form10_56.htm


    


    EXHIBIT 10.56

    

     

    February
1, 2008

    


    


    Richard
L. Rudolph, M.D.

    15118
Blossom Bay Dr.

    Houston,
TX 77059

    


    Re:  Confirmation of Status
Change

    


    Dear Dr.
Rudolph:

    


    This letter will confirm that, as of
the close of business, February 1, 2008, your employment status will change from
full-time to part-time in accordance with the following terms:

    


    
      
        	
                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 the
Company.

              


      

    

     

    
      
        	
                Base
      Compensation

              


      

    

     

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

              


      

    

     

    
      
        	
                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 conditional
compensation:

              


      

    

     

    
      $150,000,
payable if the due diligence process associated with Project Twister is
completed and a
related third party investment and/or purchase is consummated;
or

    

     

    
      
      

    

    
      
        	
                $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.

              


      

    

    


    
      
        	
                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 submitted
shortly.

              


      

    

     

    
      
        	
                Payment

              


      

    

     

    
      
        	
                You
      will be paid bi-weekly for all wages actually earned based on the reports
      referenced above on our standard payroll
cycle.

              


      

    

     

    
      
        	
                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 in
effect.

              


      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                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.

              


      

    

     

    
      
        	
                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).

              


      

    

    

      
        	
                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.  

              


      

    

    


    If the
terms and conditions of this offer of Part-Time Work are acceptable to you,
please sign and date this letter in the space provided below and fax it back in
it entirety to 281-853-2529.  Of course, if you have any questions or
comments, please do not hesitate to contact us.

    


    Very
Truly Yours,

    


     

    


    /s/
Daniel J. Moore

    Daniel J. Moore

    


    


    


    I hereby
agree to the terms and conditions as outlined in this letter.

    


    


    


    


    Signature  /s/ Richard L. Rudolph

    
Printed
Legal Name  Richard L.
Rudolph

    


    Date  1 February, 2008