EMPLOYMENT AGREEMENT
Exhibit
10.1
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 terminates Executive’s employment without
Cause, or Executive terminates his employment for Good Reason, then the Company
shall pay and provide to Executive the following benefits:
(i) a
payment equal to 1.5 times the sum of (A) Base Salary and (B) the average bonus
amount paid Executive for the past two fiscal years (or, if the termination
occurs prior to the second anniversary of the date Executive commences
employment at the Company, sixty percent (60%) of the Target Bonus Amount for
the year of termination). Subject to the holdback and interest
provisions of Section 22, such payment shall be made within sixty
(60) days following Executive’s Separation from Service provided that the
Release required under Section 10(e) has become effective during such sixty
(60)-day period following any applicable revocation period;
(ii) the
restrictions on that number of shares of time-based vesting equity awards,
including restricted stock and stock options, shall immediately lapse as would
otherwise have lapsed if Executive had remained employed with the Company for a
period through the date that is twelve (12) months from the date of
termination;
(iii) the
restrictions on that number of shares of performance-based vesting restricted
stock shall lapse as determined by the 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;
(iv) provided
Executive and/or his eligible dependents timely elects to continue their
healthcare coverage under the Company’s group health plan pursuant to the
Consolidated Omnibus Reconciliation Act (“COBRA”), the Company shall reimburse
Executive for the costs incurred to obtain such continued coverage for himself
and his eligible dependents for a period of twelve months measured from the
termination date. In order to obtain reimbursement for such
healthcare coverage costs, Executive shall submit appropriate evidence to the
Company of each periodic payment within thirty (30) days after the payment date,
and the Company shall within thirty (30) days after such submission reimburse
Executive for that payment. During the period such healthcare
coverage remains in effect hereunder, the following provisions shall govern the
arrangement: (a) the amount of coverage costs eligible for reimbursement in any
one calendar year of such coverage shall not affect the amount of coverage costs
eligible for reimbursement in any other calendar year for which
such reimbursement is to be provided hereunder; (ii) no coverage
costs shall be reimbursed after the close of the calendar year following the
calendar year in which those coverage costs were incurred; and (iii) Executive’s
right to the reimbursement of such coverage costs cannot be liquidated or
exchanged for any other benefit. To the extent the reimbursed
coverage costs constitute taxable income to Executive, the Company shall report
the reimbursement as taxable W-2 wages and collect the applicable withholding
taxes, and any remaining tax liability shall be Executive’s sole responsibility,
provided that the reimbursed coverage costs shall not be considered as taxable
income to Executive if such treatment is permissible under applicable law;
and
(v) waiver
of the requirement, if any, to repay relocation benefits as otherwise required
by the Company’s Relocation Policy with such waiver to occur within sixty (60)
days following Executive’s Separation from Service provided that the Release
required under Section 14(f) has become effective during such sixty (60)-day
period following any applicable revocation period.
For
purposes of this Agreement, "Separation from Service" shall mean Executive’s
separation from service as determined in accordance with Section 409A of the
Internal Revenue Code (“Code”) and the applicable standards of the Treasury
Regulations issued thereunder.
(e) The
Severance Benefits payable to Executive under subsection (d) shall be in lieu of
any other severance benefits to which Executive may otherwise be entitled upon
his termination of employment under any severance plan, program, policy,
practice, or arrangement of the Company. Payment of the Severance
Benefits herein is contingent upon Executive’s execution of a full and complete
release substantially in the form set forth in Exhibit A hereto within
twenty-one (21) days (or forty-five (45) days if such longer period is required
under applicable law) after the date of termination and such Release becoming
effective and enforceable in accordance with applicable law after the expiration
of any applicable revocation period.
11. Conduct Detrimental to the
Company. Executive acknowledges and agrees that the Company
and its shareholders need to protect themselves from Conduct Detrimental to the
Company and the provisions of this Section are designed to protect the Company
and its shareholders from Conduct Detrimental to the Company.
(a) The
terms of Executive’s equity awards shall provide that if Executive engages in
Conduct Detrimental to the Company (as defined in subsection (c)) during the
Employment Period, Executive shall disgorge and return to the Company, upon
demand, that number of shares of restricted stock or options to purchase shares
of Company stock on which restrictions lapsed after the date on which the
Company establishes, by a preponderance of the evidence, Executive first engaged
in Conduct Detrimental to the Company, less the net effect of any taxes paid by
Executive (taking into account the initial taxes paid and the tax effect of the
disgorgement), or if Executive does not then own that number of shares, the
amount of the cash proceeds received by Executive from his most recent sale of a
like number of the shares, less the net tax effect as stated
above. Executive understands and agrees that this Section does not
prohibit Executive from competing with the Company or soliciting the Company’s
employees, but requires only a return of equity in the event of such competition
or solicitation. Executive understands and agrees that the return of shares is
in addition to and separate from any other relief available to the Company under
the terms of this Agreement.
(b) The
Company shall have no obligation to pay Executive the Severance Benefits
pursuant to Section 10(d), and Executive agrees to repay any portion of such
Severance Benefits previously paid, for any period that the Company establishes,
by a preponderance of the evidence, that Executive engaged in Conduct
Detrimental to the Company. Executive understands and agrees that
this Section does not prohibit Executive from competing with the Company or
soliciting the Company’s employees, but requires only return of the Severance
Benefit for the period of such competition or solicitation.
(c) “Conduct
Detrimental to the Company,” as used in this Section, means:
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(i)
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conduct that results
in Executive’s termination for Cause as defined in Section 9(c) (or
that would have resulted in termination for Cause if known by the
Company prior to the termination of Executive’s
employment);
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(ii)
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Executive
engages in conduct in violation of Section 8 of this Agreement;
or
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(iii)
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Executive
engages in conduct in violation of Section 9 of this
Agreement.
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12. Change of
Control.
(a) In
the event a Change of Control of the Company occurs during the Employment
Period, the forfeiture restrictions on all shares of the time-based vesting
restricted stock as to which such restrictions remain in place shall lapse
immediately; all unvested stock options shall vest immediately; and if the
Change of Control occurs as provided in Section 12(c) (i), (ii), or (iii), the
forfeiture restrictions on all shares of the performance-based vesting
restricted stock as to which such restrictions remain in place shall lapse
immediately.
(b) If,
within one year following a Change of Control, either the Company terminates
Executive’s employment without Cause, or Executive terminates his employment for
Good Reason, then the Company shall pay and provide to Executive the benefits
and rights provided in Section 10(d), except that in lieu of the amount set
forth in Section 10(d)(i), the amount shall equal two times the sum of (A) Base
Salary and (B) the Target Bonus Amount in effect at the time of
termination.
(c) For
purposes of this Agreement, a “Change of Control” of the Company shall
mean:
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(i)
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the
acquisition by any “person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), other than the Company, a subsidiary of the Company or a Company
employee benefit plan, of “beneficial ownership” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company which, together with any securities held by the person, represents
50% or more of the combined voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors;
or
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(ii)
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the
consummation of a reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case, with
respect to which persons who were the shareholders of the Company
immediately prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company’s then
outstanding voting securities in substantially the same proportions as
their ownership immediately prior to such event;
or
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(iii)
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the
closing of a sale or disposition by the Company of all or substantially
all the Company’s assets; or
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(iv)
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a
change in the composition of the Board, as a result of which less than a
majority of the directors are Incumbent Directors. “Incumbent
Directors” shall mean directors who either (A) are directors of the
Company as of the Start Date, or (B) are elected, or nominated for
election, thereafter to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or
nomination, but “Incumbent Director” shall not include an individual whose
election or nomination is in connection with (i) an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or an actual or threatened
solicitation of proxies or consents by or on behalf of a person other than
the Board or (ii) a plan or agreement to replace a majority of the then
Incumbent Directors; or
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(v)
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the
approval by the Board or the stockholders of the Company of a complete or
substantially complete liquidation or dissolution of the
Company.
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13. Post-Termination
Restrictions. Executive acknowledges and agrees that the
Company has a substantial and legitimate interest in protecting the Company’s
Confidential Information and goodwill. Executive and the Company
further acknowledge and agree that the provisions of this Section are reasonably
necessary to protect the Company’s legitimate business interests and are
designed to protect the Company’s Confidential Information and goodwill during
the Employment Period and for a period following the Employment Period (such
period following the Employment Period, the “Restricted Period”). The
Restricted Period for the Non-Competition Covenant shall be one (1) year from
the date of termination of the Agreement, and the Restricted Period for the
Non-Solicitation Covenant shall be two (2) years from the date of termination of
the Agreement.
(a) Non-Competition
Covenant. Executive shall not engage in, or otherwise directly
or indirectly be employed by or act as a consultant or lender to, or be a
director, officer, employee, principal, agent, member, owner, or
partner of, or permit his name to be used in connection with the activities of
any other business, organization, or entity which engages, directly or
indirectly, with any “Competitive Business” as defined in subsection (c) during
the Employment Period or the Restricted Period; provided, that it shall not be a
violation of this Section for Executive to become the registered or beneficial
owner of up to one percent (1%) of any class of the capital stock of a
corporation registered under the Securities Exchange Act of 1934, as amended,
provided that Executive does not actively participate in the business of such
corporation until such time as the Restricted Period expires.
(b) Non-Solicitation
Covenant. Executive shall not, directly or indirectly, for his
benefit or for the benefit of any other person, firm, entity, or business
solicit, recruit, advise, attempt to influence, or otherwise induce or persuade,
directly or indirectly (including encouraging another person to influence,
induce, or persuade), any person, employed by the Company to leave the employ of
the Company during the Employment Period and the Restricted Period (except for
those actions that are within the scope of Executive’s employment and taken on
behalf of the Company). Nothing herein shall prohibit Executive from
general advertising for personnel not specifically targeting any employee of the
Company.
(c) For
purposes of this Section, the term “Competitive Business” means any business
enterprise (whether a corporation, partnership, sole proprietorship, or other
business entity) that competes in any material way with the products of the
Company marketed and sold or under substantial development by the Company during
the Employment Period.
Executive
agrees that the scope of the restrictions as to time, geographic area, and scope
of activity in this Section are reasonably necessary for the protection of the
Company’s legitimate business interests and are not oppressive or injurious to
the public interest. Executive further agrees that any breach or
threatened breach of any of the provisions of this Section 13 would cause
irreparable injury to the Company for which it would have no adequate remedy at
law. Executive agrees that in the event of a breach or threatened
breach of any of the provisions of this Section the Company shall,
notwithstanding Section 16 hereof, be entitled to injunctive relief against
Executive’s activities to the extent allowed by law. Finally,
Executive further agrees that the relief available under this Section 13 is
in addition to and separate from any other relief available to the Company under
this Agreement, including without limitation under Section 11.
14. Publicity. Executive
agrees that the Company may use, and hereby grants the Company the nonexclusive
and worldwide right to use, Executive’s name, picture, likeness, photograph, or
any other attribute of Executive’s persona (all of such attributes are hereafter
collectively referred to as “Persona”) in any media for any advertising,
publicity, or other purpose at any time, during the Employment
Period. Executive agrees that such use of his Persona will not result
in any invasion or violation of any privacy or property rights Executive may
have; and Executive agrees that he will receive no additional compensation for
the use of his Persona. Executive further agrees that any negatives,
prints, or other material for printing or reproduction purposes prepared in
connection with the use of his Persona by the Company shall be and are the sole
property of the Company.
15. Indemnification. If
Executive is made a party to or is threatened to be made a party to or is
otherwise involved in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that Executive is or was
an officer of the Company or is or was serving at the request of the Company as
a director, officer, or trustee of another corporation or of a partnership,
joint venture, trust, or other enterprise, including service with respect to an
employee benefit plan, whether the basis of such proceeding is alleged action in
an official capacity as a director, officer, or trustee or in any other capacity
while serving as a director, officer, or trustee, then Executive shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the Delaware General Corporate Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent such
amendment permits the corporation to provide broader indemnification rights than
such law permitted the corporation to provide prior to such amendment), against
all expense, liability, and loss (including attorneys’ fees, judgments, fines,
ERISA excise taxes or penalties, and amounts paid in settlement) reasonably
incurred or suffered by Executive in connection therewith; provided, however,
that, except with respect to proceedings to enforce his right to indemnification
hereunder, the Company shall indemnify Executive in connection with a proceeding
(or part thereof) initiated by Executive only if such proceeding (or part
thereof) was authorized by the Board.
16. Arbitration. Any
dispute or controversy arising out of or relating to this Agreement, including
without limitation, any and all disputes, claims (whether in tort, contract,
statutory, or otherwise), or disagreements concerning the interpretation or
application of the provisions of this Agreement shall be resolved by arbitration
in accordance with the rules of the American Arbitration Association (the “AAA”)
then in effect for employment disputes. The arbitration shall be
conducted before a single arbitrator, who shall be a Labor and Employment Law
specialist certified by the Texas Board of Legal Specialization, selected by
mutual agreement of the parties, or if not agreed within 30 days following
commencement of the proceeding, appointed by the AAA. The arbitrator
shall not have the authority to alter the terms of this Agreement or to award
punitive damages. The decision of the arbitrator will be final and
binding on both parties. The Company shall pay the expenses of the
AAA and the arbitrator, and the Company and Executive shall pay their own legal
fees. The arbitrator shall have the authority to award reasonable
attorneys’ fees to the prevailing party. The Company and Executive
agree that the arbitration and all matters related to the arbitration shall be
treated as confidential. This arbitration provision is expressly made
pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1-16 (or replacement or successor statute). Pursuant to
Section 9 of the Federal Arbitration Act, the Company and Executive agree that a
judgment of the United States District Court for the Southern District of Texas
may be entered upon the award made pursuant to the arbitration.
17. Successors.
(a) This
Agreement shall be binding upon the Company and any successor thereof (whether
direct or indirect, by purchase, merger, consolidation, or
otherwise). As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to its business or assets or
any entity that otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law or by contract.
(b) This
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and
legatees. If Executive dies while any amounts are payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive’s devisee, legatee, or
other designee or, if there is no such designee, to Executive’s
estate.
18. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations, or warranties, whether oral or written, by any
person in respect of such subject matter. Any prior agreements of the
parties hereto in respect of the subject matter contained herein are hereby
terminated and canceled.
19. Enforcement of
Agreement. No waiver of any
action with respect to any breach by the other party of any provision of this
Agreement shall be construed to be a waiver of any succeeding breach of such
provision, or as a waiver of the provision itself. Should any
provisions hereof be held to be invalid or wholly or partially unenforceable,
such holdings shall not invalidate or void the remainder of this
Agreement. Portions held to be invalid or unenforceable shall be
enforced to the greatest extent permitted by law, and shall be revised and
reduced in scope so as to be valid and enforceable, or, if such is not possible,
then such portion shall be deemed to have been wholly excluded with the same
force and effect as if the provision had never been included
herein.
20. Governing
Law. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
21. Notice. All notices or other communications
required or permitted hereunder shall be in writing and sufficient if delivered
personally, or sent by nationally-recognized, overnight courier or by registered
or certified mail, return receipt requested and postage prepaid, addressed as
follows:
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If to Executive:
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[Name]
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000 Xxxxxxxxxx Xxxx.
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Xxxxxxx, XX 00000
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If to Company:
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Cyberonics, Inc.
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000 Xxxxxxxxxx Xxxx.
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Xxxxxxx, XX 00000
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Attn: General
Counsel
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(000) 000-0000
(Facsimile)
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or to such other address as any party may have furnished
to the other in writing in accordance herewith. All such notices and
other communications shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of a facsimile
transmission, when the party receiving such transmission shall have confirmed
receipt of the communication, (c) in the case of delivery by
nationally-recognized, overnight courier, on the business day following dispatch
and (d) in the case of registered or certified mailing, on date actually
received.
22. Section 409A of the Internal
Revenue Code.
(a) This
Agreement is intended to comply with the requirements of Section 409A of the
Code. Accordingly, all provisions herein shall be construed and
interpreted to comply with Code Section 409A and if necessary, any such
provision shall be deemed amended to comply with Code Section 409A and the
regulations thereunder.
(b) Notwithstanding
any provision to the contrary in this Agreement, no payments or benefits to
which Executive becomes entitled under this Agreement in connection with the
termination of Executive’s employment with the Company shall be made or paid to
Executive prior to the earlier of (i) the first day of the seventh (7th) month
following the date of Executive’s Separation from Service due to such
termination of employment or (ii) the date of Executive’s death, if Executive is
deemed, pursuant to the procedures established by the Board in accordance with
the applicable standards of Code Section 409A and the Treasury Regulations
thereunder and applied on a consistent basis for all non-qualified deferred
compensation plans subject to Code Section 409A, to be a “specified employee” at
the time of such Separation from Service and such delayed commencement is
otherwise required in order to avoid a prohibited distribution under Code
Section 409A(a)(2). Upon the expiration of the applicable Code
Section 409A(a)(2) deferral period, all payments deferred pursuant to this
Section 22(b) shall be paid in a lump sum to Executive, and any remaining
payments due under this Agreement shall be paid in accordance with the normal
payment dates specified for them herein. In addition, if Executive is
deemed to be a specified employee at the time of Separation from Service and
there is an amount payable by Executive to the Company under the Company’s
Relocation Policy (the "Relocation Amount"), then notwithstanding Section
10(d)(v), the following provisions shall apply: (i) the Company shall
waive the requirement to repay the portion of the Relocation Amount up to the
applicable dollar amount under Code Section 402(g)(1)(B), (ii) Executive shall
repay to the Company any Relocation Amounts in excess of such limit (the "Repaid
Amount") and (iii) upon the expiration of the applicable Code Section 409A(a)(2)
deferral period, the Company shall pay to Executive the Repaid Amount in a lump
sum. The specified employees subject to a delayed commencement date
shall be identified on December 31 of each calendar year. If
Executive is so identified on any such December 31, he shall have specified
employee status for the twelve (12)-month period beginning on April 1 of the
following calendar year.
23. Counterparts. This Agreement my be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
24. Surviving Terms. The rights and obligations of the parties
regarding the payment or provision of benefits set forth in this Agreement upon
such termination and the rights and restrictions during the period after
termination shall survive the termination of this Agreement.
25. Amendment or
Modification. No provisions of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing and signed by Executive and an authorized officer of the
Company.
26. Withholding. All
payments, compensation, and benefits hereunder shall be subject to any required
withholding of federal, state, and local taxes pursuant to any applicable law or
regulation.
27. No
Waiver. Executive’s or the Company’s failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right that Executive or the Company may
have hereunder shall not constitute a
waiver of such right to insist upon strict compliance in the
future.
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Cyberonics,
Inc.
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By:/s/ Xxxxxx X.
Xxxxx
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Xxxxxx
X. Xxxxx
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President
& Chief Executive Officer
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Executive:
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EXHIBIT
A
RELEASE
Executive
hereby irrevocably and unconditionally releases, acquits, and forever discharges
the Company and its affiliated companies and their directors, officers,
employees, and representatives, (collectively “Releasees”), from any and all
claims, liabilities, obligations, damages, causes of action, demands, costs,
losses, and/or expenses (including attorneys’ fees) of any nature whatsoever,
whether known or unknown, including, but not limited to, rights arising out of
alleged violations of any contracts, express or implied, any covenant of good
faith and fair dealing, express or implied, any tort, any legal restrictions on
the Company’s right to terminate employees, or any federal, state, or other
governmental statute, regulation, or ordinance, including, without limitation,
Title VII of the Civil Rights Act of 1964, and the Federal Age Discrimination in
Employment Act, which Executive claims to have against any of the
Releasees. Executive acknowledges that the payments provided in the
Agreement are in full and complete satisfaction of all contract or severance
obligations that the Company may have. In addition, Executive waives
all rights and benefits afforded by any state laws which provide in substance
that a general release does not extend to claims which a person does not know or
suspect to exist in his favor at the time of executing the release which, if
known by him, must have materially affected Executive’s settlement with the
other person. Notwithstanding the foregoing, this Release shall not
apply to: (i) Executive’s continuing rights under any pension or welfare plans,
including his rights under COBRA, (ii) Executive’s right to enforce the
surviving terms of the Employment Agreement, (iii) Executive’s right to
indemnification, and (iv) claims and rights that may arise after the date of
execution of this Release.
Executive
represents and acknowledges that in executing this Release he does not rely and
has not relied upon any representation or statement, oral or written, not set
forth herein or in the Agreement made by any of the Releasees or by any of the
Releasees’ agents, representatives, or attorneys with regard to the subject
matter, basis, or effect of this Release, the Agreement, or
otherwise.
Executive
represents and agrees that he fully understands his right to discuss all aspects
of this Release with his private attorney, that to the extent, if any, that he
desires, he has availed himself of this right, that he has carefully read and
fully understands all of the provisions of this Release, and that he is
voluntarily entering into this Release for good and valuable consideration, the
receipt of which is hereby acknowledged.
Executive
further represents and acknowledges that Executive has twenty-one (21) days to
consider this Release prior to signing. Executive further understands
that Executive may revoke this Agreement within seven (7) days of its
execution. This Release shall not become effective or enforceable
until the seven-day revocation period has expired.
AGREED
AND ACCEPTED, on this _____ day of _______________, 20__.
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