Exhibit 10.1

 

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NON-QUALIFIED STOCK OPTION AGREEMENT

2003 LONG-TERM INCENTIVE PLAN

 

Optionee’s Name

Optionee’s Address

Grant Date

Number of Options Granted

Option Price

Aggregate Option Price

 

1.                                       The Option.  Medtronic, Inc., a
Minnesota corporation (the “Company”), hereby grants to the individual named
above (the “Optionee”), as of the above Grant Date, an option (the “Option”) to
purchase the above number of shares of common stock of the Company (the “Common
Stock”), for the above Option Price Per Share, on the terms and conditions set
forth in this Non-Qualified Stock Option Agreement (this “Agreement”) and in the
Medtronic, Inc. 2003 Long-Term Incentive Plan (the “Plan”).  In the event of any
inconsistency between the terms of the Agreement and the Plan, the terms of the
Plan shall govern.  Capitalized terms not defined in this Agreement shall have
the meanings ascribed to them in the Plan.

 

2.                                       Exercise of Option.  The exercise of
the Option is subject to the following conditions and restrictions:

 

(a)                                  Expiration.  The Option may be exercised in
whole or in part, from time to time, during the period commencing on the first
anniversary of the Grant Date and ending on the earlier of (i) the above
Expiration Date, or (ii) the expiration of the applicable period following your
termination of employment with the Company or one of its subsidiaries, as
provided in Sections 2(c),(d) or (e) below.

 

(b)                                 Schedule of Exercisability.  The Option
shall become vested and exercisable to the extent of 25% of the above number of
shares of Common Stock on each of the first, second, third and fourth
anniversaries of the Grant Date.    Once a portion of the Option has become
exercisable, that portion may be exercised at any time thereafter, subject to
the provisions of Paragraph 2(a) above.

 

(c)                                  Death.  Notwithstanding the schedule of
exercisability set forth in Section 2(b) above, the Option shall become
immediately exercisable in full upon your death, and may be exercised by your
Successor (as defined below) at any time, or from time to time, within five
years after the date of your death.  For purposes of this Agreement, the term
“Successor” shall mean the legal representative of your estate or the person or
persons who may, by bequest or inheritance, or valid beneficiary designation (as
provided in Section 15 of the Plan), acquire the right to exercise the Option.

 

(d)                                 Disability or Retirement.  Notwithstanding
the schedule of exercisability set forth in Section 2(b) above, the Option shall
become immediately exercisable in full upon your Disability or Retirement (as
each such term is defined below), and you may exercise your Option at any time,
or from time to time, within five years after the date of Retirement or
determination of Disability.  For purposes of this Agreement, the terms
“Disability”  and  “Retirement” shall have the meanings ascribed to those terms
under any retirement plan of the Company which is qualified under Section 401 of
the Code  (which currently provides for retirement on or after age 55, provided
you have been employed by the Company and/or one or more Affiliates for at least
ten years, or retirement on or after age 62), or under any disability or
retirement plan of the Company or any Affiliate applicable to you due to
employment by a non-U.S. Affiliate or employment in a non-U.S. location, or as
otherwise determined by the Committee.

 

(e)                                  Termination for Any Other Reason.  In the
event your employment with the Company terminates for any reason other than
those specified in Sections 2(c) and 2(d), the unvested portion of the Option
will terminate as of 11:00 p.m. CT (midnight ET) on the date of termination of
your employment.  You may exercise that portion of the Option that was vested
but unexercised as of the date of termination of your employment for thirty (30)
days following the date of termination of your employment.  At 11:00 p.m. CT
(midnight ET) on the date 30 days after the date of termination of your
employment, the Option will expire.

 

(f)                                    Change in Control.  Notwithstanding the
schedule of exercisability set forth in Section 2(b) above, the Option shall
become immediately exercisable in full upon the occurrence of a Change in
Control.

 

(g)                                 Expiration of Term.  Notwithstanding the
foregoing paragraphs (a)-(f), in no event shall the Option be exercisable after
the Expiration Date.

 

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3.                                       Manner of Exercise.  To exercise your
Option, you must deliver notice of exercise (the “Notice”) to UBS Financial
Services.  The Notice must specify the number of shares of Common Stock (the
“Shares”) as to which the Option is being exercised and must be accompanied by
payment of the purchase price for the Shares in cash, check, or by the delivery
of Common Stock already owned by the Optionee, or by a combination thereof,
pursuant to such forms and subject to such conditions as may be prescribed from
time to time by the Committee.

 

Exercise shall be deemed to occur on the earlier of the date the Notice and
option cost payment are received by UBS Financial Services or the date you
simultaneously exercise the Option and sell the shares, using the proceeds from
such sale to pay the purchase price.

 

4.                                       Withholding Taxes.  You are responsible
for payment of any federal, state, local or other taxes which must be withheld
upon the exercise of the Option, and you must promptly pay to the Company any
such taxes.  The Company and its subsidiaries are authorized to deduct from any
payment owed to you any taxes required to be withheld with respect to the
Shares, including social security and Medicare (FICA) taxes and federal, state
and local income tax with respect to income arising from the exercise of the
Option.  The Company shall have the right to require the payment of any such
taxes before issuing any Shares pursuant to an exercise of the Option.  In lieu
of all or any part of a cash payment, you may elect to have a portion of the
Shares otherwise issuable upon exercise of the Option withheld by the Company to
satisfy all or part of the withholding tax requirements relating to the Option
exercise with such Shares valued in the same manner as used in computing such
withholding taxes.  Any fractional share amount due relating to such tax
withholding will be rounded up to the nearest whole share and the additional
amount will be added to your federal withholding.

 

5.                                       Forfeitures.   If you have received or
been entitled to receive payment in cash, delivery of Common Stock or a
combination thereof pursuant to an Option within the period beginning six months
prior to your termination of employment with the Company or its Affiliates and
ending when the Option terminates or is cancelled, the Company, in its sole
discretion, may require you to return or forfeit the cash and/or Common Stock
received or receivable with respect to the Option (or its economic value as of
the date of the exercise of the Option), in the event you are involved in any of
the following occurrences:  performing services for or on behalf of a competitor
of, or otherwise competing with, the Company or any Affiliate, unauthorized
disclosure of material proprietary information of the Company or any Affiliate,
a violation of applicable business ethics policies or business policies of the
Company or any Affiliate, or any other occurrence determined by the Committee. 
The Company’s right to require forfeiture must be exercised not later than 90
days after discovery of such an occurrence but in no event later than 15 months
after your termination of employment with the Company and its Affiliates.  Such
right shall be deemed to be exercised upon the Company’s mailing written notice
to you of such exercise at your most recent home address as shown on the
personnel records of the Company.  In addition to requiring forfeiture as
described herein, the Company may exercise its rights under this Section 5 by
preventing or terminating the exercise of any Options or the acquisition of
Shares or cash thereunder.  If you fail or refuse to forfeit the cash and/or
Shares demanded by the Company (adjusted for any intervening stock splits), you
shall be liable to the Company for damages equal to the number of Shares
demanded times the highest closing price per share of the Common Stock during
the period between the exercise date of the Option and the date of any judgment
or award to the Company, together with all costs and attorneys’ fees incurred by
the Company to enforce this provision.

 

6.                                       Transferability.  Upon prior written
approval of the Corporate Secretary of the Company, in his or her discretion,
this Option may be transferred to a member of your “immediate family” (as such
term is defined in Rule 16a-1(e) promulgated under the Exchange Act, or any
successor rule or regulation) or to one or more trusts whose beneficiaries are
members of your “immediate family” or  partnerships in which such family members
are the only partners; provided, however, that (1) you receive no consideration
for the transfer and (2) the transferred Option shall continue to be subject to
the same terms and conditions as were applicable to such Option immediately
prior to its transfer.

 

7.                                       Conversion to Stock-Settled Stock
Appreciation Rights.  At any time following the Grant Date, the Company may
convert this Option to a stock-settled Stock Appreciation Right.  Upon exercise
of a Stock Appreciation Right, you shall receive Common Stock with a value equal
to the excess of the Fair Market Value of the Shares on the date of exercise
over the aggregate of (a) the Option Price Per Share multiplied by the number of
Shares and (b) the amount of any taxes required to be withheld as a result of
such exercise.

 

8.                                       Agreement.  Your receipt of the Option
and this Agreement constitutes your agreement to be bound by the terms and
conditions of this Agreement and the Plan.

 

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Accompanying this Agreement are instructions for accessing the Plan and the Plan
Summary (prospectus) on the Company’s intranet.  You may also print these
documents from the intranet or request written copies by contacting Shareholder
Services at 763.505.3030.

 

Shareholder Services, MS LC 310

Medtronic, Inc.

710 Medtronic Parkway

Minneapolis, MN 55432

 

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