exv10w69



 







Exhibit 10.69




CYBERONICS, INC.

1996 STOCK OPTION PLAN

NOTICE OF STOCK OPTION GRANT

(Standard Vesting)




GRANTEE NAME




     You have been granted an option (the “Option”) to purchase Common Stock of Cyberonics, Inc.
(the “Company”) as follows:



	 	 	 
	Date of Grant:
	 	 
	 
	 	 
	Exercise Price:

	 	$
	 
	 	 
	Number of Shares Subject to Option:
	 	 
	 
	 	 
	Type of Option:

	 	Nonstatutory Stock Option
	 
	 	 
	Vesting Start Date:
	 	 
	 
	 	 
	Expiration Date:

	 	Tenth Anniversary of Date of Grant
	 
	 	 
	Exercise Schedule:

	 	The Option shall be exercisable at any
time prior to the Expiration Date or
earlier termination as to shares which
are vested in accordance with the
Vesting Schedule below.
	 
	 	 
	Termination Period:

	 	Option may be exercised for up to 90
days after termination of employment
or consulting relationship except as
set out in Sections 7 and 8 of the
Stock Option Agreement (but in no
event later than the Expiration Date).
	 
	 	 
	Vesting Schedule:

	 	l/60th of the Shares subject to the
Option shall vest each month after the
Vesting Commencement Date until the
Option is fully vested, subject to the
Optionee continuing to be a Service
Provider on such dates.






 









 





     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS
EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WELL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S STOCK OPTION PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH
OPTIONEE’S OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY RELATIONSHIP
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
Company’s 1996 Stock Option Plan and the Stock Option Agreement, all of which are attached and
made a part of this document.



	 	 	 	 	 	 	 	 	 
	OPTIONEE:	 	 	 	CYBERONICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

Grantee Name

	 	 
	 	 	 	 

Pamela B. Westbrook
	 	 
	 

	 	 	 	Title:
	 	Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Address:

	 	 	 	Date:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 


	 	 	 	 	 	 	 	 
	 


	 	 	 	 	 	 	 	 
	 


	 	 	 	 	 	 	 	 
	 


	 	 	 	 	 	 	 	 






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Cyberonics, Inc.




STOCK OPTION AGREEMENT




     1. Grant of Option. Cyberonics, Inc., a Delaware corporation (the “Company”), hereby
grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to
purchase a total number of shares of Common Stock (the “Shares”) 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, definitions and provisions of the Company’s 1996 Stock Option Plan (the “Plan”) which is
incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Option.



          This Option is a Nonstatutory Stock Option, and is not intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Code.




     2. Adjustments for Stock Splits, Recapitalization.



          (a) The Exercise Price and number of Shares subject to this Option (as set forth on the Notice
of Grant) shall be subject to adjustment as follows: If the Company at any time (i) subdivides (by
any stock split, stock dividend or otherwise) the Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and
the number of Shares issuable shall be proportionately increased, and (ii) if the Company at any
time combines (by reverse stock split or otherwise) the Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination will be proportionately
increased and the number of Shares issuable shall be proportionately decreased.




          (b) If at any time while this Option is outstanding there shall be any reclassification
or conversion of the Common Stock into another class of securities (other than a subdivision or
combination or shares provided for in the preceding paragraph), the Optionee shall thereafter be
entitled to receive, during the term hereof and upon payment of the Exercise Price, the number of
shares of stock to which a holder of the Common Stock would have been entitled upon such
reclassification or conversion had the Optionee exercised this Option immediately prior to such
reclassification or conversion.




     3. Exercise of Option. This Option shall be exercisable during its term in accordance
with the Exercise Schedule set out in the Notice of Grant and with the provisions of Section 10 of
the Plan as follows:



          (a) Right to Exercise.




               (i) This Option may not be exercised for a fraction of a share.



               (ii) In the event of Optionee’s death, disability or other termination of employment, the
exercisability of the Option is governed by Sections 6, 7 and 8 below.



               (iii) In no event may this Option be exercised after the Expiration Date of this Option as
set forth in the Notice of Grant.



          (b) Method of Exercise. This Option shall be exercisable by execution and delivery
of the Exercise Notice and Stock Purchase Agreement (the “Exercise Notice”) in the form




 









 







attached as Exhibit A. Such written notice shall be signed by the Optionee and shall be delivered
in person or by certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price.




     4. Method of Payment. Payment of the Exercise Price shall be by:



          (i) cash; or




          (ii) check; or




          (iii) delivery of a properly executed Exercise Notice together with such other documentation
as the Administrator and the broker, if applicable, shall require to effect an exercise of the
Option and immediate sale of the Shares through a broker which provides for delivery to the
Company from the sale or loan proceeds of the Exercise Price; or




          (iv) any combination of the foregoing methods of payment.




     5. Restrictions on Exercise. This Option may not be exercised if the issuance of such
Shares upon such exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other law or regulation,
including the requirements of any stock exchange upon which the Shares may then be listed and
including any rule under Part 207 of Title 12 of the Code of Federal Regulations (“Regulation G”)
as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the Company as may be
required by any applicable law or regulation.



     6. Termination of Relationship. In the event of termination of Optionee’s consulting
relationship or Continuous Status as an Employee, Optionee may, to the extent otherwise so entitled
at the date of such termination (the “Termination Date”), exercise this Option during the
Termination Period set out in the Notice of Grant. To the extent that Optionee was not entitled to
exercise this Option at the date of such termination, or if Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.



     7. Disability of Optionee. Notwithstanding the provisions of Section 6 above, in the
event of termination of an Optionee’s consulting relationship or Continuous Status as an Employee
as a result of total and permanent disability (as defined in Section 22(e)(3) of the Code),
Optionee may, but only within twelve (12) months from the date of termination of employment (but in
no event later than the Expiration Date of this Option as set forth in the Notice of Grant),
exercise the Option to the extent otherwise so entitled at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of termination, or if
Optionee does not exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.



     8. Death of Optionee. In the event of the death of Optionee during the term of this
Option and while an Employee or Consultant or within ninety (90) days following termination of
Optionee’s employment/consultancy relationship with the Company, this Option may be exercised at



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any time within twelve (12) months following the date of death (but in no event later than the
Expiration Date), by Optionee’s estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent the Optionee could exercise the Option at
the date of death.




     9. Non-Transferability 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 him. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.



     10. Term of Option. This Option may be exercised only prior to the Expiration Date 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.



     11. Tax Consequences. Set forth below is a brief summary as of the date of this
Option of some of the federal tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.



          (a) Exercise of Option. Upon exercise of this Option, 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 Shares on the date of exercise over the Exercise Price. If
Optionee is an employee, the Company will be required to withhold from Optionee’s compensation or
collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage
of this compensation income at the time of exercise.




          (b) Disposition of Shares. If Shares are held 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.




     12. Change of Control. In the event of a Change of Control (as defined in the Plan),
this Option shall be governed by the terms of Section 12 of the Plan.



     OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS
EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S STOCK OPTION PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH
HIS OR HER RIGHT OR THE COMPANY’S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT OR CONSULTANCY AT ANY
TIME, WITH OR WITHOUT CAUSE.



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EXHIBIT A 




EXERCISE NOTICE AND STOCK PURCHASE AGREEMENT




Cyberonics, Inc.

100 Cyberonics Blvd., Suite 600

Houston, Texas 77058




Attention: Secretary




     1. Exercise of Option. Effective as of today,                     , 19 ___, the undersigned (“Optionee”)
hereby elects to exercise Optionee’s option to purchase
                     shares of the Common Stock (the
“Shares”) of Cyberonics, Inc. (the “Company”) under and pursuant to the Company’s 1996 Stock
Option Plan, as amended (the “Plan”) and the Nonqualified Stock Option Agreement dated                      (the
“Option Agreement”).



     2. Representations of Optionee.



          (a) Optionee acknowledges that Optionee has received, read and understood the Plan and the
Option Agreement and agrees to abide by and be bound by their terms and conditions.




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




     3. Rights as Stockholder. Subject to the terms and conditions of this Agreement,
Optionee shall have all of the rights of a stockholder of the Company with respect to the Shares
from and after the date that Optionee delivers full payment of the Exercise Price until such time
as Optionee disposes of the Shares.



     4. Successors and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,
this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.



     5. Arbitration. Any dispute or claim arising out of or in connection with this
Agreement shall be settled by binding arbitration. Any such arbitration shall be conducted in
accordance with the Rules of Conciliation and Arbitration of the American Arbitration Association
and shall take place in Webster, Texas. The arbitration shall be conducted by one arbitrator;
provided that if the parties cannot agree on a single arbitrator, then the arbitration shall be
conducted by a panel of three arbitrators, one selected by each party and the third selected by the
other two arbitrators. The determination of the arbitrator(s) shall be final and binding upon the
parties.



 









 





     6. Governing
Law; Severability. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE EXCLUDING THAT BODY OF LAW PERTAINING TO
CONFLICTS OF LAW. Should any provision of this Agreement be determined by a court of law to be
illegal or unenforceable, the other provisions shall nevertheless remain effective and shall
remain enforceable.



     7. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States
mail by certified mail, with postage and fees prepaid, addressed to the other party at its
address as shown below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.



     8. Further Instruments. The parties agree to execute such further instruments and to
take such further action as may be reasonably necessary to carry out the purposes and intent of
this Agreement.



     9. Delivery of Payment. Optionee herewith delivers to the Company the full Exercise
Price for the Shares.



     10. Entire Agreement. The Plan and Notice of Grant/Option Agreement are incorporated
herein by reference. This Agreement, the Plan and the Notice of Grant/Option Agreement constitute
the entire agreement of the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter hereof.



	 	 	 	 	 	 	 	 	 
	Submitted by:	 	 	 	Accepted by:	 	 
	 
	 	 	 	 	 	 	 	 
	OPTIONEE:	 	 	 	CYBERONICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

Grantee Name

	 	 
	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	Address:

	 	 	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	100 Cyberonics Blvd.	 	 
	 	 	 	 	Houston, TX 77058	 	 
	 


	 	 	 	 	 	 	 	 
	 


	 	 	 	 	 	 	 	 
	 


	 	 	 	 	 	 	 	 






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SCHEDULE 




1996 Stock Option Plan Form




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name	 	Grant Date	 	Grant Amount	 	Exercise Price
	Michael Allen Cheney
	 	May 14, 2002	 	 	10,000	 	 	$	14.740000	 
	Shawn P. Lunney
	 	March 6, 1999	 	 	25,000	 	 	$	8.000000	 
	 
	 	May 14, 2002	 	 	10,000	 	 	$	14.740000	 
	Randal L. Simpson
	 	February 1, 2000	 	 	10,000	 	 	$	23.000000	 
	 
	 	October 10, 2001	 	 	10,000	 	 	$	15.700000	 
	 
	 	January 24, 2002	 	 	1,000	 	 	$	12.450000	 
	 
	 	July 24, 2002	 	 	20,000	 	 	$	9.960000	 
	 
	 	June 2, 2003	 	 	25,000	 	 	$	18.940000	 
	Pamela B. Westbrook
	 	October 12, 1998	 	 	175,000	 	 	$	5.125000	 
	 
	 	May 14, 2002	 	 	10,000	 	 	$	14.740000