STOCK OPTION AMENDMENT AND CASH BONUS AGREEMENT
EXHIBIT
10.5
STOCK
OPTION AMENDMENT
AND
AGREEMENT
made by Cyberonics, Inc. (the “Company”) which shall be effective on the date
executed by a validly-authorized officer of the Company.
WHEREAS,
the Company previously granted to the optionee listed on the attached
Schedule I (the “Optionee”) the options identified on
Schedule I (the “Options”) to purchase shares
of the
Company’s common stock under one or more of the Company’s employee stock
incentive plans (individually, a “Plan”).
WHEREAS,
the Company and Optionee entered into a Notice of Stock Option Grant
and/or Stock Option Agreement (collectively, the “Option Agreement”) evidencing
each such Option.
WHEREAS,
in order to avoid potential adverse tax consequences under section
409A
of the Internal Revenue Code, Optionee desires to amend each of the Options
to
increase the exercise price per share to be in effect for the unexercised
portion of that Option which is subject to section 409A and identified as
such
on Schedule I (the “Covered Portion”) to the higher
exercise price per share indicated for the Covered Portion of such Option
on
Schedule I.
WHEREAS,
in order to compensate Optionee for the increased exercise prices
to be
in effect for the Covered Portions of the Options, the Company is willing
to pay
Optionee a special cash bonus in a dollar amount equal to the aggregate increase
in the exercise prices for the Covered Portion of the Options as indicated
on
Schedule I.
NOW
THEREFORE, the parties hereby agree as follows:
1. Increased
Exercise Price. The exercise price per
share set forth in the Option Agreement for each of the Options listed on
Schedule I is hereby increased, with respect to the
shares subject to the Covered Portion of that Option, to the higher exercise
price per share set forth for that Option on Schedule
I.
2. Cash
Bonus. Optionee shall become entitled
to receive a cash bonus from the Company (the “Cash Bonus”) in the gross dollar
amount indicated as his or her Total Cash Bonus on attached Schedule
I. Payment shall be made on the Company’s first regular
payroll date in January 2008. However, the Cash Bonus shall be
subject to the Company’s collection of all applicable federal, state and local
income and employment withholding taxes, and Optionee shall be paid only
the net
amount of such bonus remaining after such taxes have been
collected. Optionee need not remain in the Company’s employ to
receive the Cash Bonus.
3. Entire
Agreement. This Agreement, together
with the Option Agreements (to the extent not expressly amended hereby) and
the
applicable Plan under which each Option is outstanding, represents the entire
agreement of the parties with respect to the Options, the Covered Portions
thereof and the Cash Bonus and supersedes any and all previous contracts,
arrangements or understandings between the parties with respect to such Options
and the Cash Bonus. This Agreement may be amended at any time only by
means of a writing signed by Optionee and an authorized officer of the
Company.
4. Continuation
of Option Agreements. Except for the foregoing increases
to the exercise prices per share for the Covered Portions of the Options,
no
other terms or provisions of the Option Agreements for such Options or the
applicable Plans have been modified as a result of this Agreement, and those
terms and provisions shall continue in full force and effect.
IN
WITNESS WHEREOF, this Agreement has been executed on behalf of
Cyberonics, Inc. by a duly-authorized officer on the date indicated
below.
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CYBERONICS,
INC.
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/s/
XXXXXX X. XXXXXX, III
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By: Xxxxxx
X. Xxxxxx, III
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TITLE: VP,
Human Resources
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DATED: October
22, 2007
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1
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SCHEDULE
I
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|||||||||||||||||||||||
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Name
|
Plan
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Grant
Date
|
ExercisePrice
Per
Share
|
Number
of Unexercised Options vested after 12/31/04 subject to
409A
|
Applicable
Measurement Date
|
Increased
Exercise Price
Per
Share
|
Aggregate
Increase in Price
Exercise
|
Cash
Bonus
**
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|||||||||||||||
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Xxxxxxx,
Xxxxxx
|
1996
Plan
|
01/24/02
|
$ |
12.45
|
417
|
02/12/02
|
$ |
2.06
|
$ |
859.02
|
$ |
859.02
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|||||||||||
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Xxxxxxx,
Xxxxxx
|
0000
Plan
|
07/24/02
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$ |
9.96
|
9,334
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08/12/02
|
$ |
4.82
|
$ |
44,989.88
|
$ |
44,989.88
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|||||||||||
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Total
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$ |
45,848.90
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**
The Cash Bonus will be paid on the Company's first regular payroll
date in
January 2008.
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