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                                                                     EXHIBIT 4.1

                                CYBERONICS, INC.
                              AMENDED AND RESTATED
                             1996 STOCK OPTION PLAN

     1.   Purposes of the Plan. The purposes of this Amended Stock Option Plan
are:

          (a) to attract and retain the best available personnel for positions
of substantial responsibility,

          (b)  to provide incentives to Employees and Consultants, and

          (c)  to promote the success of the Company's business.

          Options granted under the Plan will be Nonstatutory Stock Options.

     2.   Definitions. As used herein, the following definitions shall apply:

          (a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.

          (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) "Committee" means a committee of Directors appointed by the Board
in accordance with Section 4 of the Plan.

          (f) "Common Stock" means the Common Stock of the Company.

          (g) "Company" means Cyberonics, Inc., a Delaware corporation.

          (h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

          (i) "Director" means a member of the Board.

          (j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

          (k) "Employee" means any person, excluding Officers, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

          (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.


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          (m) "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;

               (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;

               (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.

          (n) "Notice of Grant" means a written or electronic notice evidencing
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.

          (o) "Officer" means a person who is an executive officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

          (p) "Option" means a nonstatutory stock option granted pursuant to the
Plan, that is not intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.

          (q) "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.

          (r) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.

          (s) "Optioned Stock" means the Common Stock subject to an Option.

          (t) "Optionee" means the holder of an outstanding Option granted under
the Plan.

          (u) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (v) "Plan" means this Amended 1996 Stock Option Plan.

          (w) "Service Provider" means an Employee, Officer or Consultant, and
specifically excludes Directors of the Company.

          (x) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.


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          (y) "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, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 4,600,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock. If an Option expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).

     4. Administration of the Plan.

          (a) The Plan shall be administered by (A) the Board or (B) a
Committee, which committee shall be constituted to satisfy Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

               (i) to determine the Fair Market Value of the Common Stock;

               (ii) to select the Service Providers to whom Options may be
          granted hereunder;

               (iii) to determine whether and to what extent Options are granted
          hereunder;

               (iv) to determine the number of shares of Common Stock to be
          covered by each Option granted hereunder;

               (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent with
          the terms of the Plan, of any award 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), any vesting acceleration or waiver of
          forfeiture restrictions, and any restriction or limitation regarding
          any Option or the shares of Common Stock relating thereto, based in
          each case on such factors as the Administrator, in its sole
          discretion, shall determine;

               (vii) to reduce the exercise price of any Option to the then
          current Fair Market Value if the Fair Market Value of the Common Stock
          covered by such Option shall have declined since the date the Option
          was granted;

               (viii) to institute an Option Exchange Program;

               (ix) to construe and interpret the terms of the Plan and awards
          granted pursuant to the Plan;

               (x) 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;

               (xi) to modify or amend each Option (subject to Section 15(b) of
          the Plan), including the discretionary authority to extend the
          post-termination exercisability period of Options longer than is
          otherwise provided for in the Plan;


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               (xii) to authorize any person to execute on behalf of the Company
          any instrument required to effect the grant of an Option or previously
          granted by the Administrator;

               (xiii) to determine the terms and restrictions applicable to
          Options;

               (xiv) to allow Optionees to satisfy withholding tax obligations
          by electing to have the Company withhold from the Shares to be issued
          upon exercise of an Option or Stock Purchase Right that number of
          Shares having a Fair Market Value equal to the 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; and

               (xv) 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. Options may be granted to Service Providers; provided,
however that the number of Shares subject to Options granted to Officers
pursuant to this Plan subsequent to July 9, 1998 shall not exceed 10% of the
total number of Shares reserved for issuance under this Plan. For purposes of
determining compliance with the forgoing 10% limitation, the following
provisions shall apply:

          (a) Options granted to a person at a time when such person was not an
Officer shall not be counted toward the 10% limit upon promotion to officer
status, and

          (b) If an Option granted to an Officer expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased shares which were subject thereto
shall no longer be counted toward the 10% limit.

     6. Limitation. 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.

     7. Term of Plan. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect until October 31, 2006, unless sooner
terminated under Section 14 of the Plan.

     8. Term of Option. The term of each Option shall be stated in the Option
Agreement.

     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.

          (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:


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               (i) cash;

               (ii) check;

               (iii) promissory note;

               (iv) 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;

               (v) consideration received by the Company under a cashless
          exercise program implemented by the Company in connection with the
          Plan;

               (vi) 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;

               (vii) such other consideration and method of payment for the
          issuance of Shares to the extent permitted by Applicable Laws; or

               (viii) any combination of the foregoing methods of payment.

     10. Exercise of Option.

          (a) Procedure for Exercise; Rights as a Stockholder. 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. 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 stockholder 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, but only within such
period of time as is specified in the Option Agreement, and only 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


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Optionee does not exercise his or her Option within the time specified by the
Administrator, 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 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 twelve (12) 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 herein,
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. 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 herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (e) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.

     11. Limited Transferability of Options. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than (i)
by will or by the laws of descent or distribution, or (ii) with the
Administrator's consent and pursuant to such procedures as the Administrator (in
its discretion) may specify, in a manner which would not prevent any Option from
being registered on Form S-8 in the reasonable discretion of the Company's legal
counsel. The Administrator shall establish procedures for the transfer of
Options by an Optionee to such Optionee's spouse and to members of such
Optionee's immediate family; provided, however, that (i) no such transfer would
prevent any Option from being registered on Form S-8 in the reasonable
discretion of the Company's legal counsel, and (ii) such transferee executes an
assignment agreeing to the terms of this Plan. Options may be exercised during
the lifetime of the Optionee only by the Optionee or a valid transferee. The
terms of this Plan shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee. In order to effect a valid transfer, the
transferee shall execute an assignment agreeing to the terms of this Plan.


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     12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

          (a) Changes in Capitalization. Subject to any required action by the
Stockholders 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 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) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

          (c) Change of Control. In the event of a Change of Control (as defined
below), Options under this Plan shall become fully vested and exercisable as to
all Optioned Stock, including Shares as to which an Option would not otherwise
be vested or exercisable, effective as of immediately prior to closing of the
transaction constituting the Change of Control. For purposes of this Plan,
"CHANGE OF CONTROL" shall mean a corporate reorganization of the Company which
results in the then current Stockholders of the Company owning less than 50% of
the equity securities of the surviving company, or the sale of all or
substantially all of the assets 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) 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.


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     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) 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.

     16. 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.