Document:

EXHIBIT
10.2

NOTICE
OF NON-QUALIFIED STOCK OPTION GRANT 

TO NON-EMPLOYEE DIRECTOR

          This
certifies that ___________________________ has an option to purchase
___________________ shares of common stock, par value $.10 per share, of St.
Jude Medical, Inc., a Minnesota corporation.

          Social
Security Number: ____________________

          Address:
______________________

          Grant
Date: _____________________

          Purchase
Price Per Share: $_______

          Expiration
Date: ____________________

          Exercisable
Date: 100% exercisable on _____________________

          This
stock option is governed by, and subject in all respects to, the terms and
conditions of the Non-Qualified Stock Option Agreement for Non-Employee
Directors, a copy of which is attached to and made a part of this document, and
the St. Jude Medical, Inc. 2006 Stock Plan, a copy of which is available upon
request. This Notice of Non-Qualified Stock Option Grant to Non-Employee
Director has been duly executed, by manual or facsimile signature, on behalf of
St. Jude Medical, Inc.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 ST.
 JUDE MEDICAL, INC.

 
	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
 Name: 

 	
  

 
	
  

 	
 Title: 

 	
  

 

ST.
JUDE MEDICAL, INC. 2006 STOCK PLAN

NON-QUALIFIED
STOCK OPTION AGREEMENT 

FOR NON-EMPLOYEE DIRECTORS     

          This
Non-Qualified Stock Option Agreement for Non-Employee Directors (this
“Agreement”) is between St. Jude Medical, Inc., a Minnesota corporation (the
“Company”), and you, the person named in the attached Notice of Non-Qualified
Stock Option Grant to Non-Employee Director (the “Notice”). This Agreement is
effective as of the date of grant set forth in the attached Notice (the “Grant
Date”).

          The
Company desires to provide you with an opportunity to purchase shares of the
Company’s common stock, $.10 par value (the “Common Stock”), as provided in
this Agreement in order to carry out the purpose of the St. Jude
Medical, Inc. 2006 Stock Plan (the
“Plan”).

          Accordingly,
for good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Company and you hereby agree as follows:

          1.          Grant
of Option.

          The
Company hereby grants to you, effective as of the Grant Date, the right and
option (the “Option”) to purchase all or any part of the aggregate number of
shares of Common Stock set forth in the attached Notice, on the terms and
conditions contained in this Agreement and in accordance with the terms of the
Plan. The Option is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).

          2.          Exercise
Price.

          The
per share purchase price of the shares subject to the Option shall be the
purchase price per share set forth in the attached Notice.

          3.          Term
of Option and Exercisability.

          The
term of the Option shall be for a period of eight years from the Grant Date,
terminating at the close of business on the expiration date set forth in the
attached Notice (the “Expiration Date”) or such shorter period as is prescribed
in Section 5 of this Agreement. The Option shall become exercisable, or vest,
on the date set forth in the attached Notice, subject to the provisions of
Sections 4 and 5 of this Agreement. To the extent the Option is exercisable,
you may exercise it in whole or in part, at any time, or from time to time,
prior to the termination of the Option. 

          4.          Change
of Control.

          Notwithstanding
the vesting provisions contained in Section 3 above, but subject to the
other terms and conditions contained in this Agreement, from and after a Change
of Control (as defined below) the Option shall become immediately exercisable
in full. As used herein, “Change of Control” shall mean any of the following
events:

	
  

 	
  

 
	
  

 	
           (i)          the
 acquisition by any person, 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”), other than the Company or any of its Subsidiaries, or any
 employee benefit plan of the Company and/or one or more of its Subsidiaries,
 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
 the Exchange Act) of 35% or more of either the then outstanding shares of
 Common Stock or the combined voting power of the Company’s then outstanding
 voting securities in a transaction or series of transactions not approved in
 advance by a vote of at least three-quarters of the Continuing Directors (as
 defined below); or

 
	
  

 	
  

 
	
  

 	
           (ii)         individuals
 who, as of the Grant Date, constitute the Board of Directors of the Company
 (generally the “Directors” and as of the Grant Date the “Continuing
 Directors”) cease for any reason to constitute at least a majority thereof,
 provided that any person becoming a Director subsequent to the Grant Date
 whose nomination for election was approved in advance by a vote of at least
 three-quarters of the Continuing Directors (other than a nomination of an
 individual whose initial assumption of office is in connection with an actual
 or threatened solicitation with respect to the election or removal of the
 Directors of the Company, as such terms are used in Rule 14a-11 of Regulation
 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

 
	
  

 	
  

 
	
  

 	
           (iii)        the
 consummation of a reorganization, merger, consolidation, liquidation or
 dissolution of the Company or of the sale (in one transaction or a series of
 related transactions) of all or substantially all of the assets of the Company
 other than a reorganization, merger, consolidation, liquidation, dissolution
 or sale approved in advance by a vote of at least three-quarters of the
 Continuing Directors; or

 
	
  

 	
  

 
	
  

 	
           (iv)        the
 first purchase under any tender offer or exchange offer (other than an offer
 by the Company or any of its Subsidiaries) pursuant to which shares of Common
 Stock are purchased; or

 
	
  

 	
  

 
	
  

 	
           (v)         at
 least a majority of the Continuing Directors determines in their sole
 discretion that there has been a change in control of the Company.

 

          5.        Effect
of Termination of Board Service.

          (a)       If
your board service terminates by reason of your death, the Option may be
exercised at any time within 12 months after the date of your death, to the
extent that the Option was exercisable by you on the date of death, by your
personal representatives or administrators or by any person or persons to whom
the Option has been transferred by will or the applicable laws of descent and
distribution, subject to the condition that the Option shall not be exercisable
after the Expiration Date of the Option.

          (b)       If
your board service terminates by reason of Disability, you may exercise the
Option at any time within 12 months after such termination of service, to the
extent that the Option was exercisable by you on the date of such termination,
subject to the condition that the Option shall not be exercisable after the
Expiration Date of the Option.

2

          (c)        If
your board service is terminated for Cause, the Option shall terminate
immediately upon termination of service and shall not be exercisable
thereafter.

          (d)        If
your board service terminates for any reason other than your death, Disability
or for Cause, you may exercise the Option after the date of such termination of
service in accordance with its terms to the extent that the Option was
exercisable by you on the date of such termination, subject to the condition
that the Option shall not be exercisable after the Expiration Date of the
Option.

          6.          Method
of Exercising Option.

          (a)        Subject
to the terms and conditions of this Agreement, you may exercise your Option by
following the procedures established by the Company from time to time. In
addition, you may exercise your Option by written notice to the Company as
provided in Section 9(i) of this Agreement that states (i) your election
to exercise the Option, (ii) the Grant Date of the Option, (iii) the
purchase price of the shares, (iv) the number of shares as to which the
Option is being exercised and (v) the manner of payment. The notice shall
be signed by you or the person(s) exercising the Option. The notice shall be
accompanied by payment in full of the exercise price for all shares designated
in the notice. To the extent that the Option is exercised after your death, the
notice of exercise shall also be accompanied by appropriate proof of the right
of such person(s) to exercise the Option.

          (b)        Payment
of the exercise price shall be made to the Company through one or a combination
of the following methods:

	
  

 	
  

 
	
  

 	
            (i)        cash,
 in United States currency (including check, draft, money order or wire
 transfer made payable to the Company); or

 
	
  

 	
  

 
	
  

 	
            (ii)       delivery
 (either actual delivery or by attestation) of shares of Common Stock acquired
 by you more than six months prior to the date of exercise having a Fair
 Market Value on the date of exercise equal to the Option exercise price. You
 shall represent and warrant in writing that you are the owner of the shares
 so delivered, free and clear of all liens, encumbrances, security interests
 and restrictions, and you shall duly endorse in blank all certificates
 delivered to the Company.

 

           7.          Income
Tax.

          You
acknowledge that you will consult with your personal tax adviser regarding the
income tax consequences of exercising the Option or any other matters related
to this Agreement and that any federal, state, local or foreign payroll,
withholding, income or other taxes are your sole and absolute responsibility.
In order to comply with all applicable federal, state, local or foreign income
tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state, local or foreign
payroll, withholding, income or other taxes, if and to the extent required by
applicable law, are withheld or collected from you.

3

          8.          Adjustments.

          If
the Committee administering the Plan determines that any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
reverse stock split, other change in corporate structure affecting the Common
Stock, spin-off, split-up or other distribution of assets to shareholders, or
other similar corporate transaction or event affects the shares of Common Stock
such that an adjustment is determined by the Committee administering the Plan
to be appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under this Agreement, then
the Committee administering the Plan shall, in such manner as it may deem
equitable, in its sole discretion, adjust any or all of the number and type of
the shares covered by the Option and the exercise price of the Option.

          9.          General
Provisions.

         (a)          Interpretations.
This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon your request. Terms used herein which are defined in
the Plan shall have the respective meanings given to such terms in the Plan,
unless otherwise defined herein. In the event that any provision of this
Agreement is inconsistent with the terms of the Plan, the terms of the Plan
shall govern. Any question of administration or interpretation arising under
this Agreement shall be determined by the Committee administering the Plan, and
such determination shall be final, conclusive and binding upon all parties in
interest.

          (b)        No
Rights as a Shareholder.  Neither you nor your legal
representatives shall have any of the rights and privileges of a shareholder of
the Company with respect to the shares of Common Stock subject to the Option
unless and until certificates for such shares have been issued upon exercise of
the Option.

          (c)        No
Right to Board Service. Nothing in this Agreement or the Plan shall be
construed as giving you the right to continue to serve on the Company’s Board
of Directors.

          (d)        Option
Not Transferable. The Option may not be transferred, pledged, alienated,
attached or otherwise encumbered, and any purported transfer, pledge,
alienation, attachment or encumbrance of the Option will be void and
unenforceable against the Company, except that the Option may be transferred
(i) by will or by the laws of descent and distribution or (ii) if approved in
advance by the Committee administering the Plan, in its discretion and subject
to such additional terms and conditions as it determines, by gift, without
consideration, under a written instrument that is approved in advance by the
Committee administering the Plan, to a member of your family, as defined in
Section 267 of the Code, or to a trust or similar entity whose sole
beneficiaries are you and/or members of your family (such family member or
other entity, a “Permitted Transferee”), provided that such transfer and
the exercise of the Option by such Permitted Transferee do not violate any
federal or state securities laws. During your lifetime the Option will be
exercisable only by you or such Permitted Transferee.

          (e)        Reservation
of Shares. The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Agreement.

4

          (f)        Securities
Matters. The Company shall not be required to deliver any shares of Common
Stock until the requirements of any federal or state securities or other laws,
rules or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.

          (g)        Headings.
Headings are given to the sections and subsections of this Agreement solely as
a convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of this
Agreement or any provision hereof.

          (h)        Governing
Law. The internal law, and not the law of conflicts, of the State of
Minnesota will govern all questions concerning the validity, construction and
effect of this Agreement.

          (i)         Notices.
You should send all written notices regarding this Agreement or the Plan to the
Company at the following address:

	
  

 	
  

 
	
  

 	
 St. Jude Medical, Inc.

 
	
  

 	
 Stock Option Administrator

 One Lillehei Plaza

 St. Paul, MN 55117

 

          (j)        Notice
of Non-Qualified Stock Option Grant to Non-Employee Director. This
Agreement is attached to and made part of a Notice of Non-Qualified Stock
Option Grant to Non-Employee Director and shall have no force or effect unless
such Notice is duly executed and delivered by the Company to you.

* * * * * * * *

5EXHIBIT
10.3

NOTICE
OF NON-QUALIFIED STOCK OPTION GRANT

TO EMPLOYEE

(2006 STOCK PLAN)

          This
certifies that ____________________ has an option to purchase
____________________ shares of common stock, par value $.10 per share, of St.
Jude Medical, Inc., a Minnesota corporation.

	
  

 	
  

 
	
  

 	
 Social Security Number: ____________________

 
	
  

 	
  

 
	
  

 	
 Address: ________________________________

 
	
  

 	
  

 
	
  

 	
 Grant Date: ______________________________

 
	
  

 	
  

 
	
  

 	
 Purchase Price Per Share: $ _________________

 
	
  

 	
  

 
	
  

 	
 Expiration Date: __________________________

 
	
  

 	
  

 
	
  

 	
 Exercisable Date: [insert vesting schedule, e.g.,
 25% exercisable on each of first four anniversaries of grant date]

 

          This
stock option is governed by, and subject in all respects to, the terms and
conditions of the Non-Qualified Stock Option Agreement for Employees, a copy of
which is attached to and made a part of this document, and the St. Jude
Medical, Inc. 2006 Stock Plan, a copy of which is available upon request. This
Notice of Non-Qualified Stock Option Grant to Employee has been duly executed,
by manual or facsimile signature, on behalf of St. Jude Medical, Inc.

	
  

 	
  

 	
  

 
	
  

 	
 ST. JUDE MEDICAL, INC.

 
	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title:

 	
  

 

ST.
JUDE MEDICAL, INC. 2006 STOCK PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES

          This
Non-Qualified Stock Option Agreement for Employees (this “Agreement”) is
between St. Jude Medical, Inc., a Minnesota corporation (the “Company”), and
you, the person named in the attached Notice of Non-Qualified Stock Option
Grant to Employee (the “Notice”). This Agreement is effective as of the date of
grant set forth in the attached Notice (the “Grant Date”).

          The
Company desires to provide you with an opportunity to purchase shares of the
Company’s common stock, $.10 par value (the “Common Stock”), as provided in
this Agreement in order to carry out the purpose of the St. Jude Medical, Inc.
2006 Stock Plan (the “Plan”).

          Accordingly,
for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the Company and you hereby agree as follows:

	
  

 	
  

 	
  

 
	
  

 	
 1.

 	
 Grant of Option.

 

          The
Company hereby grants to you, effective as of the Grant Date, the right and
option (the “Option”) to purchase all or any part of the aggregate number of
shares of Common Stock set forth in the attached Notice, on the terms and
conditions contained in this Agreement and in accordance with the terms of the
Plan. The Option is not intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).

	
  

 	
  

 	
  

 
	
  

 	
 2.

 	
 Exercise Price.

 

          The
per share purchase price of the shares subject to the Option shall be the
purchase price per share set forth in the attached Notice.

	
  

 	
  

 	
  

 
	
  

 	
 3.

 	
 Term of Option and Exercisability.

 

          The
term of the Option shall be for a period of eight years from the Grant Date,
terminating at the close of business on the expiration date set forth in the
attached Notice (the “Expiration Date”), or such shorter period as is
prescribed in the attached Notice or in Section 5 of this Agreement. The Option
shall become exercisable, or vest, on the date or dates and in the amount or
amounts set forth in the attached Notice, subject to the provisions of Sections
4 and 5 of this Agreement. To the extent the Option is exercisable, you may
exercise it in whole or in part, at any time, or from time to time, prior to
the termination of the Option.

	
  

 	
  

 	
  

 
	
  

 	
 4.

 	
 Change of Control.

 

          Notwithstanding
the vesting provisions contained in Section 3 above, but subject to the other
terms and conditions contained in this Agreement, from and after a Change of
Control (as defined below) the Option shall become immediately exercisable in
full. As used herein, “Change of Control” shall mean any of the following
events:

	
  

 	
  

 	
  

 
	
  

 	
           (i)          the
 acquisition by any person, 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”), other than the Company or any of its Subsidiaries, or any
 employee benefit plan of the Company and/or one or more of its Subsidiaries,
 of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
 the Exchange Act) of 35% or more of either the then outstanding shares of
 Common Stock or the combined voting power of the Company’s then outstanding
 voting securities in a transaction or series of transactions not approved in
 advance by a vote of at least three-quarters of the Continuing Directors (as
 defined below); or

 
	
  

 	
  

 
	
  

 	
           (ii)         individuals
 who, as of the Grant Date, constitute the Board of Directors of the Company
 (generally the “Directors” and as of the Grant Date the “Continuing
 Directors”) cease for any reason to constitute at least a majority thereof,
 provided that any person becoming a Director subsequent to the Grant Date
 whose nomination for election was approved in advance by a vote of at least
 three-quarters of the Continuing Directors (other than a nomination of an
 individual whose initial assumption of office is in connection with an actual
 or threatened solicitation with respect to the election or removal of the
 Directors of the Company, as such terms are used in Rule 14a-11 of Regulation
 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

 
	
  

 	
  

 
	
  

 	
           (iii)        the
 consummation of a reorganization, merger, consolidation, liquidation or
 dissolution of the Company or of the sale (in one transaction or a series of
 related transactions) of all or substantially all of the assets of the
 Company other than a reorganization, merger, consolidation, liquidation,
 dissolution or sale approved in advance by a vote of at least three-quarters
 of the Continuing Directors; or

 
	
  

 	
  

 
	
  

 	
           (iv)        the
 first purchase under any tender offer or exchange offer (other than an offer
 by the Company or any of its Subsidiaries) pursuant to which shares of Common
 Stock are purchased; or

 
	
  

 	
  

 
	
  

 	
           (v)         at
 least a majority of the Continuing Directors determines in their sole
 discretion that there has been a change in control of the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 5.

 	
 Effect of Termination of Employment.

 

          (a)      If
your employment is terminated by reason of your death, the Option may be
exercised at any time within 12 months after the date of your death, to the
extent that the Option was exercisable by you on the date of death, by your
personal representatives or administrators or by any person or persons to whom
the Option has been transferred by will or the applicable laws of descent and
distribution, subject to the condition that the Option shall not be exercisable
after the Expiration Date of the Option.

          (b)      If
your employment is terminated by reason of Disability, you may exercise the
Option at any time within 12 months after such termination of employment, to
the extent that the Option was exercisable by you on the date of such
termination, subject to the condition that the Option shall not be exercisable
after the Expiration Date of the Option.

2

          (c)      If
your employment is terminated by reason of Retirement, you may exercise the
Option at any time within 36 months after such termination of employment, to
the extent that the Option was exercisable by you on the date of such
termination, subject to the condition that the Option shall not be exercisable
after the Expiration Date of the Option.

          (d)      If
your employment is terminated for Cause, the Option shall terminate immediately
upon termination of employment and shall not be exercisable thereafter.

          (e)      If
your employment is terminated for any reason other than your death, Disability,
Retirement or for Cause, you may exercise the Option at any time within 90 days
after the date of such termination of employment, to the extent that the Option
was exercisable by you on the date of such termination, subject to the
condition that the Option shall not be exercisable after the Expiration Date of
the Option. However, if concurrently with the termination of your employment
you become a consultant to the Company pursuant to a written consulting
agreement, then you may continue to exercise the Option at any time until 90
days after the date of termination of such consulting agreement, to the extent
the Option was exercisable by you on the date of your termination of
employment, subject to the condition that the Option will not be exercisable
after the Expiration Date of the Option.

	
  

 	
  

 	
  

 
	
  

 	
 6.

 	
 Method of Exercising Option.

 

          (a)      Subject
to the terms and conditions of this Agreement, you may exercise the Option by
following the procedures established by the Company from time to time. In
addition, you may exercise the Option by written notice to the Company, as
provided in Section 9(i) of this Agreement, that states (i) your election to
exercise the Option, (ii) the Grant Date of the Option, (iii) the purchase
price of the shares, (iv) the number of shares as to which the Option is being
exercised, (v) the manner of payment of the exercise price and (vi) the manner
of payment for any income tax withholding amount. The notice shall be signed by
you or the person(s) exercising the Option. The notice shall be accompanied by
payment in full of the exercise price for all shares designated in the notice.
To the extent that the Option is exercised after your death, the notice of
exercise shall also be accompanied by appropriate proof of the right of such
person(s) to exercise the Option.

          (b)      Payment
of the exercise price shall be made to the Company through one or a combination
of the following methods:

	
  

 	
  

 
	
  

 	
           (i)          cash,
 in United States currency (including check, draft, money order or wire
 transfer made payable to the Company); or

 
	
  

 	
  

 
	
  

 	
           (ii)         delivery
 (either actual delivery or by attestation) of shares of Common Stock acquired
 by you more than six months prior to the date of exercise having a Fair
 Market Value on the date of exercise equal to the Option exercise price. You
 shall represent and warrant in writing that you are the owner of the shares
 so delivered, free and clear of all liens, encumbrances, security interests
 and restrictions, and you shall duly endorse in blank all certificates
 delivered to the Company.

 

3

	
  

 	
  

 	
  

 
	
  

 	
 7.

 	
 Income Tax Withholding.

 

          (a)      You
acknowledge that you will consult with your personal tax adviser regarding the
income tax consequences of exercising the Option or any other matters related
to this Agreement and that any federal, state, local or foreign payroll,
withholding, income or other taxes are your sole and absolute responsibility.
In order to comply with all applicable federal, state, local or foreign income
tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state, local or foreign
payroll, withholding, income or other taxes are withheld or collected from you.

          (b)      In
accordance with the terms of the Plan, and such rules as may be adopted by the
Committee administering the Plan, you may elect to satisfy any applicable tax
withholding obligations arising from the exercise of the Option by (i)
delivering cash (including check, draft, money order or wire transfer made
payable to the order of the Company), (ii) having the Company withhold a
portion of the shares of Common Stock otherwise to be delivered upon exercise
of the Option having a Fair Market Value equal to the amount of such taxes or
(iii) delivering to the Company shares of Common Stock having a Fair Market
Value equal to the amount of such taxes. The Company will not deliver any
fractional share of Common Stock but will pay, in lieu thereof, the Fair Market
Value of such fractional share. Your election must be made on or before the
date that the amount of tax to be withheld is determined.

	
  

 	
  

 	
  

 
	
  

 	
 8.

 	
 Adjustments.

 

          If
the Committee administering the Plan determines that any merger,
reorganization, consolidation, recapitalization, stock dividend, stock split,
reverse stock split, other change in corporate structure affecting the Common
Stock, spin-off, split-up or other distribution of assets to shareholders, or
other similar corporate transaction or event affects the shares of Common Stock
such that an adjustment is determined by the Committee administering the Plan
to be appropriate in order to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under this Agreement, then
the Committee administering the Plan shall, in such manner as it may deem
equitable, in its sole discretion, adjust any or all of the number and type of
the shares covered by the Option and the exercise price of the Option.

	
  

 	
  

 	
  

 
	
  

 	
 9.

 	
 General Provisions.

 

          (a)      Interpretations.
This Agreement is subject in all respects to the terms of the Plan. A copy of
the Plan is available upon your request. Terms used herein which are defined in
the Plan shall have the respective meanings given to such terms in the Plan,
unless otherwise defined herein. In the event that any provision of this
Agreement is inconsistent with the terms of the Plan, the terms of the Plan
shall govern. Any question of administration or interpretation arising under
this Agreement shall be determined by the Committee administering the Plan, and
such determination shall be final, conclusive and binding upon all parties in
interest.

          (b)      No
Rights as a Shareholder. Neither you nor your legal representatives shall
have any of the rights and privileges of a shareholder of the Company with
respect to the shares of Common Stock subject to the Option unless and until
certificates for such shares have been issued upon exercise of the Option.

4

          (c)          No
Right to Employment. Nothing in this Agreement or the Plan shall be
construed as giving you the right to be retained as an employee of the Company.
In addition, the Company may at any time dismiss you from employment, free from
any liability or any claim under this Agreement, unless otherwise expressly
provided in this Agreement.

          (d)          Option
Not Transferable. The Option may not be transferred, pledged, alienated,
attached or otherwise encumbered, and any purported transfer, pledge,
alienation, attachment or encumbrance of the Option will be void and
unenforceable against the Company, except that the Option may be transferred
(i) by will or by the laws of descent and distribution or (ii) if approved in
advance by the Committee administering the Plan, in its discretion and subject
to such additional terms and conditions as it determines, by gift, without
consideration, under a written instrument that is approved in advance by the
Committee administering the Plan, to a member of your family, as defined in
Section 267 of the Code, or to a trust or similar entity whose sole
beneficiaries are you and/or members of your family (such family member or
other entity, a “Permitted Transferee”), provided that such transfer and the
exercise of the Option by such Permitted Transferee do not violate any federal
or state securities laws. During your lifetime the Option will be exercisable
only by you or such Permitted Transferee.

          (e)          Reservation
of Shares. The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Agreement.

          (f)          Securities
Matters. The Company shall not be required to deliver any shares of Common
Stock until the requirements of any federal or state securities or other laws,
rules or regulations (including the rules of any securities exchange) as may be
determined by the Company to be applicable are satisfied.

          (g)          Headings.
Headings are given to the sections and subsections of this Agreement solely as
a convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of this
Agreement or any provision hereof.

          (h)          Governing
Law. The internal law, and not the law of conflicts, of the State of
Minnesota will govern all questions concerning the validity, construction and
effect of this Agreement.

          (i)          Notices.
You should send all written notices regarding this Agreement or the Plan to the
Company at the following address:

	
  

 	
  

 
	
  

 	
 St. Jude Medical, Inc.

 Stock Option Administrator

 One Lillehei Plaza

 St. Paul, MN 55117

 

5

          (j)          Notice
of Non-Qualified Stock Option Grant to Employee. This Agreement is attached
to and made part of a Notice of Non-Qualified Stock Option Grant to Employee
and shall have no force or effect unless such Notice is duly executed and
delivered by the Company to you.

* * * * * * * *

6

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