Document:

EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), entered into effective as of July 9, 2007 (the
“Effective Date”), by and between Cyberonics, Inc. (the “Company”) and Gregory H. Browne
(“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, Finance and
Chief Financial 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 principal
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 $265,000 (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. In further consideration of the services
rendered by Employee during the Employment Period, the Company shall grant Employee,
consistent with the United States securities laws, sixty thousand (60,000) shares of
restricted stock (collectively, the “Initial Equity Grant”) to be issued from the
Company’s Amended and Restated New Employee Equity Inducement Plan in two separate
grants. The Company shall grant the thirty thousand (30,000) of such restricted
            shares (the “Time-Vested Shares”) on the first quarterly grant date immediately
following the Effective Date as determined under the Company’s Equity Incentives
Grant Policy and any and all restrictions on the 7,500 of such Time-Vested Shares
shall lapse on each of the first four anniversaries of the grant date. The Company
shall grant the remaining thirty thousand (30,000) shares of the Initial Equity
Grant (the “Performance-Vested Shares”) on the quarterly grant date (as determined
under its Equity Incentives Grant Policy) immediately following the establishment of
the performance measures based upon the financial performance of the Company and
upon qualitative measures as established by the Compensation Committee no later than
one-hundred eighty (180) days from the Effective Date. 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.

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), (ii) 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.

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 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 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 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 (iii) 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 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

To Employee:

Gregory H. Browne

1300 Woodhollow Drive, Apt. 22201

Houston, TX 77057

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.

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/ George E. Parker III

George E. Parker III

Interim Chief Operating Officer

EMPLOYEE

/s/ Gregory H. Browne

Gregory H. BrowneEX-10.2

EXHIBIT 10.2

SEVERANCE AGREEMENT

THIS AGREEMENT (the “Agreement”), made and entered into effective as of July 9, 2007 (the
“Effective Date”), is by and between Cyberonics, Inc., a Delaware corporation (the “Company”), and
Gregory H. Browne (the “Employee”).

WHEREAS, Employee is a key employee of the Company; and

WHEREAS, the Company recognizes that the possibility of a Change of Control (as defined below)
of the Company is unsettling and may result in the departure of key employees to the detriment of
the Company and its stockholders; and

WHEREAS, the Board of Directors of the Company (the “Board”) has authorized this Agreement and
certain similar agreements in order to retain key employees to ensure the continuity of its
management;

THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Employee agree as follows:

1. Term. This Agreement shall commence on the Effective Date and shall continue until April
30, 2008; provided, however, that commencing on April 30, 2008 and on each April 30th thereafter,
the Term of this Agreement shall automatically be extended for one additional year, unless at least
six months prior to such April 30 date the Board shall give written notice to Employee that the
Term of this Agreement shall cease to be so extended; provided further, however, that if a Change
of Control shall occur during the Term, the Term shall automatically continue in effect for a
period of not less than one year from the date of such Change of Control. Notwithstanding the
foregoing, except as provided in Section 3, this Agreement shall automatically terminate on
Employee’s termination of employment; provided, however, termination of this Agreement shall not
alter or impair any rights of Employee arising hereunder on or prior to such termination.

2. Change of Control. 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
representing 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 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 fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A)
are directors of the Company as of July 9, 2007, 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.

3. Termination on or Following a Change of Control. If a Change of Control occurs during the
Term, Employee shall be entitled to the benefits provided in Section 4 hereof if, during the
Protected Period (as hereinafter defined), Employee becomes disabled or Employee’s employment is
terminated, unless such termination is (a) due to Employee’s death, (b) by the Company either for
Cause or Employee’s Disability, or (c) by Employee for other than a Good Reason. Anything in this
Agreement to the contrary notwithstanding, if Employee’s employment with the Company is terminated
during the Term and prior to the date on which a Change of Control occurs, and it is reasonably
demonstrated that such termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect the Change of Control, or (ii) otherwise arose in connection with
or anticipation of the Change of Control, then for all purposes of this Agreement the Change of
Control shall be deemed to have occurred on the date immediately prior to the date of Employee’s
termination and Employee shall be deemed terminated by the Company during the Protected Period
other than for Cause. For purposes of this Agreement, the “Protected Period” shall mean the period
of time beginning with the Change of Control and ending on the first anniversary of such Change of
Control or Employee’s death, if earlier.

(i) Disability. If, as a result of Employee’s incapacity due to physical or mental illness,
Employee shall have been absent from Employee’s duties with the Company on a full-time basis
for 150 consecutive calendar days, and within 30 days after written Notice of Termination
(as defined hereinafter) Employee shall not have returned to the full-time performance of
Employee’s duties, the Company may terminate Employee’s employment for “Disability”;
provided, however, a termination of Employee’s employment for Disability under this
Agreement shall not alter or impair Employee’s rights as a “disabled employee” under any of
the Company’s employee benefit plans.

(ii) Cause. The Company may terminate Employee’s employment for Cause. For the purposes of
this Agreement, the Company shall have “Cause” to terminate Employee’s employment hereunder
only upon (A) the willful and continued failure by Employee to perform substantially
Employee’s duties with the Company, other than any such failure resulting from Employee’s
incapacity due to physical or mental illness, which continues unabated after a written
demand for substantial performance is delivered to Employee by the Board that specifically
identifies the manner in which the Board believes that Employee has not substantially
performed Employee’s duties or (B) Employee willfully engaging in gross misconduct that is
materially and demonstrably injurious to the Company. For purposes of this paragraph, an
act or failure to act on Employee’s part shall be considered “willful” only if done or
omitted to be done by Employee otherwise than in good faith and without reasonable belief
that Employee’s action or omission was in the best interest of the Company. Notwithstanding
the foregoing, Employee shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the Board, at a
meeting of the Board called and held for such purpose (after reasonable notice to Employee
and an opportunity for Employee, together with Employee’s counsel, to be heard before the
Board), finding that in the good faith opinion of the Board Employee was guilty of conduct
set forth in clauses (A) or (B) of this subsection (ii) and specifying the particulars
thereof in reasonable detail.

(iii) Good Reason. Employee may terminate Employee’s employment for Good Reason. For
purposes of this Agreement, “Good Reason” shall mean the occurrence of any of the following
without Employee’s express written consent:

(A) an adverse change (as determined by Employee in good faith, which determination
shall be controlling for all purposes under this Agreement) in Employee’s (i)
positions, duties, responsibilities or status with the Company from that in effect
immediately prior to the Change of Control, or (ii) reporting responsibilities,
titles or offices as in effect immediately prior to the Change of Control; or any
removal of Employee from, or any failure to re-elect or appoint Employee to, any of
such responsibilities, titles, offices or positions, except in connection with the
termination of Employee’s employment for Cause or Disability, or as a result of
Employee’s death, or by Employee for other than a Good Reason;

(B) a reduction in Employee’s annual rate of base salary as in effect immediately
prior to the Change of Control or as the same may be increased from time to time
thereafter (the “Base Salary”);

(C) a failure by the Company to continue the Company’s Annual Incentive Compensation
Plan as the same may be modified from time to time, but substantially in the form in
effect immediately prior to the Change of Control (the “Bonus Plan”), or a failure
by the Company to continue Employee as a participant in the Bonus Plan in at least
the same amount (the “Bonus Amount” ) as Employee’s target bonus amount under the
Bonus Plan with respect to the fiscal year ending immediately prior to the Change of
Control or with respect to the current fiscal year if Employee has been employed by
the Company for a shorter period (Bonus Amounts related to less than a full fiscal
year shall be annualized for this purpose);

(D) the failure by the Company to continue in effect any other employee benefit or
compensation plan program or policy, in which Employee is participating immediately
prior to the Change of Control, unless the Company establishes such new plans,
programs or policies as is necessary to provide Employee with substantially
comparable benefits; the taking of any action by the Company not required by law
that would adversely affect Employee’s participation in or reduce Employee’s
benefits under any of such plans, programs or policies or deprive Employee of any
material fringe benefit enjoyed by Employee immediately prior to the Change of
Control;

(E) the Company’s requiring Employee to relocate to an office more than 25 miles
from the Company’s office to which Employee was assigned immediately prior to the
Change of Control, except for required travel on the Company’s business to an extent
substantially consistent with Employee’s business travel obligations immediately
prior to the Change of Control;

(F) the amendment, modification or repeal of any provision of the Company’s
Certificate of Incorporation, as amended, or the Bylaws of the Company which was in
effect immediately prior to such Change of Control, if such amendment, modification
or repeal would adversely effect Employee’s right to indemnification by the Company;

(G) the failure of the Company to obtain the assumption of this Agreement by any
successor as contemplated in Section 6 hereof; or

(H) any purported termination of Employee’s employment that is not effected pursuant
to a Notice of Termination satisfying the requirements of subparagraph (iv) below
and, if applicable, subparagraph (ii) above; and for purposes of this Agreement, no
such purported termination shall be effective.

Employee’s right to terminate employment for a Good Reason hereunder shall not be affected
by Employee’s incapacity due to a physical or mental illness nor shall Employee’s continued
employment following any circumstance that constitutes a Good Reason hereunder, regardless
of the length of such continued employment, constitute a consent to or a waiver of
Employee’s rights hereunder with respect to such circumstance.

(iv) Notice of Termination. Any termination by the Company pursuant to subparagraphs (i) or
(ii) above, or by Employee pursuant to subparagraph (iii) above, shall be communicated by
written Notice of Termination to the other party hereto. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Employee’s employment under
the provision so indicated.

(v) Date of Termination. “Date of Termination” shall mean (A) if Employee is terminated for
Disability, 30 days after Notice of Termination is given, provided that Employee shall not
have returned to the performance of Employee’s duties on a full-time basis during such
30-day period, (B) if Employee’s employment is terminated pursuant to subparagraph (iii)
above, the date specified in the Notice of Termination, (C) with respect to a termination
prior to a Change of Control, which is deemed to be after such Change of Control as provided
in Section 3, the date of such termination, and (D) if Employee’s employment is terminated
for any other reason on or after a Change of Control, the date of such termination.

4. Compensation During Disability or Upon Termination.

(i) If, during the Protected Period, Employee fails to perform Employee’s normal duties as a
result of incapacity due to physical or mental illness, Employee shall continue during the
period of such disability to receive Employee’s full Base Salary and any awards, deferred
and nondeferred, payable during such period under the Bonus Plan, less any amounts paid to
Employee during such period of disability pursuant to the Company’s short term disability or
sick-leave program(s) until Employee’s employment is terminated or such Disability ends.
This Section 4(i) shall not reduce or impair Employee’s rights to terminate employment for a
Good Reason as otherwise provided herein.

(ii) If, during the Protected Period, Employee’s employment shall be terminated (x) by the
Company for Cause, (y) by Employee’s death, or (z) by Employee other than for a Good Reason,
the Company shall pay Employee’s earned but unpaid Base Salary through the Date of
Termination and the Company shall have no further obligations to Employee under this
Agreement.

(iii) If, during the Protected Period, (1) the Company shall terminate Employee other than
for Cause or Disability or (2) Employee shall terminate Employee’s employment for a Good
Reason, the Company shall pay to Employee, by certified or bank cashier’s check or wire
transfer within five business days after the Date of Termination, an amount equal to: (A)
three times the sum of Employee’s Base Salary and Bonus Amount; plus (B) that portion of
Employee’s Base Salary earned, and vacation pay vested for the prior year and accrued for
the current year to the Date of Termination, but not paid or used, and all other amounts
previously deferred by Employee or earned but not paid as of such date under all Company
bonus or pay plans or programs.

(iv) If any payment due under the terms of this Agreement is not timely made or otherwise
withheld by the Company, its successors or assigns, interest shall accrue on such payment at
the highest maximum legal rate permissible under applicable law from the date such payment
first became due through the date of payment thereof.

(v) In the event that any payment or benefit received or to be received by Employee pursuant
to the terms of this Agreement or any other plan, arrangement or agreement with (A) the
Company, (B) any Person whose actions result in a “change in control” (for purposes of
Section 280G of the Internal Revenue Code (the “Code”)) or (C) any Person affiliated with
the Company or such Person) (all such payments and benefits being hereinafter called “Total
Payments”) would be subject to the excise tax imposed under Section 280G of the Code, the
Company shall pay to Employee such additional amount (the “Gross-Up Payment”) such that the
net amount retained by Employee, after deduction of any excise tax imposed under Section
4999 of the Code (the “Excise Tax”) on the Total Payments and all federal, state and local
taxes, including the Excise Tax, upon the Gross-Up Payment, shall be equal to the Total
Payments. For purposes of determining the amount of the Gross-Up Payment, Employee shall be
deemed to pay federal income tax at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of Employee’s
residence on the date on which the Gross-Up Payment is calculated for purposes of this
subparagraph. In the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder, Employee shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment
being repaid by Employee to the extent that such repayment results in a reduction in Excise
Tax and/or a federal, state or local income tax deduction) plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder (including by
reason of any payment the existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by Employee with respect to
such excess) at the time that the amount of such excess if finally determined. Employee and
the Company shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of liability for
Excise Tax with respect to the Total Payments. The parties intend that the Gross-Up Payment
be determined in a manner that is most favorable to Employee.

5. No Mitigation or Offset. The provisions of this Agreement are not intended to, nor shall
they be construed to, require that Employee mitigate the amount of any payment provided for in this
Agreement by seeking or accepting other employment, nor shall the amount of any payment provided
for in this Agreement be reduced by any compensation earned by Employee as the result of employment
by another employer or otherwise. Without limitation of the foregoing, the Company’s obligations
to make the payments to Employee required under this Agreement shall not be affected by any set
off, counterclaim, recoupment, defense or other claim, right or action that the Company may have
against Employee.

6. Successors; Binding Agreement.

(i) The Company will require any successor, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably satisfactory to Employee, expressly
to assume and agree to perform this Agreement in the same manner and to the same extent as
the Company would have been required if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement and shall entitle Employee to payment from the Company in the
same amount and on the same terms as Employee would be entitled hereunder if Employee had
terminated Employee’s employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be deemed the
Date of Termination. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as aforesaid that
executes and delivers the agreement provided for in this Section 6 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of law.

(ii) This Agreement 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 should die while any amounts would still be payable to
Employee hereunder if Employee had continued to live, all such amounts shall be paid in
accordance with the terms of this Agreement to Employee’s beneficiary as filed with the
Company pursuant to this Agreement or, if there be no such designated beneficiary, to
Employee’s estate.

7. Notice. All notices, consents, waivers, and other communications required under this
Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by facsimile (with confirmation of receipt),
provided that a copy is mailed by certified mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service, in each case to the
appropriate addresses and facsimile numbers set forth below (or to such other addresses and
facsimile numbers as a party may designate by notice to the other parties):

If to the Company:

Cyberonics, Inc.

Vice President, Human Resources

100 Cyberonics Boulevard

Houston, TX 77058

Facsimile No.: 281-228-7535

If to Employee:

Gregory H. Browne

1300 Woodhollow Drive, Apt. 22201

Houston, TX 77057

8. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by Employee and by the
Chairman of the Board or an authorized officer of the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent time.

9. Validity. The interpretation, construction and performance of this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State of Texas without
regard to conflicts of laws principles. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other provision of this
Agreement, each of which shall remain in full force and effect.

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

11. Descriptive Headings. Descriptive headings are for convenience only and shall not control
or affect the meaning or construction of any provision of this Agreement.

12. Corporate Approval. This Agreement has been approved by the Board, and has been duly
executed and delivered by Employee and on behalf of the Company by its duly authorized
representative.

13. Disputes. The parties agree to resolve any claim or controversy arising out of or
relating to this Agreement by binding arbitration under the Federal Arbitration Act before one
arbitrator in the City of Houston, State of Texas, administered by the American Arbitration
Association under its Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The Company shall reimburse
Employee, on a current basis, for all legal fees and expenses incurred by Employee in connection
with any dispute arising under this Agreement, including, without limitation, the fees and expenses
of the arbitrator, unless the arbitrator finds Employee brought such claim in bad faith, in which
event each party shall pay its own costs and expenses and Employee shall repay to the Company any
fees and expenses previously paid on Employee’s behalf by the Company.

The parties stipulate that the provisions hereof shall be a complete defense to any suit,
action, or proceeding instituted in any federal, state, or local court or before any administrative
tribunal with respect to any controversy or dispute arising during the period of this Agreement and
which is arbitrable as herein set forth. The arbitration provisions hereof shall, with respect to
such controversy or dispute, survive the termination of this Agreement.

IN WITNESS WHEREOF, the Company and Employee have executed this Agreement in multiple
counterparts effective for all purposes as of the Effective Date.

CYBERONICS, INC.

By:/s/ George E. Parker, III

George E. Parker III

Interim Chief Operating Officer

EMPLOYEE

/s/ Gregory H. Browne

Gregory H. Browne

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]