Exhibit 10.1

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

                    CHANGE OF CONTROL EMPLOYMENT AGREEMENT by and between
Medtronic, Inc., a Minnesota corporation (the “Company”), and
________________________ (the “Executive”), dated as of the ______ day of
____________________.

                    The Board of Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which are competitive with those of other corporations and
which ensure that the compensation and benefits expectations of the Executive
will be satisfied. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement.

                    NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

                    1.          Certain Definitions.

                    (a)          The “Effective Date” shall mean the first date
during the Change of Control Period (as defined in Section l(b)) on which a
Change of Control) occurs. Anything in this Agreement to the contrary
notwithstanding, if (i) the Executive’s employment with the Company is
terminated by the Company or the Executive terminates employment because the
Executive ceases to be an officer of the Company, (ii) the Date of Termination
occurs prior to the date on which a Change of Control occurs, and (iii) it is
reasonably demonstrated by the Executive that such termination of employment or
cessation of status as an officer (A) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control or (B)
otherwise arose in connection with or anticipation of the Change of Control,
then for all purposes of this Agreement the “Effective Date” shall mean the date
immediately prior to such Date of Termination.

                    (b)          The “Change of Control Period” shall mean the
period commencing on the date hereof and ending on the third anniversary of such
date; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the “Renewal Date”),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give written
notice to the Executive that the Change of Control Period shall not be so
extended.

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                    2.            Change of Control. For the purpose of this
Agreement, a “Change of Control” shall mean:

 

 

 

          (a)          Any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person) becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that, for purposes of this Section 2(a), the following
acquisitions shall not constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the Company or any of its
subsidiaries, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its subsidiaries, (4)
any acquisition by an underwriter temporarily holding securities pursuant to an
offering of such securities or (5) any acquisition pursuant to a transaction
that complies with clauses (i), (ii) and (iii) of Section 2(c); or

 

 

 

          (b)          Individuals who, as of the date hereof, constitute the
Board (the “Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Incumbent Directors then on the Board shall be considered as
though such individual was an Incumbent Director, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 

 

 

          (c)          Consummation of a reorganization, merger, statutory share
exchange or consolidation (or similar corporate transaction) involving the
Company or any of its subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Company, or the acquisition of assets or
stock of another entity by the Company or any of its subsidiaries (each, a
“Business Combination”), in each case, unless, immediately following such
Business Combination, (i) substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock (or, for a
non-corporate entity, equivalent securities) and the then-outstanding voting
securities entitled to vote generally in the election of directors (or, for a
non-corporate entity, equivalent governing body), as the case may be, of (A) the
entity resulting from such Business Combination (the “Surviving Corporation”) or
(B) if applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership of 80% or more of the voting securities eligible to elect
directors of the Surviving Corporation (the “Parent Corporation”), in
substantially the same proportion as their ownership, immediately prior to the
Business Combination, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii) no person (other
than any employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the beneficial
owner, directly or indirectly, of 30% or more of the outstanding shares of
common stock and the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (iii) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination; or

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

                    3.          Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, for the period commencing on the Effective Date
and ending on the second anniversary of such date (the “Employment Period”),
provided, that nothing stated in this Agreement shall restrict the right of the
Company or the Executive at any time to terminate the Executive’s employment
with the Company, subject to the obligations of the Company provided for in this
Agreement in the event of such terminations. The Employment Period shall
terminate upon the Executive’s termination of employment for any reason.

                    4.          Terms of Employment.

                    (a)         Position and Duties.

                                 (i)          During the Employment Period, (A)
the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period immediately
preceding the Effective Date; and (B) the Executive’s services shall be
performed at the location where the Executive was employed immediately preceding
the Effective Date or any office or location less than 50 miles from such
location.

                                 (ii)         Except as otherwise expressly
provided in this Agreement, during the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive’s
responsibilities to the Company.

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                    (b)          Compensation.

                                   (i)          Base Salary. During the
Employment Period, the Executive shall receive an annual base salary (“Annual
Base Salary”) at an annual rate at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary that has been earned but
deferred, to the Executive by the Company and the affiliated companies in
respect of the 12-month period immediately preceding the month in which the
Effective Date occurs. The Annual Base Salary shall be paid at such intervals as
the Company pays executive salaries generally. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually and shall be increased at
any time and from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of business to
other peer executives of the Company and its affiliated companies. Any increase
in Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term “Annual Base Salary” as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term “affiliated companies” shall include any company controlled
by, controlling or under common control with the Company.

                                   (ii)         Annual Incentive Payments. In
addition to Annual Base Salary, the Executive shall be paid, for each fiscal
year ending during the Employment Period, an annual bonus (“Annual Bonus”) in
cash at least equal to the Executive’s average annual or annualized (for any
fiscal year consisting of less than 12 full months or with respect to which the
Executive has been employed by the Company for less than 12 full months) award
earned by the Executive, including any award earned but deferred, under the
Company’s Executive Incentive Plan, as amended from time to time prior to the
Effective Date (or under any successor or replacement annual incentive plan of
the Company or any of the affiliated companies), for the last three fiscal years
immediately preceding the fiscal year in which the Effective Date occurs (the
“Three-Year Average Bonus”). If the Executive has not been eligible to earn, or
has not been employed, for each of the last three fiscal years immediately
preceding the fiscal year during which the Effective Date occurs but has earned
a bonus for at least one fiscal year during the last three fiscal years
immediately preceding the fiscal year during which the Effective Date occurs,
the “Three-Year Average Bonus” shall mean the average of any annual or
annualized bonus actually earned over any such years. If the Executive has not
been eligible to earn, or has not received, such a bonus for any fiscal year
prior to the Effective Date, the “Three-Year Average Bonus” shall mean the
Executive’s Target Annual Bonus for the year during which the Effective Date
occurs. Each such Annual Bonus shall be paid no later than two and a half months
after the end of the fiscal year for which the Annual Bonus is awarded, unless
the Executive shall elect to defer the receipt of such Annual Bonus pursuant to
an arrangement that meets the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).

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                              (iii)        Long-Term Cash and Equity Incentives,
Savings Plans and Retirement Plans. During the Employment Period, the Executive
shall be entitled to participate in all long-term cash incentive, equity
incentive, savings and retirement plans, practices, policies and programs (any
such arrangement a “Plan” for purposes of this Agreement) applicable generally
to other peer executives of the Company and the affiliated companies, but in no
event shall such Plans provide the Executive with incentive opportunities
(measured with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company and the
affiliated companies for the Executive under such Plans as in effect at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the affiliated
companies.

                              (iv)        Welfare Benefit Plans. During the
Employment Period, the Executive and/or the Executive’s family, as the case may
be, shall be eligible for participation in and shall receive all benefits under
welfare benefit Plans provided by the Company and the affiliated companies
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance Plans) to the extent applicable generally to other peer
executives of the Company and the affiliated companies, but in no event shall
such Plans provide the Executive with benefits which are less favorable, in the
aggregate, than the most favorable of such Plans in effect for the Executive at
any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and the affiliated
companies.

                              (v)         Expenses. During the Employment
Period, the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and the affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and the affiliated companies.

                              (vi)        Business Allowance. During the
Employment Period, the Executive shall be entitled to a business allowance in
accordance with the most favorable Plans of the Company and the affiliated
companies in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and the affiliated companies.

                              (vii)       Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and the affiliated companies
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and the
affiliated companies.

                              (viii)      Vacation. During the Employment
Period, the Executive shall be entitled to paid vacations in accordance with the
most favorable Plans of the Company and the affiliated companies as in effect
for the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
affiliated companies.

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                    5.            Termination of Employment.

                    (a)          Death or Disability. The Executive’s employment
shall terminate automatically upon the Executive’s death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Executive written notice in
accordance with Section 12(b) of this Agreement of its intention to terminate
the Executive’s employment. In such event, the Executive’s employment with the
Company shall terminate on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”), provided, that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable
to the Executive or the Executive’s legal representative (such agreement as to
acceptability not to be unreasonably withheld).

                    (b)          Cause. (i) The Company may terminate the
Executive’s employment during the Employment Period with or without Cause. For
purposes of this Agreement, “Cause” shall mean (A) repeated violations by the
Executive of the Executive’s obligations under Section 4(a) of this Agreement
(other than as a result of incapacity due to physical or mental illness) which
are demonstrably willful and deliberate on the Executive’s part, which are not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such violations or (B) the conviction of the Executive of a
felony involving moral turpitude.

                                   (ii)          For purposes of Section
5(b)(i)(A) of this Agreement, no act, or failure to act, on the part of the
Executive shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, based upon (A) authority given pursuant to a resolution
duly adopted by the Board, or if the Company is not the ultimate parent
corporation of the affiliated companies and is not publicly traded, the board of
directors of the Parent Corporation (the “Applicable Board”), (B) the
instructions of the Chief Executive Officer of the Company or the Parent
Corporation or a senior officer of the Company or the Parent Corporation or (C)
the advice of counsel for the Company or the Parent Corporation shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Applicable Board (excluding the Executive, if the Executive is a member
of the Applicable Board) at a meeting of the Applicable Board called and held
for such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel for the Executive, to
be heard before the Applicable Board), finding that, in the good faith opinion
of the Applicable Board, the Executive is guilty of the conduct described in
Section 5(b)(i)(A) of this Agreement, and specifying the particulars thereof in
detail.

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                    (c)          Good Reason. The Executive’s employment may be
terminated by the Executive for Good Reason or by the Executive voluntarily
without Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

 

 

 

                        (i)          the assignment to the Executive of any
duties inconsistent in any respect with the Executive’s position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or any
diminution in such position, authority, duties or responsibilities (whether or
not occurring solely as a result of the Company ceasing to be a publicly traded
entity or becoming a subsidiary), excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and that is remedied
by the Company promptly after receipt of notice thereof given by the Executive;

 

 

 

                        (ii)         any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

 

 

 

                        (iii)        the Company’s requiring the Executive to be
based at any office or location other than that described in Section 4(a)(i)(B)
of this Agreement or the Company’s requiring the Executive to be based at a
location other than the principal executive offices of the Company (if the
Executive were employed at such location immediately preceding the Effective
Date) or the Company’s requiring the Executive to travel on Company business to
a substantially greater extent than required immediately prior to the Effective
Date;

 

 

 

                        (iv)        any purported termination by the Company of
the Executive’s employment otherwise than as expressly permitted by this
Agreement; or

 

 

 

                        (v)         any failure by the Company to comply with
and satisfy Section 11(c) of this Agreement.

For purposes of this Section 5(c) of this Agreement, any good faith
determination of “Good Reason” made by the Executive shall be conclusive. The
Executive’s mental or physical incapacity following the occurrence of an event
described above in clauses (i) through (v) shall not affect the Executive’s
ability to terminate employment for Good Reason.

                    (d)         Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
12(b) of this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated and (iii) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice, specifies the Date of Termination (which
Date of Termination shall be not more than 30 days after the giving of such
notice). The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause, respectively, shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive’s or the
Company’s respective rights hereunder.

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                    (e)          Date of Termination. “Date of Termination”
means (i) if the Executive’s employment is terminated by the Company for Cause,
or by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified in the Notice of Termination, as the
case may be, (ii) if the Executive’s employment is terminated by the Company
other than for Cause or Disability or death, the Date of Termination shall be
the date on which the Company notifies the Executive of such termination, (iii)
if the Executive resigns without Good Reason, the date on which the Executive
notifies the Company of such termination and (iv) if the Executive’s employment
is terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be. Notwithstanding the foregoing, in no event shall the Date of Termination
occur until the Executive experiences a “separation from service” within the
meaning of Section 409A of the Code, and the date on which such separation from
service takes place shall be the “Date of Termination.”

                    6.           Obligations of the Company upon Termination.

                    (a)          Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company terminates the
Executive’s employment other than for Cause or Disability or the Executive
terminates employment for Good Reason, in lieu of further payments pursuant to
Section 4(b) of this Agreement with respect to periods following the Date of
Termination:

 

 

 

                        (i)          the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of Termination the aggregate of
the following amounts:

 

 

 

                            (A)          the sum of (1) the Executive’s Annual
Base Salary through the Date of Termination, and (2) any accrued vacation pay,
in each case, to the extent not theretofore paid (the sum of the amounts
described in subclauses (1) and (2), the “Accrued Obligations”);

 

 

 

                            (B)          an amount equal to the product of (1)
the higher of (I) the Three-Year Average Bonus and (II) the Annual Bonus paid or
payable, including any portion thereof that has been earned but deferred (and
annualized for any fiscal year consisting of less than 12 full months or during
which the Executive has been employed for less than 12 full months), for the
most recently completed fiscal year during the Employment Period, if any (such
higher amount, the “Highest Annual Bonus”), and (2) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, in lieu of any amounts
otherwise payable pursuant to the Executive Incentive Plan solely with respect
to the year in which the Date of Termination occurs (the “Pro-Rata Incentive
Payment”); and

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                            (C)          the amount equal to the product of (1)
two, and (2) the sum of (x) the Executive’s Annual Base Salary, and (y) the
Highest Annual Bonus; and

                              (ii)             the Executive’s benefits under
the Company’s tax qualified retirement plan (the “Retirement Plan”) and any
excess or supplemental retirement plan in which the Executive participates as of
the Effective Date (or if more favorable to the Executive, as of the Date of
Termination) (collectively, the “SERP”) shall be calculated assuming that the
Executive’s employment continued for the remainder of the Employment Period and
that during such period the Executive received service credit for all purposes
under such plans and the Executive’s age increased by the number of years that
the Executive is deemed to be so employed; provided, however; that in no event
shall the Executive be entitled to age or service credit, as a result of the
application of this Section 6(a)(ii), beyond the maximum age or maximum number
of years of service credit, as applicable, permitted under the Retirement Plan
or the SERP; and

                              (iii)            for the remainder of the
Employment Period, or such longer period as any plan, program, practice or
policy may provide (the “Benefit Continuation Period”), the Company shall
provide health care and life insurance benefits to the Executive and/or the
Executive’s family at least equal to, and at the same after-tax cost to the
Executive and/or the Executive’s family (taking into account any applicable
required employee contributions), as those which would have been provided to
them in accordance with the Plans providing health care and life insurance
benefits and at the benefit level described in Section 4(b)(iv) of this
Agreement if the Executive’s employment had not been terminated; provided,
however, that the health care benefits provided during the Benefit Continuation
Period shall be provided in such a manner that such benefits (and the costs and
premiums thereof) are excluded from the Executive’s income for federal income
tax purposes and, if the Company reasonably determines that providing continued
coverage under one or more of its health care benefit plans contemplated herein
could be taxable to the Executive, the Company shall provide such benefits at
the level required hereby through the purchase of individual insurance coverage;
provided, further, that if the Executive becomes re-employed with another
employer and is eligible to receive health care and life insurance benefits
under another employer-provided plan, the health care and life benefits provided
hereunder shall be secondary to those provided under such other plan during such
applicable period of eligibility. Following the end of the Benefit Continuation
Period, the Executive shall be eligible for continued health coverage as
required by Section 4980B of the Code or other applicable law (“COBRA
Coverage”), as if the Executive’s employment with the Company had terminated as
of the end of such period, and the Company shall take such actions as are
necessary to cause such COBRA Coverage not to be offset by the provision of
benefits under this Section 6(a)(iii) and to cause the period of COBRA Coverage
to commence at the end of the Benefit Continuation Period. For purposes of
determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree welfare benefits pursuant to the retiree welfare benefit
Plans, the Executive shall be considered to have remained employed until the end
of the Employment Period and to have retired on the last day of such period, and
the Company shall cause the Executive to be eligible to commence in the
applicable retiree welfare benefit Plans as of the applicable benefit
commencement date; and

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                                   (iv)            except as otherwise set forth
in the last sentence of Section 7, to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits that the Executive is otherwise entitled to receive under
any other plan, program, practice, policy, contract, arrangement or agreement of
the Company or the affiliated companies (such other amounts and benefits, the
“Other Benefits”).

Notwithstanding the foregoing provisions of Section 6(a)(i), in the event that
the Executive is a “specified employee” within the meaning of Section 409A of
the Code (as determined in accordance with the methodology established by the
Company as in effect on the Date of Termination) (a “Specified Employee”),
amounts that would otherwise be payable under Section 6(a)(i) during the
six-month period immediately following the Date of Termination (other than the
Accrued Obligations) shall instead be paid, with interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code
(“Interest”), on the first business day after the date that is six months
following the Executive’s “separation from service” within the meaning of
Section 409A of the Code (the “409A Payment Date”).

                    (b)          Death. If the Executive’s employment is
terminated by reason of the Executive’s death during the Employment Period, the
Company shall provide the Executive’s estate or beneficiaries with the Accrued
Obligations, the Pro-Rata Incentive Payment and the timely payment or delivery
of the Other Benefits, and shall have no other severance obligations under this
Agreement. The Accrued Obligations shall be paid to the Executive’s estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of the Other Benefits, the term
“Other Benefits” as used in this Section 6(b) shall include, without limitation,
and the Executive’s estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the Company
and the affiliated companies to the estates and beneficiaries of peer executives
of the Company and the affiliated companies under such Plans relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other peer executives of the Company and the affiliated
companies and their beneficiaries.

                    (c)          Disability. If the Executive’s employment is
terminated by reason of the Executive’s Disability during the Employment Period,
the Company shall provide the Executive with the Accrued Obligations and the
Pro-Rata Incentive Payment the timely payment or delivery of the Other Benefits
in accordance with the terms of the underlying plans or agreements, and shall
have no other severance obligations under this Agreement. The Accrued
Obligations and the Pro-Rata Incentive Payment shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination, provided, that in
the event that the Executive is a Specified Employee, the Pro-Rata Incentive
Payment shall be paid, with Interest, to the Executive on the 409A Payment Date.
With respect to the provision of the Other Benefits, the term “Other Benefits”
as used in this Section 6(c) shall include, and the Executive shall be entitled
after the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the Company and
the affiliated companies to disabled executives and/or their families in
accordance with such Plans relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive’s family, as in effect at any
time thereafter generally with respect to other disabled peer executives of the
Company and the affiliated companies and their families.

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                    (d)        Cause; Other Than for Good Reason. If the
Executive’s employment is terminated for Cause during the Employment Period, the
Company shall provide to the Executive (i) the Accrued Obligations and (ii) the
Other Benefits, in each case to the extent theretofore unpaid, and shall have no
other severance obligations under this Agreement. If the Executive voluntarily
terminates employment during the Employment Period, excluding a termination for
Good Reason, the Company shall provide to the Executive the Accrued Obligations
and the Pro-Rata Incentive Payment and the timely payment or delivery of the
Other Benefits, and shall have no other severance obligations under this
Agreement. In such case, the Accrued Obligations and the Pro-Rata Incentive
Payment shall be paid to the Executive in a lump sum in cash within 30 days of
the Date of Termination, provided, that in the event that the Executive is a
Specified Employee, the Pro-Rata Incentive Payment shall be paid, with Interest,
to the Executive on the 409A Payment Date.

                    7.          Non-Exclusivity of Rights. Nothing in this
Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of the affiliated companies (other than participation in any severance
plan upon the Executive’s termination of employment during the Employment
Period) and for which the Executive may qualify, nor, subject to Section 12(f)
of this Agreement, shall anything herein limit or otherwise affect such rights
as the Executive may have under any contract or agreement with the Company or
any of the affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of the
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement. Without limiting the
generality of the foregoing, the Executive’s resignation under this Agreement
with or without Good Reason, shall in no way affect the Executive’s ability to
terminate employment by reason of the Executive’s “retirement” under any
compensation and benefits plans, programs or arrangements of the affiliated
companies, including without limitation any retirement or pension plans or
arrangements or to be eligible to receive benefits under any compensation or
benefit plans, programs or arrangements of the affiliated companies, including
without limitation any retirement or pension plan or arrangement of the
affiliated companies or substitute plans adopted by the Company or its
successors, and any termination which otherwise qualifies as Good Reason shall
be treated as such even if it is also a “retirement” for purposes of any such
plan. Notwithstanding the foregoing, if the Executive receives payments and
benefits pursuant to Section 6(a) of this Agreement, the Executive shall not be
entitled to any other severance pay or benefits under any severance plan,
program or policy of the Company or the affiliated companies, unless expressly
provided therein in a specific reference to this Agreement.

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                    8.          Full Settlement; Legal Fees. The Company’s
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company agrees to pay as
incurred (within 10 days following the Company’s receipt of an invoice from the
Executive) at any time from the Effective Date of this Agreement through the
Executive’s remaining lifetime (or, if longer, through the 20th anniversary of
the Effective Date), to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, Interest, provided, that the Executive shall
have submitted an invoice for such fees and expenses at least 10 days before the
end of the calendar year next following the calendar year in which such fees and
expenses were incurred. The amount of such legal fees and expenses that the
Company is obligated to pay in any given calendar year shall not affect the
legal fees and expenses that the Company is obligated to pay in any other
calendar year.

                    9.          Certain Additional Payments by the Company.

                    (a)         Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this Section 9) (a “Payment”)
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then the Executive
shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding
any income taxes and penalties imposed pursuant to Section 409A of the Code, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 9(a), if it shall be determined that the Executive is entitled to the
Gross-Up Payment, but that the Parachute Value (as defined below) of all
Payments does not exceed 110% of the Safe Harbor Amount (as defined below), then
no Gross-Up Payment shall be made to the Executive and the amounts payable under
this Agreement shall be reduced so that the Parachute Value of all Payments, in
the aggregate, equals the Safe Harbor Amount. The reduction of Payments to the
Safe Harbor Amount, if applicable, shall be made by reducing the Payments under
the following sections of this Agreement in the following order: (i) Section
6(a)(1)(C), (ii) Section 6(a)(1)(B), (iii) Section 6(a)(iii) and (iv) Section
6(a)(ii). For purposes of reducing the Payments to the Safe Harbor Amount, only
amounts payable under this Agreement (and no other Payments) shall be reduced.
If the reduction of the amount payable under this Agreement would not result in
a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no
amounts payable under the Agreement shall be reduced pursuant to this Section
9(a). The Company’s obligation to make Gross-Up Payments under this Section 9
shall not be conditioned upon the Executive’s termination of employment.

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For the purposes of this Section 9, (i) the “Parachute Value” of a Payment shall
mean the present value as of the date of the change of control for purposes of
Section 280G of the Code of the portion of such Payment that constitutes a
“parachute payment” under Section 280G(b)(2) of the Code, as determined by the
Accounting Firm for purposes of determining whether and to what extent the
Excise Tax will apply to such Payment; and (ii) the “Safe Harbor Amount” means
2.99 times the Executive’s “base amount,” within the meaning of Section
280G(b)(3) of the Code.

                    (b)          Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by PricewaterhouseCoopers or such other nationally recognized certified public
accounting firm as may be designated by the Executive (the “Accounting Firm”),
which shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the “Accounting Firm” hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

                    (c)          The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days after
the Executive is informed in writing of such claim and the Executive shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that the Company
desires to contest such claim, the Executive shall:

 

 

 

                        (i)          give the Company any information reasonably
requested by the Company relating to such claim;

 

 

 

                       (ii)          take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;

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                  (iii)          cooperate with the Company in good faith in
order to effectively contest such claim; and

 

 

 

                  (iv)          permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
option, either pay the tax claimed to the appropriate taxing authority on behalf
of the Executive and direct the Executive to sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such payment or with respect to any imputed income in connection with such
payment; and provided, further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which the Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

                    (d)          If, after the receipt by the Executive of a
Gross-Up Payment or payment by the Company of an amount on the Executive’s
behalf pursuant to Section 9(c), the Executive becomes entitled to receive any
refund with respect to the Excise Tax to which such Gross-Up Payment relates or
with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 9(c) if applicable) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on the Executive’s behalf pursuant to Section 9(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then the amount of such payment shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

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                    (e)          Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Company within five days of the receipt of
the Accounting Firm’s determination; provided that, the Gross-Up Payment shall
in all events be paid no later than the end of the Executive’s taxable year next
following the Executive’s taxable year in which the Excise Tax (and any income
or other related taxes or interest or penalties thereon) on a Payment are
remitted to the Internal Revenue Service or any other applicable taxing
authority or, in the case of amounts relating to a claim described in Section
9(c) that does not result in the remittance of any federal, state, local and
foreign income, excise, social security and other taxes, the calendar year in
which the claim is finally settled or otherwise resolved. The Gross-Up Payment
shall be paid to the Executive; provided that the Company, in its sole
discretion, may withhold and pay over to the Internal Revenue Service or any
other applicable taxing authority, for the benefit of the Executive, all or any
portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.

                    10.         Confidential Information. The Executive shall
comply with any and all confidentiality agreements with the Company to which the
Executive is, or shall be, a party.

                    11.         Successors.

                    (a)          This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

                    (b)          This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. Except as
provided in Section 11(c) of this Agreement, this Agreement shall not be
assignable by the Company.

                    (c)          The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.

                    12.         Miscellaneous.

                    (a)          This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.

                    (b)          All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

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If to the Executive:

 

 

 

              At the most recent address on file at the Company.

 

 

 

If to the Company:

 

 

 

              Medtronic, Inc.

 

              Legal Dept. LC400

 

              710 Medtronic Parkway

 

              Minneapolis, MN 55432-5604

 

              Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.

                    (c)          The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

                    (d)          The Company may withhold from any amounts
payable under this Agreement such United States federal, state, or local or
foreign taxes as shall be required to be withheld pursuant to any applicable law
or regulation.

                    (e)          The Executive’s or the Company’s failure to
insist upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Sections 5(c)(i) through 5(c)(v) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.

                    (f)          The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Company, the employment of the Executive by the Company
may be terminated by either the Executive or the Company at any time prior to
the Effective Date or, subject to the obligations of the Company provided for in
this Agreement in the event of a termination after the Effective Date, at any
time on or after the Effective Date. Moreover, if prior to the Effective Date,
(i) the Executive’s employment with the Company terminates or (ii) the Executive
ceases to be an officer of the Company, then the Executive shall have no further
rights under this Agreement. From and after the Effective Date, except with
respect to the agreements described in Section 10 hereof, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof in effect immediately prior to the execution of this Agreement.

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                    (g)          The Agreement is intended to comply with the
requirements of Section 409A of the Code or an exemption or exclusion therefrom
and, with respect to amounts that are subject to Section 409A of the Code, shall
in all respects be administered in accordance with Section 409A of the Code.
Each payment under this Agreement shall be treated as a separate payment for
purposes of Section 409A of the Code. In no event may the Executive, directly or
indirectly, designate the calendar year of any payment to be made under this
Agreement. If the Executive dies following the Date of Termination and prior to
the payment of any amounts delayed on account of Section 409A of the Code, such
amounts shall be paid to the personal representative of the Executive’s estate
within 30 days after the date of the Executive’s death. All reimbursements and
in-kind benefits provided under this Agreement that constitute deferred
compensation within the meaning of Section 409A of the Code shall be made or
provided in accordance with the requirements of Section 409A of the Code,
including, without limitation, that (i) in no event shall reimbursements by the
Company under this Agreement be made later than the end of the calendar year
next following the calendar year in which the applicable fees and expenses were
incurred, provided, that the Executive shall have submitted an invoice for such
fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred; (ii)
the amount of in-kind benefits that the Company is obligated to pay or provide
in any given calendar year shall not affect the in-kind benefits that the
Company is obligated to pay or provide in any other calendar year; (iii) the
Executive’s right to have the Company pay or provide such reimbursements and
in-kind benefits may not be liquidated or exchanged for any other benefit; and
(iv) in no event shall the Company’s obligations to make such reimbursements or
to provide such in-kind benefits apply later than the Executive’s remaining
lifetime (or if longer, through the 20th anniversary of the Effective Date).
Prior to the Effective Date but within the time period permitted by the
applicable Treasury Regulations (or such later time as may be permitted under
Section 409A or any IRS or Department of Treasury rules or other guidance issued
thereunder), the Company may, in consultation with the Executive, modify the
Agreement, in the least restrictive manner necessary and without any diminution
in the value of the payments to the Executive, in order to cause the provisions
of the Agreement to comply with the requirements of Section 409A of the Code, so
as to avoid the imposition of taxes and penalties on the Executive pursuant to
Section 409A of the Code.

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Exhibit 10.1

                    IN WITNESS WHEREOF, the Executive has hereunto set the
Executive’s hand and, pursuant to the authorization from its Board of Directors,
the Company has caused these presents to be executed in its name on its behalf,
all as of the day and year first above written.

 

 

 

 

 

EXECUTIVE

 

MEDTRONIC, INC.

 

 

 

 

 

By:

 

 

By:

 

 

 

 

 

[Name]

 

[Name]

 

 

 

 

 

 

 

[Title]

 

[Title]

 

 

 

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