content: <!-- CoverPageHeader start -->
  <!DOCTYPE html PUBLIC "-//W3C//DTD HTML 3.2//EN">
  <HTML>
  <HEAD>
  <TITLE> Cyberonics, Inc. (Form: 8-K) </TITLE>
  </HEAD>
  <BODY TEXT="#000000" BGCOLOR="#FFFFFF" ALINK="#0000FF" HLINK="#FF0000" VLINK="#800080">
  <A NAME="DOCUMENT_TOP">&nbsp;</A>
  <P>
  <!-- CoverPageHeader end --><!-- CoverPageTitle START -->
  <A NAME="DOCUMENT_TOP">&nbsp;</A>
  <HR NOSHADE>
  <P>
  <P ALIGN="CENTER">
  <FONT SIZE="4">
  		UNITED STATES<BR>
  	SECURITIES AND EXCHANGE COMMISSION
  </FONT>
  <BR>
  <FONT SIZE="2">
  	WASHINGTON, D.C. 20549
  </FONT>
  <P ALIGN="CENTER">
  <FONT SIZE="5">
  	FORM 8-K
  </FONT>
  <FONT SIZE="2">
  
  </FONT>
  </P>
  <P ALIGN="CENTER">
  <FONT SIZE="3">
  	CURRENT REPORT
  </FONT>
  </P>
  <P ALIGN="CENTER">
  <FONT SIZE="2">
  	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
  </FONT>
  </P>
  <CENTER>
  <TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
  <TR VALIGN="BOTTOM">
  <TD WIDTH="51%">
  	&nbsp;
  </TD>
  <TD WIDTH="5%">
  	&nbsp;
  </TD>
  <TD WIDTH="44%">
  	&nbsp;
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	Date of Report (Date of Earliest Event Reported):
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	December 24, 2006
  </FONT>
  </TD>
  </TR>
  </TABLE>
  <BR>
  </CENTER>
  <!-- CoverPageTitle END --><!-- CoverPageRegistrant START -->
  <P ALIGN="CENTER"><!-- -->
  <FONT SIZE="6">
  	Cyberonics, Inc.
  </FONT>
  <FONT SIZE="2">
  <BR>__________________________________________<BR>
  	(Exact name of registrant as specified in its charter)
  </FONT>
  <CENTER>
  <TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
  <TR VALIGN="BOTTOM">
  <TD WIDTH="33%">
  	&nbsp;
  </TD>
  <TD WIDTH="34%">
  	&nbsp;
  </TD>
  <TD WIDTH="33%">
  	&nbsp;
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	Delaware
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	000-19806
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	76-0236465
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  _____________________<BR>
  	(State or other jurisdiction
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  _____________<BR>
  	(Commission
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  ______________<BR>
  	(I.R.S. Employer
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	of incorporation)
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	File Number)
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	Identification No.)
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	100 Cyberonics Blvd., Houston, Texas
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	77058
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  _________________________________<BR>
  	(Address of principal executive offices)
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  ___________<BR>
  	(Zip Code)
  </FONT>
  </TD>
  </TR>
  </TABLE>
  </CENTER>
  <CENTER>
  <TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
  
  <TR VALIGN="BOTTOM">
  <TD WIDTH="51%">
  	&nbsp;
  </TD>
  <TD WIDTH="5%">
  	&nbsp;
  </TD>
  <TD WIDTH="44%">
  	&nbsp;
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	Registrant&#146;s telephone number, including area code:
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="CENTER" VALIGN="TOP">
  <FONT SIZE="2">
  	2812287200
  </FONT>
  </TD>
  </TR>
  </TABLE>
  </CENTER>
  <P ALIGN="CENTER">
  <FONT SIZE="2">
  	Not Applicable
  <BR>______________________________________________<BR>
  	Former name or former address, if changed since last report
  </FONT>
  <P ALIGN="CENTER">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  <!-- CoverPageRegistrant END --><P><FONT SIZE="2">
  Check the appropriate box below if the Form 8-K filing is intended to
  simultaneously satisfy the filing obligation of the registrant under any
  of the following provisions:</FONT>
  </P>
  <P><FONT SIZE="2">
  [&nbsp;&nbsp;]&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br>
  [&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<br>
  [&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<br>
  [&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<br>
  </P></FONT><!-- PageBreak START -->
  <P>
  <HR NOSHADE>
  <DIV ALIGN="LEFT" STYLE="PAGE-BREAK-BEFORE:ALWAYS">
  <A HREF="#DOCUMENT_TOP">
  <U>
  <B>
  <FONT SIZE="2">Top of the Form</FONT>
  </B>
  </U>
  </A>
  </DIV>
  <!-- PageBreak END --><!-- Item START -->
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  <B>
  	Item 1.01 Entry into a Material Definitive Agreement.
  </B>
  </FONT>
  </P>
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  On January 13, 2006, Cyberonics, Inc. (the "Company") entered into a Credit Agreement (the "Credit Agreement") with Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc. (the "Administrative Agent") and the lenders who are party thereto (the "Lenders").  The Credit Agreement provides for a three-year revolving line of credit in an amount up to $40 million, against which the Company has drawn the minimum $7.5 million for which it is currently required to pay interest.  The Credit Agreement requires the Company, among other covenants, (a) to comply with applicable laws, including securities laws that require the filing of its annual report on Form 10-K and quarterly reports on Form 10-Q and (b) to maintain compliance with all applicable listing criteria for the principal stock market on which the Company&#x2019;s common stock is listed.<br><br>As previously disclosed, the Company was not able to file timely with the Securities and Exchange Commission ("SEC") its Annual Report on Form 10-K for the year ended April 28, 2006 (the "2006 Annual Report"), its Quarterly Report on Form 10-Q for the fiscal quarter ended July 28, 2006 (the "First Quarter Form 10-Q"), and its Quarterly Report on Form 10-Q for the fiscal quarter ended October 27, 2006 (the "Second Quarter Form 10-Q") pending completion of a review by the Audit Committee of the Company&#x2019;s Board of Directors regarding previous option grants and resolution of any disclosure and accounting issues arising from the results of the review.<br><br>Also as previously disclosed, the Company entered into a Consent and Amendment Agreement ("Consent") on July 27, 2006, and a further Consent on October 31, 2006, with the Administrative Agent and Lenders providing that certain events will not constitute a default under the Credit Agreement prior to October 31, 2006 and, with respect to the further Consent, December 31, 2006.<br><br>On December 29, 2006, the Company entered into a third Consent with the Administrative Agent and Lenders providing that certain events will not constitute a default under the Credit Agreement.  Such events include, among other events, (a) the Company&#x2019;s failure to file timely with the SEC its 2006 Annual Report on or before January 8, 2006 and its quarterly reports on Form 10-Q, including the First Quarter Form 10-Q and Second Quarter Form 10-Q, on or before February 28, 2006; (b) the Company&#x2019;s failure to maintain compliance with the listing standards for The NASDAQ Global Market because of its failure to file such SEC reports; and (c) the Company&#x2019;s receipt of a notice of default and demand from Wells Fargo Bank, N.A. ("Trustee") in connection with the Indenture ("Indenture") dated September 27, 2005 between the Company, as issuer, and Trustee as a result of the Company&#x2019;s failure to timely file and deliver its 2006 Annual Report as purportedly required by the Indenture, so long as there is no determination by a court and the Company has not otherwise acknowledged that a default has occurred under the Indenture.  The Consent further provides that, until such time as the delinquent SEC reports have been delivered to Administrative Agent and the notice of default and demand has been withdrawn by the Trustee or a court has determined that the alleged default has not occurred under the Indenture, the Company&#x2019;s borrowing under the Credit Agreement is limited to $7.5 million.  The Company will be required to pay interest on a minimum loan balance of $10 million starting on February 1, 2007.
  </FONT>
  </P>
  <!-- Item END -->
  <BR><BR><BR><BR><!-- Item START -->
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  <B>
  	Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
  </B>
  </FONT>
  </P>
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  As previously disclosed, the Audit Committee of the Company&#x2019;s Board of Directors has conducted a review of the Company&#x2019;s stock option grants, practices and procedures and concluded that incorrect measurement dates were used for certain stock option grants. Consistent with the Audit Committee&#x2019;s conclusions, on December 24, 2006, the Company entered into a Stock Option Agreement Amendment and Bonus Agreement with Michael A. Cheney correcting the measurement dates and increasing the exercise price per share of the unexercised portion of certain stock options.  The Stock Option Agreement Amendment and Bonus Agreement also provides that the Company will pay Mr. Cheney a bonus in a dollar amount equal to the aggregate increase to the exercise prices for such options as follows:  with respect to shares that vest prior to January 1, 2008, the bonus will be paid on or about January 15, 2008; and with respect to shares that vest on or after January 1, 2008, the bonus will be paid quarterly for shares that actually vest during the preceding fiscal quarter.  <br><br>In addition, on December 28, 2006, the Company entered into a Stock Option Agreement Amendment and Bonus Agreement with Richard L. Rudolph, M.D. correcting the measurement dates and increasing the exercise price per share of the unexercised portion of certain stock options.  The Stock Option Agreement Amendment and Bonus Agreement also provides that the Company will pay Dr. Rudolph a bonus in a dollar amount equal to the aggregate increase to the exercise prices for such options as follows:  with respect to shares that vest prior to January 1, 2008, the bonus will be paid on or about January 15, 2008; and with respect to shares that vest on or after January 1, 2008, the bonus will be paid quarterly for shares that actually vest during the preceding fiscal quarter.
  </FONT>
  </P>
  <!-- Item END -->
  <BR><BR><BR><BR><!-- Item START -->
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  <B>
  	Item 9.01 Financial Statements and Exhibits.
  </B>
  </FONT>
  </P>
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  Exhibit 10.1 &#x2013; Consent and Amendment Agreement dated December 29, 2006<br><br>Exhibit 10.2 &#x2013; Stock Option Agreement Amendment and Bonus Agreement dated December 24, 2006 between Michael Cheney and the Company<br><br>Exhibit 10.3 &#x2013; Stock Option Agreement Amendment and Bonus Agreement dated December 28, 2006 between Richard Rudolph, M.D. and the Company
  </FONT>
  </P>
  <!-- Item END -->
  <BR><BR><BR><BR><P ALIGN="LEFT" STYLE="FONT-SIZE: 10PT"></P><!-- PageBreak START -->
  <P>
  <HR NOSHADE>
  <DIV ALIGN="LEFT" STYLE="PAGE-BREAK-BEFORE:ALWAYS">
  <A HREF="#DOCUMENT_TOP">
  <U>
  <B>
  <FONT SIZE="2">Top of the Form</FONT>
  </B>
  </U>
  </A>
  </DIV>
  <!-- PageBreak END --><!-- SignatureHeader START -->
  <P ALIGN="CENTER">
  <FONT SIZE="2">
  <B>
  	SIGNATURES
  </B>
  </FONT>
  </P>
  <P ALIGN="LEFT">
  <FONT SIZE="2">
  	Pursuant to the requirements of the Securities Exchange Act of 1934, the
  	registrant has duly caused this report to be signed on its behalf by the
  	undersigned hereunto duly authorized.
  </FONT>
  </P>
  <!-- SignatureHeader END --><!-- Signature START -->
  <CENTER>
  <TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
  <TR VALIGN="BOTTOM">
  <TD WIDTH="19%">
  	&nbsp;
  </TD>
  <TD WIDTH="34%">
  	&nbsp;
  </TD>
  <TD WIDTH="3%">
  	&nbsp;
  </TD>
  <TD WIDTH="1%">
  	&nbsp;
  </TD>
  <TD WIDTH="43%">
  	&nbsp;
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD COLSPAN="3" VALIGN="TOP" ALIGN="LEFT">
  <FONT SIZE="2">
  	Cyberonics, Inc.
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP">
  <FONT SIZE="2">
  <I>
  	January 5, 2007
  </I>
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  <I>
  	By:
  </I>
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  <I>
  	/s/ David S. Wise
  </I>
  <BR>
  </FONT>
  </TD>
  </TR>
  <TR>
  <TD VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <HR SIZE="1" NOSHADE>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  <I>
  	Name: David S. Wise
  </I>
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP">
  <FONT SIZE="2">
  <I>
  	Title: Secretary
  </I>
  </FONT>
  </TD>
  </TR>
  </TABLE>
  </CENTER>
  <!-- Signature END --><!-- PageBreak START -->
  <P>
  <HR NOSHADE>
  <DIV ALIGN="LEFT" STYLE="PAGE-BREAK-BEFORE:ALWAYS">
  <A HREF="#DOCUMENT_TOP">
  <U>
  <B>
  <FONT SIZE="2">Top of the Form</FONT>
  </B>
  </U>
  </A>
  </DIV>
  <!-- PageBreak END --><P ALIGN="CENTER">
  <FONT SIZE="2">
  	Exhibit&nbsp;Index
  </FONT>
  <CENTER>
  <TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="60%">
  <TR VALIGN="BOTTOM">
  <TD WIDTH="8%">
  	&nbsp;
  </TD>
  <TD WIDTH="15%">
  	&nbsp;
  </TD>
  <TD WIDTH="77%">
  	&nbsp;
  </TD>
  </TR>
  
  <BR>
  <TR VALIGN="BOTTOM">
  <TD NOWRAP ALIGN="LEFT">
  <FONT SIZE="1">
  <B>
  	Exhibit No.
  </B>
  </FONT>
  </TD>
  <TD>
  <FONT SIZE="1">
  	&nbsp;
  </FONT>
  </TD>
  <TD NOWRAP ALIGN="LEFT">
  <FONT SIZE="1">
  <B>
  	Description
  </B>
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD NOWRAP ALIGN="CENTER">
  <HR SIZE="1" NOSHADE>
  </TD>
  <TD>
  <FONT SIZE="1">
  	&nbsp;
  </FONT>
  </TD>
  <TD NOWRAP ALIGN="CENTER">
  <HR ALIGN="LEFT" SIZE="1" WIDTH="88%" NOSHADE>
  </TD>
  </TR>
  
  
  
  
  
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP" WIDTH="8%" nowrap>
  <FONT SIZE="2">
  <DIV ALIGN="LEFT">
  	10.1
  </DIV>
  </FONT>
  </TD>
  <TD WIDTH="15%">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
  <FONT SIZE="2">
  Consent and Amendment Agreement dated December 29, 2006
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP" WIDTH="8%" nowrap>
  <FONT SIZE="2">
  <DIV ALIGN="LEFT">
  	10.2
  </DIV>
  </FONT>
  </TD>
  <TD WIDTH="15%">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
  <FONT SIZE="2">
  Stock Option Agreement Amendment and Bonus Agreement dated December 24, 2006 between Michael Cheney and the Company
  </FONT>
  </TD>
  </TR>
  <TR VALIGN="BOTTOM">
  <TD VALIGN="TOP" WIDTH="8%" nowrap>
  <FONT SIZE="2">
  <DIV ALIGN="LEFT">
  	10.3
  </DIV>
  </FONT>
  </TD>
  <TD WIDTH="15%">
  <FONT SIZE="2">
  	&nbsp;
  </FONT>
  </TD>
  <TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
  <FONT SIZE="2">
  Stock Option Agreement Amendment and Bonus Agreement dated December 28, 2006 between Richard Rudolph, M.D., and the Company
  </FONT>
  </TD>
  </TR></TABLE></CENTER><!-- HTMLFooter START -->
  </BODY>
  </HTML>
  <!-- HTMLFooter END -->
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "htm_17432.htm", "description": "LIVE FILING", "secsgml_size_bytes": 16490}]
metadata_filer: {"company-data": {"conformed-name": "CYBERONICS INC", "cik": "0000864683", "assigned-sic": "3845", "irs-number": "760236465", "state-of-incorporation": "DE", "fiscal-year-end": "0430"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-19806", "film-number": "07515191"}, "business-address": {"street1": "100 CYBERONICS CENTER BLVD", "street2": "SUITE 600", "city": "HOUSTON", "state": "TX", "zip": "77058", "phone": "(281) 228-7200"}, "mail-address": {"street1": "100 CYBERONICS  BLVD", "street2": "SUITE 600", "city": "HOUSTON", "state": "TX", "zip": "77058"}}
text: Cyberonics, Inc. (Form: 8-K)
  UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549
  FORM 8-K
  CURRENT REPORT
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  Date of Report (Date of Earliest Event Reported):
  December 24, 2006
  Cyberonics, Inc.
  __________________________________________
  (Exact name of registrant as specified in its charter)
  Delaware
  000-19806
  76-0236465
  _____________________
  (State or other jurisdiction
  _____________
  (Commission
  ______________
  (I.R.S. Employer
  of incorporation)
  File Number)
  Identification No.)
  100 Cyberonics Blvd., Houston, Texas
  77058
  _________________________________
  (Address of principal executive offices)
  ___________
  (Zip Code)
  Registrant's telephone number, including area code:
  2812287200
  Not Applicable
  ______________________________________________
  Former name or former address, if changed since last report
  Check the appropriate box below if the Form 8-K filing is intended to
  simultaneously satisfy the filing obligation of the registrant under any
  of the following provisions:
  [  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
  Top of the Form
  Item 1.01 Entry into a Material Definitive Agreement.
  On January 13, 2006, Cyberonics, Inc. (the "Company") entered into a Credit Agreement (the "Credit Agreement") with Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc. (the "Administrative Agent") and the lenders who are party thereto (the "Lenders").  The Credit Agreement provides for a three-year revolving line of credit in an amount up to $40 million, against which the Company has drawn the minimum $7.5 million for which it is currently required to pay interest.  The Credit Agreement requires the Company, among other covenants, (a) to comply with applicable laws, including securities laws that require the filing of its annual report on Form 10-K and quarterly reports on Form 10-Q and (b) to maintain compliance with all applicable listing criteria for the principal stock market on which the Company's common stock is listed.
  As previously disclosed, the Company was not able to file timely with the Securities and Exchange Commission ("SEC") its Annual Report on Form 10-K for the year ended April 28, 2006 (the "2006 Annual Report"), its Quarterly Report on Form 10-Q for the fiscal quarter ended July 28, 2006 (the "First Quarter Form 10-Q"), and its Quarterly Report on Form 10-Q for the fiscal quarter ended October 27, 2006 (the "Second Quarter Form 10-Q") pending completion of a review by the Audit Committee of the Company's Board of Directors regarding previous option grants and resolution of any disclosure and accounting issues arising from the results of the review.
  Also as previously disclosed, the Company entered into a Consent and Amendment Agreement ("Consent") on July 27, 2006, and a further Consent on October 31, 2006, with the Administrative Agent and Lenders providing that certain events will not constitute a default under the Credit Agreement prior to October 31, 2006 and, with respect to the further Consent, December 31, 2006.
  On December 29, 2006, the Company entered into a third Consent with the Administrative Agent and Lenders providing that certain events will not constitute a default under the Credit Agreement.  Such events include, among other events, (a) the Company's failure to file timely with the SEC its 2006 Annual Report on or before January 8, 2006 and its quarterly reports on Form 10-Q, including the First Quarter Form 10-Q and Second Quarter Form 10-Q, on or before February 28, 2006; (b) the Company's failure to maintain compliance with the listing standards for The NASDAQ Global Market because of its failure to file such SEC reports; and (c) the Company's receipt of a notice of default and demand from Wells Fargo Bank, N.A. ("Trustee") in connection with the Indenture ("Indenture") dated September 27, 2005 between the Company, as issuer, and Trustee as a result of the Company's failure to timely file and deliver its 2006 Annual Report as purportedly required by the Indenture, so long as there is no determination by a court and the Company has not otherwise acknowledged that a default has occurred under the Indenture.  The Consent further provides that, until such time as the delinquent SEC reports have been delivered to Administrative Agent and the notice of default and demand has been withdrawn by the Trustee or a court has determined that the alleged default has not occurred under the Indenture, the Company's borrowing under the Credit Agreement is limited to $7.5 million.  The Company will be required to pay interest on a minimum loan balance of $10 million starting on February 1, 2007.
  Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
  As previously disclosed, the Audit Committee of the Company's Board of Directors has conducted a review of the Company's stock option grants, practices and procedures and concluded that incorrect measurement dates were used for certain stock option grants. Consistent with the Audit Committee's conclusions, on December 24, 2006, the Company entered into a Stock Option Agreement Amendment and Bonus Agreement with Michael A. Cheney correcting the measurement dates and increasing the exercise price per share of the unexercised portion of certain stock options.  The Stock Option Agreement Amendment and Bonus Agreement also provides that the Company will pay Mr. Cheney a bonus in a dollar amount equal to the aggregate increase to the exercise prices for such options as follows:  with respect to shares that vest prior to January 1, 2008, the bonus will be paid on or about January 15, 2008; and with respect to shares that vest on or after January 1, 2008, the bonus will be paid quarterly for shares that actually vest during the preceding fiscal quarter.
  In addition, on December 28, 2006, the Company entered into a Stock Option Agreement Amendment and Bonus Agreement with Richard L. Rudolph, M.D. correcting the measurement dates and increasing the exercise price per share of the unexercised portion of certain stock options.  The Stock Option Agreement Amendment and Bonus Agreement also provides that the Company will pay Dr. Rudolph a bonus in a dollar amount equal to the aggregate increase to the exercise prices for such options as follows:  with respect to shares that vest prior to January 1, 2008, the bonus will be paid on or about January 15, 2008; and with respect to shares that vest on or after January 1, 2008, the bonus will be paid quarterly for shares that actually vest during the preceding fiscal quarter.
  Item 9.01 Financial Statements and Exhibits.
  Exhibit 10.1 – Consent and Amendment Agreement dated December 29, 2006
  Exhibit 10.2 – Stock Option Agreement Amendment and Bonus Agreement dated December 24, 2006 between Michael Cheney and the Company
  Exhibit 10.3 – Stock Option Agreement Amendment and Bonus Agreement dated December 28, 2006 between Richard Rudolph, M.D. and the Company
  Top of the Form
  SIGNATURES
  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  	registrant has duly caused this report to be signed on its behalf by the
  	undersigned hereunto duly authorized.
  Cyberonics, Inc.
  January 5, 2007
  By:
  /s/ David S. Wise
  Name: David S. Wise
  Title: Secretary
  Top of the Form
  Exhibit Index
  Exhibit No.
  Description
  10.1
  Consent and Amendment Agreement dated December 29, 2006
  10.2
  Stock Option Agreement Amendment and Bonus Agreement dated December 24, 2006 between Michael Cheney and the Company
  10.3
  Stock Option Agreement Amendment and Bonus Agreement dated December 28, 2006 between Richard Rudolph, M.D., and the Company