Exhibit 10.15

MEDTRONIC PLC

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as restated generally effective January 26, 2015)

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TABLE OF CONTENTS

 

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ARTICLE 1 DEFERRED COMPENSATION ACCOUNT					2
Section 1.1		Establishment of Account			2
Section 1.2		Property of Company			2
ARTICLE 2 DEFINITIONS, GENDER, AND NUMBER					2
Section 2.1		Definitions			2
Section 2.2		Gender and Number			6
ARTICLE 3 PARTICIPATION					6
Section 3.1		Who May Participate			6
Section 3.2		Time and Conditions of Participation			6
Section 3.3		Termination and Suspension of Participation			6
Section 3.4		Missing Persons			6
Section 3.5		Relationship to Other Plans			6
ARTICLE 4 RETIREMENT PLAN SUPPLEMENTAL BENEFIT					7
Section 4.1		Calculation of Retirement Plan Supplemental Benefit			7
Section 4.2		Establishment of Nonqualified Retirement Plan Account			8
Section 4.3		Interest Credited to Nonqualified Retirement Plan Account			8
Section 4.4		Payment of Nonqualified Retirement Plan Account			8
ARTICLE 5 DEFINED CONTRIBUTION SUPPLEMENTAL BENEFIT					8
Section 5.1		Nonqualified Defined Contribution Account			8
Section 5.2		Gains Credited to Nonqualified Defined Contribution Account			9
Section 5.3		Payment of Nonqualified Defined Contribution Account			9
ARTICLE 6 PERSONAL INVESTMENT ACCOUNT SUPPLEMENTAL BENEFIT					9
Section 6.1		Calculation of Personal Investment Account Supplemental Benefit			9
Section 6.2		Establishment of Nonqualified Personal Investment Account			10
Section 6.3		Crediting Gains and Losses to Nonqualified Personal Investment Account			10
Section 6.4		Vested Interest in Nonqualified Personal Investment Account			10
Section 6.5		Payment of Nonqualified Personal Investment Account			10
ARTICLE 7 DEATH BENEFITS					11
Section 7.1		Form and Time of Payment			11
Section 7.2		Beneficiary			11
ARTICLE 8 CHANGE IN CONTROL PROVISIONS					11
Section 8.1		Application of Article 8			11
Section 8.2		Payments to and by the Trust			11
Section 8.3		Legal Fees and Expenses			11
Section 8.4		Late Payment and Additional Payment Provisions			12

 

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ARTICLE 9 FUNDING					12
Section 9.1		Source of Benefits			12
Section 9.2		No Claim on Specific Assets			12
ARTICLE 10 ADMINISTRATION					13
Section 10.1		Administration			13
Section 10.2		Powers of Committee			13
Section 10.3		Actions of the Committee			13
Section 10.4		Delegation			13
Section 10.5		Reports and Records			13
Section 10.6		Claims Procedure			13
ARTICLE 11 AMENDMENTS AND TERMINATION					14
Section 11.1		Amendments			14
Section 11.2		Termination			14
ARTICLE 12 MISCELLANEOUS					15
Section 12.1		No Guarantee of Employment			15
Section 12.2		Release			15
Section 12.3		Notices			15
Section 12.4		Nonalienation			15
Section 12.5		Withholding			15
Section 12.6		Captions			15
Section 12.7		Applicable Law			15
Section 12.8		Invalidity of Certain Provisions			15
Section 12.9		No Other Agreements			16
Section 12.10		Incapacity			16
Section 12.11		Electronic Media			16
Section 12.12		Delay of Distributions Upon Certain Events Delay in Distributions			16
Section 12.13		Acceleration of Distributions Upon Certain Events			17
SCHEDULE A					A-1

 

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MEDTRONIC PLC

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as restated generally effective January 26, 2015)

Medtronic, Inc., a Minnesota corporation (“Medtronic”), previously established the Medtronic, Inc. Executive Nonqualified Supplemental Benefit Plan (the “Plan”) for the benefit of the Eligible Employees of Medtronic and certain of its Affiliates, effective May 1, 1986. The Plan was most recently amended and restated effective January 1, 2008. On June 15, 2014, Medtronic entered into a Transaction Agreement with Covidien plc and the other parties named therein to acquire Covidien through the formation of a new holding company incorporated in Ireland that will be renamed Medtronic plc (the “Transaction”). In connection with the Transaction, Medtronic plc, an Irish public limited company (the “Company”) hereby adopts and amends and restates the Plan, effective January 26, 2015 (the “Restatement Date”).

This restatement applies to amounts deferred under the Plan on or after the Restatement Date, and to the payment of all amounts deferred under the Plan (whether such amounts were deferred before, on, or after the Restatement Date) that have not yet been distributed as of the Restatement Date. No amount deferred under the Plan is intended to be “grandfathered” under Section 409A of the Code (“Section 409A”).

The purpose of the Plan is to provide Eligible Employees with benefits that supplement those provided under certain of the tax-qualified plans maintained by the Company and its Affiliates. More specifically, the Plan is intended to provide certain benefits on a nonqualified basis that are not otherwise provided under such tax-qualified plans as a result of the application of certain legal limitations on contributions, benefits and includible compensation and as a result of elections made by eligible employees under other plans maintained by the Company and its Affiliates.

The Plan is intended to be (and shall be construed and administered as) an employee benefit pension plan under the provisions of ERISA, which is unfunded and maintained primarily for the purpose of providing deferred compensation for Eligible Employees who constitute a select group of management or highly-compensated employees, as described in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

The Plan is not intended to be qualified under Section 401(a) of the Code. The Plan, as restated herein, is subject to, and intended to comply with, Section 409A of the Code. Notwithstanding any provision of this Plan, all benefits payable hereunder shall be deemed to be paid solely for services to Medtronic and its subsidiaries.

The obligation of the Company and its Affiliates to make payments under the Plan constitutes an unsecured (but legally enforceable) promise of the Company and its Affiliates to make such payments and no person, including any Participant or Beneficiary, shall have any lien, prior claim or other security interest in any property of the Company or its Affiliates as a result of the Plan.

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ARTICLE 1

DEFERRED COMPENSATION ACCOUNT

Section 1.1 Establishment of Account. The Company shall establish one or more Accounts 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 set aside for benefits payable under the Plan are the property of the Company, except, and to the extent, provided in the Trust.

 

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 a bookkeeping account established by the Company on its books and records to record and determine the benefits payable to a Participant or Beneficiary under the Plan. The Company shall establish a separate Account on behalf of each Participant for:

(a) The benefit the Participant is entitled to receive pursuant to Section 4.2, if any, referred to as the “Nonqualified Retirement Plan Account;”

(b) The benefit the Participant is entitled to receive pursuant to Article 5, if any, referred to as the “Nonqualified Defined Contribution Account;” and

(c) The benefit the Participant is entitled to receive pursuant to Section 6.2, if any, entitled the “Supplemental Personal Investment Account.”

The Committee may establish any number of sub-accounts on behalf of a Participant or Beneficiary as the Committee considers necessary or advisable for purposes of maintaining a proper accounting of amounts to be credited under the Plan on behalf of a Participant or Beneficiary.

2.1.2 “Affiliate” or “Affiliates” means the Company and any entity with which the Company would be considered a single employer under Section 414(b) of the Code (employees of controlled group of corporations) and Section 414(c) of the Code (employees of partnerships, proprietorships, etc., under common control).

2.1.3 “Beneficiary” or “Beneficiaries” means the persons or trusts designated by a Participant in writing pursuant to Section 7.2.1 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 7.2.2 of the Plan.

2.1.4 “Board” means the Board of Directors of the Company as constituted at the relevant time.

 

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2.1.5 “Capital Accumulation Plan” means the Medtronic plc Capital Accumulation Plan Deferral Program, as amended or restated from time to time or any successor thereto, and any predecessor or successor plan thereto.

2.1.6 “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.

2.1.7 “Committee” means the Committee or individual appointed by the Compensation Committee of the Board (or any person or entity designated by the Committee) to administer the Plan pursuant to Section 10.4.

2.1.8 “Company” means Medtronic plc and its successors and assigns, by merger, purchase or otherwise.

2.1.9 “Defined Contribution Supplemental Benefit” means the benefit under the Predecessor Plan that was commonly referred to as the “ESOP restoration benefit.” This benefit equals the difference between: (a) the allocation due to Medtronic contributions the Participant would have received under the ESOP prior to May, 1, 2005, but for the Section 401(a)(17) Limitation and Section 415 Limitation; and (b) the actual allocation actually received by the Participant under the ESOP.

2.1.10 “Domestic Relations Order” has the meaning set forth in Section 414(p)(1)(B) of the Code.

2.1.11 “Eligible Employee” means an elected or appointed officer of the Company, or any other key employee of the Company or an Affiliate designated by the Committee, excluding any individual who is neither a United States citizen nor a United States resident. In order to be an Eligible Employee an employee must be a member of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and rules established by the Committee. The Company may make such projections or estimates as it deems desirable in applying the eligibility requirements, and its determination shall be conclusive.

2.1.12 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time and any successor statute. References to an ERISA section shall be deemed to be to that section or to any successor to that section.

2.1.13 “ESOP” means the Medtronic, Inc. Employee Stock Ownership Plan, as in effect prior to April 30, 2001. (As of April 30, 2001, the ESOP was amended to permit elective deferrals under Section 401(k) of the Code and renamed the Medtronic, Inc. Employee Stock Ownership and Supplemental Retirement Plan. As of May 1, 2005, the Medtronic, Inc. Employee Stock Ownership and Supplemental Retirement Plan was amended and renamed the Medtronic, Inc. Savings and Investment Plan.) As of January 26, 2015, the Medtronic, Inc. Savings and Investment Plan was amended and renamed the Medtronic plc Savings and Investment Plan.

 

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2.1.14 “Event” means an event of change in control of the Company, as defined in the Trust.

2.1.15 “Option Replacement Plan” means the Medtronic plc Option Replacement Plan, as amended or restated from time to time or any predecessor or successor thereto.

2.1.16 “Participant” means an Eligible Employee who has commenced participation in the Plan.

2.1.17 “Personal Investment Account” has the same meaning as in the Savings and Investment Plan.

2.1.18 “Personal Investment Account Supplemental Benefit” has the meaning set forth in Article 6.

2.1.19 “Plan” means the “Medtronic plc Supplemental Executive Retirement Plan” as set forth herein and as amended or restated from time to time.

2.1.20 “Plan Year” means the 12-month period commencing May 1 and ending the following April 30.

2.1.21 “Predecessor Plan” means the Plan, as in effect prior to May 1, 2005.

2.1.22 “Restatement Date” has the meaning set forth in the preamble.

2.1.23 “Retirement Plan” means the Medtronic plc Retirement Plan, as amended from time to time, and any predecessor or successor thereto. In general, the Retirement Plan includes a final average pay benefit for individuals employed by the Company or an Affiliate prior to May 1, 2005. Effective May 1, 2005, the Retirement Plan provides a personal pension account benefit for individuals who become employed on or after May 1, 2005. Individuals participating in the Retirement Plan prior to May 1, 2005, may elect a personal pension account benefit in lieu of the final average pay benefit for Plan Years commencing May 1, 2005. Alternatively, an individual otherwise eligible to participate in the Retirement Plan may elect not to participate in the Retirement Plan and receive a contribution to a Personal Investment Account.

2.1.24 “Retirement Plan Supplemental Benefit” has the meaning set forth in Article 4.

2.1.25 “Savings and Investment Plan” means the Medtronic, plc Savings and Investment Plan, as amended from time to time, and any successor thereto. The Savings and Investment Plan includes a salary reduction benefit under Section 401(k) of the Code and a matching contribution benefit under Section 401(m) of the Code. Effective May 1, 2005, the Savings and Investment Plan also includes a Personal Investment Account for those Participants who have elected this retirement benefit option.

 

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2.1.26 “Section 401(a)(17) Limitation” means the limitation on the dollar amount of compensation that may be taken into account under qualified retirement plans under Section 401(a)(17) of the Code, or any successor provision thereto.

2.1.27 “Section 415 Limitation” means the limitation on benefits for qualified defined benefit pension plans and the limitation on allocations for qualified defined contribution plans, which are imposed by Section 415(b) and (c), respectively, of the Code, or any successor provision thereto.

2.1.28 “Separation from Service” or “Separate from Service,” with respect to a Participant, means the Participant’s separation from service with all Affiliates, within the meaning of Section 409A(a)(2)(A)(i) of the Code and the regulations thereunder. Solely for this purpose, a Participant will be considered to have a Separation from Service when the Participant dies, retires, or otherwise has a termination of employment with all Affiliates. The employment relationship is treated as continuing intact while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the an Affiliate under an applicable statute or by contract. For purposes hereof, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for an Affiliate. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than six months, where such impairment causes the employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, the Company may substitute a 29-month period of absence for such six-month period.

Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Affiliate and the Participant reasonably anticipated that no further services will be performed after a certain date or that the level of bona fide services the Participant will perform after such date (whether as an employee or independent contractor) will permanently decrease to no more than 40 percent of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding 36-month period (or the full period of services if the Participant has been providing services for less than 36 months).

Notwithstanding anything in Section 2.1.2 to the contrary, in determining whether a Participant has had a Separation from Service with an Affiliate, an entity’s status as an “Affiliate” shall be determined substituting “50 percent” for “80 percent” each place it appears in Section 1563(a)(1),(2), and (3) and in Treasury Regulation Section 1.414(c)-2.

 

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The Company shall have discretion to determine whether a Participant has experienced a Separation from Service in connection with an asset sale transaction entered into by the Company or an Affiliate, provided that such determination conforms to the requirements of Section 409A and the regulations and other guidance issued thereunder, in which case the Company’s determination shall be binding on the Participant.

2.1.29 “Section 409A” means section 409A of the Internal Revenue Code, as amended from time to time and any successor statute.

2.1.30 “Specified Employee” means an employee of an Affiliate who is subject to the six-month delay rule described in Section 409A(2)(B)(i) of the Code. The Company shall establish a written policy for identifying Specified Employees in a manner consistent with Section 409A, which policy may be amended by the Company from time to time as permitted by Section 409A.

2.1.31 “Stock” means the Company’s ordinary shares $.0001 par value per share (as such par value may be adjusted from time to time).

2.1.32 “Trust” means the Medtronic plc Compensation Trust Agreement Number One, as 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.

 

ARTICLE 3

PARTICIPATION

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

Section 3.2 Time and Conditions of Participation. An Eligible Employee shall become a Participant on the date on which he or she first accrues a benefit under the Plan, provided that he or she is then in 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.

Section 3.3 Termination and Suspension of Participation. Once an individual has become a Participant, participation shall continue until payment in full of all benefits to which the Participant or Beneficiary is entitled under the Plan.

Section 3.4 Missing Persons. Each Participant and Beneficiary entitled to receive benefits under the Plan shall be obligated to keep the Company informed of his or her current address until all Plan benefits that are due to be paid to the Participant or Beneficiary have been paid to him or her. If, after having made reasonable efforts to do so, the Company is unable to locate the Participant or Beneficiary for purposes of making a distribution, the Participant’s or Beneficiary’s Plan benefit will be forfeited. In no event will a Participant’s or Beneficiary’s benefit be paid to him or her later than the date otherwise required by the Plan.

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

 

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Affiliate for which the Participant would otherwise be eligible. Notwithstanding anything in the Plan to the contrary, to the extent permitted by Section 409A, the Committee, or anyone to whom the Committee has delegated this authority pursuant to Section 10.4, may reduce the benefits payable to a Participant under the Plan if, and to the extent that, benefits are payable to the Participant under another similar plan or arrangement maintained by the Company or an Affiliate. The Committee (or its delegate) shall have complete and absolute discretion to determine whether another benefit plan or arrangement maintained by the Company or an Affiliate is similar to the Plan, whether the benefit under the Plan can be reduced in a manner that does not cause a violation of Section 409A, and the amount of the reduction to be applied.

 

ARTICLE 4

RETIREMENT PLAN SUPPLEMENTAL BENEFIT

Section 4.1 Calculation of Retirement Plan Supplemental Benefit. An Eligible Employee shall earn a Retirement Plan Supplemental Benefit as of any determination date in an amount equal to the lump sum actuarial equivalent value of his or her Unrestricted Retirement Plan Benefit less the lump sum actuarial equivalent value of his or her Actual Retirement Plan Benefit, determined as of the determination date. For purposes hereof, the determination date is the first day of the month. The lump sum actuarial equivalent value shall be determined in each case by use of the otherwise applicable interest rates and other assumptions under the Retirement Plan in determining actuarially equivalent benefits.

For purposes hereof, an Eligible Employee’s Unrestricted Retirement Plan Benefit as of any determination date equals the vested benefit that such individual would have accrued under the Retirement Plan as of such date under the otherwise applicable provisions of the Retirement Plan, but determined for periods from and after May 1, 1986, without application of the Section 415 Limitation or the Section 401(a)(17) Limitation and based upon the compensation that would have been paid to the Eligible Employee during the year but for his or her election to reduce his or her compensation under the Capital Accumulation Plan or the Option Replacement Plan.

For purposes hereof, compensation that is reduced pursuant to such an election shall be taken into account for the Plan Year during which such compensation would have been paid to the Eligible Employee but for such election and only to the extent that such compensation would otherwise be taken into account under the Retirement Plan in calculating benefits thereunder had such compensation otherwise been paid directly to the Eligible Employee (but without regard to application of the Section 401(a)(17) Limitation).

For purposes hereof, an Eligible Employee’s Actual Retirement Plan Benefit as of any determination date equals the vested benefit that the individual has actually accrued as of such date under the provisions of the Retirement Plan, after taking into account all applicable limitations on contributions, benefits and compensation.

An Eligible Employee’s Unrestricted Retirement Plan Benefit and Actual Retirement Plan Benefit shall be determined after giving effect to the election a Participant makes under Section 3.2 of the Retirement Plan (i.e., the election to receive a contribution to a Personal Investment Account under the Savings and Investment Plan, the final average pay benefit under the Retirement Plan or the personal pension account benefit under the Retirement Plan) for benefits accruing under the Retirement Plan on or after May 1, 2005.

 

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Section 4.2 Establishment of Nonqualified Retirement Plan Account. A Participant’s Retirement Plan Supplemental Benefit shall be determined as of the first day of the month following the month in which the Participant has a Separation from Service, and the lump sum value of such Retirement Plan Supplemental Benefit shall be credited as of such date to a bookkeeping account established for the Participant on the books and records of the Company, referred to as the “Nonqualified Retirement Plan Account.”

In the event a Participant terminates employment as a result of death, the value of the benefits, if any, to be credited to his or her Nonqualified Retirement Account shall be based upon the lump sum actuarial equivalent value of the death benefits that would be paid under the Retirement Plan under the same assumptions as used under Section 4.1 hereof in determining the Participant’s Unrestricted Retirement Plan Benefit (that is, without regard to the Section 415 Limitation and the Section 401(a)(17) Limitation and without regard to any election the Participant may have made under the Capital Accumulation Plan or the Option Replacement Plan to reduce his or her compensation) less the lump sum actuarial equivalent value of death benefits actually payable with respect to such Participant under the Retirement Plan, if any, taking into account all applicable limitations on contributions, benefits and compensation.

Section 4.3 Interest Credited to Nonqualified Retirement Plan Account. All amounts credited to the Nonqualified Retirement Plan Account from time to time shall be credited with interest at a rate that is equal to the pre-retirement interest rate or rates used by the Retirement Plan during the period for which interest is to be so credited for purposes of determining actuarially equivalent benefits under the Retirement Plan. Interest as so determined shall be compounded monthly during the Plan Year.

Section 4.4 Payment of Nonqualified Retirement Plan Account. Payment to a Participant of his or her Nonqualified Retirement Plan Account shall commence within 90 days following the six month anniversary of his or her Separation from Service. All distributions of the Nonqualified Retirement Account will be made in cash. If the value of the Participant’s Nonqualified Retirement Account, determined as of the date on which such Account is established, is greater than $100,000, the Account together with interest thereon shall be paid to the Participant on a monthly basis over a 15-year period in 180 equal monthly installments. If the value of the Participant’s Nonqualified Retirement Account, determined as of the date on which such Account is established, is $100,000 or less, the Account together with interest thereon shall be paid to the Participant in a lump sum.

 

ARTICLE 5

DEFINED CONTRIBUTION SUPPLEMENTAL BENEFIT

Section 5.1 Nonqualified Defined Contribution Account. The Company previously established an Account on behalf of each Participant entitled to a Defined Contribution Supplemental Benefit (as defined in the Predecessor Plan and commonly referred to as the “ESOP restoration benefit”) referred to as the “Nonqualified Defined Contribution Account.” All contributions to the Nonqualified Defined Contribution Account ceased effective April 30, 2005. A Participant’s Nonqualified Defined Contribution Account, if any, will continue to vest according to the terms of the Predecessor Plan.

 

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Section 5.2 Gains Credited to Nonqualified Defined Contribution Account. A Participant’s Defined Contribution Supplemental Benefit is expressed in the form of the right to receive Stock. Because of this, the Nonqualified Defined Contribution Account is adjusted to reflect Stock splits, Stock dividends and recapitalizations in such manner as may be determined by the Committee. The Committee may also, in its discretion, adjust the Nonqualified Defined Contribution Account to reflect dividends payable with respect to the Stock from time to time in such manner as it deems appropriate.

Section 5.3 Payment of Nonqualified Defined Contribution Account. Payment to a Participant of his or her Nonqualified Defined Contribution Account shall be made within 90 days following the end of the Plan Year in which the Participant’s Separation from Service occurs. Payment shall be made in Stock in the form of a lump sum.

 

ARTICLE 6

PERSONAL INVESTMENT ACCOUNT SUPPLEMENTAL BENEFIT

Section 6.1 Calculation of Personal Investment Account Supplemental Benefit. An Eligible Employee who, pursuant to Section 3.2 of the Retirement Plan, elects to participate in the Personal Investment Account Benefit under the Savings and Investment Plan, shall be credited with a Personal Investment Account Supplemental Benefit as of the end of each Plan Year commencing May 1, 2005, in an amount equal to his or her Unrestricted Personal Investment Account Allocation for such year less his or her Actual Personal Investment Account Allocation for such year; provided, however, that for the year in which the Participant has a Separation from Service, the Participant’s Personal Investment Account Supplemental Benefit for such year shall be determined as of the end of the month in which the Separation from Service occurs.

An Eligible Employee’s Unrestricted Personal Investment Account Allocation for a year equals the dollar amount that would have been allocated by the Company to his or her Personal Investment Account for the year, but without application of the Section 415 Limitation or the Section 401(a)(17) Limitation and based upon the compensation that would have been paid to the Eligible Employee during the year but for his or her election to reduce his or her compensation under the Capital Accumulation Plan or the Option Replacement Plan. For purposes hereof, compensation that is reduced pursuant to such an election shall be taken into account for the Plan Year during which such compensation would have been paid to the Eligible Employee but for such election and only to the extent that such compensation would otherwise be taken into account under the Savings and Investment Plan in calculating benefits thereunder had such compensation otherwise been paid directly to the Eligible Employee (but without regard to application of the Section 401(a)(17) Limitation).

An Eligible Employee’s Actual Personal Investment Account Allocation for a year equals the dollar amount that the Company actually allocates as a contribution to the Eligible Employee’s Personal Investment Account for such year.

 

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Section 6.2 Establishment of Nonqualified Personal Investment Account. The Personal Investment Account Supplemental Benefit to be credited to a Participant for a Plan Year under Section 6.1 shall be credited as of the last day of such year (except for the Plan Year in which a Participant has a Separation from Service, in which case it shall be credited as of the last day of the month in which the Separation from Service occurs) to an account established on the books and records of the Company, referred to as the “Nonqualified Personal Investment Account.”

Section 6.3 Crediting Gains and Losses to Nonqualified Personal Investment Account. The Committee shall designate the manner in which a Participant’s Nonqualified Personal Investment Account is to be credited with gains and losses as described on Schedule A hereto, which Schedule may be amended from time to time in the Committee’s discretion. If the Committee designates specific investment funds to serve as an index for crediting gains and losses to a Participant’s Nonqualified Personal Investment Account: (a) the Participant shall be entitled to designate which such fund or funds shall be used to measure gains and losses on his or her Nonqualified Personal Investment Account and to change such designation in accordance with rules established by the Committee; (b) the Participant’s Nonqualified Personal Investment Account will be credited with gains and losses as if invested in such fund or funds in accordance with the Participant’s designation and the rules established by the Committee; and (c) the Committee may, in its sole discretion, eliminate any investment fund or funds previously designated by it, substitute a new investment fund or funds therefore, or add investment fund or funds, at any time. If the Committee makes any such investment funds available for this purpose, the Company shall have no obligation to actually invest any amounts in any such investment funds. Unless the Committee adopts a different rule, investment designations may be changed, generally, on a daily basis.

Section 6.4 Vested Interest in Nonqualified Personal Investment Account. A Participant’s vested interest in his or her Nonqualified Personal Investment Account shall be determined in the same manner as the Participant’s vested interest in his or her Personal Investment Account, and the Company may forfeit the non-vested portion of the Participant’s Nonqualified Personal Investment Account under the same rules and subject to the same limitations as provided for the Personal Investment Account under the Savings and Investment Plan. Notwithstanding the preceding sentence, a Participant shall not earn a fully-vested interest in his or her Nonqualified Personal Investment Account as a result of the termination or partial termination of the Plan in those situations where the Participant is not otherwise fully vested in such Account.

Section 6.5 Payment of Nonqualified Personal Investment Account. Payment to a Participant of his or her Nonqualified Personal Investment Account shall commence within 90 days following the six month anniversary of his or her Separation from Service. All distributions of the Nonqualified Personal Investment Account will be paid in the form of cash. If the value of the Participant’s Nonqualified Personal Investment Account, determined as of the date on which the Participant’s Separation from Service occurs, is greater than $100,000, the Account shall be paid to the Participant on a monthly basis over a fifteen-year period in 180 equal monthly installments. Gains and losses pursuant to Section 6.3 shall continue to be credited on the declining balance of the Account during the payout period. If the value of the Participant’s Nonqualified Personal Investment Account, determined as of the date on which the Participant’s Separation from Service occurs, is $100,000 or less, the Account shall be paid to the Participant in a lump sum.

 

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ARTICLE 7

DEATH BENEFITS

Section 7.1 Form and Time of Payment. If a Participant dies before all amounts in an Account have been distributed to him or her (whether the Participant’s death occurs before or after distributions have commenced to the Participant), the Account balance, to the extent then vested, shall be paid to the Participant’s Beneficiary in a lump sum within 90 days after the Participant’s death.

Section 7.2 Beneficiary.

7.2.1 Designation of Beneficiary. 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 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.

7.2.2 Failure to Designate Beneficiary. In the event there is no Beneficiary designation on file with the Company at the Participant’s death, or if all Beneficiaries designated by a Participant have predeceased the Participant, any benefits payable pursuant to this Article 7 will be paid to the Participant’s surviving spouse, if living; or if the Participant does not leave a surviving spouse, to the Participant’s surviving issue by right of representation; or, if there are no such surviving issue, to the Participant’s estate.

 

ARTICLE 8

CHANGE IN CONTROL PROVISIONS

Section 8.1 Application of Article 8. To the extent applicable, the provisions of this Article 8 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 8.

Section 8.2 Payments to and by the Trust. Pursuant to the terms of the Trust, the Company is required to make certain payments to the Trust if an Event occurs or if the Company determines that it is probable that an Event may occur. The obligation of the Company to make such payments shall be considered an obligation under the Plan; provided, however, that such obligation shall at all times be and remain subject to the terms of the Trust as in effect from time to time.

Section 8.3 Legal Fees and Expenses. The Company shall reimburse a Participant or his or her Beneficiary for all reasonable legal fees and expenses incurred by such Participant or Beneficiary after the date of an Event in seeking to obtain any right or benefit provided by the Plan; provided however, that: (a) any such reimbursement shall be made during a period not to exceed 20 years following the date of the Event; (b) the amount eligible for reimbursement

 

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during a taxable year of the Participant or Beneficiary shall not affect the amount eligible for reimbursement in any other taxable year; (c) the reimbursement is made on or before the last day of the Participant’s or Beneficiary’s taxable year following the taxable year in which the legal fees and expenses are incurred; and (d) the right to reimbursement is not subject to liquidation or exchange for another benefit.

Section 8.4 Late Payment and Additional Payment Provisions. If after the date of an Event the Company delays a payment required to be made under the Plan past the final date that the payment was due to be made, the amount of each such delayed payment shall be credited with interest at the rate of five percent per year, compounded quarterly, from the date on which the distribution was required to be made under the terms of the Plan until the actual date of the distribution. In the event that this interest is to be credited for some period less than a full calendar quarter, the interest shall be determined and compounded for the fractional quarter. This interest represents a late payment penalty for the delay in payment and is intended to supplement any other interest or gains credited to a Participant’s Account under the Plan.

Any benefit payments made by the Company after the date on which a benefit distribution was required to be made under the terms of the Plan shall be applied first against the first due of such benefit distributions (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.

In the event that payment of benefits has commenced to a Participant or Beneficiary prior to the date of an Event, then the date on which distribution was required to be made under the terms of the Plan shall be determined with reference to the payment provision that 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.

Participants and their Beneficiaries shall be entitled to benefit payment under the Plan plus the late payment penalty referred to hereinabove first from the Trust and secondarily from the Company, as otherwise provided in Section 8.2.

 

ARTICLE 9

FUNDING

Section 9.1 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 9.2 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.

 

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ARTICLE 10

ADMINISTRATION

Section 10.1 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 10.2 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 to:

(a) interpret the provisions of the Plan;

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

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

Section 10.3 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 10.6, 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 10.4 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 10.5 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.

Section 10.6 Claims Procedure. The Committee shall notify a Participant in writing within 90 days of the Participant’s written application for benefits of his or her eligibility or non-eligibility 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 or

 

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her 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 or her 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 or she is entitled to greater or different benefits, the Participant shall have the opportunity to have his or her claim reviewed by the Committee by filing a petition for review with the Committee within 60 days after receipt by the Participant of the notice issued by the Committee. If a Participant does not appeal on time, the Participant will lose the right to appeal the denial and the right to file suit under ERISA, and the Participant will have failed to exhaust the Plan’s internal administrative appeal process, which is generally a prerequisite to bringing suit. Said petition shall state the specific reasons the Participant believes he or she is entitled to benefits or greater or different benefits. Within 60 days after receipt by the Committee of said petition, the Committee shall afford the Participant (and his or her counsel, if any) an opportunity to present the Participant’s position to the Committee orally or in writing, and the Participant (or his or her counsel) shall have the right to review the pertinent documents, and the Committee shall notify the Participant of its decision in writing within said 60-day period, stating specifically the basis of the 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 60-day period is not sufficient, the decision may be deferred for up to another 60-day period at the election of the Committee, but notice of this deferral shall be given to the Participant. In the event an appeal of a denial of a claim for benefits is denied, any lawsuit to challenge the denial of such claim must be brought within one year of the date the Committee has rendered a final decision on the appeal.

 

ARTICLE 11

AMENDMENTS AND TERMINATION

Section 11.1 Amendments. The Company, by action of the Compensation Committee of the Board, or the Chief Executive Officer of the Company or the Senior Vice President of Human Resources, 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 reduce the vested amounts credited to a Participant’s Account (or that would be so credited with respect to a Participant who is actively employed immediately prior to the date of amendment had the Participant had a Separation from Service and had his or her Account been established immediately prior to such date), as determined immediately prior to such amendment, except that the Company may change the investment funds or funds that it may make available for crediting gains and losses pursuant to Section 6.3 at any time in its discretion.

Section 11.2 Termination. The Company reserves the right to terminate the Plan at any time by action of the Compensation Committee of the Board. Upon termination of the Plan, all accruals and contributions shall immediately cease. Termination of the Plan shall not be effective to reduce the vested amounts credited to a Participant’s Account (or that would be so credited with respect to a Participant who is actively employed immediately prior to the date of such termination had the Participant had a Separation from Service and had his or her Account been

 

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established immediately prior to such date). If the Plan is terminated, payments from the Accounts of all Participants and Beneficiaries shall be made at the time and in the manner otherwise specified in the Plan, except as otherwise determined by the Company at the time of termination, subject to Article 8.

 

ARTICLE 12

MISCELLANEOUS

Section 12.1 No Guarantee of Employment. Neither the adoption nor the maintenance of the Plan shall be deemed to be a contract of employment between any Affiliate and any Participant. Nothing contained herein shall give any Participant the right to be retained in the employ of an Affiliate or to perform services for 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 perform services for it or to interfere with the Participant’s right to terminate his or her employment or performance of services at any time.

Section 12.2 Release. Any payment of benefits to or for the benefit of a Participant or a Participant’s Beneficiary that is made in good faith by the Company in accordance with the Company’s interpretation of its obligations under the Plan shall be in full satisfaction of all claims against the Company for benefits under the Plan to the extent of such payment.

Section 12.3 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 12.4 Nonalienation. No benefit payable at any time under the 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, except with respect to a Domestic Relations Order.

Section 12.5 Withholding. The Company may withhold from any payment of benefits or other compensation payable to a Participant or Beneficiary, or the Company may direct the trustee of the Trust to withhold from any payment of benefits to a Participant or Beneficiary, such amounts as the Company determines are reasonably necessary to pay any taxes or other amounts required to be withheld under applicable law.

Section 12.6 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 12.7 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.

Section 12.8 Invalidity of Certain Provisions; Sections 409A and 457A. If any provision of the Plan is held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision of the Plan and the Plan shall be construed and enforced as if such

 

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provision had not been included. The Plan is intended to comply in form and operation with Section 409A, and shall be construed accordingly. If any provision of the Plan does not conform to the requirements of Section 409A or Section 457A of the Code, the Plan shall be construed and enforced as if such provision had not been included. Without limiting the generality of the foregoing, no compensation may be deferred under the Plan if such deferral would violate the provisions of Section 457A of the Code by virtue of being paid or payable in respect of services to any “non-qualified entity” within the meaning of Section 457A of the Code.

Section 12.9 No Other Agreements. The terms and conditions set forth herein constitute the entire understanding of the Company and the Participants with respect to the matters addressed herein.

Section 12.10 Incapacity. In the event that any Participant is unable to care for his or her affairs because of illness or accident, any payment due may be paid to the Participant’s spouse, parent, brother, sister or other person deemed by the Committee to have incurred expenses for the care of such Participant, unless a duly qualified guardian or other legal representative has been appointed.

Section 12.11 Electronic Media. Notwithstanding anything in the Plan to the contrary, but subject to the requirements of ERISA, the Code, or other applicable law, any action or communication otherwise required to be taken or made in writing by a Participant or Beneficiary or by the Company or Committee shall be effective if accomplished by another method or methods required or made available by the Company or Committee, or their agent, with respect to that action or communication, including e-mail, telephone response systems, intranet systems, or the Internet.

Section 12.12 Delay of Distributions Upon Certain Events Delay in Distributions.

(a) Except as set forth in Section 12.13, if a Participant is a Specified Employee as of the date of his or her Separation from Service, any distributions that under the terms of the Plan are to commence to the Participant on his or her Separation from Service (“separation distributions”) shall commence within 90 days after the Participant’s “delayed distribution date” (as defined below). In this case, the Company shall, in its discretion, determine whether the first separation distribution to the Participant shall include the aggregate amount of any separation distributions that, but for this paragraph (a), would have been paid to the Participant from the date of his or her Separation from Service until the delayed distribution date, or whether each separation distribution shall be delayed for six months. For purposes of this paragraph (a), a Specified Employee’s “delayed distribution date” is the first day of the seventh month following the Participant’s Separation from Service, or if earlier, the date of the Participant’s death.

 

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(b) A payment under the Plan may be delayed by the Company under any of the following circumstances so long as all payments to similarly situated Participants are treated on a reasonably consistent basis:

(i) The Company reasonably anticipates that if such payment were made as scheduled, the Company’s deduction with respect to such payment would not be permitted under Section 162(m) of the Code, provided that the payment is made either during the first Plan Year in which the Company reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Section 162(m) or during the period beginning with the date of the Participant’s Separation from Service and ending on the later of the last day of the Company’s fiscal year in which the Participant has a Separation from Service or the 15th day of the third month following the Separation from Service.

(ii) The Company reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law, provided that the payment is made at the earliest date at which the Company reasonably anticipates that the making of the payment will not cause such violation.

(iii) Upon such other events as determined by the Company and according to such terms as are consistent with Section 409A or are prescribed by the Commissioner of Internal Revenue.

Section 12.13 Acceleration of Distributions Upon Certain Events. The Company may, in its discretion, distribute all or a portion of a Participant’s Accounts at an earlier time and in a different form than specified above in this Article 5 under the circumstances described below:

(a) As may be necessary to fulfill a Domestic Relations Order. Distributions pursuant to a Domestic Relations Order shall be made according to administrative procedures established by the Company.

(b) To the extent reasonably necessary to avoid the violation of ethics laws or conflict of interest laws pursuant to Section 1.409A-3(j)(ii) of the Treasury regulations.

(c) To pay FICA on amounts deferred under the Plan and the income tax resulting from such payment.

(d) To pay the amount required to be included in income as a result of the Plan’s failure to comply with Section 409A.

(e) If the Company determines, in its discretion, that it is advisable to liquidate the Plan in connection with a termination of the Plan pursuant to Section 11.2, subject to Article 8.

(f) As satisfaction of a debt of the Participant to an Affiliate, where such debt is incurred in the ordinary course of the service relationship between the Affiliate and the Participant, the entire amount of the reduction in any Plan Year does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

 

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Notwithstanding anything in this Section 12.13 to the contrary, the Company shall not provide the Participant with discretion or a direct or indirect election regarding whether a payment is accelerated pursuant to this Section 12.13.

 

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SCHEDULE A

Manner of Crediting Gains and Losses to Personal Investment Account

Pursuant to Section 6.3

The Personal Investment Accounts of Participants shall be credited with gains and losses as if invested in one or more of the investments funds listed below that are selected by the Company and communicated to the Participants from time to time, in the proportions designated by the Participant on an investment election form submitted to the Company by the Participant. The investment election form shall be submitted to the Company in the form and manner specified by the Committee, which may be electronically pursuant to Section 12.11. Until and unless changed by the Committee, Participants shall be permitted to change investment elections, generally, on a daily basis.

Medtronic Interest Income Fund

Vanguard Total Bond Market Index Fund

Vanguard Wellington Fund

Vanguard 500 Index Fund

Vanguard Windsor II Fund

Vanguard Morgan Growth Fund

Vanguard PRIMECAP Fund

Vanguard Extended Market Index Fund

Vanguard Explorer Fund

Vanguard International Growth Fund

Medtronic plc Stock Fund

 

A-1