| Position |
|----------|

| You      will perform the duties of Special Advisor, Clinical and Medical for      Cyberonics (the “Company”) on a part-time basis, working up to forty (40)      hours per two-week period (“Part-Time Work”), unless additional hours are      mutually agreed upon by the parties.  In this capacity, you will      no longer be an officer of theCompany. |
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| Base      Compensation |
|------------------------|

| In      exchange for your efforts in performing the Part-Time Work, you will be      paid an hourly rate of$250.00. |
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| Travel      Compensation |
|--------------------------|

| If      you are required to travel in order to perform the Part-Time Work, you      will be paid an hourly rate of $125.00.  Also, travel-related      expenses will be reimbursed in accordance with Policy No. 9.2, Travel Expense      Reimbursement. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Conditional      Compensation |
|-------------------------------|

| You      will no longer be eligible to participate in the Cyberonics’ Annual CEO      Direct Reports Bonus Plan,  Annual CEO Direct Reports      Overachievement Bonus Plan (the “Plans”), or any other Cyberonics bonus      plan.  Instead, subject to continued employment, satisfactory      performance of your duties in the Company’s sole discretion and successful      satisfaction of the stated conditions, you will be eligible to receive the      following conditionalcompensation: |
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| $75,000,      payable if the due diligence process associated with Project Twister is      completed but no related      third party investment and/or purchase is  consummated. |
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| Reporting |
|-----------|

| George      Parker will serve as your contact person while you perform the Part-Time      Work.  You will be required to maintain and submit records of      the hours worked and a description of such work on a bi-weekly      basis.  These records will be submitted to Mr.      Parker.  A template to be used in submitting the required      information will be submittedshortly. |
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| Payment |
|---------|

| You      will be paid bi-weekly for all wages actually earned based on the reports      referenced above on our standard payrollcycle. |
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| Other      Documents |
|----------------------|

| It      has been mutually agreed by the Company and you that, upon your transition      to Part-Time Work, your Employment Agreement dated June 15, 2006 and      Severance Agreement dated January 1, 2002 are no longer valid or in      effect.   Notwithstanding your transition to Part-Time      Work, your Confidentiality Agreement dated August 20, 2001 shall continue      in full force and effect.  Also, except as modified herein in      order to implement the transition to Part-Time Work, the Offer Letter      dated June 8, 2001 remains valid and ineffect. |
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| Company      Policies |
|-----------------------|

| You      will be obligated to comply with all Company policies and procedures that      are applicable to part-time employees.  However, notwithstanding      any Company policy to the contrary, it is agreed that during your      Part-Time Work you may concurrently serve as an officer, employee or other      service provider for third parties, provided that any such      third party is not engaged in the field of    neurostimulation. |
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| Designated      Insider |
|-------------------------|

| As      a consequence of the information to which you will have access as an      employee in this position, you will continue to be classified as an      “Insider.” |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Section      409(a) |
|---------------------|

| Subject      to the Company determining in its sole discretion that you have      satisfactorily performed the Part-Time Work, the Company will reimburse      you for the Section 409(a) federal excise tax and interest liability and      federal income tax due on such reimbursement relating to the stock options      granted to you on August 23, 2001 that failed to comply with Section      409(a). |
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| At-Will      Employment |
|-------------------------|

| This      letter does not expressly or impliedly guarantee employment with      Cyberonics for any specific duration.  You or Cyberonics may      terminate the employment relationship at will, with or without cause, at      any time and for any reason.  This letter is not intended to      alter this employment at will relationship in any      way.   |
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