exv10w70



 





EXHIBIT 10.70




CYBERONICS, INC.




2005 STOCK PLAN




STOCK OPTION AGREEMENT




     Unless otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option Agreement.



I.
NOTICE OF GRANT




     You have been granted an option to purchase Common Stock of the Company, subject to the
terms and conditions of the Plan and this Option Agreement, as follows:



	 	 	 
	Date of Grant:
	 	 
	 
	 	 
	Exercise Price per Share:

	 	$ 
	 
	 	 
	Total Number of Shares Granted:
	 	 
	 
	 	 
	Type of Option:

	 	Nonstatutory Stock Option
	 
	 	 
	Expiration Date:

	 	10th Anniversary of Date of Grant 
	 
	 	 
	Vesting Schedule:

	 	1/60th of the Shares subject to the Option shall
vest each month after the Date of Grant, subject
to the Optionee continuing to be a Service
Provider on such dates, until the Option is fully
vested.
	 
	 	 
	Termination Period:

	 	To the extent vested, this Option may
be
exercised for 90 days after Optionee ceases to
be a Service Provider and shall then terminate.
Upon the death or Disability of the Optionee
while a Service Provider, this Option may
be
exercised one year after Optionee ceases to be a
Service Provider and shall then terminate.
However, in no event may this Option
be
exercised after the Expiration Date as provided
above.






 









 






II. AGREEMENT




     1. Grant
of Option. The Plan’s Administrator hereby grants to the Optionee named in the
Notice of Grant attached as Part I of this Agreement (the “Optionee”) an option (the “Option”) to
purchase the number of Shares, as set forth in the Notice of Grant, at the exercise price per share
set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and conditions of the
Plan, which is incorporated herein by reference. Subject to Section 15(c) of the Plan, in the event
of a conflict between the terms and conditions of the Plan and the terms and conditions of this
Option Agreement, the terms and conditions of the Plan shall prevail.



     If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if
this Option is intended to be an Incentive Stock Option, to the extent that it exceeds the
$100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).



     2. Exercise of Option.



          (a) Right to Exercise. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Option Agreement.



          (b) Method of Exercise. This Option is exercisable by delivery of an exercise notice,
in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“Exercised Shares”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be completed by the
Optionee and delivered to the Director of Corporate Compliance or to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by such aggregate Exercise Price.



     No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.



     3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:



          (a) cash; or



          (b) check; or



          (c) consideration received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan; or



          (d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of



-2-









 







surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the Exercised Shares; or



     4. Nontransferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement
shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.



     5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant and may be exercised during such term only in accordance with the Plan
and the terms of this Option Agreement.



     6. Tax Consequences. Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND
THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.



          (a) Exercising the Option.



               (i) Nonstatutory Stock Option. The Optionee may incur federal and other tax
liabilities upon exercise of a NSO. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise Price. If the
Optionee is an Employee or a former Employee, the Company will be required to withhold from his or
her compensation or collect from Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.



               (ii) Incentive
Stock Option. If this Option qualifies as an ISO at the time of
exercise, the Optionee will have no federal tax liabilities upon its exercise, although the excess,
if any, of the Fair Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price will be treated as an adjustment to alternative minimum taxable income for
federal tax purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised shall
cease to qualify as an Incentive Stock Option and will be treated for tax purposes as a
Nonstatutory Stock Option on the date three months and one day following such change of status.



          (b) Disposition of Shares.



               (i) NSO. If the Optionee holds NSO Shares for at least one year, any
gain realized on disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes.



               (ii) ISO.
If the Optionee holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of the Shares will be



-3-









 







treated as long-term capital gain for federal income tax purposes. If the Optionee disposes of ISO
Shares within one year after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the Fair Market Value of the
Shares acquired on the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price. Any additional gain will be
taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were
held.



          (c) Notice
of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on or before the later
of (i) two years after the grant date, or (ii) one year-after the exercise date, the Optionee shall
immediately notify the Company in writing of such disposition. The Optionee agrees that he or she
may be subject to tax withholding by the Company on the compensation income recognized from such
early disposition of ISO Shares by payment in cash or out of the current earnings paid to the
Optionee.



     7. Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The
Plan and this Option Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be modified adversely
to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This
Agreement is governed by the internal substantive laws, but not the choice of law rules, of Texas.



     8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.



     By your signature and the signature of the Company’s representative below, you and
the Company agree that this Option is granted under and governed by the terms and conditions of the
Plan and this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their
entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Option Agreement and fully understands all
provisions of the Plan and Option Agreement. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon any questions
relating to the Plan and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.



-4-









 





	 	 	 	 	 
	OPTIONEE:	 	CYBERONICS, INC.
	 
	 
	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 
	 	 	Pamela B. Westbrook
	Social Security Number
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 

	 	Title:
	 	Vice President, Finance &
Administration
and Chief Financial
Officer
	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	Residence Address

	 	Date:	 	 
	 	 	 






-5-










 





EXHIBIT A




2005 STOCK PLAN




EXERCISE NOTICE




Cyberonics, Inc.

1651 1 Space Center Blvd. #600

Houston, TX 77062




Attention: Chief Financial Officer




     1. Exercise of Option. Effective as of today,                                         ,___the undersigned
(“Purchaser”) hereby elects to purchase                     shares (the “Shares”) of the Common Stock of Cyberonics,
Inc. (the “Company”) under and pursuant to the 2005 Stock Plan (the “Plan”) and the Stock Option
Agreement dated (the “Option Agreement”). The purchase price for the Shares shall be $                    , as required by the Option Agreement.



     2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase
price for the Shares.



     3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound
by their terms and conditions.



     4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the Shares, no right to vote or receive dividends or any other rights as a shareholder
shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment will be made for a dividend or other right for which the record date is prior
to the date of issuance, except as provided in Section 13 of the Plan.



     5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents
that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with
the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any
tax advice.



     6. Entire Agreement: Governing Law. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan and the Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of
the Company and Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser’s interest except by means of a writing



A-1









 






signed by the Company and
Purchaser. This agreement is governed by the internal substantive laws, but not the choice of law
rules, of Texas.



	 	 	 
	Submitted by:

	 	Accepted by:
	 
	 	 
	PURCHASER:

	 	CYBERONICS, INC.
	 
	 	 
	 

	 	 
	 

	 	By:
	 

	 	 
	 
	 	 
	 

	 	 
	 

	 	Its:
	 

	 	 
	 
	 	 
	 

	 	 
	Social Security Number
	 	 






	 	 	 	 	 
	Address:

	 	Address:	 	 
	 
	 	 	 	 
	 	 	Cyberonics, Inc.
	 	 	100 Cyberonics Blvd.
	 	 	Houston, TX 77058
	 
	 	 	 	 
	 	 	Date Received:
	 

	 	 	 	 





A-2









 





SCHEDULE




2005 Stock Option Plan Form (Restricted Grants; 5 Year Vesting)




	 	 	 	 	 	 	 	 	 	 	 
	Name	 	Grant Date	 	Grant Amount	 	Exercise Price
	Michael Allen Cheney

	 	June 1, 2005
	 	 	5,000	 	 	$	0.000000	 
	W. Steven Jennings

	 	June 1, 2005
	 	 	5,000	 	 	$	0.000000	 
	Shawn P. Lunney

	 	June 1, 2005
	 	 	10,000	 	 	$	0.000000	 
	George E. Parker

	 	June 1, 2005
	 	 	5,000	 	 	$	0.000000	 
	Richard L. Rudolph

	 	June 1, 2005
	 	 	12,500	 	 	$	0.000000	 
	Randal L. Simpson

	 	June 1, 2005
	 	 	10,000	 	 	$	0.000000	 
	Reese S. Terry

	 	June 1, 2005
	 	 	5,000	 	 	$	0.000000	 
	David S. Wise

	 	June 1, 2005
	 	 	10,000	 	 	$	0.000000