EXHIBIT 10.2
EMPLOYEE RESTRICTED STOCK AGREEMENT
     THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made effective as of
___ (the “Grant Date”), between CYBERONICS, INC., a Delaware corporation (the
“Company”), and ___(the “Employee”).
     1. Award. Pursuant to the CYBERONICS, INC. 2005 STOCK PLAN (the “Plan”), as
of the Grant Date [___] shares (the “Restricted Shares”) of the Company’s common
stock shall be issued as hereinafter provided in the Employee’s name subject to
certain restrictions thereon. The Employee hereby acknowledges receipt of a copy
of the Plan and the Prospectus relating thereto pursuant to the Securities Act
of 1933, and agrees that this award of Restricted Shares shall be subject to all
of the terms and provisions of the Plan, including future amendments thereto, if
any, pursuant to the terms thereof. All dividends and other distributions on a
Restricted Share shall be subject to the same Forfeiture Restrictions (as
hereinafter defined) as are applicable to such Restricted Share.
     2. Restricted Shares. The Employee hereby accepts the Restricted Shares
when issued and agrees with respect thereto as follows:
     (a) Forfeiture Restrictions. The Restricted Shares may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or disposed of to the extent then subject to the Forfeiture Restrictions, and in
the event of termination of the Employee’s service relationship with the Company
(as provided in Section 5) for any reason other than as provided in
Section 2(b), the Employee shall, for no consideration, forfeit to the Company
all Restricted Shares then subject to the Forfeiture Restrictions. The
prohibition against transfer and the Employee’s obligation to forfeit and
surrender the Restricted Shares to the Company upon the Employee’s termination
of service are herein referred to as the “Forfeiture Restrictions.” The
Forfeiture Restrictions shall be binding upon and enforceable against any
transferee of Restricted Shares.
     (b) Vesting/Lapse of Forfeiture Restrictions. The Forfeiture Restrictions
shall lapse in full as to all of the Restricted Shares on the earlier of (i) the
first anniversary of the Grant Date (ii) a Change of Control (as defined in the
Plan) or (iii) the termination of the Employee’s service relationship with the
Company due to the Employee’s death.
     (c) Certificates. A certificate evidencing the Restricted Shares shall be
issued by the Company in the Employee’s name, pursuant to which the Employee
shall have all of the rights of a shareholder of the Company with respect to the
Restricted Shares, including, without limitation, voting rights and the right to
receive dividends (provided, however, that dividends paid in shares of the
Company’s stock shall be subject to the Forfeiture Restrictions). The Employee
may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of
the stock until the Forfeiture Restrictions with respect to such shares have
expired, and a breach of the terms of this Agreement shall

 

--------------------------------------------------------------------------------

 

cause a forfeiture of all then remaining Restricted Shares. The certificate
shall contain an appropriate endorsement reflecting the Forfeiture Restrictions.
The certificate shall be delivered upon issuance to the Secretary of the Company
or to such other depository as may be designated by the Committee as a
depository for safekeeping until the forfeiture of such Restricted Shares occurs
or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this
award. On the date of this Agreement, the Employee shall, if required by the
Committee, deliver to the Company a stock power, endorsed in blank, relating to
the Restricted Shares. Upon the lapse of the Forfeiture Restrictions without
forfeiture of the Restricted Shares, the Company shall cause a new certificate
or certificates to be issued without legend (except for any legend required
pursuant to applicable securities laws or any other agreement to which the
Employee is a party) in the name of the Employee in exchange for the certificate
evidencing the Restricted Shares.
     (d) Corporate Acts. The existence of the Restricted Shares shall not affect
in any way the right or power of the Board of Directors of the Company or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities, the dissolution or liquidation of the Company or
any sale, lease, exchange or other disposition of all or any part of its assets
or business or any other corporate act or proceeding. The prohibitions of
Section 2(a) hereof shall not apply to the transfer of Restricted Shares
pursuant to a plan of reorganization of the Company, but the stock, securities
or other property received in exchange therefor shall also become subject to the
Forfeiture Restrictions and provisions governing the lapsing of such Forfeiture
Restrictions applicable to the original Restricted Shares for all purposes of
this Agreement and the certificates representing such stock, securities or other
property shall be legended to show such restrictions.
     3. Withholding of Tax. To the extent that the receipt of the Restricted
Shares or the lapse of any Forfeiture Restrictions results in compensation
income to the Employee for federal or state income tax purposes, the Employee is
responsible for taxes due from Employee on such compensation income. In the
event that the Employee fails to reimburse the Company for amounts the Company
is required to pay as withholding taxes on behalf of the Employee, the Company
has the right to withhold from amounts otherwise due to the Employee, and the
Employee hereby authorizes such withholding, an amount equal to the withholding
taxes paid by the Company by reason of compensation income to the Employee
resulting under this Agreement.
     4. Status of Stock. The Employee agrees that the Restricted Shares issued
under this Agreement will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable federal or state securities
laws. The Employee also agrees that (i) the certificates representing the
Restricted Shares may bear such legend or legends as the Committee deems
appropriate in order to reflect the Forfeiture Restrictions and to assure
compliance with applicable securities laws, (ii) the Company may refuse to
register the transfer of the Restricted Shares on the stock transfer records of
the Company if such proposed transfer would constitute a violation of the
Forfeiture Restrictions or, in the opinion of counsel satisfactory to the
Company,

-2-

--------------------------------------------------------------------------------

 

of any applicable securities law, and (iii) the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer
of the Restricted Shares.
     5. Service Relationship. For purposes of this Agreement, the Employee shall
be considered to be in service to the Company as long as the Employee remains an
Employee, a Consultant or a Employee (as those terms are defined in the Plan).
Nothing in the adoption of the Plan, nor the award of the Restricted Shares
thereunder pursuant to this Agreement, shall confer upon the Employee the right
to continued service by or with the Company.
     6. Notices. Any notices or other communications provided for in this
Agreement shall be sufficient if in writing. In the case of the Employee, such
notices or communications shall be effectively delivered if hand delivered to
the Employee at his principal place of employment or if sent by registered or
certified mail to the Employee at the last address the Employee has filed with
the Company. In the case of the Company, such notices or communications shall be
effectively delivered if sent by registered or certified mail to the Company at
its principal executive offices.
     7. Amendment. This Agreement may not be modified in any respect by any
verbal statement, representation or agreement made by the Employee or by any
employee, officer, or representative of the Company or by any written agreement
unless signed by the Employee and by an officer of the Company who is expressly
authorized by the Company to execute such document.
     8. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
the Employee.
[This space is intentionally left blank.]

-3-

--------------------------------------------------------------------------------

 

     9. Controlling Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas.
     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by an officer thereunto duly authorized, and the Employee has executed
this Agreement, all effective as of the Grant Date.

      CYBERONICS, INC.
 
   
By:
   
 
   
Name:
  Pamela B. Westbrook
Title:
  Vice President, Finance and Administration, Chief Financial Officer
 
   
 
   
EMPLOYEE
   
 
     

-4-