Agreement from any publicly accessible version of this Agreement and file a confidential
nonredacted version with the appropriate authorities or agency as may be required.

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     7.3 Each Party may disclose the existence of this Agreement to its employees on a
need-to-know basis, including the employees of any related subsidiary, parent and/or affiliated
company.

     7.4 The Hathaway License attached hereto as Exhibit C is to remain confidential to the Parties and
successors-in-interest to that License, except that Sutura may have and grant further access to the
Hathaway License to the extent necessary to exercise Sutura’s rights and fulfill its obligations as
set forth in this Agreement, provided that any person or entity to whom Sutura discloses the
Hathaway License agrees to maintain the confidentiality of that License in a manner consistent with
the provisions of this Agreement.

8.0 NOTICES

     8.1 Any notice required or permitted by this Agreement shall be sent by (a) certified mail, return
receipt requested or (b) a recognized courier service, and such notice shall be effective on the
date received as indicated by the carrier receipt, if sent and addressed as follows or to such
other address as may be designated by a party in writing:

	 	 	 	 	 
	 

	 	If to Sutura:
	 	Mr. David Teckman

President/CEO

Sutura, Inc.

17080 Newhope Street

Fountain Valley, CA 92708
	 
	 	 	 	 
	 

	 	With copy to:
	 	Dr. Anthony Nobles

Chief Technology Officer

Sutura, Inc.

17080 Newhope Street

Fountain Valley, CA 92708
	 
	 	 	 	 
	 

	 	If to Abbott:
	 	Dr. John M. Capek

Executive Vice President, Medical Devices

Abbott Laboratories

3200 Lakeside Drive

Santa Clara, CA 95054-2807
	 
	 	 	 	 
	 

	 	With copy to:
	 	Ms. Laura Schumacher

Executive Vice President, General Counsel and Secretary

Abbott Laboratories

100 Abbott Park Road

Abbott Park, IL 60604-6049

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9.0 MISCELLANEOUS

     9.1 Execution in Counterparts. This Agreement may be executed in counterparts, such
counterparts consisting of a single agreement notwithstanding that all signatories are not
signatories to the original or to the same counterpart.

     9.2 Binding Effect. This Agreement shall be binding upon the Parties hereto, their
respective representatives, administrators, parents, subsidiaries, affiliates, divisions,
successors, predecessors, and assigns.

     9.3 Construction. This Agreement is the product of extensive negotiation between and has
been drafted by the Parties. The terms and conditions of this Agreement shall be construed as a
whole according to its fair meaning and not strictly for or against any of the Parties by reason of
any presumption.

     9.4 Entire Agreement. This Agreement constitutes the final expression and the complete and
exclusive integrated statement of all of the agreements, conditions, promises, representations and
covenants among the Parties with respect to the subject matter hereof, and supersedes all prior
agreements, negotiations, representations, understandings and discussions among the Parties, their
respective representatives and any other person or entity with respect to the subject matter
covered hereby. Any change, modification or amendment to this Agreement must be in writing, must
specifically refer to this Agreement and must be signed by duly authorized representatives of the
Parties against whom the change, modification or amendment is to be enforced.

     9.5 Voluntary and Knowing Execution by Authorized Persons. The Parties acknowledge that
this Agreement is made and executed by and of their own free will, after consultation with counsel
of their own choosing, and that they have not been knowingly influenced or induced to enter into
this Agreement as a result of any improper act or action. Both Parties warrant and represent that
the persons executing this Agreement on their respective behalf have authority and are authorized
to do so.

     9.6 Assignment. The rights and obligations created by this Agreement for any Party are not
assignable by that Party without the express written consent of the other Parties, which consent is
not to be unreasonably withheld, except that rights and obligations created by this Agreement may
be assigned to affiliates, subsidiaries and/or successors in interest to the business to which the
Agreement relates, of any Party, without written consent of the other Parties. Any assignment of
such rights and obligations shall include all obligations, including, but not limited to, the
indemnity obligation under Paragraph 3.2. No assignment of this agreement shall relieve the
assigning Party of its obligations under this agreement that accrued prior to such assignment.

     9.7 Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the conflict of law principles thereof.
The United States District Court for the Eastern District of Texas shall retain personal
jurisdiction over the Parties for the purpose of enforcing this Agreement.

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     9.8 Alternative Dispute Resolution of Disputes. Any controversy or claim arising
out of or relating to this Agreement shall be finally settled by Alternative Dispute Resolution
(“ADR”) in accordance with the provisions set forth herein and attached hereto as Exhibit G, which
is made a part hereof.

     9.9 Severability. If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or render unenforceable the
entire Agreement, but rather the entire Agreement shall be construed as if not containing the
particular invalid or unenforceable provision or provisions, and the rights and obligations of each
Party shall be construed and enforced accordingly. However, in the event such provision is
considered an essential element of this Agreement, then the Parties shall promptly negotiate a
replacement thereof.

     9.10 Non-waiver. No course of dealing, course of performance or failure of any Party to
strictly enforce any term, right or condition of this Agreement shall be construed as a waiver of
any term, right or condition, unless such waiver is set forth in a writing signed by the Party who
is alleged to have waived the term, right or condition, which writing shall expressly reference the
term, right or condition to be waived and state that the term, right or condition has been waived.

* * *

(Remainder of this page left intentionally blank.)

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     IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute
this Agreement.

	 	 	 	 	 	 	 
	Sutura, Inc.	 	Abbott Laboratories
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Signature
	 	 	 	Signature
	 
	 	 	 	 	 	 
	Name

	 	 	 	Name	 	 
	 

	 	 
	 	 	 	 
	 

	 	Print/Type
	 	 	 	Print/Type
	 
	 	 	 	 	 	 
	Title

	 	 	 	Title	 	 
	 

	 	 
	 	 	 	 
	 

	 	Print/Type
	 	 	 	Print/Type
	 
	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Abbott Vascular Inc.	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Signature	 	 	 	 
	 
	 	 	 	 	 	 
	Name
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Print/Type	 	 	 	 
	 
	 	 	 	 	 	 
	Title
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Print/Type	 	 	 	 
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

10exv10w2

 

Exhibit 10.2

     November 29, 2007

     Mr. Dinesh Paliwal

     Dear Dinesh:

     Reference is made to the Letter Agreement, as amended, dated as of May 8, 2007 (the “Letter
Agreement”) by and between Harman International Industries, Incorporated (the “Company”) and you.
Capitalized terms not defined herein shall have the meanings ascribed to such terms in the Letter
Agreement.

     The purpose of this letter is to evidence certain additional understandings between you and
the Company, as follows:

     1. Paragraph 4 of the Letter Agreement shall be amended by adding the following sentence at
the end thereof:

You shall receive an additional cash payment in the amount of $350,000 (less applicable
withholding) on March 1, 2008 if you are then employed by the Company or have ceased
employment with the Company prior thereto as a result of death, a termination by the Company
without Cause or for Disability or a termination by you for Good Reason (a “Protected
Termination”).

     2. The fourth and the fifth sentences of Paragraph 6 of the Letter Agreement are hereby
deleted and replaced with the following new sentences:

You will also be eligible for an annual equity grant (the “Annual Equity Grant”) beginning
with September 2008, and each September thereafter, under the Company’s then in force equity
award plan. The Annual Equity Grant will have a grant date value equal to two (2) times the
annual bonus awarded to you in respect of the immediately preceding fiscal year. The Annual
Equity Grant will consist of a combination of twenty-five percent (25%) stock options (the
“Annual Stock Options”) and seventy-five (75%) percent restricted stock units (the “Annual
RSUs”). To the extent that the required grant amounts exceed any applicable equity plan
limits, you and the Compensation Committee will mutually agree on an alternative
compensation award equal to the value of such excess. The portion of the grant date value
of the Annual Equity Grant in respect of shares underlying (i) the Annual Stock Option shall
be determined using the Black-Scholes methodology utilized by the Company for financial
reporting purposes as of the date of grant, and (ii) the Annual RSUs shall be determined
based on the fair market value of the shares of Company common stock (or that of any
successor) on the date of grant. The Stock Option Award, the Annual Stock Options and the
Annual RSUs (or the alternative compensation award) shall vest 20% per year over five years
commencing on the first anniversary of the grant date, with acceleration and exercise
periods as provided in Exhibit A for the Stock Option Award, and Exhibit A (but with full
vesting on Protected Terminations) for the Annual Stock Option and Exhibit H for the Annual
RSUs. The grants shall be in the forms respectively of Exhibit A for the options and
Exhibit H for the Annual RSUs; provided that in the event the Company’s equity plans in
effect permit the grant and vesting of the Annual RSUs consistent with the terms set forth

 

 

herein, the Company may grant such Annual RSUs under any such plan and provide for the
settlement of such RSUs in shares of the Company’s common stock. The Stock Option Award,
the Annual Stock Option award and the Annual RSUs will provide for an automatic reduction in
the number of shares otherwise required to be delivered to you, as applicable, to cover
minimum required withholding and, in the case of options, to pay the exercise price in all
cases, unless and to the extent such reduction is prohibited by a material financing or
other agreement that restricts the ability of the Company to permit such reduction.

     3. The Letter Agreement is hereby amended by adding the following new Paragraph 7(e).

You will receive a special one-time award of 34,608 restricted stock units (the “Special
RSUs”) on January 2, 2008. The Special RSUs shall vest as follows: 8,039 Special RSUs shall
vest at the same time as the Restricted Stock Award prescribed by Paragraph 7(a), 17,993
Special RSUs shall vest at the same time and in the same proportion as the Inducement Stock
Award prescribed by Paragraph 7(b) and 8,576 Special RSUs shall vest at the same time and in
the same proportion as the Equity Replacement Award prescribed by Paragraph 7(c) provided
that in all cases the award shall fully vest on a Protected Termination. Such awards shall
be in the form of Exhibit H.

     4. The Letter Agreement is hereby amended by adding the following new Paragraph 7(f).

(i) The Parties hereby agree that on November 9, 2012 (the “Measurement Date”), you will be
entitled to a cash payment (the “Special Bonus”), determined as follows:

(A) The Enterprise Value of Harman as of close of business on November 9, 2007 shall be
calculated (the “Base EV”).

(B) The Enterprise Value of Harman as of close of business on November 9, 2012 shall be
calculated (the “Final EV”).

(C) If the Final EV is not greater than 1.3 times the Base EV, no payment will be made. If
the Final EV is two (2) times the Base EV, a payment of fifty million dollars ($50,000,000)
will be made to you. If the Final EV is three (3) times or more the Base EV, a payment of
seventy-five million dollars ($75,000,000) will be made to you. If Final EV is between 1.3
times and 2 times or 2 times and 3 times the Base EV, straight line interpolation between
the applicable levels shall be used to determine the amount due you.

(D) Payment under this paragraph 7(f) shall be reduced by the sum of (a) the excess, if any,
of the fair market value of 100,000 shares of Harman common stock on the Measurement Date
(or if, applicable the CIC Date, as defined below) over the aggregate exercise price of the
Stock Option Award and (b) the excess, if any, of the fair market value of 100,000 shares of
Harman common stock on the Measurement Date (or, if applicable, the CIC Date) over the
aggregate exercise price of the option granted to you on October 18, 2007 (the “Additional
Stock Option Award”). The foregoing shall apply

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whether or not you exercise the options prior to the Measurement Date (or, if applicable,
the CIC Date).

(E) Subject to clause (iii) below, you will be paid the Special Bonus on the 70th
day following the Measurement Date.

(F) For the avoidance of doubt, the Special Bonus will not be taken into account for
purposes of determining your “Compensation” as that term is used in the Harman International
Industries, Incorporated Supplemental Executive Retirement Plan.

(ii) Upon termination of your employment prior to the Measurement Date, you shall be
eligible for the Special Bonus, if any, determined as follows:

(A) Upon termination of your employment with Harman, other than for a Protected Termination,
you shall forfeit any right to the Special Bonus.

(B) Upon termination of your employment due to death or Disability prior to the Measurement
Date, you (or your estate, in the event of your death) shall receive on the date specified
in clause (i)(E) above a pro rata portion of the Special Bonus, if any, determined by
multiplying the amount of the Special Bonus by a fraction, the numerator of which is the
number of full or partial months from November 9, 2007 to the date of your death or
Disability, as applicable, and the denominator of which is 60 (the “Pro Rata Portion”).

(C) Upon termination of your employment by the Company (other than for Cause, death or
Disability) or by you for Good Reason, you will be entitled to the Special Bonus, if any, at
the date specified in clause (i)(E) above as follows: 50% of the Special Bonus, if such
termination occurs on or prior to November 9, 2008, 75% of the Special Bonus if such
termination occurs after November 9, 2008 and on or prior to November 9, 2009 and 100% of
the Special Bonus if such termination occurs after November 9, 2009. Notwithstanding the
foregoing, if clause (iii) applies, the payment shall be equal to the full amount of the
Special Bonus (as determined pursuant to clause (iii) below) and shall be paid as specified
in clause (iii) below.

(iii) In the event there occurs a Change in Control, as defined in your Severance Agreement,
prior to the Measurement Date and provided that you are still employed by the Company on the
date such Change in Control is consummated (the “CIC Date”), or you incurred a Protected
Termination prior thereto, in lieu of the Special Bonus calculated as provided above, you
shall be eligible for the Special Bonus determined as follows: If the Change in Control
occurs on or prior to November 9, 2009, you shall be entitled to a payment equal to the Pro
Rata Portion of fifty million dollars ($50 million). If the Change in Control occurs after
November 9, 2009, but prior to the Measurement Date, you shall be entitled to a Special
Bonus calculated in accordance with clause (i) above, provided that the Measurement Date
shall be the CIC Date and the 1.3 times, 2 times and 3 times and the $50 million and $75
million numbers all shall be proportionately reduced utilizing the Pro Rata Portion, but
there shall be straight line interpolation above the reduced 3 times and reduced $75
million; however, in no event

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shall you receive greater than $75 million. The payments contemplated by this clause (iii)
shall be paid to you within 30 days following the consummation of the Change in Control if
such Change in Control satisfies the requirements for a change in control under Internal
Revenue Code Section 409A(a)(2)(A)(v) and, if not, on the date specified in clause (i)(E)
above. Notwithstanding the foregoing, for the avoidance of doubt, the target EV values
shall be adjusted in a manner that does not include the Base EV. For example, after a
three-year period (i.e., a Pro Rata Portion equal to 60%), the target values shall be equal
to 1.18 (i.e., 1 plus (60% x 0.3)), 1.6 (i.e., 1 plus (60% x 1.0)) and 2.2 (i.e., 1 plus
(60% x 2.0)).

(iv) For purposes of this Paragraph 7(f) “Enterprise Value” shall mean the sum of (A) market
capitalization (the market price per share of Company common stock determined on the basis
of the average market price of Company common stock over the 30 trading days preceding the
Measurement Date (or, if the Measurement Date is the CIC Date, the closing market price of
Company common stock on the day preceding the CIC Date) multiplied by the average number of
common shares outstanding during such 30-day period) on such date, as the case may be plus
(B) net debt (consolidated total financial indebtedness, including capitalized lease
obligations and off-balance sheet items in the nature of financial indebtedness, minus cash
and cash equivalents). In the event that prior to the Measurement Date a spinoff to
stockholders of a portion of Harman’s business occurs or an extraordinary dividend is paid
by Harman, then an amount equal to the Enterprise Value of the spun off entity on the date
of such spinoff or the amount of such extraordinary dividend, plus interest from the date
of such spinoff or extraordinary dividend through the Measurement Date based on the prime
rate as reported in The Wall Street Journal on the first business day of January in each
year, shall be added to the Enterprise Value as determined above to determine the
Measurement Date Enterprise Value.

(v) For the avoidance of doubt and without any implication as to any other provision, the
amounts due under this Section 7(f) shall be paid in addition to any amounts due hereunder,
under the Severance Agreement or under any other plan or arrangement.

     5. Paragraph 8 of the Letter Agreement is hereby amended by adding the following sentences at
the end thereof:

To the extent that the amount of the RSU Replacement Award is less than $3,974,000 (the
“Adjustment Amount”), you shall be entitled to receive an additional payment on March 1,
2008 (less applicable withholding) equal to the Adjustment Amount less the amount of the RSU
Replacement Award. You shall also be entitled to receive interest calculated based on an
amount equal to the sum of the RSU Replacement Award and any additional payment payable to
you pursuant to the preceding sentence, for the period commencing on November 1, 2007 and
ending on March 1, 2008 at a rate equal to the “prime rate” reported in The Wall Street
Journal on November 15, 2007.

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     This letter is intended to constitute an amendment to the Letter Agreement which, subject to
the provisions hereof, shall otherwise remain in full force and effect. In order to evidence your
agreement to the foregoing, please sign and return the enclosed copy of this document, which shall
constitute a binding agreement between the Company and you.

[signature page follows]

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     IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this amendment to
the Letter Agreement as of the date set forth below:

	 	 	 	 	 	 	 	 	 
	/s/ Dinesh Paliwal	 	 	 	HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
	 

	 	 	 	 	 	 	 	 
	Date: November 29, 2007

	 	 	 	By:
	 	/s/ Sidney Harman
 

Name: Sidney Harman
	 	 
	 

	 	 	 	 	 	Title: Executive Chairman	 	 
	 

	 	 	 	 	 	Date: November 29, 2007	 	 

- 6 -

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