RESIGNATION AGREEMENT
 
This Agreement by and between JAMES A. REINSTEIN (“Mr. Reinstein”) a resident of
Houston, Texas, and CYBERONICS, INC. (“Cyberonics” or “Company”), a Delaware
corporation, is made and effective the 24th day of February, 2012 (“Effective
Date”).
 
WHEREAS, Mr. Reinstein is employed by Cyberonics as Senior Vice President and
Chief Commercial Officer pursuant to an Employment Agreement dated January 1,
2011 and effective through January 1, 2015 (“Employment Agreement”);
 
WHEREAS, Cyberonics has granted Mr. Reinstein stock options pursuant to stock
option agreements, including:
 
o  
Grant No. 3241 dated June 8, 2009 for 25,488 shares (12,744 unvested)

o  
Grant No. 3374 dated June 15, 2010 for 16,440 shares (12,330 unvested)

o  
Grant No. 3554 dated June 15, 2011 for 18,590 shares (all unvested)
(collectively, “Stock Option Agreements”);

 
WHEREAS, Cyberonics has granted Mr. Reinstein restricted stock pursuant to
restricted stock agreements including:
 
o  
Grant No. 3169 dated June 8, 2009 for 12,744 shares

o  
Grant No. 3373 dated June 15, 2010 for 8,220 shares

o  
Grant No. 3553 dated June 15, 2011 for 9,295 shares

o  
Grant No. 3555 dated June 15, 2011 for 13,000 shares

o  
Grant No. 3556 dated June 15, 2011 for 13,000 shares

o  
Grant No. 3557 dated June 15, 2011 for 13,000 shares

(collectively, “Restricted Stock Agreements”);

 
WHEREAS, effective immediately, Mr. Reinstein desires voluntarily to resign as
Senior Vice President and Chief Commercial Officer and all other positions he
may have with Cyberonics or any affiliated company, and Cyberonics desires to
accept such resignation effective immediately; and
 
WHEREAS, in connection with Mr. Reinstein’s resignation, the parties desire to
amend and restate their rights and obligations with respect to each other.
 
NOW THEREFORE, for good and valuable consideration, the sufficiency of which is
hereby acknowledged, Mr. Reinstein and Cyberonics agree as follows:
 
1.  
Effective immediately, Mr. Reinstein hereby resigns as Senior Vice President and
Chief Commercial Officer and Cyberonics hereby accepts Mr. Reinstein’s
resignation.

 
2.  
The stock options previously granted Mr. Reinstein pursuant to the Stock Option
Agreements and the shares of restricted stock previously granted to Mr.
Reinstein pursuant to the Restricted Stock Agreements which have not previously
vested shall terminate and be forfeited on the Effective Date.  All vested
options shall become fully exercisable and all shares of restricted stock shall
become freely tradable, subject to such restrictions, if any, as required by
federal law or regulation or the regulation of any stock exchange. Any exercise
of such options shall be according to the terms and conditions of the Stock
Option Agreements and the stock option plans pursuant to which such options were
granted.

 
3.  
In accordance with the Company’s ordinary and regular process for executive
annual incentive compensation, Mr. Reinstein shall be eligible to receive a
prorated portion of his target annual incentive compensation.  The Compensation
Committee of the Board of Directors (the “Board”) shall evaluate Mr. Reinstein's
fiscal 2012 performance following the end of the fiscal year and determine an
appropriate portion, if any, of his target annual incentive compensation to be
awarded him for his contributions to the Company's fiscal year 2012 performance.

 
4.  
Mr. Reinstein shall receive such benefits as he may have from the Cyberonics’
pension and welfare benefit plans according to the terms and conditions of those
plans pursuant to any elections made by Mr. Reinstein.

 
5.  
Within five (5) business days of the Effective Date of this Agreement, Mr.
Reinstein shall submit any request for reimbursement of any business expenses
incurred in the course of his duties prior to the Effective Date.  Cyberonics
shall promptly review and process any such request.

 
6.  
Sections 8, 9(g), 14, 16, 17 and 27 of the Employment Agreement shall remain in
full force and effect.

 
7.  
Section 13 of the Employment Agreement shall remain in full force and effect
with the following modification:

 
The Restricted Period for the Non-Competition Covenant shall be the later of one
(1) year from the date of termination of the Employment Agreement, or the date
Executive is no longer in a Service Relationship with the Company, and
Restricted Period for the Non-Solicitation Covenant shall be the later of two
(2) years from the date of termination of the Employment Agreement, or the date
Executive is no longer in a Service Relationship with the Company.
 
8.  
Except as expressly set forth otherwise herein, the Employment Agreement is
superseded and extinguished by this Agreement.

 
9.  
On reasonable notice and request of Cyberonics’ Senior Vice President and Chief
Administrative Officer or such other person designated by the Board, Mr.
Reinstein shall cooperate with Cyberonics in: (a) all matters related to his
employment with Cyberonics; (b) any investigation or inquiry undertaken by
Cyberonics, its Board or any committee of the Board, or any governmental agency
or stock exchange; and (c) with respect to any litigation or administrative
proceeding against Cyberonics or any employee, officer, or director of
Cyberonics.  Cyberonics also agrees to pay Mr. Reinstein his reasonable
expenses, including without limitation, travel, legal, accounting, and other
related expenses.

 
10.  
Mr. Reinstein will deliver to Cyberonics within ten (10) business days of the
Effective Date all business records in his possession, custody, or control,
including without limitation all analyses, correspondence, data, or information,
memoranda, notes, records, documents, or other materials (in whatever form
maintained, whether electronic, hard copy or otherwise) composed or received by
Mr. Reinstein, solely or jointly with others, related in any manner to the past,
present, or anticipated business of Cyberonics or any affiliated company and all
property owned by Cyberonics or any affiliated company, provided, however, that
Cyberonics may, in its sole discretion, extend the time for such delivery.  Mr.
Reinstein represents and agrees that he has no claim or right, title or interest
in any property designated on Cyberonics’ records as property or assets of
Cyberonics.  Mr. Reinstein shall, within ten (10) business days of the Effective
Date, remove all property owned by him from Cyberonics’ premises.  This
paragraph does not apply to any personal documents, records, or property of Mr.
Reinstein as well as any documents that are attorney/client privileged between
Mr. Reinstein and his personal counsel or constitute work product of Mr.
Reinstein or his personal counsel.

 
11.  
Except as provided herein, Mr. Reinstein does hereby release, acquit, and
discharge Cyberonics, its directors, officers, employees, agents, attorneys, and
representatives, past and present, and Cyberonics does hereby release, acquit
and discharge Mr. Reinstein, from any and all claims and from any and all causes
of action of any kind or character, whether now known or not known, either may
have with respect to bonuses, compensation, expenses, remuneration, salary,
severance or wages payable under his Employment Agreement.  The payments or
consideration provided in paragraphs 2 and 3 of this Agreement are in full
satisfaction and compromise of any obligations which Cyberonics may have to Mr.
Reinstein for compensation or payments including without limitation any and all
claims for salary, bonuses, severance, restricted stock, stock options or tax
gross-up payments.

 
12.  
Should any provision of this Agreement be held to be invalid or wholly or
partially unenforceable by a final, non-appealable judgment in a court of
competent jurisdiction, such holding shall not invalidate or void the remainder
of this Agreement, and those portions held to be invalid or unenforceable shall
be revised and reduced in scope so as to be valid and enforceable or, if such is
not possible, then such portions shall be deemed to have been wholly excluded
with the same force and effect as if it had never been included herein.

 
13.  
Mr. Reinstein and Cyberonics, its directors, officers, employees,
representatives, attorneys, and agents of Cyberonics shall not make any public
or private statement with respect to each other (including, as to Mr. Reinstein,
any statement with respect to the directors, officers, employees,
representatives, attorneys, and agents of Cyberonics) which are derogatory,
disparaging 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.

 
14.  
This Agreement shall be governed by and construed and enforced, in all respects,
in accordance with the laws of the State of Texas without regard to conflict of
law principles unless preempted by federal law, in which case federal law shall
govern.

 
15.  
Except as expressly provided herein, this Agreement supersedes, replaces, and
merges all previous agreements and discussions relating to Mr. Reinstein’s
resignation from all positions with Cyberonics and constitutes the entire
agreement between Mr. Reinstein and Cyberonics with respect to Mr. Reinstein’s
resignation.  The parties execute this Agreement without reliance on any
representation or promise, of any kind or character, not expressly set forth
herein.  This Agreement may not be changed or terminated orally, and no change,
termination, or waiver of this Agreement or any of the provisions herein
contained shall be binding unless made in writing and signed by all parties, and
in the case of Cyberonics, by an authorized officer.

 
16.  
Any notices required or permitted to be given under this Agreement shall be
properly made if delivered, in the case of Cyberonics, to:

 
100 Cyberonics Boulevard, Suite 600
Houston, Texas  77058
Attention:  Senior Vice President & Chief Administrative Officer
 
In the case of Mr. Reinstein to:
 
3724 Ingold Street
Houston, Texas  77005

17.  
Any payments made or consideration provided pursuant to this Agreement shall be
less withholding for federal, state or local taxes as may be required by law or
applicable regulation.  Cyberonics shall pay all such tax withholding to the
United States Treasury or other government account as required by statute or
federal regulations.  Mr. Reinstein shall be solely responsible for payment of
all taxes incurred with respect to the payments set forth herein, including but
not limited to federal income and excise taxes.

 
18.  
Mr. Reinstein understands that he has the right to, and has been advised to,
consult with an attorney prior to signing. Mr. Reinstein further understands
that he has twenty-one (21) days to consider this Agreement prior to
signing.  Mr. Reinstein understands that he may revoke this Agreement within
seven (7) days of its execution.

 
19.  
This Agreement shall be for the benefit of and binding upon the parties and
their respective heirs, personal representatives, legal representatives,
successors and, as to Cyberonics, assigns, including without limitation, any
successor to Cyberonics by merger, consolidation, sale of stock or assets, or
otherwise.

 
In witness whereof, the parties have caused this Agreement to be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument, at Houston, Harris County, Texas
on the Effective Date.
 

                                                                

                   ______________________________
                   James A. Reinstein

                   Cyberonics, Inc.

                   By: ____________________________                                                               

 
                   Daniel J. Moore
 
                    President & Chief Executive Officer
 

Reinstein Execution Copy

 
 

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