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                                                                    EXHIBIT 10.1


                              EMPLOYMENT AGREEMENT


         This Employment Agreement ("Agreement") made and entered into effective
as of June 1, 2001 (the "Effective Date") by and between Cyberonics, Inc. (the
"Company"), a Delaware corporation, and Robert P. Cummins (the "Executive").

         WHEREAS, the Company desires to secure the continued employment of the
Executive in accordance herewith and the Executive is willing to commit to be
employed by the Company on the terms and conditions set forth herein and thus to
forgo opportunities elsewhere;

         NOW, THEREFORE, in consideration of the mutual premises, covenants and
agreements set forth below, it is hereby agreed as follows:

         1.       Employment and Term.

                  (a) Employment. The Company agrees to employ the Executive,
         and the Executive agrees to be employed by the Company, in accordance
         with the terms and provisions of this Agreement during the Employment
         Period (as defined below).

                  (b) Term. Subject to earlier termination as provided in
         Section 5, the term of the Executive's employment under this Agreement
         shall commence as of the Effective Date and shall continue until the
         fifth anniversary of the Effective Date (such term being referred to
         hereinafter as the "Employment Period"); provided, however, that
         commencing on the fifth anniversary of the Effective Date (and on each
         anniversary thereafter) the Employment Period automatically shall be
         extended for one additional year, unless six months prior to such
         anniversary date the Company or the Executive shall give written notice
         to the other party that it or the Executive, as the case may be, does
         not wish to so extend this Agreement. However, in the event of a Change
         in Control (as defined below) during the Employment Period, in no event
         shall the Employment Period end prior to the first anniversary of such
         Change in Control.

         2.       Duties and Powers of Executive.

                  (a) Duties. During the Employment Period the Executive shall
         serve as the Chairman of the Board of Directors and the Chief Executive
         Officer of the Company with such authority, duties, powers and
         responsibilities as are normally attributable to such positions and
         with such other duties and responsibilities as may be from time to time
         reasonably assigned to the Executive by the Board of Directors of the
         Company (the "Board").

                  (b) Attention. Except as provided below, during the Employment
         Period the Executive shall devote the Executive's full attention and
         time during normal business hours to the business and affairs of the
         Company and, to the extent necessary to discharge the responsibilities
         assigned to the Executive under this Agreement, use the Executive's
         best efforts to carry out such responsibilities faithfully and
         efficiently. It shall not be considered a violation of the foregoing
         for the Executive to (i) serve on industry, civic or charitable

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         boards or committees, (ii) manage the Executive's personal investments,
         or (iii) with the consent of the Board, serve on the boards of other
         businesses, so long as such activities do not interfere with the
         performance of the Executive's duties in accordance with this
         Agreement. In no event shall such activities by the Executive be deemed
         to interfere with the Executive's duties hereunder until the Executive
         has been notified in writing thereof by the Board and given a
         reasonable period in which to cure such interference.

         3. Place of Employment. The Executive's place of employment hereunder
shall be at the Company's principal executive offices in the greater Houston,
Texas area.

         4.       Compensation.

                  (a) Base Salary. During the Employment Period, the Executive's
         annual base salary ("Annual Base Salary") shall be payable in
         accordance with the Company's general payroll practices. As of the
         Effective Date, the Executive's Annual Base Salary shall be $375,000.
         The Board, in its discretion, may from time to time make such upward
         adjustments in the Executive's Annual Base Salary as it deems to be
         necessary or desirable. The Executive's Annual Base Salary (as
         increased from time to time) may not be decreased during the Employment
         Period.

                  (b) Annual Bonus. During the Employment Period, the Executive
         shall participate in the Company's annual bonus plan and will annually
         be eligible to earn a bonus (the "Annual Bonus") up to 100% of his
         Annual Base Salary based upon the achievement of performance goals
         included in the Board approved budget as determined by the Compensation
         Committee.

                  (c) Equity Compensation. On the Effective Date the Executive
         shall be granted an option with respect to 150,000 shares under the
         Company's 1997 Stock Option Plan. During the Employment Period, each
         year the Executive shall be granted stock options under an annual stock
         option grant program by the applicable anniversary of the Effective
         Date. The number of stock options granted each year will be based on
         the Executive's performance in the preceding year as determined by the
         Compensation Committee. In no event will the annual option grant be for
         the purchase of less than 50,000 common shares. Except as provided in
         Section 5, the terms of all options granted to the Executive shall be
         consistent with the grants made to other senior executives of the
         Company.

                  (d) Retirement and Welfare Benefit Plans. During the
         Employment Period, the Executive shall be eligible to participate in
         all savings, retirement and welfare benefit plans, practices, policies
         and programs applicable generally to employees and/or senior executives
         of the Company, subject to meeting the general eligibility requirements
         of such plans or programs.

                  (e) Expenses. The Company shall promptly reimburse the
         Executive for all reasonable business expenses, including those for
         travel and entertainment, properly incurred by the Executive in the
         performance of his duties hereunder in accordance with policies
         established from time to time by the Company.


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                  (f) Fringe Benefits and Perquisites. During the Employment
         Period, the Executive shall be entitled to receive fringe benefits and
         perquisites in accordance with the plans, practices, programs and
         policies of the Company from time to time in effect, and which are
         commensurate with the Executive's positions.

         5.       Termination of Employment.

                  (a) Death or Disability. The Executive's employment shall
         terminate upon the Executive's death or, at the election of the Board
         or the Executive, by reason of his Disability (as defined below) during
         the Employment Period; provided, however, that the Board may not
         terminate the Executive's employment hereunder by reason of Disability
         unless at the time of such termination there is no reasonable
         expectation that the Executive will return to work on a substantially
         full-time basis within the next one hundred eighty day period. For
         purposes of this Agreement, Disability shall mean the Executive is
         receiving long-term disability benefits under the Company's long-term
         disability plan.

                  (b) By the Company for Cause. The Company may terminate the
         Executive's employment during the Employment Period for Cause (as
         defined below). For purposes of this Agreement, "Cause" shall mean (i)
         the willful and continued failure by the Executive to substantially
         perform the Executive's duties with the Company (other than any such
         failure resulting from the Executive's incapacity due to physical or
         mental illness or any such actual or anticipated failure after the
         issuance of a Notice of Termination for Good Reason by the Executive
         pursuant to Section 5(d)), (ii) the Executive's commission of one or
         more acts that constitute a felony or a misdemeanor involving moral
         turpitude, (iii) the Executive is publicly censured by the Securities
         Exchange Commission, or (iv) the Executive 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 the Executive's part shall be
         deemed "willful" unless done, or omitted to be done, by the Executive
         not in good faith and without reasonable belief that the Executive'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 two-thirds of the
         entire membership of the Board at a meeting of the Board that was
         called for the purpose of considering such termination (after
         reasonable notice to the Executive and an opportunity for the
         Executive, together with the Executive's counsel, to be heard before
         the Board and, if possible, to cure the breach that was the alleged
         basis for Cause ) finding that, in the good faith opinion of the Board,
         the Executive was guilty of conduct and specifying the particulars
         thereof in detail.

                  (c) By the Company without Cause or by the Executive without
         Good Reason. Notwithstanding any other provision of this Agreement, the
         Company, by action of the Board, may terminate the Executive's
         employment other than for Cause during the Employment Period and the
         Executive may similarly terminate his employment for other than Good
         Reason during the Employment Period.

                  (d) By the Executive for Good Reason. The Executive may
         terminate his employment during the Employment Period for Good Reason
         (as defined below). For purposes of this Agreement, "Good Reason" shall
         mean the occurrence, without the written


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         consent of the Executive, of any one of the following acts by the
         Company, or failures by the Company to act, unless such act or failure
         to act is corrected prior to the Date of Termination (as defined below)
         specified in the Notice of Termination (as defined below) given in
         respect thereof:

                           (i) an adverse change in the Executive's title,
                  status, authority, duties, or responsibilities;

                           (ii) any failure by the Company to continue in effect
                  any material incentive compensation or employee benefit plan
                  or arrangement (unless replacement plans providing the
                  Executive with substantially similar benefits are adopted)
                  (herein referred to as "Benefit Plans")) or the taking of any
                  action by the Company that would adversely affect the
                  Executive's participation in any such Benefit Plan or
                  materially reduce the Executive's incentive compensation
                  opportunities or employee benefits under such Benefit Plan, as
                  the case may be;

                           (iii) any purported termination of the Executive's
                  employment that is not effected pursuant to a Notice of
                  Termination satisfying the requirements of Section 5(g); for
                  purposes of this Agreement, no such purported termination
                  shall be effective;

                           (iv) the failure by the Company to obtain a
                  satisfactory agreement from any successor of the Company
                  requiring such successor to assume and agree to perform the
                  Company's obligations under this Agreement, as contemplated in
                  Section 14; or

                           (v) the failure by the Company to comply with any
                  material provision of this Agreement.

                  The Executive's continued employment following any act or
         omission to act constituting Good Reason hereunder shall not constitute
         the Executive's consent to, or a waiver of the Executive's rights with
         respect to, such act or failure to act. The Executive's right to
         terminate the Executive's employment for Good Reason shall not be
         affected by the Executive's incapacity due to physical or mental
         illness. Following a Change in Control (as defined below) the
         Executive's determination that an act or failure to act constitutes
         Good Reason shall be presumed to be valid unless such determination is
         deemed by an arbitrator pursuant to Section 9 be unreasonable and not
         to have been made in good faith by the Executive.

                  (e) Termination by Mutual Agreement. The parties may mutually
         agree that the Executive's employment shall terminate during the
         Employment Period by evidencing their agreement in writing that
         expressly acknowledges it is mutual. Such a mutual termination shall
         not be treated hereunder as a unilateral termination of employment by
         either party.

                  (f) Change in Control. For purposes of this Agreement, a
         Change of Control of the Company shall mean:


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                           (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

                           (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, 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 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 or the stockholders of
                  the Company of a complete or substantially complete
                  liquidation or dissolution of the Company.

                  (g) Notice of Termination. During the Employment Period, any
         purported termination of the Executive's employment (other than by
         reason of death) shall be communicated by written Notice of Termination
         from one party hereto to the other party hereto (or, if by mutual
         agreement by a joint written agreement) in accordance with Section
         14(b). For purposes of this Agreement, a "Notice of Termination" shall
         mean a notice that shall indicate the specific termination provision in
         this Agreement relied upon, if any, and shall set forth in reasonable
         detail the facts and circumstances claimed to provide a basis for
         termination of the Executive's employment under the provision so
         indicated.

                  (h) Date of Termination. "Date of Termination", with respect
         to any purported termination of the Executive's employment during the
         Employment Period, shall mean the


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         date specified in the Notice of Termination (which, in the case of a
         termination by the Company for reasons other than Cause or a
         termination by the Executive shall not be less than 30 days from the
         date such Notice of Termination is given).

         6.       Obligations of the Company Upon Termination.

                  (a) Termination by the Company Other than for Cause, Death or
         Disability or Termination for Good Reason. During the Employment
         Period, if the Company shall terminate the Executive's employment other
         than for Cause, death or Disability or the Executive shall terminate
         his employment for Good Reason, the Company shall pay to the Executive
         the amounts described in this Section 6 (hereinafter referred to as the
         "Severance Payments") and the Executive shall become vested in all
         stock options or other equity based instruments as provided below. The
         amounts specified in this Section 6(a) shall be paid within five
         business days after the Date of Termination.

                           (i) Lump Sum Payment. The Company shall pay to the
                  Executive a lump sum amount in cash equal to the greater of
                  (1) three times the sum of (x) the Executive's Annual Base
                  Salary and (y) an Annual Bonus equal to 100% of such Annual
                  Base Salary, and (2) sum of the amount of Annual Base Salary
                  that would be payable to the Executive if the Employment
                  Period continued through its then term ("Remaining Term"), and
                  an Annual Bonus for such Remaining Term equal to 100% of the
                  Annual Base Salary that would be payable for such period.

                           (ii) Accrued Obligations. The Company shall pay the
                  Executive a lump sum amount in cash equal to the sum of (A)
                  the Executive's earned Annual Base Salary through the Date of
                  Termination to the extent not theretofore paid, (B) an amount
                  equal to any Annual Bonus earned with respect to fiscal years
                  ended prior to the year that includes the Date of Termination
                  to the extent not theretofore paid, and (C) an Annual Bonus
                  for the fiscal year that includes the Date of Termination
                  equal to 100% of his Annual Base Salary multiplied by a
                  fraction, the numerator of which shall be the number of days
                  from the beginning of such fiscal year to and including the
                  Date of Termination and the denominator of which shall be 365.
                  (The amounts specified in clauses (A), (B) and (C) shall be
                  hereinafter referred to as the "Accrued Obligations").

                           (iii) Accelerated Vesting and Payment of Stock
                  Options and Other Equity Based Instruments. All stock options
                  and other equity based instruments held by Executive shall
                  immediately vest and become fully exercisable or payable, as
                  the case may be, as of the Date of Termination. In addition,
                  all of the Executive's stock options and equity based
                  instruments shall remain exercisable through the 180th day
                  following the end of the Remaining Term; provided, however,
                  that in no event shall the options remain outstanding for
                  longer than their original term.

                  (b) Termination by the Company for Cause or by the Executive
         Other than for Good Reason. If the Executive's employment shall be
         terminated for Cause during the Employment


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         Period, or if the Executive terminates his employment during the
         Employment Period other than for Good Reason, the Company shall have no
         further obligations to the Executive under this Agreement other than
         the Accrued Obligations.

                  (c) Termination due to Death or Disability. If the Executive's
         employment shall terminate by reason of death or Disability, the
         Company shall pay the Executive or his estate, as the case may be, the
         Accrued Obligations. Such payments shall be in addition to those rights
         and benefits to which the Executive or his estate may be entitled under
         the relevant Company benefit plans or programs. In addition, all stock
         options and equity based instruments held by the Executive shall
         immediately vest and become fully exercisable or payable, as the case
         may be, as of the Date of Termination. In addition, all of the
         Executive's stock options and equity based instruments shall remain
         exercisable through the 180th day following the end of the Remaining
         Term; provided, however, that in no event shall the options remain
         outstanding for longer than their original term.

                  (d) Mutual Termination of Employment. If the Executive's
         employment shall terminate due to the mutual written agreement of the
         parties, the Company shall pay the Executive an amount in cash equal to
         the sum of (1) his Annual Base Salary plus an Annual Bonus equal to
         100% of his Annual Base Salary and (2) the Accrued Obligations. In
         addition, all stock options and equity based instruments held by the
         Executive shall immediately vest and become fully exercisable or
         payable, as the case may be, as of the Date of Termination. In
         addition, all of the Executive's stock options and equity based
         instruments shall remain exercisable through the 180th day following
         the end of the Remaining Term; provided, however, that in no event
         shall the options remain outstanding for longer than their original
         term.

                  (e) Gross Up Payment. In the event that any payment or benefit
         received or to be received by the Executive (whether pursuant to the
         terms of this Agreement or any other plan, arrangement or agreement
         with (A) the Company, (B) any Person (as defined in Section 5(e)) whose
         actions result in a "change in control" (for purposes of Section 280G
         of the Internal Revenue Code (the "Code")) or (C) any Person affiliated
         with the Company or such Person) (all such payments and benefits being
         hereinafter called "Payments") would be subject to the excise tax
         imposed by Section 4999 of the Code (or any interest or penalties with
         respect to such excise tax (collectively, the "Excise Tax")), then, the
         Company shall pay to the Executive an additional amount (the "Gross-Up
         Payment") such that after payment by the Executive of all taxes
         (including any interest or penalties imposed with respect to such
         taxes), including any Excise Tax, imposed on the Gross-Up Payment, the
         Executive retains an amount of the Gross-Up Payment equal to the Excise
         Tax imposed upon the Payments. For purposes of determining the amount
         of the Gross-Up Payment, the Executive shall be deemed to pay federal
         income tax at the highest marginal rate of federal income taxation in
         the calendar year in which the Gross-Up Payment is to be made and state
         and local income taxes at the highest marginal rate of taxation in the
         state and locality of the Executive's residence on the date on which
         the Gross-Up Payment is calculated for purposes of this section, net of
         the maximum reduction in federal income taxes which could be obtained
         from deduction of such state and local taxes. In the event that the
         Excise Tax is subsequently determined to be less than the amount taken
         into account hereunder, the Executive shall repay to the Company, at
         the time that the amount of such reduction in Excise Tax is
         finally


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         determined, the portion of the Gross-Up Payment attributable to such
         reduction (plus that portion of the Gross-Up Payment being repaid by
         the Executive to the extent that such repayment results in a reduction
         in Excise Tax and/or a federal, state or local income tax deduction)
         plus interest on the amount of such repayment at the rate provided in
         Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
         determined to exceed the amount taken into account hereunder (including
         by reason of any payment the existence or amount of which cannot be
         determined at the time of the Gross-Up Payment), the Company shall make
         an additional Gross-Up Payment in respect of such excess (plus any
         interest, penalties or additions payable by the Executive with respect
         to such excess) at the time that the amount of such excess if finally
         determined. The Executive and the Company shall each reasonably
         cooperate with the other in connection with any administrative or
         judicial proceedings concerning the existence or amount of liability
         for Excise Tax with respect to the Payments. It is understood that the
         application of this Section 6 and Section 280G may have differing
         interpretations; however, the parties intend that the Gross-Up Payment
         be determined in a manner that is most favorable to the Executive.

                  (f) Any delay by the Company in paying any amount due the
         Executive under this Agreement shall bear interest at the maximum
         nonusurious rate from the date such payment was due until paid.

         7. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, plan,
program, policy or practice provided by the Company and for which the Executive
may qualify, nor shall anything herein limit or otherwise adversely affect such
rights as the Executive may have under any other contract or agreement entered
into after the Effective Date with the Company. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
benefit, plan, policy, practice or program of, or any contract or agreement
entered into with the Company shall be payable in accordance with such benefit,
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

         8. Full Settlement; No Mitigation. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other clam, right or action which the Company may have against the
Executive or others, provided that nothing herein shall preclude the Company
from separately pursuing recovery from the Executive based on any such claim. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts (including amounts for damages
for breach) payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment.

         9. Arbitration. Any dispute about the validity, interpretation, effect
or alleged violation of this Agreement (an "arbitrable dispute") must be
submitted to confidential arbitration in Houston, Texas. Arbitration shall take
place before an experienced employment arbitrator licensed to practice law in
such state and selected in accordance with the rules of the Model Employment
Arbitration Procedures of the American Arbitration Association. Arbitration
shall be the exclusive remedy of any arbitrable dispute. Should any party to
this Agreement pursue any arbitrable dispute by any


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method other than arbitration, the other party shall be entitled to recover from
the party initiating the use of such method all damages, costs, expenses and
attorneys' fees incurred as a result of the use of such method. Notwithstanding
anything herein to the contrary, nothing in this Agreement shall purport to
waive or in any way limit the right of any party to seek to enforce any judgment
or decision on an arbitrable dispute in a court of competent jurisdiction. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts in Houston, Texas, for the purposes of any proceeding arising out
of this Agreement.

         10. Confidentiality. The Company agrees to provide the Executive, in
the course of his employment with the Company, with non-public privileged or
confidential information and trade secrets concerning the operations, future
plans and methods of doing business of the Company, its subsidiaries and
affiliates ("Proprietary Information"); and the Executive agrees that it would
be extremely damaging to the Company, its subsidiaries and affiliates if such
Proprietary Information were disclosed to a competitor of the Company, its
subsidiaries and affiliates or to any other person or corporation. In
consideration for the Company providing such Proprietary Information to the
Executive, the Executive agrees that all Proprietary Information divulged to the
Executive is in confidence and further agrees to keep all Proprietary
Information secret and confidential (except for such information which is or
becomes publicly available other than as a result of a breach by the Executive
of this provision) without limitation in time. In view of the nature of the
Executive's employment and the Proprietary Information the Executive has
acquired during the course of such employment, the Executive likewise agrees
that the Company, its subsidiaries and affiliates would be irreparably harmed by
any disclosure of Proprietary Information in violation of the terms of this
paragraph and that the Company, its subsidiaries and affiliates shall therefore
be entitled to preliminary and/or permanent injunctive relief prohibiting the
Executive from engaging in any activity or threatened activity in violation of
the terms of this Section and to any other relief available to them. Inquiries
regarding whether specific information constitutes Proprietary Information shall
be directed to the Board, provided that the Company shall not unreasonably
classify information as Proprietary Information.

         11. Non-Solicitation of Employees. The Executive recognizes that he
will be provided confidential information about other employees of the Company,
its subsidiaries and affiliates relating to their education, experience, skills,
abilities, compensation and benefits, and inter-personal relationships with
customers of the Company, its subsidiaries and affiliates and recognizes that
such information is not generally known, is of substantial value to the Company,
its subsidiaries and affiliates in developing their business and in securing and
retaining customers, and has been and will be acquired by him because of his
business position with the Company, its subsidiaries and affiliates.
Accordingly, in consideration of the Proprietary Information and other benefits
provided to the Executive under this Agreement, the Executive agrees that,
during the Employment Period and for the Restricted Period (as defined in
Section 12), he will not, directly or indirectly, solicit or recruit any
employee of the Company, its subsidiaries or affiliates on whose behalf he is
acting as an agent, representative or employee and that he will not convey any
such confidential information or trade secrets about other employees of the
Company, its subsidiaries and affiliates to any other person; provided, however,
that it shall not constitute a solicitation or recruitment of employment in
violation of this Section to discuss employment opportunities with any employee
of the Company, its subsidiaries or affiliates who has either first contacted
the Executive or regarding whose employment the Executive has discussed with and
received the written approval of the Chairman of


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the Board prior to making such solicitation or recruitment In view of the nature
of the Executive's employment with the Company, the Executive likewise agrees
that the Company, its subsidiaries and affiliates would be irreparably harmed by
any solicitation or recruitment in violation of the terms of this paragraph and
that the Company, its subsidiaries and affiliates shall therefore be entitled to
preliminary and/or permanent injunctive relief prohibiting the Executive from
engaging in any activity or threatened activity in violation of the terms of
this Section and to any other relief available to them.

         12.      Noncompetition.

                  (a) In consideration for the Company's providing the Executive
         with Confidential Information during the Employment Period and the
         other benefits provided by this Agreement, the Executive agrees that
         while employed by the Company and for the Restricted Period (as defined
         below), the Executive shall not, unless the Executive receives the
         prior written consent of the Board, own an interest in, manage,
         operate, join, control, lend money or render financial or other
         assistance to or participate in or be connected with, as an officer,
         employee, partner, stockholder, consultant or otherwise, any person
         which competes with the Company in the field of neurostimulation and
         are in a matter covered by a Company patent; provided, however, that
         following the Executive's termination of employment with the Company
         the foregoing restriction shall apply only to those areas where the
         Company is actually doing business on the date of such termination of
         employment. The Restricted Period shall be (i) the one-year period
         following the mutual termination of the Executive's employment and (ii)
         in all other cases, the period beginning on the Date of Termination and
         ending one year after the end of the Remaining Period.

                  (b) The Executive has carefully read and considered the
         provisions of this Section 12 and, having done so, agrees that the
         restrictions set forth in this Section 12 (including the Restricted
         Period, scope of activity to be restrained and the geographical scope)
         are fair and reasonable and are reasonably required for the protection
         of the interests of the Company, its officers, directors, employees,
         creditors and shareholders. The Executive understands that the
         restrictions contained in this Section 12 may limit his ability to
         engage in a business similar to the Company's business, but
         acknowledges that he will receive sufficiently high remuneration and
         other benefits from the Company hereunder to justify such restrictions.

                  (c) It is specifically agreed that the Restricted Period
         following termination of employment, during which the agreements and
         covenants of the Executive made in Sections 11 and 12 shall be
         effective, shall be computed by excluding from such computation any
         time which the Executive is in violation of the provisions of such
         Sections.

                  (d) In the event that any provision of this Section 12
         relating to the Restricted Period and/or the areas of restriction shall
         be declared by a court of competent jurisdiction to exceed the maximum
         time period or areas such court deems reasonable and enforceable, the
         Restricted Period and/or areas of restriction deemed reasonable and
         enforceable by the court shall become and thereafter be the maximum
         time period and/or areas.


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<PAGE>   11

         13. Legal Fees. The Company shall promptly pay all legal fees and
expenses (including, without limitation, fees and expenses in connection with
any arbitration) incurred by the Executive in disputing in good faith any issue
arising under this Agreement relating to the termination of the Executive's
employment or in seeking in good faith to obtain or enforce any benefit or right
provided by this Agreement.

         14.      Successors.

                  (a) Assignment by Executive. This Agreement is personal to the
         Executive and without the prior written consent of the Company shall
         not be assignable by the Executive otherwise than by will or the laws
         of descent and distribution. This Agreement shall inure to the benefit
         of and be enforceable by the Executive's legal representatives.

                  (b) Successors and Assigns of Company. This Agreement shall
         inure to the benefit of and be binding upon the Company, its successors
         and assigns.

                  (c) Assumption. The Company shall require any successor
         (whether direct or indirect, by purchase, merger, consolidation or
         otherwise) to all or substantially all of the business and/or assets of
         the Company to assume expressly and agree in writing prior to such
         succession to perform this Agreement in the same manner and to the same
         extent that the Company would be required to perform it if no such
         succession had taken place. A copy of such agreement shall be furnished
         to the Executive. As used in this Agreement, "Company" shall mean the
         Company as hereinbefore defined and any successor to its businesses
         and/or assets as aforesaid that assumes and agrees to perform this
         Agreement by operation of law or otherwise. Any failure of the Company
         to timely obtain such agreement shall be a material breach of this
         Agreement.

         15.      Miscellaneous.

                  (a) Governing Law. This Agreement shall be governed by and
         construed in accordance with the laws of the State of Texas, without
         reference to its principles of conflict of laws. The captions of this
         Agreement are not part of the provisions hereof and shall have no force
         or effect. This Agreement may not be amended, modified, repealed,
         waived, extended or discharged, except by an agreement in writing
         signed by the party against whom enforcement of such amendment,
         modification, repeal, waiver, extension or discharge is sought. No
         person, other than pursuant to a resolution of the Board or a committee
         thereof, shall have authority on behalf of the Company to agree to
         amend, modify, repeal, waive, extend or discharge any provision of this
         Agreement or anything in reference thereto.

                  (b) Notices. All notices and other communications hereunder
         shall be in writing and shall be given by hand delivery to the other
         party or by registered or certified mail, return receipt requested,
         postage prepaid, addressed, in either case, to the Company's
         headquarters or to such other address as either party shall have
         furnished to the other in writing in accordance herewith. Notices and
         communications shall be effective when actually received by the
         addressee.


                                      -11-
<PAGE>   12

                  (c) Severability. The invalidity or unenforceability of any
         provision of this Agreement shall not affect the validity or
         enforceability of any other provision of this Agreement.

                  (d) Taxes. The Company may withhold from any amounts payable
         or benefits provided under this Agreement such federal, state or local
         taxes as shall be required to be withheld pursuant to any applicable
         law or regulation.

                  (e) No Waiver. The Executive's or the Company's failure to
         insist upon strict compliance with any provision hereof or any other
         provision of this Agreement or the failure to assert any right that the
         Executive or the Company may have hereunder, including, without
         limitation, the right of the Executive to terminate employment for Good
         Reason pursuant to Section 5 of this Agreement.

                  (f) Entire Agreement; Effect on Stock Awards. This instrument
         contains the entire agreement of the Executive and the Company with
         respect to the subject matter hereof, and all promises,
         representations, understandings, arrangements and prior agreements
         between the parties with respect to the subject matter hereof,
         including without limitation that certain Severance Agreement between
         the parties dated May 1, 2001, are terminated hereby. The provisions of
         this Agreement concerning the accelerated vesting and extended period
         for exercise of Company stock options and other stock incentive awards
         shall be deemed to modify any such options and awards outstanding as of
         the Effective Date and shall be incorporated by reference into any such
         grants made after the Effective Date; the intent of the parties being
         that, in the event of any language in any plan or award agreement in
         conflict herewith or to the contrary, the terms of this Agreement shall
         control as to the vesting and exercisability of all outstanding and
         future stock options and stock incentive awards granted to the
         Executive.

         IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed effective for all purposes as of the Effective Date.



CYBERONICS, INC.                             CYBERONICS, INC.

By:  s/s Stanley H. Appel                    By:  s/s Tony Coelho
     --------------------                         ---------------
     Stanley H. Appel                             Tony Coelho
     Member of the Board of Directors and         Member of the Board of
     Compensation Committee                       Directors and Compensation
                                                  Committee


                                             EXECUTIVE

                                             s/s Robert P. Cummins
                                             ---------------------
                                                 Robert P. Cummins


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