Sample Business Contracts


Change of Control Agreement - Cyberonics Inc. and William H. Duffell Jr.

Free Change in Control Forms


                           CHANGE OF CONTROL AGREEMENT


         This Change of Control Agreement (the "Agreement") is made and entered
into effective as of May 8, 1995 (the "Effective Date"), by and between William
H. Duffell, Jr. ("Employee") and Cyberonics, Inc. (the "Company").

                                 R E C I T A L S


         A. It is expected that the Company may from time to time consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.

         B. The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.

         In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:

         1. Cash Bonus.

                  (a) In the event of a Change of Control (as defined below)
occurring within twelve (12) months of the Effective Date of this Agreement, as
long as the Employee has maintained continuous employment with the Company
during the period from the Effective Date through the date of closing of an
event which constitutes a Change of Control hereunder (the "Closing Date"), and
regardless of whether the Employee is terminated by the Company or its
successor, or terminates his or her employment with the Company following such
Change in Control, such Employee shall be entitled to receive a lump sum payment
(the "Bonus") equal to (i) $325,000 minus (ii) the difference between (a) the
aggregate value of 60,000 shares of the Company's Common Stock (adjusted for any
stock split, stock dividend or the like) on the Closing Date and (b) $195,000.
The Company shall pay such Bonus to the Employee not later than five (5)
business days after the Closing Date.

                  (b) For purposes of this Agreement, the term "Change of
Control" shall mean (i) a corporate reorganization of the Company which results
in the stockholders of the Company immediately prior to such reorganization
owning less than 50% of the combined voting power of the capital stock of the
surviving company immediately following such reorganization, or (ii) the sale of
all or substantially all of the assets of the Company.

         2. At-Will Employment. The Company and the Employee acknowledge that
the Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or
<PAGE>   2
as may otherwise be available in accordance with the Company's established
employee plans and practices or other agreements with the Company at the time of
termination.

         3. Duration. The terms of this Agreement shall terminate upon the
earlier of (i) the date that all obligations of the parties hereunder have been
satisfied or (ii) one year after the Effective Date; provided, however, that
this Agreement may be extended for an additional period or periods by resolution
adopted by the Board at any time during the period that the Agreement is in
effect.

         4. Miscellaneous Provisions.

                  (a) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

                  (b) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

                  (c) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

                  IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
date set forth above.


COMPANY:                                CYBERONICS, INC.



                                        By: /s/  Reese S. Terry, Jr.
                                           -------------------------------------
                                        Title: President
                                               ---------------------------------



EMPLOYEE:                               /s/ William H. Duffell, Jr.
                                        ----------------------------------------
                                        William H. Duffell, Jr.




                                       -2-
<PAGE>   3
                                  EXTENSION OF
                           CHANGE OF CONTROL AGREEMENT


         This Extension of Change of Control Agreement (the "Extension") is made
and entered into effective as of April 10, 1996 (the "Effective Date"), by and
between William H. Duffell, Jr. (the "Employee") and Cyberonics, Inc. (the
"Company").

                                 R E C I T A L S

          A. The Company and the Employee are parties to a Change of Control
Agreement dated as of May 8, 1995, as extended on January 10, 1996 (the "Change
of Control Agreement"), which provides Employee with certain benefits in the
event of a Change of Control of the Company as defined therein. The Change of
Control Agreement expires by its terms on September 30, 1996.

          B. The Company has announced the execution of an Agreement and Plan of
Merger pursuant to which the Company may be acquired by another company. The
Board of Directors of the Company (the "Board") recognizes that such
announcement can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility or occurrence of a Change of Control (as defined
below) of the Company.

          C. The Board believes that it is in the best interests of the Company
and its stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.

          In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree that the Change of Control Agreement is hereby amended as follows:

         1.       Section 1(a). Section 1(a) of the Change of Control Agreement
                  is hereby amended in its entirety to read as follows:

                  "In the event of a Change of Control (as defined below)
         occurring within on or before December 31, 1996 (the "Expiration
         Date"), as long as the Employee has maintained continuous employment
         with the Company from the Effective Date through the date of closing
         (the "Closing Date") of an event which constitutes a Change of Control
         hereunder, and regardless of whether the Employee is terminated by the
         Company or its successor, or terminates his or her employment with the
         Company following such Change in Control, such Employee shall be
         entitled to receive a lump sum payment (the "Bonus") equal to (i)
         $325,000 minus (ii) the difference between (a) the aggregate value of
         60,000 shares of the Company's Common Stock (adjusted for any stock
         split, stock dividend or the like) on the Closing Date and (b)
         $195,000. The Company shall pay such Bonus to the Employee not later
         than five (5) business days after the Closing Date."

         2. No Other Changes. Except as expressly provided in this Extension,
the terms of the Change of Control Agreement shall remain in full force and
effect.
<PAGE>   4
         3. Miscellaneous. The Miscellaneous provisions set forth in Section 4
of the Change of Control Agreement shall apply to this Extension as if set forth
herein.

                  IN WITNESS WHEREOF, each of the parties has executed this
Extension, in the case of the Company by its duly authorized officer, as of the
day and year first above written.


COMPANY:                                CYBERONICS, INC.



                                        By:   /s/ Robert P. Cummins
                                           -------------------------------------

                                        Title:   President & CEO
                                               ---------------------------------



EMPLOYEE:                               /s/  William H. Duffell, Jr.
                                        ----------------------------------------
                                        WILLIAM H. DUFFELL, JR.




                                       -2-

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