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THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should take, you are recommended to consult immediately your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser being, if you are resident in Ireland, an organization or firm authorised or exempted pursuant to the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos 1-3) 2007 or the Investment Intermediaries Act 1995 (as amended) or, if you are resident in a territory outside Ireland, from another appropriately authorised adviser.

Covidien Public Limited Company

(“Covidien”) (a public company incorporated with limited liability under the Companies Acts 1963 – 2009 of Ireland with registered number 466385)

EMPLOYEE SHARE PLAN PROSPECTUS

for the Offer of ordinary shares of Covidien Public Limited Company (listed and admitted, or to belisted and admitted upon their issuance, to trading on the New York Stock Exchange)

This prospectus is dated 11 January 2011.

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This employee share plan prospectus (the “Prospectus”) has been prepared in accordance with Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (“Directive 2003/71/EC”), the Commission Regulation EC No 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements (the “Prospectus Regulations”) and the Prospectus (Directive 2003/71/EC) Regulations 2005 (SI No.324 of 2005) of Ireland (the “2005 Regulations”).

This Prospectus has been approved by the Central Bank of Ireland (the “Central Bank”), as competent authority under Directive 2003/71/EC. The Central Bank only approves this Prospectus as meeting the requirements imposed under Irish and EU law pursuant to Directive 2003/71/EC. Such approval relates only to the Shares which are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes of Directive 2004/39/EC or which are to be offered to the public in any Member State of the European Economic Area.

Covidien has requested the Central Bank to provide the competent authorities in Austria, France, Germany and The Netherlands with a certificate of approval attesting that the Prospectus has been drawn up in accordance with Directive 2003/71/EC.

PERSONS RESPONSIBLE

Covidien and its directors accept responsibility for the information contained in this Prospectus. To the best of the knowledge of Covidien and its directors, the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information and Covidien and its directors have taken all reasonable care to ensure that such is the case.

IMPORTANT NOTICES

This Prospectus should be read and construed together with any supplements.

This Prospectus sets out the offer of the Shares which is made under the Covidien Employee Stock Purchase Plan as amended and restated and as assumed by Covidien on 4 June 2009 (“ESPP”). The description of the Shares set out in this Prospectus also applies to the Shares which may be received by certain Company employees in connection with stock options granted, pursuant to the terms of a Grant Letter and accompanying Award Certificate (defined on page 37), under the Covidien 2007 Stock and Incentive Plan as amended and restated and as assumed by Covidien on 4 June 2009 (“SIP”) (“Stock Options”).

The offer of Shares in connection with the ESPP which is made by this Prospectus is a public offer of securities pursuant to Directive 2003/71/EC in the following EEA countries, subject to the applicable legislation in each of those countries: Austria, France, Germany, Ireland and The Netherlands. This Prospectus will be made available to employees of the Company in the above-named countries.

The offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus may also be made in Austria, France, Germany, Ireland and The Netherlands, however, such offer is not considered a public offer of securities and/or the obligation to publish a prospectus does not apply to such offer under the legislation implementing Directive 2003/71/EC in Austria, France, Ireland or The Netherlands. The relevant provisions of the SIP have been included in Annex III to this Prospectus in accordance with requirements of the competent authority for the purpose of Directive 2003/71/EC in Germany in respect of the Stock Options.

It is expected that the offer of Shares under the ESPP which is made by this Prospectus and the offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus, will commence on or about 11 January 2011 and that the offers, unless otherwise terminated in accordance with the terms of the ESPP or the SIP, will be open for acceptance until the offer period closes at 11.59 p.m. (Dublin time) on 10 January 2012. In the event of termination of the ESPP or the SIP in accordance with its terms, Covidien will notify ESPP Participants and SIP Participants (as relevant) of the termination of the ESPP or the SIP in such manner as Covidien considers appropriate at the time, including by way of a notice or information made available on Covidien’s intranet and/or web site at www.covidien.com.

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Receipt of this Prospectus is neither a guarantee nor an indication that you are, or will be, eligible to participate in the ESPP or the SIP.

As used in this Prospectus, “Covidien” means Covidien public limited company, a public company with limited liability incorporated in Ireland with its registered office located at 1 st Floor, 20 On Hatch, Hatch Street Lower, Dublin 2, Ireland. “Company” means Covidien and its subsidiaries. “Tyco International” means Tyco International Ltd., a Swiss corporation. The “Committee” means the Compensation and Human Resources Committee of the board of directors of Covidien (the “Board”) or any other person or committee having delegated authority over the administration of the ESPP or the SIP, as applicable. The Company or Committee selects the participants under the ESPP and the SIP, respectively, in conformity with the provisions of the ESPP and the SIP, as described on pages 33 to 40 of the Prospectus.

Please read Annex I to the Prospectus describing the withholding tax consequences in your country and any adjustments or modifications to the terms and conditions or other information that may be applicable.

This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be considered a recommendation by Covidien that any recipient of this Prospectus should purchase Shares. Each participant should determine for himself/herself the relevance of the information contained in this Prospectus and his/her decision to participate in the ESPP or the SIP should be based upon such investigation as he/she deems necessary. If you are in any doubt as to what action you should take, you are recommended to consult immediately your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser.

Share purchases will be conducted in United States dollars. In this Prospectus, unless otherwise specified, references to “U.S. $”, “U.S. dollars” or “$” are to United States dollars and references to “€”, “Euro” or “EUR” are to the common currency of the EU.

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TABLE OF CONTENTS

PERSONS RESPONSIBLE

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IMPORTANT NOTICES

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TABLE OF CONTENTS

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SUMMARY

 

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RISK FACTORS

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DOCUMENTS FORMING PART OF THIS PROSPECTUS

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SUPPLEMENTS TO THIS PROSPECTUS

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SELECTED FINANCIAL DATA

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DESCRIPTION OF THE SHARES

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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

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CAPITALIZATION AND INDEBTEDNESS

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GOAL OF THE PLANS, EXPENSES AND USE OF PROCEEDS

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DETAILS OF THE ESPP AND THE SIP

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ADDITIONAL INFORMATION

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GENERAL INFORMATION

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ANNEX I: APPLICABLE WITHHOLDING TAXES

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ANNEX II: TERMS AND CONDITIONS OF THE ESPP

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ANNEX III: TERMS AND CONDITIONS OF THE SIP

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ANNEX

IV:

2010 ANNUAL REPORT

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ANNEX V: 2010 AGM PROXY STATEMENT

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ANNEX

VI: DEFINITIONS

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SUMMARY

This summary (the “Summary”) should be read as an introduction to the Prospectus. Any decision to invest in the Shares should be based on a consideration of this Prospectus as a whole by the investor. Where a claim relating to information contained in this Prospectus is brought before a court, the plaintiff might, under the national legislation of the member states of the European Economic Area, have to bear the costs of translating this Prospectus before the legal proceedings are initiated. Civil liability attaches to those persons responsible under law for the contents of the Prospectus but only if this Summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus.

Words and expressions defined in the Prospectus shall have the same meaning in this Summary.

1. Information concerning Covidien

Covidien is the holding company of the Covidien group. Covidien and its subsidiary companies operate the former healthcare businesses of Tyco International. Details of Covidien’s subsidiaries are available in the 2010 Annual Report, at Exhibit 21.1.

The members of the Board are Richard J. Meelia, Dennis H. Reilley, Craig Arnold, Robert H. Brust, John M. Connors, Jr., Christopher J. Coughlin, Timothy M. Donahue, Kathy J. Herbert, Randall J. Hogan, III, Tadataka Yamada and Joseph A. Zaccagnino. Each of the members of the Board is a non-executive director of Covidien, except for Richard J. Meelia who is an executive director of Covidien.

The senior managers of Covidien are Richard J. Meelia, Charles J. Dockendorff and Jose E. Almeida.

2. Information concerning the Shares and the ESPP and the SIP

Description of the Shares

CUSIP Number

G2554F105

Class

Ordinary

Legislation

The Shares have been, or will be, issued under the laws of Ireland.

Form

Registered book-entry

Transfer Agent

BNY Mellon Shareowner Services

Currency

US dollars

Resolutions authorizing issue

Shares offered under the ESPP are already issued. Shares offered under the SIP will either be issued upon exercise of the Stock Options or issued from shares previously acquired by the Company (i.e. treasury shares) in accordance with the resolutions adopted by the Board on 7 May 2009.

Taxes

Please refer to Annex I of the Prospectus

Listing and admission to trading

The Shares are, or will upon their issuance be, listed and admitted to trading on the New York Stock Exchange (the “NYSE”).

Description of the ESPP and the SIP

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It is expected that the offer of Shares under the ESPP which is made by this Prospectus and the offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus, will commence on or about 11 January 2011 and that the offers, unless otherwise terminated in accordance with the terms of the ESPP or the SIP, will be open for acceptance until the offer period closes at 11.59 p.m. (Dublin time) on 10 January 2012. In the event of termination of the ESPP or the SIP in accordance with their terms, Covidien will notify ESPP Participants and SIP Participants (as relevant) of the termination of the ESPP or the SIP in such manner as Covidien considers appropriate at the time, including by way of a notice or information made available on Covidien’s intranet and/or web site at www.covidien.com.

Offer of Shares made under the ESPP

General. The number of Shares available for purchase under the ESPP, as of September 24, 2010, is 4,231,333. If Covidien’s structure changes, e.g. because of a share dividend, reorganization or similar event, the number of Shares that may be purchased under the ESPP will be adjusted appropriately.

To give effect to the terms of the ESPP, Shares will be purchased on the open market by a brokerage firm designated by Covidien to act on behalf of the eligible employees who have authorised payroll deductions. Covidien will pay all commissions related to such purchases. Subject to shareholder approval, the Board may increase the number of Shares approved for purchase under the ESPP in the future.

Administration. The Committee has oversight of the ESPP and has the power to interpret and construe any provision of the ESPP and to adopt rules and regulations for carrying out the ESPP. The Committee has appointed Fidelity Investments as the designated ESPP administrator (the “ESPP Administrator”), i.e. a record keeper who handles the day-to-day administration of the ESPP.

Participation. No employee has an absolute right to participate in the ESPP. Covidien determines which employees are eligible to participate. An eligible employee may join the ESPP by authorizing payroll deductions in the manner specified by Covidien.

Contributions. Contributions of those eligible employees’ participating in the ESPP will begin as soon as administratively possible. The maximum contribution that may be deducted from any employees’ remuneration cannot exceed the employees’ base salary or, for employees paid on a commission-only basis, the employees’ commission during a payroll period (exclusive of overtime and bonuses, and net of withholding and other deductions). Covidien will match a portion of the employees’ contributions by contributing to the ESPP an additional percentage of the employees’ contributions.

Withdrawal from the ESPP. An eligible employee may cease making contributions to the ESPP at any time by changing his/her payroll deduction to zero.

Termination of Employee’s Rights. An employee’s rights under the ESPP terminate when he/she ceases to be an eligible employee.

Termination of the ESPP. The ESPP may be terminated at any time by Covidien’s Board.

A participant in the ESPP (an “ESPP Participant”, and two or more together being “ESPP Participants”)

will hold an account relating to the ESPP with the ESPP Administrator (an “ESPP Account”) and will receive monthly account statements, showing all activity in their accounts, from the ESPP Administrator.

If there is no activity in the relevant ESPP Participant’s account, the ESPP Administrator will issue

quarterly account statements.

Any dividends to be paid on Shares acquired under the ESPP will be paid in cash and deposited to the ESPP Participant’s account with the ESPP Administrator.

Sale or transfer of Shares. ESPP Participants may sell or transfer the Shares allocated to their ESPP Accounts at any time provided that, under the ESPP’s short-term trading rules, employees will be prohibited from selling or transferring ESPP Shares within three months of the date of their purchase and further provided that transactions in ESPP Shares are subject to the Company’s Insider Trading Policy, which may be accessed on the Company’s intranet web site under “Resources - Policies - Global Policies

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Library”. The Insider Trading Policy prohibits employees from trading in securities of the Company when they have material, non-public information.

Miscellaneous. ESPP Participants cannot assign or transfer their interest under the ESPP. They can, however, have a joint account with someone else.

Offer of Shares in connection with Stock Options granted to certain Company Employees under the SIP

General. The Committee administers the SIP and it has broad discretion and authority under the SIP, including the power to select employees who receive Stock Options (each such employee being a “SIP Participant” and, two or more together being “SIP Participants”). The offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus may be made in Austria, France, Germany, Ireland and The Netherlands, however, such offer is not considered a public offer of securities and/or the obligation to publish a prospectus does not apply to such offer under the legislation implementing Directive 2003/71/EC in Austria, France, Ireland or The Netherlands.

Exercise Price of Stock Options. The Committee will set the exercise price at the time of grant, which will be no less than the fair market value of an ordinary share of Covidien as of the date of grant. For this purpose, fair market value is the closing price of an ordinary share of Covidien as reported on the NYSE on the date of grant. The exercise price may not be decreased after the date of grant, other than in connection with permitted SIP adjustments.

Vesting of Stock Options. Stock Options vest at such time and in the manner as determined at the time of grant by the Committee. Unless the applicable Award Certificate provides otherwise, Stock Options will fully vest upon the normal retirement, death or disability of the recipient of a Stock Option awarded under the SIP, or upon an involuntary termination of employment (i.e., termination by the Company for reasons other than cause, disability or death or termination by the SIP Participant for good reason) within twelve months after a change of control and will vest pro rata upon the SIP Participant’s early retirement. Unless the applicable Award Certificate provides otherwise, Stock Options that have not vested as of the date of a SIP Participant's termination of employment other than as a result of one of the previously discussed provisions will be forfeited.

Post-Termination Exercise. Unless the applicable Award Certificate provides otherwise, any vested Stock Option that has not been exercised at termination of employment, but that remains exercisable, will remain exercisable for a period of three years after termination of employment because of retirement, death, disability, or a change of control termination and for a period of ninety days after termination of employment for any other reason (but subject to earlier expiry of the Stock Option).

No Obligation to Exercise Stock Options. SIP Participant to exercise the Stock Option.

The grant of a Stock Option will impose no obligation upon the

No Rights as Shareholders. A SIP Participant who is granted a Stock Option under the SIP will have no rights as a shareholder of Covidien with respect to the Stock Option unless and until certificates for the Shares underlying the Stock Option are registered in the SIP Participant's name and delivered to the SIP Participant.

Termination. The SIP will terminate upon the earlier of (a) the adoption of a resolutions of the Board terminating the SIP or (b) 20 November 2018. Following termination of the SIP, any previously granted Stock Option will remain in effect and will continue to be governed by the terms of the SIP.

3. Risk factors

Risk factors relating to the Shares

- The shareholding, voting rights and the earnings per ordinary share may be diluted as a result of an issuance of additional shares of Covidien.

- Certain provisions of the Articles may reduce the likelihood of any unsolicited acquisition proposal or potential change in control that the Participants may consider favorable.

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- Covidien cannot assure the Participants that it will pay dividends in the future.

- Securities or industry analysts may cease to publish research or reports about Covidien’s business or may change their recommendations regarding Covidien’s ordinary shares.

- The marketability of Covidien’s ordinary shares may decline and the market price of Covidien’s ordinary shares may fluctuate and may decline below the purchase price of Shares acquired under the ESPP or the exercise price of the Stock Options issued to Company employees under the SIP.

Risk factors relating to the business of Covidien

- Covidien may be unable to effectively introduce and market new products or may fail to keep pace with advances in technology.

- Sales of Covidien’s products are affected by the reimbursement practices of a small number of large public and private insurers.

- Cost-containment efforts of Covidien’s customers, purchasing groups, third-party payors and governmental organizations could adversely affect Covidien’s sales and profitability.

- Covidien may be unable to protect its intellectual property rights or may infringe the intellectual property rights of others.

- Covidien is subject to complex and costly regulation.

- Implementation by the FDA of certain specific public advisory committee recommendations regarding acetaminophen use in both over-the-counter and prescription products could have an adverse material impact on Covidien’s pharmaceutical sales.

- The manufacture of Covidien’s products is highly exacting and complex, and its business could suffer if Covidien or its suppliers encounter manufacturing problems.

- Defects or failures associated with Covidien’s products could lead to recalls or safety alerts and negative publicity.

- Covidien may incur product and liability losses and other litigation liability.

- An interruption in Covidien’s ability to manufacture its products or an inability to obtain key components or raw materials may adversely affect Covidien’s business.

- Covidien may experience higher costs to produce its products as a result of changes in prices for oil, gas and other commodities.

- Divestitures of some of Covidien’s businesses or product lines may materially affect its business, results of operations and financial condition.

- Covidien may not be successful in its strategic acquisitions of, investments in, or alliances with, other companies and businesses, and acquisitions could require Covidien to issue additional debt or equity.

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

- Covidien is subject to risks associated with doing business outside of the United States.

- Foreign currency exchange rates may adversely affect Covidien’s results.

- Most of Covidien’s customer relationships outside of the United States are with governmental entities and Covidien could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-bribery laws in non-U.S. jurisdictions.

- Covidien is subject to healthcare fraud and abuse regulations that could result in significant liability, require Covidien to change its business practices and restrict its operations in the future.

- Covidien’s operations expose it to the risk of material environmental liabilities, litigation and violations.

- The volatility and disruption of the capital and credit markets and adverse changes in the global economy may negatively impact Covidien’s business and its ability to access financing.

Risk relating to tax matters

- Examination and audits by tax authorities, including the Internal Revenue Service, could also result in additional tax payments for periods subsequent to June 29, 2007.

- Covidien shares responsibility for certain of its, Tyco International’s and Tyco Electronics’ income tax liabilities for tax periods prior to and including June 29, 2007.

- If the distribution of Covidien and Tyco Electronics common shares by Tyco International to its shareholders or certain internal transactions undertaken in anticipation of the Separation are determined to be taxable for U.S. federal income tax purposes, Covidien could incur significant U.S. federal income tax liabilities.

Risk factors relating to Covidien’s jurisdiction of incorporation

- Legislative action in the United Sates could materially and adversely affect Covidien.

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- Irish law differs from the laws in effect in the United States and may afford less protection to the holders of Covidien securities.

- Covidien may not be able to maintain a competitive worldwide effective corporate tax rate. RISK FACTORS

1. Risk factors relating to the Shares

The following risk factors relating to the Shares should be considered before making any investment decision pursuant to the terms of the ESPP and the SIP.

The shareholding, voting rights and the earnings per ordinary share may be diluted as a result of an issuance of additional shares of Covidien.

The shareholding and voting rights, and the earnings per share of the ordinary shares of Covidien may be diluted as a result of an issuance of additional shares of Covidien.

Certain provisions of Covidien's articles of association may reduce the likelihood of any unsolicited acquisition proposal or potential change in control that the Participants might consider favorable.

Covidien’s articles of association (the “Articles”) contain certain provisions that could be considered to be “anti-takeover” provisions because they make it harder for a third-party to acquire Covidien without the consent of Covidien’s incumbent Board. These provisions in the Articles include:

Shareholders may act only at shareholder meetings or by unanimous written consent;

Shareholders must comply with advance notice provisions for nominating directors or presenting other proposals at shareholder meetings;

Restrictions will apply to any merger or other business combination (including a consolidation under Irish law) between Covidien and the holder of 15% or more of the issued voting shares of Covidien who became such without the prior approval of the Board; and

The Board may without shareholder approval issue preferred shares and determine their rights and terms, including voting rights, or adopt a shareholder rights plan.

Covidien cannot assure the Participants that it will pay any dividends in the future.

Covidien cannot assure Participants that it will have sufficient distributable reserves to be able to pay any dividends under Irish law. While Covidien expects that it will continue to pay dividends to holders of ordinary shares of Covidien, the recommendation of dividends and the timing, declaration and payment of interim dividends falls within the discretion of the Board and depends on many factors, including the statutory requirements of Irish law, Covidien’s earnings and financial condition, the capital requirements of Covidien’s business, industry practice and any other factors that the Board deems relevant.

Securities or industry analysts may cease to publish research or reports about Covidien’s business or may change their recommendations regarding Covidien’s ordinary shares.

The market price and/or trading volume of Covidien’s ordinary shares may be influenced by the research and reports that industry or securities analysts publish about Covidien and its business. There can be no guarantee of continued and sufficient analyst research coverage for Covidien as it has no influence on analysts who prepare such researches and reports. If analysts fail to publish reports on Covidien regularly or cease publishing such reports, Covidien may lose the visibility in the capital markets, which in turn could cause the price of its shares and/or trading volume to decline. Furthermore, analysts may downgrade Covidien’s shares or give negative recommendations regarding Covidien’s ordinary shares, each of which could result in a decline of the price of the ordinary shares of Covidien.

The marketability of Covidien’s ordinary shares may decline and the market price of Covidien’s ordinary shares may fluctuate and may decline below the purchase price of Shares acquired under the ESPP or the exercise price of Stock Options issued to Company employees under the SIP.

Covidien cannot assure that the marketability of Covidien’s ordinary shares will improve or remain consistent. The SIP Offer Price may not be indicative of the market price of Covidien’s ordinary shares

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after the exercise of Stock Options has completed. Covidien’s ordinary shares may experience in the future significant price fluctuations whether or not in response to developments that are unrelated to the operating performance of particular companies. The market price of Covidien’s ordinary shares may fluctuate widely, depending on many factors beyond Covidien’s control. These factors include, amongst other things, actual or anticipated variations in operating results and earnings by Covidien and/or its competitors, changes in financial estimates by securities analysts, market conditions in the healthcare industry and, in general, the status of the securities market, governmental legislation and regulations, as well as general economic and market conditions, such as recession. These may cause the market price and demand for the Shares to fluctuate substantially and any such development, if adverse, may have an adverse effect on the market price of the Shares which may decline disproportionately to its operating performance.

The market price of Covidien’s ordinary shares is also subject to fluctuation in response to any further issuance of shares by Covidien, sales of shares of Covidien by Covidien’s major shareholders, the liquidity of trading in the Covidien shares, capital reduction or purchases of shares by Covidien and investor perception. As a result of these, there can be no assurance that the public trading market price of the Shares will not decline below the purchase price of Shares acquired under the ESPP or the exercise price of Stock Options issued to Company employees under the SIP (the “SIP Offer Price”).

2. Risk factors relating to the business of Covidien

The following risk factors relating to the business of Covidien reflect those risk factors set out in the 2010 Annual Report and should be considered before making any investment decision pursuant to the terms of the ESPP and the SIP:

Covidien may be unable to effectively introduce and market new products or may fail to keep pace with advances in technology.

The healthcare industry is characterized by continuous technological change, resulting in changing customer preferences and requirements. The success of our business depends on our ability to introduce new products and adapt to these changing technologies and customer demands. The success of new product development depends on many factors, including our ability to anticipate and satisfy customer needs, obtain regulatory and reimbursement approvals on a timely basis, develop and manufacture products in a cost-effective and timely manner, maintain advantageous positions with respect to intellectual property and differentiate our products from those of our competitors. To compete successfully in the marketplace, we must make substantial investments in new product development whether internally or externally through licensing or acquisitions. Our failure to introduce new and innovative products in a timely manner would have an adverse effect on our business, results of operations, financial condition and cash flows.

Even if we are able to develop, manufacture and obtain regulatory and reimbursement approvals for our new products, the success of those products depends on market acceptance. Market acceptance for our new products could be affected by several factors, including:

• the availability of alternative products from our competitors;

• the price of our products;

• the timing of our market entry; and

• our ability to market and distribute our products effectively.

Sales of Covidien’s products are affected by the reimbursement practices of a small number of large public and private insurers.

Sales of our products depend, in part, on the extent to which the costs of our products are reimbursed by governmental health administration authorities, private health coverage insurers and other third-party payors. Our potential customers’ ability to obtain appropriate reimbursement for products and services from these third-party payors affects the selection of products they purchase and the prices they are willing to pay. In addition, demand for new products may be limited unless we obtain reimbursement approval from governmental and private third-party payors prior to introduction. Reimbursement criteria vary by country, are becoming increasingly stringent and require management expertise and significant attention to obtain and maintain qualification for reimbursement.

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Major third-party payors for healthcare services both within and outside of the United States continue to work to contain costs through, among other things, the introduction of cost containment incentives and closer scrutiny of healthcare expenditures. In March 2010, significant reforms to the U.S. healthcare system were enacted as law. The law includes provisions that, among other things, reduce Medicare reimbursement. We cannot predict what additional healthcare initiatives, if any, will be implemented, or the effect any future legislation or regulation will have on us. However, the implementation of healthcare reforms both within and outside of the United States may further reduce the level at which reimbursement is provided and adversely affect demand for and profitability of our products. Legislative or administrative reforms to U.S. or non-U.S. reimbursement practices that significantly reduce or deny reimbursement for treatments using our products could adversely affect the acceptance of our products and the prices for which our customers are willing to pay and could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Cost-containment efforts of Covidien’s customers, purchasing groups, third-party payors and governmental organizations could adversely affect our sales and profitability.

Many existing and potential customers for our products within the United States have become members of GPOs and IDNs, in an effort to reduce costs. GPOs and IDNs negotiate pricing arrangements with healthcare product manufacturers and distributors and offer the negotiated prices to affiliated hospitals and other members. GPOs and IDNs typically award contracts on a category-by-category basis through a competitive bidding process. Bids are generally solicited from multiple manufacturers with the intention of driving down pricing. Due to the highly competitive nature of the GPO and IDN contracting processes, we may not be able to obtain or maintain contract positions with major GPOs and IDNs across our product portfolio.

Furthermore, the increasing leverage of organized buying groups may reduce market prices for our products, thereby reducing our profitability.

While having a contract with a GPO or IDN for a given product category can facilitate sales to members of that GPO or IDN, such contract position can offer no assurance that sales volumes of those products will be maintained. GPOs and IDNs increasingly are awarding contracts to multiple suppliers for the same product category. Even when we are the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN generally are free to purchase from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause upon 60 to 90 days’ notice. Accordingly, although we have multiple contracts with many major GPOs and IDNs, the members of such groups may choose to purchase from our competitors due to the price or quality offered by such competitors, which could result in a decline in our sales and profitability.

Distributors of our products also have begun to negotiate terms of sale more aggressively to increase their profitability. Failure to negotiate distribution arrangements having advantageous pricing and other terms of sale could cause us to lose market share and would adversely affect our business, results of operations, financial condition and cash flows.

Outside the United States, we have experienced pricing pressure from centralized governmental healthcare authorities and increased efforts by such authorities to lower healthcare costs. We frequently are required to engage in competitive bidding for the sale of our products to governmental purchasing agents. Our failure to offer acceptable prices to these customers could adversely affect our sales and profitability in these markets.

Covidien may be unable to protect its intellectual property rights or may infringe the intellectual property rights of others.

We rely on a combination of patents, trademarks, trade secrets and nondisclosure agreements to protect our proprietary intellectual property. Our efforts to protect our intellectual property and proprietary rights may not be sufficient. We cannot assure you that our pending patent applications will result in the issuance of patents to us, that patents issued to or licensed by us in the past or in the future will not be challenged or circumvented by competitors or that these patents will be found to be valid or sufficiently broad to preclude our competitors from introducing technologies similar to those covered by our patents and patent applications. In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies that are similar to those developed or licensed by us. Competitors also may harm our sales by designing products that mirror the capabilities of our products or technology without infringing our intellectual property rights. If we do not obtain sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights, our competitiveness could be impaired, which would limit our growth and future revenue.

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We operate in an industry characterized by extensive patent litigation. Patent litigation is costly to defend and can result in significant damage awards, including treble damages under certain circumstances, and injunctions that could prevent the manufacture and sale of affected products or force us to make significant royalty payments in order to continue selling the affected products. At any given time, we are involved as either a plaintiff or a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time. We can expect to face additional claims of patent infringement in the future. A successful claim of patent or other intellectual property infringement against us could adversely affect our business, results of operations, financial condition and cash flows.

Covidien is subject to complex and costly regulation.

Our products are subject to regulation by the FDA and other national, supranational, federal and state governmental authorities. It can be costly and time-consuming to obtain regulatory approvals to market a medical device or pharmaceutical product. Approvals might not be granted for new devices or drugs on a timely basis, if at all. Regulations are subject to change as a result of legislative, administrative or judicial action, which may further increase our costs or reduce sales. As an example, the FDA has proposed changes to the clearance process for medical devices that are substantially equivalent to other legally marketed devices, called the 510(k) process. If the changes to the 510(k) process are adopted as proposed, the time and cost to get many of our medical devices to market could increase significantly. Our failure to maintain approvals or obtain approval for new products could adversely affect our business, results of operations, financial condition and cash flows.

We also rely on licenses from the DEA to purchase raw materials used in many of our pharmaceutical products and to manufacture and distribute such products. Our failure to maintain these licenses could adversely affect our pharmaceuticals business.

In addition, we are subject to regulations covering manufacturing practices, product labeling and advertising and adverse-event reporting that apply after we have obtained approval to sell a product. Many of our facilities and procedures and those of our suppliers are subject to ongoing oversight, including periodic inspection by governmental authorities. Compliance with production, safety, quality control and quality assurance regulations is costly and time-consuming.

Our manufacturing facilities and those of our suppliers could be subject to significant adverse regulatory actions in the future. These actions could include warning letters, fines, injunctions, civil penalties, recalls, seizures of our products and criminal prosecution. Possible consequences of such actions could include:

• substantial modifications to our business practices and operations;

• a total or partial shutdown of production in one or more of our facilities while we remediate the alleged violation;

• the inability to obtain future pre-market clearances or approvals; and

• withdrawals or suspensions of current products from the market.

Any of these events, in combination or individually, could disrupt our business and adversely affect our business, results of operations, financial condition and cash flows.

Implementation by the FDA of certain specific public advisory committee recommendations regarding acetaminophen use in both over-the-counter and prescription products could have an adverse material impact on Covidien’s pharmaceutical sales.

We are the world’s largest manufacturer of acetaminophen. In June 2009, following an FDA report that severe liver damage and even death can result from overdoses of acetaminophen, the FDA’s public advisory committee issued a number of recommendations relating to acetaminophen use in both over-the-counter and prescription products. These recommendations include the banning of certain prescription painkillers which combine acetaminophen with an opiate narcotic and lowering the maximum dose of over-the-counter painkillers containing acetaminophen. These recommendations are advisory in nature and the FDA is not required to follow them. The FDA has stated that it will review the recommendations of the advisory committee, all available safety and efficacy data as well as public input before making a final decision. At this time, it is unclear what actions the FDA may take in response to the committee’s recommendations. Given our significant sales of acetaminophen and acetaminophen combination products, any measures taken by the FDA to address concerns raised by the panel, could have a material adverse effect on our consolidated results of operations and our pharmaceuticals business.

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The manufacture of Covidien’s products is highly exacting and complex, and its business could suffer if Covidien or its suppliers encounter manufacturing problems.

The manufacture of our products is highly exacting and complex, due in part to strict regulatory requirements. Problems may arise during manufacturing for a variety of reasons including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials and environmental factors. If problems arise during the production of a batch of product, that entire batch of product may have to be discarded. These problems could lead to increased costs, lost revenue, damage to customer relationships, time and expense spent investigating the cause and, depending on the cause, similar losses with respect to other products. If problems are not discovered before the product is released to the market, we also could incur recall and product liability costs. Significant manufacturing problems could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Defects or failures associated with Covidien’s products could lead to recalls or safety alerts and negative publicity.

Manufacturing flaws, component failures, design defects, off-label uses or inadequate disclosure of product-related information could result in an unsafe condition or the injury or death of a patient. These problems could lead to a recall of, or issuance of a safety alert relating to, our products and result in significant costs and negative publicity. Due to the strong name recognition of our brands, an adverse event involving one of our products could result in reduced market acceptance and demand for all products within that brand, and could harm our reputation and our ability to market our products in the future. In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our applications for new product approvals. We also may undertake a voluntary recall of products or temporarily shut down production lines based on performance relative to our own internal safety and quality monitoring and testing data. Any of the foregoing problems could disrupt our business and have a material adverse effect on our business, results of operations, financial condition and cash flows.

Covidien may incur product liability losses and other litigation liability.

In the ordinary course of business, we are subject to product liability claims and lawsuits, including potential class actions, alleging that our products have resulted in or could result in an unsafe condition or injury. Any product liability claim brought against us, with or without merit, could be costly to defend and could result in an increase of our insurance premiums. Some claims brought against us might not be covered by our insurance policies. In addition, we have significant self-insured retention amounts which we would have to pay in full before obtaining any insurance proceeds to satisfy a judgment or settlement. Furthermore, even where the claim is covered by our insurance, our insurance coverage might be inadequate and we would have to pay the amount of any settlement or judgment that is in excess of our policy limits. We may not be able to obtain insurance on terms acceptable to us or at all since insurance varies in cost and can be difficult to obtain. Our failure to maintain adequate insurance coverage or successfully defend against product liability claims could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We are subject to antitrust claims and lawsuits in which competitors allege that we use our market position to exclude competitors from certain markets and to prevent customers from purchasing the competitors’ products. We also are subject to consumer antitrust class action lawsuits in which the putative class representatives, on behalf of themselves and other customers, seek to recover overcharges they allege that they paid for certain products. Any antitrust claim brought against us, with or without merit, could be costly to defend and could result in significant damages against us.

An interruption in Covidien’s ability to manufacture its products or an inability to obtain key components or raw materials may adversely affect Covidien’s business.

Many of our key products are manufactured at single locations, with limited alternate facilities. If an event occurs that results in damage to one or more of our facilities, we may be unable to manufacture the relevant products at previous levels or at all. In addition, for reasons of quality assurance or cost effectiveness, we purchase certain components and raw materials from sole suppliers. Due to the stringent regulations and requirements of the FDA and other similar non-U.S. regulatory agencies regarding the manufacture of our products, we may not be able to quickly establish additional or replacement sources for certain components or materials. A reduction or interruption in manufacturing, or an inability to secure alternative sources of raw materials or components, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

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Covidien may experience higher costs to produce its products as a result of changes in prices for oil, gas and other commodities.

We use resins, other petroleum-based materials and pulp as raw materials in many of our products. Prices of oil and gas also significantly affect our costs for freight and utilities. Oil, gas and pulp prices are volatile and may increase, resulting in higher costs to produce and distribute our products. Due to the highly competitive nature of the healthcare industry and the cost-containment efforts of our customers and third party payors, we may be unable to pass along cost increases through higher prices. If we are unable to fully recover these costs through price increases or offset these increases through cost reductions, we could experience lower margins and profitability and our business, results of operations, financial condition and cash flows could be materially and adversely affected.

Divestitures of some of Covidien’s businesses or product lines may materially adversely affect its business, results of operations and financial condition.

We continue to evaluate the performance of all of our businesses and may sell a business or product line. Any divestitures may result in significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our business, results of operations and financial condition. Divestitures could involve additional risks, including difficulties in the separation of operations, services, products and personnel, the diversion of management’s attention from other business concerns, the disruption of our business and the potential loss of key employees. We may not be successful in managing these or any other significant risks that we encounter in divesting a business or product line.

Covidien may not be successful in its strategic acquisitions of, investments in, or alliances with, other companies and businesses, and acquisitions could require Covidien to issue additional debt or equity.

We may pursue acquisitions of complementary businesses, technology licensing arrangements and strategic alliances to expand our product offerings and geographic presence as part of our business strategy. We may not complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the expected benefits of any acquisition, license arrangement or strategic alliance. Other companies may compete with us for these strategic opportunities. Even if we are successful in making an acquisition, the products and technologies that we acquire may not be successful or may require significantly greater resources and investments than we originally anticipated. We also could experience negative effects on our results of operations and financial condition from acquisition-related charges, amortization of intangible assets and asset impairment charges. These effects, individually or in the aggregate, could cause a deterioration of our credit rating and result in increased borrowing costs and interest expense. We could experience difficulties in integrating geographically separated organizations, systems and facilities, and personnel with diverse backgrounds. Integration of an acquired business also may require management resources that otherwise would be available for development of our existing business. If an acquired business fails to operate as anticipated or cannot be successfully integrated with our existing business, our business, results of operations, financial condition and cash flows could be materially and adversely affected.

In connection with acquisitions, we may incur or assume significant debt and unknown or contingent liabilities, such as environmental remediation expense, products liability, patent infringement claims or other unknown liabilities. Financing for acquisitions could decrease our ratio of earnings to fixed charges and adversely affect our borrowing capacity. Furthermore, acquisition financing may not be available to us on acceptable terms if and when required. If we were to undertake an acquisition by issuing equity securities, the acquisition could have a dilutive effect on the interests of the holders of our shares.

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

We compete with many companies ranging from other multinationals to start-up companies. Competition takes many forms, including price reductions on products that are comparable to our own, development of new products that are more cost-effective or have superior performance than our current products, and the introduction of generic versions when our proprietary products lose their patent protection. Our current or future products could be rendered obsolete or uneconomic as a result of this competition. Our failure to compete effectively could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We also face competition for marketing, distribution and collaborative development agreements, for establishing relationships with academic and research institutions, and for licenses to intellectual property. In addition, academic institutions, governmental agencies and other public and private research organizations also may conduct research, seek patent protection and establish collaborative arrangements for discovery, research, clinical development and marketing of products similar to ours. These companies and institutions compete with us in recruiting and retaining qualified scientific and management personnel as well as in acquiring necessary product technologies.

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Covidien is subject to risks associated with doing business outside of the United States.

Our operations outside of the United States are subject to risks that are inherent in conducting business under non- U.S. laws, regulations and customs. Sales outside of the United States made up approximately 45% of our net sales in fiscal 2010 and we expect that non-U.S. sales will contribute significantly to future growth. The risks associated with our operations outside the United States include:

• healthcare reform legislation;

• changes in non-U.S. medical reimbursement policies and programs;

• multiple non-U.S. regulatory requirements that are subject to change and that could restrict our ability to manufacture and sell our products;

• possible failure to comply with anti-bribery laws such as the FCPA and similar anti-bribery laws in other jurisdictions;

• different local product preferences and product requirements;

• trade protection measures and import or export licensing requirements;

• difficulty in establishing, staffing and managing non-U.S. operations;

• different labor regulations;

• changes in environmental, health and safety laws;

• potentially negative consequences from changes in or interpretations of tax laws;

• political instability and actual or anticipated military or political conflicts;

• economic instability and inflation, recession or interest rate fluctuations; and

• minimal or diminished protection of intellectual property in some countries.

These risks, individually or in aggregate, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Foreign currency exchange rates may adversely affect Covidien’s results.

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. Approximately 45% of our net sales for fiscal 2010 were derived from sales in non-U.S. markets, and we expect sales from non-U.S. markets to continue to represent a significant portion of our net sales. Therefore, if the U.S. dollar strengthens in relation to the currencies of other countries where we sell our products, such as the euro, our U.S. dollar reported revenue and income will decrease. Changes in the relative values of currencies occur regularly and, in some instances, may have a significant effect on our operating results.

Most of Covidien’s customer relationships outside of the United States are with governmental entities and Covidien could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws in non-U.S. jurisdictions.

The FCPA and similar worldwide anti-bribery laws in non-U.S. jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Because of the predominance of government-sponsored healthcare systems around the world, most of our customer relationships outside of the United States are with governmental entities and are therefore subject to such anti-bribery laws. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that have experienced governmental corruption to some degree, and in certain circumstances strict compliance with anti-bribery laws may conflict with local customs and practices. Despite our training and compliance programs, our internal control policies and procedures may not always protect us from reckless or criminal acts committed by our employees or agents. As noted in the Legal Proceedings discussion in the 2010 Annual Report, we and Tyco International have disclosed to the Department of Justice (DOJ) and SEC potential non-compliance with the FCPA, including by subsidiaries which are now a part of Covidien. Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, financial condition and cash flows.

Covidien is subject to healthcare fraud and abuse regulations that could result in significant liability, require us to change our business practices and restrict our operations in the future.

We are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws. Violations of these laws are punishable by criminal or civil sanctions, including

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substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid and health programs outside the United States. These laws and regulations are wide ranging and subject to changing interpretation and application, which could restrict our sales or marketing practices. Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs to cover a substantial portion of their expenditures, our exclusion from such programs as a result of a violation of these laws could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Covidien’s operations expose it to the risk of material environmental liabilities, litigation and violations.

We are subject to numerous federal, state, local and non-U.S. environmental protection and health and safety laws governing, among other things:

• the generation, storage, use and transportation of hazardous materials;

• emissions or discharges of substances into the environment;

• investigation and remediation of hazardous substances or materials at various sites;

• chemical constituents in medical equipment and end-of-life disposal and take-back programs; and

• the health and safety of our employees.

We may not have been, or we may not at all times be, in compliance with environmental and health and safety laws. If we violate these laws, we could be fined, criminally charged or otherwise sanctioned by regulators. Environmental laws outside of the United States are becoming more stringent resulting in increased costs and compliance burdens.

Certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, removal or remediation of hazardous substances or materials at their properties or at properties at which they have disposed of hazardous substances. Liability for investigative, removal and remedial costs under certain federal and state laws are retroactive, strict and joint and several. In addition to cleanup actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances. We have received notification from the U.S. Environmental Protection Agency (EPA) and similar state environmental agencies that conditions at a number of formerly owned sites where we and others have disposed of hazardous substances require investigation, cleanup and other possible remedial action and may require that we reimburse the government for its costs incurred at these sites or otherwise pay for the costs of investigation and remediation and for natural resource damage claims from such sites.

While we have budgeted for future capital and operating expenditures to maintain compliance with environmental laws, our costs of complying with current or future environmental protection and health and safety laws, or our liabilities arising from past or future releases of, or exposures to, hazardous substances may exceed our estimates or adversely affect our business, results of operations, financial condition and cash flows. We may also be subject to additional environmental claims for personal injury or cleanup in the future based on our past, present or future business activities.

The volatility and disruption of the capital and credit markets and adverse changes in the global economy may negatively impact Covidien’s business and its ability to access financing.

We have exposure to many different industries and counterparties, including commercial banks, investment banks, customers (which include distributors, governments and healthcare organizations) and customers who are dependent upon governmental entities to provide funding to pay for our products that could experience liquidity challenges relating to economic and market conditions. Any such issues may affect these parties’ ability to fulfill contractual obligations to us or might limit or place burdensome conditions upon future transactions with us. Customers may also reduce spending during times of economic uncertainty, and it is possible that suppliers may be adversely affected. Decreased consumer spending levels and increased pressure on prices for our products and services could result in decreased revenues and have a material adverse effect on our business, results of operations, financial condition and cash flows.

In addition, although we intend to finance expansion and renovation projects with existing cash, cash flow from operations and borrowing under our existing commercial paper program or senior credit facility, we may require additional financing to support our continued growth. Uncertainties in the capital and credit markets, however, could limit our access to capital on terms acceptable to us or at all.

Further, general economic conditions could result in severe downward pressure on the equity and credit markets, which could reduce the return available on invested corporate cash, reduce the return on investments under pension

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plans and thereby potentially increase funding obligations, all of which, if severe and sustained, could have a material adverse effect on our results of operations, financial condition and cash flows.

3. Risks relating to Tax Matters

The following risk factors relating to the Separation reflect those risks set out in the 2010 Annual Report and should be considered before making any investment decision pursuant to the terms of the ESPP and the SIP:

Examination and audits by tax authorities, including the Internal Revenue Service, could also result in additional tax payments for periods subsequent to June 29, 2007.

Our tax returns for periods subsequent to our separation from Tyco International are subject to examination by various tax authorities, including the U.S. Internal Revenue Service (IRS). The tax returns from these periods are not subject to the Tax Sharing Agreement discussed below. Covidien has sole responsibility to administer, control and settle any dispute with any tax authority and we are liable for any increase in tax. As with tax returns for periods prior to our separation from Tyco International, we provide reserves for potential payments of tax to various tax authorities related to uncertain tax positions. It is our intention to vigorously defend our prior tax returns. However, the calculation of our tax liabilities involves the application of complex tax regulations to our global operations in many jurisdictions. Therefore, any dispute with any tax authority may result in a payment that is materially different from our current estimate of the tax liabilities associated with our returns from these periods.

Covidien shares responsibility for certain of its, Tyco International’s and Tyco Electronics’ income tax liabilities for tax periods prior to and including June 29, 2007.

On June 29, 2007, we entered into a Tax Sharing Agreement with Tyco International and Tyco Electronics. Under the Tax Sharing Agreement, we share responsibility for certain of our, Tyco International’s and Tyco Electronics’ income tax liabilities based on a sharing formula for periods prior to and including June 29, 2007. More specifically, we, Tyco International and Tyco Electronics share 42%, 27% and 31%, respectively, of U.S. income tax liabilities that arise from adjustments made by tax authorities to our, Tyco International’s and Tyco Electronics’ U.S. income tax returns, certain income tax liabilities arising from adjustments made by tax authorities to intercompany transactions or similar adjustments, and certain taxes attributable to internal transactions undertaken in anticipation of the separation. All costs and expenses associated with the management of these shared tax liabilities are being shared equally among the parties. Moreover, under the Tax Sharing Agreement, Tyco International has the right to administer, control and settle all U.S. income tax audits for these periods. The timing, nature and amount of any settlement agreed to by Tyco International may not be in our best interests. The other parties to the Tax Sharing Agreement will be able to remove Tyco International as the controlling party only under limited circumstances, including a change of control or bankruptcy of Tyco International, or by a majority vote of the parties. We are responsible for all of our own taxes that are not shared pursuant to the Tax Sharing Agreement’s sharing formula. All tax audits related to taxes that are not shared pursuant to the Tax Sharing Agreement’s sharing formula are administered, controlled and settled by the party that would be responsible for paying the tax.

We are primarily liable for taxes owed by Tyco International subsidiaries that became Covidien subsidiaries after separation. Although we share certain of these tax liabilities with Tyco International and Tyco Electronics pursuant to the Tax Sharing Agreement, if Tyco International and Tyco Electronics default on their obligations to us under the Tax Sharing Agreement, we would be liable for the entire amount of these liabilities.

If any party to the Tax Sharing Agreement were to default in its obligation to another party to pay its share of the distribution taxes that arise as a result of no party’s fault, each non-defaulting party would be required to pay, equally with any other non-defaulting party, the amounts in default. In addition, if another party to the Tax Sharing Agreement that is responsible for all or a portion of an income tax liability were to default in its payment of such liability to a taxing authority, we could be legally liable under applicable tax law for such liabilities and be required to make additional tax payments. Accordingly, under certain circumstances, we may be obligated to pay amounts in excess of our agreed upon share of our, Tyco International’s and Tyco Electronics’ tax liabilities.

Our, Tyco International’s and Tyco Electronics’ income tax returns for tax periods prior to our separation from Tyco International are periodically examined by various tax authorities. In connection with such examinations, tax authorities, including the IRS, have proposed tax adjustments. Tyco International has appealed certain of the proposed tax adjustments and it is our understanding that Tyco International intends to vigorously defend its previously filed tax returns. Such defense may include litigation concerning certain positions taken on these returns. In the event that Tyco International is unable to resolve these issues in the IRS administrative process, Tyco International will likely contest the adjustments through litigation. The outcome of any such litigation is uncertain

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and could result in a significant increase in our liability for taxes arising during these periods.

that the amounts recorded as non-current taxes payable or guaranteed contingent tax liabilities related to these adjustments are adequate, the timing and outcome of such litigation is highly uncertain and could have a significant effect on our financial statements.

We provide reserves for potential payments of tax to various tax authorities related to uncertain tax positions. We adjust these liabilities as a result of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities generally would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If our estimate of tax liabilities proves to be less than the amount for which we are ultimately liable, we would incur additional charges to expense and such charges could have a material adverse effect on our business, results of operations, financial condition and cash flow.

While we believe

If the distribution of Covidien and Tyco Electronics common shares by Tyco International to its shareholders or certain internal transactions undertaken in anticipation of the separation are determined to be taxable for U.S. federal income tax purposes, Covidien could incur significant U.S. federal income tax liabilities.

Tyco International has received private letter rulings from the IRS regarding the U.S. federal income tax consequences of the distribution of Covidien and Tyco Electronics common shares by Tyco International to its shareholders, substantially to the effect that the distribution, except for cash received in lieu of a fractional share, of our shares and the Tyco Electronics common shares, will qualify as tax-free under Sections 368(a)(1)(D) and 355 of the Code. The private letter rulings also provided that certain internal transactions undertaken in anticipation of the separation would qualify for favorable treatment under the Code. In addition to obtaining the private letter rulings, Tyco International obtained opinions from the law firm of McDermott Will & Emery LLP confirming the tax-free status of the distribution and certain internal transactions. The private letter rulings and the opinions relied on certain facts and assumptions, and certain representations and undertakings, from us, Tyco Electronics and Tyco International regarding the past and future conduct of our respective businesses and other matters. Notwithstanding the private letter rulings and the opinions, the IRS could determine on audit that the distribution or the internal transactions should be treated as taxable transactions if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated, or that the distributions should be taxable for other reasons, including as a result of significant changes in stock or asset ownership after the distribution. If the distribution ultimately is determined to be taxable, Tyco International would recognize a gain in an amount equal to the excess of the fair market value of our shares and Tyco Electronics common shares distributed to Tyco International shareholders on the distribution date over Tyco International’s tax basis in such common shares. Such gain, if recognized, generally would not be subject to U.S. federal income tax; however, we would incur significant U.S. federal income tax liabilities if it ultimately is determined that certain internal transactions undertaken in anticipation of the separation should be treated as taxable transactions.

In addition, under the terms of the Tax Sharing Agreement, in the event the distribution or the internal transactions were determined to be taxable and such determination was the result of actions taken after the distribution by us, Tyco International or Tyco Electronics, the party responsible for such failure would be responsible for all taxes imposed on us, Tyco International or Tyco Electronics as a result thereof. If such determination is not the result of actions taken after the distribution by us, Tyco International or Tyco Electronics, then we, Tyco International and Tyco Electronics would be responsible for 42%, 27% and 31%, respectively, of any taxes imposed on us, Tyco International or Tyco Electronics as a result of such determination. Such tax amounts could be significant. In the event that any party to the Tax Sharing Agreement defaults in its obligation to pay distribution taxes to another party that arise as a result of no party’s fault, each non-defaulting party would be responsible for an equal amount of the defaulting party’s obligation to make a payment to another party in respect of such other party’s taxes.

4. Risk factors relating to Covidien’s jurisdiction of incorporation

The following risk factors relating to our jurisdiction of incorporation should be considered before making any investment decision pursuant to the terms of the ESPP and the SIP:

Legislative action in the United States could materially and adversely affect Covidien.

Tax-Related Legislation

Legislative action may be taken by the U.S. Congress which, if ultimately enacted, could limit the availability of tax benefits or deductions that we currently claim, override tax treaties upon which we rely, or otherwise affect the taxes that the United States imposes on our worldwide operations. Such changes would adversely affect our effective tax rate and/or require us to take further action, at potentially significant expense, to seek to preserve our effective tax

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rate. In addition, if proposals were enacted that had the effect of disregarding the Irish reorganization, limiting our ability as an Irish company to take advantage of tax treaties with the United States, we could incur additional tax expense and/or otherwise incur business detriment.

In March 2010, healthcare reform legislation was enacted in the United States, which includes provisions that would impose a 2.3% excise tax on the sale of certain of our medical device and supply products in the United States starting in 2013. In addition, the new legislation includes a $28 billion fee on the branded pharmaceutical industry over nine years starting in 2011 and a $2.8 billion annual fee on branded pharmaceuticals thereafter. The amount of branded pharmaceutical fee payable by each company is based upon market share. Since our branded pharmaceutical sales currently represent a small portion of the total market, we do not expect this annual assessment to have a significant impact on Covidien. The medical devices tax, however, may have a significant impact on our results of operations. We are still evaluating the potential impact that this tax may have on our overall business. This new legislation increases our cost of doing business. If this cost is not offset by increased demand for our products, other cost reductions or price increases, we could experience lower margins and profitability and our business and results of operations could be materially and adversely affected. In addition to the excise tax and annual fee described above, the new legislation contains numerous other provisions, many of which pertain to health insurance plans, which could adversely impact our financial results in future periods.

Legislation Relating to Governmental Contracts

Various U.S. federal and state legislative proposals that would deny governmental contracts to U.S. companies that move their corporate location abroad may affect us. We are unable to predict the likelihood that, or final form in which, any such proposed legislation might become law, the nature of regulations that may be promulgated under any future legislative enactments, or the effect such enactments and increased regulatory scrutiny may have on our business.

Irish law differs from the laws in effect in the United States and may afford less protection to holders of Covidien’s securities.

It may not be possible to enforce court judgments obtained in the United States against us in Ireland based on the

civil liability provisions of the U.S. federal or state securities laws. In addition, there is some uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on those laws. We have been advised that the United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether or not based solely on U.S. federal or state securities laws, would not automatically be enforceable in Ireland.

As an Irish company, Covidien plc is governed by the Irish Companies Acts, which differ in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions and shareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have

a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of Covidien plc securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.

Covidien may not be able to maintain a competitive worldwide effective corporate tax rate.

While we believe that the Irish reorganization should improve our ability to maintain a competitive worldwide effective corporate tax rate, we cannot give any assurance as to what our effective tax rate will be because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we operate. Our actual effective tax rate may vary from our expectation and that variance may be material. Additionally, the tax laws of Ireland and other jurisdictions could change in the future, and such changes could cause a material change in our effective tax rate.

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DOCUMENTS FORMING PART OF THIS PROSPECTUS

The following documents form part of this Prospectus:

(a)

Covidien’s Definitive Notice and Proxy Statement filed in connection with Covidien’s 2010 annual general meeting of shareholders (the “2010 AGM Proxy Statement”) forms part of this Prospectus. A copy of the 2010 AGM Proxy Statement is attached at Annex V of this Prospectus. The 2010 AGM Proxy Statement is not available for viewing on the web site of the Central Bank, but is available on Covidien’s web site at www.covidien.com. Documents stated in the 2010 AGM Proxy Statement to be incorporated by reference into the 2010 AGM Proxy Statement do not form part of and are not incorporated by reference into this Prospectus.

(b)

Covidien’s annual report on Form 10-K for the fiscal year ended 24 September 2010 (the “2010 Annual Report”) forms part of this Prospectus. A copy of the 2010 Annual Report is attached at Annex IV of this Prospectus. The 2010 Annual Report is not available for viewing on the web site of the Central Bank but is available on Covidien’s web site at www.covidien.com. Documents stated in the 2010 Annual Report to be incorporated by reference into the 2010 Annual Report do not form part of and are not incorporated by reference into this Prospectus.

(c)

Covidien Employee Stock Purchase Plan as amended and restated on 4 June 2009 and as assumed by Covidien on 4 June 2009 (“ESPP Plan Document”) forms part of this Prospectus. The ESPP Plan Document is attached at Annex II of this Prospectus and is available on the ESPP Administrator’s web site at www.netbenefits.fidelity.com.

(d)

Covidien 2007 Stock and Incentive Plan as amended and restated on 21 November 2008 and 4 June 2009 and as assumed by Covidien on 4 June 2009 (“SIP Plan Document”) forms part of this Prospectus. The SIP Plan Document is attached at Annex III of this Prospectus and is available on the Company’s intranet web site, which is available only to employees of the Company.

This Prospectus is available on the web site of the Central Bank at www.centralbank.ie.

All reports (including those set out at items (a) and (b) above) filed by Covidien with the SEC pursuant to Sections 13, 14 or 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder are available to the public on the web site of the SEC at www.sec.gov and Covidien’s web site at www.covidien.com. The page numbers referred to below in Covidien’s documents filed with the SEC are the page numbers as reflected in the electronic copies of the documents as displayed on the web site of the SEC. Depending on the paper format and layout chosen when printing the documents, different page numbers may be displayed on the printed documents.

Set out on page 21 of this Prospectus is a table indicating the information contained in the documents listed at paragraphs (a) and (b) above which forms part of this Prospectus.

20

The information described in the column titled ‘Information’ appears on the pages of the documents noted in the column titled ‘Documents and Page Numbers’ as set out below:

 

Information

 

Documents and Page numbers Documents are available on Covidien’s web site at

 

www.covidien.com

1.

Trends

 

Description of trends

 

Pages 105 to 106 of the 2010 Annual Report

2.

Administration and Management

   

2.1.

General information on Covidien’s directors and senior managers

Pages 56-61 of the 2010 AGM Proxy Statement

2.2.

Activities performed by and names of companies and partnerships of Covidien’s directors and senior managers

Pages 56-61 of the 2010 AGM Proxy Statement

2.3.

Information

on

Covidien’s

directors

service

Pages 15, 32 42-43 of the 2010 AGM Proxy Statement

contracts

2.4.

Information on Covidien’s Audit Committee and Remuneration Committee

Pages 13-14, 53-54 of the 2010 AGM Proxy Statement

2.5.

Information on Covidien’s Corporate Governance compliance

Pages 7-12 of the 2010 AGM Proxy Statement

2.6.

Shareholding and Options of Covidien’s directors and senior managers

Pages 39, 51-52 of the 2010 AGM Proxy Statement

2.7.

Related party transaction of Covidien’s directors and senior managers

Pages 11-12 of the 2010 AGM Proxy Statement

3.

Employees

 

3.1.

Share ownership and any options over such shares

Pages 39, 51 and 52 of the 2010 AGM Proxy Statement

3.2.

Arrangements

for

involving

the

employees

in

Pages 107 to 110 of the 2010 Annual Report

Covidien’s capital

 

4.

Litigation and Arbitration Proceedings

   

Information on Litigation and Arbitration Proceedings

Pages 23 to 26, page 50 and pages 112 to 117 of the 2010 Annual Report

5.

Capitalization and Indebtedness

   

Information on Capitalization and Indebtedness

Pages 47 and 49 of the 2010 Annual Report

6.

Major Shareholders

   

Information on Major Shareholders 1

 

Page 52 of the 2010 AGM Proxy Statement

All information included in the 2010 AGM Proxy Statement that is not referred to in this Prospectus or that is not listed in the above cross reference table or that is otherwise inapplicable in the context of the information disclosed is not relevant to this Prospectus.

1 The major shareholders disclosed in the 2010 AGM Proxy Statement do not have different or special voting rights.

21

SUPPLEMENTS TO THIS PROSPECTUS

If, during the period that the offer of Shares under the ESPP which is made by this Prospectus or the offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus is open for acceptance, there shall arise any significant new factor which is capable of affecting the assessment of securities, Covidien will prepare a supplement to this Prospectus and recognize any withdrawals of acceptances in accordance with article 16 of Directive 2003/71/EC and regulation 51 of the 2005 Regulations. See further the information set out in the section of this Prospectus titled ‘Details of the ESPP and the SIP.

22

SELECTED FINANCIAL DATA

The following tables present selected financial and other data for Covidien for the periods indicated.

Selected financial information (annual)

The statement of operations and share data set forth below for fiscal 2010 and the balance sheet data at 24 September 2010 are derived from Covidien’s audited financial statements included in the 2010 Annual Report.

23

Selected financial information

Statement of Operations Data:

Net sales

Research and development expenses (2)

Restructuring charges

Shareholder settlements, net of insurance recoveries

In-process research and development charges

Operating income (3)

Interest expense, net

Other income (expense), net (4)

Income from continuing operations before income taxes

Income (loss) from

continuing operations

Income (loss) from discontinued operations, net of income taxes

Net income (loss)

Balance Sheet Data (End of Period):

Total assets

Long-term debt

Shareholders’ equity

Share Data:

Basic earnings per share:

Income from continuing operations

Net income

Diluted earnings per share:

Income from continuing operations

Net income

Cash dividend declared per share

Basic weighted-average number of shares outstanding

Diluted weighted-average number of shares outstanding (4)

24

 

2010 (1)

2009

2008

Dollars in millions, except per share data

Dollars in millions, except per share data

Dollars in millions, except per share data

$ 10,429

$ 10,263

$

9,910

 

447

427

341

76

61

77

183

42

115

22

2,063

1,813

1,946

(177)

(151)

(166)

40

145

199

1,926

1,807

1,979

1,563

942

1,443

69

(35)

(82)

1,632

907

1,361

$ 20,387

$ 17,139

$

16,003

 

4,451

2,961

2,986

8,974

8,001

7,747

$

3.13

$

1.87

$

2.89

3.26

1.80

2.72

$

3.10

$

1.86

$

2.86

3.24

1.79

2.70

$

0.74

$

0.66

$

0.64

500

503

500

504

505

505

Other Data:

Operating margin (2)

Number of employees (thousands)

2010

(1)

2009

2008

Dollars in millions, except per share data

Dollars in millions, except per share data

Dollars in millions, except per share data

19.8%

17.7%

19.6%

42

42

42

(1)

Covidien sold its specialty chemicals business during fiscal 2010. Pursuant to US GAAP, this business met

(2)

the discontinued operations criteria. Under US GAAP, Covidien is required to restate all amounts contained in its financial statements to reflect this business as a discontinued operation, which is why the figures for fiscal 2009 and fiscal 2008 differ from what was previously presented. Note 4 in the 2010 Annual Report (Annex IV) addresses discontinued operations and divestitures. Research and development expenses for fiscal 2009 include $30 million related to up front fees and milestone

(3)

payments for licensing arrangements entered into by our Pharmaceuticals segment. Operating income and margin for fiscal 2010 include a $33 million legal charge related to an antitrust case, a

(4)

net loss on divestitures of $25 million and transaction costs of $39 million associated with acquisitions, all of which are included in selling, general and administrative expenses. Operating income and margin for fiscal 2010 also includes a $39 million charge in cost of goods sold related to inventory that had been written up to fair value upon the acquisition of businesses. Operating income and margin for fiscal 2009 include legal charges totaling $94 million for three antitrust cases, a charge of $71 million for the estimated additional cost to remediate environmental matters at a site located in Orrington, Maine and charges totaling $21 million related to divestitures, all of which are included in selling, general and administrative expenses. Amounts for fiscal 2010, 2009 and 2008 relate primarily to the impact of the Tax Sharing Agreement with Tyco International and Tyco Electronics.

25

DESCRIPTION OF THE SHARES

The Shares are issued under and subject to the provisions of the Companies Acts 1963 to 2009 together with the Investment Funds, Companies and Miscellaneous Provisions Acts 2005 and 2006 (the “Companies Acts 1963- 2009”) and the Articles. The following sets out the material terms of the Shares.

1. Rights attaching to the Shares. Subject to the Articles, holders of the ordinary shares of Covidien shall:

1. be entitled, on a poll, to one vote for each ordinary share held of record by such holder on the relevant record date and, on a show of hands, to one vote, on all matters submitted to a vote of the holders of the ordinary shares of Covidien;

2. be entitled to participate pro-rata in such dividends and other distributions in cash, shares or property of Covidien out of assets or funds of Covidien legally available therefore, as the Board may from time to time declare; and

3. for the purposes of the Articles, the rights attaching to any of the ordinary shares shall not, unless otherwise expressly provided in the terms of issue, be deemed to be altered by the allotment or issue by Covidien of other shares ranking pari passu with such ordinary shares.

2. No Preemptive Rights. Save as required by section 23(1) of the Companies Act 1983 of Ireland, no holder of ordinary shares of Covidien shall, in their capacity as such holder of shares, have any preemptive right to purchase shares of Covidien.

3. Dividends and Other Payments. Covidien may in general meeting declare dividends out of assets or funds of Covidien legally available to be paid to the shareholders, including the holders of the Shares, according to their rights and interests but no dividend shall be declared that exceeds an amount recommended by the Board. The Board may from time to time pay to the shareholders such interim dividends out of assets or funds of Covidien legally available therefor as appear to the Board to be justified by the position of Covidien. Covidien may deduct from any dividend, distribution or other monies payable to a shareholder on or in respect of any shares all sums of money (if any) presently payable by the shareholder to Covidien in respect of shares of Covidien. No dividend, distribution or other monies payable by Covidien on or in respect of any share shall bear interest against Covidien. Any general meeting declaring a dividend may direct payment of such dividend wholly or partly by the distribution of specific assets and, in particular, of paid up shares, debentures or debenture stocks of any company.

On a winding-up of Covidien, the holders of the ordinary shares of Covidien have the right to participate pro-rata in the assets of Covidien.

4. Capitalization of Reserves. The Board may, at any time and from time to time, resolve to capitalise any part of the amount for the time being standing to the credit of any reserve account of Covidien or to the credit of the profit and loss account which is not available for distribution by applying such sum in paying up in full unissued shares to be allotted as fully paid bonus shares to the shareholders or any class of shareholders who would be entitled to it if it were distributable, and had been distributed, by way of dividend and in the same proportions.

5. Transfer of Shares. Subject to the Companies Acts 1963-2009 of Ireland and any other restrictions existing under the Articles or otherwise from time to time (including the terms of the ESPP or the SIP, as relevant), the Shares are freely transferable. Where held in certificated form, the instrument of transfer of a share shall be signed by or on behalf of the transferor. The Board may decline to register any transfer unless the instrument of transfer is in respect of only one class of share.

Transmission of Shares

6. Representative of a Deceased Shareholder. If a holder of Covidien’s ordinary shares dies, the survivor or survivors, where the deceased was a joint holder, and the legal personal representative, where the deceased was a sole holder, shall be the only person recognized by Covidien as having any title to the deceased holder's shares. Nothing herein contained shall release the estate of a deceased holder from any liability in respect of any share held by such deceased holder solely or jointly with other persons.

7. Registration on Death. Any person becoming entitled to one or more Covidien ordinary shares in consequence of the death of a shareholder or bankruptcy, may be registered as a shareholder or may elect to nominate some person

26

to be registered as the holder of such share or shares upon such evidence being produced as may from time to time

be required by the Board. In either case, the Board shall have the same right to decline or suspend registration as it

would have had in the case of a transfer of the share by that shareholder before such shareholder's death or bankruptcy, as the case may be.

8. Dividend Entitlement following Transmission of Shares. A person becoming entitled to one or more Covidien ordinary shares in consequence of the death of a shareholder or bankruptcy shall be entitled to receive and may give a discharge for any dividends or other monies payable in respect of the shares, but such person shall not be entitled in respect of the shares to exercise any right conferred by membership in relation to the meetings of the Company. The Board may at any time give notice requiring such person to elect either to be registered himself or to transfer the shares and, if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses and other monies payable in respect of the shares until the requirements of the notice have been complied with.

9. Ownership of Shares. Except as required by law, no person shall be recognized by Covidien as holding any share upon trust and Covidien shall not be bound by or required in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as the Articles or law otherwise provide) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.

10. Redemption. Covidien has power pursuant to section 207 and subject to Part XI of the Companies Act 1990

(the “1990 Act”) to issue shares that are redeemable at the option of Covidien or its shareholders on such terms and in such manner as may be determined by Covidien in general meeting on the recommendation of

the Board. Covidien may convert any of its shares into redeemable shares pursuant to section 210 of the 1990

Act. An ordinary share of Covidien shall be deemed to be a redeemable share on, and from the time of, the existence or creation of an agreement, transaction or trade between Covidien and any third party pursuant to which Covidien acquires or will acquire ordinary shares of Covidien, or an interest in ordinary shares of

Covidien, from such third party. In these circumstances, the acquisition of such ordinary shares or interest in ordinary shares by Covidien shall constitute the redemption of a Redeemable Share in accordance with Part

XI of the 1990 Act.

11. Conversion. The Company has power pursuant to section 68 of the Companies Act 1963 by ordinary resolution to convert any paid up shares into stock, and reconvert any stock into paid up shares of any denomination.

27

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

The business and affairs of Covidien are managed by the Board.

Directors and senior managers of Covidien

The members of the Board are Richard J. Meelia, Dennis H. Reilley, Craig Arnold, Robert H. Brust, John M. Connors, Jr., Christopher J. Coughlin, Timothy M. Donahue, Kathy J. Herbert, Randall J. Hogan, III, Tadataka Yamada and Joseph A. Zaccagnino. Each of the members of the Board is a non-executive director of Covidien, except for Richard J. Meelia who is an executive director of Covidien.

In addition to their directorship of the Company and certain subsidiaries of the Company, the Directors have held the following directorships in the five years prior to the date of this Prospectus:

Director

Current Directorships

Previous Directorships

Richard J. Meelia (CEO)

EmployAbility, Inc. Chernobyl Children’s Project, Inc. St Anselm College Tufts Medical Center

Haemonetics Corporation Aspect Medical Systems, Inc.

Dennis H. Reilley (Non-executive Director)

H.J. Heinz Company Marathon Oil Corporation The Conservation Fund The Dow Chemical Company

Praxair, Inc.

Craig Arnold (Non-executive Director)

University Hospitals Health Systems Salvation Army of Greater Cleveland

Unocal Corporation

Robert H. Brust

Imperium Renewable, Inc.

Applied Materials

(Non-executive Director)

Nantucket Cottage Hospital

Delphi Corporation

Nantucket Historical Association Nantucket School of Music

WMS Industries

John M Connors, Jr (Non-executive Director)

Hasbro, Inc. ACM Partners (d/b/a Dovetail) American Ireland Fund Boston College Brandeis University Campaign for Catholic Schools Camp Harbor View Foundation Carmel Terrace Dana Farber/Partners Cancer Care JV Emmanuel College Gather, Inc. Greater Boston Chamber of Commerce Harvard Medical School Board of Fellows Jackpot Rewards Jobs for Massachusetts Partners HealthCare System, Inc. Partners-in-Health

Hill, Holdays, Connors, Cosmopulos, Inc. Papa Ginos

Christopher J. Coughlin (Non-executive Director)

The Dun & Bradstreet Corporation Delbarton School

Timothy M. Donahue (Non-executive Director)

Eastman Kodak Company NVR, Inc John Carroll University

Sprint Nextel Corporation

28

Kathy J. Herbert (Non-executive Director)

Randall J. Hogan, III (Non-executive Director)

Tadataka Yamada (Non-executive Director)

Joseph A. Zaccagnino (Non-executive Director)

Tyco International Ltd.

Big Brothers Big Sisters of Chicago Metro Area

Pentair, Inc. Guthrie Theatre American Public Media/Minnesota Public Radio

National University of Singapore Research!America A*Star

NewAlliance Bancshares, Inc.

Unisys Corporation

Premise Corporation Yale New Haven Health Services Corp. Yale New Haven Hospital University Health System Consortium Connecticut United for Research Excellence Inc.

For the purpose of the Prospectus Regulations, the senior managers of Covidien are Richard J. Meelia, Charles J. Dockendorff and Jose E. Almeida.

None of the directors or senior managers of Covidien has ever been convicted in relation to fraudulent offences, or been subject to proceedings involving bankruptcies, receiverships or liquidations, or been publicly incriminated or sanctioned by statutory or regulatory authorities, or been disqualified from its functions by a court.

The business address of each of Covidien’s directors, is located at 15 Hampshire Street, Mansfield, MA 02048.

Covidien is not aware of any conflicts of interest between the private interests of the members of the Board or senior managers as listed above and the interests of Covidien.

Employees

For detailed information concerning arrangements for involving employees in the capital of Covidien, please refer to item 3.2 of the DOCUMENTS FORMING PART OF THIS PROSPECTUS on page 20 of the Prospectus.

29

CAPITALIZATION AND INDEBTEDNESS

Working capital

In Covidien’s opinion, the working capital of the Company is sufficient for its present requirements, that is for a period of twelve months from the date of this Prospectus.

Capitalization and indebtedness

The following table shows the capitalization and indebtedness of Covidien as of 24 September 2010 in millions of

US$:

 

24 September

 

2010

Total Current debt:

Guaranteed 1 Secured 2 Unguaranteed/ Unsecured

 

$ 250

 

5

---

Total Total Non-Current debt (excluding current portion of long-term debt):

$

255

 

Guaranteed 1 Secured 2 Unguaranteed/ Unsecured

$ 4,391

 

36

24

Total Shareholder’s equity:

 

$

4,451

a…….Share capital

$

101

b…….Legal Reserve

c…….Other Reserves

6,429

 

Total

$

6,530

A.

Cash

$

280

B.

Cash equivalent (Detail)

1,285

C.

Trading securities

---

D.

Liquidity (A) + (B) + (C)

1,565

E.

Current Financial Receivable

--

F.

Current Bank debt

--

G.

Current portion of non current debt

250

H.

Other current financial debt

5

I.

Current Financial Debt (F) + (G) + (H)

 

255

J.

Net Current Financial Indebtedness (I) – (E) – (D)

(1,310)

K.

Non current Bank loans

--

L.

Bonds Issued

3,994

M.

Other non current loans

457

N.

Non current Financial Indebtedness (K) + (L) + (M)

4,451

O.

Net Financial Indebtedness (J) + (N)

$

3,141

1 Covidien International Finance S.A. (“CIFSA”), a Luxembourg company, is a holding company that owns, directly or indirectly, all of the operating subsidiaries of Covidien plc. CIFSA, an indirect wholly-owned subsidiary of Covidien plc is the issuer of the Covidien’s $4.250 billion aggregate principal amount of senior notes and $1.425 billion unsecured senior revolving credit facility expiring in 2012. In addition to being the issuer of the Covidien’s senior notes and the borrower under the Covidien’s revolving credit facility, CIFSA is also the issuer of the Covidien’s commercial paper. The credit facility, public notes and notes issued under the commercial paper program are all fully and unconditionally guaranteed on a senior unsecured basis by both Covidien plc and Covidien Ltd., a wholly-owned subsidiary of Covidien plc.

2 Represents capital lease obligations, which are secured by the assets under lease.

30

For detailed information concerning capitalization and indebtedness of Covidien, please refer to item 5 of the DOCUMENTS FORMING PART OF THIS PROSPECTUS on page 20 of the Prospectus. There have been no material changes to the figures shown in the capitalization and indebtedness table since 24 September 2010. A repayment of $250 millon of current debt (being 5.2% senior notes which matured in October 2010) has been made since that date. This is not reflected in the above table

31

GOAL OF THE PLANS, EXPENSES AND USE OF PROCEEDS

Reasons for the ESPP and the SIP

Shares offered under the ESPP are intended to provide the Company’s employees with an opportunity to purchase ordinary shares of Covidien (and receive a Company matching contribution towards such purchase up to certain limits) as a means for employees to share in the growth of the Company.

The Stock Options granted under the SIP are awarded to certain of the Company’s employees and are offered as part of the Company’s remuneration program. The offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus may be made in Austria, France, Germany, Ireland and The Netherlands, however, such offer is not considered a public offer of securities and/or the obligation to publish a prospectus does not apply to such offer under the legislation implementing Directive 2003/71/EC in Austria, France, Ireland or The Netherlands.

Neither the ESPP nor the SIP is intended to raise capital in the market. In the case of the SIP, the Shares to be delivered to employees in case of the exercise of a Stock Option exercise have been reserved by Covidien exclusively for issuance to employees under the SIP or were previously acquired by the Company and held as treasury shares.

Number of Shares granted under the SIP

The total number of Shares with respect to which Stock Options granted under the SIP may be issued is 35,000,000 ordinary shares of Covidien (subject to certain adjustments for share splits, etc.). As of 24 September 2010, there were 26,814,575 Shares available for issuance under the SIP.

Number of Shares offered under the ESPP

The total number of Shares subject to purchase under the ESPP is 5,000,000 (subject to certain adjustments for share splits, etc.). As of 24 September 2010, there were 4,231,333 Shares available for issuance under the ESPP.

Total expenses

The expenses of administering the SIP and the ESPP are borne by the Company. The Company estimates that the annual costs associated with administering the SIP and the ESPP will be $125,000 for the SIP and $60,000 for the ESPP.

Use of proceeds

The Company will not receive proceeds from the Offer. Any proceeds received from the exercise of Stock Options granted under the SIP shall be used for general corporate purposes of the Company.

32

DETAILS OF THE ESPP AND THE SIP

Shares may be offered to Covidien’s employees or the employees of Covidien’s subsidiaries either under the ESPP or in connection with Stock Options granted under the SIP.

1. OFFER OF SHARES UNDER THE ESPP

1.1. Purpose of the offer made under the ESPP

Covidien’s ESPP is created for the purpose of encouraging share ownership by officers and employees of the Company so that they may share in the growth of the Company by acquiring or increasing their proprietary interest in the Company.

1.2. Authorization of the offer made under the ESPP

The ESPP was adopted by resolutions of the board of Covidien Ltd. dated 1 June 2007 and was assumed by Covidien by resolutions of the Board dated 7 May 2009, with a 4 June 2009 effective date.

1.3. Administration of the offer made under the ESPP and the Committee

The ESPP is administered by the Committee. The Committee may delegate its authority and responsibility for the ESPP administration to a committee or an officer or group of officers, as it deems advisable. The interpretation and construction by the Committee, or its delegate, of any provision of the ESPP shall be final and binding on all parties. The Committee, or its delegate, may adopt, from time to time, such rules and regulations, as it deems appropriate for carrying out the ESPP. No member of the Board or the Committee, or its delegate, shall be liable for any action or determination made in good faith with respect to the ESPP.

1.4. Eligible Employees

The Company or the Committee will, from time to time, determine which of its employees will be eligible to participate in the ESPP. All officers who are employees of the Company will be eligible to participate in the ESPP.

The Company or the Committee determines which employees are entitled to participate in the ESPP based on country of employment, utilization of and demand for the ESPP in such country and regulatory and other constraints (such as provisions of collectively bargained agreements). There are no specific criteria applicable to a particular employee and the Committee therefore does not determine that only key employees in a particular country are eligible to participate. Rather the Committee determines whether the ESPP will be available to employees in a particular country and offers participation to all employees in such country, subject to any constraints as described above.

Notice of eligibility for participation in the ESPP is provided to these employees upon their commencement of employment and in the course of the ordinary operations of the ESPP (such as periodically throughout the year).

1.5. Shares to be purchased

The total number of Shares subject to purchase under the ESPP is 5,000,000 ordinary shares of Covidien (subject to adjustment in the event of share splits, share dividends, recapitalization, or similar adjustment in the Company’s ordinary shares) of the ordinary shares of the Company which will be purchased on the open market. As of 24 September 2010, there were 4,231,333 Shares available for purchase under the ESPP.

The CUSIP code of the Shares offered under the ESPP is G2554F105.

Shares offered for purchase through the ESPP will be offered for purchase at the fair market value at the time of purchase. For this purpose, fair market value is the price at which ordinary shares of Covidien are offered for purchase or sale to any willing buyer or seller as reported by the NYSE at the time the purchase is effectuated.

33

Employees in EU jurisdictions will be able to participate in an open enrollment process as soon as administratively possible after obtaining approval by the Central Bank for this Prospectus, with first purchases being made in the month following the month in which enrollment begins. As part of the open enrollment process, employees who currently do not participate in the ESPP will be offered the opportunity to enroll in the ESPP and employees who currently participate in the ESPP will automatically continue their participation unless they withdraw from the ESPP.

Purchases authorized by ESPP Participants will be made on the open market and Shares will be offered for purchase at the current fair market value on the purchase date. The price of the Shares purchased through the ESPP will be disclosed to ESPP Participants by either (1) ESPP Participant access to such information online through the ESPP Participant’s account with the ESPP Administrator; (2) an e-mail confirmation delivered directly to the ESPP Participant, if the ESPP Participant has requested electronic delivery of such information; or (3) a monthly account statement delivered directly to the ESPP Participant by mail or, if the ESPP Participant has so requested, by e-mail.

Employees who purchase Shares through the ESPP do so by enrolling directly through the ESPP Administrator’s web site. The information relating to the web site is communicated to employees via a welcome packet and brochure that describes the pertinent plan provisions and how to access the ESPP Administrator’s web site. This information also is readily available to any employee on the Company’s intranet web site. The current ESPP Administrator’s web site is www.netbenefits.fidelity.com. Employees may also access their ESPP Account by logging on to this secure web site and, once they do so, will be able to view the current fair market value of the Shares. An employee may also locate the current fair market value of the Shares on the Bloomberg web site, which is at www.bloomberg.com, by entering the Company’s ticker “COV” and clicking on the “Quote” link or, if the employee is not aware of the Company’s ticker symbol by clicking on “Symbol Lookup” tab and typing in Covidien’s name.

The information provided in the above paragraph might change in the future and, in that event, the Company will inform its employees in such manner as the Company considers appropriate.

1.6. Payroll Deductions

ESPP Participants, upon entering the ESPP, shall authorize payroll deductions to be made for the purchase of Shares. The maximum deduction shall not, on a per pay period basis, exceed an ESPP Participant’s base salary or commission (in the case of an employee who receives commission and no base salary) and deductions shall be exclusive of overtime and net withholding and other deductions. The ESPP Participant may authorize increases or decreases in the amount of payroll deductions at any time. In order to effect such a change in the amount of the payroll deductions, the Company must receive notice of such change in the manner specified by the Company and changes will take effect as soon as administratively practicable. The Company will accumulate and hold for the ESPP Participant’s account the amounts deducted from his/her pay. No interest shall be paid on such amounts. Notwithstanding the foregoing, the Committee may, in its sole discretion, authorize a special bonus payment to be made to an ESPP Participant and such bonus to be designated as an employee contribution. The Company will match such employee contribution, subject to the limit described in the next section. The bonus may exceed the contribution limits otherwise imposed on the ESPP Participant.

1.7. Employer Contribution

The Company will match a part of the employee contribution by contributing to the ESPP an additional percentage of the employee’s payroll deduction. The Committee, from time to time, may increase or decrease the percentage of the Company’s contribution to the ESPP Participant’s payroll deduction if the interests of the Company so require. In the event that the Company increases or decreases the percentage of its contribution, the Company will notify the ESPP Participant, and such notification will be made in such manner as the Company considers appropriate at that time, including by way of a notice or information made available on Covidien’s intranet and/or web site at www.covidien.com. The Company shall not match any part of an employee’s contribution that exceeds twenty-five thousand dollars (US) ($25,000.00) during a single calendar year. The matching contributions hereunder are not an entitlement or part of the compensation of any ESPP Participant. The Company will pay all commissions relating to the purchase of the Shares under the ESPP, and the Company will pay all administrative costs associated with the implementation and operation of the ESPP.

1.8. Authorization for entering the ESPP

34

An eligible employee may enter the ESPP by enrolling in the ESPP and specifying his/her contribution amount in the manner authorized by the Company. Such authorization will take effect as of the next practicable payroll period. Unless an ESPP Participant authorizes changes to his/her payroll deductions in accordance with section 1.6. or withdraws from the ESPP, his/her deductions under the latest authorization on file with the Company shall continue from one payment period to the succeeding payment period until (a) the ESPP Participant withdraws from the ESPP in accordance with paragraph 1.13, (b) there is a termination of rights as described in 1.15 or (c) the ESPP terminates in as described in 1.16.

1.9. Purchase of Shares

All Shares purchased under the ESPP shall be purchased on the open market by a broker designated, from time to time, by the Committee. On a monthly basis, as soon as practicable following the month end, the Company shall remit the total of contributions to the broker for the purchase of the Shares. The broker will then execute the purchase order and the ESPP Administrator shall allocate Shares to each ESPP Participant’s individual recordkeeping account. In the event that the purchase of Shares takes place over a number of days and at different prices, each ESPP Participant’s allocation shall be adjusted on the basis of the average price per Share over such period.

1.10. Issuance of Shares

The Shares purchased under the ESPP shall be held by the ESPP Administrator or its nominee.

1.11. Dividend Reinvestment

Any dividends paid to an ESPP Participant for Shares purchased under the ESPP shall be paid in cash.

1.12. Sales of Shares Purchased under the ESPP

Each ESPP Participant may sell at any time all or any portion of the Shares acquired under the ESPP and held by the ESPP Administrator for at least three months by notifying the ESPP Administrator, who will direct the broker to execute the sale on behalf of the ESPP Participant. The ESPP Participant shall pay the broker’s commission and any other expenses incurred with regard to the sale of the Shares. All such sales of the Shares will be subject to compliance with any applicable securities, tax, or other laws (whether federal or state or otherwise). Each ESPP Participant assumes the risk of any fluctuations in the market price of the Shares.

1.13. Withdrawal from the ESPP

An ESPP Participant may cease making contributions to the ESPP at any time by changing his/her payroll deduction to zero as described in section 1.6. above. In order to execute a sale of all or part of the Shares purchased under the ESPP and held by the ESPP Administrator for at least three months, the ESPP Participant must contact the ESPP Administrator directly. If the ESPP Participant desires to withdraw from the ESPP by liquidating all or part of his/her shareholder interest, he/she shall receive the proceeds from the sale thereof, minus the commission and other expenses on such sale. Additionally, in the event of Covidien issuing a supplement to this Prospectus as required by article 16 of Directive 2003/71/EC and regulation 51 of the 2005 Regulations, investors who have already agreed to subscribe for the securities before the supplement is published shall have the right to withdraw their acceptances in accordance with article 16 of Directive 2003/71/EC and regulation 52 of the 2005 Regulations.

1.14. No Transfer or Assignment

An ESPP Participant’s right to purchase Shares under the ESPP through payroll deduction is his/her alone and may not be transferred or assigned to, or availed of, by any other person.

1.15. Termination of Employee Rights

All of the ESPP Participants’ rights under the ESPP will terminate when he/she ceases to be an eligible employee due to retirement, resignation, death, termination, or any other reason. A notice of withdrawal will be deemed to have been received from an ESPP Participant on the day of his/her final payroll deduction. If an ESPP Participant’s payroll deductions are interrupted by any legal process, a withdrawal notice will be deemed as having been received on the day that the interruption occurs.

1.16. Termination and Amendment of the ESPP

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The ESPP may be terminated at any time by the Board. Upon such termination, or any other termination of the ESPP, all payroll deductions not used to purchase Shares will be refunded. The Board also reserves the right to amend the ESPP, from time to time, in any respect and authorizes the Committee to approve amendments to the ESPP on its behalf.

1.17. Local Tax Laws

If the provisions of the ESPP contradict local tax laws, the local tax laws prevail.

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2.

OFFER MADE IN CONNECTION WITH STOCK OPTIONS GRANTED UNDER THE SIP

2.1. Purpose of the offer of Shares in connection with Stock Options granted under the SIP

The purpose of the SIP is to promote the interests of Covidien (and any successor thereto) by (i) aiding in the recruitment and retention of directors and employees of the Company, (ii) providing incentives to directors and employees of the Company by means of performance-related incentives to achieve short-term and long-term performance goals, (iii) providing directors and employees of the Company with an opportunity to participate in the growth and financial success of the Company, and (iv) promoting the growth and success of the Company's business by aligning the financial interests of directors and employees of the Company with that of the other shareholders of Covidien.

2.2. Authorization of the offer of Shares in connection with Stock Options granted under the SIP

The SIP was approved by the board of Covidien Ltd. on 1 June 2007, was amended and restated effective as of 21 November 2008 and 4 June 2009 and was assumed by Covidien by resolutions of the Board dated 7 May 2009, with a 4 June 2009 effective date.

2.3. Offer of Stock Options under the SIP

The offer of Stock Options pursuant to the terms of a Grant Letter and accompanying Award Certificate under the SIP which is described in this Prospectus may be made in Austria, France, Germany, Ireland and The Netherlands, however, such offer is not considered a public offer of securities and/or the obligation to publish a prospectus does not apply to such offer under the legislation implementing Directive 2003/71/EC in Austria, France, Ireland or The Netherlands.

For the purpose of this Prospectus, the offer of Stock Options to Company employees under the SIP is made pursuant to the terms of a grant letter issued to a SIP Participant in respect of the grant of Stock Options (“Grant Letter”) and an award certificate that accompanies the Grant Letter (“Award Certificate”). This Prospectus will be made available to employees of the Company in Germany.

Covidien may grant to these employees, the SIP Participants, a right to purchase a stated number of Shares at a specified price (each such right is a Stock Option). The number of Shares subject to a Stock Option is set forth in the Grant Letter and is subject to the terms and conditions of the SIP and the other terms and conditions that are set forth in the Award Certificate issued to the SIP Participant in respect of the grant of Stock Options.

The Committee may grant Stock Options under the SIP to SIP Participants in the amounts and pursuant to the other terms and conditions that the Committee, in its discretion, may determine and set forth in the Award Certificate, subject to the provisions below:

Exercise Price. The exercise price required to purchase the Shares covered by a Stock Option is the fair market value of an ordinary share of Covidien on the date of grant of the Stock Option (the “Exercise Price”), subject to adjustment described below in the sub-section titled “Adjustments”.

Vesting. Shares subject to a Stock Option will vest in the manner set forth in the Award Certificate. Unless the applicable Award Certificate provides otherwise, if the SIP Participant terminates employment before full (100%) vesting, he/she will forfeit the unvested portion of his/her Stock Option and may exercise the vested portion until the earlier of (i) the date described below in the sub-section titled “Term of Option” below or (ii) 90 days after he/she terminates employment. However, unless the applicable Award Certificate provides otherwise, if the SIP Participant terminates employment due to ‘Normal Retirement’ (i.e. he/she terminates employment on or after age 60 and the sum of his/her age and years of service equals at least 70), ‘Retirement’ (i.e. he/she terminates employment on or after age 55 and the sum of his/her age and years of service equals at least 60), death, disability or a change in control, the Stock Option will become vested and exercisable in accordance with the provisions of Section “Retirement, Normal Retirement, Disability or Death”, “Termination of Employment Following a Change in Control” as applicable.

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Term of Option. Unless a Stock Option has been terminated or cancelled, it must be exercised before the 10 th anniversary of the date a Stock Option is granted to a SIP Participant (the “Grant Date”).

Payment of Exercise Price. To exercise all or a portion of a Stock Option, a SIP Participant must pay the exercise price for each Share. A SIP Participant may pay the exercise price in cash or by certified cheque, bank draft, wire transfer or postal or express money order. A SIP Participant may also pay the exercise price by using any other method specified in the Award Certificate, which may include delivering a properly executed exercise notice to the Company or its agent, together with irrevocable instructions to a broker to deliver promptly, within the typical settlement cycle for the sale of equity securities on the relevant trading market (or otherwise in accordance with Regulation T issued by the Federal Reserve Board), the amount of sale proceeds with respect to the portion of the Shares to be acquired having a fair market value on the date of exercise equal to the sum of the applicable portion of the exercise price being so paid. Notwithstanding the foregoing, a SIP Participant may not tender any form of payment that the Company determines, in its sole discretion, could violate any applicable law, regulation or Company policy. A SIP Participant is not required to purchase all Shares subject to a Stock Option at one time, but must pay the full exercise price for all Shares that he/she elects to purchase before Shares are delivered. The date of exercise of a Stock Option shall be the date on which the Company receives the exercise price for such Stock Option. If a Stock Option is scheduled to expire due to the expiration of the term on the date described in the “Term of Option” Section above and the fair market value of a Share on the last day of such term exceeds the exercise price, then the SIP Participant will be treated as having instructed the Company to exercise the vested portion of the Stock Option on the last day of such term provided that the exercise price will be made in accordance with applicable law.

If a SIP Participant is entitled to exercise a Stock Option, he/she may exercise it by

contacting UBS Financial Services through its web site at www.ubs.com/onesource/cov or by calling its number at +1-201-272-7685. If someone other than the SIP Participant attempts to exercise a Stock Option (for example, because the Stock Option is being exercised after the SIP Participant’s death), the Company will deliver the Shares only after determining that the person attempting to exercise the Stock Option is the duly appointed executor or administrator of his/her estate or an individual to whom the Stock Option has been transferred in accordance with the terms and conditions of the SIP as described below in the sub-section titled “Retirement, Normal Retirement, Disability or Death”.

Exercise of a Stock Option.

Retirement, Normal Retirement, Disability or Death. Notwithstanding the vesting and exercise provisions described in the sub-section titled “Vesting” above and unless the applicable Award Certificate provides otherwise, a Stock Option will vest and remain exercisable if a SIP Participant’s termination of employment is a result of his/her Retirement (as defined in the sub-section titled “Vesting” above), Normal Retirement (as defined in the sub- section titled “Vesting” above), disability or death as follows:

i. Retirement. If a SIP Participant terminates employment as a result of his/her Retirement and such Retirement occurs at least 12 months after the Grant Date, the SIP Participant will be entitled to pro rata vesting of the Stock Option on the date of his/her Retirement so that the total number of vested Stock Options held by the SIP Participant at his/her Retirement date will be based on (A) the number of whole months completed from the Grant Date through the SIP Participant’s Retirement date divided by 48 times (B) the total number of Shares subject to the Stock Option minus (C) the number of Shares that previously vested and the SIP Participant will be entitled to exercise the Stock Option until the earlier of (A) the date described in the “Term of Option” Section above or (B) the third anniversary of the date of his/her Retirement.

ii. Normal Retirement, Disability or Death. If a SIP Participant terminates employment as a result of his/her Normal Retirement, death or Disability then the SIP Participant will become fully vested in the Stock Option on the date of his/her Normal Retirement, death or termination of employment due to disability until the earlier of (A) the date described in the “Term of Option” Section or (B) the third anniversary of the date of his/her Normal Retirement, death or termination of employment due to disability, as applicable.

Termination of Employment Following a Change in Control. Notwithstanding the vesting and exercise provisions described in the “Vesting” Section above and unless the applicable Award Certificate provides otherwise, a SIP Participant will become fully vested in a Stock Option on the date he/she terminates employment after a change in control and be entitled to exercise a Stock Option until the earlier of (A) the date described in the “Term of Option” Section above or (B) the third anniversary of his/her employment termination date, if the SIP Participant satisfies one of the following requirements:

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(i)

Within 12 months after a change in control, the Company terminates his/her employment for any

reason other than cause, disability or death; or

(ii) Within 12 months after a change in control and within 60 days after one of the events listed below in

this paragraph (ii) occurs a SIP Participant terminates his/her employment because (A) the Company (1) assigns or causes to be assigned to the SIP Participant duties inconsistent in any material respect with his/her position as in effect immediately prior to the change in control; (2) makes or causes to be made any material adverse change in his/her position (including titles and reporting relationships and level), authority, duties or responsibilities; or (3) takes or causes to be taken any other action which, in the SIP Participant’s reasonable judgment, would cause the SIP Participant to violate ethical or professional obligations (after written notice has been provided to the Company and the Company has been given a 15-day cure period) or which results in a significant diminution in such position, authority, duties or responsibilities; or (B) the Company, without the consent of the SIP Participant, (1) requires him/her to relocate to a principal place of employment more than 50 miles from his/her existing place of employment; or (2) reduces his/her base salary, annual bonus, or retirement, welfare, share incentive, perquisite (if any) and other benefits when taken as a whole.

Withholdings. Covidien has the right, prior to the issuance or delivery of any Shares in connection with the exercise of a Stock Option, to withhold or require from a SIP Participant the amount necessary to satisfy applicable tax requirements, as determined by the Committee. The methods described in the “Payment of exercise price” Section above may be used by the SIP Participant to pay, or the Company to satisfy, his/her withholding tax obligation.

Transfer of Option. A SIP Participant generally may not transfer a Stock Option or any interest in a Stock Option except by will or the laws of descent and distribution. However, unless the applicable Award Certificate otherwise provides, a SIP Participant may transfer a Stock Option to a family member provided that the SIP Participant does not receive any consideration for the transfer and provides the Company’s Vice President and Corporate Secretary with written notice of the transfer at least 10 business days in advance of such transfer, provided, however, that the transfer may be delayed or prohibited if, in the sole discretion of the Company’s Vice President and Corporate Secretary, such transfer would violate, or would have the potential to violate, applicable law, regulation or Company policy. If a Stock Option is transferred, it will continue to be subject to the same terms and conditions that applied immediately prior to the transfer.

Forfeiture of Option. A SIP Participant will forfeit all or a portion of his/her Stock Options under the circumstances described below:

(i) If the Company terminates the SIP Participant’s employment for cause or if the Committee determines that,

while the SIP Participant was a Company employee he/she engaged in activity that would have constituted grounds for termination for cause, (A) the Company will rescind the unvested portion of the Stock Options and any vested but unexercised portion of the Stock Options; (B) the SIP Participant will immediately forfeit any and all rights he/she has remaining at such time with respect to such Stock Options; and (C) the SIP Participant will be required to deliver to the Company shares (or cash) equal to the amount of any profit realized upon the exercise of the Stock Options during the 12-month period before the termination of employment for cause or the date the Committee determines that he/she could have been terminated for cause.

(ii) If the Committee determines, after the SIP Participant’s termination of employment but before the second

anniversary of such termination of employment, that the SIP Participant (A) disclosed confidential or proprietary information or (B) entered into an employment or consultation arrangement that would likely result in the disclosure of confidential or proprietary information to a business that is competitive with any Company business as to which the SIP Participant had access to strategic or confidential information and the Committee has not approved such arrangement in writing, the Company will rescind the unvested portion of the relevant Stock Options and any vested but unexercised portion of the Stock Options; (B) the SIP Participant will immediately forfeit any and all rights he/she has remaining at such time with respect to the Stock Options; and (C) the SIP Participant will be required to deliver to the Company shares (or cash) equal to the amount of any profit realized upon the exercise of the Stock Options during the period that begins 12 months immediately prior to his/her termination of employment and ends on the date of the Committee’s determination.

Adjustments. In the event of any share split, reverse share split, dividend or other distribution (whether in the form of cash, shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange of shares or other securities, the issuance of warrants or other rights to purchase shares or other securities, or other similar corporate transaction or event, the Committee shall make an appropriate adjustment to prevent dilution or enlargement of the benefits or

39

potential benefits intended to be made available under the SIP. Any such determinations and adjustments made by the Committee will be binding on all persons.

No Obligation to Exercise Stock Options. The grant of a Stock Option will impose no obligation upon the SIP Participant to exercise it.

No Rights as Shareholders. A SIP Participant who is granted a Stock Option under the SIP will have no rights as a shareholder of Covidien with respect to the Stock Option unless and until he/she exercises the Stock Option and becomes registered as a holder of the underlying shares. The right of any SIP Participant to receive a Stock Option by virtue of participation in the SIP will be no greater than the right of any unsecured general creditor of the Company.

Termination. The SIP will terminate upon the earlier of (a) the adoption of a resolutions of the Board terminating the SIP or (b) 20 November 2018. Following termination of the SIP, any previously granted Stock Options will remain in effect in accordance with terms set out in the Award Certificate and the SIP.

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ADDITIONAL INFORMATION

Trends

For detailed information concerning Covidien’s trends, please refer to the DOCUMENTS FORMING PART OF THIS PROSPECTUS set out in item 1 on page 21 of the Prospectus.

There have been no significant changes to the information concerning Covidien’s trends, as set out in item 1 on page 21 of the Prospectus, since the 2010 Annual Report was filed with the SEC.

Exchange Controls

At this time, there are no exchange controls issues triggered by Shares offered under the ESPP or in connection with Stock Options granted under the SIP. If Shares offered under the ESPP or in connection with Stock Options granted under the SIP trigger exchange control issues at any time in the future, the Company will implement appropriate procedures, including the imposition of restrictions on the method of exercise of Stock Options, to ensure compliance with applicable exchange controls.

Taxation

For information on the tax treatment of Shares offered under the ESPP or in connection with Stock Options granted under the SIP, see Annex I. Covidien will assume responsibility for the withholding of taxes at the source.

Dividends

Distributions of dividends that are subject to Irish law and that have not been claimed by shareholders within twelve years may lapse in favor of Covidien.

No dividends were paid during fiscal years 2005 and 2006. Covidien Ltd. was part of the Tyco International controlled group until 29 June 2007 and, therefore, did not issue dividends prior to such time. Covidien Ltd. has paid a dividend of $0.16 (USD) per share quarterly beginning on 9 November 2007 and ending on 4 June 2009, the effective date of the Reorganization. After the Reorganization Covidien continued payment of the quarterly dividend.

Covidien paid cash dividends totaling $360 and $322 million during fiscal 2010 and 2009, respectively. On September 22, 2010, the Board of Directors declared a quarterly cash dividend of $0.20 per share to shareholders of record at the close of business on October 4, 2010. The dividend, totaling $99 million, was paid on November 8, 2010. Covidien expects that it will continue to pay dividends comparable to this amount to holders of ordinary shares. The timing, declaration and payment of future dividends to holders of ordinary shares in Covidien falls within the discretion of the Board and depends on many factors including the statutory requirements of Irish law, the earnings and financial position of Covidien, the capital requirements of Covidien’s business, industry practice and any other factors that the Board deems relevant.

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GENERAL INFORMATION

Documents available

Hard-copies of the following documents may be inspected during usual business hours on any business day at the registered office of Covidien at 1st Floor, 20 On Hatch, Hatch Street Lower, Dublin 2, Ireland for the life of this Prospectus:

(a)

Prospectus;

(b)

memorandum and articles of association of Covidien;

(c)

2008 Annual Report;

(d)

2009 Annual Report;

(e)

2010 Annual Report

(f)

2010 AGM Proxy Statement;

(g)

SIP Plan Document;

(h)

ESPP Plan Document;

(i)

resolutions of the board of directors of Covidien Ltd. adopting the SIP and ESPP dated 1 June 2007;

(j)

resolutions of the board of directors of Covidien Ltd. amending and restating the SIP dated 20 May 2009;

and

(k)

resolutions of the Board dated 7 May 2009 approving the assumption of the terms of the SIP and ESPP.

Covidien files its annual report, quarterly reports and other documents with the SEC. These SEC filings are available to the public on the SEC’s web site at www.sec.gov or on Covidien’s web site at www.covidien.com from the date of filing.

The Prospectus is available to the public on the web site of the Central Bank at www.centralbank.ie.

Electronic Communications

By participating in the ESPP or the SIP, each Participant agrees that the Company is authorized to send, convey or supply all types of notices, documents or information in connection with the ESPP and the SIP by means of electronic equipment for the processing (including digital compression), storage and transmission of data, employing wires, radio, optical technologies or any other electromagnetic means, including by making such notices, documents or information available on Covidien’s intranet and/or web site at www.covidien.com.

Mandatory Takeover Bid

If an acquisition of shares of Covidien were to increase the aggregate holding of an acquirer and its concert parties to shares carrying 30% or more of the voting rights in Covidien, the acquirer and, depending on the circumstances, its concert parties would be required (except with the consent of the Irish Takeover Panel) to make a cash offer for the outstanding shares at a price not less than the highest price paid for the shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by an acquisition of shares by a person holding (together with its concert parties) shares carrying between 30% and 50% of the voting rights in Covidien if the effect of such acquisition were to increase the percentage of the voting rights held by that person (together with its concert parties) by 0.05% within a twelve-month period. A single holder (that is, a holder excluding any parties acting in concert with the holder) holding more than 50% of the voting rights of a company is not subject to this rule.

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Squeeze-Out/Sell-Out Rules

In the event of an offer for the acquisition of shares of Covidien, where the holders of 80% or more of Covidien’s shares have accepted the offer, the remaining shareholders may be statutorily required to also transfer their shares. If the bidder does not exercise its “squeeze out” right, the non-accepting shareholders also have a statutory right to require the bidder to acquire their shares on the same terms.

Significant or Material Change

There has been no significant change in the financial or trading position of the Company since 24 September 2010 (the date to which the latest financial information of Covidien was prepared).

Litigation and Arbitration

Covidien (whether as defendant or otherwise) has not been engaged in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which Covidien is aware) during the period covering the previous 12 months preceding the date of this document which may have, or have had in the recent past had, significant effects on Covidien and/or the consolidated financial position or profitability of the Company.

For information concerning litigation and arbitration in respect of Covidien., please refer to the DOCUMENTS FORMING PART OF THIS PROSPECTUS set out in item 4 on page 21 of the Prospectus. Although it is not feasible to predict the outcome of the proceedings noted in this information, based upon our experience, current information and applicable law, we do not expect that these proceedings will have a material adverse effect on our financial condition.

Auditors

The auditors of Covidien are Deloitte and Touche, Earlsfort Terrace, Dublin 2 (“Deloitte and Touche (Ireland)”) and Deloitte and Touche LLP, 200 Berkeley Street, Boston, Massachusetts 02116, USA (“Deloitte & Touche (United States)”).

The auditors of Covidien Ltd. are Deloitte and Touche LLP (United States).

Deloitte and Touche (Ireland) is a member of the Irish Institute of Chartered Accountants and its oversight body is the Irish Auditing and Accounting Supervisory Body. Deloitte & Touche (United States) is a member of the American Institute of Certified Public Accountants and its oversight body is the Public Company Accounting Oversight Board.

Other information

Covidien’s ordinary shares are listed and admitted to trading on the NYSE.

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ANNEX I: APPLICABLE WITHHOLDING TAXES

The following chart is based on the tax laws in effect at the date of this Prospectus, and such laws are often complex and change frequently. As a result, the information contained herein may no longer be current as of a taxable event.

The Shares purchased on the open market through the ESPP with an ESPP Participant’s accumulated payroll deductions will not be subject to additional income or social tax at the time of purchase. However, the amount of the employer contribution (i.e., the Company’s matching contribution described in Section 1.7 under the heading “Details of the ESPP and the SIP”) used to purchase additional Shares generally will be subject to income and social tax at the time of purchase.

For Stock Options granted to SIP Participants (i.e., employees in Germany), the SIP Participant will be subject to tax at exercise on the difference between the fair market value of the Shares acquired at exercise and the SIP Offer Price.

Please see the information on income and social tax withholding on the chart below.

Participants may have additional income or social tax obligations that are not set forth herein. Participants are strongly advised to seek appropriate professional advice as to how the tax laws in his/her country apply to such Participant’s specific situation. Regardless of any action Covidien or the Participant’s employer takes with respect to any tax withholding, the ultimate liability for all taxes legally due by the Participant is the Participant’s responsibility. This information below is not intended to be used, and cannot be used, for the purpose of avoiding tax penalties that may be imposed on the Participant.

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Country

ESPP Income and Social Tax Withholding

Austria

Income tax withholding is required at marginal rates up to 50% for annual income above

€60,001.

Social tax (including health, pension, accident and unemployment insurance) must also be withheld at a rate of 18.07% on monthly income up to €4,110. The maximum combined withholding rate is 50%. This assumes the Participant is in the top income tax bracket, in which case the social tax ceiling has been reached.

France

No income tax withholding is required (for French resident taxpayers).

Social security tax must be withheld at a rate of up to 23% on all income.

The maximum combined withholding rate is 23%.

Germany

Income tax withholding is required at combined federal and municipal rates up to 47.48% (including a mandatory 5.5% income tax surcharge) for annual income above €250,731. Church tax withholding may also be required at rates ranging from 8% to 9%.

Please also note that certain tax deductions may apply and the Participant should consult with his/her personal tax advisor.

Both Pension Insurance at a rate of 9.95% and Unemployment Insurance at a rate of 1.4% must be withheld on earnings up to €5,500 per month (€4,650 per month for former East German states).

Health Insurance must be withheld at rates that vary depending on insurance company; the average rate is 7% plus an additional 0.9% that must be withheld on earnings of up to €3,750 per month.

Nursing Care insurance of 0.975% for individuals with children and 1.225% for individuals who are: (1) born after 1940; (2) age 23 or older; and (3) do not have children must be withheld on earnings of up to €3,750 per month.

The maximum combined withholding rate is 51.525%. This rate includes combined federal and municipal income tax, surcharge and church tax. This assumes the Participant is in the top income tax bracket, in which case the maximum social tax ceiling of €66,000 has been reached. Thus, the maximum combined withholding rate is the maximum income tax rate plus the income tax surcharge and church tax.

Ireland

No withholding is required in respect of Shares attributable to the employer contribution unless the employee had an option to receive cash instead of shares.

Netherlands

Income tax withholding is required at marginal rates up to 52% for annual income of more than €54,368.

Social security contributions must be withheld at a rate of 31.15% on annual income up to

€32,738.

The maximum combined withholding rate is 52%. This assumes the Participant is in the top income tax bracket, in which case the social tax ceiling has been reached.

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Country

SIP Income and Social Tax Withholding

Germany

Same as "ESPP Income and Social Tax Withholding"

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ANNEX II: TERMS AND CONDITIONS OF THE ESPP

ARTICLE 1

PURPOSE

The Covidien Employee Stock Purchase Plan as amended and restated by Covidien Ltd. effective as of June 4, 2009 and as assumed by Covidien public limited company on June 4, 2009 (the “Plan”) is created for the purpose of encouraging share ownership by officers and employees of Covidien public limited company (the “Company”) and its subsidiaries so that they may share in growth of the Company by acquiring or increasing their proprietary interest in the Company.

ARTICLE 2

ADMINISTRATION OF THE PLAN

The Plan is administered by the Compensation and Human Resources Committee, a committee of the Board of Directors of the Company (the “Committee”). The Committee may delegate its authority and responsibility for plan administration to a committee or an officer or group of officers, as it deems advisable. The interpretation and construction by the Committee, or its delegate, of any provision of the Plan shall be final and binding on all parties. The Committee, or its delegate, may adopt, from time to time, such rules and regulations, as it deems appropriate for carrying out the Plan. No member of the Board of Directors or the Committee, or its delegate, shall be liable for any action or determination made in good faith with respect to the Plan.

ARTICLE 3

ELIGIBLE EMPLOYEES

The Company will, from time to time, determine which of its employees (including employees of its subsidiaries and divisions) will be eligible to participate in the Plan. All officers who are employees of the Company will be eligible to participate in the Plan. Eligible employees who elect to participate in the Plan shall hereinafter be referred to as “Participants.”

ARTICLE 4

SHARES TO BE PURCHASED

The shares subject to purchase under the Plan is 5,000,000 shares (subject to adjustment in the event of share splits, share dividends, recapitalization, or similar adjustment in the Company’s share capital) of the ordinary share capital of the Company (the “Shares”) which will be purchased in accordance with Article 8.

ARTICLE 5

PAYROLL DEDUCTIONS

Participants, upon entering the Plan, shall authorize payroll deductions to be made for the purchase of Shares. The maximum deduction shall not, on a per pay period basis, exceed a Participant’s base salary or commission (in the case of an employee who receives commission and no base salary) and deductions shall be exclusive of overtime and net withholding and other deductions. The Participant may authorize increases or decreases in the amount of payroll deductions at any time. In order to effect such a change in the amount of the payroll deductions, the Company must receive notice of such change in the manner specified by the Company and changes will take effect as soon as administratively practicable. The Company will accumulate and hold for the Participant’s account the amounts deducted from his/her pay. No interest shall be paid on such amounts. Notwithstanding the foregoing, the Committee may, in its sole discretion, authorize a special bonus payment be made to a Participant and such bonus be designated as an employee contribution. The Company will match such employee contribution, subject to the limit described in the next Article. The bonus may exceed the contribution limits otherwise imposed on the Participant.

ARTICLE 6

EMPLOYER CONTRIBUTION

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The Company will match a part of the employee contribution by contributing to the Plan an additional percentage of the Participant’s payroll deduction. The Committee, from time to time, may increase or decrease the percentage of the Company’s contribution to the Participant’s payroll deduction if the interests of the Company so require. The Company shall not match any part of a Participant’s contribution that exceeds twenty-five thousand dollars (US) ($25,000.00) during a single calendar year. The matching contributions hereunder are not intended to be entitlement or part of the regular compensation of any Participant. The Company will pay all commissions relating to the purchase of the Shares under the Plan, and the Company will pay all administrative costs associated with the implementation and operation of the Plan.

ARTICLE 7

AUTHORIZATION FOR ENTERING THE PLAN

An eligible employee may enter the Plan by enrolling in the Plan and specifying his/her contribution amount in the manner authorized by the Company. Such authorization will take effect as of the next practicable payroll period. Unless a Participant authorizes changes to his/her payroll deductions in accordance with Article 5 or withdraws from the Plan, his/her deductions under the latest authorization on file with the Company shall continue from one payment period to the succeeding payment period as long as the Plan remains in effect.

ARTICLE 8

PURCHASE OF SHARES

All Shares purchased under the Plan shall be purchased on the open market by a broker designated, from time to time, by the Committee. On a monthly basis, as soon as practicable following the month end, the Company shall remit the total of contributions to the broker for the purchase of the Shares. The broker will then execute the purchase order and the Plan Administrator shall allocate Shares (or fraction thereof) to each participant’s individual recordkeeping account. In the event the purchase of Shares takes place over a number of days and at different prices, then each participant’s allocation shall be adjusted on the basis of the average price per Share over such period.

ARTICLE 9

ISSUANCE OF SHARES

The Shares purchased under the Plan shall be held by the Plan Administrator or its nominee. Participants shall receive periodic statements that will evidence all activity in the accounts that have been established on their behalf. Such statements will be issued by the Plan Administrator or its nominee.

ARTICLE 10

DIVIDEND REINVESTMENT

Any dividends paid to a Participant for Shares purchased under the Plan shall be paid in cash except where the Participant voluntarily elects to reinvest such dividends in Shares of the Company in accordance with such rules or procedures as may be established by the Company from time to time.

ARTICLE 11

SALE OF SHARES PURCHASED UNDER THE PLAN

Each Participant may sell at any time all or any portion of the Shares acquired under the Plan and held by the Plan Administrator for at least three months by notifying the Plan Administrator, who will direct the broker to execute the sale on behalf of the Participant. The Participant shall pay the broker’s commission and any other expenses incurred with regard to the sale of the Shares. All such sales of the Shares will be subject to compliance with any applicable federal or state securities, tax, or other laws. Each participant assumes the risk of any fluctuations in the market price of the Shares.

ARTICLE 12

WITHDRAWAL FROM THE PLAN

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A Participant may cease making contributions to the Plan at any time by changing his/her payroll deduction to zero as described in

Article 5. In order to execute a sale of all or part of the Shares purchased under the Plan and held by the Plan Administrator for at least

three months, the Participant must contact the Plan Administrator directly. If the Participant desires to withdraw from the Plan by liquidating all or part of his/her shareholder interest, he/she shall receive the proceeds from the sale thereof, minus the commission and other expenses on such sale.

ARTICLE 13

NO TRANSFER OR ASSIGNMENT

A Participant’s right to purchase Shares under the Plan through payroll deduction is his/hers alone and may not be transferred or assigned

to, or availed of, by any other person.

ARTICLE 14

TERMINATION OF EMPLOYEE RIGHTS

All of the employee’s rights under the Plan will terminate when he/she ceases to be an eligible employee due to retirement, resignation, death, termination, or any other reason. A notice of withdrawal will be deemed to have been received from a Participant on the day of his/her final payroll deduction. If a Participant’s payroll deductions are interrupted by any legal process, a withdrawal notice will be deemed as having been received on the day the interruption occurs.

ARTICLE 15

TERMINATION AND AMENDMENT TO THE PLAN

The Plan may be terminated at any time by the Company’s Board of Directors. Upon such termination, or any other termination of the Plan, all payroll deductions not used to purchase Shares will be refunded. The Board of Directors also reserves the right to amend the Plan, from time to time, in any respect and authorizes the Committee to approve amendments to the Plan on its behalf.

ARTICLE 16

LOCAL TAX LAWS

If the provisions of the Plan contradict local tax laws, the local tax laws shall prevail.

ARTICLE 17

GOVERNING LAW

This Plan shall be governed by, and construed in accordance with, the laws of Ireland.

ARTICLE 18

SEVERABILITY

If any provision of this Plan is held unlawful or otherwise invalid or unenforceable in whole or in part, the unlawfulness, invalidity or

unenforceability will not affect any other parts of the Plan, which parts will remain in force and effect.

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ANNEX III: TERMS AND CONDITIONS OF THE SIP

COVIDIEN 2007 STOCK AND INCENTIVE PLAN AS AMENDED AND RESTATED ON NOVEMBER 21, 2008 AND JUNE 4, 2009 AND AS ASSUMED BY COVIDIEN PUBLIC LIMITED COMPANY ON JUNE 4, 2009

1.1 Purpose.

ARTICLE I

PURPOSE

The purposes of this Covidien 2007 Stock and Incentive Plan as amended and restated and as

assumed by Covidien public limited company (the "Plan") are to promote the interests of Covidien public limited company (and any successor thereto) by (i) aiding in the recruitment and retention of Directors and Employees, (ii) providing incentives to Directors and Employees by means of performance-related incentives to achieve short-term and long-term performance goals, (iii) providing Directors and Employees with an opportunity to participate in the growth and financial success of the Company, and (iv) promoting the growth and success of the Company's business by aligning the financial interests of Directors and Employees with that of the other shareholders of the Company. Toward these objectives, the Plan provides for the grant of Stock Options, Stock Appreciation Rights, Annual Performance Bonuses, Long-Term Performance Awards and Other Stock-Based Awards.

1.2 Effective Date; Shareholder Approval.

The Plan was amended and restated, effective as of November 21,

2008, and such amendment and restatement was approved by the shareholders of Covidien Ltd. at its 2009 annual general meeting held on March 18, 2009. The Plan was amended and restated to reflect its assumption by Covidien public limited company and this amendment and restatement became effective as of June 4, 2009.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms have the following meanings, unless another definition is clearly indicated by particular usage and context:

" Acquired Company " means any business, corporation or other entity acquired by the Company or any Subsidiary.

" Acquired Grantee " means the grantee of a stock-based award of an Acquired Company and may include a current or former Director of an Acquired Company.

" Annual Performance Bonus " means an Award of cash or Shares granted under Section 4.4 of the Plan that is

paid solely on account of the attainment of a specified performance target in relation to one or more Performance Measures.

" Award " means any form of incentive or performance award granted under the Plan, whether singly or in

combination, to a Participant by the Committee pursuant to any terms and conditions that the Committee may establish and set forth in the applicable Award Certificate. Awards granted under the Plan may consist of:

(a)

" Stock Options " awarded pursuant to Section 4.3;

(b)

" Stock Appreciation Rights " awarded pursuant to Section 4.3;

(c)

" Annual Performance Bonuses " awarded pursuant to Section 4.4;

(d)

" Long-Term Performance Awards " awarded pursuant to Section 4.5;

(e)

" Other Stock-Based Awards " awarded pursuant to Section 4.6;

(f)

" Director Awards " awarded pursuant to Section 4.7; and

(g)

" Substitute Awards " awarded pursuant to Section 4.8.

" Award Certificate " means the document issued, either in writing or an electronic medium, by the Committee

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or its designee to a Participant evidencing the grant of an Award and which contains, in the same or accompanying document, the terms and conditions applicable to such Award

" Board " means the Board of Directors of the Company.

" Cause " means an Employee’s or Director’s (i) substantial failure or refusal to perform duties and

responsibilities of his or her job as required by the Company or Subsidiary, (ii) violation of any fiduciary duty owed

to the Company or Subsidiary, (iii) conviction of a felony or misdemeanor, (iv) dishonesty, (v) theft, (vi) violation of Company or Subsidiary rules or policy, or (vii) other egregious conduct, that has or could have a serious and detrimental impact on the Company or Subsidiary and its employees. The Committee (or the Nominating Committee solely with respect to Director Awards), in its sole and absolute discretion, shall determine Cause.

" Change in Control " means the first to occur of any of the following events:

(a) any "person" (as defined in Section 13(d) and 14(d) of the Exchange Act, excluding for this purpose, (i)

the Company or any Subsidiary or (ii) any employee benefit plan of the Company or any Subsidiary (or any person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan that acquires beneficial ownership of voting securities of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of securities of the Company representing more than 30 percent of the combined voting power of the Company's then outstanding securities; provided, however, that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company; or

(b) persons who, as of the Effective Date constitute the Board (the "Incumbent Directors") cease for any

reason (including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction) to constitute at least a majority thereof, provided that any person becoming a Director of the Company subsequent to the Effective Date shall be considered an Incumbent Director if such person's election or nomination for election was approved by a vote of at least 50 percent of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened proxy contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a "person" (as defined in Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of

agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

(c) consummation of a reorganization, merger or consolidation or sale or other disposition of at least 80

percent of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own directly or indirectly more than 50 percent of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, of the company resulting from such Business Combination (including, without limitation, a company which, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more Subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities of the Company; or

(d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

" Change in Control Termination " means a Participant’s involuntary termination of employment that occurs

during the twelve (12) month period immediately following a Change in Control. For this purpose, a Participant’s

involuntary termination of employment includes only the following:

(a)

for Cause, Disability or death;

termination of the Participant’s employment by the Company for any reason other than

(b)

events, provided that the Participant’s termination of employment occurs within sixty (60) days after the occurrence of any such event:

termination of the Participant’s employment by the Participant after one of the following

(i)

inconsistent in any material respect with his or her position as in effect immediately prior to the Change in Control;

the Company (1) assigns or causes to be assigned to the Participant duties

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(2) makes or causes to be made any material adverse change in the Participant’s position (including titles and reporting relationships and level), authority, duties or responsibilities; or (3) takes or causes to be taken any other action which, in the reasonable judgment of the Participant, would cause him or her to violate his or her ethical or professional obligations (after written notice of such judgment has been provided by the Participant to the Company and the Company has been given a 15-day