FORM OF EXECUTIVE RESTRICTED STOCK AGREEMENT (NET SALES)
Exhibit
10.3
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For
Internal Use:
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Grant
Control #: ______
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(NET
SALES)
THIS
RESTRICTED STOCK AGREEMENT (this “Agreement”) is made effective as of
September 10, 2007 (the “Grant Date”), between CYBERONICS,
INC., a Delaware corporation (the “Company”), and [NAME]
(the “Executive”).
1. Award. Pursuant
to the CYBERONICS, INC. AMENDED AND RESTATED NEW EMPLOYEE EQUITY
INCENTIVE PLAN (the “Plan”), as
of the Grant Date, [Number] shares (the “Restricted Shares”) of
the Company’s common stock shall be issued as hereinafter provided in the
Executive’s name subject to certain restrictions thereon. The
Executive hereby acknowledges receipt of a copy of the Plan and the Prospectus
relating thereto pursuant to the Securities Act of 1933, and agrees that
this
award of Restricted Shares shall be subject to all of the terms and provisions
of the Plan, including future amendments thereto, if any, pursuant to the
terms
thereof. All dividends and other distributions on a Restricted Share
shall be subject to the same Forfeiture Restrictions (as hereinafter defined)
as
are applicable to such Restricted Share.
2. Restricted
Shares. The Executive hereby accepts the Restricted
Shares when issued and agrees with respect thereto as follows:
(a) Forfeiture
Restrictions. The Restricted Shares may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of to the extent then subject to the Forfeiture Restrictions,
and in
the event of termination of the Executive’s service relationship with the
Company (as provided in Section 5) for any reason other than as provided
in
Section 2(b), the Executive shall, for no consideration, forfeit to the Company
all Restricted Shares then subject to the Forfeiture
Restrictions. The prohibition against transfer and the Executive’s
obligation to forfeit and surrender the Restricted Shares to the Company
upon
the Executive’s termination of service are herein referred to as the “Forfeiture
Restrictions.” The Forfeiture Restrictions shall be binding upon and
enforceable against any transferee of Restricted Shares.
(b) Vesting/Lapse
of Forfeiture Restrictions. For a period of five (5)
years from the Grant Date, until the Restricted Shares are fully vested or
forfeited and subject to the satisfaction of the tax liability under Section
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by the Executive, the Restricted Shares shall vest and the Forfeiture
Restrictions shall lapse on such vested shares upon the satisfaction of the
following condition as determined by the Company:
The
sum
of four consecutive fiscal quarters of the Company’s net sales exceeds the sum
of the previous four consecutive fiscal quarters of the Company’s net sales by
[Target Amount], provided that the first quarter fiscal year
2008 is the first quarter eligible for the comparison.
Notwithstanding
the foregoing vesting schedule, the Forfeiture Restrictions shall lapse in
full
as to all of the Restricted Shares on the earlier of (i) a Change of Control
(as
defined in the Plan) or (ii) the termination of the Executive’s service
relationship with the Company due to the Executive’s death.
(c) Certificates. A
certificate evidencing the Restricted Shares shall be issued by the Company
in
the Executive’s name, pursuant to which the Executive shall have all of the
rights of a shareholder of the Company with respect to the Restricted Shares,
including, without limitation, voting rights and the right to receive dividends
(provided, however, that dividends paid in shares of the Company’s stock shall
be subject to the Forfeiture Restrictions). The Executive may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the
stock
until the Forfeiture Restrictions with respect to such shares have expired,
and
a breach of the terms of this Agreement shall cause a forfeiture of all then
remaining Restricted Shares. The certificate shall contain an
appropriate endorsement reflecting the Forfeiture Restrictions. The
certificate shall be delivered upon issuance to the Secretary of the Company
or
to such other depository as may be designated by the Committee as a depository
for safekeeping until the forfeiture of such Restricted Shares occurs or
the
Forfeiture Restrictions lapse pursuant to the terms of the Plan and this
award. On the date of this Agreement, the Executive shall, if
required by the Committee, deliver to the Company a stock power, endorsed
in
blank, relating to the Restricted Shares. Upon the lapse of the
Forfeiture Restrictions without forfeiture of the Restricted Shares, the
Company
shall cause a new certificate or certificates to be issued without legend
(except for any legend required pursuant to applicable securities laws or
any
other agreement to which the Executive is a party) in the name of the Executive
in exchange for the certificate evidencing the Restricted Shares.
(d) Corporate
Acts. The existence of the Restricted Shares shall not
affect in any way the right or power of the Board of Directors of the Company
or
the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any
issue
of debt or equity securities, the dissolution or liquidation of the Company
or
any sale, lease, exchange or other disposition of all or any part of its
assets
or business or any other corporate act or proceeding. The
prohibitions of Section 2(a) hereof shall not apply to the transfer of
Restricted Shares pursuant to a plan of reorganization of the Company, but
the
stock, securities or other property received in exchange therefor shall also
become subject to the Forfeiture Restrictions and provisions governing the
lapsing of such Forfeiture Restrictions applicable to the original Restricted
Shares for all purposes of this Agreement and the certificates representing
such
stock, securities or other property shall be legended to show such
restrictions.
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3. Withholding
of Tax. To the extent that the receipt of the Restricted
Shares or the lapse of any Forfeiture Restrictions results in
compensation income to the Executive for federal or state income tax purposes,
the Executive is responsible for taxes due from Executive on such compensation
income. Executive agrees to remit estimated taxes to the Company prior to
and as
a condition of the receipt of the Restricted Shares or the lapse of any
Forfeiture Rights becoming effective. In the event that the estimated
taxes are insufficient to satisfy the taxes actually due from Executive,
Executive agrees to (1) remit funds to satisfy such taxes; or (2) specifically
authorize the Company in writing to withhold from amounts otherwise due to
the
Executive. To the maximum extent permitted by applicable law,
Executive hereby authorizes such withholding.
4. Status
of Stock. The Executive agrees that the Restricted
Shares issued under this Agreement will not be sold or otherwise disposed
of in
any manner which would constitute a violation of any applicable federal or
state
securities laws. The Executive also agrees that (i) the
certificates representing the Restricted Shares may bear such legend or legends
as the Committee deems appropriate in order to reflect the Forfeiture
Restrictions and to assure compliance with applicable securities laws, (ii)
the
Company may refuse to register the transfer of the Restricted Shares on the
stock transfer records of the Company if such proposed transfer would constitute
a violation of the Forfeiture Restrictions or, in the opinion of counsel
satisfactory to the Company, of any applicable securities law, and (iii)
the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the Restricted Shares.
5. Service
Relationship. For purposes of this Agreement, the
Executive shall be considered to be in service to the Company as long as
the
Executive remains an Employee, an Officer, a Consultant or a Director (as
those
terms are defined in the Plan). Nothing in the adoption of the Plan,
nor the award of the Restricted Shares thereunder pursuant to this Agreement,
shall confer upon the Executive the right to continued service by or with
the
Company.
6. Notices. Any
notices or other communications provided for in this Agreement shall be
sufficient if in writing. In the case of the Executive, such notices
or communications shall be effectively delivered if hand delivered to the
Executive at his principal place of employment or if sent by overnight courier,
with confirmation, to the Executive at the last address the
Executive has filed with the Company. In the case of the Company,
such notices or communications shall be effectively delivered if sent by
overnight courier, with confirmation, to the Company at its principal executive
offices.
7. Amendment. This
Agreement may not be modified in any respect by any verbal statement,
representation or agreement made by the Executive or by any employee, officer,
director, or representative of the Company or by any written agreement
unless signed by the Executive and by an officer of the Company who is expressly
authorized by the Company to execute such document.
8. Binding
Effect. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under the Executive.
9. Controlling
Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas.
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by an officer thereunto duly authorized, and the Executive has executed
this Agreement, all effective as of the Grant Date.
CYBERONICS,
INC.
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By:___________________________________
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Xxxxxx
X. Xxxxxx, III
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Vice
President, Human Resources
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and
General Manager, Depression
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EXECUTIVE
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______________________________________
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[Name]
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EXHIBIT
TO FORM OF EXECUTIVE RESTRICTED STOCK AGREEMENT
Name
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Number
of Shares
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Xxxxxx
X. Xxxxx*
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31,250
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Xxxxx
X. Xxxxxxxxx
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12,500
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Xxxxxxx
X. Xxxxxx
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7,500
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_______________
*The
Executive
Restricted Stock Agreement between Cyberonics, Inc. and Xxxxxx X. Xxxxx
contains
language in Section 3 which authorizes Xx. Xxxxx to elect to have the minimum
withholding tax obligations of Cyberonics satisfied by having Cyberonics
withhold from the Restricted Shares to be issued upon the lapse of the
Forfeiture Restrictions on the Restricted Shares that number of Restricted
Shares having a Fair Market Value that approximates, but is less than,
the
minimum amount required to be withheld.
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