Document:

form10_61.htm

    EXHIBIT
10.61

     

    

      EMPLOYMENT
AGREEMENT

       

      

      

      

      
        	
                This
      Employment Agreement (the “Agreement”), entered into effective as of
      August 1, 2007 (the “Effective Date”), by and between Cyberonics, Inc.
      (the “Company”) and James Reinstein (“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, Global Sales and General Manager,
      International 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 $290,000 (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, one hundred
      thousand (100,000) 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 fifty thousand (50,000) 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 12,500 of such
      Time-Vested Shares shall lapse on each of the first four anniversaries of
      the grant date.  The Company shall grant the remaining fifty
      thousand (50,000) 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:

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                James
      Reinstein

                311
      Offerson Road #255

                Beaver
      Creek, Colorado 81620

              
	 
      	 
      	 
      	 
      
	
                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:

              	 
      
	 
      	 
      	 
      	
                George
      E. Parker III

              
	 
      	 
      	 
      	
                Interim
      Chief Operating Officer

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                EMPLOYEE

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                James
      Reinsteinform10_62.htm

    
EXHIBIT
10.62

      

      

      

      

      

      SEVERANCE
AGREEMENT

      

      
        	
                THIS AGREEMENT (the
      “Agreement”), made and entered into effective as
      of   August 1, 2007 (the “Effective Date”), is by and
      between Cyberonics,
      Inc., a Delaware corporation (the “Company”), and James Reinstein (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 August 1, 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:

              
	 
      	 
      	 
      	 
      
	 
      	 
      	
                James
      Reinstein

                311
      Offerson Road #225

                Beaver
      Creek, Colorado 81620

                 

              
	 
      	 
      	 
      	 
      
	 
      	
                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:

              	 
      
	 
      	 
      	 
      	
                George
      E. Parker III

              
	 
      	 
      	 
      	
                Interim
      Chief Operating Officer

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                EMPLOYEE

              
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                James
      Reinstein

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]