**Exhibit 10.66****INDEMNIFICATION AGREEMENT**     This Indemnification Agreement (this “Agreement”) is executed on and effective as of November13, 2001 (the “Effective Date”), by and between Cyberonics, Inc., a Delaware corporation (the“Company”), and                      (“Director”).     WHEREAS, the Company and Director recognize the difficulty in obtaining directors’ andofficers’ liability insurance, the increases in the cost of such insurance, and the generallimitations in the coverage of such insurance;     WHEREAS, the Company and Director further recognize the substantial increase in corporatelitigation in general, subjecting officers and directors to expensive litigation risks at the sametime as the availability and coverage of liability insurance has been severely limited;     WHEREAS, Director does not regard the current protection available as adequate under thepresent circumstances, and Director and other officers and directors of the Company may not bewilling to serve or continue to serve as officers and directors without additional protection; and     WHEREAS, the Company desires to attract and retain the services of highly qualifiedindividuals, such as Director, to serve as officers and directors of the Company and to indemnifyits officers and directors so as to provide them with the maximum protection permitted by law.     NOW, THEREFORE, the Company and Director hereby agree as follows:     1. Indemnification.     (a) Third Party Proceedings. The Company shall indemnify Director and any partnership,corporation, trust, or other entity of which Director is or was a partner, stockholder,trustee, director, officer, employee, or agent (Director and each such partnership,corporation, trust, or other entity being referred to as an “Indemnitee”) if Indemnitee isor was a party or is threatened to be made a party to any threatened, pending, or completedaction, suit or proceeding, whether civil, criminal, administrative, or investigative (otherthan an action by or in the right of the Company) by reason of the fact that Director is orwas a director, officer, employee, or agent of the Company, or any subsidiary of theCompany, by reason of any action or inaction on the part of Director while an officer ordirector or by reason of the fact that Director is or was serving at the request of theCompany as a director, officer, employee, or agent of another corporation, partnership,joint venture, trust, or other enterprise, against expenses (including attorneys’ fees),judgments, fines, and amounts paid in settlement (if such settlement is approved in advanceby the Company, which approval shall not be unreasonably withheld) actually and reasonablyincurred by Indemnitee in connection with such action, suit, or proceeding, if Directoracted in good faith and in a manner Director reasonably believed to be in or not opposed tothe best interests of the Company, and, with respect to any criminal action or proceeding,had no reasonable cause to believe Director’s conduct was unlawful. The termination of anyaction, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea ofnolo contendere or its equivalent, shall not, of itself, create a presumption that Directordid not act in good faith and in a manner that
 

 
Director reasonably believed to be in or not opposed to the best interests of theCompany, and, with respect to any criminal action or proceeding, had reasonable cause tobelieve that Director’s conduct was unlawful.     (b) Proceedings By or in the Right of the Company. The Company shall indemnifyIndemnitee if Indemnitee was or is a party or is threatened to be made a party to anythreatened, pending, or completed action or suit by or in the right of the Company or anysubsidiary of the Company to procure a judgment in its favor by reason of the fact thatDirector is or was a director, officer, employee, or agent of the Company, or any subsidiaryof the Company, by reason of any action or inaction on the part of Director while an officeror director or by reason of the fact that Director is or was serving at the request of theCompany as a director, officer, employee, or agent of another corporation, partnership,joint venture, trust, or other enterprise, against expenses (including attorneys’ fees) and,to the fullest extent permitted by law, amounts paid in settlement, in each case to theextent actually and reasonably incurred by Indemnitee in connection with the defense orsettlement of such action or suit, if Director acted in good faith and in a manner Directorreasonably believed to be in or not opposed to the best interests of the Company, exceptthat no indemnification shall be made in respect of any claim, issue, or matter as to whichDirector shall have been adjudged to be liable to the Company unless and only to the extentthat the Court of Chancery of the State of Delaware or the court in which such action orsuit was brought shall determine upon application that, despite the adjudication ofliability but in view of all the circumstances of the case, Indemnitee is fairly andreasonably entitled to indemnity for such expenses that the Court of Chancery of the Stateof Delaware or such other court shall deem proper.     (c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful onthe merits or otherwise in defense of any action, suit, or proceeding referred to inSections 1(a) and (b) or the defense of any claim, issue, or matter therein, Indemniteeshall be indemnified against expenses (including attorneys’ fees) actually and reasonablyincurred by Indemnitee in connection therewith.     2. Expenses: Indemnification Procedure.     (a) Advancement of Expenses. The Company shall advance all expenses incurred byIndemnitee, and, to the fullest extent permitted by law, amounts paid in settlement byIndemnitee, in connection with the investigation, defense, settlement, or appeal of anycivil or criminal action, suit, or proceeding referenced in Section 1(a) or (b) hereof.Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that,it shall ultimately be determined that Indemnitee is not entitled to be indemnified by theCompany as authorized hereby. The advances to be made hereunder shall be paid by the Companyto Indemnitee within 20 days following delivery of a written request therefor by Indemniteeto the Company.     (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to hisor its right to be indemnified under this Agreement, give the Company notice in writing assoon as practicable of any claim made against Indemnitee for which indemnification will orcould be sought under this Agreement. Notice to the Company
 

 
shall be directed to the President of the Company at the address shown on the signaturepage of this Agreement, or such other address as the Company shall designate in writing toIndemnitee. Notice shall be deemed received three business days after the date postmarked ifsent by domestic certified or registered mail, properly addressed; otherwise notice shall bedeemed received when such notice shall actually be received by the Company. In addition,Indemnitee shall give the Company such information and cooperation as it may reasonablyrequire and as shall be within Indemnitee’s power.     (c) Procedure. Any indemnification and advances provided for in Section 1 and thisSection 2 shall be made no later than 45 days after receipt of the written request ofIndemnitee. If a claim under this Agreement, under any statute, or under any provision ofthe Company’s Certificate of Incorporation or Bylaws providing for indemnification, is notpaid in full by the Company within 45 days after a written request for payment thereof hasfirst been received by the Company, Indemnitee may, but need not, at any time thereafterbring an action against the Company to recover the unpaid amount of the claim and, subjectto Section 12 of this Agreement, Indemnitee shall also be entitled to be paid for theexpenses (including attorneys’ fees) of bringing such action. It shall be a defense to anysuch action (other than an action brought to enforce a claim for expenses incurred inconnection with any action, suit, or proceeding in advance of its final disposition) thatIndemnitee has not met the standards of conduct that make it permissible under applicablelaw for the Company to indemnify Indemnitee for the amount claimed, but the burden ofproving such defense shall be on the Company and Indemnitee shall be entitled to receiveinterim payments of expenses pursuant to Subsection 2(a) unless and until such defense maybe finally adjudicated by court order or judgment from which no further right of appealexists. It is the parties’ intention that if the Company contests Indemnitee’s right toindemnification, the question of Indemnitee’s right to indemnification shall be for thecourt to decide, and neither the failure of the Company (including its Board of Directors,any committee or subgroup of the Board of Directors, independent legal counsel, or itsstockholders) to have made a determination that indemnification of Indemnitee is proper inthe circumstances because Indemnitee has met the applicable standard of conduct required byapplicable law, nor an actual determination by the Company (including its Board ofDirectors, any committee or subgroup of the Board of Directors, independent legal counsel,or its stockholders) that Indemnitee has not met such applicable standard of conduct, shallcreate a presumption that Indemnitee has or has not met the applicable standard of conduct.     (d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuantto Section 2(b) hereof, the Company has directors’ and officers’ liability insurance ineffect, the Company shall give prompt notice of the commencement of such proceeding to theinsurers in accordance with the procedures set forth in the respective policies. The Companyshall thereafter take all necessary or desirable action to cause such insurers to pay, onbehalf of the Indemnitee, all amounts payable as a result of such proceeding in accordancewith the terms of such policies.     (e) Selection of Counsel. In the event the Company shall be obligated under Section2(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, ifappropriate, shall be entitled to assume the defense of such proceeding, with
 

 
counsel approved by Indemnitee (whose approval shall not be unreasonably withheld),upon the delivery to Indemnitee of written notice of its election so to do. After deliveryof such notice, approval of such counsel by Indemnitee and the retention of such counsel bythe Company, the Company will not be liable to Indemnitee under this Agreement for any feesof counsel subsequently incurred by Indemnitee with respect to the same proceeding, providedthat (i) Indemnitee shall have the right to employ his counsel in any such proceeding atIndemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has beenpreviously authorized by the Company, (B) Indemnitee shall have reasonably concluded thatthere may be a conflict of interest between the Company and Indemnitee in the conduct of anysuch defense, or (C) the Company shall not, in fact, have employed counsel to assume thedefense of such proceeding, then the fees and expenses of Indemnitee’s counsel shall be atthe expense of the Company.     3. Additional Indemnification Rights; Nonexclusivity.     (a) Scope. Notwithstanding any other provision of this Agreement, the Company herebyagrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstandingthat such indemnification is not specifically authorized by the other provisions of thisAgreement, the Company’s Certificate of Incorporation, the Company’s Bylaws, or by statute.In the event of any change, after the date of this Agreement, in any applicable law,statute, or rule that expands the right of a Delaware corporation to indemnify a member ofits board of directors or an officer, such changes shall be, ipso facto, within the purviewof Indemnitee’s rights and Company’s obligations under this Agreement. In the event of anychange in any applicable law, statute, or rule that narrows the right of a Delawarecorporation to indemnify a member of its board of directors or an officer, such changes, tothe extent not otherwise required by such law, statute, or rule to be applied to thisAgreement, shall have no effect on this Agreement or the parties’ rights and obligationshereunder.     (b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemedexclusive of any rights to which Director or any other Indemnitee may be entitled under theCompany’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholdersor disinterested directors, the General Corporation Law of the State of Delaware, orotherwise, both as to action in Director’s official capacity and as to action in anothercapacity while holding such office. The indemnification provided under this Agreement shallcontinue as to Director and each other Indemnitee for any action taken or not taken whileDirector is or was serving in an indemnified capacity even though he may have ceased toserve in such capacity at the time of any action, suit, or other covered proceeding.     4. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement toindemnification by the Company for some or a portion of the expenses, judgments, fines, orpenalties actually or reasonably incurred by Indemnitee in the investigation, defense, appeal, orsettlement of any civil or criminal action, suit, or proceeding, but not, however, for the totalamount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of suchexpenses, judgments, fines, or penalties to which Indemnitee is entitled.
 

 
     5. Mutual Acknowledgment. Both the Company and Director acknowledge that in certain instancesFederal law or applicable public policy may prohibit the Company from indemnifying its directorsand officers under this Agreement or otherwise, in which event, notwithstanding any otherprovisions of this Agreement to the contrary, the indemnification provided by this Agreement shallbe limited to such extent as is necessary to comply with applicable Federal law or public policy.For example, the Company and Director acknowledge that the Securities and Exchange Commission (the“SEC”) has taken the position that indemnification is not permissible for liabilities arising undercertain federal securities laws, and federal legislation prohibits indemnification for certainviolations of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Directorunderstands and acknowledges that in the event the Company undertakes a public offering of itssecurities pursuant to a registration with the SEC, the Company may be required to undertake withthe SEC to submit the question of indemnification to a court in certain circumstances for adetermination of the Company’s right under public policy to indemnify Director or any otherIndemnitee.     6. Directors and Officers Liability Insurance. The Company has applied for and will use itsbest efforts to obtain and maintain in force with a financially sound and reputable insurer adirectors, officers, and corporate liability insurance policy having a limit which the Company,together with the Board of Directors, approves as providing coverage appropriate and acceptable tothe Board of Directors. In all policies of directors and officers liability insurance, Director andeach other Indemnitee shall be named as an insured in such a manner as to provide Director the samerights and benefits as are accorded to the most favorably insured of the Company’s directors.     7. Severability. Nothing in this Agreement is intended to require or shall be construed asrequiring the Company to do or fail to do any act in violation of applicable law. The Company’sinability, pursuant to court order, to perform its obligations under this Agreement shall notconstitute a breach of this Agreement. The provisions of this Agreement shall be severable asprovided in this Section 7. If this Agreement or any portion hereof shall be invalidated on anyground by any court of competent jurisdiction, then the Company shall nevertheless indemnifyDirector and each other Indemnitee to the full extent permitted by any applicable portion of thisAgreement that shall not have been invalidated, and the balance of this Agreement not soinvalidated shall be enforceable in accordance with its terms.     8. Exceptions. Any other provision herein to the contrary notwithstanding, the Company shallnot be obligated pursuant to the terms of this Agreement:     (a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee withrespect to proceedings or claims initiated or brought voluntarily by Indemnitee and not byway of defense, except with respect to proceedings brought to establish or enforce a rightto indemnification under this Agreement or any other statute or law or otherwise as requiredunder Section 145 of the Delaware General Corporation Law, but such indemnification oradvancement of expenses may be provided by the Company in specific cases if the Board ofDirectors finds it to be appropriate;     (b) Lack of Good Faith. To indemnify Indemnitee for any expensesincurred by theIndemnitee with respect to any proceeding instituted by Indemnitee to enforce or
 

 
interpret this Agreement, if a court of competent jurisdiction determines that each ofthe material assertions made by the Indemnitee in such proceeding was not made in good faithor was frivolous;     (c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any typewhatsoever (including, but not limited to, judgments, fines, ERISA, excise taxes orpenalties, and amounts paid in settlement) that have been paid directly to Indemnitee by aninsurance carrier under a policy of officers’ and directors’ liability insurance maintainedby the Company; or     (d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment ofprofits arising from the purchase and sale by Indemnitee of securities in violation ofSection 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successorstatute.     9. Construction of Certain Phrases.     (a) For purposes of this Agreement, references to the “Company” shall include, inaddition to the resulting corporation, any constituent corporation (including anyconstituent of a constituent) absorbed in a consolidation or merger, so that if Indemniteeis or was a director, officer, employee, or agent of such constituent corporation, or is orwas serving at the request of such constituent corporation as a director, officer, employee,or agent of another corporation, partnership, joint venture, trust, or other enterprise,Indemnitee shall stand in the same position under the provisions of this Agreement withrespect to the resulting or surviving corporation as Indemnitee would have with respect tosuch constituent corporation if its separate existence had continued.     (b) For purposes of this Agreement, references to “other enterprises” shall includeemployee benefit plans; references to “fines” shall include any excise taxes assessed onIndemnitee with respect to an employee benefit plan; and references to “serving at therequest of the Company” shall include any service as a director, officer, employee, or agentof the Company that imposes duties on, or involves services by, such director, officer,employee, or agent with respect to an employee benefit plan, its participants, orbeneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonablybelieved to be in the interest of the participants and beneficiaries of an employee benefitplan, Indemnitee shall be deemed to have acted in a manner “not opposed to the bestinterests of the Company” as referred to in this Agreement.     10. Counterparts. This Agreement may be executed in one or more counterparts, each of whichshall constitute an original.     11. Successors and Assigns. This Agreement shall be binding upon the Company and itssuccessors and assigns, and shall inure to the benefit of Director and each other Indemnitee andtheir respective estates, heirs, successors, legal representatives, and assigns.     12. Attorneys’ Fees. In the event that any action is instituted by Indemnitee under thisAgreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid
 

 
all court costs and expenses, including reasonable attorneys’ fees, incurred by Indemniteewith respect to such action, unless as a part of such action, the court of competent jurisdictiondetermines that each of the material assertions made by Indemnitee as a basis for such action wasnot made in good faith or was frivolous. In the event of an action instituted by or in the name ofthe Company under this Agreement or to enforce or interpret any of the terms of this Agreement,Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys’ fees,incurred by Indemnitee in defense of such action (including with respect to Indemnitee’scounterclaims and cross-claims made in such action), unless as a part of such action the courtdetermines that each of Indemnitee’s material defenses to such action was made in bad faith or wasfrivolous.     13. Notice. All notices, requests, demands, and other communications under this Agreementshall be in writing and shall be deemed duly given on the third business day after the datepostmarked, if delivered by domestic certified or registered mail with postage prepaid, or, ifdelivered by other means, on the date actual notice is received. Addresses for notice to eitherparty are as shown on the signature page of this Agreement, or as subsequently modified by writtennotice.     14. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to thenon-exclusive jurisdiction of the courts of the State of Delaware for all purposes in connectionwith any action or proceeding that arises out of or relates to this Agreement and agree that anyaction instituted under this Agreement may be brought in any court of competent jurisdiction in theState of Delaware.     15. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND ITS PROVISIONS CONSTRUED INACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AS APPLIED TO CONTRACTS BETWEEN DELAWARERESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN DELAWARE.[Signature page follows.]
 

 
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.         COMPANY:           Cyberonics, Inc.         By:             Name:             Title:                    DIRECTOR: