Vice President, Marketing Employment Agreement - Michael A. Cheney

Exhibit 10.30 EMPLOYMENT AGREEMENT This Employment Agreement (the " Agreement" ), entered into effective as of June 15, 2006 (the " Effective Date" ), by and between Cyberonics, Inc. (the " Company" ) and Michael A. Cheney (" 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, Marketing 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 principle 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 $320,000 (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 . 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:

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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.

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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 re ...