Exhibit 10.30**EMPLOYMENT AGREEMENT**     This Employment Agreement (the “Agreement”), entered into effective as of June 15, 2006 (the“Effective Date”), by and between Cyberonics, Inc. (the “Company”) and Michael A. Cheney(“Employee”)**WITNESSETH:**     WHEREAS, the Company desires to secure the experience, abilities and service of Employee byemploying Employee upon the terms and conditions specified herein; and     WHEREAS, Employee is willing to enter into this Agreement upon the terms and conditionsspecified herein;     NOW, THEREFORE, in consideration of the premises, terms and provisions set forth herein, themutual benefits to be gained by the performance thereof and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:     SECTION 1. Employment. The Company hereby employs Employee, and Employee herebyaccepts such employment, all upon the terms and conditions set forth herein.     SECTION 2. Term. Subject to the terms and conditions of this Agreement, unless soonerterminated pursuant to Section 5 of this Agreement, Employee shall be employed by the Companycommencing on the Effective Date and terminating on June 1, 2009 (the “Term”). Termination of thisAgreement shall not alter or impair any rights of Employee (or his beneficiaries or heirs) withrespect to payments, benefits or other rights provided by the terms of this Agreement, arisingbefore or after the end of the Term.     SECTION 3. Duties. Responsibilities and Location.     A. Capacity. Employee shall serve as the Vice President, Marketing of theCompany and shall report to the Chief Executive Officer of the Company.     B. Full-Time Duties. Employee shall devote his full business time,attention and energies to the business of the Company. Notwithstanding anythingherein to the contrary, Employee shall be allowed to (i) manage Employee’spersonal investments and affairs and, (ii) with the written consent of the ChiefExecutive Officer of the Company, serve on boards or committees of civic orcharitable organizations or trade associations, provided that such activities donot materially interfere with his performance of the duties and responsibilities ofhis position specified in Section 3 A.     C. Offices. Employee’s primary place of work shall be at the principleexecutive offices of the Company located in the greater Houston, Texasmetropolitan area, but Employee shall be required to travel on a basis consistentwith his position
 

 
     SECTION 4. Compensation.     A. Base Salary. During the Term, Employee shall receive anannual salary of $320,000 (the “Base Salary”) payable in accordance withthe Company’s general payroll practices. Employee’s Base Salary shall bereviewed prior to the beginning of each fiscal year of the Company forincrease in the discretion of the Compensation Committee of the Board ofDirectors (“Compensation Committee”); provided, however, that the BaseSalary, as it may be increased at any time, may not thereafter bedecreased,     B. Annual Incentive Bonus. During the Term, Employee shallbe eligible to participate in the Annual CEO Direct Reports Bonus Plan,with a target bonus of 50% of Employee’s annual Base Salary. A bonus, ifearned, shall be payable as soon as reasonably practical following thecompletion of the applicable fiscal year. Bonuses for Employee shall bebased on the achievement of such Company, departmental and/or individualperformance goals that may be established for the applicable bonus yearby the Compensation Committee.     C Annual Overachievement Bonus. During the Term, Employeeshall be eligible to participate in the Annual CEO Direct ReportsOverachievement Bonus Plan as determined by the CompensationCommittee. Overachievement Bonuses shall be based on the Company’s overachievementof such Company, departmental and/or individual performance goals thatmay be established for the applicable bonus year by the CompensationCommittee.     D. Equity Compensation. Employee will be eligible forgrants of Company stock options (the “Options”) and other equity awards inthe discretion of the Compensation Committee.     E. General Benefits. Upon satisfying applicable eligibility requirements, if any, Employee will be eligible to participate inthe Company’s qualified 401(k) plan, group health, group life insurance,accidental death and dismemberment, travel accident, long-term disability and short-termdisability plans and other welfare and similar plans and vacation policiesunder terms generally applicable to other similarly situated employees of theCompany and shall be eligible to receive all perquisites and other benefitsprovided or made available by the Company to other similarly situated executives ofthe Company.     F. Reimbursements. Employee shall be entitled to receiveprompt reimbursement by the Company in accordance with its businessreimbursement policy in effect from time to time for all reasonable,out-of-pocket business expenses incurred by him in performing his dutiesunder this Agreement upon the submission by Employee of such accountsand records as may be reasonably required under the Company’s businessreimbursement policy.     SECTION 5. Termination of Employment. Notwithstanding the provisionsof Section 2, Employee’s employment hereunder may terminate under any of thefollowing conditions:
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     A. Death. Employee’s employment under this Agreementshall terminate automatically upon his death.     B Disability. Employee’s employment under this Agreementmay be terminated due to his Disability. “Disability” shall meanEmployee’s inability to substantially perform his duties hereunder forany period of at least 180 consecutive days due to a physical ormental incapacity. The date of termination due to Disability shall bethe date Employee elects to terminate his employment service due tosuch Disability or, if earlier, the date the Board determines thatEmployee has met the definition of Disability and given written noticeof such termination to Employee,     C.Termination by Company without Cause. “The Company mayterminate Employee’s employment hereunder without Cause (ashereinafter defined) on 30 days’ prior written notice to Employee.     D.Termination by Company for Cause. Employee’semployment hereunder may be terminated for Cause by the Company. Forpurposes of this Agreement, “Cause” shall mean (i) the willful andcontinued failure by Employee to substantially perform Employee’sduties with the Company (other than any such failure resulting fromEmployee’s incapacity due to physical or mental illness), (ii) an actor acts of dishonesty taken by Employee and intended to result inpersonal enrichment of Employee at the expense of the Company, (iii)willful violation by Employee of Employee’s material obligations underthis Agreement, (iv) willful violation by Employee of a materialpolicy of the Company, including its policies regarding professionaland ethical conduct, (v) Employee’s commission of one or more actsthat constitute a felony, (vi) Employee is publicly censured by theSecurities Exchange Commission, or (vii) Employee commits one or moreacts of fraud as regards the Company. For purposes of clause (i) ofthis definition, no act, or failure to act, on Employee’s part shallbe deemed “willful” unless done, or omitted to be done, by Employeenot in good faith and without reasonable belief that Employee’s act,or failure to act, was in the best interest of the Company. Thedetermination of whether Cause exists must be made by a resolutionduly adopted by the affirmative vote of not less than a majority ofthe entire membership of the Board of Directors of the Company.     E. Termination by Employee. Employee mayterminate his employment hereunder at any time on 30 days’ priorwritten notice to the Board.
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     SECTION 6. Payments Upon Termination.     A. Upon termination of Employee’s employment for any reason prior tothe expiration of the Term, the Company shall be obligated to pay,and Employee shall be entitled to receive:     1. all accrued and unpaid Base Salary to the date of termination;     2. any earned, but unpaid, bonuses for the bonus year endingprior to the date of termination;     3. all incurred but unreimbursed business expenses for whichEmployee is entitled to reimbursement; and     4. any benefits to which he is entitled under the terms ofany applicable employee benefit plan or program, or applicablelaw.     B. Upon termination of Employee’s employment pursuant to Section 5.C., the Company shall be obligated to pay or provide, andEmployee’s estate or beneficiary shall be entitled to receive:     1. all of the amounts and benefits described in Section 6. A.; and     2.either (a) a lump sum payment equal to 1.5 times the sum of(i) Employee’s Base Salary, plus (ii) the most recent annualbonus earned by Employee or (b) a lump sum payment equal to 1.5 timesEmployee’s Base Salary and, solely for purposes of determining Employee’svesting under any Options, the number of shares that would become vestedunder such Options during the 12-month period following Employee’stermination date if Employee’s employment had continued during suchperiod shall become vested on his termination of employment date,whichever of (a) or (b) is elected by Employee in writing to the Company withinfive days of his termination date.     C. In the event of any termination of employment under Section 5,Employee shall be under no obligation to seek other employment and thereshall be no offset against amounts due Employee under this Agreement onaccount of any remuneration attributable to any subsequent employment orself-employment that he may obtain.     D. The Company and Employee have previously or contemporaneouslywith this Agreement entered into a Severance Agreement which providescertain payments and benefits to Employee upon a qualified termination ofemployment in connection with a change of control of the Company.Notwithstanding anything in this Agreement to the contrary, to the extentEmployee is entitled to receive any severance payment or benefits underthe Severance Agreement any
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severance payment or benefits to which Employee is otherwise entitledto receive under this Agreement shall be reduced or offset by theseverance payment or benefit payable under the Severance Agreement insuch manner as is appropriate, as determined in good faith by theBoard, to prevent a duplication of such payment and benefits.     SECTION 7. Indemnification. The Company agrees to indemnify Employeeto the fullest extent permitted by applicable law with respect to any acts ornon-acts he may have committed during the period which he was an officer, directorand/or employee of the Company or any subsidiary or affiliate thereof, or of anyother entity of which he served as an officer, director or employee at the requestof the Company.     SECTION 8. Covenants of Employee. Employee covenants as follows:     A. Confidentiality. During and after his employment withthe Company and its affiliates, Employee will hold in confidence allconfidential information and will not disclose it to any person otherthan in connection with the performance of his duties and obligationshereunder, except with the specific prior written consent of the Boardof Directors or the Chief Executive Officer; provided, however, thatthe parties agree that this Agreement does not prohibit the disclosureof confidential information where applicable law requires, including,but not limited to, in response of subpoenas and/or orders of agovernmental agency or court of competent jurisdiction. In the eventthat Employee is requested or becomes legally compelled under theterms of a subpoena or order issued by a court of competentjurisdiction or by a governmental body to make any disclosure ofconfidential information, Employee agrees that he will (i) immediatelyprovide the Company with written notice of the existence, terms andcircumstances, surrounding such request(s) so that the Company mayseek an appropriate protective order or other appropriate remedy, (ii) cooperate with the Company in its efforts to decline, resist or narrowsuch requests and (iii) if disclosure of such confidential informationis required in the opinion of counsel, exercise reasonable efforts toobtain an order or other reliable assurance that confidentialtreatment will be accorded to such disclosed information.“Confidential information” means any and all intellectual property ofthe Company (or any of its affiliates), including but not limited to:(a) trade secrets concerning the business and affairs of the Company(or any of its affiliates), product specifications, data, know-how,formulae, compositions, processes, designs, sketches, photographs,graphs, drawings, samples, inventions and ideas, past, current, andplanned research and development, current and planned manufacturing ordistribution methods and processes, customer lists, current andanticipated customer requirements, price lists, market studies,business plans, computer software and programs (including object codeand source code), computer software and database technologies,systems, structures, and architectures (and related formulae,compositions, processes, improvements, devices, know-how, inventions,discoveries, concepts, ideas, designs, methods and information), andany other information, however documented, that is a trade secretunder federal, state or other applicable law; and (b) informationconcerning
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the business and affairs of the Company (or any of its affiliates) (whichincludes historical financial statements, financial projections andbudgets, historical and projected sales, capital spending budgets andplans, the names and backgrounds of key personnel, personnel training andtechniques and materials), however documented; and notes, analysis,compilations, studies, summaries, and other material prepared by or forthe Company (or any of its affiliates) containing or based, in whole orin part, on any information included in the foregoing.     B. Trade Secrets. Any trade secrets of the Company will beentitled to all of the protections and benefits under the federal and statetrade secret and intellectual property laws and any other applicable law. If anyinformation that the Company deems to be a trade secret is found by a court ofcompetent jurisdiction not to be a trade secret for purposes of thisAgreement, such information will, nevertheless, be considered confidentialinformation for purposes of this Agreement, so long as it otherwise meets thedefinition of confidential information. Employee hereby waives any requirementthat the Company submit proof of the economic value of any trade secret orpost a bond or other security.     C. Proprietary Items. Employee will not remove from theCompany’s premises (except to the extent such removal is for purposes of theperformance of Employee’s duties at home or while traveling, or except as otherwisespecifically authorized by the Company) any document, record, notebook, plan,model, component, device, or computer software or code, whether embodied ina disk or in any other form belonging to the Company or used in the Company’sbusiness (collectively, the “Proprietary Items”). All of the ProprietaryItems, whether or not developed by Employee, are the exclusive property of theCompany. Upon termination of his employment, or upon the request of the Companyduring the Term, Employee will return to the Company all of the ProprietaryItems and confidential information in Employee’s possession or subject toEmployee’s control, and Employee shall not retain any copies, abstracts,sketches, or other physical embodiment, including electronic or otherwise, of any ofthe Proprietary Items or confidential information.     D. Non-Competition and Non-Interference. During the periodof his employment with the Company or its affiliates and for the one-yearperiod after the termination of his employment with the Company and itsaffiliates, Employee will not, directly or indirectly:     1. without the express prior written consent of the Board ofDirectors, own an interest in, manage, operate, join, control,lend money or render financial or other assistance to orparticipate in or be connected with, as an officer, employee,partner, stockholder, consultant or otherwise, any person thatcompetes with the Company in the field of neurostimulation in amatter covered by a patent assigned to or held by the Company;provided, however, that following Employee’s termination ofemployment with the Company the foregoing restriction shall applyonly
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to those areas where the Company is actually doing business onthe date of such termination of employment; provided, further,that Employee may purchase or otherwise acquire for passiveinvestment up to 3% of any class of securities of any suchenterprise if such securities are listed on any national orregional securities exchange or have been registered underSection 12(g) of the Securities Exchange Act of 1934;     2. whether for Employee’s own account or for the accountof any other person, (except for the account of the Company andits affiliates), solicit Business from any person known byEmployee to be a customer of the Company or its affiliates,whether or not Employee had personal contact with such personduring Employee’s employment with the Company and itsaffiliates;     3. whether for Employee’s own account or the account ofany other person, (i) solicit, employ, or otherwise engage asan employee, independent contractor, or otherwise, any personwho is an employee of the Company or an affiliate, or in anymanner induce, or attempt to induce, any employee of theCompany or its affiliate to terminate his employment with theCompany or its affiliate; or (ii) interfere with the Company’sor its affiliate’s relationship with any person who at any timeduring the Term, was an employee, contractor, supplier, orcustomer of the Company or its affiliate; or     4. at any time after the termination of his employment,disparage the Company or its affiliates or any shareholders,directors, officers, employees, or agents of the Company orany of its affiliates, so long as the Company does notdisparage Employee,     E.Acknowledgements. The Company acknowledges that it isproviding Employee with confidential information in order forEmployee to perform his duties under this Agreement. Employeeacknowledges that (a) the services to be performed by him under thisAgreement are of a special, unique, unusual, extraordinary, andintellectual character, and (b) the provisions of this Section 8 arereasonable and necessary to protect the confidential information,goodwill and other business interests of the Company. If any covenantin this Section 8 is held to be unreasonable, arbitrary, or againstpublic policy, such covenant will be considered to be divisible withrespect to scope, time, and geographic area, and such lesser scope,time, or geographic area, or all of them, as a court of competentjurisdiction may determine to be reasonable, not arbitrary, and notagainst public policy, will be effective, binding, and enforceableagainst Employee. Employee hereby agrees that this covenant is amaterial and substantial part of this Agreement and that: (i) thegeographic limitations are reasonable; (ii) the term of the covenantis reasonable; and (iii) the covenant is not made for the purpose oflimiting competition per se and is reasonably related to aprotectable business interest of the Company. The period of timeapplicable to any covenant in this Section 8 will be extended by theduration of any violation
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               by Employee of such covenant. The provisions of this Section 8 shallsurvive the termination of the Term of this Agreement.     SECTION 9. Injunctive Relief and Additional Remedy. Employeeacknowledges that the injury that would be suffered by the Company as a result of abreach of the provisions of Section 8 of this Agreement would be irreparable and thatan award of monetary damages to the Company for such a breach would be an inadequateremedy. Consequently, the Company will have the right, in addition to any otherrights it may have, to obtain a temporary restraining order and/or injunctive reliefto restrain any breach or threatened breach or otherwise to specifically enforce anyprovision of this Agreement. Employee waives any requirement for the Company’ssecuring or posting of any bond in conjunction with any such remedies. Employeefurther agrees to and hereby does submit to in personam jurisdiction before each andevery court for that purpose. Without limiting the Company’s rights under thisSection or any other remedies of the Company, if Employee breaches any of theprovisions of Section 8 and such breach is proven in a court of competentjurisdiction, the Company will have the right to cease making any payments orproviding other benefits otherwise due Employee under this Agreement.     SECTION 10. Amendment: Waiver. The terms and provisions of thisAgreement may be modified or amended only by a written instrument executed by each ofthe parties hereto, and compliance with the terms and provisions hereof may be waivedonly by a written instrument executed by each party entitled to the benefits thereof.No failure or delay on the part of any party in exercising any right, power orprivilege granted hereunder shall constitute a waiver thereof, nor shall any singleor partial exercise of any such right, power or privilege preclude any other orfurther exercise thereof or the exercise of any other right, power or privilegegranted hereunder,,     SECTION 11. Entire Agreement. Except as contemplated herein, thisAgreement constitutes the entire agreement between the parties with respect to thesubject matter hereof and supersedes any and all prior or contemporaneous written ororal agreements, arrangements or understandings between the Company and Employee.     SECTION 12. Notices. All notices or communications hereunder shall be inwriting, addressed as follows or to any address subsequently provided to the otherparty:To the Company:Cyberonics, Inc.