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EXHIBIT 10.3
FIRST AMENDMENT TO THE
CYBERONICS, INC. 1997 STOCK PLAN
WHEREAS, there is reserved to the Board of Directors ("Board") of
Cyberonics, Inc. in Section 15 of the Cyberonics, Inc. 1997 Stock Plan (the
"Plan") the right to amend the Plan, subject to certain restrictions set forth
therein; and
WHEREAS, the Board deems it advisable to amend the Plan in the manner
hereafter set forth;
NOW, THEREFORE, Sections 13 (b), (c) and (d) of the Plan are deleted
effective as of October 2, 2000, and replaced by a new Section 13(b) to read as
follows:
Notwithstanding anything in the Plan or any award agreement to the
contrary, in the event of a Change of Control (as defined below), all Options
and Stock Rights shall automatically become fully vested and exercisable
effective immediately prior to the Change of Control or for such earlier period
as the Committee may provide. 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
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(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
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.
In addition to, or in lieu of, any other provision of the Plan, the
Committee, with the approval of a majority of the Incumbent Directors, may
provide that all Options and Stock Rights 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) above, (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).
Except as amended and modified hereby, the Plan shall continue in full
force and effect and the Plan and this amendment shall be read, take and
construed as one and the same instrument.
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