Document:

EXHIBIT 10.2

                                 MEDTRONIC, INC.
                            MANAGEMENT INCENTIVE PLAN

                      (AS AMENDED THROUGH AUGUST 25, 1999)

                                   I. PURPOSES

         This Medtronic, Inc. Management Incentive Plan, as amended through
August 25, 1999 (the "Plan"), was amended and restated in its entirety effective
April 29, 1994 from the existing Restated Medtronic, Inc. Management Incentive
Plan originally adopted May 1, 1977. The Plan is designed to motivate officers
and other key employees to achieve the Company's operating goals by providing
the opportunity for incentive compensation in addition to annual salaries. The
Plan is also designed to promote the accomplishment of management's primary
annual objectives as reflected in the Company's annual operating plan, in the
various business unit annual operating plans, and in the objectives established
by management for employees, and to recognize the achievement of management's
objectives through the payment of incentive compensation.

         It is not the purpose of this Plan to reward employees for consistent
performance of primary job responsibilities, nor to assure the payment of fixed
salaries comparable in amount to those paid by similar companies, nor to
recognize achievements related to successful daily performance on the job, all
of which are intended to be identified, recognized, and rewarded through the
Company's ongoing administration of base salaries.

         The Company intends that all amounts paid to Covered Employees under
this Plan should qualify as deductible "performance-based compensation" under
Section 162(m) of the Code, and the Plan shall be interpreted in accordance with
this intent.

                                 II. DEFINITIONS

         2.01 DEFINITIONS. As used in the Plan:

             (a) "Affiliate" shall mean any corporation that is a "parent
corporation" or "subsidiary corporation" of the Company, as those terms are
defined in Sections 424(e) and (f) of the Code, or any successor provision, and
any joint venture in which the Company or any such "parent corporation" or
subsidiary corporation" owns an equity interest.

             (b) "Board of Directors" or "Board" shall mean the Board of
Directors of the Company.

             (c) "Chief Executive Officer" shall mean the person duly elected by
the Board to the office of Chief Executive Officer of the Company.

             (d) "Code" shall mean the Internal Revenue Code of 1986, as amended
and in effect from time to time, or any successor statute.

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             (e) "Committee" shall mean the Compensation Committee of the Board
of Directors, which shall consist of members of the Board who are not employees
and who are not eligible for participation in this Plan.

             (f) "Company" shall mean Medtronic, Inc., its Affiliates and their
successors and assigns.

             (g) "Covered Employee" shall mean any Employee who is a "covered
employee" as defined in section 162(m) of the Code.

             (h) "Employee" shall mean any employee of the Company, whether or
not an officer or member of the Board, but excluding any temporary employee and
any person serving the Company only in the capacity of a member of the Board.

             (i) "Participant" shall mean an Employee who has been selected in
accordance with the Plan's terms by the Committee or the Chief Executive Officer
for participation in this Plan.

             (j) "Participation Categories" shall mean those categories which
specify the range of plan awards, one of which categories will be assigned to
each Plan Participant. The Participation Categories may be redesignated or
revised (such as by establishing more or fewer categories or by changing the
percentages of salary ranges applicable to a category) from time to time at or
prior to the commencement of an applicable Plan Year by the Committee or, except
as otherwise provided in Sections 3.02 and 3.03, by the Chief Executive Officer
if such administrative responsibility has been delegated to such officer by the
Committee.

             (k) "Performance Categories" shall mean those financial and
management objective-based categories for performance measurement specified in
Section 4.05 hereof.

             (l) "Plan Year" shall mean the applicable fiscal year of the
Company.

             (m) "Salary" shall mean the direct gross (as opposed to taxable)
compensation earned by a Participant as base salary during the Plan Year,
excluding any and all commissions, bonuses, incentive payments for the current
Plan Year or prior Plan Years and other similar payments.

             (n) "Subsidiary" means a "subsidiary corporation," as that term is
defined in Section 424(f) of the Code, or any successor provision.

         Certain other terms used in the Plan shall have the meanings ascribed
to such terms in the text of the Plan.

                         III. ADMINISTRATION OF THE PLAN

         3.01 COMMITTEE OVERSIGHT. The Committee will administer the Plan by
majority vote. The Committee may establish such rules and regulations as it
deems necessary for the Plan and its interpretation. In addition, the Committee
may make such determinations and take such actions in connection with the Plan
as it deems necessary. Each determination made by the Committee in

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accordance with the provisions of the Plan will be final, binding and
conclusive. The Committee may rely on the financial statements certified by the
Company's independent public accountants.

         3.02 CHIEF EXECUTIVE OFFICER'S OVERSIGHT. Except as provided in Section
3.03, the Committee may delegate some or all of its administrative powers and
responsibilities under the Plan to the Chief Executive Officer for Employees
other than any Covered Employee. The Chief Executive Officer may make such
determinations and take such actions within the scope of such delegation and as
otherwise provided in the Plan as he deems necessary. Each such determination
made by the Chief Executive Officer will be final, binding and conclusive. The
Chief Executive Officer may rely on the financial statements certified by the
Company's independent public accountants. Unless the Committee determines
otherwise, the Committee shall be treated as delegating its authority to the
Chief Executive Officer to the full extent permitted hereunder.

         3.03 FURTHER APPROVAL NECESSARY. The Committee in its sole discretion
may modify, suspend, terminate or reinstate the Plan; provided, however, that
the Committee must receive prior approval of the Board of Directors (a) to
render nonemployees, whether or not members of the Board of Directors, eligible
to participate in the Plan, or (b) to increase the maximum awards (expressed as
a percentage of salary) for a Participation Category beyond the maximum award
which has been previously approved by the Board for such Participation Category.

                        IV. ELIGIBILITY AND PARTICIPATION

         4.01 CERTAIN PARTICIPANTS SELECTED BY COMMITTEE. At the beginning of
each Plan Year (or at such other time as is consistent with the requirements
under Section 162(m) of the Code), the Committee will assign each Covered
Employee to a Participation Category.

         4.02 OTHER PARTICIPANTS. Employees eligible to participate in the Plan
shall include executives, heads of key staff functions, heads of operating
business units and other major contributors to business unit or corporate
results. At the beginning of each Plan Year, the Chief Executive Officer will
select Participants in the Plan (other than those Participants who are to be
assigned to Participation Categories by the Committee pursuant to Section 4.01
hereof) from among such eligible employees. In addition, the Chief Executive
Officer may select other employees (other than Covered Employees) to participate
in the Plan when the Chief Executive Officer, in his sole discretion, deems such
participation appropriate.

         4.03 FUTURE PARTICIPATION. Participation in the Plan during one Plan
Year does not guarantee participation during any other Plan Year.

         4.04 PARTICIPATION CATEGORY. The Chief Executive Officer shall
designate for each Participant in the Plan (other than Covered Employees) a
Participation Category for purposes of determining the Participant's award. The
Participation Categories and relative awards for such category for each Plan
Year shall be set forth in writing. The range of potential awards to
Participants under the Plan is stated for each Participation Category as
percentages of each Participant's Salary and, if minimum performance objectives
are met or exceeded, actual awards will fall within a scale ranging from
designated minimum awards to designated target awards to designated maximum
awards. The designated target award for each respective Participation Category
is sometimes referred to herein as the "Target Award Percentage."
Notwithstanding any contrary provisions of this Plan, the final award granted to
any Participant under this Plan shall not

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be permitted to exceed the maximum award as a percentage of Salary for such
Participant's Participation Category.

         4.05 PERFORMANCE CATEGORY. Each Participant's entitlement to an award
under the Plan will be based on one or more of the weighted combinations of the
performance of the Participant individually, as part of a team or as a member of
management ("Management" performance), the Participant's division or other
business unit ("Unit Financial" performance) and the Company as a whole
("Corporate Financial" performance). The Chief Executive Officer shall designate
for each Participant in the Plan (except for Covered Employees) a Performance
Category for purposes of establishing such weighted combination from the
Participant's Performance Categories. The Committee shall designate Performance
Categories for all Covered Employees; provided however, that for Covered
Employees such Performance Categories shall be based only on one or any
combination of two or more of the following criteria: revenue, revenue per
employee, earnings before income tax (profit before taxes), earnings before
interest and income tax, net earnings (profit after taxes), earnings per
employee, tangible, controllable or total asset turnover, earnings per share,
operating income, total shareholder return, market share, return on equity,
before- or after-tax return on net assets, distribution expense, inventory
turnover, economic value added (economic profit). For Covered Employees, such
targets may relate to one or any combination of two or more of corporate, group,
unit, division, Affiliate, or individual performance, and such designated
targets will be treated as Corporate Financial objectives, Unit Financial
objectives, or Management objectives as appropriate.

                            V. PERFORMANCE OBJECTIVES

         5.01 CORPORATE FINANCIAL OBJECTIVES. Subject to Section 4.05 hereof, at
the beginning of each Plan Year, or, with respect to Covered Employees, at such
other time as is consistent with the requirements under Section 162(m) of the
Code, the Committee will establish the Corporate Financial objectives by which
the Company's financial performance during the Plan Year will be measured. Each
Corporate Financial objective shall have a stated performance target. In the
event that more than one Corporate Financial objective is used, the multiple
Corporate Financial objectives shall be appropriately weighted by percentage in
accordance with their importance (with the aggregate weighted objectives
totaling 100%) at the time the objectives are established. At the end of each
Plan Year the degree of achievement of each stated Corporate Financial objective
shall be expressed as a percentage of the Corporate Financial performance target
for each such objective. When one objective is used, such percentage shall
constitute the "Corporate Financial Score" as such term is used herein. (When
more than one objective is used, the determined percentage achievement of each
objective's target must be multiplied by the percentage weight (out of 100%)
assigned to each such specific objective, and the resulting percentages for the
various objectives must then be added and such sum shall constitute the
Corporate Financial Score.) The relationship between Corporate Financial
performance and awards hereunder will be distributed to all Participants at the
beginning of each Plan Year.

         5.02 OVERRIDING MINIMUM THRESHOLD. At the beginning of each Plan Year
(or at such other time as is consistent with the requirements under Section
162(m) of the Code), the Committee will designate a minimum threshold level of
Corporate Financial performance objective(s) which the Company must achieve for
there to be any award made under the Plan. If such minimum threshold is not met
or exceeded, no awards will be paid to Participants regardless

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of whether other Corporate Financial objectives, Unit Financial objectives or
Management objectives have been met.

         5.03 UNIT FINANCIAL OBJECTIVES. Subject to Section 4.05 hereof, at the
beginning of each Plan Year (or at such other time as is consistent with the
requirements under Section 162(m) of the Code), the Vice President or other unit
head responsible for each business unit of the Company will recommend and the
Chief Executive Officer will adopt the Unit Financial objectives by which the
business Unit's Financial performance will be measured. The Unit Financial
objective(s) will be based on financial goals reflected in the respective
business unit's fiscal year operating plan. Each Unit Financial objective shall
have a stated performance target. In the event that more than one Unit Financial
objective is used, the multiple Unit Financial objectives shall be appropriately
weighted in accordance with their importance (with the aggregate weighted
objectives totaling 100%). At the end of each Plan Year the degree of
achievement of each stated Unit Financial objective shall be expressed as a
percentage of the Unit Financial performance target for each objective. When one
objective is used, such percentage shall constitute the "Unit Financial Score"
as such term is used herein. When more than one objective is used, the
determined percentage achievement of each objective's target must be multiplied
by the percentage weight (out of 100%) assigned to each such specific objective,
and the resulting percentages for the various objectives must then be added and
such sum shall constitute the Unit Financial Score. The relationship between
Unit Financial performance and awards hereunder shall be distributed at the
beginning of each Plan Year to all Participants to which it applies. For all
Participants other than Covered Employees, at the beginning of each Plan Year
each business unit Vice President or other unit head may recommend and the Chief
Executive Officer may adopt, in the Chief Executive Officer's sole discretion, a
minimum threshold level of the business unit's most significant financial
objective which the business unit must achieve for there to be any award based
on such business unit's financial and management performance. If such minimum is
established for any Participant (other than a Covered Employee) and is not met
or exceeded, no award will be paid for one or both of the Unit Financial and
Management portions, as determined by the Chief Executive Officer, under the
Performance Category of each Participant in the business unit. The Committee
shall determine whether a minimum threshold level shall apply in the case of a
Covered Employee and the consequences of the failure to attain such minimum
threshold level.

         5.04 MANAGEMENT OBJECTIVES. Subject to Section 4.05 hereof, at the
beginning of each Plan Year (or, with respect to Covered Employees, at such
other time as is consistent with the requirements under Section 162(m) of the
Code), the manager of each Participant will recommend and the Chief Executive
Officer will adopt the Management objectives by which the individual
Participant's performance will be measured. Management objectives shall relate
to objectives in the business unit's annual operating plan and/or long-range
plan. Each Management objective shall have a stated performance target. In the
event that more than one Management objective is used, the multiple Management
objectives shall be appropriately weighted by percentage, at the time they are
established, in accordance with their importance (with the aggregate weighted
objectives totaling 100%). At the end of each Plan Year the degree of
achievement of each stated Management objective shall be expressed as a
percentage of the Management performance target for each such objective. When
one objective is used, such percentage shall constitute the "Management Score"
as such term is used herein. When more than one objective is used, the
determined percentage achievement of each objective's target must be multiplied
by the percentage weight (out of 100%) assigned to each such specific

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objective, and the resulting percentages for the various objectives must then be
added and such sum shall constitute the Management Score. The relationship
between individual performance and awards hereunder will be distributed at the
beginning of each Plan Year to all Participants to which it applies.

         5.05 FINAL AWARD FUNDING. At the end of each Plan Year, the Chief
Executive Officer will submit to the Committee a statement of the proposed final
award to be granted to each Participant (including Covered Employees) under the
terms of the Plan. The Committee shall determine and certify that the
performance goals were satisfied and shall make the final award for each such
Participant; provided that no Covered Employee may receive an award under this
Plan in excess of $3 million during any Plan Year. The Chief Executive Officer
shall make the final award for each Participant, other than Covered Employees,
subject, however, to having first received the Committee's approval of the
aggregate amount of the awards to be paid to all of such Participants.

                      VI. CALCULATION AND PAYMENT OF AWARDS

         6.01 CALCULATION OF AWARDS. Each Participant's final award shall be
equal to the sum of the following:

              (a) CORPORATE FINANCIAL PORTION. The Corporate Financial portion
of each Participant's award will be the product of (i) the Participant's Salary,
(ii) the Target Award Percentage for the Participant's applicable Participation
Category, (iii) the Corporate Financial percentage under the Participant's
Performance Category and (iv) the Corporate Performance Score;

              (b) UNIT FINANCIAL PORTION. The Unit Financial portion of each
Participant's award will be the product of (i) the Participant's Salary, (ii)
the Target Award Percentage for the Participant's applicable Participation
Category, (iii) the Unit Financial percentage under the Participant's
Performance Category and (iv) the Unit Financial Score; and

              (c) MANAGEMENT PORTION. The Management portion of each
Participant's award will be the product of (i) the Participant's Salary, (ii)
the Target Award Percentage for the Participant's applicable Participation
Category, (iii) the Management percentage under the Participant's Performance
Category and (iv) the individual's Management Score; provided, however, that for
Covered Employees subsection (i) of (a), (b) and (c) above shall be equal to
such Participant's annual Salary in effect on the first day of the Plan Year, if
required to comply with Section 162(m) of the Code.

         6.02 PAYMENT OF AWARDS. Final awards shall be paid to each Participant
in cash within 90 days after the end of the Plan Year. Notwithstanding the
preceding sentence: (1) a Participant who is eligible to participate in the
Medtronic, Inc. Capital Accumulation Plan Deferral Program ("CAP") shall be
entitled to defer any part or all of the award granted to him or her hereunder
in accordance with the terms of the CAP, and (2) if the Committee in its
discretion permits, a Participant may elect to receive stock options granted
under the Company's 1994 Stock Award Plan in lieu of any part or all of the cash
award to which the Participant would otherwise be entitled hereunder, in
accordance with rules established by the Committee for such purpose.

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                           VII. EMPLOYMENT PROVISIONS

         7.01 PROMOTIONS AND NEW EMPLOYEES. Except as to Covered Employees (as
to whom such determinations must be made by the Committee), Employees who are
newly hired or promoted into positions eligible for participation in the Plan
will participate in the degree deemed appropriate, if at all, by the Chief
Executive Officer and at the sole discretion of the Chief Executive Officer.

         7.02 TERMINATION OF EMPLOYMENT.

              (a) DEATH, DISABILITY OR RETIREMENT. Following termination of
employment (which shall be deemed to occur on the date on which the Participant
ceases working for the Company) during a Plan Year by reason of death,
disability or normal or early retirement, a Participant will be eligible to
receive a pro rata award equal to the portion of the final award, otherwise
determined in accordance with Section 6.01, represented by the percentage equal
to the number of full months of employment during the Plan Year divided by 12.
Such pro rata award will be paid in accordance with Section 6.02.

              (b) OTHER TERMINATION. Following a termination of employment
(which shall be deemed to occur on the date on which the Participant ceases
working for the Company) during a Plan Year for any reason other than death,
disability or normal or early retirement, a Participant's eligibility to receive
an award for that Plan Year will be determined solely at the discretion of the
Chief Executive Officer, or, in the case of a Covered Employee, solely at the
discretion of the Committee. No such award may exceed a pro rata portion of the
amount that normally would be available under the Plan, with such pro rata
portion to be determined as in Section 7.02(a).

         If a Participant's employment is terminated for "Cause," the time at
which such employee ceases to be an employee for purposes of this subparagraph
shall mean the time at which such employee is instructed or notified to cease
performing his or her job responsibilities for the Company or any Affiliate,
whether or not for other reasons such as payroll, benefits or compliance with
legal procedures or requirements that he or she may still have other attributes
of an employee. For purposes of this subparagraph, "Cause" shall mean (i)
failure to comply with any material policies and procedures of the Company, (ii)
conduct reflecting dishonesty or disloyalty to the Company, or which may have a
negative impact on the reputation of the Company, (iii) commission of a felony,
theft or fraud, or violations of law involving moral turpitude or (iv) failure
to perform the material duties of his or her employment.

         7.03 NO EMPLOYMENT CONTRACT. Nothing contained in the Plan shall create
any right in any employee to continued employment or otherwise affect his or her
status as an employee-at-will.

                         VIII. MISCELLANEOUS PROVISIONS

         8.01 NONASSIGNABILITY OF BENEFITS. No Participant, nor his or her legal
representative, shall have any right to assign, transfer, appropriate, encumber
or anticipate any interest in the Plan or any payments hereunder. Participants
have only the right to receive payments under this

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Plan if, as and when such payments are due and payable under the terms and
conditions of the Plan.

         8.02 WITHHOLDING TAXES. The Company will deduct from all payments under
the Plan any taxes required to be withheld by the federal or any state or local
government and will pay over such taxes to such government for the account of
such Participant.

         8.03 EXPENSES OF THE PLAN. The Company will bear all of the expenses of
administering the Plan and will not charge such expenses against amounts payable
hereunder.

         8.04 APPLICABLE LAW. This Plan, all determinations made hereunder, and
all actions taken pursuant hereto will be governed by the laws of the state of
Minnesota.

                              IX. CHANGE IN CONTROL

         9.01 CALCULATION OF AWARDS. Notwithstanding any other provisions of
this Plan, including without limitation the minimum threshold requirements of
Sections 5.02 and 5.03 and the provisions of Section 7.02(b) which shall not
apply, Participants shall be entitled to a final award calculated in accordance
with Section 6.01 of the Plan during any Plan Year in which there is a Change in
Control, as defined in Section 9.03 hereof; provided, however, that for purposes
hereof the amount of the final award shall be the product of (i) the amount of
the Participant's Salary that the Participant would have earned if paid through
the end of the Plan Year at the Participant's base salary in effect at the time
of the Change in Control and (ii) the greater of (A) the target award as a
percentage of salary for the Participant's Participation Category or (B) if the
Change in Control occurs after the first quarter of a Plan Year, the award as a
percentage of salary that the Participant would have received if (1) no Change
in Control had occurred during such Plan Year, (2) Participant's employment did
not terminate during such Plan Year and (3) the applicable Management
performance, Unit Financial performance and Corporate Financial performance (or
if less than all such performance categories are to be taken into consideration
in determining the achievement of performance objectives of the Participant,
such categories as are to be taken into consideration in determining the
achievement of such performance objectives) had equaled the performance most
recently projected by the Company prior to the Change in Control with respect to
such performance categories for such Plan Year (adjusted to exclude (a) all
legal, accounting, investment banking and other costs and expenses incurred or
projected by the Company in connection with, or in opposition to, the events
resulting in the Change in Control and (b) the projected effect of the Change in
Control upon Management performance, Unit Financial performance and Corporate
Financial performance). The Company shall compute such projections for the Plan
Year at or about the end of each quarter, except the last quarter, of each Plan
Year.

         9.02 PAYMENT OF AWARDS. Final awards shall be paid under this Article
IX within 90 days following the occurrence of the earliest Change in Control
described in Section 9.03. Notwithstanding the preceding sentence, a Participant
who is eligible to participate in the CAP shall be entitled to defer any part or
all of the award granted to him or her hereunder in accordance with the terms of
the CAP.

         9.03 CHANGE IN CONTROL. For purposes of this Article IX, a "Change in
Control" shall mean:

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              (i) the acquisition by 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")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) 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
the following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Company, (B) any acquisition by the Company or any
Subsidiary, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary or (D) any acquisition
by any corporation with respect to which, following such acquisition, more than
55% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such acquisition in substantially
the same proportions as their ownership, immediately prior to such acquisition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be; or

              (ii) individuals who, as of the effective date of this Plan,
constitute the Board (the "Incumbent Board") 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 directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, 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 (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents;
or

              (iii) approval by the shareholders of the Company of a
reorganization, merger, consolidation or statutory exchange of Outstanding
Company Voting Securities in each case, with respect to which all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
consolidation or exchange do not, following such reorganization, merger,
consolidation or exchange, beneficially own, directly or indirectly, more than
55% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger, consolidation or exchange in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger, consolidation or exchange of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be; or

              (iv) approval by the shareholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation with respect to which, following such sale or other disposition,
more than 55% of, respectively, the then outstanding shares of common stock

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of such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be.

         Notwithstanding the foregoing provisions of this definition, a Change
of Control shall not be deemed to occur with respect to a Participant if the
acquisition of the 30% or greater interest referred to in subparagraph (i) of
this definition is by a group, acting in concert, that includes the Participant
or if at least 40% of the then outstanding common stock or combined voting power
of the then outstanding voting securities (or voting equity interests) of the
surviving corporation or of any corporation (or other entity) acquiring all or
substantially all of the assets of the Company shall be beneficially owned,
directly or indirectly, immediately after a reorganization, merger,
consolidation, statutory share exchange or disposition of assets referred to in
subparagraph (iii) or (iv) of this definition by a group, acting in concert,
that includes that Participant.

                                       10EXHIBIT 10.7

                                 MEDTRONIC, INC.
                            CAPITAL ACCUMULATION PLAN
                     DEFERRAL PROGRAM, AS RESTATED EFFECTIVE
                                 JANUARY 1, 1994

<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1. DEFERRED COMPENSATION ACCOUNT.......................................1
    Section 1.1. Establishment of Account......................................1
    Section 1.2. Property of Committee.........................................1
ARTICLE 2.  DEFINITIONS, GENDER, AND NUMBER....................................2
    Section 2.1. Definitions...................................................2
    Section 2.2. Gender and Number.............................................7
ARTICLE 3. PARTICIPATION.......................................................8
    Section 3.1. Who May Participate...........................................8
    Section 3.2. Time and Conditions of Participation..........................8
    Section 3.3. Termination of Participation..................................8
    Section 3.4. Missing Persons...............................................9
    Section 3.5. Relationship to Other Plans...................................9
ARTICLE 4. ENTRIES TO THE ACCOUNT..............................................9
    Section 4.1. Contributions.................................................9
    Section 4.2. Crediting Rate...............................................10
ARTICLE 4A. DEFERRAL OF RECEIPT OF COMMON STOCK UNDER STOCK OPTION
            AGREEMENTS........................................................10
    Section 4A.1. Purpose of Article..........................................10
    Section 4A.2. Definitions.................................................10
    Section 4A.3. Deferral Election...........................................11
    Section 4A.4. Accounting for Deferrals....................................12

                                      -i-
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    Section 4A.5. Distributions...............................................12
    Section 4A.6. Adjustment to Deferred Stock Unit Accounts..................15
ARTICLE 5. DISTRIBUTION OF BENEFITS...........................................15
    Section 5.1. Distributions Pursuant to Deferral Election..................15
    Section 5.2. Distribution of Benefits Upon Termination of Employment......15
    Section 5.3. Death Benefits...............................................17
    Section 5.4. Minimum Amount and Frequency of Payments.....................18
    Section 5.5. Acceleration of Distributions................................18
    Section 5.6. Withdrawals..................................................19
    Section 5.7. Distributions on Plan Termination............................20
    Section 5.8. Claims Procedure.............................................20
ARTICLE 6. FUNDING............................................................21
    Section 6.1. Source of Benefits...........................................21
    Section 6.2  No Claim on Specific Assets..................................21
ARTICLE 7. ADMINISTRATION AND FINANCES........................................21
    Section 7.1. Administration...............................................21
    Section 7.2. Powers of Committee..........................................21
    Section 7.3. Actions of the Committee.....................................22
    Section 7.4. Delegation...................................................22
    Section 7.5. Reports and Records..........................................22
ARTICLE 8. AMENDMENTS AND TERMINATION.........................................23
    Section 8.1. Amendments...................................................23
    Section 8.2. Termination..................................................23

                                       -i-
<PAGE>

ARTICLE 9. TRANSFERS..........................................................23
ARTICLE 10. CHANGE IN CONTROL PROVISIONS......................................24
    Section 10.1. Application of Article 10...................................24
    Section 10.2. Payments to and by the Trust................................24
    Section 10.3. Legal Fees and Expenses.....................................25
    Section 10.4. No Reduction in Crediting Rate..............................25
    Section 10.5. Late Payment and Additional Payment Provisions..............25
ARTICLE 11. MISCELLANEOUS.....................................................27
    Section 11.1. No Guarantee of Employment..................................27
    Section 11.2. Release.....................................................27
    Section 11.3. Notices.....................................................27
    Section 11.4. Nonalienation...............................................27
    Section 11.5. Tax Liability...............................................27
    Section 11.6. Captions....................................................28
    Section 11.7. Applicable Law..............................................28

                                       -i-
<PAGE>

                                 MEDTRONIC, INC.
                            CAPITAL ACCUMULATION PLAN
                     DEFERRAL PROGRAM, AS RESTATED EFFECTIVE
                                 JANUARY 1, 1994

         Medtronic, Inc. (the "Company") established, effective January 1, 1989,
a nonqualified deferred compensation plan for the benefit of Executives of the
Company and of certain of the Company's Affiliates. This plan is known as the
Medtronic, Inc. Capital Accumulation Plan Deferral Program (the "Plan"). The
Plan was restated, effective January 1, 1992. The Company hereby restates the
Plan, effective January 1, 1994, as set forth herein.

         Except as specifically provided herein, this restatement shall apply to
Permissible Deferrals first effective for Plan Years commencing on or after
January 1, 1994, and the provisions of the Plan, as in effect prior to this
restatement, shall apply to Permissible Deferrals first effective for Plan Years
prior to January 1, 1994.

         The Plan is intended to be an unfunded plan maintained primarily for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees as described in Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA").

         ARTICLE 1. DEFERRED COMPENSATION ACCOUNT.
         ----------------------------------------

         Section 1.1. Establishment of Account. The Company shall establish an
account ("Account") for each Participant which shall be utilized solely as a
device to measure and determine the amount of deferred compensation to be paid
under the Plan.

         Section 1.2. Property of Company. Any amounts so set aside for benefits
payable under the Plan are the property of the Company, except, and to the
extent, provided in the Trust.

<PAGE>

         ARTICLE 2. DEFINITIONS, GENDER, AND NUMBER.
         ------------------------------------------

         Section 2.1. Definitions. Whenever used in the Plan, the following
words and phrases shall have the meanings set forth below unless the context
plainly requires a different meaning, and when a defined meaning is intended,
the term is capitalized.

                  2.1.1. "Account" means the device used to measure and
         determine the amount of deferred compensation to be paid to a
         Participant or Beneficiary under the Plan, and may refer to the
         separate Accounts that represent amounts deferred by a Participant
         under separate Permissible Deferral elections pursuant to Section
         4.1.1, by the Company pursuant to Section 4.1.2, or as a transfer from
         the Medtronic, Inc. Compensation Deferral Plan for Officers and Key
         Employees pursuant to Article 9.

                  2.1.2. "Affiliates" or "Affiliate" means a group of entities,
         including the Company, which constitutes a controlled group of
         corporations (as defined in section 414(b) of the Code), a group of
         trades or businesses (whether or not incorporated) under common control
         (as defined in section 414(c) of the Code), and members of an
         affiliated service group (within the meaning of section 414(m) of the
         Code.)

                  2.1.3. "Age" of a Participant means the number of whole
         calendar years that have elapsed since the date of the Participant's
         birth.

                  2.1.4. "Base Salary" of a Participant for any Plan Year means
         the total annual salary and wages paid by all Affiliates to such
         individual for such Plan Year, including any amount which would be
         included in the definition of Base Salary, but for the individual's
         election to defer some of his or her salary pursuant to this Plan or
         some other deferred compensation plan established by an Affiliate; but
         excluding any other remuneration paid by Affiliates, such as overtime,
         incentive compensation, stock options, distributions of compensation
         previously deferred, restricted stock, allowances for expenses
         (including moving, travel

                                       2
<PAGE>

         expenses, and automobile allowances), and fringe benefits whether
         payable in cash or in a form other than cash. In the case of an
         individual who is a participant in a plan sponsored by an Affiliate
         which is described in Section 401(k) or 125 of the Code, the term Base
         Salary shall include any amount which would be included in the
         definition of Base Salary but for the individual's election to reduce
         his salary and have the amount of the reduction contributed to or used
         to purchase benefits under such plan.

                  2.1.5. "Beneficiary" or "Beneficiaries" means the persons or
         trusts designated by a Participant in writing pursuant to Section 5.3.4
         of the Plan as being entitled to receive any benefit payable under the
         Plan by reason of the death of a Participant, or, in the absence of
         such designation, the persons specified in Section 5.3.5 of the Plan.

                  2.1.6. "Board" means the Board of Directors of the Company as
         constituted at the relevant time.

                  2.1.7. "Code" means the Internal Revenue Code of 1986, as
         amended from time to time and any successor statute. References to a
         Code section shall be deemed to be to that section or to any successor
         to that section.

                  2.1.8. "Committee" means the Committee appointed by the
         Company's Board, or any person or entity designated by the Committee to
         administer the Plan pursuant to Section 7.4.

                  2.1.9. "Company" means Medtronic, Inc.

                  2.1.10. "Compensation" with respect to a Participant for any
         period means the sum of such Participant's Base Salary and Incentive
         Compensation for such period.

                  2.1.11. "Crediting Rate" with respect to any Plan Year means
         the rate set forth on Schedule B, hereto, which schedule may be revised
         from time to time by the Company's Chief Executive Officer, in his
         discretion. In general, the

                                       3
<PAGE>

         Crediting Rate in effect with respect to a Plan Year shall apply to all
         deferrals made in such Plan Year; however, if the Chief Executive
         Officer subsequently makes other rates ("alternative rates") available,
         a Participant may elect to have an alternate rate apply to such
         deferrals in accordance with rules established by the Company.

                  2.1.12. "Disabled" or "Disability" with respect to a
         Participant shall have the same definition as in the Company's then
         existing long term group disability insurance program.

                  2.1.13. "Early Retirement Date" of a Participant means the
         last day of the calendar month in which the Participant has (a) reached
         Age 55 while in the employ of an Affiliate and has completed at least
         ten (10) Years of Service, or (b) reached the Age of 62 while in the
         employ of an Affiliate.

                  2.1.14. "Effective Date" means the date on which this Plan
         became effective, i.e., January 1, 1989.

                  2.1.15. "Executive" means any United States employee who is
         (a) an Officer or a Vice President of the Company, (b) a member of the
         Sales Force of a Participating Affiliate whose Compensation for the
         Participating Affiliate's fiscal year ending immediately prior to the
         date on which he first enters into a Permissible Deferral election
         equals or exceeds the dollar amount set forth on Schedule A, hereto,
         which schedule may be revised from time to time by the Company's Chief
         Executive Officer in his discretion, or (c) any individual designated
         as eligible to participate in the Plan by the Company's Chief Executive
         Officer.

                  2.1.16. "Incentive Compensation" of a Participant for any Plan
         Year means the total remuneration paid under the various incentive
         compensation programs maintained by Affiliates to such individual for
         that Plan Year including any amount which would be included in the
         definition of Incentive Compensation,

                                       4
<PAGE>

         but for the individual's election to defer some or all of his or her
         Incentive Compensation pursuant to this Plan or some other deferred
         compensation plan established by an Affiliate; but excluding long-term
         incentive awards (other than the cash portion of the Performance Share
         Plan) and any other remuneration paid by Affiliates, such as Base
         Salary, overtime, net commissions, stock options, distributions of
         compensation previously deferred, restricted stock, allowances for
         expenses (including moving, travel expenses, and automobile
         allowances), and fringe benefits whether payable in cash or in a form
         other than cash.

                  2.1.17. "Maximum Annual Deferral" with respect to a
         Participant for a Plan Year means the sum of (a) 50% of such
         Participant's Base Salary and (b) 100% of the cash portion of such
         Participant's Incentive Compensation for such Plan Year. Initially,
         Participants described in Section 2.1.15(b) may defer from Incentive
         Compensation only. The Committee may, in its discretion, adopt a policy
         to permit such Participants to also defer from Base Salary.

                  2.1.18. "Normal Retirement Date" of a Participant means the
         last day of the calendar month in which the Participant has reached the
         Age of 65 while in the employ of an Affiliate.

                  2.1.19. "Officer or Vice President" means an employee who is
         either elected by the Board or appointed by the Company's Chief
         Executive Officer to such position.

                  2.1.20. "Participant" means an individual who is eligible to
         participate in the Plan and has elected to participate in the Plan.

                  2.1.21. "Participating Affiliate" or "Participating
         Affiliates" means the Company and such Affiliates as may be designated
         by the Chief Executive Officer of the Company, or his designee, from
         time to time.

                                       5
<PAGE>

                  2.1.22. "Performance Share Plan" means the Medtronic, Inc.
         1979 Restricted Stock and Performance Share Award Plan, as may be
         amended from time to time.

                  2.1.23. "Permissible Deferral" means one of the following
         options as selected by the Participant:

                           (a) A deferral from Base Salary for one (1) Plan Year
                  which is not less than $3,000 nor more than the Maximum Annual
                  Deferral.

                           (b) A deferral from Incentive Compensation for one
                  (1) Plan Year which is not less than $3,000 nor more than the
                  Maximum Annual Deferral.

                  Initially, Participants described in Section 2.1.15(b) may
         make deferrals pursuant to paragraph (b) of this Section only. The
         Committee may, in its discretion, adopt a policy to permit such
         Participants to also make deferrals pursuant to paragraph (a) of this
         Section. Participants other than those described in Section 2.1.15(b)
         may make deferrals pursuant to paragraph (a) or (b) of this Section, or
         a combination of both, but in no event may any deferrals exceed the
         Maximum Annual Deferral for any Plan Year.

                  Elections to defer from Base Salary or Incentive Compensation
         shall be made annually at a date to be determined by the Committee, but
         no later than December 30th of the calendar year immediately preceding
         the Plan Year during which the Base Salary or Incentive Compensation
         would otherwise have been paid to the Participant. All deferral
         elections must specify either the percentages (stated as integers) or
         dollar amounts, or combination of percentages and dollar amounts, as
         determined by the Committee in its discretion, of the deferrals that
         are intended to be deducted from Base Salary or Incentive Compensation,
         respectively. Each installment of a deferral shall be rounded to the
         nearest whole

                                       6
<PAGE>

         dollar amount. Only the cash portion of an award under the Performance
         Share Plan may be deferred.

                  No Permissible Deferral election for a deferral from Incentive
         Compensation payable under the Performance Share Plan or the Medtronic,
         Inc. Management Incentive Plan shall be effective for any Plan Year
         unless the cash amount payable to the Participant under such plan for
         the Plan Year (but for the election) is sufficient to satisfy such
         election.

                  Deferrals from Incentive Compensation for Participants
         described in Section 2.1.14(b) shall be made in periodic installments,
         as determined by the Committee in its discretion.

                  All deferrals must be completed by the end of the Plan Year in
         which the Participant attains Age 70.

                  2.1.25. "Plan" means the "Medtronic, Inc. Capital Accumulation
         Plan Deferral Program" as set forth herein and as amended or restated
         from time to time.

                  2.1.26.  "Plan Year" means January 1 through December 31.

                  2.1.27. "Premature Distribution" means a distribution to a
         Participant at his or her request prior to the time otherwise permitted
         under the Plan, subject to certain penalties, as described in Section
         5.6.2.

                  2.1.28. "Sales Force" means employees of Participating
         Affiliates whose primary employment responsibilities involve selling
         the products manufactured by Participating Affiliates.

                  2.1.29. "Trust" means the Medtronic, Inc. Compensation Trust
         Agreement Number One, as may be amended from time to time.

         Section 2.2. Gender and Number. Except as otherwise indicated by
context, masculine terminology used herein also includes the feminine and
neuter, and terms used in the singular may also include the plural.

                                       7
<PAGE>

         ARTICLE 3. PARTICIPATION.
         ------------------------

         Section 3.1. Who May Participate. Participation in the Plan is limited
to Executives.

         Section 3.2. Time and Conditions of Participation. An eligible
Executive shall become a Participant only upon (a) the individual's completion
of a Permissible Deferral election form for the succeeding Plan Year, and (b)
compliance with such terms and conditions as the Committee may from time to time
establish for the implementation of the Plan, including, but not limited to, any
condition the Committee may deem necessary or appropriate for the Company to
meet its obligations under the Plan. To enable the Company to meet its financial
commitment under the Plan, the Company may purchase insurance on the lives of
each Participant. Consequently, participation in the Plan is contingent upon an
individual's insurability. The Committee may, in its sole discretion, accept or
reject for participation in the Plan individuals who are rated as uninsurable.
If the Committee accepts such an individual for participation in the Plan, such
individual's Account under the Plan may be credited with interest at a lesser
rate than provided in Section 4.2.

         An individual may make a Permissible Deferral election for any Plan
Year provided that the Participant's remaining Compensation, after all
deferrals, is sufficient to enable the Company to withhold from the
Participant's Compensation (a) any amounts necessary to satisfy withholding
requirements under applicable tax law; and (b) the amount of any contributions
which the employee may be required to make or may have elected to make under the
Company's various benefit plans.

         Section 3.3. Termination of Participation. Once an individual has
become a Participant in the Plan, participation shall continue until the first
to occur of (a) payment in full of all benefits to which the Participant or
Beneficiary is entitled under the Plan, or (b) the occurrence of an event
specified in Section 3.4 which results in loss of benefits. Except as otherwise
specified in the Plan, the Company may not terminate an individual's
participation in the Plan; provided, however, that if the Committee, in its
discretion, determines that it is likely that a Participant would not be
considered to be a member of a select group of

                                       8
<PAGE>

management or highly compensated employees, within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of ERISA, for any period, the Committee may
require that no contributions be made to the Plan by or on behalf of such
Participant during such period.

         Section 3.4. Missing Persons. If the Company is unable to locate the
Participant or his Beneficiary for purposes of making a distribution, the amount
of a Participant's benefits under the Plan that would otherwise be considered as
nonforfeitable shall be forfeited effective four (4) years after (a) the last
date a payment of said benefit was made, if at least one such payment was made,
or (b) the first date a payment of said benefit was directed to be made by the
Company pursuant to the terms of the Plan, if no payments have been made. If
such person is located after the date of such forfeiture, the benefits for such
Participant or Beneficiary shall not be reinstated hereunder.

         Section 3.5. Relationship to Other Plans. Participation in the Plan
shall not preclude participation of the Participant in any other fringe benefit
program or plan sponsored by an Affiliate for which such Participant would
otherwise be eligible.

         ARTICLE 4. ENTRIES TO THE ACCOUNT.
         ---------------------------------

         Section 4.1. Contributions.

                  Section 4.1.1. Deferrals. During each Plan Year, the Company
         shall post to the Account of each Participant the amount of Base Salary
         and Incentive Compensation to be deferred as designated by the
         Participant's Permissible Deferral election in effect for that Plan
         Year.

                  Section 4.1.2. Company Contributions. The Company may, in its
         discretion, make contributions to the Plan from time to time on behalf
         of a Participant equal to all or a portion of amounts which would have
         been contributed on behalf of the Participant under other benefit plans
         of the Company if the Participant had not made a Permissible Deferral
         election under the Plan.

                  Section 4.1.3. Disability. If a Participant becomes Disabled,
         deferrals and Company contributions shall continue to be posted as
         described in Sections 4.1.1

                                       9
<PAGE>

         and 4.1.2 during the period in which the Participant is entitled to
         receive Base Salary from the Company. If a Participant continues to be
         Disabled after such period, deferrals and Company contributions will
         cease.

         Section 4.2. Crediting Rate. Except as otherwise provided in Sections
3.2, 5.2.2 and 8.2, a Participant's Account will be credited with interest at
the Crediting Rate as described in Section 2.1.11.

         ARTICLE 4A. DEFERRAL OF RECEIPT OF COMMON STOCK UNDER STOCK OPTION
         AGREEMENTS.
         ------------------------------------------------------------------

         Section 4A.1 Purpose of Article This Article establishes special
procedures for deferring the delivery and receipt of Common Stock which the
Participants identified in Section 4A.3 may receive from the exercise of a
nonqualified stock option granted to the Participant by the Company. The stock
options are governed by the stock option plan under which they are granted. No
stock options or shares of Common Stock are authorized to be issued under the
Plan. Participants who elect to defer receipt of Common Stock issuable upon the
exercise of stock options will have no rights as stock holders of the Company
with respect to allocations made to their Deferred Stock Unit Accounts except
the right to receive dividend equivalent allocations as hereafter described.

         Section 4A.2. Definitions. Whenever used in this Article 4A the
following words and phrases shall have the meanings set forth below unless the
context plainly requires a different meaning, and when a defined meaning is
intended, the term is capitalized. All other capitalized terms shall have the
meaning ascribed to them in Section 2.1.

                  4A.2.1 "Common Stock" means the Company's common stock. $.10
         par value per share (as such par value may be adjusted from time to
         time).

                                       10
<PAGE>

                  4A.2.2 "Deferred Stock Unit Account" means the notational
         account established to record the Net Shares deferred by the
         participant and the dividend equivalents with respect to such Net
         Shares.

                  4A.2.3 "Net Shares" means the difference between the number of
         shares of Common Stock subject to the stock option exercise and the
         number of shares of Common Stock delivered to satisfy the stock option
         exercise price less any shares used to satisfy FICA or any other taxes
         due upon the stock option exercise as may be elected by the Participant
         pursuant to Section 4A.3.

                  4A.2.4 "Stock Unit" means a notational unit representing the
         right to receive one share of Common Stock.

         Section 4A.3. Deferral Election. A Participant at the level of Vice
President or above (or any other Participant designated by the Senior Vice
President, Human Resources) can elect to defer receipt of Net Shares of Common
Stock resulting from a stock-for-stock exercise of an exercisable stock option
issued to the Participant by completing and submitting to the Company an
irrevocable stock option deferral election by a date which is at least twelve
months in advance of the date of exercise of the stock option and in the
calendar year prior to the date of the exercise of the stock option. The stock
option exercise must occur on or prior to the expiration date of the stock
option and must be accomplished by delivering by the attestation method, on or
prior to the exercise date, shares of Common Stock which have been personally
owned by the Participant for at least six months prior to the exercise date and
have not been used in a stock swap in the prior six months. At the time of the
deferral election the Participant may designate that some of the shares subject
to the stock option shall be used to satisfy FICA or any other taxes due upon
the stock option exercise. A Participant's deferral election shall not be
effective if the stock option

                                       11
<PAGE>

as to which the Participant has made the deferral election terminates prior to
the exercise date selected by the Participant. If the Participant dies or fails
to deliver shares of Common Stock which have been personally owned by the
Participant at least six months prior to the exercise date (and have not been
used in a stock swap in the prior six months) in payment of the exercise price,
then the deferral election shall not be effective.

         Section 4A.4 Accounting for Deferrals. A Deferred Stock Unit Account
will be established for each Participant with respect to each deferral election
made pursuant to this Article 4A. For each Net Share deferred, a Stock Unit will
be credited as of the date of the stock option exercise to the Deferred Stock
Unit Account so established. The Committee shall adjust the Deferred Stock Unit
Account of each Participant to reflect dividends payable with respect to the
Company's Common Stock from time to time. The Committee shall determine the
manner in which any such adjustment shall be made. Each Participant will receive
a periodic statement of the number of whole and fractional units in his or her
Deferred Stock Unit Account.

         Section 4A.5 Distributions. At the time of the Participant's deferral
election, a Participant must also elect to begin receiving distributions of the
Deferred Stock Unit Accounts with respect to the deferral election at either (a)
the Participant's termination from employment, or (b) a distribution date which
shall be at least two years after the exercise date of the stock option to which
the deferral election applies.

         If the Participant elects to defer pursuant to (a) above, the timing
and manner of distribution shall be determined in accordance with Sections
4A.5.1 and 4A.5.2. If a Participant elects to defer pursuant to (b) above,
distributions shall commence at the time designated by the Participant in his or
her election and shall be made in the form of a lump sum (unless the Participant
terminates employment or dies before such date, in which case Section 4A.5.1,

                                       12
<PAGE>

4A.5.2, 4A.5.3, as the case may be, shall apply). All distributions shall be
made in the form of Common Stock.

         The Participant shall receive a distribution equivalent to the Stock
Units, rounded up to the nearest whole number, credited to the Participant's
Deferred Stock Unit Account as soon as administratively practicable after the
specified distribution date.

         In the case of any installment delivery, the precise number of shares
delivered in each installment shall be determined in such a manner as to cause
each installment to be essentially equal based on the Stock Units credited to
the Participant's Deferred Stock Unit Account as of the date of the first
installment together with any divided equivalents credited thereon. Installment
distributions shall be in whole shares of Common Stock. Any fractional Stock
Units remaining at the time of the final installment distribution shall be
rounded up to the nearest full Stock Unit.

         Notwithstanding a Participant's deferral election or the other
provisions of this Section 4A.5, all of a Participant's Deferred Stock Units
shall be distributed to the Participant or the Participant's Beneficiary (in the
event of the Participant's death) as soon as administratively feasible
following: (a) the occurrence of an event of change of control (as defined in
Article 10), or (b) the termination of the Plan.

                  4A.5.1. Benefits Upon Retirement. If a Participant terminates
         employment with all Affiliates on or after the Participant's Early
         Retirement Date or Normal Retirement Date, the Participant shall
         receive the balance in his or her Deferred Stock Unit Account in
         monthly installments over a period of fifteen (15) years. Payments
         pursuant to Section 4A.5.1 shall commence within an administratively
         practicable period of time following the date on which the Participant
         terminates employment.

                                       13
<PAGE>

                  4A.5.2. Benefits Upon Resignation or Discharge. If a
         Participant terminates employment with all Affiliates before the
         Participant's Early Retirement Date or Normal Retirement Date for
         reasons other than death, the Participant shall receive the balance in
         his or her Deferred Stock Unit Account in a lump sum payment within an
         administratively practicable period of time following the date on which
         the Participant terminates employment.

                  4A.5.3. Death Benefits. In the event a Participant dies after
         benefits have commenced pursuant to Section 4A.5.1, the Participant's
         remaining benefits, if any, shall be paid to the Participant's
         Beneficiary in the same manner as such benefits would have been paid to
         the Participant had the Participant survived. In the event a
         Participant dies prior to the date on which benefits commence, the
         Participant's Deferred Stock Unit Account shall be paid to the
         Participant's Beneficiary in a lump sum within an administratively
         practicable time following the Participant's death.

                  4A.5.4. Hardship Withdrawals. A Participant shall be entitled
         to make withdrawals from his or her Deferred Stock Unit Accounts in
         accordance with Section 5.6 of the Plan. Distributions pursuant to such
         withdrawals shall be in the form of Common Stock.

                  4A.5.5. Effect on Other Provisions. The provisions of Article
         5 shall not apply to amounts deferred pursuant to this Article 4A,
         except for the withdrawal provisions described in the previous
         paragraph, the provisions applicable to the marital deduction and
         designating a Beneficiary at Sections 5.3.4 and 5.3.5, the acceleration
         provision of Section 5.5 and the claims procedure at Section 5.8.
         Likewise the second paragraph of Section 8.2 shall not apply to amounts
         deferred pursuant to this Article 4A.

                                       14
<PAGE>

         4A.6 Adjustment to Deferred Stock Unit Accounts. In the event that the
Compensation Committee of the Company's Board of Directors determines that any
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other securities of the Company, issuance of warrants or other rights
to purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the Common Stock, an appropriate
adjustment to the Participant's Deferred Stock Units shall be made to prevent
reduction or enlargement of the Participants' benefits under the Plan.

         ARTICLE 5. DISTRIBUTION OF BENEFITS.
         -----------------------------------

         Section 5.1. Distributions Pursuant to Deferral Election. The
Participant shall, as part of his or her Permissible Deferral election, elect to
begin receiving distributions with respect to a Permissible Deferral at either
(a) the Participant's retirement; or (b) a date specified by the Participant in
the election, which is at least five (5) years after the Plan Year to which the
Permissible Deferral applies. If the Participant elects to defer distribution
pursuant to (a), above, the timing and manner of distribution shall be
determined in accordance with Sections 5.2 and 5.3. If a Participant elects to
defer distributions pursuant to (b), above, distributions shall commence at the
time designated by the Participant in his or her election and shall be made in
the form of a lump sum (unless the Participant terminates employment or dies
before such date, in which case Section 5.2 or 5.3, as the case may be, shall
apply).

         Section 5.2. Distribution of Benefits Upon Termination of Employment.
If a Participant terminates employment for any reason, except death, prior to
distribution of the Participant's Account, the Participant's Account balance,
determined as of the first day of the first month

                                       15
<PAGE>

following the date of such termination, shall be distributed at the time and in
the manner set forth in this Section 5.2.

                  5.2.1. Benefits Upon Retirement. If a Participant terminates
         employment with all Affiliates on or after Early Retirement Date or
         Normal Retirement Date, the Participant shall receive the balance in
         his Account in monthly installments over a period of fifteen (15)
         years. The monthly benefit amount shall be a level amount for each
         twelve-month period calculated using the balance in the Account at the
         beginning of the twelve-month period and dividing it by the total
         periods remaining in the entire payment period. The benefit payment
         shall be adjusted each subsequent twelve-month period to reflect the
         Account as of that time. The Participant's Account shall be credited
         during the payment period with interest at the Crediting Rate.

                  Payments pursuant to this Section 5.2.1 shall commence within
         an administratively practicable period of time following the date on
         which the Participant terminates employment.

                  5.2.2. Benefits Upon Resignation or Discharge. If a
         Participant terminates employment with all Affiliates before Early
         Retirement Date or Normal Retirement Date for reasons other than death,
         the Participant shall receive the balance in his Account in the form of
         monthly installments over a five-year period. The monthly benefit
         amount shall be a level amount for each twelve-month period calculated
         using the balance in the Account at the beginning of the twelve-month
         period and dividing it by the total periods remaining in the entire
         payment period. The benefit payment shall be adjusted each subsequent
         twelve-month period to reflect the Account as of that time. The rate at
         which the Account has been credited with interest shall be reduced
         retroactively to 90% of

                                       16
<PAGE>

         the Crediting Rate. The Account shall continue to be credited with
         interest at this reduced rate during the payment period.

                  Payments pursuant to this Section 5.2.2 shall commence within
         an administratively practicable period of time following the date on
         which the Participant terminates employment.

         Section 5.3. Death Benefits.

                  5.3.1. Death After Benefit Commencement. In the event a
         Participant dies after benefits have commenced pursuant to Section
         5.2.1 or 5.2.2, the Participant's remaining benefits, if any, shall be
         paid to the Participant's Beneficiary in the same manner such benefits
         would have been paid to the Participant had the Participant survived.

                  5.3.2. Death Prior to Benefit Commencement. In the event a
         Participant dies prior to the date on which benefits commence pursuant
         to Sections 5.2.1 or 5.2.2, the Participant's Account balance shall be
         paid to the Participant's Beneficiary in a lump sum within an
         administratively practicable time following the Participant's death.
         Notwithstanding anything in the Plan to the contrary, the provisions of
         this Section 5.3.2 shall apply to the Participant's entire Account
         balance as of the date of his or her death, including any portion of
         the Participant's Account which may be attributable to Permissible
         Deferral elections first effective for Plan Years prior to 1994.

                  5.3.3. Marital Deduction. If any benefits are payable under
         the Plan to the surviving spouse of deceased Participant, the estate of
         the Participant's spouse shall be entitled to all remaining benefits,
         if any, at his or her death, unless specifically directed to the
         contrary by an effective beneficiary designation.

                  5.3.4. Designation by Participant. Each Participant has the
         right to designate primary and contingent Beneficiaries for death
         benefits payable under the Plan. Such Beneficiaries may be individuals
         or trusts for the benefit of

                                       17
<PAGE>

         individuals. A Beneficiary designation by a Participant shall be in
         writing on a form acceptable to the Committee and shall only be
         effective upon delivery to the Company. A Beneficiary designation may
         be revoked by a Participant at any time by delivering to the Company
         either written notice of revocation or a new Beneficiary designation
         form. The Beneficiary designation form last delivered to the Company
         prior to the death of a Participant shall control.

                  5.3.5. Failure to Designate Beneficiary. In the event there is
         no Beneficiary designation on file with the Company, or all
         Beneficiaries designated by a Participant have predeceased the
         Participant, the benefits payable by reason of the death of the
         Participant shall be paid to the Participant's spouse, if living; if
         the Participant does not leave a surviving spouse, to the Participant's
         issue by right of representation; or, if there are no such issue then
         living, to the Participant's estate. In the event there are benefits
         remaining unpaid at the death of a sole Beneficiary and no successor
         Beneficiary has been designated, the remaining balance of such benefit
         shall be paid to the deceased Beneficiary's estate. If there are
         benefits remaining unpaid at the death of a Beneficiary who is one of
         multiple concurrent Beneficiaries, such remaining benefits shall be
         paid proportionally to the surviving Beneficiaries.

         Section 5.4. Minimum Amount and Frequency of Payments. The Committee
may adjust the length of the distribution period under this Article 5 in order
to assure that each monthly installment in not less than $1,000. The Committee
may also, if it so elects, distribute benefits in installments on a basis which
is more or less frequently than monthly.

         Section 5.5. Acceleration of Distributions. The Committee may, in its
discretion, accelerate the distribution of, or alter the method of payment of,
benefits payable to a Participant under the Plan. If the Internal Revenue
Service determines that a Participant or Beneficiary has received an economic
benefit or is in constructive receipt of a benefit under the Plan and has made a
final assessment of an income tax deficiency with respect to such

                                       18
<PAGE>

benefit or if a final judicial determination has been entered that an income tax
deficiency exists, the Committee shall distribute to such Participant an amount
equal to the taxable income recognized.

         Section 5.6. Withdrawals.

                  5.6.1. Hardship Withdrawal. Upon the application of any
         Participant, the Committee, in accordance with its uniform,
         nondiscriminatory policy, may permit such Participant to terminate
         future deferrals or to withdraw some or all of his or her Account. A
         Participant must give a written petition of the termination of his or
         her deferral election at least thirty (30) days (or such shorter period
         of time as permitted by the Committee in its discretion) prior to the
         next deferral. A Participant must give a written petition of the intent
         to withdraw from his or her Account at least sixty (60) days (or such
         shorter time as permitted by the Committee in its discretion) prior to
         the date of withdrawal. No termination or withdrawal shall be made
         under the provisions of this Section except for the purpose of enabling
         a Participant to meet immediate needs created by a financial hardship
         for which the Participant does not have other reasonably available
         sources of funds as determined by the Committee in accordance with
         uniform rules. The term "financial hardship" shall include the need for
         funds to: meet uninsured medical expenses for the Participant or his
         dependents, meet a significant uninsured casualty loss for the
         Participant or his dependents, and meet other catastrophes of a "sudden
         and serious nature."

         If a withdrawal is permitted, the amount of the withdrawal shall be
distributed to the Participant in a single sum as soon as is administratively
practicable. If a termination of deferrals or a withdrawal is made under this
Section 5.6, the Participant may not enter into a new deferral election for two
(2) complete Plan Years from the date of the termination or withdrawal.

                  5.6.2 Premature Distributions. Upon the application of any
         Participant, the Committee shall permit such Participant to receive a
         distribution of his or her entire Account prior to the

                                       19
<PAGE>

         time otherwise specified in the Plan for reasons other than financial
         hardship. A Participant must give a written petition of his or her
         intent to receive such a distribution at lease sixty (60) days (or such
         shorter time as permitted by the Committee in its discretion) prior to
         the date of the distribution. If a Participant elects to receive such a
         distribution: (a) a penalty shall be imposed such that the value of the
         Participant's Account, determined immediately prior to the
         distribution, shall be reduced by 10%; and (b) the Participant may not
         enter into a new deferral election for two (2) complete Plan Years
         following the date of the distribution.

         5.7. Distributions on Plan Termination Notwithstanding anything in this
Article 5 to the contrary, if the Plan is terminated, distributions shall be
made in accordance with Section 8.2.

         5.8. Claims Procedure Except as otherwise provided in Section 5.4(c) of
the Trust, the following shall apply with respect tot he claims of Participants
for benefits under the Plan. The Committee shall notify a Participant in writing
within ninety (90) days of the Participant's written application for benefits of
his eligibility or noneligibility for benefits under the Plan. If the Committee
determines that a Participant is not eligible for benefits or full benefits, the
notice shall set forth (a) the specific reasons for such denial, (b) a specific
reference to the provision of the Plan on which the denial is based, (c) a
description of any additional information or material necessary for the claimant
to perfect his claim, and a description of why it is needed, and (d) an
explanation of the Plan's claims review procedure and other appropriate
information as to the steps to be taken if the Participant wishes to have his
claim reviewed. If the Committee determines that there are special circumstances
requiring additional time to make a decision, the Committee shall notify the
Participant of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to an additional 90-day
period. If a Participant is determined by the Committee to be not eligible for
benefits, or if the Participant believes that he is entitled to greater or
different benefits, he shall have the opportunity to have his claim reviewed by
the Committee by filing a petition for review with the Committee within sixty
(60) days after receipt by him of the notice issued by the Committee. Said
petition shall state the specific

                                       20
<PAGE>

reasons the Participant believes he is entitled to benefits or greater or
different benefits. Within sixty (60) days after receipt by the Committee of
said petition, the Committee shall afford the Participant (and his counsel, if
any) an opportunity to present his position to the Committee orally or in
writing, and said Participant (or his counsel) shall have the right to review
the pertinent documents, and the Committee shall notify the Participant of its
decision in writing within said sixty (60) day period, stating specifically the
basis of said decision written in a manner calculated to be understood by the
Participant and the specific provisions of the Plan on which the decision is
based. If, because of the need for a hearing, the sixty (60) day period is not
sufficient, the decision may be deferred for up to another sixty (60) day period
at the election of the Committee, but notice of this deferral shall be given to
the Participant.

         ARTICLE 6. FUNDING.
         ------------------

         Section 6.1. Source of Benefits. All benefits under the Plan shall be
paid when due by the Company out of its assets or from the Trust.

         Section 6.2. No Claim on Specific Assets. No Participant shall be
deemed to have, by virtue of being a Participant in the Plan, any claim on any
specific assets of the Company such that the Participant would be subject to
income taxation on his or her benefits under the Plan prior to distribution and
the rights of Participants and Beneficiaries to benefits to which they are
otherwise entitled under the Plan shall be those of an unsecured general
creditor of the Company.

         ARTICLE 7. ADMINISTRATION AND FINANCES.
         --------------------------------------

         Section 7.1. Administration. The Plan shall be administered by the
Committee. The Company shall bear all administrative costs of the Plan other
than those specifically charged to a Participant or Beneficiary.

         Section 7.2. Powers of Committee. In addition to the other powers
granted under the Plan, the Committee shall have all powers necessary to
administer the Plan, including, without limitation, powers:

                  (a) to interpret the provisions of the Plan;

                                       21
<PAGE>

                  (b) to establish and revise the method of accounting for the
         Plan and to maintain the Accounts; and

                  (c) to establish rules for the administration of the Plan and
         to prescribe any forms required to administer the Plan.

         Section 7.3. Actions of the Committee. Except as modified by the Board,
the Committee (including any person or entity to whom the Committee has
delegated duties, responsibilities or authority, to the extent of such
delegation) has total and complete discretionary authority to determine
conclusively for all parties all questions arising in the administration of the
Plan, to interpret and construe the terms of the Plan, and to determine all
questions of eligibility and status of employees, Participants and Beneficiaries
under the Plan and their respective interests. Subject to the claims procedures
of Section 5.9, all determinations, interpretations, rules and decisions of the
Committee (including those made or established by any person or entity to whom
the Committee has delegated duties, responsibilities or authority, if made or
established pursuant to such delegation) are conclusive and binding upon all
persons having or claiming to have any interest or right under the Plan.

         Section 7.4. Delegation. The Committee, or any officer designated by
the Committee, shall have the power to delegate specific duties and
responsibilities to officers or other employees of the Company or other
individuals or entities. Any delegation may be rescinded by the Committee at any
time. Each person or entity to whom a duty or responsibility has been delegated
shall be responsible for the exercise of such duty or responsibility and shall
not be responsible for any act or failure to act of any other person or entity.

         Section 7.5. Reports and Records. The Committee, and those to whom the
Committee has delegated duties under the Plan, shall keep records of all their
proceedings and actions and shall maintain books of account, records, and other
data as shall be necessary for the proper administration of the Plan and for
compliance with applicable law.

                                       22
<PAGE>

         ARTICLE 8. AMENDMENTS AND TERMINATION.
         -------------------------------------

         Section 8.1. Amendments. The Company, by action of the Compensation
Committee of the Board, or the Chief Executive Officer of the Company, to the
extent authorized by the Compensation Committee of the Board, may amend the
Plan, in whole or in part, at any time and from time to time. Any such amendment
shall be filed with the Plan documents. No amendment, however, may be effective
to eliminate or reduce the benefits of any retired Participant or the
Beneficiary of any deceased Participant then eligible for benefits or the
benefits in any active Participant's Account immediately before the date of such
amendment.

         Section 8.2. Termination. The Company expects the Plan to be permanent,
but necessarily must, and hereby does, reserve the right to terminate the Plan
at any time by action of the Board. Upon termination of the Plan, all deferrals,
transfers and Company contributions will cease and no future deferrals,
transfers or Company contributions will be made. Termination of the Plan shall
not operate to eliminate or reduce benefits of any retired Participant or the
Beneficiary of any deceased Participant then eligible for benefits or the
benefits in any active Participant's Account.

         If the Plan is terminated, payments from the Accounts of all
Participants and Beneficiaries shall be made as soon as administratively
convenient in the form of monthly payments over a three-year period, credited
with interest at 90% of the Crediting Rate during the payment period; however,
the Committee in its sole discretion may pay benefits in a lump sum.

         ARTICLE 9. TRANSFERS. A Participant may transfer to the Plan amounts
         --------------------
credited to the Participant under the Medtronic, Inc. Compensation Deferral Plan
for Officers and Key Employees. Any such transfer shall be in accordance with
procedures established by the Committee. Amounts transferred to the Plan
pursuant to this Article 9 shall be credited with interest in accordance with
Section 4.2. Distributions from the Account established pursuant to this Article
9 shall be made at the time and in the manner specified in Sections 5.2 through
5.8.

                                       23
<PAGE>

         ARTICLE 10. CHANGE IN CONTROL PROVISIONS.
         ----------------------------------------

         Section 10.1. Application of Article 10. To the extent applicable, the
provisions of this Article 10 relating to an Event of change in control of the
Company shall control, notwithstanding any other provisions of the Plan to the
contrary, and shall supersede any other provisions of the Plan to the extent
inconsistent with the provisions of this Article 10. For purposes of this
Article 10, an "Event" refers to an event of change in control of the Company as
described in Section 3.1(b)(1) through (3) of the Trust.

         Section 10.2. Payments to and by the Trust. If the Company determines
that it is probable that an Event may occur within the six-month period
immediately following the date of determination, or if an Event in fact occurs
in those situations where the Company has not otherwise made such a
determination, the Company shall make a contribution to the Trust (if in
existence at the date of determination or the date of the Event, as the case may
be) in accordance with the provisions of the Trust. Solely for purposes of
determining the amount of such contribution (but in no way in limitation of the
Company's liability under the Plan as determined under other provisions of the
Plan), the Company's total liability under the Plan shall be equal to the value
of the current credit balances under all Accounts established under the Plan,
including any interest credited to such Accounts under the terms of the Plan,
which remain unpaid by the Company as of the date of determination or the date
of the Event, as the case may be, whether or not amounts are otherwise currently
payable to Participants or Beneficiaries under the Plan. All such contributions
shall be made as soon as possible after the date of determination or of the
Event, as the case may be, and shall be made in cash or property valued at fair
market value. Further, the Company may, in its discretion, make other
contributions to the Trust from time to time for purposes of providing benefits
hereunder, whether or not an Event has occurred or may occur.

         Notwithstanding the foregoing, any contributions to the Trust, as well
as any income or gains thereon, shall be at all times subject to the provisions
of the Trust, including but not

                                       24
<PAGE>

limited to the provisions permitting a return of such contributions and income
or gains thereon to the Company in certain circumstances.

         Payments of amounts credited to Accounts under the Plan with respect to
those Participants and their Beneficiaries for whom Trust contributions are made
shall be made first from the Trust in accordance with the terms of the Trust,
but, to the extent not paid by the Trust, shall be paid by the Company.

         Section 10.3. Legal Fees and Expenses. The Company shall reimburse any
Participant or his or her Beneficiary for all reasonable legal fees and expenses
incurred by such Participant or Beneficiary after the date of any Event in
seeking to obtain any right or benefit provided by the Plan.

         Section 10.4. No Reduction in Crediting Rate. If the Company determines
that it is probable that an Event may occur within the six-month period
immediately following the date of determination, or if an Event in fact occurs
in those situations where the Company has not otherwise made such a
determination, the Company shall not from and after the date of the
determination or the date of the Event, as the case may be, amend the Plan to
cause a reduction in the crediting rate applicable to a Participant's Account
under the Plan.

         Section 10.5. Late Payment and Additional Payment Provisions. If, after
the date of an Event, there is a delay in the payment of any amounts credited to
an Account under the Plan beyond the final date for payment under the Plan, the
amounts otherwise payable to any Participant or Beneficiary shall be increased
by an amount equal to the stated interest which shall be credited to such
amounts from the final date for payment of such amounts through the date that
payment of such amounts (plus such credited interest) is actually made to the
Participant or Beneficiary, compounded quarterly on a calendar year basis. The
amount of stated interest to be so credited shall be equal to the lesser of (i)
the prime rate plus five (5) percentage points, or (ii) the prime rate
multiplied by two. For purposes hereof, the prime rate shall be the prime rate
of interest quoted by Norwest Bank Minnesota, N.A., as its prime rate,
determined each calendar quarter as the average of the daily prime rates in
effect throughout such calendar quarter,

                                       25
<PAGE>

averaged for the number of days for which the prime rates are quoted during such
calendar quarter. In the event that stated interest is to be credited for some
period less than a full calendar quarter, however, the stated interest shall be
determined and compounded for the fractional quarter, with the prime rate
determined as the average of the daily prime rates in effect throughout such
fractional calendar quarter averaged for the number of days during such
fractional calendar quarter for which prime rates are quoted.

         The increase in amounts otherwise payable under the Plan by the
crediting of such stated interest represents a late payment penalty for the
delay in payment.

         For purposes hereof, the final date for payment under the Plan shall be
determined with reference to the otherwise applicable provisions of the Plan,
provided, however, that the final date for commencement of benefit payments
pursuant to Sections 5.2 and 5.3 shall be a date which is not later than
forty-five (45) days after the earliest to occur of the Participant's
retirement, resignation, discharge or death. In the event that payment of
benefits has commenced to a Participant or Beneficiary prior to the date of an
Event, then the final date for payment shall be determined with reference to the
payment provision which was in effect prior to the date of the Event. No
adjustment may be made to any payment form which was in effect prior to the date
of an Event with respect to any Account which would have the effect of delaying
payments otherwise to be made under the payment form or otherwise increasing the
period of time over which payments are to be made.

         Any payment of benefits by the Company after the final date for payment
of benefits as hereinabove determined shall be applied first against the first
due of such payment of benefits (with application first against any applicable
late payment penalty and next against the benefit amount itself) until fully
paid, and next against the next due of such payments in the same manner, and so
forth, for purposes of calculating the late payment penalties hereunder.

         Participants and their Beneficiaries shall be entitled to the payment
of amounts credited to their Accounts plus the late payment penalty referred to
hereinabove first from the Trust and secondarily from the Company, as otherwise
provided in Section 10.2.

                                       26
<PAGE>

         ARTICLE 11. MISCELLANEOUS.
         -------------------------

         Section 11.1. No Guarantee of Employment. Neither the adoption and
maintenance of the Plan nor the execution by the Company of a Permissible
Deferral agreement with any Participant shall be deemed to be a contract of
employment between an Affiliate and any Participant. Nothing contained herein
shall give any Participant the right to be retained in the employ of an
Affiliate or to interfere with the right of an Affiliate to discharge any
Participant at any time, nor shall it give an Affiliate the right to require any
Participant to remain in its employ or to interfere with the Participant's right
to terminate his employment at any time.

         Section 11.2. Release. Any payment of benefits to or for the benefit of
a Participant or a Participant's Beneficiaries that is made in good faith by the
Company in accordance with the Company's interpretation of its obligations
hereunder, shall be in full satisfaction of all claims against the Company for
benefits under this Plan to the extent of such payment.

         Section 11.3. Notices. Any notice permitted or required under the Plan
shall be in writing and shall be hand delivered or sent, postage prepaid, by
first class mail, or by certified or registered mail with return receipt
requested, to the principal office of the Company, if to the Company, or to the
address last shown on the records of the Company, if to a Participant or
Beneficiary. Any such notice shall be effective as of the date of hand delivery
or mailing.

         Section 11.4. Nonalienation. No benefit payable at any time under this
Plan shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, levy, attachment, or encumbrance of any kind by any Participant or
Beneficiary.

         Section 11.5. Tax Liability. The Company may withhold or direct the
trustee of the Trust to withhold from any payment of benefits such amounts as
the Company determines are reasonably necessary to pay any taxes (and interest
thereon) required to be withheld or for which the trustee of the Trust may
become liable under applicable law. The Company may also forward or direct the
trustee of the Trust to forward to the appropriate taxing authority any amounts
required to be paid by the Company or the Trust under the preceding sentence.

                                       27
<PAGE>

         Section 11.6. Captions. Article and section headings and captions are
provided for purposes of reference and convenience only and shall not be relied
upon in any way to construe, define, modify, limit, or extend the scope of any
provision of the Plan.

         Section 11.7. Applicable Law. The Plan and all rights hereunder shall
be governed by and construed according to the laws of the State of Minnesota,
except to the extent such laws are preempted by the laws of the United States of
America.

                                       28

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