-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P8S058Fb5qILJ/z9TjBGuID12jpW/Ngq8yJk3DAwgYe5OQZL6Syw3ZKH43nRYUC8 tqeIOsC1Y8SAhlvRz8flXw== 0000950129-03-004476.txt : 20030827 0000950129-03-004476.hdr.sgml : 20030827 20030827172905 ACCESSION NUMBER: 0000950129-03-004476 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20030827 EFFECTIVENESS DATE: 20030827 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYBERONICS INC CENTRAL INDEX KEY: 0000864683 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 760236465 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108281 FILM NUMBER: 03869323 BUSINESS ADDRESS: STREET 1: 100 CYBERONICS CENTER BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77058 BUSINESS PHONE: (281) 228-7200 MAIL ADDRESS: STREET 1: 100 CYBERONICS BLVD STREET 2: SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77058 S-8 1 h08755sv8.txt CYBERONICS, INC. NEW EMP. EQUITY INDUCEMENT PLAN AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 2003 Registration No.333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CYBERONICS, INC. (Exact name of registrant as specified in its charter) DELAWARE 0236465 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 100 CYBERONICS BOULEVARD, CYBERONICS BUILDING, HOUSTON, TEXAS 77058 (281) 228-7200 (Address of principal executive offices, including zip code) ------------ CYBERONICS, INC. NEW EMPLOYEE EQUITY INDUCEMENT PLAN (Full title of the plan) PAMELA B. WESTBROOK VICE PRESIDENT & CHIEF FINANCIAL OFFICER 100 CYBERONICS BOULEVARD, CYBERONICS BUILDING, HOUSTON, TEXAS 77058 (Name and address of agent for service) (281) 228-7200 (Telephone number, including area code, of agent for service) Copies to: David P. Oelman Vinson & Elkins L.L.P. 2300 First City Tower, 1001 Fannin Street Houston, Texas 77002 (713) 758-2222 CALCULATION OF REGISTRATION FEE
================================================================================================================== MAXIMUM TITLE OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM SECURITIES TO BE REGISTERED OFFERING PRICE AGGREGATE AMOUNT OF REGISTERED (1)(2) PER SHARE (3) OFFERING PRICE REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------ Common Stock, $.01 par value ....... 750,000 Shares $27.37 $ 20,527,500 $ 1,660.67 - ------------------------------------------------------------------------------------------------------------------
(1) The number of shares of Common Stock registered hereby consists of 750,000 shares authorized to be issued under the New Employee Equity Inducement Plan (the "Plan"). The number of shares of Common Stock registered hereby is subject to adjustment to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Includes preferred share purchase rights associated with the Common Stock. No separate fee is payable in respect of the registration of such preferred share purchase rights. (3) Estimated in part pursuant to Rule 457(h) under the Securities Act of 1933 (the "Securities Act"), and in part pursuant to Rule 457(c) under the Securities Act. The proposed maximum offering price per share represents a weighted average of the foregoing estimates calculated in accordance with Rule 457(c) and 457(h) under the Securities Act. ================================================================================ PART I INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS The document(s) containing the information specified in Part I of Form S-8 will be sent or given to participants as specified by Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act"). Such documents need not be filed with the Securities and Exchange Commission (the "Commission") either as a part of this Registration Statement or as prospectuses of prospectus supplements pursuant to Rule 424. These documents and the documents incorporated herein by reference pursuant to Item 3 of Part II of this Registration Statement, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act (the "Prospectus"). PART II EXPLANATORY NOTE This Registration Statement on Form S-8 is being filed for the purpose of registering 750,000 shares of the Registrant's Common Stock, par value $0.01 per share, (the "Common Stock") to be issued pursuant to the Registrant's New Employee Equity Inducement Plan (the "Plan"). -2- PART II INFORMATION REQUIRED IN THIS REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents previously filed with the Securities and Exchange Commission are incorporated by reference and made a part of this prospectus. o the description of our common stock contained in our registration statement on Form 8-A dated February 10, 1993, including any amendment to that form that we may have filed in the past, or may file in the future, for the purpose of updating the description of our common stock; and o our annual report on Form 10-K for the fiscal year ended April 25, 2003. All documents we have filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 subsequent to the effective date of this Registration Statement, prior to the filing of a post-effective amendment which indicates that all securities offered by this prospectus have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference of this prospectus and to be a part of this prospectus from the date of filing of such documents. Any statement contained herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of this Registration Statement, except as so modified or superseded. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VIII of Cyberonics' Certificate of Incorporation, a copy of which is filed as Exhibit 4.1, provides that directors, officers, employees and agents shall be indemnified to the fullest extent permitted by the Delaware General Corporation Law ("DGCL"). Section 145 of the DGCL authorizes, inter alia, a corporation to indemnify any person ("indemnitee") who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, by or in the right of the corporation), by reason of the fact that such person is or was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise. The amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A Delaware corporation may indemnify past or present officers and directors of such corporation or of another corporation or other enterprise at the former corporation's request, in an action by or in the right of the corporation to procure a judgment in its favor under the same conditions, except that no indemnification is permitted without judicial approval if such person is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in defense of any action referred to above, or in defense of any claim, issue or matter therein, the corporation must indemnify him against the expenses (including attorney's fees) which he actually and reasonably incurred in connection therewith. Section 145 further provides that any indemnification shall be made by the corporation only as authorized in each specific case upon a determination by the (i) stockholders, (ii) board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding or (iii) independent counsel if a quorum of disinterested directors so directs. Section 145 provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. II-1 Section 145 of the DGCL also empowers Cyberonics to purchase and maintain insurance on behalf of any person who is or was an officer or director of Cyberonics against liability asserted against or incurred by him in any such capacity, whether or not Cyberonics would have the power to indemnify such officer or director against such liability under the provisions of Section 145. Cyberonics intends to purchase and maintain a directors' and officers' liability policy for such purposes. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. Unless otherwise indicated below as being incorporated by reference to another filing of the Company with the Commission, each of the following exhibits is filed herewith: 4.1 Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-3 filed with the Securities and Exchange Commission on February 21, 2001). 4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K filed with the Securities & Exchange Commission on September 12, 2000). 4.3* Cyberonics, Inc. New Employee Equity Inducement Plan. 5.1* Opinion of Vinson & Elkins L.L.P. 23.1* Consent of KPMG LLP. 23.2* Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto). 24.1* Powers of Attorney (included on the signature page to this registration statement). - -------------- * Filed herewith. II-2 UNDERTAKINGS The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (a) To include any prospectus required by Section 10(a)(3) of the Securities Act; (b) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (c) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable rounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on the 27th day of August, 2003. CYBERONICS, INC. By: /s/ Pamela B. Westbrook ----------------------- Pamela B. Westbrook Vice President, Finance and Administration, Secretary and Chief Financial Officer KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert P. Cummins and Pamela B. Westbrook as his or her true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and anything appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the 27th day of August, 2003.
SIGNATURE TITLE --------- ----- /s/ Robert P. Cummins President, Chief Executive Officer and Chairman - ---------------------------- of the Board of Directors Robert P. Cummins (Principal Executive Officer) /s/ Pamela B. Westbrook Vice President, Finance and Administration, - ---------------------------- Secretary and Chief Financial Officer Pamela B. Westbrook (Principal Financial and Accounting Officer) * - ---------------------------- Reese S. Terry, Jr. Director * - ---------------------------- Stanley H. Appel, M.D. Director * - ---------------------------- Tony Coelho Director * - ---------------------------- Thomas A. Duerden, Ph.D. Director * - ---------------------------- Michael J. Strauss, M.D. Director * - ---------------------------- Alan J. Olsen Director * - ---------------------------- Ronald A. Matricaria Director
- ----------------- * Indicates that the Registration Statement was signed by Pamela B. Westbrook as Power of Attorney and Attorney-in-Fact. II-4 INDEX TO EXHIBITS 4.1 Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-3 filed with the Securities and Exchange Commission on February 21, 2001). 4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K filed with the Securities & Exchange Commission on September 12, 2000). 4.3* Cyberonics, Inc. New Employee Equity Inducement Plan 5.1* Opinion of Vinson & Elkins L.L.P. 23.1* Consent of KPMG LLP. 23.2* Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto). 24.1* Powers of Attorney (included on the signature page to this registration statement). - -------------- * Filed herewith. EX-4.3 3 h08755exv4w3.txt NEW EMPLOYEE EQUITY INDUCEMENT PLAN EXHIBIT 4.3 CYBERONICS, INC. NEW EMPLOYEE EQUITY INDUCEMENT PLAN 1. Purposes of the Plan. The purposes of this New Employee Equity Inducement Plan are to attract key personnel as new hires to the Company, and to provide such new hires with long-term incentives to promote the success of the Company's business. Options granted under the Plan are Nonstatutory Stock Options. 2. Definitions. As used herein, the following definitions shall apply: (a) "Administrator" means a majority of the independent directors of the Board or the Compensation Committee of the Board. (b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Common Stock" means the common stock of the Company. (f) "Company" means Cyberonics, Inc., a Delaware corporation. (g) "Compensation Committee" means the compensation committee of the Board authorized to administer the Plan in accordance with Section 4 of the Plan. (h) "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. (i) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (j) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; -1- (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. (k) "Nonstatutory Stock Option" means an Option not intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (l) "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. (m) "Option" means a stock option granted pursuant to the Plan. (n) "Option Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. (o) "Optioned Stock" means the Common Stock subject to an Option. (p) "Optionee" means the holder of an outstanding Option granted under the Plan. (q) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (r) "Plan" means the New Employee Equity Inducement Plan. (s) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor rule or provision. (t) "Section 16(b)" means Section 16(b) of the Exchange Act. (u) "Service Provider" means an individual who is an employee, director or consultant of the Company, its Parent or a Subsidiary. An Optionee shall not cease to be a Service Provider in the case of (i) any leave of absence approved by the Company, Parent or Subsidiary or (ii) transfers between locations of, or between, the Company, its Parent, any Subsidiary, or any successor. If an Optionee's employer ceases to be a Subsidiary of the Company or its Parent, such Optionee shall cease to be a Service Provider on such date. (v) "Share" means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan. -2- (w) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan and the following provisions of this Section, the maximum aggregate number of Shares which may be delivered under the Plan is 750,000. The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan was terminated); provided, however, that Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan. 4. Administration of the Plan. (a) Procedure. (i) Administrative Bodies. The Plan shall be administered by a majority of the Board's independent directors or the Compensation Committee of the Board. (ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of the Compensation Committee, subject to the specific duties delegated by the Board to the Compensation Committee, the Administrator shall have the authority, in its discretion: (i) to determine the Fair Market Value; (ii) to select the Service Providers to whom Options may be granted hereunder; (iii) to determine the number of shares of Common Stock to be covered by each Option granted hereunder; (iv) to approve forms of agreement for use under the Plan; (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), and vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option of the shares of Common Stock relating thereto, based on such factors as the Administrator, in its sole discretion, shall determine; (vi) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; -3- (vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws; (viii) to allow Optionees to satisfy the minimum withholding tax obligations of the Company by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; (ix) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator; and (x) to make all other determinations deemed necessary or advisable for administering the Plan. (c) Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options. 5. Eligibility. Nonstatutory Stock Options may be granted only to newly hired Service Providers in connection with, and as an inducement for, their becoming an employee of, or employed by, the Company, its Parent or a Subsidiary of the Parent. 6. Limitations. (a) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause. (b) The following limitations shall apply to grants of Options: (i) In connection with his or her initial employment, a Service Provider may be granted Options to purchase up to 250,000 Shares. (ii) The foregoing limitation shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 12. 7. Term of Plan. Subject to Section 8 of the Plan, this Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years from such date unless terminated earlier under Section 14 of the Plan. -4- 8. Term of Option. The term of each Option shall be stated in the Option Agreement. If the Option Agreement does not provide for a term, such term shall be ten (10) years from the date of grant. 9. Option Exercise Price and Consideration. (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: (i) The per Share exercise price shall be determined by the Administrator but shall not be less than 100% of the Fair Market Value per Share on the date of grant. (ii) Notwithstanding the foregoing, replacement or substitution Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. (b) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. (c) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of: (i) cash or check; (ii) surrender of other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; (iii) consideration received by the Company under a "cashless-broker" exercise program implemented by the Company in connection with the Plan; (iv) a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored deferred compensation program or arrangement; (v) any combination of the foregoing methods of payment; or (vi) such other consideration and method of payment for the issuance of Shares to the extent permitted by applicable Laws. -5- 10. Exercise of Option. (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement or herein, if applicable, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option agreement to the extent the Option is vested on the date of termination (but is no event later than the expiration of the term of such Option as set forth in the Option Agreement). Unless provided otherwise in the grant agreement, Options granted after the date this Plan is approved by the Board shall be fully vested upon the Optionee's ceasing to be a Service Provider due to Disability. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the -6- Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement or herein, if applicable, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. Unless provided otherwise in the grant agreement, Options granted after the date this Plan is approved by the Board shall be fully vested upon the Optionee's ceasing to be a Service Provider due to death. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Optionee's estate or, if none, by the person(s) entitled to exercise the Option under the Optionee's will or the laws of descent or distribution. If the Option is not so exercised within the time specified in the Option Agreement or herein, if applicable, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 11. Nontransferability of Options. Unless otherwise expressly permitted by the Administrator, an Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option transferable, such Option shall contain such additional terms and conditions as the Administrator deems appropriate. 12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of -7- any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. (b) Change of Control. In the event of a Change of Control (as defined below), the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable, and any Company reacquisition option applicable to any Shares acquired upon exercise of an Option shall lapse as to all such Shares. If an Option becomes fully vested and exercisable as a result of a Change of Control, the Administrator shall notify the Optionee in writing or electronically prior to the Change of Control that the Option shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and, subject to the following, the Option shall terminate upon the expiration of such period. In addition to, or in lieu of, any other provision of the Plan, the Compensation Committee, with the approval of a majority of the Incumbent Directors (as defined below), may provide that all Options not exercised immediately prior to the Change of Control shall (x) terminate on such Change of Control, unless such Change of Control is described in clause (iv) below, (y) be assumed by the successor (a parent thereof) in any such merger or other corporate transaction, or (z) be surrendered in exchange for equivalent substitution options or awards from the successor (or a parent thereof). For purposes of this Plan, a "Change of Control" means the happening of any of the following events: (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 of Directors of the Company, 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 October 2, 2000, or (B) are elected, or nominated for election, thereafter to the Board of Directors of the Company 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 -8- 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 of Directors or the stockholders of the Company of a complete or substantially complete liquidation or dissolution of the Company. 13. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 14. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. (b) Shareholder Approval. This Plan has been adopted without approval of the shareholders of the Company in accordance with Rule 4350(i)(1)(A)(iv) of the NASDAQ Marketplace Rules which excludes new hire equity incentives from shareholder approval requirements. As necessary, the Company shall obtain shareholder approval of any Plan amendment or otherwise to the extent necessary and desirable to comply with Applicable Laws. (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 15. Conditions Upon Issuance of Shares (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) Investment Representations. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being acquired only for investment and without any present intention to sell or distribute such Shares if, in the option of counsel for the Company, such a representation is required. 16. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. -9- 17. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 18. No Enhancement of Outstanding Options. Notwithstanding anything in this Plan to the contrary, the adoption of this Plan shall not operate or be construed to modify any Option that is outstanding prior to the date the Board approves this Plan. -10- EX-5.1 4 h08755exv5w1.txt OPINION OF VINSON & ELKINS L.L.P. EXHIBIT 5.1 OPINION AND CONSENT OF LEGAL COUNSEL August 27, 2003 Cyberonics, Inc. 100 Cyberonics Blvd. Cyberonics Building Houston, Texas 77058 Ladies and Gentlemen: We have acted as counsel for Cyberonics, Inc., a Delaware corporation (the "Company"), in connection with the filing of a Registration Statement on Form S-8 (the "Registration Statement"), under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of 750,000 shares (the "Shares") of common stock, par value $.01 per share, of the Company issuable upon exercise of options under the New Employee Equity Inducement Plan (the "Plan"). In connection with the foregoing, we have examined or are familiar with the Restated Certificate of Incorporation of the Company, the Bylaws of the Company, the Plan and the Registration Statement, and such other certificates, instruments and documents as we have considered necessary or appropriate for purposes of this opinion. Based upon the foregoing, we are of the opinion that the Shares have been duly authorized and, when the Shares are issued in accordance with the provisions of the Plan, will be validly issued and fully paid and non-assessable. The foregoing opinion is limited to the laws of the United States of America and the State of Delaware. For purposes of this opinion, we assume that the Shares will be issued in compliance with all applicable state securities or Blue Sky laws. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act and the rules and regulations thereunder. Very truly yours, /s/ Vinson & Elkins L.L.P. VINSON & ELKINS L.L.P. EX-23.1 5 h08755exv23w1.txt CONSENT OF KPMG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Cyberonics, Inc: We consent to the incorporation by reference in the registration statement on Form S-8 to be filed on August 27, 2003 of Cyberonics, Inc. of our report dated May 19, 2003 with respect to the consolidated balance sheets of Cyberonics, Inc. and subsidiary as of April 25, 2003 and April 26, 2002, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the 52 weeks then ended, which report appears in the April 25, 2003, annual report on Form 10-K of Cyberonics, Inc. /s/ KPMG LLP Houston, Texas August 26, 2003 -----END PRIVACY-ENHANCED MESSAGE-----