ST. JUDE MEDICAL, INC.
RETIREMENT PLAN FOR MEMBERS OF THE BOARD OF DIRECTORS
St. Jude Medical, Inc. ('St. Jude'), a Minnesota corporation, hereby
establishes this Retirement Plan (the 'Plan'), effective as of January 1, 1988,
for the purpose of rewarding members of the Board of Directors of St. Jude (the
'Board') for their efforts in making St. Jude's business successful, and to
provide benefits to them upon retirement, disability or death.
1.1 'Administrative Committee' shall mean the committee appointed
pursuant to Section 7 hereof.
1.2 'Effective Date' shall mean January 1, 1988.
1.3 'Normal Retirement Benefit' shall equal the Participant's average
annual retainer fee during his or her period of Board membership
calculated by dividing the Participant's total retainer fees by
the number of years of service, or fraction thereof based on
completed months of service, for which the Participant received
such retainer fees. Solely for purposes of this definition and
notwithstanding anything in Section 1.7 to the contrary, all
completed years and months of service prior to and after 1988
shall be counted in full. In no event shall the average retainer
fee for any Board member on March 1, 1995 be less than $24,000.
1.4 'Normal Retirement Date' shall mean the later of:
1.4.1 the day following the Participant's 60th birthday, or
1.4.2 the day on which the Participant is no longer a member of
1.5 'Participant' shall mean a member of the Board of St. Jude who is
not a full-time employee of St. Jude.
1.6 'Totally Disabled' or 'Total Disability' shall mean (a) the
inability of an injured or ill Participant to engage in or
perform the duties of his regular occupation or employment within
the first two years of such disability; and (b) after the first
two years of such disability, the inability of the Participant to
engage in any paid employment or work for which he may, by
education and training, including rehabilitative training, be or
reasonably become qualified.
1.7 'Year Of Service' shall mean the following:
1.7.1 For purposes of vesting under paragraph 3.1, Year of
Service shall mean a twelve consecutive month period
during which the Participant serves as a member of the
Board. In addition, the twelve consecutive month period,
which includes the Participant's Normal Retirement Date,
shall constitute one Year of Service under paragraph 3.1,
notwithstanding the fact that the Participant may not have
served on the Board for the entire twelve months.
1.7.2 Year of Service for purposes of payment of benefits under
Article 4 shall mean a twelve consecutive month period
beginning on or after the Effective Date, during which the
Participant serves as a member of the Board. In addition,
22.214.171.124 Each twelve consecutive month period served by a
Board member prior to the Effective Date shall
count as six months towards a Year of Service,
so that two twelve consecutive month periods
served prior to January 1, 1988 count as one
Year of Service under the Plan.
126.96.36.199 With respect to the twelve-month period which
includes the Participant's Normal Retirement
Date, a Participant shall be credited with
one-twelfth of his Normal Retirement Benefit for
each month during which he serves on the Board
following his last complete Year of Service.
188.8.131.52 If a Participant has six months of credit toward
a Year of Service under subparagraph 184.108.40.206 and
a number of months' credit under 220.127.116.11, such
credited months may be aggregated to provide the
Participant with a Normal Retirement Benefit for
the final year in which he or his beneficiary
receives benefits which equals his Normal
Retirement Benefit multiplied by a fraction, the
numerator of which equals the aggregated number
of months credited under subparagraphs 18.104.22.168
and 22.214.171.124 (or the non-aggregated months
credited under either such subparagraph) and the
denominator of which equals twelve.
2. Eligibility. Board members who qualify as Participants and who are
acting as such on the Effective Date shall automatically be Participants in the
Plan as of the Effective Date. Thereafter, each other Board member who qualifies
as a Participant shall become a Plan Participant effective with his first day of
service as a non-employee Board member.
3.1 Service. Payment of benefits under the Plan is conditioned upon
the Participant completing five Years of Service. Years of
Service need not be consecutive. After the five-year service
condition is met, the Participant's benefit shall be fully vested
and nonforfeitable, subject to paragraph 3.2.
3.2 Fidelity. The payment of benefits under the Plan is conditioned
upon the Participant not committing fraud or dishonesty against
or going into competition with St. Jude. If the Board determines
that a Participant has breached the condition set forth in the
previous sentence, either before or after he has completed five
Years of Service, all of the Participant's benefits under the
Plan shall be immediately forfeitable and forfeited. However, all
Plan benefits with respect to all Plan Participants who have not
breached the condition set forth above shall become
nonforfeitable and this provision shall no longer be effective on
the later of the last day of the calendar year during which the
Participant terminates (a) employment or (b) membership in the
Board, provided the Participant satisfies the requirement of
3.3 Termination of plan. If the Board elects to terminate the Plan,
the benefits of all current Participants who have satisfied the
requirements of paragraphs 3.1 and 3.2 and who continue to
satisfy 3.2 as long as required by the terms of that paragraph,
shall be fully vested. Such Participants shall receive their
benefits at the times specified in Article 4 below.
3.4 Change in control. In the event of a Change in Control, the
benefits of all current Participants shall become immediately
fully vested, whether or not such Participants have completed
five Years of Service. Such Participants shall be deemed to have
satisfied the requirements of paragraph 3.1, shall not be subject
to the conditions of paragraph 3.2 and shall be entitled to
receive benefits under the Plan in accordance with Article 4.
3.4.1 'Change in control' shall mean a change in control which
would be required to be reported in response to Item 5(f)
on Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), whether or not St. Jude is then subject to such
reporting requirement, including, without limitation, if:
126.96.36.199 Any 'Person' (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes a
'beneficial owner' (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly,
of securities of St. Jude representing 40% or
more of the combined voting power of St. Jude's
then outstanding securities; or
188.8.131.52 There ceases to be a majority of the Board of
Directors comprised of individuals described in
184.108.40.206 For purposes of this paragraph 220.127.116.11, 'Board
of Directors' shall mean: (a) individuals who,
on the effective date hereof, constituted the
Board of St. Jude; and (b) any new director who
subsequently was elected or nominated for
election by a majority of the directors who held
such office immediately prior to a Change in
Change in control shall also mean the
commencement of any insolvency proceeding by or
against St. Jude, including the appointment of a
4. Payment Of Benefits.
4.1 Normal Retirement Benefit. A Participant who is fully vested
shall be entitled to receive a Normal Retirement Benefit on the
first business day of the calendar year following the
Participant's retirement from full-time employment after his
Normal Retirement Date and such payments shall continue to be
paid on the first business day of each calendar year thereafter
until the number of payments equals the Participant's Years of
Service, at which time payments under the Plan shall cease. If
the Participant is credited with a final, fractional Year of
Service under paragraph 18.104.22.168, the Participant's Normal
Retirement Benefit for the final year in which he receives
benefits shall equal his Normal Retirement Benefit multiplied by
the fraction described in subparagraph 22.214.171.124.
4.2 Reappointment To The Board After Commencement Of Normal
Retirement Benefits. No Participant shall receive benefits while
serving as a member of the Board. If a Participant is receiving
his Normal Retirement Benefit and is reappointed to the Board,
all payments to the Participant under the Plan shall cease during
his term and shall recommence on the first business day of the
first calendar year commencing after his term expires. The number
of years during which such a Participant or his survivors may
receive benefits shall equal all of his Years of Service, both
before and after his reappointment to the Board, minus Years of
Service for which benefits had been paid prior to the
Participant's reappointment to the Board.
4.3 Disability Benefit. A Participant whose full-time employment
terminates prior to his Normal Retirement Date due to Total
Disability but who has completed five Years of Service shall be
entitled to receive a benefit equal to a Normal Retirement
Benefit commencing on the first business day of the calendar year
following the onset of the Participant's Total Disability,
provided he has not violated paragraph 3.2. Such payments shall
continue to be paid on the first business day of each calendar
year thereafter until the number of payments equals the
Participant's Years of Service, at which time payments under the
Plan shall cease.
4.4 Survivor's Benefit. If the Participant dies before receiving all
benefits due him under the Plan, St. Jude shall continue to pay
to the Participant's designated beneficiary the benefit the
Participant had been receiving at the date of his death under
paragraph 4.1. If the Participant had not yet commenced receipt
of benefits under the Plan, St. Jude shall pay to his designated
beneficiary the benefits he would have received under paragraph
4.1, provided the Participant completed five Years of Service
prior to his death and had not breached the condition set forth
in paragraph 3.2. Benefit payments to the Participant's
beneficiary shall commence (or continue) on the first business
day of the year following the Participant's death and shall
continue to be paid on each anniversary date thereof until the
number of payments, including any payments to the Participant
prior to his death, equals the number of the Participant's Years
of Service, including any final, fractional Year of Service under
paragraph 126.96.36.199, at which time payments under the Plan shall
cease. Notwithstanding the foregoing, a survivor's benefit shall
not be paid if the Participant has earned fewer than five Years
4.5 Benefit Personal To Participant. If the Participant is or becomes
obligated to turn over all or part of any Plan benefit to his
current or former employer, such benefit shall not be paid, it
being the intent of the Plan that benefits be paid only to the
Participant or pursuant to paragraph 4.4 hereof.
5. Designation Of Beneficiary. All payments to be made by St. Jude shall be
made to the Participant, if living. In the event of a Participant's death prior
to the receipt of all benefit payments, all subsequent payments to be made under
the Plan shall be made to the Participant's beneficiary. In the event a
beneficiary dies before receiving all the payments due to such beneficiary, the
then-remaining payments shall be paid to the legal representatives of the
beneficiary's estate. The Participant shall designate a beneficiary by filing a
written notice of such designation with St. Jude in such form as St. Jude may
prescribe. The Participant may revoke or modify said designation at any time by
a further written designation. The Participant's beneficiary designation shall
be deemed automatically revoked in the event of the death of the beneficiary or,
if the beneficiary is the Participant's spouse, in the event of dissolution of
marriage. If no designation shall be in effect at the time when any benefits
payable under this Plan shall become due, the beneficiary shall be the spouse of
the Participant or, if no spouse is then living, the Participant's children or
their issue by right of representation or, if none, the legal representatives of
the Participant's estate.
6. Facility Of Payment. In the event a benefit is payable to a minor or a
person incapable of handling the disposition of his property, the Administrative
Committee may pay such benefit to the guardian, legal representative or person
having the care or custody of such minor or incompetent person. The
Administrative Committee may require proof of incompetency, minority or
guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Administrative Committee and
St. Jude from all liability with respect to such benefit.
7. Administration And Interpretation Of The Plan. The Board shall appoint
an Administrative Committee consisting of two or more senior managers of St.
Jude to administer and interpret the Plan. Interpretation by the Administrative
Committee shall be final and binding upon a Participant. The Administrative
Committee shall adopt rules and regulations relating to the Plan as it may deem
necessary or advisable for the administration of the Plan.
8. Claims Procedure. If the Participant or the Participant's beneficiary
(the 'Claimant') is denied all or a portion of an expected benefit under this
Plan for any reason, he may file a claim with the Administrative Committee. The
Administrative Committee shall notify the Claimant within 60 days of allowance
or denial of the claim, unless the Claimant receives written notice from the
Administrative Committee prior to the end of the 60-day period stating that
special circumstances require an extension of the time for decision. The notice
of the Administrative Committee's decision shall be in writing, sent by mail to
Claimant's last known address and, if a denial of the claim, must contain the
a. the specific reasons for the denial;
b. specific reference to pertinent provisions of the Plan on which
the denial is based; and
c. if applicable, a description of any additional information or
material necessary to perfect the claim, an explanation of why
such information or material is necessary, and an explanation of
the claims review procedure.
9. Review Procedure. A Claimant is entitled to request a review of any
denial of his claim by the Administrative Committee. The request for review must
be submitted in writing within 60 days of mailing of notice of the denial.
Absent a request for review within the 60-day period, the claim will be deemed
to be conclusively denied. The Claimant or his representative shall be entitled
to review all pertinent documents, and to submit issues and comments orally and
If the request for review by a Claimant concerns the interpretation and
application of the provisions of this Plan and St. Jude's obligations, then the
review shall be conducted by a separate committee consisting of three persons
designated or appointed by the Administrative Committee. The separate committee
shall afford the Claimant a hearing and the opportunity to review all pertinent
documents and submit issues and comments, orally and in writing, and shall
render a review decision in writing, all within 60 days after receipt of a
request for a review, provided that in special circumstances (such as the
necessity of holding a hearing) the Committee may extend the time for decision
by not more than 60 days upon written notice to the Claimant. The Claimant shall
receive written notice of the separate committee's review decision, together
with specific reasons for the decision and reference to the pertinent provisions
of the Plan. If the Claimant's claim is denied by the separate committee, the
Claimant may request arbitration of the claim, as follows: The American
Arbitration Association shall be asked to appoint an arbitrator to rule on the
matter in accordance with its Commercial Arbitration Rules, as then in effect.
The decision of the Arbitrator shall be binding and conclusive upon the parties
and St. Jude and the Claimant shall divide equally the costs of the arbitration.
10. Unsecured Creditor. The rights of the Participant, his beneficiary or
estate to benefits under the Plan shall be solely those of an unsecured creditor
of St. Jude. Any insurance policy or other assets acquired by or held by St.
Jude in connection with the liabilities assumed by it pursuant to the Plan shall
not be deemed to be held under any trust for the benefit of the Participant, his
beneficiary, or his estate, or to be security for the performance of the
obligations of St. Jude but shall be, and remain, a general, unpledged, and
unrestricted asset of St. Jude.
11. Assignment Of Benefits. Neither the Participant nor any beneficiary
under the Plan shall have any right to assign the right to receive any benefits
under the Plan, and any such assignment shall be invalid.
12. Board Membership Not Guaranteed By Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving a Participant the right to
be retained or continue as a member of the Board of Directors.
13. Taxes. St. Jude shall deduct from all payments made hereunder all
applicable federal or state taxes required by law to be withheld from such
14. Amendment And Termination. The Board of St. Jude may, at any time,
amend or terminate the Plan, provided that the Board may not reduce or modify
any benefit payable to a Participant without the prior consent of the
15. Construction. The Plan shall be construed according to the laws of the
State of Minnesota.
16. Form Of Communication. Any election, application, claim, notice or
other communication required or permitted hereunder shall be made in writing and
in such form as St. Jude may prescribe. Such communication shall be effective
upon mailing, if sent by first class mail, postage prepaid, and addressed to St.
Jude Medical, Inc., One Lillehei Plaza, St. Paul, Minnesota 55117, or to the
Participant at the address which he files with the Administrative Committee. The
Participant shall notify the Administrative Committee in writing of any change
17. Captions And Interpretation. The captions at the head of a section or a
paragraph of this Plan are designed for convenience of reference only and are
not to be resorted to for the purpose of interpreting any provision of this
Plan. Where appropriate, the masculine includes the feminine, the singular
includes the plural, and vice versa.
18. Severability. The invalidity of any portion of this Plan shall not
invalidate the remainder thereof, and said remainder shall continue in full
force and effect.
19. Binding Agreement. The provisions of this Plan shall be binding upon
the Participant and St. Jude and their successors, assigns, heirs, executors and
ST. JUDE MEDICAL, INC.
AS AMENDED THROUGH MARCH 15, 1995.