**Exhibit 10.2****LICENSE AGREEMENT**     **THIS AGREEMENT**(“Agreement”) dated as of August 22, 2000 (the “Effective Date”) by andbetween Mitchell S. Roslin, M.D., a citizen of the United States of America residing in New York,NY (“Licensor”), and Cyberonics, Inc., a Delaware corporation with offices in Houston, Texas(“Licensee”).**Recitals:**     Licensee is engaged in designing, developing, investigating, testing, and marketingspecialized medical devices primarily used or to be used for treating disorders by nervous systemstimulation, and owns basic patents related to the use of nerve stimulation for eating, endocrineand other disorders, including patents on the use of vagus nerve stimulation (VNS) to treatobesity;     Licensor is medical doctor licensed to practice medicine in the State of New York, and is aco-inventor with Burke T. Barrett of Licensee and Ramesh Reddy, M.D. on a United States patentapplication for bi-lateral VNS for the treatment of obesity, Serial No. 09/346,396, filed on orabout July 1, 1999, and/or continuations or divisions thereof, and a PCT counterpart applicationthereof (collectively, “the ‘396 Application”), the original animal studies for which wereinitiated by Licensor with participation, assistance, support, advice and devices of Licensee; and     Licensee and Licensor desire to enter into an agreement under which Licensee will acquirefrom Licensor the exclusive right and license to practice theinventions) covered by the ‘396Application to the fullest extent of Licensor’s right, title and interest in and to theinvention(s), and in and to all other inventions conceived, made, reduced to practice, owned orcontrolled by Licensor in the field of nervous system stimulation, on the terms and conditions setforth in this Agreement.     In consideration of the foregoing recitals, and the mutual undertakings set forth herein,Licensee and Licensor (collectively, “the Parties”) do hereby **AGREE AS FOLLOWS:****Article I. Definitions.**As used in this Agreement, terms shall have the following meanings:     1.01 “Confidential Information” shall mean information of Licensee relating to itsbusinessplans, experimental products, research or development activities, financial information,identity ofcustomers and key personnel, marketing and distribution, and other transactions, actual orprospective, treated by Licensee as secret and protected as such by confidentiality ornondisclosureagreements or the like and by applicable marking of documents and other tangible items withwordsindicative of information of confidential or secret content and with applicable notice wherethecontent is communicated orally or visually.     1.02 “FDA” shall mean the U.S. Food and Drug Administration, which has responsibilityunder the law for, among other things, establishing protocol for clinical investigation ofmedicaldevices and granting Investigational Device Exemption (“IDE”), determining from results ofclinicalinvestigation whether a medical device is safe and effective for treating a disease ordisorder, and
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granting Pre-Market Approval (“PMA”) of medical devices.     1.03 “Invention” shall mean an advance, innovation, discovery, or improvement in a product,process, method, or technique, whether patentable or not, conceived, made, or reduced topracticeby Licensor, alone or with others, or owned or controlled in whole or in part by Licensor, atany timeduring the term of this Agreement, in the field of nervous system stimulation.     1.04 “Licensed Patents” shall mean United States patent application Serial No.09/346,396filed July 1, 1999 in the names of Mitchell Roslin and others for “Treatment of Obesity byBilateralVagus Nerve Stimulation”, and all continuations, continuations in part and divisions thereof,allpatents issued, reissued, reexamined, and renewed (e.g., by payment of maintenance fees orannuities,as the case may be) thereon, and all counterparts (i.e., corresponding applications andpatents) andequivalents (i.e., statutorily protected or designated by status of invention, characterizedas other thana patent application or patent) thereof filed or issued in other countries (including but notlimited tonationalizations under the Patent Cooperation Treaty (PCT) in the name (with or withoutothers), onbehalf, or with concurrence of Licensor; and any and all Inventions, whether or notapplications forpatent, patents or equivalents are filed thereon, and, if filed, such patent, patents orequivalents. TheLicensed Patents as of the Effective Date hereof are set forth in Exhibit A (attachedhereto andintegrated herein), subject to modification from time to time to add newly arising, filed orissuedLicensed Patents as provided herein.     1.05 “Licensed Products” shall mean any and all products, devices, apparatus, andsystems,and “Licensed Methods” shall mean any and all methods, techniques, and processes,covered by anyclaim(s) of the Licensed Patents.     1.06 “Net Sales” shall mean gross sales of Licensed Products by Licensee or itssublicensee(s), as the case may be, less taxes and tariffs (by whatever name they may bedesignated)imposed by governmental authorities on the manufacture, sale, importation, lease or storage ofLicensed Products and actually paid by Licensee (or its sublicensee(s)); packing and freightcharges(including insurance costs for transportation) actually included in Licensee’s (or itssublicensee’(s’))invoices for Licensed Products; and credits for returns, discounts, and allowances actuallygrantedby Licensee (or it sublicensee(s)) to customers for Licensed Products. In the event that aLicensedProduct is disposed of in a transaction with a third party other than an arms length salebetweenunrelated parties, the transaction shall be treated and accounted for by Licensee and itssublicensees,as applicable, as a typical sale at the average gross sales price of the Licensed Product byLicenseeor the sublicensee, as the case may be, in the market in which such transaction occurred.     1.07 “License Fee” shall mean a fee paid to Licensee by a sublicensee for the privilege ofreceiving a sublicense, which is neither based on Net Sales by the sublicensee nor deductiblefromroyalties paid or payable to Licensee by the sublicensee for its Net Sales.**Article II. Grant of License.**     2.01 Exclusive License. Licensor agrees to grant and hereby does grant to Licenseethe
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exclusive worldwide right and license to all of Licensor’s rights in and to the Licensed Patents,including but not limited to the exclusive worldwide right and license to make, have made, use,sell, import, export and otherwise dispose of the Licensed Products, and to practice the LicensedMethods.     2.02 Right to grant Sublicenses. The license granted to Licensee hereunder shallinclude the exclusive right to grant sublicenses to third parties for the exercise of any or allof the rights granted in the Licensee’s license in any territory constituting a country, portionof a country, or countries of the world.**Article III. Royalties; Advances; Audit.**     3.01 Royalties.     (a) Licensee shall pay Licensor Royalties at the royalty rate specified in ExhibitB applied to(i) Net Sales of Licensed Products by Licensee and its sublicensees and (ii) any License Feesreceivedby Licensee on account of sublicenses.     (b) Royalties shall be deemed earned when sales are made, but shall be due and payablequarterly in United States dollars, within 90 days after the end of the fiscal quarter ofLicensee inwhich the applicable sales were made. Only one Royalty shall be due per Licensed Product sold,regardless of the number of Licensed Patents and/or claims that may apply or the number oftimes aLicensed Product may be used to practice Licensed Methods.     (c) With each quarterly payment of Royalties, Licensee shall furnish a quarterly report toLicensor setting forth its own and its sublicensees’ cumulative gross sales, permitteddeductions andresulting Net Sales of the Licensed Products, License Fees and the Royalty payment due thereonforthe applicable fiscal quarter. If no sales of Licensed Products were made in the quarter byLicenseeor its sublicensees, the report shall so state.     3.02 Advances.     (a) Annual. Licensee shall pay Licensor annual advances (“Annual Advances”) againstearned Royalties in the amount of $25,000.00 each, to be paid on January 1 of each year,retroactiveto January 1, 2000, for a period of five years ending December 31, 2004 (totaling$125,000.00), oruntil the first sale of a Licensed Product, whichever occurs first. Annual Advances shall bedeductedfrom Royalties earned at any time during the term of this Agreement (or payable thereafter asprovided herein).     (b) Milestone. Licensee shall also pay Licensor advances for each of the followingmilestones against future earned Royalties (“Milestone Advances”), within 30 days after therespective milestone is first reached during the term of this Agreement, in the followingamounts (upto a maximum cumulative amount of $325,000.00): (1) $25,000.00 upon the first implant byLicensorof a Licensee VNS device in a patient in the pilot clinical study of VNS as a treatment forobesity
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(which milestone the parties acknowledge has been reached as of the date hereof), (2) $50,000.00upon completion of a 30-patient pilot clinical study of VNS as a treatment for obesity, (3)$100,000.00 upon completion of a pivotal or Phase III clinical study of VNS as a treatment forobesity that would support a Premarket Approval (PMA) application to FDA and submission ofthe results of that study as part of a PMA application submission to the FDA, and (d) $150,000.00upon FDA approval of VNS for the treatment of obesity. A prerequisite for the payment of eachMilestone Advance, in addition to actual achievement of the respective milestone, is that Licensorshall have performed the implant for milestone (1), and, except in the event of either his deathor a disability that prevents him from doing so, Licensor shall have been an active advisor andclinical investigator in the achievement of each of milestones (2), (3) and (4). MilestoneAdvances shall be deducted from Royalties earned at any time during the term of this Agreement (orpayable thereafter as provided herein).     (c) Deductibility. To the extent that either or both the Annual Advances and MilestoneAdvances cannot be deducted from earned Royalties because of an insufficiency of Net Sales ofLicensed Products, the non-deducted amounts of such advance payments shall not be refundable byLicensor.     3.03 Audit.     (a) Licensee shall maintain books and records according to generally accepted accountingprinciples bearing on its sales of the Licensed Products, and shall, on not less than 30 days’advancenotice of Licensor’s intent to audit, make same available for inspection and audit on its ownpremisesduring Licensee’s regular business hours. Any such audit(s) shall be performed by a CPAdesignatedand paid by Licensor(Licensor’s auditor), not more often than annually during the term of thisAgreement, with respect to applicable sales made in the preceding calendar year.     (b) Licensee shall promptly pay any deficiency in Royalties payable to Licensor uncoveredby audit, with interest at an annual rate of 1% over the prime rate, calculated from thedate(s) theunderpaid amount(s) should have been paid. If the deficiency exceeds 10% of the Royaltiesactuallyearned for the year under audit, Licensee shall reimburse Licensor’s cost of the audit.Licensor’sagreement with its auditor shall require the auditor not to disclose to third partiesConfidentialInformation of Licensee obtained from the audit, and Licensee may require Licensor’s auditorto signa non-disclosure agreement to that effect prior to allowing the audit.     3.04 Change of Control. In the event that Licensee undergoes a change in control(measuredas a change in legal or beneficial ownership, or a combination thereof, by a single entity ofmore than50% of Licensee’s capital stock entitled to vote for the election of directors) from thatwhich existedat the Effective Date, Licensor shall, upon the occurrence of the change of control, be within60 daysafter the change of control is effected, due in cash the difference between $450,000.00 andthe sumof any Annual Advances or Milestone Advances that have been made as of the occurrence of thechange of control (such difference being the “Accelerated Change of Control Payment”). Uponpayment of the Accelerated Change of Control Payment, Licensor will no longer be entitled toanyadditional Annual Advances or Milestone Advances and a total of $450,000 (including anyRoyalties
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that have already been deducted as of the occurrence of the change of control) will bededucted from Royalties earned at any time during the term of this Agreement (or payablethereafter as provided herein).**Article IV. Prosecution and Maintenance of Licensed Patents.**     4.01 Prosecution. Licensee shall have the right to prosecute or have prosecutedand bear theentire cost of prosecuting the ‘396 Application, and all other applications among the LicensedPatents,including any applications for patent or counterpart applications Licensee may elect to fileor havedesignated and Licensee shall pay all government fees designated for maintaining the pendencyofsuch applications and of patents maturing therefrom.     4.02 Notice. Licensor shall give Licensee notice of each and every Invention within 30daysafter conception thereof; and shall not make an Invention public without first having givenLicenseeboth notice thereof and a reasonable opportunity to file a patent application on theInvention.**Article V. Infringement.**     5.01 Of Patents of Third Parties by Licensee or Its Sublicensees. Licensee and/or itssublicensees shall defend at their own expense all suits brought against them for infringementof thirdparty patents by their respective manufacture, use, sale, or other disposition of LicensedProducts.In no event shall Licensee enter into a settlement containing terms purporting to affect thevalidityor scope of a Licensed Patent without obtaining prior written consent of Licensor, which shallnotbe withheld unreasonably.     5.02 Of the Licensed Patents by Third Parties. During the term of this Agreement, Licenseeshall have the option but not the obligation, at its own expense, to investigate and prosecuteinfringements of the Licensed Patents. Licensee shall be entitled to the entirety of anyrecovery byway of settlement or award of money damages based on a claim of infringement of a LicensedPatent(collectively, “Claim”), provided, however, that any such recovery shall be treated as NetSales andsubject to Licensor Royalties. If Licensee declines to take action against an allegedinfringer, it shallso notify Licensor who shall then have the right to prosecute the infringer at its ownexpense, and inthat event, Licensor and Licensee shall share equally the amount of the recovery, if any,afterdeduction of Licensor’s costs, including attorney fees, incurred for such prosecution.     5.03 Joinder and Cooperation of Licensee. Licensee may join Licensor as a partyplaintiff inany suit or counterclaim instituted by Licensee for infringement or in defense of validity ofa LicensedPatent, provided that Licensee shall indemnify and hold harmless Licensor from and against anydamages, losses, awards, costs, and expenses (including attorney’s fees) accrued as a resultof orarising from or in connection with such joinder. Whether joined or not, Licensor agrees uponLicensee’s request to provide reasonable assistance and cooperation to Licensee in advancing aClaimor in defending the validity of a Licensed Patent, subject only to Licensee’s reimbursement ordirectpayment of costs incurred by Licensor for or in connection with such assistance andcooperation.
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     5.04Non-refundable Royalties; Adjustment. Licensee shall not be entitled to arefund of Royalties paid to Licensor, but if one or more (but less than all) of the LicensedPatents is held by final decision of a court of last resort (as the result of an appeal or afailure to timely prosecute an appeal) to be invalid or unenforceable, Licensor and Licensee shallpromptly negotiate an equitable downward adjustment of the royalty rate as to the remaining patentswhich shall apply to future Net Sales and Exhibit B shall be modified in writingaccordingly.**Article VI. Representations and Warranties.**     6.01 By Licensor. Licensor represents and warrants to Licensee that, as of theEffective Dateof this Agreement:     (a) Licensor owns an undivided interest in the Licensed Patents and has complete power andauthority to enter into this Agreement and to grant the rights and licenses granted herein toLicensee.     (b) Licensor is not aware of any information which is material to the patentability orvalidityof the ‘396 application that he not already brought to the attention of Licensee.     (c) Licensor has not entered into any agreement or understanding with any third party thatconflicts with this Agreement or the rights and licenses granted herein to Licensee.     6.02 By Licensee. Licensee represents and warrants to Licensor that, as of theEffective Dateof this Agreement:     (a) Licensee has complete power and authority to enter into this Agreement, and to acceptand perform all of its other obligations on the terms and conditions set forth herein.     (b) Licensee does not require any approval from any third party to enter into thisAgreement.     (c) Licensee’s entry into this Agreement will not conflict with any other agreement orunderstanding it has with a third party.     (d) Licensee will defend, indemnify and hold harmless Licensor from and against any liabilityfor manufacture, use, sale, or other activity relating to the Licensed Products or practice oftheLicensed Methods, including without limitation all costs, fees (including attorney’s fees),awards,damages, fines, and penalties finally awarded against Licensee or Licensor for any Claim ofpersonalinjury, death, emotional distress, property damage, or any other casualty or risk whatsoever.Licensorshall promptly notify Licensee of any Claim or communication relating thereto made toLicensor, shallfurnish reasonable assistance and information to Licensee for defense or settlement of suchclaim, andshall give Licensee authority to assume control of the defense or settlement of the Claimincludingthe right to appoint counsel to implement such defense or settlement.     6.03 Disclaimers. Nothing contained in this Agreement shall constitute arepresentation orwarranty by Licensor that:
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     (a) apatent will issue from any application encompassed within the Licensed Patents or Improvement Patents; or     (b) the Licensed Patents are valid or enforceable; or     (c) the manufacture, use, sale, or other activity relating to the Licensed Products orpracticeof the Licensed Methods will be free from infringement of third party patent(s).**Article VII. Term and Termination.**     7.01 Term. This Agreement shall commence on the Effective Date, and shall remain inforceuntil the last Licensed Patent expires or is held invalid or unenforceable, unless terminatedearlier as provided herein.     7.02 Termination.     (a) Licensor or Licensee may terminate this Agreement and the licenses and rights grantedto Licensee herein by notice given to the other at any time after 90 days from date of noticeto theother of a breach which has not been cured prior to the termination notice; provided, however,if thebreach is other than a failure to pay money and cannot reasonably be cured within 90 days buttheparty charged with having committed the breach has taken reasonable steps to effect a curewithinthat period and is acting with diligence to complete the cure, then the notice period forbreach shallbe extended until the cure is effected, not to exceed an additional 60 days. The licenses andrightsgranted herein shall terminate upon termination of this Agreement.     (b) Upon termination of this Agreement, Licensee and its sublicensees shall have the right tosell or otherwise dispose of its and their then remaining inventory of the Licensed Products,subjectto compliance with all applicable provisions of Article III above, including the continuedpayment ofRoyalties.     7.03 Surviving Provisions. The provisions of Articles III, V (to the extent of any then-remaining obligations of the Parties), VI, section 7.02(b), and sections 8.01, 8.03, 8.05, and8.06,shall survive expiration or termination of this Agreement.**Article VIII. General.**     8.01 Notices. Any and all notices or other communications required or permittedto be given under any of the provisions of this Agreement shall be in writing and shall be deemedto have been duly given when personally delivered or the earlier of (i) 6 business days after themailing thereof (postage prepaid, first class mail) and (ii) the actual receipt thereof ifdelivered by facsimile transmission or if mailed by first class registered mail, return receiptrequested, addressed:
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       If to Licensor: Mitchell S. Roslin, M.D.    149 Beach 144 Street    Far Rockaway, NY 11694       With copy to: Matthew I. Roslin, Esq.    Executive Vice President    MED3000 Group, Inc.    Foster Plaza 10    680 Andersen Drive    Pittsburgh, PA 15220    (Facsimile No: 412-937-9221)       If to Licensee: Cyberonics, Inc.    16511 Space Center Boulevard, Suite 600    Houston, TX 77058