8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2006

ST. JUDE MEDICAL, INC.
(Exact name of registrant as specified in its charter)

Minnesota	0-8672	41-1276891
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Lillehei Plaza, St. Paul, MN	55117
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (651) 483-2000

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01    Entry into a Material Definitive Agreement.

Severance Agreements with Certain Executive Officers

On July 27, 2006, St. Jude Medical, Inc. (the “Company”) entered into a change of control severance agreement (each, a “Severance Agreement” and collectively, the “Severance Agreements”) with each of its executive officers other than Pamela S. Krop, who joined the Company as Vice President, General Counsel and Secretary on June 30, 2006 and entered into a Severance Agreement with the Company on that date, and David Fetah, Vice President, Human Resources, who is resigning from the Company effective August 31, 2006. For all of the Company’s executive officers other than Ms. Krop, who had no prior agreements with the Company, Mr. Fetah and Christopher G. Chavez, President, Neuromodulation Division, the Severance Agreements supersede and replace the previous severance agreements between the Company and such executive officers. For Mr. Chavez, the Severance Agreement replaced his Special Termination Agreement dated April 1, 2002 (the “Chavez Termination Agreement”) with Advanced Neuromodulation Systems, Inc. (“ANS”). The Company also entered into Severance Agreements with seven employees who are not executive officers. For six of these non-executive employees, the Severance Agreements replaced prior agreements.

The Severance Agreements provide for certain payments and other benefits if, following a Change in Control, the Company terminates the executive’s employment without Cause or the executive terminates his or her employment for Good Reason. Such payments and benefits include: (1) severance pay equal to 2.9 times the sum of the executive’s annual salary, target bonus, annual perk package and certain other compensation paid to the executive during the 12 months prior to the termination (a reduction from the amount payable under the prior agreements, as discussed under Item 1.02 below); (2) three years of life, health, accident and disability insurance benefits substantially similar to those in effect at the time of termination; (3) payment of legal fees and expenses relating to the termination; (4) termination of any non-competition arrangement between the Company and the executive; and (5) a gross-up payment for certain excise taxes, if they are imposed on such payments or benefits, and for any tax imposed on such gross-up payment.

Under the Severance Agreements, “Change in Control” is defined to include a change in control of the type required to be disclosed under Securities and Exchange Commission proxy rules, acquisition by a person or group of 35% of the outstanding voting stock of the Company, a proxy fight or contested election which results in Continuing Directors (as defined) not constituting a majority of the Company’s Board of Directors, or another event the majority of the Continuing Directors determines to be a change in control, and “Cause” is defined as a conviction for felony criminal conduct. “Good Reason” is defined to include a change in the executive’s responsibility or status, a reduction in salary or benefits, a mandatory relocation or the failure by the Company to obtain an assumption of the Company’s obligations under the Severance Agreements by any successor to the Company. In addition, if the Change in Control arises from a transaction which is not authorized, recommended or approved by formal action taken by the Continuing Directors, the executive may voluntarily terminate his or her employment for any reason on the 180^th day following the Change in Control, and such termination will be deemed “Good Reason” under the Severance Agreements.

The above summary of the Severance Agreements is qualified in its entirety by reference to the full text of the Severance Agreements, a form of which is attached as Exhibit 10.1 and incorporated herein by reference.

Amendment to Employment Agreement with Christopher G. Chavez

On July 27, 2006, the Company (through ANS) and Christopher G. Chavez entered into an amendment (the “Amendment”) to the Employment Agreement (the “Employment Agreement”), effective as of April 1, 2002, by and between ANS and Mr. Chavez, which remained in effect following the Company’s acquisition of ANS on November 29, 2005. The Employment Agreement was described in, and filed (via incorporation by reference from Exhibit 10.16 to the ANS Quarterly Report on Form 10-Q for the quarter ended March 31, 2002) as Exhibit 10.23 to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. The Amendment clarifies that if Mr. Chavez is terminated without “cause” (as defined in the Employment Agreement) in connection with a “change-in-control” (as defined in the Severance Agreement), then he will not be entitled to receive severance compensation under the Employment Agreement and will only be entitled to severance compensation under the Severance Agreement.

The above summary of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached as Exhibit 10.2 and incorporated herein by reference.

Item 1.02    Termination of a Material Definitive Agreement.

Upon execution of the Severance Agreements described under Item 1.01 above, effective July 27, 2006, the Company terminated its prior severance agreements with its executive officers other than Mr. Fetah, whose agreement was terminated in connection with his resignation from the Company, and Ms. Krop, who did not have a prior severance agreement with the Company. The form of the Company’s prior severance agreement with its executive officers was filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 and is incorporated herein by reference. A detailed summary of the prior severance agreements can be found in the Company’s Proxy Statement for the Company’s 2006 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on March 30, 2006. The prior severance agreements were substantially similar to the new Severance Agreements except that the prior severance agreements provided for severance pay equal to 3.0 times (rather than the 2.9 times under the new Severance Agreements) the sum of the executive’s annual salary, target bonus, annual perk package and certain other compensation paid to the executive during the 12 months prior to the termination.

The Severance Agreement with Mr. Chavez superseded and replaced, and thus terminated, the Chavez Termination Agreement. The Chavez Termination Agreement was described in, and filed (via incorporation by reference from Exhibit 10.18 of the ANS Quarterly Report on Form 10-Q for the quarter ended March 31, 2002) as Exhibit 10.24 to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2005. The Chavez Termination Agreement provided that, upon a “change-in-control” (as defined in the Chavez Termination Agreement), Mr. Chavez would be entitled to severance pay in an amount equal to 299% of his highest annual salary and targeted annual bonus, payment of any excise taxes Mr. Chavez incurs as a result of the severance payment and payment of any income and excise taxes on the excise tax payments, and a job search payment.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits:

10.1 Form of Severance Agreement between St. Jude Medical, Inc. and certain executive officers.

10.2 Amendment, dated as of July 27, 2006, between Advanced Neuromodulation Systems, Inc. and Christopher G. Chavez, to Employment Agreement, effective as of April 1, 2002, between Advanced Neuromodulation Systems, Inc. and Christopher G. Chavez.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ST. JUDE MEDICAL, INC.
Date:	August 1, 2006	By:	/s/   Pamela S. Krop
			Pamela S. Krop Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No. Description of Exhibit

10.1 Form of Severance Agreement between St. Jude Medical, Inc. and certain executive officers.

10.2 Amendment, dated as of July 27, 2006, between Advanced Neuromodulation Systems, Inc. and Christopher G. Chavez, to Employment Agreement, effective as of April 1, 2002, between Advanced Neuromodulation Systems, Inc. and Christopher G. Chavez.

EX-10.1

Exhibit 10.1

SEVERANCE AGREEMENT

This agreement is made as of the _____ day of _________, 200__, between St. Jude Medical, Inc., a Minnesota corporation, with its principal offices at St. Paul, Minnesota (the “Company”) and ______________ (“Executive”), residing at _________________________________________________.

WITNESSETH THAT:

WHEREAS, this Agreement is intended to specify the financial arrangements that the Company will provide to Executive upon Executive’s separation from employment with the Company under any of the circumstances described herein; and

[WHEREAS, this Agreement is intended to replace and supersede the existing Severance Agreement between the Company and Executive dated as of ___________________ relating to payments to be made to Executive upon a change in control of the Company (the “Prior Agreement”); and]

WHEREAS, this Agreement is entered into by the Company in the belief that it is in the best interests of the Company and its shareholders to provide stable conditions of employment for Executive notwithstanding the possibility, threat or occurrence of certain types of change in control, thereby enhancing the Company’s ability to attract and retain highly qualified people.

NOW, THEREFORE, to assure the Company that it will have the continued dedication of Executive notwithstanding the possibility, threat or occurrence of a bid to take over control of the Company, and to induce Executive to remain in the employ of the Company, and for other good and valuable consideration, the Company and Executive agree as follows:

1.           Term of Agreement. The term of this Agreement shall commence on the date hereof as first written above and shall continue through January 1, 2007; providedthat commencing on January 1, 2007 and each January 1^st thereafter, the term of this Agreement shall automatically be extended for one additional year unless not later than December 31 of the preceding year, the Company shall have given notice that it does not wish to extend this Agreement; and provided, further, that notwithstanding any such notice by the Company not to extend, this Agreement shall continue in effect for a period of 36 months beyond the term provided herein if a Change in Control (as defined in Section 3(i) hereof) shall have occurred during such term.

2.           Termination of Employment.

(i)          Prior to a Change in Control. Executive’s rights upon termination of employment prior to a Change in Control (as defined in Section 3(i) hereof) shall be governed by the Company’s standard employment termination policy applicable to Executive in effect at the time of termination or, if applicable, any written employment agreement between the Company and Executive other than this Agreement in effect at the time of termination.

(ii)           After a Change in Control.

(a)          From and after the date of a Change in Control (as defined in Section 3(i) hereof) during the term of this Agreement, the Company shall not terminate Executive from employment with the Company except as provided in this Section 2(ii) or as a result of Executive’s Disability (as defined in Section 3(iv) hereof), Retirement (as defined in Section 3(v) hereof) or death.

(b)          From and after the date of a Change in Control (as defined in Section 3(i) hereof) during the term of this Agreement, the Company shall have the right to terminate Executive from employment with the Company at any time during the term of this Agreement for Cause (as defined in Section 3(iii) hereof), by written notice to Executive, specifying the particulars of the conduct of Executive forming the basis for such termination.

(c)          From and after the date of a Change in Control (as defined in Section 3(i) hereof) during the term of this Agreement: (x) the Company shall have the right to terminate Executive’s employment without Cause (as defined in Section 3(iii) hereof), at any time; and (y) Executive shall, upon the occurrence of such a termination by the Company without Cause, or upon the voluntary termination of Executive’s employment by Executive for Good Reason (as defined in Section 3(ii) hereof), be entitled to receive the benefits provided in Section 4 hereof. Executive shall evidence a voluntary termination for Good Reason by written notice to the Company given within 60 days after the date of the occurrence of any event that Executive knows or should reasonably have known constitutes Good Reason for voluntary termination. Such notice need only identify Executive and set forth in reasonable detail the facts and circumstances claimed by Executive to constitute Good Reason. Any notice give by Executive pursuant to this Section 2 shall be effective five business days after the date it is given by Executive.

3.             Definitions.

(i)            A “Change in Control” shall mean:

(a)          a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or successor provision thereto, whether or not the Company is then subject to such reporting requirement;

(b)          any “person” (as such term is used in Sections 13(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities;

(c)          the Continuing Directors (as defined in Section 3(vi) hereof) cease to constitute a majority of the Company’s Board of Directors; providedthat such change is the direct or indirect result of a proxy fight and contested election or elections for positions on the Board of Directors; or

(d)          the majority of the Continuing Directors (as defined in Section 3(vi) hereof), excluding any Continuing Director who has this Severance Agreement, determine in their sole and absolute discretion that there has been a change in control of the Company.

(ii)           “Good Reason” shall mean the occurrence of any of the following events, except for the occurrence of such an event in connection with the termination or reassignment of Executive’s employment by the Company for Cause (as defined in Section 3(iii) hereof), for Disability (as defined in Section 3(iv) hereof), for Retirement (as defined in Section 3(v) hereof) or for death:

(a)          the assignment to Executive of any duties inconsistent with Executive’s status or position with the Company, or a substantial alteration in the nature or status of Executive’s responsibilities from those in effect immediately prior to the Change in Control;

(b)          a reduction by the Company in Executive’s annual compensation in effect immediately prior to the Change in Control;

(c)          the Company’s requiring Executive to be based anywhere other than within 50 miles of Executive’s office location immediately prior to a Change in Control except for required travel on the Company’s business to an extent substantially consistent with Executive’s business travel obligations immediately prior to the Change in Control;

(d)          the failure by the Company to continue to provide Executive with benefits at least as favorable to those enjoyed by Executive under any of the Company’s pension, life insurance, medical, health and accident, disability, deferred compensation, incentive, stock, stock purchase, stock option, savings, perk package or other plans or programs in which Executive participates, or any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive Executive of any material fringe benefit enjoyed immediately prior to the Change in Control, or the failure by the Company to provide Executive with the number of paid vacation days to which Executive is entitled immediately prior to the Change in Control; or

(e)          the failure of the Company to obtain, as specified in Section 6(i) hereof, an assumption of the obligations of the Company to perform this Agreement by any successor to the Company.

Notwithstanding anything herein to the contrary, if the Change in Control arises from a transaction or series of transactions which are not authorized, recommended or approved by formal action taken by the Continuing Directors (as defined in Section 3(vi) hereof), Executive may voluntarily terminate his or her employment for any reason on the 180^th day following the Change in Control, and such termination shall be deemed “Good Reason” for all purposes of this agreement.

(iii)        “Cause” shall mean termination by the Company of Executive’s employment based upon the conviction of Executive by a court of competent jurisdiction for felony criminal conduct.

(iv)        “Disability” shall mean that, as a result of incapacity due to physical or mental illness, Executive shall have been absent from the full-time performance of Executive’s duties with the Company for six consecutive months, and within 30 days after written notice of termination is given, Executive shall not have returned to the full-time performance of Executive’s duties. Any question as to the existence of Executive’s Disability upon which Executive and the Company cannot agree shall be determined by a qualified independent physician selected by Executive (or, if Executive is unable to make such selection, it shall be made by any adult member of Executive’s immediately family), and approved by the Company. The determination of such physician made in writing to the Company and to Executive shall be final and conclusive for all purposes of this Agreement.

(v)         “Retirement” shall mean termination on or after attaining normal retirement age in accordance with the Company’s Profit Sharing Employee Savings Plan and Trust.

(vi)        “Continuing Director” shall mean any person who is a member of the Board of Directors of the Company, while such person is a member of the Board of Directors, and who (a) was a member of the Board of Directors on the date of this Agreement as first written above or (b) subsequently becomes a member of the Board of Directors, if such person’s nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors.

4.            Benefits upon Termination under Section 2(ii)(c).

(i)           Upon the termination (voluntary or involuntary) of the employment of Executive pursuant to Section 2(ii)(c) hereof, Executive shall be entitled to receive the benefits specified in this Section 4. The amounts due to Executive under this Section 4(i) shall be paid to Executive in a lump sum not later than one business day prior to the date that the termination of Executive’s employment becomes effective. Subject to the provisions of Section 4(ii) hereof, all benefits to Executive pursuant to this Section 4(i) shall be subject to any applicable payroll or other taxes required by law to be withheld.

(a)          The Company shall pay Executive, through the date the termination of Executive’s employment became effective, Executive’s base salary as in effect at the time of the notice of termination is given and any other form or type of compensation otherwise payable for such period. Executive shall be entitled to receive all benefits payable to Executive under the Company’s Profit Sharing Employee Savings Plan and Trust or any successor of such Plan and any other plan or agreement relating to retirement benefits which shall be in addition to, and not reduced by, any other amounts payable to Executive under this Section 4. Executive shall be entitled to exercise all rights and to receive all benefits accruing to Executive under any and all Company stock purchase plans, stock option plans and other stock plans or programs, or any successor to any such plans or programs, which shall be in addition to, and not reduced by, any other amounts payable to Executive under this Section 4.

(b)          In lieu of any further salary payments for periods subsequent to the date the termination of Executive’s employment became effective, the Company shall pay a severance payment in an amount equal to 2.9 times Executive’s Annual Compensation, as defined below. For purposes of this Section 4, “Annual Compensation” shall mean Executive’s annual salary (regardless of whether all or any portion of such salary has been contributed to a deferred compensation plan), the annual amount of Executive’s perk package, the target bonus for which Executive is eligible upon attainment of 100% of the target (regardless of whether such target bonus has been achieved or whether conditions of such target bonus are actually fulfilled), and any other type or form of compensation paid to Executive by the Company (or any entity affiliated with the Company (“Affiliate”) within the meaning of Section 1504 of the Internal Revenue Code of 1986, as may be amended from time to time (the “Code”)) and included in Executive’s gross income for federal tax purposes during the twelve month period ending immediately prior to the date that the termination of Executive’s employment became effective but reduced by: (i) any amount actually paid to Executive as a cash payment of the target bonus (regardless of whether all or any portion of such target bonus was contributed to a deferred compensation plan); (ii) compensation income recognized as a result of the exercise of stock options or sale of the stock so acquired; and (iii) any payments actually or constructively received from a plan or arrangement of deferred compensation between the Company and Executive. All of the factors included in Annual Compensation shall be those in effect on the date that the termination of Executive’s employment became effective and shall be calculated without giving effect to any reduction in such compensation that would constitute a breach of this Agreement.

(c)          For a period of 36 months following the date that the termination of Executive’s employment became effective or until Executive reaches age 65 or dies, whichever is the shorter period, the Company shall arrange to provide for Executive, at the Company’s expense, the health, accident, disability and life insurance benefits substantially similar to those in effect for Executive immediately prior to the date that the termination of Executive’s employment became effective.

(d)          The Company shall pay to Executive (1) any amount earned by Executive as a bonus with respect to the fiscal year of the Company preceding the termination of Executive’s employment if such bonus has not theretofore been paid to Executive, and (2) an amount representing credit for any vacation earned or accrued by Executive but not taken.

(e)          The Company shall also pay to Executive all legal fees and expenses incurred by Executive as a result of such termination of employment (including all fees and expenses, if any, incurred by Executive in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided to Executive by this Agreement whether by arbitration or otherwise).

(f)          Any and all contracts, agreements or arrangements between the Company and Executive prohibiting or restricting Executive from owning, operating, participating in, or providing employment or consulting services to, any business or company competitive with the Company at any time or during any period after the date the termination of Executive’s employment becomes effective, shall be deemed terminated and of no further force or effect as of the date the termination of Executive’s employment becomes effective, to the extent, but only to the extent, such contracts, agreements or arrangements so prohibit or restrict Executive; providedthat the foregoing provision shall not constitute a license or right to use any proprietary information of the Company and shall in no way affect any such contracts, agreements or arrangements insofar as they relate to nondisclosure and nonuse or proprietary information of the Company notwithstanding the fact that such nondisclosure and nonuse may prohibit or restrict Executive in certain competitive activities.

(ii)           In the event that any payment or benefit received or to be received by Executive in connection with a Change in Control of the Company or termination of Executive’s employment (whether payable pursuant to the terms of this Agreement or any other plan, contract, agreement or arrangement with the company, with any person whose actions result in a Change in Control of 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 of the Company (collectively, the “Total Payments”)) would be subject to the excise tax imposed by Section 4999 of the Code, or any successor provision thereto, or any interest, penalties or additions to tax with respect to such excise tax (such excise tax, together with any such interest, penalties or additions to tax, are collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive from the Company an additional cash payment (a “Gross-Up Payment”) within thirty business days of such determination in an amount such that after payment by Executive of all taxes (including any interest, penalties or additions to tax imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. All determinations required to be made under this Section 4(ii), including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, shall be made by the independent accounting firm retained by the Company on the date of the Change in Control (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the date that the termination of Executive’s employment becomes effective, or such earlier time as is requested by the Company. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with an opinion that Executive has substantial authority not to report any Excise Tax on Executive’s federal income tax return.

Any uncertainty in the application of Section 4999 of the Code, or any successor provision thereto, at the time of the initial determination by the Accounting Firm hereunder shall be resolved in favor of Executive. As a result of the uncertainty in the application of Section 4999 of the Code, or any successor provision thereto, at the time of the initial determination by the Accounting Firm hereunder, it is possible that at a later time there will be a determination that the Gross-Up Payments made by the Company were less than the Gross-Up Payments that should have been made by the Company (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that Executive is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment, if any, that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive. As a result of the uncertainty in the application of Section 4999 of the Code, or any successor provision thereto, at the time of the initial determination by the Accounting Firm hereunder, it is possible that at a later time there will be a determination that the Gross-Up Payments made by the Company were more than the Gross-Up Payments that should have been made by the Company (“Overpayment”), consistent with the calculations required to be made hereunder. Executive agrees to refund the Company the amount of any Overpayment that the Accounting Firm shall determine has occurred hereunder. Any good faith determination by the Accounting Firm as to the amount of any Gross-Up Payment, including the amount of any Underpayment or Overpayment, shall be binding upon the Company and Executive.

(iii)          Any payment not made to Executive when due hereunder shall thereafter, until paid in full, bear interest at the rate of interest equal to the reference rate announced from time to time by Wells Fargo Bank Minnesota, National Association, plus two percent, with such interest to be paid to Executive upon demand or monthly in the absence of a demand.

(iv)          Executive shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise. The amount of any payment or benefit provided in this section 4 shall not be reduced by any compensation earned by Executive as a result of any employment by another employer, by any retirement benefits or otherwise.

5.             Executive’s Agreements.

Executive agrees that:

(i)            Without the consent of the Company, Executive will not terminate employment with the Company without giving 30 days prior notice to the Company, and during such 30-day period Executive will assist the Company, as and to the extent reasonably requested by the Company, in training the successor to Executive’s position with the Company. The provisions of this Section 5(i) shall not apply to any termination (voluntary or involuntary) of the employment of Executive pursuant to Section 2(ii)(c) hereof.

(ii)           In the event that Executive has received any benefits from the Company under Section 4 of this Agreement, then, during the period of 36 months following the date that the termination of Executive’s employment became effective, Executive, upon request by the Company:

(a)          Will consult with one or more of the executive officers concerning the business and affairs of the Company for not to exceed four hours in any month at times and places selected by Executive as being convenient to him, all without compensation other than what is provided for in Section 4 of this Agreement; and

(b)          Will testify as a witness on behalf of the Company in any legal proceedings involving the Company which arise out of events or circumstances that occurred or existed prior to the date that the termination of Executive’s employment became effective (except for any such proceedings relating to this Agreement), without compensation other than what is provided for in Section 4 of this Agreement, provided that all out-of-pocket expenses incurred by Executive in connection with serving as a witness shall be paid by the Company.

Executive shall not be required to perform Executive’s obligations under this Section 5(ii) if and so long as the Company is in default with respect to performance of any of its obligations under this Agreement.

6.           Successors and Binding Agreement.

(i)          The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), by agreement in form and substance satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle Executive to compensation from the Company in the same amount and on the same terms as Executive would be entitled hereunder if Executive terminated employment after a Change in Control for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the date that the termination of Executive’s employment becomes effective. As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets which executes and delivers the agreement provided for in this Section 6(i) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(ii)         This Agreement is personal to Executive, and Executive may not assign or transfer any part of Executive’s rights or duties hereunder, or any compensation due to him hereunder, to any other person. Notwithstanding the foregoing, this Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees, and legatees.

7.           Modification; Waiver. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in a writing signed by Executive and such officer as may be specifically designated by the Board of Directors of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

8.           Notice. All notices, requests, demand, and all other communications required or permitted by either party to the other party by this Agreement (including, without limitation, any notice of termination of employment and any notice of an intention to arbitrate) shall be in writing and shall be deemed to have been duly given when delivered personally or received by certified or registered mail, return receipt requested, postage prepaid, at the address of the other party, as first written above (directed to the attention of the Board of Directors and Corporate Secretary in the case of the Company). Either party hereto may change its address for purposes of this Section 8 by giving 15 days prior notice to the other party hereto.

9.           Severability. If any term or provision of this agreement or the application hereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Agreement or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

10.         Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

11.         Governing Law. This Agreement has been made in the State of Minnesota and shall, in all respects, be governed by, and construed and enforced in accordance with, the laws of the State of Minnesota, including all matters of construction, validity and performance.

12.         Effect of Agreement; Entire Agreement. The Company and Executive understand and agree that this Agreement is intended to reflect their agreement only with respect to payments and benefits upon termination in certain cases and is not intended to create any obligation on the part of either party to continue employment. This Agreement supersedes any and all other oral or written agreements or policies made relating to the subject matter hereof [(including, without limitation, the Prior Agreement)] and constitutes the entire agreement of the parties relating to the subject matter hereof; providedthat this Agreement shall not supersede or limit in any way Executive’s rights under any benefit plan, program or arrangements in accordance with their terms (other than the provisions of the Company’s policy HR-1.02.25 entitled “Severance Pay,” effective January 1, 1994, as amended from time to time, or any successor to such policy, to the extent that payments are made hereunder).

13.         ERISA. For purposes of the Executive Retirement Income Security Act of 1974, this Agreement is intended to be a severance pay employee welfare benefit plan, and not an employee pension benefit plan, and shall be construed and administered with that intention.

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

EX-10.2

Exhibit 10.2

AMENDMENT TO EMPLOYMENT AGREEMENT

ThisAmendmentto Employment Agreement(this “Amendment”) is madeas of July 27, 2006, by and between Advanced Neuromodulation Systems, Inc., a wholly-owned subsidiary of St. Jude Medical, Inc. (“ANS”), and Christopher G. Chavez (“Employee”). This Amendment amends the Employment Agreement (the “Employment Agreement”), effective as of April 1, 2002, by and between ANS and Employee. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Employment Agreement.

W I T N E S S E T H:

WHEREAS, concurrently with the execution hereof, St. Jude Medical, Inc. and Employee are entering into a Severance Agreement dated as of the date hereof (the “Severance Agreement”); and

WHEREAS, ANS desires to enter into this Amendment to clarify that if Employee receives severance benefits under Section 4 of the Severance Agreement, then Employee will not be entitled to receive severance compensation under the Employment Agreement.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ANS and Employee hereby agree as follows:

SECTION 1. The first paragraph under Section 10(c) of the Employment Agreement is hereby deleted and replaced with the following:

“(c) However, if Employee receives severance benefits under Section 4 of that certain severance agreement between St. Jude Medical, Inc. and Employee dated as of July 27, 2006, as it may be amended and/or replaced from time to time (the “Severance Agreement”), then Employee will not be entitled to any payments under the preceding subparagraphs (a) and (b), and Employee’s rights to severance compensation shall be governed by the terms of the Severance Agreement.”

SECTION 2. Except as expressly amended hereby, the Employment Agreement is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.

SECTION 3. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

SECTION 4. This Amendment shall be governed by and construed in accordance with the laws of the State of Minnesota.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have caused this Amendment to Employment Agreement to be duly executed as of the day and year first above written.

ADVANCED NEUROMODULATION SYSTEMS, INC.
By:	/s/ John C. Heinmiller
	Name: John C. Heinmiller Title: Vice President
EMPLOYEE
/s/ Christopher G. Chavez
Christopher G. Chavez