Exhibit 10.1 to Medtronic, Inc. Form 10-Q for quarter ended 7-31-2009



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.







                    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.


-10-







                    (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. 


-11-







                    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.


-12-








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; 





-13-








	
 

	
 


	
 

	
                  (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. 



-14-








                    (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: 


-15-








	
 

	
 


	
 

	
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. 


-16-







                    (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. 


-17-







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]