Exhibit 10.52**EMPLOYMENT AGREEMENT**     This Employment Agreement (the “Agreement”), entered into effective as of June15, 2006 (the “Effective Date”), by and between Cyberonics, Inc. (the “Company”)and Richard L. Rudolph, M.D. (“Employee”).**WITNESSETH:**     WHEREAS, the Company desires to secure the experience, abilities and serviceof Employee by employing Employee upon the terms and conditions specified herein;and     WHEREAS, Employee is willing to enter into this Agreement upon the terms andconditions specified herein;     NOW, THEREFORE, in consideration of the premises, terms and provisions setforth herein, the mutual benefits to be gained by the performance thereof and othergood and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:     SECTION1. 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 thisAgreement, unless sooner terminated pursuant to Section 5 of this Agreement,Employee shall be employed by the Company commencing on the Effective Date andterminating on June 1, 2009 (the “Term”). Termination of this Agreement shall notalter or impair any rights of Employee (or his beneficiaries or heirs) with respectto payments, benefits or other rights provided by the terms of this Agreement,arising before or after the end of the Term.     SECTION 3. Duties. Responsibilities and Location.     A.Capacity. Employee shall serve as the Vice President,Clinical and Medical Affairs and Chief Medical Officer of the Companyand shall report to the Chief Executive Officer of the Company.     B. Full-Time Duties. Employee shall devote his fullbusiness time,attention and energies to the business of the Company.Notwithstanding anythingherein to the contrary, Employee shall be allowed to (i) manageEmployee’spersonal investments and affairs and, (ii) with the written consentof the ChiefExecutive Officer of the Company, serve on boards or committees ofcivic orcharitable organizations or trade associations, provided that suchactivities do notmaterially interfere with his performance of the duties andresponsibilities of hisposition specified in Section 3.A.     C. Offices. Employee’s primary place of work shall be at theprincipleexecutive offices of the Company located in the greater Houston,Texas
 

 
metropolitan area, but Employee shall be required to travel on a basisconsistent with his position.     SECTION 4. Compensation.     A. Base Salary. During the Term, Employee shall receive anannualsalary of $300,000 (the “Base Salary”) payable in accordance with theCompany’sgeneral payroll practices. Employee’s Base Salary shall be reviewed priorto thebeginning of each fiscal year of the Company for increase in thediscretion of theCompensation Committee of the Board of Directors(“CompensationCommittee”); provided, however, that the Base Salary, as it may beincreased atany time, may not thereafter be decreased.     B.Annual Incentive Bonus. During the Term, Employee shall beeligible to participate in the Annual CEO Direct Reports Bonus Plan, witha targetbonus of 50% of Employee’s annual Base Salary. A bonus, if earned,shall bepayable as soon as reasonably practical following the completion of theapplicablefiscal year. Bonuses for Employee shall be based on the achievement ofsuchCompany, departmental and/or individual performance goals that maybeestablished for the applicable bonus year by the Compensation Committee.     C. Annual Overachievement Bonus. During the Term, Employee shallbe eligible to participate in the Annual CEO Direct ReportsOverachievementBonus Plan as determined by the Compensation Committee. OverachievementBonuses shall be based on the Company’s overachievement of such Company,departmental and/or individual performance goals that may be establishedfor theapplicable bonus year by the Compensation Committee.     D. Equity Compensation. Employee will be eligible for grantsofCompany stock options (the “Options”) and other equity awards in thediscretionof the Compensation Committee.     E.General Benefits. Upon satisfying applicableeligibilityrequirements, if any, Employee will be eligible to participate in theCompany’squalified 401(k) plan, group health, group life insurance, accidentaldeath anddismemberment, travel accident, long-term disability and short-termdisabilityplans and other welfare and similar plans and vacation policies undertermsgenerally applicable to other similarly situated employees of the Companyandshall be eligible to receive all perquisites and other benefits providedor madeavailable by the Company to other similarly situated executives of theCompany.     F.Reimbursements. Employee shall be entitled to receive promptreimbursement by the Company in accordance with its businessreimbursementpolicy in effect from time to time for all reasonable, out-of-pocketbusinessexpenses incurred by him in performing his duties under this Agreementupon thesubmission by Employee of such accounts and records as may be reasonablyrequired under the Company’s business reimbursement policy.
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     SECTION 5. Termination of Employment. Notwithstanding theprovisions of Section 2, Employee’s employment hereunder may terminate under any ofthe following conditions:     A. Death. Employee’s employment under thisAgreement shallterminate automatically upon his death.     B. Disability. Employee’s employment under this Agreementmay beterminated due to his Disability. “Disability” shall meanEmployee’s inability tosubstantially perform his duties hereunder for any period of atleast 180consecutive days due to a physical or mental incapacity. The dateof terminationdue to Disability shall be the date Employee elects to terminate hisemploymentservice due to such Disability or, if earlier, the date the Boarddetermines thatEmployee has met the definition of Disability and given writtennotice of suchtermination to Employee.     C. Termination by Company Without Cause. The Company mayterminate Employee’s employment hereunder without Cause (ashereinafterdefined) on 30 days’ prior written notice to Employee.     D. Termination by Company for Cause. Employee’s employmenthereunder may be terminated for Cause by the Company. For purposes ofthis Agreement, “Cause” shall mean (i) the willful and continuedfailure by Employee to substantially perform Employee’s duties with theCompany (other than any such failure resulting from Employee’sincapacity due to physical or mental illness), (a) an act or acts ofdishonesty taken by Employee and intended to result in personalenrichment of Employee at the expense of the Company, (iii) willfulviolation by Employee of Employee’s material obligations under thisAgreement, (iv) willful violation by Employee of a material policy ofthe Company, including its policies regarding professional and ethicalconduct, (v) Employee’s commission of one or more acts that constitutea felony, (vi) Employee is publicly censured by the Securities ExchangeCommission, or (vii) Employee commits one or more acts of fraud asregards the Company. For purposes of clause (i) of this definition, noact, or failure to act, on Employee’s part shall be deemed “willful”unless done, or omitted to be done, by Employee not in good faith andwithout reasonable belief that Employee’s act, or failure to act, wasin the best interest of the Company. The determination of whether Causeexists must be made by a resolution duly adopted by the affirmativevote of not less than a majority of the entire membership of the Boardof Directors of the Company.     E. Termination by Employee. Employee may terminate hisemployment hereunder at any time on 30 days’ prior written notice tothe 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, andEmployeeshall 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 of anyapplicable employee benefit plan or program, or applicable law.     B. Upon termination of Employee’s employment pursuant to Section5.C., the Company shall be obligated to pay or provide, and Employee’sestate orbeneficiary 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 annual bonusearned byEmployee or (b) a lump sum payment equal to 1.5 times Employee’sBaseSalary and, solely for purposes of determining Employee’s vestingunderany Options, the number of shares that would become vested undersuchOptions during the 12-month period following Employee’sterminationdate if Employee’s employment had continued during such periodshallbecome vested on his termination of employment date, whichever of(a) or(b) is elected by Employee in writing to the Company within fivedays ofhis 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 thereshallbe no offset against amounts due Employee under this Agreement on accountofany remuneration attributable to any subsequent employment orself-employmentthat he may obtain.     D. The Company and Employee have previously or contemporaneouslywith this Agreement entered into a Severance Agreement which providescertainpayments and benefits to Employee upon a qualified termination ofemploymentin connection with a change of control of the Company. Notwithstandinganything in this Agreement to the contrary, to the extent Employee isentitled toreceive any severance payment or benefits under the Severance Agreementany
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severancepayment or benefits to which Employee is otherwise entitled to receive under this Agreement shall be reduced or offset by theseverance payment or benefit payable under the SeveranceAgreement in such manner as is appropriate, as determined in goodfaith by the Board, to prevent a duplication of such payment andbenefits.     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,director and/or employee of the Company or any subsidiary or affiliate thereof,or of any other entity of which he served as an officer, director or employee atthe request of the Company.     SECTION8. Covenants of Employee. Employee covenants as follows:     A.Confidentiality. During and after his employmentwith the Company and its affiliates, Employee will hold inconfidence all confidential information and will not disclose it toany person other than in connection with the performance of hisduties and obligations hereunder, except with the specific priorwritten consent of the Board of Directors or the Chief ExecutiveOfficer; provided, however, that the parties agree that thisAgreement does not prohibit the disclosure of confidentialinformation where applicable law requires, including, but notlimited to, in response of subpoenas and/or orders of agovernmental agency or court of competent jurisdiction. In theevent that Employee is requested or becomes legally compelled underthe terms 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)immediately provide the Company with written notice of theexistence, terms and circumstances, surrounding such request(s) sothat the Company may seek an appropriate protective order or otherappropriate remedy, (ii) cooperate with the Company in its effortsto decline, resist or narrow such requests and (iii) if disclosureof such confidential information is required in the opinion ofcounsel, exercise reasonable efforts to obtain an order or otherreliable assurance that confidential treatment will be accorded tosuch disclosed information. “Confidential information” means anyand all intellectual property of the Company (or any of itsaffiliates), including but not limited to: (a) trade secretsconcerning the business and affairs of the Company (or any of itsaffiliates), product specifications, data, know-how, formulae,compositions, processes, designs, sketches, photographs, graphs,drawings, samples, inventions and ideas, past, current, and plannedresearch 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 objectcode and 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 andinformation), and any other information, however documented, thatis a trade secret under federal, state or other applicable law; and(b) information concerning
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the business and affairs of the Company (or any of its affiliates) (whichincludes historical financial statements, financial projections and budgets,historical and projected sales, capital spending budgets and plans, the names andbackgrounds of key personnel, personnel training and techniques and materials),however documented; and notes, analysis, compilations, studies, summaries, andother material prepared by or for the Company (or any of its affiliates)containing or based, in whole or in part, on any information included in theforegoing.     B.Trade Secrets. Any trade secrets of the Company will be entitled to allof the protections and benefits under the federal and state trade secret andintellectual property laws and any other applicable law. If any information thatthe Company deems to be a trade secret is found by a court of competentjurisdiction not to be a trade secret for purposes of this Agreement, suchinformation will, nevertheless, be considered confidential information forpurposes of this Agreement, so long as it otherwise meets the definition ofconfidential information. Employee hereby waives any requirement that the Companysubmit proof of the economic value of any trade secret or post a bond or othersecurity.     C. Proprietary Items. Employee will not remove from the Company’spremises (except to the extent such removal is for purposes of the performance ofEmployee’s duties at home or while traveling, or except as otherwise specificallyauthorized by the Company) any document, record, notebook, plan, model,component, device, or computer software or code, whether embodied in a disk or inany other form belonging to the Company or used in the Company’s business(collectively, the “Proprietary Items”). All of the Proprietary Items, whether ornot developed by Employee, are the exclusive property of the Company. Upontermination of his employment, or upon the request of the Company during theTerm, Employee will return to the Company all of the Proprietary Items andconfidential information in Employee’s possession or subject to Employee’scontrol, and Employee shall not retain any copies, abstracts, sketches, or otherphysical embodiment, including electronic or otherwise, of any of the ProprietaryItems or confidential information,     D.Non-Competition and Non-Interference. During the period of hisemployment with the Company or its affiliates and for the one-year period afterthe termination of his employment with the Company and its affiliates, Employeewill not, directly or indirectly:     1. without the express prior written consent of the Board ofDirectors, own an interest in, manage, operate, join, control, lend moneyor render financial or other assistance to or participate in or beconnected with, as an officer, employee, partner, stockholder, consultantor otherwise, any person that competes with the Company in the field ofneurostimulation in a matter covered by a patent assigned to or held bythe Company; provided, however, that following Employee’s termination ofemployment with the Company the foregoing restriction shall apply only
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to those areas where the Company is actually doing business onthe date of such termination of employment; provided, further, thatEmployee may purchase or otherwise acquire for passive investment upto 3% of any class of securities of any such enterprise if suchsecurities are listed on any national or regional securities exchangeor have been registered under Section 12(g) of the Securities ExchangeAct of 1934;     2. whether for Employee’s own account or for the account of anyother person, (except for the account of the Company and itsaffiliates),solicit Business from any person known by Employee to be a customerofthe Company or its affiliates, whether or not Employee had personalcontact with such person during Employee’s employment with theCompany and its affiliates;     3. whether for Employee’s own account or the account of any otherperson, (i) solicit, employ, or otherwise engage as anemployee,independent contractor, or otherwise, any person who is an employeeofthe Company or an affiliate, or in any manner induce, or attempt toinduce,any employee of the Company or its affiliate to terminate hisemploymentwith the Company or its affiliate; or (ii) interfere with theCompany’s orits affiliate’s relationship with any person who at any time duringtheTerm, was an employee, contractor, supplier, or customer of theCompanyor its affiliate; or     4. at any time after the termination of his employment, disparagethe Company or its affiliates or any shareholders, directors,officers,employees, or agents of the Company or any of its affiliates, so longas theCompany does not disparage Employee.     E.Acknowledgements. The Company acknowledges that it is providingEmployee with confidential information in order for Employee to perform hisduties under this Agreement. Employee acknowledges that (a) the services to beperformed by him under this Agreement are of a special, unique, unusual,extraordinary, and intellectual character, and (b) the provisions of thisSection 8 are reasonable and necessary to protect the confidentialinformation, goodwill and other business interests of the Company. If anycovenant in this Section 8 is held to be unreasonable, arbitrary, or againstpublic policy, such covenant will be considered to be divisible with respectto scope, time, and geographic area, and such lesser scope, time, orgeographic area, or all of them, as a court of competent jurisdiction maydetermine to be reasonable, not arbitrary, and not against public policy, willbe effective, binding, and enforceable against Employee. Employee herebyagrees that this covenant is a material and substantial part of this Agreementand that: (i) the geographic limitations are reasonable; (ii) the term of thecovenant is reasonable; and (ii) the covenant is not made for the purpose oflimiting competition per se and is reasonably related to a protectablebusiness interest of the Company. The period of time applicable to any covenantin this Section 8 will be extended by the duration of any violation
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by Employee of such covenant. The provisions of this Section 8shall survive 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 eachof the parties hereto, and compliance with the terms and provisions hereof may bewaived only by a written instrument executed by each party entitled to the benefitsthereof. No failure or delay on the part of any party in exercising any right, poweror privilege granted hereunder shall constitute a waiver thereof, nor shall anysingle or partial exercise of any such right, power or privilege preclude any otheror further 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 bein writing, addressed as follows or to any address subsequently provided to theother party:To the Company:Cyberonics, Inc.