AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit
10.3
AMENDMENT
TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT
AGREEMENT (the “Amendment”), made and entered into effective as of this
______ day of _________________, 2008 (the “Effective Date”), is by and between
Cyberonics, Inc., a
Delaware corporation (the “Company”), and _______________________ (the
“Employee”).
WHEREAS, Employee is a key
employee of the Company; and
WHEREAS, the Company and
Employee previously entered into an Employment Agreement (the “Agreement”) in
order to secure the experience, abilities and service of Employee;
WHEREAS, the Agreement remains
in full force and effect as of this date;
WHEREAS, the Company and
Employee desire to amend the terms and conditions of the Agreement so as to
bring those terms and conditions into documentary compliance with the final
Treasury Regulations under Section 409A of the Internal Revenue Code of 1986, as
amended and to continue the Executive’s employment with the Company upon those
amended terms and conditions
THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Employee agree to modify the Agreement as
follows:
1. Section
4.B. is hereby amended and restated in its entirety to read as
follows:
“B. Annual Incentive
Bonus. For each fiscal year during the Term, Employee shall be
eligible to participate in the Annual Executive Bonus Program, with a target
bonus amount of 50% of Employee’s annual Base Salary for such year. A
bonus, if earned, shall be payable as soon as reasonably practical following the
completion of the applicable fiscal year, but in no event prior to the first day of the fiscal year following such
fiscal year and no later than the 15th day
of the third month of such subsequent fiscal year. Bonuses for Employee shall be
based on the achievement of such Company, departmental and/or individual
performance goals that may be established for the applicable bonus year by the
Compensation Committee.”
2. Section
4.C. is hereby amended and restated in its entirety to read as
follows:
“C. Annual Overachievement
Bonus. During the Term, Employee shall be eligible to
overachieve the target bonus amount of the Annual Executive Bonus Program as
determined by the Compensation Committee. Overachievement bonuses
shall be based on the Company’s overachievement of such Company, departmental
and/or individual performance goals that may be established for the applicable
bonus year by the Compensation Committee. A bonus, if earned, shall
be payable as soon as reasonably practical following the completion of the
applicable fiscal year, but in no event prior to
the first day of the fiscal year following such fiscal year and no later than the 15th day
of the third month of such subsequent fiscal year.”
3. Section
4.F. is hereby amended and restated in its entirety to read as
follows:
“F. Reimbursements. Employee
shall be entitled to receive reimbursement by the Company in accordance with its
business reimbursement policy in effect from time to time for all reasonable,
out-of-pocket business expenses incurred by him in performing his duties under
this Agreement upon the submission by Employee of such accounts and records as
may be reasonably required under the Company’s business reimbursement
policy. Employee must submit to the Company such accounts and records
of each such expense within [60] days after the later of (i)
Employee’s incurrence of such expense or (ii) Employee’s receipt of the invoice
for such expense. If such expense qualifies for reimbursement, then
the Company shall reimburse Employee the expense within [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 reimbursements (or in-kind benefits) to which
Employee may become entitled in any one calendar year shall not affect the
amount of expenses eligible for reimbursement hereunder in any other calendar
year. Employee’s right to reimbursement cannot be liquidated or
exchanged for any other benefit or payment.”
4. Section
6.B. is hereby amended and restated in its entirety to read as
follows:
“B. Upon
termination of Employee’s employment pursuant to Section 5.C., the Company shall
be obligated to pay or provide, and Employee’s estate or beneficiary shall be
entitled to receive:
1. all
of the amounts and benefits described in Section 6.A. which shall be paid within
ten (10) business days of the date of
termination;
2. a
lump sum payment equal to 1.5 times the Employee’s Base Salary at the time of
termination. Subject to Section 20,
such amount shall be paid in a lump sum within ten (10) business days following
Employee’s Separation from Service; and
3. with
respect to each outstanding Option (other than performance-based restricted
shares (“Performance-Vested Share(s)”)) on Employee’s termination date, Employee
will vest with respect to the number of shares that would become vested under
such Options during the 12-month period following Employee’s termination date if
Employee’s employment had continued during such period. Such option
will remain exercisable for such period of time as specified in the agreement
evidencing the Option; and
4. with
respect to each outstanding Option that is a Performance-Vested Share on
Employee’s termination date, the restrictions shall lapse on that number of
Performance-Vested Shares for which the stated performance-based vesting
criteria has been attained during the 6-month period following Employee’s
termination date if Employee’s employment had continued during such
period.
For purposes of this Agreement, Employee's "Separation
from Service" shall mean a separation from service as determined in accordance
with Code Section 409A and the applicable Treasury regulations issued
thereunder."
5. A
new Section 20 is hereby added to the Agreement to read as follows:
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“SECTION
20.
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Section
409A.
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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 Employee becomes entitled under this Agreement in connection with the
termination of Employee’s employment with the Company shall be made or paid to
Employee prior to the earlier of (i) the first day
of the seventh (7th) month following the date of Employee’s Separation from
Service due to such termination of employment
or (ii) the date of Employee’s death, if Employee 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 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 20.B. shall be paid in a lump sum to Employee, and any remaining
payments due under this Agreement shall be paid in accordance with the normal
payment dates specified for them herein. The specified employees subject to such a delayed
commencement date shall be identified on December 31 of each calendar
year. If Employee 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.”
6. Employee
acknowledges that Employee has had the right to consult with counsel and is
fully aware of his rights and obligations under Agreement and this
Amendment.
7. Except
as expressly modified by this Amendment, the provisions of the Agreement remain
unchanged and in full force and effect.
IN
WITNESS WHEREOF, Company and Employee have caused this Amendment to be executed
by their duly authorized representative as of the date and year set forth
above.
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Cyberonics,
Inc.
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Employee
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By:___________________________________
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By:__________________________________
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Date:_________________________________
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Date:_________________________________
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