Document:

Exhibit

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is made by and between Cyberonics, Inc., a Delaware corporation (the “Company”) and David S. Wise (“Employee”).
The Company desires to maintain Employee’s employment and to encourage Employee’s attention and dedication to the Company as a member of the Company’s management, in the best interests of the Company and its shareholders; 
Employee desires to maintain employment with the Company;
The Company and Employee desire to enter into this Agreement to set forth the terms and conditions on which Employee is employed by the Company from and after the Effective Date.
This Agreement contemplates that Employee is a key employee of the Company.  As such, the Company will continue to make available to Employee confidential information and will continue to make a substantial investment in Employee for the benefit of the Company and its shareholders.  The Company and Employee recognize that the goodwill derived therefrom is a valuable asset of the Company.  The Company and Employee agree that such confidential information and goodwill are entitled to protection during the term of this Agreement and for a reasonable time thereafter.  Company acknowledges that Employee brings to the Company experience and non-confidential general knowledge of the medical device industry.
The Company and Employee are sophisticated business persons.  Each has been advised by counsel with respect to this Agreement, or has had the opportunity to be advised by counsel, including with respect to the post-termination restrictions and acknowledges that these restrictions are appropriate protection of the Company’s confidential information and goodwill, and that Employee has entered into this Agreement fully knowing the effect of such restrictions and voluntarily accepting the restrictions, which the parties believe to be reasonable in temporal and geographic scope.
Now, therefore, for good and valuable consideration, the receipt and sufficiency of such consideration being hereby acknowledged, and for and in consideration of the mutual promises, covenants, and obligations contained herein, Company and Employee agree as follows:
1.Employment.  The Company shall employ Employee, and Employee hereby accepts such employment, on the terms and conditions set forth in this Agreement.
2.    Term.  Unless terminated pursuant to Section 9, this Agreement shall be effective as of January 1, 2015 (the “Effective Date”) and shall terminate at 12:01 a.m. on January 1, 2016, the period during which this Agreement remains in effect being referred to as the “Employment Period.”  Notwithstanding the foregoing, if a Change of Control occurs during the Employment Period, the Employment Period shall automatically continue in effect for a period of not less than two years from the date of such Change of Control.
3.    Duties.  During the Employment Period, Employee agrees to devote his full energy, attention, abilities, and productive time to the diligent performance of his duties and responsibilities as may from time to time be assigned to him by the Company’s Board of Directors (“Board”) or its designated representative.  Employee agrees and acknowledges that Employee owes fiduciary duties to the Company and will act accordingly.
4.    Outside Business Activities.  During the Employment Period, Employee shall not, without the prior written consent of the Company, engage in any other business activity, with or without compensation.  Notwithstanding the foregoing, Employee shall be permitted to spend a reasonable amount of time on civic, charitable, and other non-commercial activities, and activities related to Employee’s investments, provided such activities are consistent in nature and scope as exist on the Effective Date and do not interfere with Employee’s duties and obligations under this Agreement.  
5.    Base Salary.  For all services rendered by Employee during the Employment Period, the Company shall pay Employee an annual base salary of three hundred thirty thousand dollars ($330,000) (the “Base Salary”) per year.  This amount shall be payable bi-weekly in equal installments, in arrears, according to the Company’s customary payroll practices, less all amounts required to be held by federal, state, or local law, and all applicable deductions authorized by Employee or required by law.  The Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) shall meet at least annually to review Employee’s Base Salary.  The Base Salary, at the discretion of the Compensation Committee, may be increased, but may not be decreased materially during the Employment Period.  
6.    Annual Bonus Opportunity.  During the Employment Period, Employee shall be eligible to earn a bonus payable within a reasonable period following the end of each of the Company’s fiscal years based on the achievement of certain objectives (the “Bonus Objectives”) to be determined by the Compensation Committee within the first ninety (90) days of each such fiscal year.  Employee’s annual bonus (the “Annual Bonus”) for achievement of all Bonus Objectives at target (the “Target Bonus Amount”) will be seventy-five percent (75%) of the Base Salary paid in such fiscal year (or pro rata as to any portion of the fiscal year), but the actual amount of the Annual Bonus may exceed 75% of Base Salary or be less than 75% of Base Salary based on overachievement of the Bonus Objectives, underachievement of the Bonus Objectives, or in the case of underachievement, the discretion of the Compensation Committee.  If awarded, the Annual Bonus for a fiscal year shall be paid in the fiscal year following such fiscal year after the Compensation Committee determination of the amount of the Annual Bonus, if any, but no later than the 15th day of the third month of such subsequent fiscal year and shall be subject to all amounts required to be withheld by federal, state, or local law and all applicable deductions properly authorized by Employee or required by law.
7.    Benefits.  Employee shall be eligible for the following benefits:
(a)    All welfare benefit plans generally applicable to all employees of the Company, subject to the general eligibility requirements of such plans.  The Company shall have the right to amend, modify, or terminate any such plans from time to time at its discretion; provided that, such action is generally applicable to all employees.
(b)    Reimbursement of all actual, reasonable, and customary business expenses incurred during the Employment Period by Employee in performing services for the Company, including all reasonable expenses of travel on business; provided that, such expenses are incurred and accounted for in accordance with policies and procedures established by the Company.
(c)    Fringe benefits and perquisites (including, but not limited to, reasonable vacation time) in accordance with the plans, practices, programs, and policies of the Company from time to time in effect and which are commensurate with Employee’s position.
8.    Confidential Information.  During the Employment Period, the Company shall continue to provide Employee with trade secrets and confidential information, knowledge, and data relating to the business of the Company or to the business of other entities with which the Company has a confidential relationship (including trade secrets, being collectively referred to as “Confidential Information”).  Employee shall hold in confidence in a fiduciary capacity for the benefit of the Company during the Employment Period and thereafter all Confidential Information that Employee obtained during Employee’s employment by the Company and that shall not have become public knowledge (other than by acts by Employee in violation of this Agreement).  Employee agrees to return all Confidential Information, including all photocopies, extracts, and summaries thereof, and any such information stored electronically on tapes, computer disks, or in any other manner to the Company at any time upon request by the Company and upon the termination of Employee’s employment for any reason.  Except as may be required or appropriate in connection with carrying out Employee’s duties under this Agreement and in furtherance of the Company’s business, Employee shall not, during and after the Employment Period, without the prior written consent of the Company or as may otherwise be required by law, or as is necessary in connection with any adversarial proceeding against the Company (in which case Employee shall use his/her reasonable best efforts in cooperating with the Company in obtaining a protective order against disclosure by a court of competent jurisdiction), communicate or divulge any such Confidential Information to anyone other than the Company and those designated by the Company or on behalf of the Company.  Notwithstanding the foregoing, Employee may retain, upon termination of employment, information and documents of a purely personal nature relating to compensation and benefits accrued during the Employment Period.
9.    Early Termination.  Notwithstanding the Employment Period established in Section 2 or any renewal or extension thereof, Employee’s employment hereunder and this Agreement may be terminated as follows:
(a)    Death.  Employee’s employment hereunder shall terminate upon Employee’s death.  
(b)    Disability.  If, as a result of Employee’s incapacity due to physical or mental illness, Employee shall have been absent from the full-time performance of his/her duties hereunder for a period of ninety (90) days in the aggregate during any period of twelve (12) consecutive months, or where Employee shall have been absent from the full-time performance of his/her duties hereunder for a period of ninety (90) consecutive days and it is reasonably expected that Employee will be eligible for long-term disability benefits under a Company-sponsored disability plan, and no later than thirty (30) days after written notice is given, if Employee shall not have returned to the performance of his/her duties hereunder on a full-time basis, the Company may terminate Employee’s employment for disability.
(c)    Termination by the Company For Cause.  The Company may terminate Employee’s employment for Cause.  “Cause” shall mean (i) any action or inaction that constitutes a material breach of this Agreement by the Employee; (ii) Employee’s willful conduct which is materially injurious to the Company’s reputation, financial condition, or business relationships, (iii) Employee’s willful failure to comply with a lawful directive of the Company’s Chief Executive Officer (“CEO”) or another officer to whom Employee reports, directly or indirectly, (iv) Employee’s failure to comply with any of the Company’s written policies and procedures, including, but not limited to, the Company’s Corporate Code of Business Conduct and Ethics and its Financial Code of Ethics, (v) Employee’s fraud, dishonesty, or misappropriation involving the Company’s assets, business, customers, suppliers, or employees, (vi) Employee’s conviction of, or plea of guilty or nolo contendere to, a felony; or, (vii) Employee’s continued failure or refusal to perform satisfactorily, or gross neglect of, Employee’s duties (other than any such failure or neglect resulting from Employee’s incapacity due to physical or mental illness).
 (d)    Termination by Employee for Good Reason.  Employee may terminate his/her employment and this Agreement for Good Reason.  “Good Reason” shall mean the occurrence, without Employee’s prior written consent, of any one the following:  (i) a material diminution in Employee’s Base Salary or Target Bonus Amount; or (ii) any action or inaction that constitutes a material breach by the Company of this Agreement.  Within two years following a Change of Control (as defined in Section 12), “Good Reason” shall further mean and include the occurrence, without the Employee’s prior written consent, of any one of the following:  (i) a material diminution in Employee’s authority, duties, or responsibilities from those applicable to Employee as of the Change of Control; or (ii) the Company requiring Employee to be based at any office or location more than 35 miles from the Company’s office to which Employee was assigned as of the Change of Control.
 (e)    Termination by Employee other than for Good Reason.  Employee may terminate his employment other than for Good Reason by giving the Company no less than thirty (30) days prior written notice of Employee’s intent to terminate this Agreement.  As used in this Section, “other than Good Reason” shall mean for any reason not constituting Good Reason.
(f)    Termination by the Company without Cause.  The Company may terminate the employment relationship and this Agreement at any time by giving Employee no less than thirty (30) days prior written notice of the Company’s intent to terminate this Agreement or, in addition to any other amounts payable under this Agreement, one month of Base Salary in lieu of notice.  As used in this Section, “without Cause” shall mean for any reason not constituting Cause.
(g)    In the event of Employee’s termination, Employee and the Company, including its directors, officers, employees, representatives, attorneys, and agents shall refrain from making any public or private statement (including, as to Employee, any statement with respect to the directors, officers, employees, representatives, attorneys, and agents of the Company) that is derogatory or may tend to injure such person in its or their business, public or private affairs.  The foregoing obligations shall not apply to information required to be disclosed or requested by any governmental agency, court, or stock exchange, or any law, rule, or regulation.
(h)    If, in connection with Employee’s termination of employment with the Company, the Company determines to issue a press release, the Company agrees to provide a copy of the press release to Employee by e-mail or facsimile to review and comment on in advance of its publication; however, the Company retains sole discretion as to the content of the press release.
10.    Compensation Upon Termination.  In the event Employee’s employment terminates upon expiration of the Employment Period or as provided under Section 9 hereof, the Company shall pay to Employee or his estate: (i) Employee’s Base Salary through the date of termination, and (ii) any other amounts due Employee as of the date of termination, in each case to the extent not previously paid.  The Company shall also provide additional compensation (the “Severance Benefits”) as provided below.
(a)    Death or Disability.  Upon termination of Employee’s employment pursuant to Sections 9(a) or 9(b) hereof, (i) the restrictions on all of Employee’s time-based vesting equity awards, including restricted stock and stock options, shall lapse, the unvested portion of each such award vesting immediately and being immediately tradable or exercisable, as the case may be.  Thereafter, the Company shall have no further obligations to Employee or his/her estate other than as may be required by law.
(b)    By the Company for Cause.  If during the Employment Period the Company terminates Employee for Cause pursuant to Section 9(c), the Company shall have no further obligations to Employee other than as may be required by law.
(c)    By Employee other than for Good Reason.  If during the Employment Period Employee terminates his employment other than for Good Reason pursuant to Section 9(e), the Company shall have no further obligations to Employee other than as may be required by law.
(d)    By the Company without Cause or by Employee for Good Reason.  Except as otherwise provided in Section 11, if either the Company terminates Employee’s employment without Cause, or Employee terminates his employment for Good Reason, then the Company shall pay and provide to Employee the following benefits: 
(i)     a payment equal to 1.5 times the sum of (A) Base Salary and (B) the average annual bonus amount paid Employee for the past two fiscal years (or, if the termination occurs prior to the second anniversary of the date Employee commences employment at the Company, seventy-five percent (75%) of the Employee’s Base Salary).  Subject to the holdback and interest provisions of  Section 23, such payment shall be made on the sixtieth (60th) day following Employee’s Separation from Service provided that the Release required under Section 10(e) has become effective during such sixty (60)-day period following any applicable revocation period; 

(ii)     the restrictions on that number of shares of time-based vesting equity awards, including restricted stock and stock options, shall immediately lapse as would otherwise have lapsed if Employee had remained employed with the Company for a period through the date that is twelve (12) months from the date of termination; 

(iii)     provided that Employee and/or his eligible dependents timely elects to continue their healthcare coverage under the Company’s group health plan pursuant to the Consolidated Omnibus Reconciliation Act (“COBRA”), the Company shall reimburse Employee for the costs incurred to obtain such continued coverage for himself and his eligible dependents for a period of twelve (12) months measured from the termination date.  In order to obtain reimbursement for such healthcare coverage costs, Employee shall submit appropriate evidence to the Company of each periodic payment within thirty (30) days after the payment date, and the Company shall within thirty (30) days after such submission reimburse Employee for that payment.  During the period such healthcare coverage remains in effect hereunder, the following provisions shall govern the arrangement: (a) the amount of coverage costs eligible for reimbursement in any one calendar year of such coverage shall not affect the amount of coverage costs eligible for reimbursement in any other calendar year for which such  reimbursement is to be provided hereunder; (ii) no coverage costs shall be reimbursed after the close of the calendar year following the calendar year in which those coverage costs were incurred; and (iii) Employee’s right to the reimbursement of such coverage costs cannot be liquidated or exchanged for any other benefit.  To the extent the reimbursed coverage costs constitute taxable income to Employee, the Company shall report the reimbursement as taxable W-2 wages and collect the applicable withholding taxes, and any remaining tax liability shall be Employee’s sole responsibility, provided that the reimbursed coverage costs shall not be considered as taxable income to Employee if such treatment is permissible under applicable law; and 

(iv)     waiver of the requirement, if any, to repay relocation benefits as otherwise required by the Company’s Relocation Policy with such waiver to occur on the sixtieth (60th) day following Employee’s Separation from Service provided that the Release required under Section 10(e) has become effective during such sixty (60)-day period following any applicable revocation period. 

For purposes of this Agreement, "Separation from Service" shall mean Employee’s separation from service as determined in accordance with Section 409A of the Internal Revenue Code (“Code”) and the applicable standards of the Treasury Regulations issued thereunder.
(e)    The Severance Benefits payable to Employee under subsection (d) shall be in lieu of any other severance benefits to which Employee may otherwise be entitled upon his termination of employment under any severance plan, program, policy, practice, or arrangement of the Company.  Payment of the Severance Benefits herein is contingent upon Employee’s execution of a full and complete release substantially in the form set forth in Exhibit A hereto within twenty-one (21) days (or forty-five (45) days if such longer period is required under applicable law) after the date of termination and such Release becoming effective and enforceable in accordance with applicable law after the expiration of any applicable revocation period.
11.    Conduct Detrimental to the Company.  Employee acknowledges and agrees that the Company and its shareholders need to protect themselves from Conduct Detrimental to the Company and the provisions of this Section are designed to protect the Company and its shareholders from Conduct Detrimental to the Company.
(a)    Employee agrees that if Employee engages in Conduct Detrimental to the Company (as defined in subsection (c)) during the Employment Period, Employee shall disgorge and return to the Company, upon a demand made prior to a Change of Control, that number of shares of restricted stock or options to purchase shares of Company stock on which restrictions lapsed after the date on which the Company establishes, by a preponderance of the evidence, Employee first engaged in Conduct Detrimental to the Company, less the net effect of any taxes paid by Employee (taking into account the initial taxes paid and the tax effect of the disgorgement), or if Employee does not then own that number of shares, the amount of the cash proceeds received by Employee from his most recent sale of a like number of the shares, less the net tax effect as stated above.  Employee understands and agrees that this Section does not prohibit Employee from competing with the Company or soliciting the Company’s employees, but requires only a return of equity in the event of such competition or solicitation. Employee understands and agrees that the return of shares is in addition to and separate from any other relief available to the Company under the terms of this Agreement. 
(b)    The Company shall have no obligation to pay Employee the Severance Benefits pursuant to Section 10(d), and Employee agrees to repay such Severance Benefits previously paid, if the Company establishes, by a preponderance of the evidence in an action initiated prior to a Change of Control, that Employee engaged in Conduct Detrimental to the Company.  Employee understands and agrees that this Section does not prohibit Employee from competing with the Company or soliciting the Company’s employees, but requires only the return of the Severance Benefit in the event of such competition or solicitation.
(c)    “Conduct Detrimental to the Company,” as used in this Section, means:
		
	(i)
	conduct that results in Employee’s termination for Cause as defined in Section 9(c) (or that would have resulted in termination for Cause if known by the Company prior to the termination of Employee’s employment); 

		
	(ii)
	Employee engages in conduct in violation of Section 8 of this Agreement; or

		
	(iii)
	Employee engages in conduct in violation of Section 13 of this Agreement. 

12.    Change of Control. 
(a)    In the event a Change of Control of the Company occurs during the Employment Period, the forfeiture restrictions on all shares of restricted stock as to which such restrictions remain in place shall lapse immediately, and all unvested stock options shall vest immediately.
(b)    If, within two years following a Change of Control, either the Company terminates Employee’s employment without Cause, or Employee terminates his employment for Good Reason, then the Company shall pay and provide to Employee the benefits and rights provided in Section 10(d), except that in lieu of the amount set forth in Section 10(d)(i), the amount shall equal two times the sum of (A) Base Salary and (B) an amount that is 50% of Base Salary.
(c)    For purposes of this Agreement, a “Change of Control” of the Company shall mean:
		
	(i)
	the acquisition by any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company, a subsidiary of the Company or a Company employee benefit plan, of “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company which, together with any securities held by the person, represents 50% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; or

		
	(ii)
	the consummation of a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were the shareholders of the Company immediately prior to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company’s then outstanding voting securities in substantially the same proportions as their ownership immediately prior to such event; or

		
	(iii)
	the closing of a sale or disposition by the Company of all or substantially all the Company’s assets; or

		
	(iv)
	a change in the composition of the Board, as a result of which less than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the Effective Date, or (B) are elected, or nominated for election, thereafter to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination, but “Incumbent Director” shall not include an individual whose election or nomination is in connection with (i) an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or an actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board or (ii) a plan or agreement to replace a majority of the then Incumbent  Directors; or

		
	(v)
	the approval by the Board or the stockholders of the Company of a complete or substantially complete liquidation or dissolution of the Company.

13.    Post-Termination Restrictions.  Employee acknowledges and agrees that the Company has a substantial and legitimate interest in protecting the Company’s Confidential Information and goodwill.  Employee and the Company further acknowledge and agree that the provisions of this Section are reasonably necessary to protect the Company’s legitimate business interests and are designed to protect the Company’s Confidential Information and goodwill during the Employment Period and for a period following the Employment Period (such period following the Employment Period, the “Restricted Period”).  The Restricted Period for the Non-Competition Covenant shall be one (1) year from the date of termination of the Agreement, and the Restricted Period for the Non-Solicitation Covenant shall be two (2) years from the date of termination of the Agreement.
(a)     Non-Competition Covenant.  Employee shall not engage in, or otherwise directly or indirectly be employed by or act as a consultant or lender to, or be a director, officer, employee, principal, agent, member, owner, or partner of, or permit his name to be used in connection with the activities of any other business, organization, or entity that engages, directly or indirectly, with any “Competitive Business” as defined in subsection (c) during the Employment Period or the Restricted Period; provided, that it shall not be a violation of this Section for Employee to become the registered or beneficial owner of up to one percent (1%) of any class of the capital stock of a corporation registered under the Securities Exchange Act of 1934, as amended, provided that Employee does not actively participate in the business of such corporation until such time as the Restricted Period expires.  
(b)    Non-Solicitation Covenant.  Employee shall not, directly or indirectly, for his benefit or for the benefit of any other person, firm, entity, or business solicit, recruit, advise, attempt to influence, or otherwise induce or persuade, directly or indirectly (including encouraging another person to influence, induce, or persuade), any person, employed by the Company to leave the employ of the Company during the Employment Period and the Restricted Period (except for those actions that are within the scope of Employee’s employment and taken on behalf of the Company).  Nothing herein shall prohibit Employee from general advertising for personnel not specifically targeting any employee of the Company.
(c)    For purposes of this Section, the term “Competitive Business” means any business enterprise (whether a corporation, partnership, sole proprietorship, or other business entity) that competes in any material way with the products of the Company marketed and sold or under substantial development by the Company during the Employment Period.
Employee agrees that the scope of the restrictions as to time, geographic area, and scope of activity in this Section are reasonably necessary for the protection of the Company’s legitimate business interests and are not oppressive or injurious to the public interest.  Employee further agrees that any breach or threatened breach of any of the provisions of this Section 13 would cause irreparable injury to the Company for which it would have no adequate remedy at law.  Employee agrees that in the event of a breach or threatened breach of any of the provisions of this Section the Company shall, notwithstanding Section 17 hereof, be entitled to injunctive relief against Employee’s activities to the extent allowed by law.  Finally, Employee further agrees that the relief available under this Section 13 is in addition to and separate from any other relief available to the Company under this Agreement, including without limitation under Section 11.
14.    Mandatory Employee Compensation Clawback.  
(a)    Clawback.  In the event that the Company is required to prepare an accounting restatement due to the Company’s material non-compliance with any financial reporting requirement under the securities laws, Employee agrees to disgorge and pay back to the Company all incentive-based compensation (including stock options awarded as compensation) that Employee received during the three-year period preceding the date on which the Company is required to prepare the accounting restatement, to the extent that such compensation was based on erroneous data, in excess of what would have been paid to Employee under the accounting restatement.
(b)    Survival of Termination.  This Section 14 shall survive termination of this Agreement.
(c)    Construction of Section 14.  This Section 14 is intended to implement the requirements of Section 10D of the Securities Exchange Act of 1934, as amended, and shall be construed and interpreted consistent with such regulations as may be adopted thereunder by the Securities and Exchange Commission from time to time.
15.    Publicity.  Employee agrees that the Company may use, and hereby grants the Company the nonexclusive and worldwide right to use, Employee’s name, picture, likeness, photograph, or any other attribute of Employee’s persona (all of such attributes are hereafter collectively referred to as “Persona”) in any media for any advertising, publicity, or other purpose at any time, during the Employment Period.  Employee agrees that such use of his Persona will not result in any invasion or violation of any privacy or property rights Employee may have; and Employee agrees that he will receive no additional compensation for the use of his Persona.  Employee further agrees that any negatives, prints, or other material for printing or reproduction purposes prepared in connection with the use of his Persona by the Company shall be and are the sole property of the Company.
16.    Indemnification.  If Employee is made a party to or is threatened to be made a party to or is otherwise involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that Employee is or was an officer of the Company or is or was serving at the request of the Company as a director, officer, or trustee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, or trustee or in any other capacity while serving as a director, officer, or trustee, then Employee shall be indemnified and held harmless by the Company to the fullest extent authorized by the Delaware General Corporate Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent such amendment permits the corporation to provide broader indemnification rights than such law permitted the corporation to provide prior to such amendment), against all expense, liability, and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) reasonably incurred or suffered by Employee in connection therewith; provided, however, that, except with respect to proceedings to enforce his right to indemnification hereunder, the Company shall indemnify Employee in connection with a proceeding (or part thereof) initiated by Employee only if such proceeding (or part thereof) was authorized by the Company.  Any amendment, modification, or repeal of any provision of the Company’s Certificate of Incorporation, as amended, or the Bylaws of the Company, as such documents exist on the Effective Date, shall be deemed a material breach of this Agreement if such amendment, modification, or repeal would adversely affect Employee’s right to indemnification by the Company.
17.    Arbitration.  Any dispute or controversy arising out of or relating to this Agreement, including without limitation, any and all disputes, claims (whether in tort, contract, statutory, or otherwise), or disagreements concerning the interpretation or application of the provisions of this Agreement shall be resolved by arbitration in accordance with the rules of the American Arbitration Association (the “AAA”) then in effect for employment disputes.  The arbitration shall be conducted before a single arbitrator, who shall be a Labor and Employment Law specialist certified by the Texas Board of Legal Specialization, selected by mutual agreement of the parties, or if not agreed within 30 days following commencement of the proceeding, appointed by the AAA.  The arbitrator shall not have the authority to alter the terms of this Agreement or to award punitive damages.  The decision of the arbitrator will be final and binding on both parties.  The Company shall pay the expenses of the AAA and the arbitrator, and the Company and Employee shall pay their own legal fees.  The arbitrator shall have the authority to award reasonable attorneys’ fees to the prevailing party.  The Company and Employee agree that the arbitration and all matters related to the arbitration shall be treated as confidential.  This arbitration provision is expressly made pursuant to and shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16 (or replacement or successor statute).  Pursuant to Section 9 of the Federal Arbitration Act, the Company and Employee agree that a judgment of the United States District Court for the Southern District of Texas may be entered upon the award made pursuant to the arbitration.  
18.    Successors.
(a)    This Agreement shall be binding upon the Company and any successor thereof (whether direct or indirect, by purchase, merger, consolidation, or otherwise).  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business or assets or any entity that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law or by contract.  The failure by the Company to obtain a satisfactory agreement in writing from any successor of the Company that requires such successor to assume and agree to perform the Company’s obligations under this Agreement shall be deemed a material breach of this Agreement.
(b)    This Agreement and all rights of Employee hereunder shall inure to the benefit of and be enforceable by Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.  If Employee dies while any amounts are payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Employee’s devisee, legatee, or other designee or, if there is no such designee, to Employee’s estate.
19.    Entire Agreement.  This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, promises, covenants, arrangements, communications, representations, or warranties, whether oral or written, by any person in respect of such subject matter.  Any prior agreements of the parties hereto in respect of the subject matter contained herein are hereby terminated and canceled.
20.    Enforcement of Agreement.  No waiver of any action with respect to any breach by the other party of any provision of this Agreement shall be construed to be a waiver of any succeeding breach of such provision, or as a waiver of the provision itself.  Should any provisions hereof be held to be invalid or wholly or partially unenforceable, such holdings shall not invalidate or void the remainder of this Agreement.  Portions held to be invalid or unenforceable shall be enforced to the greatest extent permitted by law, and shall be revised and reduced in scope so as to be valid and enforceable, or, if such is not possible, then such portion shall be deemed to have been wholly excluded with the same force and effect as if the provision had never been included herein.  
21.    Governing Law.  The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of Texas without regard to its conflicts of law principles.
22.    Notice.  All notices or other communications required or permitted hereunder shall be in writing and sufficient if delivered personally, or sent by nationally-recognized, overnight courier or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:
If to Employee:            David S. Wise
100 Cyberonics Blvd.
Houston, TX 77058

If to the Company:             Cyberonics, Inc.
100 Cyberonics Blvd.
Houston, TX 77058
Attn:  General Counsel
(281) 218-9332 (Facsimile)

or to such other address as any party may have furnished to the other in writing in accordance herewith.  All such notices and other communications shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of a facsimile transmission, when the party receiving such transmission shall have confirmed receipt of the communication, (c) in the case of delivery by nationally-recognized, overnight courier, on the business day following dispatch and (d) in the case of registered or certified mailing, on date actually received. 
23.    Section 409A of the Internal Revenue Code.
  
(a)    This Agreement is intended to comply with the requirements of Section 409A of the Code.  Accordingly, all provisions herein shall be construed and interpreted to comply with Code Section 409A and if necessary, any such provision shall be deemed amended to comply with Code Section 409A and the regulations thereunder.
(b)    Notwithstanding any provision to the contrary in this Agreement, no payments or benefits to which Employee becomes entitled under this Agreement in connection with the termination of Employee’s employment with the Company shall be made or paid to Employee prior to the earlier of (i) the first day of the seventh (7th) month following the date of Employee’s Separation from Service due to such termination of employment or (ii) the date of Employee’s death, if Employee is deemed, pursuant to the procedures established by the Board in accordance with the applicable standards of Code Section 409A and the Treasury Regulations thereunder and applied on a consistent basis for all non-qualified deferred compensation plans subject to Code Section 409A, to be a “specified employee” at the time of such Separation from Service and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).  Upon the expiration of the applicable Code Section 409A(a)(2) deferral period, all payments deferred pursuant to this Section 23(b) shall be paid in a lump sum to Employee, and any remaining payments due under this Agreement shall be paid in accordance with the normal payment dates specified for them herein.  In addition, if Employee is deemed to be a specified employee at the time of Separation from Service and there is an amount payable by Employee to the Company under the Company’s Relocation Policy (the "Relocation Amount"), then notwithstanding Section 10(d)(v), the following provisions shall apply:  (i) the Company shall waive the requirement to repay the portion of the Relocation Amount up to the applicable dollar amount under Code Section 402(g)(1)(B), (ii) Employee shall repay to the Company any Relocation Amounts in excess of such limit (the "Repaid Amount") and (iii) upon the expiration of the applicable Code Section 409A(a)(2) deferral period, the Company shall pay to Employee the Repaid Amount in a lump sum.  The specified employees subject to a delayed commencement date shall be identified on December 31 of each calendar year.  If Employee is so identified on any such December 31, he shall have specified employee status for the twelve (12)-month period beginning on April 1 of the following calendar year.  
24.    Counterparts.  This Agreement my be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument
25.    Surviving Terms.  The rights and obligations of the parties regarding the payment or provision of benefits set forth in this Agreement upon such termination and the rights and restrictions during the period after termination shall survive the termination of this Agreement.
26.    Amendment or Modification.  No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Employee and an authorized officer of the Company.  
27.    Withholding.  All payments, compensation, and benefits hereunder shall be subject to any required withholding of federal, state, and local taxes pursuant to any applicable law or regulation. 
28.    No Waiver.  Employee’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right that Employee or the Company may have hereunder shall not constitute a waiver of such right to insist upon strict compliance in the future.
Cyberonics, Inc.

By _________________________________ 
Daniel J. Moore
President & Chief Employee Officer

Employee

____________________________________
David S. Wise

EXHIBIT A
RELEASE
Employee hereby irrevocably and unconditionally releases, acquits, and forever discharges the Company and its affiliated companies and their directors, officers, employees, and representatives, (collectively “Releasees”), from any and all claims, liabilities, obligations, damages, causes of action, demands, costs, losses, and/or expenses (including attorneys’ fees) of any nature whatsoever, whether known or unknown, including, but not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith and fair dealing, express or implied, any tort, any legal restrictions on the Company’s right to terminate employees, or any federal, state, or other governmental statute, regulation, or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, and the Federal Age Discrimination in Employment Act, which Employee claims to have against any of the Releasees.  Employee acknowledges that the payments provided in the Agreement are in full and complete satisfaction of all contract or severance obligations that the Company may have.  In addition, Employee waives all rights and benefits afforded by any state laws which provide in substance that a general release does not extend to claims which a person does not know or suspect to exist in his favor at the time of executing the release which, if known by him, must have materially affected Employee’s settlement with the other person.  Notwithstanding the foregoing, this Release shall not apply to: (i) Employee’s continuing rights under any pension or welfare plans, including Employee’s rights under COBRA, (ii) Employee’s right to enforce the surviving terms of the Employment Agreement, (iii) Employee’s right to indemnification, and (iv) claims and rights that may arise after the date of execution of this Release.
Employee represents and acknowledges that in executing this Release he does not rely and has not relied upon any representation or statement, oral or written, not set forth herein or in the Agreement made by any of the Releasees or by any of the Releasees’ agents, representatives, or attorneys with regard to the subject matter, basis, or effect of this Release, the Agreement, or otherwise.
Employee represents and agrees that he fully understands his right to discuss all aspects of this Release with his personal attorney, that to the extent, if any, that he desires, he has availed himself of this right, that he has carefully read and fully understands all of the provisions of this Release, and that he is voluntarily entering into this Release for good and valuable consideration, the receipt of which is hereby acknowledged. 
Employee further represents and acknowledges that Employee has twenty-one (21) days to consider this Release prior to signing.  Employee further understands that Employee may revoke this Agreement within seven (7) days of its execution.  This Release shall not become effective or enforceable until the seven-day revocation period has expired.
AGREED AND ACCEPTED, on this _____ day of _______________, 20__.

____________________________________Exhibit

,.

EMPLOYMENTCONTRACT

BETWEEN THE UNDERSIGNED:

ELA MEDICAL, a French limited liability company (SAS) with a capital of
€50,000,000, whose registered office is located at 98, rue Maurice Arnoux in Montrouge - 92120, registered with the Commercial and Companies Registry of Nanterre under  the number B 309 786 481, represented by Mr. Stéphane BESSETTE, acting in his capacity as Vice President Human Resources,

hereinafter referred to as the "Company",

on the one hand ,

AND:

Mr.  Stefano  Di  Lullo, born  on  141
h
 
June  1961 in Montréal, of  Canadian

nationality , residing at 16, allée de la Clairière in Noisy-le-Roi - 78590,

hereinafter referred to as the "Employee" or "Mr. Di Lullo",

on the other hand.

2.

THE PARTIES HAVE AGREED AS FOLLOWS:

Article 1 - Hiring

The Employee is hired by the Company as Senior Vice President, Vascular Therapy Business Unit.

In addition, the Employee shall be asked to hold a special assignment as Strategie Marketing Advisor for the Heart Valves Business.

The hiring will be effective November 1, 2005 at the latest, subject to the results of a medical examination and subject to obtainment of the necessary inmügration documents and work permits, ifnecessary. The Employee will have an executive status, level IIIC.

The Employee accepts this appointment and declares that he is not bound by any other company and has been released from his contractual obligations towards his former employer.

This employment contract (hereinafter referred to as the "Contract") is subject to the provisions of the National Collective Bargaining Agreement for Engineers and Executives for the Metal Industry (hereinafter referred to as the "Collective Bargaining Agreement") and in compliance with the Company's internai rules and regulations, a copy of which will be provided to the Employee.

For information, the Employee is reminded that the following collective agreements are in force within the  Company: Convention Collective Nationale Ingénieurs et Cadres de la Métallurgie.

Article 2- Duration

The Contract is entered into for an indefinite tenn.

The Contract shall become definitive following the fulfillment of a trial period of tlu·ee months, renewable once by an agreement between the Company and the Employee. During this trial period , the Contract may be terminated at any time by either of the Company or the Employee, without indenmity. However, after a 45-day trial period, the reciprocal notice will be fifteen days or one month if the trial period lasts six months, except in the event of dismissal for gross or serious misconduct ("faute grave ou lourde '').

Following the trial period, the Contract may be terminated by either the Company or the Employee by registered letter with acknowledgment of receipt, subject to a reciprocal tlu-ee­ month notice period. The notice period shall not apply in the event of dismissal for serious or gross misconduct.

3.

Article 3 - Duties

In his capacity as Senior Vice President, Vascular Therapy Business Unit, the Employee shall
in particular be responsible as stipulated in the job description in annex .

The duties as Senior Vice President, Vascular Therapy Business Unit shall be carried out by the Employee under the control of and according to the instructions given by the President, Cardiac Sm·gery and Vascular Therapy Business Units, or by any person designated to this end by the Company, to whom the Employee shall report on his activity and the assignments assigned to him.

In his special assignment as Strategie Marketing Advisor for the Heart Valves Business Unit, the Employee shall in particular be responsible as stipulated in the job description in atmex.

Without prejudice to the legal and regulatory provisions in force, the Employee expressly agrees that his duties may be changed from time to time by the Company, to the extent that the duties assigned to the Employee are consistent with his status and responsibilities. These modifications shall not constitute an amendment to the Contract. In any event, for the first 12 months of employment the Employee will not be responsible for,  nor involved in, any decision, activity and information concerning the endovascular business.

Article 4 - Place of work

The Employee is informed that he shall perform his duties at the Company's establishment
located at La Boursidière in Plessis Robinson -92357- France.

At the Company's request, the Employee shall make trips or may be transferred, on a temporary or permanent basis, to any other place located in France or abroad. Any change of place of work as defined in this article shall not constitute an amendment to the Contract.

Article 5 - Obligations

The Employee shall devote all of his professional activities and attention to the business of the Company and shall use all of his abilities and capacities in the promotion of the interests of the Company. Tlu-oughout the duration of the Contract, the Employee undertakes not to carry out any professional activity of any nature whatsoever on his own behalf or on behalf of any other person or company other than a company of the Sorin Group. Throughout the duration of the Contract, the Employee undertakes not to take, for any reason whatsoever, a direct or indirect interest in a comparable or similar business without the Company's prior written approval.

The Employee undertakes to abide by all the internai ntles and procedures applied by the
Company .

Article 6 - Remuneration

In consideration for carrying out his duties, the Employee shall receive a gross annual salary of a fixed amount of two hundred and forty thousand euros (€240,000), payable in thirteen point one (13.1) monthly instalments.

4 .

The Employee shall be entitled to a sign-on bonus of sixty-five thousand euros gross (€65,000), payable as follows: twenty-five thousand euros gross (€25,000) at the same time as the payment of the January 2006 salary, fifteen thousand euros gross (€15,000) at the same time as the payment of the January 2007 salary, and twenty-five thousand euros gross (€25,000) at the same ti me as the payment of the January 2008 salary. The payment of this bonus shall depend on the Employee's effective presence within the Company at the date of each instalment and in the absence of a breach of the Contract, for any reason whatsoever. In this way, in the event where his Contract is terminated, the Employee shall not be entitled to claim the payment of an instalment, which might occur during the notice period, whether performed or not.

In addition to his base salary, the Employee shall be entitled, for 2005, to a maximum bonus of twenty-five thousand euros (€25,000) gross, subject to the achievement of quality objectives of induction  in his role, defined in agreement with the Employee's direct line manager. Where applicable, this bonus shall be paid to the Employee at the same time as his January 2006 salary.

As of January 2006, and as a supplement to his base remuneration , the Employee shall be entitled to pm1icipate in an mmual management bonus scheme which will provide for the payment of a bonus amounting to a target of 40% of the gross base salary, as mentioned above. The payment of this bonus shall be linked to the achievement of business and persona! objectives (75 % of the target bonus will be related to the VT business objectives and 25 % will be related to the HV business objectives), which will be established on an annual basis with reference to the bonus plan for the key managers of the Sorin Group and the Employee's specifie position. These objectives shall be determined by way of an amendment to the Contract.

Any bonus or gratuity that the Company grants the Employee exceeding the remuneration agreed above shall constitute a discretionary payment from the Company. Any Company decision regarding such a bonus or gratuity shall only be valid for the period determined by the Company and shall be payable for this period in accordance with the terms and conditions decided by the Company.

Article 7- Du ration of work

In keeping with his appointed functions and duties, as weil as the degree of autonomy to which he is entitled, the Employee 's status shall be that of Key Manager ("cadre dirigeant") . Consequently, the provisions of the Labor Code regarding working hours shall not apply to the Employee.

Article 8 - Company car

The Company shall make available to the Employee a company car, which he may use both for professional and persona! needs. The amount corresponding to the Employee's persona! use of the vehicle will be considered as a benefit in kind and, as such, will be subject to social charges. The Employee confirms that he holds a valid driving license, and undertakes to immediately inform the Company of any change arising in this respect.

5.

information regarding the accident. The Company shall pay ail maintenance costs for said vehicle, and will reimburse the Employee for ail gasoline or toll expenses incurred in the course of his professional activity, upon production of documentary proof. Any fines shall remain the responsibility of the Employee under ali circumstances.

The vehicle made available to the Employee shall remain the property of the Company and shall immediately be returned to the Company at the end of the Contract for any reason whatsoever.

Article 9 - Professional expenses

Reasonable expenses relating to accommodation, travel and representation  costs and  any other expenses necessary for the performance of the Employee's duties shall be reimbursed to him on a monthly basis upon production of an expenses report and related receipts based on the rules and arrangements determined by the Company, in compliance with the provisions of the Collective Bargaining Agreement.

Article 10- Accrued paid vacation

The number  of days of accrued paid vacation to which the Employee is entitled shall be determined in accordance with the applicable legislation and the provisions of the Collective Bargaining Agreement.

The Employee will take his accrued paid vacation at dates agreed with the Company .

The accrued paid vacation acquired during a reference year may not be taken or postponed after the end of the following referenc e year.

Article 11-Social security

Tlll'oughout the duration of the Contract, the Employee will be affiliated to the following retirement and welfare schemes currently subscribed to by the Company for employees of his category:

Caisse ARRCO: CGIS- 509, Rue Van Gogh- 75 591 Paris Cedex 12

Caisse AGIRC: IRRAPRI- Mail Charlot- 41930 BLOIS Cedex 9;

These abovementioned schemes may be modified from time to time by the Company in compliance with applicable laws, without such a modification being an amendment to the Contract.

The  Company  is  affiliated  to  the  URSSAF  of  Montreuil,  under  the  internai  number
920080196555002011.

TIU'oughout the duration of the Contract, the Employee will also be granted private health insurance coverage and private pension plan, in tine with the Company Benefit s Policy.

6.

Article 12 - Professional secrecy

The Employee acknowledges that the disclosure of confidential information may be detrimental to the Company's interests. Any and all information, to which the Employee has access, directly or indirectly, regarding the activities, administrative and financial management, teclmology, products and clients of the Company and/or any other company of the Sorin Group, shall be considered confidential.

Therefore, the Employee undertakes not to disclose any confidential information whatsoever, whether in his own interest or in the interest of any other person. This secrecy and confidentiality undertaking shall apply (i) during the term of the performance of the Contract, unless the disclosure of such information to third parties is necessary for the Employee's performance of his duties, and (ii) after the termination of the Contract, for any reason whatsoever, except with the Company's prior written approval.

The Employee also undertakes not to copy or distribute for his own use or for the use of any other physical or moral  person, any software used or developed  by the Company without
(i) obtaining   his   line   manager's   prior   written   approval   and   (ii) taking   all   reasonable
precautions to ensure that his use of the software neither corrupts nor destroys any existing software or data.

The Company has provided the Employee upon joining the Company, with the documents and equipment necessary for the Employee's proper execution of his obligations under the Contract. Such documents and equipment, as weil as all other property placed at  the Employee's disposai during the Contract, are and will remain the sole propet1y of  the Company. Upon tennination of the Contract, or at any other moment during the performance of the Contract, the Employee undertakes to return the property , documents and equipment to the Company, upon its first written request .

Moreover, upon the termination of the Contract or at any moment during the performance of the Contract, the Employee undertakes to return to the Company, upon  its  first  written request, all files and other documents which may be in his possession or under his control (including any photocopies of documents), relating to the professional activities of the Company and/or any other company of the Sorin Group and/or their clients. This provision includes, without being limited to, all credit cards, keys, books, records, repot1s, manuals, client lists, printed matter, documents, sketches, drafts, databases, correspondence, and memoranda.

Article 13 - Inventions

Any invention made by the Employee in the performance of his duties, where they include an inventive assignment, or in the scope of studies or research, which are explicitly assigned to him, shall automatically belong to the Company. An invention is considered patentable when it is a new invention involving an innovative activity, which is liable to be used for industrial purposes, pursuant to Article L.611-1 0 1o of the Intellectual Property Code. In the event where the Company files an invention , the Employee shall be named in the patent application. The remuneration paid to the Employee pursuant to  the Contract  shall  be deemed to include the additional remuneration provided for by Article L.611-7 of the Intellectual Property Code.

7.

Ali other inventions shali belong to the Employee. However, where an invention was made by the Employee during the performance of his duties, either within the Company's Iine of business or using knowledge , teclmiques or assets that are specifie to the Company, or data obtained by the Company, the Company may assign the ownership or enjoyment of ali or part of the rights attached to the patent protecting the invention.

In such a case, the Company shall pay  the Employee  fair compensation  taking  into account the respective contributions of the Employee, the Company or one of the other companies of the Sorin Group and the industrial or commercial interest of the  invention.  Any  dispute relating to the calculation of the fair compensation shali be submitted to the Conciliation Committee ("Commission de Conciliation") created by Article L.615-21 of the Intellectual Property Code orto the Tribunal de Grande Instance.

The Employee undertakes, pursuant to the provisions of Decree No. 79.797 of 4 September 1979 to inunediately notify the Company by registered letter with acknowledgment of receipt of ali inventions for which he is the author or the co-author, whether these inventions relate to his professional duties or not. This declaration must contain ail the information in  his possession to allow the Company to assess the classification of the invention. Where the classification implies the right to attribution provided for by the law for certain types of inventions, the Employee undertakes to give the Company a description of the relevant invention. The two pat1ies undertake not to disclose the invention until a final ruling has been made regarding the classification.

At the Company's request, and at its expense, the Employee shall sign any request, transfer or other document which may be necessary so that the Company or any other company of the Sorin Group can file and obtain patents, copyrights, registration of designs or any other form of protection concerning the rights to the invention, and be officially recognized as the bolder of ail the rights and title deeds to the invention. More generally, the Employee agrees to provide the Company or any other company of the Sorin Group with any assistance necessary in connection with any action, procedure or steps concerning the application of the provisions of this article in France and abroad.

Article 14- Non-compete undertaldng

Given the nature of his functions and duties, the Employee acknowledges that a non-comp ete obligation aims to protect the legitimate interests of the Company and undertakes, in the event of tennination of the Contract for any reason whatsoever:

not to work in any capacity whatsoever, such as an employee, corporate officer, independent consultant, etc., for any competing business which bas its activity in the vascular therapy and heat1 valves sectors;

not to take a direct or indirect interest, in any way whatsoever, in this type of busines s.

This non-compete undertaking shall be limited to a period of 12 (twelve) months with effect from the effective termination of the Contract and shall cover the entire world.

8.

salary instalments, and shall be subject to social security contributions. The Company may reduce this non-competition undertaking or waive the benefit of this non-competition undertaking by infonning the Employee within 8 weekdays following the notification of the termination of the Contract. In this case, the Company will not be liable for payment of the aforementioned indemnity.

Any breach of this non-competition clause shall automatically give rise to the reimbursement of the aforementioned indemnity, the payment by the Employee of a penalty which is fixed at a lump sum corresponding to his net basic salary received during the last [8] months of his activity; such penalty shall be payable for each offence observed, without requiring any injunction to cease the competing activity, and without prejudice to the Company's right to obtain full indemnification of the loss actually incurred.

Article 15- Post-termination understandings

Following the termination of the Contract for any reason whatsoever, and without any time limit, the Employee undertakes not to represent himself as being in any way connected or interested in the business of the Company or any other company of the Sorin Group.

The Employee unde11akes during 12 (twelve) months following the date of the termination of
the Contract for any reason whatsoever, not to, directly or indirectly:

solicit, hire or attempt to hire any individual, who is an employee of the Company or any
other company of the Sorin Group;

incite any individual, who is an employee of the Company or any other company of the Sorin Group, to Jeave his position with the Company or any other company of the Sorin Group;

solicit customers of the Company with which you has been dealing, directly or indirectly,
in the last three years ofyour employment with the Company.

Article 16- Applicable law

The Contractas weil as the rights and obligations of the parties which result therefrom will be
governed by and interpreted in accordance with French law.

Every stipulation in the Contract or any part of each of these stipulations which may be declared null and void by a Court shall be considered as a separate part of the Contract, which shall remain valid and shall continue to be effective for the remainder of its provisions.

Article 17 - Miscellaneous

9.

The Employee  acknowledges  that  he has received  an original  copy of the Contract, duly signed by the parties.

The Employee  shall  inform  the Company  immediately  of any change to the information
provided on the date hereof (address, marital status, etc.). Executed in Plessis Robinson, on October 21st ,2005, in duplicate.

(*handwritten words: "lu et approuvé" ("read and approved''))

ANNEX TO EMPLOYMENT CONTRACT DATED November 7th 2005

BETWEEN THE UNDERSIGNED:

ELA MEDICAL, a French limited liability company (SAS) with a capital of
€50,000,000, whose registered office is located at 98, rue Maurice Arnoux in Montrouge - 92120, registered with the Commercial and Companies Registry of Nanterre under  the number B 309 786 481, represented by Mr. Stéphane BESSETTE, acting in his capacity as Vice President Human Resources,

hereinafter referred to as the "Company",

on the one hand,

AND:

Mr.  Stefano  Di  Lullo,  born  on  14111   June   1961  in  Montréal,  of  Canadian
nationality, residing at 16, allée de la Clairière in Noisy-le-Roi - 78590,

hereinafter referred to as the "Employee" or "Mr. Di Lullo",

on the other hand.

2.

THE PARTIES HAVE AGREED AS FOLLOWS:

The Employee has entered into an indefinite-term employment contract with the Company on November 151 2005 and accepts to be temporarily seconded to Sorin Biomedica Cardio S.r.l., an Italian company.

Article 1- Object

The Employee shall be sent on secondment, as Senior Vice President,  Vascular Therapy Business Unit to Sorin Biomedica Cardio S.r.l., since the Company and the entire Sorin Group have an interest in that the above duties be performed, at least initially, at the Sorin Group subsidiary which is specifically dedicated to the Vascular business.

It must be expressly noted that, throughout the duration of the secondment, the Employee shall perform his functions under the control of and according to the instructions given by the President, Cardiac Sm·gery and Vascular Therapy Business Units, or by any person designated to this end by the Company, to whom the Employee shall report on his activity. The Employee must comply with internai rules in force within the host offices.

During the secondment, the Employee will remain on the Company's payroll. Moreover, in such period the Company , in its capacity as the Employee's sole employer, shall retain ali supervision and disciplinary powers over the performance of the Employee's duties.

Article 2 - Duration

The secondment shall begin as of 7th November 2005, and for an initial period of tlu·ee years, which may potentially be renewed. However, insofar as the mission should end before the term of the tlu·ee-year period, the Employee will have sufficient time to organize his return.

Article 3 -Place of work

The Employee shall perform his duties at the SORIN Biomedia Cardio S.r.l. offices, located
in Saluggia, Italy.

Article 4 -Professional expenses and benefits in lund

Travel expenses

Tluoughout the length of the secondment, the Company  shall reimburse the Employee one economy class return-flight ticket per week (Paris/Milan or Paris/Turin).

Housing allowance

3.

Relocation expanses

Should the Employee decide to have his family join him in Italy, the Company shall cover reasonable relocation expenses, as well as the fees of a relocation agency it will have chosen. The invoices must be written out to the Company.

Mm eover, in such case the Company will discuss with the Employee the opportunity of providing other support benefits and/or services and to review the conditions regulating the car, house and flight tickets benefits.

Fees

The Company shall pay the reasonable fees of a persona) tax consultant.

Company car

The Company shall make available to the Employee a company car in Italy, which he may use for professionallocal needs. The Employee confirms that he hold s a valid driving license, including an international driving license, and undertakes to immediately inform the Company of any change arising in this respect.

Article 5 - Socia l benefits

The Employee will continue to benefit from French social security during his secondment.

Article 6- Post-secondment undertaldngs

At the end of the secondment, whether anticipated or not, the Company undertakes to redeploy the Employee in a position similar to the one he held within the Company, insofar as such positions are available.

Article 7 -Applicable law

The Contractas well as the rights and obligations of the parties which result therefrom will be governed by and interpreted in accordance with French law.

Every stipulation in this annex or any part of each of these stipulations  which may be declared null and void by a Court shall be considered as a separate part of the present annex, which shall remain valid and shall continue to be effective for the remainder of its provisions.

4.

Article 8 - Miscellaneous

The stipulations of this mmex replace, during its implementation, the stipulations provided in the employment contract entered into between the parties dated 21st October 2005 and that are contradictory. Any amendment to the present alU1ex shall be made in writing and signed by the parties.

The Employee acknowledges that he has received an original copy of the present annex, duly signed by the parties.

Executed in Plessis Robinson, on 7111 November 2005, in duplicate.

u et approuvé" ("read and approved"))

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