Exhibit 10.1

 

 

FIRST AMENDMENT TO SEVERANCE AGREEMENT

 

 

This Amendment is made as of the _____ day of _____________, 20__, between St.
Jude Medical, Inc., a Minnesota corporation, with its principal offices at One
St. Jude Medical Drive, St. Paul, Minnesota 55117 (the “Company”) and
____________ (“Executive”), residing at ________________________and amends that
certain Severance Agreement, dated _________, 20__, between Executive and the
Company (the “Change in Control Severance Agreement”).

 

WITNESSETH THAT:

 

WHEREAS, the Change in Control Severance Agreement provides severance protection
to Executive under certain circumstances solely in connection with a change in
control, including a right to parachute tax gross-up payments;

 

WHEREAS, the Company has determined that parachute tax gross-up payments are not
in the best interests of the Company and its shareholders, and in order to
induce Executive to give up the right to a parachute tax gross-up payment, the
Company is willing to provide severance protection to Executive for certain
events unrelated to a change in control; and

 

WHEREAS, coincident with this Amendment, desires to designate Executive as
eligible to participate in the St. Jude Medical, Inc. Executive Severance Plan
(and Executive desires to participate in the Plan) providing for severance
benefits under certain circumstances unrelated to a change in control (the
“Executive Severance Plan”).

 

NOW, THEREFORE, in consideration the benefits and obligations under the
Executive Severance Plan, and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and Executive agree
as follows:

 

1.                                    Section 4(ii) of the Change in Control
Severance Agreement is hereby amended to read in full as follows.

 

(ii)                              Anything to the contrary notwithstanding, the
amount of any payment, distribution or benefit made or provided by the Company
to or for the benefit of Executive in connection with a Change in Control or the
termination of Executive’s employment with the Company, whether payable pursuant
to this Agreement or any other agreement between Executive and the Company or
with any person constituting a member of an “affiliated group” (as defined in
Section 280G(d)(5) of the Code with the Company or with any person whose actions
result in a Change in Control (such foregoing payments or benefits referred to
collectively as the “Total Payments”), shall be reduced (but not below zero) by
the amount, if any, necessary to prevent any part of the Total Payments from
being treated as an “excess parachute payment” within the meaning of
Section 280G(b)(1) of the Code, but only if and to the extent such reduction
will also result in, after taking into account all applicable state and federal
taxes (computed at the highest marginal rate) including Executive’s share of
F.I.C.A. and Medicare taxes and any taxes payable pursuant to Section 4999 of
the Code, a greater after-tax

 

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benefit to Executive than the after-tax benefit to Executive of the Total
Payments computed without regard to any such reduction.  For purposes of the
foregoing, (i) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by the Company and acceptable to
Executive does not constitute a “parachute payment” within the meaning of
section 280G(b)(2) of the Code; (ii) any reduction in payments shall be computed
by taking into account that portion of Total Payments which constitute
reasonable compensation within the meaning of Section 280G(b)(4) of the Code in
the opinion of such tax counsel; (iii) the value of any non-cash benefit or of
any deferred cash payment included in the Total Payments shall be determined by
the Company in accordance with the principles of Section 280G(d)(3)(iv) of the
Code; and (iv) in the event of any uncertainty as to whether a reduction in
Total Payments to Executive is required pursuant to this paragraph, the Company
shall initially make the payment to Executive and Executive shall be required to
refund to the Company any amounts ultimately determined not to have been payable
under the terms of this Section 4(ii).

 

Executive will be permitted to provide the Company with written notice
specifying which of the Total Payments will be subject to reduction or
elimination (the “Reduction Notice”).  But, if Executive’s exercise of authority
pursuant to the Reduction Notice would cause any Total Payments to become
subject to any taxes or penalties pursuant to Section 409A of the Code or if
Executive fails to timely provide the Company with the Reduction Notice, then
the Company will reduce or eliminate the Total Payments in the following order: 
(i) first, by reducing or eliminating the portion of the Total Payments that are
payable in cash; and (ii) second, by reducing or eliminating the non-cash
portion of the Total Payments, in each case, in reverse chronological order
beginning with payments or benefits under the most recently dated agreement,
arrangement or award, but in all events such chronology shall be applied in such
a manner so as to produce the least amount of reduction necessary.  Except as
set forth in this Section 4(ii), any Reduction Notice will take precedence over
the provisions of any other plan, arrangement or agreement governing Executive’s
rights and entitlements to any benefits or compensation.

 

2.                                    Except as expressly provided herein, all
other terms of the Change in Control Severance Agreement are unchanged by this
Amendment and remain in full force and effect.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its
name by a duly authorized officer, and Executive has hereunto set his or her
hand, all as of the date first written above.

 

 

 

ST. JUDE MEDICAL, INC.

 

 

 

 

 

By

 

 

 

  Its

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

2

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