Exhibit
10.1


 





 


NON-QUALIFIED STOCK OPTION AGREEMENT


2003 LONG-TERM INCENTIVE PLAN


 


Optionee’s Name


Optionee’s Address


Grant Date


Number of Options Granted


Option Price


Aggregate Option Price


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 





















 


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


 


Shareholder Services, MS LC 310


Medtronic, Inc.


710 Medtronic Parkway


Minneapolis, MN 55432