exv10w52



 





Exhibit 10.52




EMPLOYMENT AGREEMENT




     This Employment Agreement (the “Agreement”), entered into effective as of June
15, 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 service
of Employee by employing Employee upon the terms and conditions specified herein;
and



     WHEREAS, Employee is willing to enter into this Agreement upon the terms and
conditions specified herein;



     NOW, THEREFORE, in consideration of the premises, terms and provisions set
forth herein, the mutual benefits to be gained by the performance thereof and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



     SECTION
1. Employment. The Company hereby employs Employee, and Employee hereby
accepts such employment, all upon the terms and conditions set forth herein,



     SECTION 2. Term. Subject to the terms and conditions of this
Agreement, unless sooner terminated pursuant to Section 5 of this Agreement,
Employee shall be employed by the Company commencing on the Effective Date and
terminating on June 1, 2009 (the “Term”). Termination of this Agreement shall not
alter or impair any rights of Employee (or his beneficiaries or heirs) with respect
to 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 Company
and shall report to the Chief Executive Officer of the Company.




     B. Full-Time Duties. Employee shall devote his full
business time,
attention and energies to the business of the Company.
Notwithstanding anything
herein to the contrary, Employee shall be allowed to (i) manage
Employee’s
personal investments and affairs and, (ii) with the written consent
of the Chief
Executive Officer of the Company, serve on boards or committees of
civic or
charitable organizations or trade associations, provided that such
activities do not
materially interfere with his performance of the duties and
responsibilities of his
position specified in Section 3.A.




     C. Offices. Employee’s primary place of work shall be at the
principle
executive offices of the Company located in the greater Houston,
Texas



 









 







metropolitan area, but Employee shall be required to travel on a basis
consistent with his position.



     SECTION 4. Compensation.




     A. Base Salary. During the Term, Employee shall receive an
annual
salary of $300,000 (the “Base Salary”) payable in accordance with the
Company’s
general payroll practices. Employee’s Base Salary shall be reviewed prior
to the
beginning of each fiscal year of the Company for increase in the
discretion of the
Compensation Committee of the Board of Directors
(“Compensation
Committee”); provided, however, that the Base Salary, as it may be
increased at
any time, may not thereafter be decreased.




     B.
Annual Incentive Bonus. During the Term, Employee shall be
eligible to participate in the Annual CEO Direct Reports Bonus Plan, with
a target
bonus of 50% of Employee’s annual Base Salary. A bonus, if earned,
shall be
payable as soon as reasonably practical following the completion of the
applicable
fiscal year. Bonuses for Employee shall be based on the achievement of
such
Company, departmental and/or individual performance goals that may
be
established for the applicable bonus year by the Compensation Committee.




     C. Annual Overachievement Bonus. During the Term, Employee shall
be eligible to participate in the Annual CEO Direct Reports
Overachievement
Bonus Plan as determined by the Compensation Committee. Overachievement
Bonuses shall be based on the Company’s overachievement of such Company,
departmental and/or individual performance goals that may be established
for the
applicable bonus year by the Compensation Committee.




     D. Equity Compensation. Employee will be eligible for grants
of
Company stock options (the “Options”) and other equity awards in the
discretion
of the Compensation Committee.




     E.
General Benefits. Upon satisfying applicable
eligibility
requirements, if any, Employee will be eligible to participate in the
Company’s
qualified 401(k) plan, group health, group life insurance, accidental
death and
dismemberment, travel accident, long-term disability and short-term
disability
plans and other welfare and similar plans and vacation policies under
terms
generally applicable to other similarly situated employees of the Company
and
shall be eligible to receive all perquisites and other benefits provided
or made
available by the Company to other similarly situated executives of the
Company.




     F.
Reimbursements. Employee shall be entitled to receive prompt
reimbursement by the Company in accordance with its business
reimbursement
policy in effect from time to time for all reasonable, out-of-pocket
business
expenses incurred by him in performing his duties under this Agreement
upon the
submission by Employee of such accounts and records as may be reasonably
required under the Company’s business reimbursement policy.



-2-









 





     SECTION 5. Termination of Employment. Notwithstanding the
provisions of Section 2, Employee’s employment hereunder may terminate under any of
the following conditions:




     A. Death. Employee’s employment under this
Agreement shall
terminate automatically upon his death.




     B. Disability. Employee’s employment under this Agreement
may be
terminated due to his Disability. “Disability” shall mean
Employee’s inability to
substantially perform his duties hereunder for any period of at
least 180
consecutive days due to a physical or mental incapacity. The date
of termination
due to Disability shall be the date Employee elects to terminate his
employment
service due to such Disability or, if earlier, the date the Board
determines that
Employee has met the definition of Disability and given written
notice of such
termination to Employee.




     C. Termination by Company Without Cause. The Company may
terminate Employee’s employment hereunder without Cause (as
hereinafter
defined) on 30 days’ prior written notice to Employee.




     D. Termination by Company for Cause. Employee’s employment
hereunder may be terminated for Cause by the Company. For purposes of
this Agreement, “Cause” shall mean (i) the willful and continued
failure by Employee to substantially perform Employee’s duties with the
Company (other than any such failure resulting from Employee’s
incapacity due to physical or mental illness), (a) an act or acts of
dishonesty taken by Employee and intended to result in personal
enrichment of Employee at the expense of the Company, (iii) willful
violation by Employee of Employee’s material obligations under this
Agreement, (iv) willful violation by Employee of a material policy of
the Company, including its policies regarding professional and ethical
conduct, (v) Employee’s commission of one or more acts that constitute
a felony, (vi) Employee is publicly censured by the Securities Exchange
Commission, or (vii) Employee commits one or more acts of fraud as
regards the Company. For purposes of clause (i) of this definition, no
act, 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 and
without reasonable belief that Employee’s act, or failure to act, was
in the best interest of the Company. The determination of whether Cause
exists must be made by a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board
of Directors of the Company.




     E. Termination by Employee. Employee may terminate his
employment hereunder at any time on 30 days’ prior written notice to
the Board.




-3-









 








     SECTION 6. Payments Upon Termination.




     A. Upon termination of Employee’s employment for any reason prior to
the expiration of the Term, the Company shall be obligated to pay, and
Employee
shall 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 ending
prior to the date of termination;




     3. all incurred but unreimbursed business expenses for which
Employee is entitled to reimbursement; and




     4.
any benefits to which he is entitled under the terms of any
applicable employee benefit plan or program, or applicable law.




     B. Upon termination of Employee’s employment pursuant to Section
5.C., the Company shall be obligated to pay or provide, and Employee’s
estate or
beneficiary 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 bonus
earned by
Employee or (b) a lump sum payment equal to 1.5 times Employee’s
Base
Salary and, solely for purposes of determining Employee’s vesting
under
any Options, the number of shares that would become vested under
such
Options during the 12-month period following Employee’s
termination
date if Employee’s employment had continued during such period
shall
become vested on his termination of employment date, whichever of
(a) or
(b) is elected by Employee in writing to the Company within five
days of
his 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 there
shall
be no offset against amounts due Employee under this Agreement on account
of
any remuneration attributable to any subsequent employment or
self-employment
that he may obtain.




     D. The Company and Employee have previously or contemporaneously
with this Agreement entered into a Severance Agreement which provides
certain
payments and benefits to Employee upon a qualified termination of
employment
in connection with a change of control of the Company. Notwithstanding
anything in this Agreement to the contrary, to the extent Employee is
entitled to
receive any severance payment or benefits under the Severance Agreement
any



-4-









 







severance
payment or benefits to which Employee is otherwise entitled to receive under this Agreement shall be reduced or offset by the
severance payment or benefit payable under the Severance
Agreement in such manner as is appropriate, as determined in good
faith by the Board, to prevent a duplication of such payment and
benefits.



     SECTION 7. Indemnification. The Company agrees to indemnify Employee
to the fullest extent permitted by applicable law with respect to any acts or
non-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 at
the request of the Company.



     SECTION
8. Covenants of Employee. Employee covenants as follows:




     A.
Confidentiality. During and after his employment
with the Company and its affiliates, Employee will hold in
confidence all confidential information and will not disclose it to
any person other than in connection with the performance of his
duties and obligations hereunder, except with the specific prior
written consent of the Board of Directors or the Chief Executive
Officer; provided, however, that the parties agree that this
Agreement does not prohibit the disclosure of confidential
information where applicable law requires, including, but not
limited to, in response of subpoenas and/or orders of a
governmental agency or court of competent jurisdiction. In the
event that Employee is requested or becomes legally compelled under
the terms of a subpoena or order issued by a court of competent
jurisdiction or by a governmental body to make any disclosure of
confidential information, Employee agrees that he will (i)
immediately provide the Company with written notice of the
existence, terms and circumstances, surrounding such request(s) so
that the Company may seek an appropriate protective order or other
appropriate remedy, (ii) cooperate with the Company in its efforts
to decline, resist or narrow such requests and (iii) if disclosure
of such confidential information is required in the opinion of
counsel, exercise reasonable efforts to obtain an order or other
reliable assurance that confidential treatment will be accorded to
such disclosed information. “Confidential information” means any
and all intellectual property of the Company (or any of its
affiliates), including but not limited to: (a) trade secrets
concerning the business and affairs of the Company (or any of its
affiliates), product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current, and planned
research and development, current and planned manufacturing or
distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object
code 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 and
information), and any other information, however documented, that
is a trade secret under federal, state or other applicable law; and
(b) information concerning



-5-









 







the business and affairs of the Company (or any of its affiliates) (which
includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials),
however documented; and notes, analysis, compilations, studies, summaries, and
other 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 the
foregoing.




     B.
Trade Secrets. Any trade secrets of the Company will be entitled to all
of the protections and benefits under the federal and state trade secret and
intellectual property laws and any other applicable law. If any information that
the Company deems to be a trade secret is found by a court of competent
jurisdiction not to be a trade secret for purposes of this Agreement, such
information will, nevertheless, be considered confidential information for
purposes of this Agreement, so long as it otherwise meets the definition of
confidential information. Employee hereby waives any requirement that the Company
submit proof of the economic value of any trade secret or post a bond or other
security.




     C. Proprietary Items. Employee will not remove from the Company’s
premises (except to the extent such removal is for purposes of the performance of
Employee’s duties at home or while traveling, or except as otherwise specifically
authorized by the Company) any document, record, notebook, plan, model,
component, device, or computer software or code, whether embodied in a disk or in
any other form belonging to the Company or used in the Company’s business
(collectively, the “Proprietary Items”). All of the Proprietary Items, whether or
not developed by Employee, are the exclusive property of the Company. Upon
termination of his employment, or upon the request of the Company during the
Term, Employee will return to the Company all of the Proprietary Items and
confidential information in Employee’s possession or subject to Employee’s
control, and Employee shall not retain any copies, abstracts, sketches, or other
physical embodiment, including electronic or otherwise, of any of the Proprietary
Items or confidential information,




     D.
Non-Competition and Non-Interference. During the period of his
employment with the Company or its affiliates and for the one-year period after
the termination of his employment with the Company and its affiliates, Employee
will not, directly or indirectly:




     1. without the express prior written consent of the Board of
Directors, own an interest in, manage, operate, join, control, lend money
or render financial or other assistance to or participate in or be
connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any person that competes with the Company in the field of
neurostimulation in a matter covered by a patent assigned to or held by
the Company; provided, however, that following Employee’s termination of
employment with the Company the foregoing restriction shall apply only



-6-









 







to those areas where the Company is actually doing business on
the date of such termination of employment; provided, further, that
Employee may purchase or otherwise acquire for passive investment up
to 3% of any class of securities of any such enterprise if such
securities are listed on any national or regional securities exchange
or have been registered under Section 12(g) of the Securities Exchange
Act of 1934;




     2. whether for Employee’s own account or for the account of any
other person, (except for the account of the Company and its
affiliates),
solicit Business from any person known by Employee to be a customer
of
the Company or its affiliates, whether or not Employee had personal
contact with such person during Employee’s employment with the
Company and its affiliates;




     3. whether for Employee’s own account or the account of any other
person, (i) solicit, employ, or otherwise engage as an
employee,
independent contractor, or otherwise, any person who is an employee
of
the Company or an affiliate, or in any manner induce, or attempt to
induce,
any employee of the Company or its affiliate to terminate his
employment
with the Company or its affiliate; or (ii) interfere with the
Company’s or
its affiliate’s relationship with any person who at any time during
the
Term, was an employee, contractor, supplier, or customer of the
Company
or its affiliate; or




     4. at any time after the termination of his employment, disparage
the Company or its affiliates or any shareholders, directors,
officers,
employees, or agents of the Company or any of its affiliates, so long
as the
Company does not disparage Employee.




     E.
Acknowledgements. The Company acknowledges that it is providing
Employee with confidential information in order for Employee to perform his
duties under this Agreement. Employee acknowledges that (a) the services to be
performed by him under this Agreement are of a special, unique, unusual,
extraordinary, and intellectual character, and (b) the provisions of this
Section 8 are reasonable and necessary to protect the confidential
information, goodwill and other business interests of the Company. If any
covenant in this Section 8 is held to be unreasonable, arbitrary, or against
public policy, such covenant will be considered to be divisible with respect
to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary, and not against public policy, will
be effective, binding, and enforceable against Employee. Employee hereby
agrees that this covenant is a material and substantial part of this Agreement
and that: (i) the geographic limitations are reasonable; (ii) the term of the
covenant is reasonable; and (ii) the covenant is not made for the purpose of
limiting competition per se and is reasonably related to a protectable
business interest of the Company. The period of time applicable to any covenant
in this Section 8 will be extended by the duration of any violation



-7-









 







by Employee of such covenant. The provisions of this Section 8
shall survive the termination of the Term of this Agreement.



     SECTION 9. Injunctive Relief and Additional Remedy. Employee
acknowledges that the injury that would be suffered by the Company as a result of a
breach of the provisions of Section 8 of this Agreement would be irreparable and that
an award of monetary damages to the Company for such a breach would be an inadequate
remedy. Consequently, the Company will have the right, in addition to any other
rights it may have, to obtain a temporary restraining order and/or injunctive relief
to restrain any breach or threatened breach or otherwise to specifically enforce any
provision of this Agreement. Employee waives any requirement for the Company’s
securing or posting of any bond in conjunction with any such remedies. Employee
further agrees to and hereby does submit to in personam jurisdiction before each and
every court for that purpose. Without limiting the Company’s rights under this
Section or any other remedies of the Company, if Employee breaches any of the
provisions of Section 8 and such breach is proven in a court of competent
jurisdiction, the Company will have the right to cease making any payments or
providing other benefits otherwise due Employee under this Agreement.



     SECTION 10. Amendment: Waiver. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by each
of the parties hereto, and compliance with the terms and provisions hereof may be
waived only by a written instrument executed by each party entitled to the benefits
thereof. No failure or delay on the part of any party in exercising any right, power
or privilege granted hereunder shall constitute a waiver thereof, nor shall any
single or partial exercise of any such right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or privilege
granted hereunder.



     SECTION 11. Entire Agreement. Except as contemplated herein, this
Agreement constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes any and all prior or contemporaneous written or
oral agreements, arrangements or understandings between the Company and Employee.



     SECTION 12. Notices. All notices or communications hereunder shall be
in writing, addressed as follows or to any address subsequently provided to the
other party:


To the Company:



Cyberonics, Inc.

Attention: Vice President of Human Resources

100 Cyberonics Blvd., Suite 600

Houston, Texas 77058




-8-









 







To Employee:



Richard
L. Rudolph, M.D.

15118 Blossom Bay Drive

Houston, TX 77059




All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery or overnight courier, upon receipt, (ii) if
sent by telecopy or facsimile transmission, upon confirmation of receipt by the
sender of such transmission or (iii) if sent by registered or certified mail, on
the fifth day after the day on which such notice is mailed.



     SECTION 13. Severability. In the event that any term or provision of
this Agreement is found to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining terms and provisions hereof shall not
be in any way affected or impaired thereby, and this Agreement shall be construed
as if such invalid, illegal or unenforceable provision had never been contained
therein.



     SECTION
14. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns (it being understood and agreed that, except as expressly
provided herein, nothing contained in this Agreement is intended to confer upon any
other person or entity any rights, benefits or remedies of any kind or character
whatsoever). No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations may
be assigned or transferred pursuant to a merger or consolidation in which the
Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee assumes the liabilities, obligations and
duties of the Company, as contained in this Agreement, either contractually or as a
matter of law. The Company further agrees that, in the event of a sale of assets or
liquidation as described in the preceding sentence, it shall take whatever action
it legally can in order to cause such assignee or transferee to expressly assume
the liabilities, obligations and duties of the Company hereunder.



     SECTION 15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (except that no effect
shall be given to any conflicts of law principles thereof that would require the
application of the laws of another jurisdiction).



     SECTION 16. Submission to Jurisdiction. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
IN HARRIS COUNTY, TEXAS, FOR THE PURPOSES OF ANY PROCEEDING ARISING OUT OF THIS
AGREEMENT.



-9-









 








     SECTION 17. Headings. The headings of the sections contained in
this Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.



     SECTION
18. Tax Withholdings. The Company shall withhold from all
payments hereunder all applicable taxes that it is required to withhold with respect
to payments and benefits provided under this Agreement.



     SECTION 19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.



     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of
the date set forth above.



	 	 	 	 
	 

	 	CYBERONICS, INC.
	 
	 	 
	 
	 	By:  	/s/ Robert P. Cummins
	 

	 	 	 
	 

	 	 	Robert P. Cummins
	 

	 	 	Chairman of the Board of Directors

and Chief Executive Officer
	 
	 	 	 
	 

	 	EMPLOYEE
	 
	 	 	 
	 

	 	/s/ Richard L. Rudolph, M.D.
	 

	 	 
	 

	 	Richard L. Rudolph, M.D.







-10-