Exhibit
10.1
EMPLOYMENT
AGREEMENT
This Employment
Agreement (“Agreement”) is made by and between
Cyberonics, Inc., a Delaware corporation (the
“Company”) and [Name]
(“Executive”).
The Company desires
to maintain Executive’s employment as the Company’s
Vice President, [Title] and to encourage Executive’s
attention and dedication to the Company as a member of the
Company’s executive management, in the best interests of the
Company and its shareholders;
Executive desires
to accept employment with the Company;
The Company and
Executive desire to enter into this Agreement to set forth the
terms and conditions on which Executive is employed by the Company
from and after the Effective Date.
This Agreement
contemplates that Executive is a key employee of the
Company. As such, the Company will continue to make
available to Executive confidential information and will continue
to make a substantial investment in Executive for the benefit of
the Company and its shareholders. The Company and
Executive recognize that the goodwill derived therefrom is a
valuable asset of the Company. The Company and Executive
agree that such confidential information and goodwill are entitled
to protection during the term of this Agreement and for a
reasonable time thereafter. Company acknowledges that Executive
brings to the Company his experience and his non-confidential
general knowledge of the medical device industry.
The Company and
Executive are sophisticated business persons. Each has
been advised by counsel with respect to this Agreement, including
the post-termination restrictions and acknowledges that these
restrictions are appropriate protection of the Company’s
confidential information and goodwill, and that Executive has
entered into this Agreement fully knowing the effect of such
restrictions and voluntarily accepting the restrictions, which the
parties believe to be reasonable in temporal and geographic
scope.
Now, therefore, for
good and valuable consideration, the receipt and sufficiency of
such consideration being hereby acknowledged, and for and in
consideration of the mutual promises, covenants, and obligations
contained herein, Company and Executive agree as
follows:
1.
Employment . The Company shall employ Executive
as Vice President, [Title] , and Executive hereby accepts
such employment, on the terms and conditions set forth in this
Agreement.
2. Term
. Unless earlier terminated pursuant to Section 9, this
Agreement shall be effective as of June 1, 2009 (the
“Effective Date”) and shall terminate at 12:01 a.m. on
May 2, 2011, the period during which this Agreement remains in
effect being referred to as the “Employment
Period.”
3.
Duties . During the Employment Period, Executive
agrees to devote his full energy, attention, abilities, and
productive time to the diligent performance of the duties and
responsibilities ordinarily required of a [Title] of a
publicly traded company and such other duties and services on
behalf of the Company, consistent with his position and customary
duties as such, as may from time to time be assigned to him by the
Board or its designated representative. Executive agrees
and acknowledges that Executive owes fiduciary duties to the
Company and will act accordingly.
4. Outside
Business Activities . During the Employment Period,
Executive shall not, without the prior written consent of the
Company, engage in any other business activity, with or without
compensation. Notwithstanding the foregoing, Executive
shall be permitted to spend a reasonable amount of time on civic,
charitable, and other non-commercial activities, and activities
related to Executive’s investments, provided such activities
are consistent in nature and scope as exist on the Effective Date
and do not interfere with his duties and obligations under this
Agreement.
5. Base
Salary . For all services rendered by Executive
during the Employment Period, the Company shall pay Executive an
annual base salary of ($ ___________ ) (the “Base
Salary”) per year. This amount shall be payable
bi-weekly in equal installments, in arrears, according to the
Company’s customary payroll practices, less all amounts
required to be held by federal, state, or local law, and all
applicable deductions authorized by Executive or required by
law. The Compensation Committee of the Company’s
Board of Directors (“Compensation Committee”) shall
meet at least annually to review Executive’s Base
Salary. The Base Salary, at the discretion of the
Compensation Committee, may be increased, but may not be decreased
during the Employment Period.
6. Annual
Bonus Opportunity . During the Employment Period,
Executive shall be eligible to earn a bonus payable within a
reasonable period following the end of each of the Company’s
fiscal years (or at such other earlier times during the year as
determined by the Compensation Committee) based on the achievement
of certain objectives (the “Bonus Objectives”) to be
determined by the Compensation Committee within the first ninety
(90) days of each such fiscal year. Executive’s
annual bonus (the “Annual Bonus”) for achievement of
all Bonus Objectives at target (the “Target Bonus
Amount”) will be fifty percent (50%) of the Base Salary paid
in such fiscal year (or pro rata as to any portion of the fiscal
year), but the actual amount of the Annual Bonus may exceed 50% of
Base Salary or be less than 50% of Base Salary based on
overachievement of the Bonus Objectives, underachievement of the
Bonus Objectives, or the discretion of the Compensation
Committee. If awarded, the Annual Bonus for a fiscal
year shall be paid in the fiscal year following such fiscal year
after the Compensation Committee determination of the amount of the
Annual Bonus, if any, but no later than the 15th day of the third
month of such subsequent fiscal year and shall be subject to all
amounts required to be withheld by federal, state, or local law and
all applicable deductions properly authorized by Executive or
required by law.
7.
Benefits . Executive shall be eligible for the
following benefits:
(a) All
welfare benefit plans generally applicable to employees or senior
executives of the Company, subject to the general eligibility
requirements of such plans. The Company shall have the
right to amend, modify, or terminate any such plans from time to
time at its discretion; provided that, such action is generally
applicable to all employees.
(b) Reimbursement
of all actual, reasonable, and customary business expenses incurred
during the Employment Period by Executive in performing services
for the Company, including all reasonable expenses of travel on
business; provided that, such expenses are incurred and accounted
for in accordance with policies and procedures established by the
Company. Executive shall submit to the Company accounts
and records of each such expense within thirty (30) days after the
later of (i) Executive’s incurrence of such expense or (ii)
Executive’s receipt of the invoice for such
expense. If such expense qualifies for reimbursement,
then the Company shall reimburse Executive the expense within
thirty (30) days thereafter. In no event will such
expense be reimbursed after the close of the calendar year
following the calendar year in which that expense is
incurred. The amount of reimbursement to which Executive
may become entitled in any one calendar year shall not affect the
amount of expenses eligible for reimbursement hereunder in any
other calendar year. Executive’s right to
reimbursement cannot be liquidated or exchanged for any other
benefit or payment.
(c) Fringe
benefits and perquisites (including, but not limited to, reasonable
vacation time) in accordance with the plans, practices, programs,
and policies of the Company from time to time in effect and which
are commensurate with Executive’s position.
8.
Confidential Information . During the Employment
Period, the Company shall continue to provide Executive with trade
secrets and confidential information, knowledge, and data relating
to the business of the Company or to the business of other entities
with which the Company has a confidential relationship (including
trade secrets, being collectively referred to as
“Confidential Information”). Executive shall
hold in a fiduciary capacity for the benefit of the Company all
Confidential Information obtained by Executive during
Executive’s employment by the Company and which shall not
have been or hereafter become public knowledge (other than by acts
by Executive in violation of this Agreement). Executive
agrees to return all Confidential Information, including all
photocopies, extracts, and summaries thereof, and any such
information stored electronically on tapes, computer disks, or in
any other manner to the Company at any time upon request by the
Company and upon the termination of Executive’s employment
for any reason. Except as may be required or appropriate
in connection with carrying out Executive’s duties under this
Agreement and in furtherance of the Company’s business,
Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law, or as is necessary
in connection with any adversarial proceeding against the Company
(in which case Executive shall use his reasonable best efforts in
cooperating with the Company in obtaining a protective order
against disclosure by a court of competent jurisdiction),
communicate or divulge any such Confidential Information to anyone
other than the Company and those designated by the Company or on
behalf of the Company. Notwithstanding the foregoing, Executive may
retain, upon termination of employment, information and documents
of a purely personal nature relating to compensation and benefits
accrued during the Employment Period.
9. Early
Termination . Notwithstanding the Employment Period
established in Section 2 or any renewal or extension thereof,
Executive’s employment hereunder and this Agreement may be
terminated as follows:
(a)
Death . Executive’s employment hereunder
shall terminate upon Executive’s death.
(b)
Disability . If, as a result of Executive’s
incapacity due to physical or mental illness, Executive shall have
been absent from the full-time performance of his duties hereunder
for a period of ninety (90) days in the aggregate during any period
of twelve (12) consecutive months, or where Executive shall have
been absent from the full-time performance of his duties hereunder
for a period of ninety (90) consecutive days and it is reasonably
expected that Executive will be eligible for long-term disability
benefits under a Company sponsored disability plan, and no later
than thirty (30) days after written notice is given or the end of
the ninety (90) day period, if Executive shall not have returned to
the performance of his duties hereunder on a full-time basis, the
Company may terminate Executive’s employment for
disability.
(c)
Termination by the Company For Cause . The
Company may terminate Executive’s employment for
Cause. “Cause” shall mean (i)
Executive’s material breach of any provision of this
Agreement, (ii) Executive’s willful conduct which is
demonstrably and materially injurious to the Company’s
reputation, financial condition, or business relationships, (iii)
Executive’s willful failure to comply with a lawful directive
of the Company’s Chief Executive Officer (“CEO”),
(iv) Executive’s failure to comply with the Company’s
written policies and procedures, including the Company’s
Corporate Code of Business Conduct and Ethics and its Financial
Code of Ethics, (v) Executive’s fraud, dishonesty, or
misappropriation involving the Company’s assets, business,
customers, suppliers, or employees, (vi) Executive’s
conviction of, or plea of guilty or nolo contendere to, a felony;
or, (vii) Executive’s continued failure or refusal to perform
satisfactorily, or gross neglect of, Executive’s duties
(other than any such failure or neglect resulting from
Executive’s incapacity due to physical or mental
illness).
No termination of
Executive for Cause other than as set forth in (c)(vi) above shall
be effective unless the Company shall, within ninety (90) days of
sufficient facts known to it to constitute Cause, give written
notice to Executive in reasonable detail of the material facts
constituting Cause and the reasonable steps the Company believes
necessary to cure, and thereafter Executive shall have thirty (30)
business days from the date of notice to cure any such occurrence
otherwise constituting Cause; provided that, no such notice and
opportunity to cure is required if the Company has previously given
Executive notice and opportunity to cure the same
conduct.
(d)
Termination by Executive for Good Reason
. Executive may terminate his employment and this
Agreement for Good Reason. “Good Reason”
shall mean the occurrence, without Executive’s prior written
consent, of any one or more of the following: (i) any
reduction in Executive’s compensation as set forth in Section
5 hereof; (ii) an adverse change in Executive’s title,
status, authority, duties, or responsibilities, provided that,
changes in Executive’s title, status, authority, duties, and
responsibilities necessitated solely by a change, following a
Change in Control (as defined in Section 12), in the
Company’s status from a publicly traded company to a
subsidiary of a publicly traded company shall not by themselves be
considered “adverse” within the meaning of this
subsection; (iii) the failure by the Company to obtain a
satisfactory agreement from any successor of the Company requiring
such successor to assume and agree to perform the Company’s
obligations under this Agreement, as contemplated in
Section 17; (iv) the failure by the Company to comply with any
material provision of this Agreement; (v) the Company’s
requiring Executive to relocate to an office more than 35 miles
from the Company’s office to which Executive was assigned on
the Effective Date; or (vi) the amendment, modification, or repeal
of any provision of the Company’s Certificate of
Incorporation, as amended, or the Bylaws of the Company as such
documents exist on the Effective Date, if such amendment,
modification, or repeal would adversely affect Executive’s
right to indemnification by the Company; provided that, any action
of the CEO to seek information directly from, or to request that a
project be undertaken by, an employee reporting directly or
indirectly to Executive shall not constitute "Good Reason"
hereunder.
No resignation for
Good Reason shall be effective unless Executive shall, within
ninety (90) days of sufficient facts known to Executive to
constitute Good Reason, give written notice to the CEO setting
forth in reasonable detail the material facts constituting Good
Reason and the reasonable steps Executive believes necessary to
cure, and thereafter the Company shall have thirty (30) business
days from the date of such notice to cure any such occurrence
otherwise constituting Good Reason; provided that, no such notice
and opportunity to cure is required if Executive has previously
given the Company notice and opportunity to cure the same
conduct.
(e)
Termination by Executive other than for Good Reason .
Executive may terminate his employment other than for Good Reason
by giving the Company no less than thirty (30) days prior written
notice of Executive’s intent to terminate this
Agreement. As used in this Section, “other than
Good Reason” shall mean for any reason not constituting Good
Reason or for Good Reason but without notice and opportunity to
cure as provided in subsection (d) above.
(f)
Termination by the Company without Cause . The
Company may terminate the employment relationship and this
Agreement at any time by giving Executive no less than thirty (30)
days prior written notice of the Company’s intent to
terminate this Agreement or, in addition to any other amounts
payable under this Agreement, one month of Base Salary in lieu of
notice. As used in this Section, “without
Cause” shall mean for any reason not constituting Cause or
for Cause but without notice and opportunity to cure, if required,
as provided in subsection (c) above.
(g) In
the event of Executive’s termination, Executive and the
Company, including its directors, officers, employees,
representatives, attorneys, and agents shall refrain from making
any public or private statement (including, as to Executive, any
statement with respect to the directors, officers, employees,
representatives, attorneys, and agents of the Company) that is
derogatory or may tend to injure such person in its or their
business, public or private affairs. The foregoing
obligations shall not apply to information required to be disclosed
or requested by any governmental agency, court, or stock exchange,
or any law, rule, or regulation.
(h) If,
in connection with Executive’s termination of employment with
the Company, the Company determines to issue a press release, the
Company agrees to provide a copy of the press release to Executive
by e-mail or facsimile to review and comment on in advance of its
publication; however, the Company retains sole discretion as to the
content of the press release.
10.
Compensation Upon Termination . In the event
Executive’s employment terminates upon expiration of the
Employment Period or as provided under Section 9 hereof, the
Company shall pay to Executive or his estate: (i) Executive’s
Base Salary through the date of termination, and (ii) any other
amounts due Executive as of the date of termination, in each case
to the extent not previously paid. The Company shall
also provide additional compensation (the “Severance
Benefits”) as provided below.
(a)
Death or Disability . Upon termination of
Executive’s employment pursuant to Sections 9(a) hereof, (i)
the restrictions on all of Executive’s time-based vesting
equity awards, including restricted stock and stock options, shall
lapse, the unvested portion of each such award vesting immediately
and being immediately tradable or exercisable, as the case may be;
and (ii) restrictions on that number of shares of performance-based
restricted stock awards shall lapse as determined by the
Compensation Committee of the Company’s Board of Directors
(“Compensation Committee”) in its sole discretion to
represent the extent of progress, if any, toward attainment of the
performance criteria as of the date of Executive’s
termination. Upon termination of Executive’s
employment pursuant to Sections 9(b) hereof, the restrictions on
all of Executive’s stock options shall lapse, the unvested
portion of each such award vesting immediately and being
immediately exercisable. Thereafter, the Company shall
have no further obligations to Executive or his estate other than
as may be required by law.
(b)
By the Company for Cause . If during the
Employment Period the Company terminates Executive for Cause
pursuant to Section 9(c), the Company shall have no further
obligations to Executive other than as may be required by
law.
(c)
By Executive other than for Good Reason . If
during the Employment Period Executive terminates his employment
other than for Good Reason pursuant to Section 9(e), the
Company shall have no further obligations to Executive other than
as may be required by law.
(d)
By the Company without Cause or by Executive for Good Reason
. Except as otherwise provided in Section 11, if either
the Company termina
