CYBERONICS, INC. NEW EMPLOYEE EQUITY INDUCEMENT PLAN AGREEMENT
Exhibit 10.65
CYBERONICS, INC.
I. NOTICE OF STOCK OPTION XXXXX
Xxxxx X. Xxxx
You have been granted a Nonstatutory Stock Option to purchase Common Stock of the Company,
subject to the terms and conditions of this Agreement, as follows:
| Date of Grant | September 17, 2003 | |||
| Vesting Commencement Date | September 17, 2003 | |||
| Exercise Price per Share | $28.45 | |||
| Total Number of Shares Granted | 150,000 | |||
| Total Exercise Price | $4,267,500 | |||
| Term/Expiration Date; | September 17, 2013 | |||
| Vesting Schedule: |
This Option shall vest and may be exercised, in whole or in part, in accordance with
the following schedule;
l/60th of the Shares subject to the Option shall vest each month after the Vesting
Commencement Date, so that the Option shall be fully vested five (5) years from the Date of Grant,
subject to the Optionee continuing to be a Service Provider on such
dates.
Termination Period
This Option may be exercised for ninety (90) days after Optionee ceases to be a Service
Provider in accordance with Section 7 of this Agreement. Upon the death or Disability of the
Optionee, this Option may be exercised for twelve (12) months after the Optionee ceases to be a
Service Provider in accordance with Sections 8 and 9 of this Agreement. In no event shall this
Option be exercised later than the Term/Expiration Date provided.
II. AGREEMENT
1. Definitions. As used herein, the following definitions shall apply:
(a) “Agreement” means this stock option agreement between the Company and
Optionee evidencing the terms and conditions of this Option.
(b) “Applicable Laws” means the requirements relating to the administration of stock
options under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction that may apply to this Option.
(c) “Board” means the Board of Directors of the Company or any committee of the
Board that has been designated by the Board to administer this Agreement.
(d)
“Code” means the Internal Revenue Code of 1986, as amended.
(e) “Common Stock” means the common stock of the Company.
(f) “Company” means Cyberonics, Inc., a Delaware corporation.
(g) “Consultant” means any person, including an advisor, engaged by the Company
or a Parent or Subsidiary to render services to such entity.
(h) “Director” means a member of the Board.
(i) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.
(j) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.
Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient
to constitute “employment” by the Company.
(k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(l) “Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:
(1) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National Market or The Nasdaq
Small Cap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or
system on the day of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
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(2) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the mean between the
high bid and low asked prices for the Common Stock on the day of determination; or
(3) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.
(m) “Nonstatutory Stock Option” means an Option not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(n) “Notice of Grant” means a written notice, in Part I of this Agreement, evidencing
certain the terms and conditions of this Option grant. The Notice of Grant is part of the Option
Agreement.
(o) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) “Option” means this stock option.
(q) “Optioned Stock” means the Common Stock subject to this Option.
(r) “Optionee” means the person named in the Notice of Xxxxx or such person’s
successor.
(s) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(t)
“Service Provider” means an Employee, Director or Consultant.
(u) “Share” means a share of the Common Stock, as adjusted in accordance with Section
10 of this Agreement.
(v) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
2. Grant of Option. The Board hereby grants to the Optionee named in the Notice of
Grant attached as Part I of this Agreement the Option to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the Notice of Grant
(the “Exercise Price”), subject to the terms and conditions
of this Agreement.
3. Exercise
of Option.
(a)
Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of this
Agreement.
(b)
Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the
election to exercise
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the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised
Shares”), and such other representations and agreements as may be required by the Company. The
Exercise Notice shall be completed by the Optionee and delivered to Secretary of the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price.
(c) Legal Compliance. No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable
Laws. Assuming such compliance,
for income tax purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares.
4. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
(a) cash or check;
(b) promissory note;
(c) consideration received by the Company under a cashless exercise program
implemented by the Company; or
(d) surrender of other Shares, provided Xxxxxx acquired directly from the Company,
(i) have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
5. Non-Transferability
of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by the Optionee. The terms of this Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
6. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the terms of this
Agreement.
7. Termination
of Relationship as a Service Provider. If the Optionee ceases to be a
Service Provider (other than for death or Disability), this Option may be exercised for a period of
ninety (90) days after the date of such termination (but in no event later than the expiration date of
this Option as set forth in the Notice of Grant) to the extent that the Option is vested on the date of such
termination. To the extent that the Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.
8. Disability of Optionee. If the Optionee ceases to be a Service Provider as a result
of the Optionee’s Disability, this Option may be exercised for a period of twelve (12) months after
the date
of such termination (but in no event later than the expiration date of this Option as set
forth in the
Notice of Grant) to the extent that the Option is vested on the date of such termination. To
the extent
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that Optionee does not exercise this Option within the time specified herein, the Option shall
terminate.
9. Death of Optionee. If the Optionee dies while a Service Provider, the Option may
be exercised at any time within twelve (12) months following the date of death (but in no event
later than the expiration date of this Option as set forth in the Notice of Grant), by the
Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only
to the extent that the Optionee was entitled to exercise the Option at the date of death. If, after
death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the Option shall terminate.
10. Adjustments
Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by this Option, as well as the price
per share of Common Stock covered by this Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting from a stock
split,
reverse stock split, stock dividend, combination or reclassification of the Common Stock, or
any
other increase or decrease in the number of issued shares of Common Stock effected without
receipt
of consideration by the Company; provided, however, that conversion of any convertible
securities
of the Company shall not be deemed to have been “effected without receipt of consideration.”
Such
adjustment shall be made by the Board, whose determination in that respect shall be final,
binding
and conclusive. Except as expressly provided herein, no issuance by the Company of shares of
stock
of any class, or securities convertible into shares of stock of any class, shall affect, and
no
adjustment by reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to this Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation
of the Company, the Board shall notify Optionee as soon as practicable prior to the effective
date of
such proposed transaction. The Board in its discretion may provide for the Optionee to have
the
right to exercise his or her Option until ten (10) days prior to such transaction as to all of
the
Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be
exercisable. To the extent it has not been previously exercised, the Option will terminate
immediately prior to the consummation of such proposed.
(c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, the Option
shall be
assumed or an equivalent option substituted by the successor corporation or a Parent or
Subsidiary of
the successor corporation. In the event that the successor corporation refuses to assume or
substitute
for the Option, the Optionee shall fully vest in and have the right to exercise the Option as
to all of
the Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If
the Option becomes fully vested and exercisable in lieu of assumption or substitution in the
event of
a merger or sale of assets, the Board shall notify the Optionee in writing or electronically
that the
Option shall be fully exercisable for a period of fifteen (15) days from the date of such
notice, and
the Option shall terminate upon the expiration of such period. For the purposes of this
paragraph,
the Option shall be considered assumed if, following the merger or sale of assets, the option
confers
the right to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately
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prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities
or property) received in the merger or sale of assets by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or sale of assets is
not solely common stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the merger or sale of assets.
(d) Change of Control. In the event of a Change of Control (as defined below), the
Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned
Stock, including Shares as to which it would not otherwise be vested or exercisable, and any
Company reacquisition option applicable to any Shares acquired upon exercise of an Option shall
lapse as to all such Shares. If an Option becomes fully vested and exercisable as the result of a
Change of Control, the Administrator shall notify the Optionee in writing or electronically prior
to the Change of Control that the Option shall be fully vested and exercisable for a period of
fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration
of such period. For purposes of this Plan, a “Change of Control” means the happening of any of the
following events:
(1) When any “person,” as such term is used in Sections 13(d) and
14(d) of the Exchange Act, other than the Company, a subsidiary of the Company or a Company
employee benefit plan, including any trustee of such plan acting as trustee, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (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
(2) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the shareholders of the Company approve an
agreement for the sale or disposition by the Company of all or substantially all the Company’s
assets; or
(3) A change in the composition of the Board of Directors of the
Company, as a result of which fewer 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
date the Plan is approved by the shareholders, or (B) are elected, or nominated for election, to
the Board of Directors of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company).
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11. Notices. Any notice to be given to the Company hereunder shall be in writing and
shall be addressed to the Company at its then current principal executive office or to such other
address as the Company may hereafter designate to the Optionee by notice as provided in this
Section. Any notice to be given to the Optionee hereunder shall be addressed to the Optionee at
the address set forth beneath his signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. A notice shall be deemed to have
been duly given when personally delivered or mailed by registered or certified mail to the party
entitled to receive it.
12. Withholding Taxes. Optionee agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Optionee) for the satisfaction of
all
federal, state, and local income and employment tax withholding requirements applicable to the
Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not delivered at the
time of
exercise.
13. Entire
Agreement; Governing Law. This Agreement constitutes the entire agreement
of
the parties with respect to the subject matter hereof and supersedes in its entirety all prior
undertakings and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by means of a
writing
signed by the Company and Optionee. This agreement is governed by the internal substantive
laws,
but not the choice of law rules, of Texas.
14. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES
AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT
THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUES ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL,
AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT
TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME,
WITH OR WITHOUT CAUSE.
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By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of this Agreement.
Optionee has reviewed this Agreement in its entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Agreement and fully understands all provisions of this
Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board upon any questions relating to this Agreement. Optionee further agrees
to notify the Company upon any change in the residence address indicated below.
OPTIONEE
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CYBERONICS, INC. | |||||
/s/ Xxxxx X. Xxxx
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/s/ Xxxxxx X. Xxxxxxx |
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00000 Xxxxxxxx Xxxx, Xxxxxxx. TX 77024 |
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Residence Address |
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EXHIBIT A
CYBERONICS, INC.
EXERCISE NOTICE
Cyberonics, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx #000
Xxxxxxx, Xxxxx 00000
00000 Xxxxx Xxxxxx Xxxxxxxxx #000
Xxxxxxx, Xxxxx 00000
Attention:
1. Exercise of Option, Effective as of today,
,
20 , the undersigned
(“Purchaser”) hereby elects to purchase shares (the “Shares”) of the Common
Stock of Cyberonics, Inc. (the “Company”) under and pursuant to the New Employee Equity
Inducement Plan Agreement dated [
] (the “Equity Inducement Agreement”). The
purchase price for the Shares shall be [$
], as required by the Option Agreement.
2. Delivery
of Payment. Purchaser herewith delivers to the Company the full purchase
price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Xxxxxxxxx has received,
read and understood the Equity Inducement Agreement and agrees to abide by and be bound by their
terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a stockholder shall exist with
respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be
issued
to the Optionee as soon as practicable after exercise of the Option. No adjustment will be
made for a
dividend or other right for which the record date is prior to the date of issuance, except as
provided
in Section 10 of the Option Agreement.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents
that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection
with
the purchase or disposition of the Shares and that Purchaser is not relying on the Company for
any
tax advice.
6. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the
benefit of
the successors and assigns of the Company. Subject to the restrictions on transfer herein set
forth,
this Exercise Notice shall be binding upon Optionee and his or her heirs, executors,
administrators,
successors and assigns.
7. Interpretation. Any dispute regarding the interpretation of this Exercise
Notice shall
be submitted by Optionee or by the Company forthwith to the Board which shall review such
dispute
at its next regular meeting. The resolution of such a dispute by the Board shall be final
and binding on all parties.
8. Entire
Agreement; Governing Law. The Agreement is incorporated herein by
reference. This Agreement, and the Equity Inducement Agreement constitute the entire
agreement
of the parties with respect to the subject matter hereof and supersede in their entirety
all prior
undertakings and agreements of the Company and Purchaser with respect to the subject
matter
hereof, and may not be modified adversely to the Purchaser’s interest except by means of
a writing
signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws,
but not the choice of law rules, of Texas.
Submitted by:
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Accepted by: | |||||
OPTIONEE
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CYBERONICS, INC. | |||||
| Date Received: | ||||||||
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