Amendment No. 7 to Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TLGFV1kQmPqdHVh+1dm13TzfnO1og33826i2maehzrmPYcCIRUMT8ql1ONGn0v/E ZClZf1KqDJUX7V5pBfnqdA== 0001193125-08-202261.txt : 20080926 0001193125-08-202261.hdr.sgml : 20080926 20080926171550 ACCESSION NUMBER: 0001193125-08-202261 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20080926 DATE AS OF CHANGE: 20080926 GROUP MEMBERS: JEFFREY E. SCHWARZ GROUP MEMBERS: KAREN FINERMAN GROUP MEMBERS: KJ ADVISORS, INC. GROUP MEMBERS: METROPOLITAN CAPITAL ADVISORS INTERNATIONAL LIMITED GROUP MEMBERS: METROPOLITAN CAPITAL ADVISORS SELECT FUND, L.P. GROUP MEMBERS: METROPOLITAN CAPITAL ADVISORS, L.P. GROUP MEMBERS: METROPOLITAN CAPITAL III, INC. GROUP MEMBERS: METROPOLITAN CAPITAL PARTNERS II, L.P. GROUP MEMBERS: METROPOLITAN CAPITAL PARTNERS III, L.P. GROUP MEMBERS: METROPOLITAN CAPITAL PARTNERS IV, L.P. GROUP MEMBERS: METROPOLITAN CAPITAL SELECT, L.L.C. GROUP MEMBERS: METROPOLITAN SPV GP, L.L.C. GROUP MEMBERS: METROPOLITAN SPV, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CYBERONICS INC CENTRAL INDEX KEY: 0000864683 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 760236465 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-45039 FILM NUMBER: 081091959 BUSINESS ADDRESS: STREET 1: 100 CYBERONICS BLVD CITY: HOUSTON STATE: TX ZIP: 77058 BUSINESS PHONE: (281) 228-7200 MAIL ADDRESS: STREET 1: 100 CYBERONICS BLVD CITY: HOUSTON STATE: TX ZIP: 77058 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: METROPOLITAN CAPITAL ADVISORS INC CENTRAL INDEX KEY: 0001280054 IRS NUMBER: 133673512 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 660 MADISON AVE STREET 2: 20TH FL CITY: NEW YORK STATE: NY ZIP: 10021 BUSINESS PHONE: 2124868100 MAIL ADDRESS: STREET 1: 660 MADISON AVE STREET 2: 20TH FL CITY: NEW YORK STATE: NY ZIP: 10021 SC 13D/A 1 dsc13da.htm AMENDMENT NO. 7 TO SCHEDULE 13D Amendment No. 7 to Schedule 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 7)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a)

AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)*

CYBERONICS, INC.

(Name of Issuer)

COMMON STOCK, $0.01 PAR VALUE

(Title of Class of Securities)

23251P102

(CUSIP Number)

Metropolitan Capital Advisors, Inc.

660 Madison Avenue, 18^th Floor

New York, NY 10065

(212) 486-8100

Copies to:

David K. Robbins, Esq.

Bingham McCutchen LLP

355 South Grand Avenue, Suite 4400

Los Angeles, CA 90071

(213) 680-6400

(Name, Address and Telephone Number of Person Authorized to

Receive Notices and Communications)

September 26, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See, Rule 13d-7(b) for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see, the Notes).

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan SPV, L.P.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 432,781
		(9) Sole dispositive power 0
		(10) Shared dispositive power 432,781


(11)	Aggregate amount beneficially owned by each reporting person 432,781
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 1.58%
(14)	Type of reporting person (see instructions) PN

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan SPV GP, L.L.C.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 432,781
		(9) Sole dispositive power 0
		(10) Shared dispositive power 432,781


(11)	Aggregate amount beneficially owned by each reporting person 432,781
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 1.58%
(14)	Type of reporting person (see instructions) OO

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Advisors, L.P.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power
		(8) Shared voting power 255,000
		(9) Sole dispositive power
		(10) Shared dispositive power 255,000


(11)	Aggregate amount beneficially owned by each reporting person 255,000
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.93%
(14)	Type of reporting person (see instructions) PN

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Partners IV, L.P.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 255,000
		(9) Sole dispositive power 0
		(10) Shared dispositive power 255,000


(11)	Aggregate amount beneficially owned by each reporting person 255,000
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.93%
(14)	Type of reporting person (see instructions) PN

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Advisors, Inc.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization NY


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 255,000
		(9) Sole dispositive power 0
		(10) Shared dispositive power 255,000


(11)	Aggregate amount beneficially owned by each reporting person 255,000
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.93%
(14)	Type of reporting person (see instructions) CO

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons KJ Advisors, Inc.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization NY


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 211,900
		(9) Sole dispositive power 0
		(10) Shared dispositive power 211,900


(11)	Aggregate amount beneficially owned by each reporting person 211,900
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.77%
(14)	Type of reporting person (see instructions) CO

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Partners II, L.P.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization NY


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 211,900
		(9) Sole dispositive power 0
		(10) Shared dispositive power 211,900


(11)	Aggregate amount beneficially owned by each reporting person 211,900
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.77%
(14)	Type of reporting person (see instructions) PN

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital III, Inc.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 270,600
		(9) Sole dispositive power 0
		(10) Shared dispositive power 270,600


(11)	Aggregate amount beneficially owned by each reporting person 270,600
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.99%
(14)	Type of reporting person (see instructions) CO

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Partners III, L.P.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 270,600
		(9) Sole dispositive power 0
		(10) Shared dispositive power 270,600


(11)	Aggregate amount beneficially owned by each reporting person 270,600
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.99%
(14)	Type of reporting person (see instructions) PN

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Advisors International Limited
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization British Virgin Islands


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 270,600
		(9) Sole dispositive power 0
		(10) Shared dispositive power 270,600


(11)	Aggregate amount beneficially owned by each reporting person 270,600
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.99%
(14)	Type of reporting person (see instructions) OO

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Advisors Select Fund, L.P.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) WC
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 20,000
		(9) Sole dispositive power 0
		(10) Shared dispositive power 20,000


(11)	Aggregate amount beneficially owned by each reporting person 20,000
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.07%
(14)	Type of reporting person (see instructions) PN

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Metropolitan Capital Select, L.L.C.
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization DE


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 20,000
		(9) Sole dispositive power 0
		(10) Shared dispositive power 20,000


(11)	Aggregate amount beneficially owned by each reporting person 20,000
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	¨
(13)	Percent of class represented by amount in Row (11) 0.07%
(14)	Type of reporting person (see instructions) OO

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Jeffrey E. Schwarz
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF, OO
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization USA


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 3,075
		(8) Shared voting power 1,198,951
		(9) Sole dispositive power 3,075
		(10) Shared dispositive power 1,198,951


(11)	Aggregate amount beneficially owned by each reporting person 1,202,026¹
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	x
(13)	Percent of class represented by amount in Row (11) 4.40%
(14)	Type of reporting person (see instructions) IN

¹	See, the penultimate paragraph of Item 5(b) of the Schedule 13D to which this Amendment No. 7 relates, along with the first paragraph of Item 5(b) of the Schedule 13D, as amended and restated hereby, regarding the beneficial ownership of these shares.

13D

CUSIP NO. 23251P102


(1)	Name of reporting persons Karen Finerman
(2)	Check the appropriate box if a member of a group (see instructions) (a) x (b) ¨
(3)	SEC use only
(4)	Source of funds (see instructions) AF
(5)	Check if disclosure of legal proceedings is required pursuant to items 2(d) or 2(e)	¨
(6)	Citizenship or place of organization USA


Number of shares beneficially owned by each reporting person with:		(7) Sole voting power 0
		(8) Shared voting power 1,190,281
		(9) Sole dispositive power 0
		(10) Shared dispositive power 1,190,281


(11)	Aggregate amount beneficially owned by each reporting person 1,190,281¹
(12)	Check if the aggregate amount in Row (11) excludes certain shares (see instructions)	x
(13)	Percent of class represented by amount in Row (11) 4.35%
(14)	Type of reporting person (see instructions) IN

¹	See, the penultimate paragraph of Item 5(b) of the Schedule 13D to which this Amendment No. 7 relates regarding the beneficial ownership of these shares.

INTRODUCTION

This Amendment No. 7 (“Amendment No. 7”) relates to the Schedule 13D filed with the Securities and Exchange Commission on September 11, 2006, as amended by Amendment No. 1 filed on September 28, 2006, Amendment No. 2 filed on November 1, 2006, Amendment No. 3 filed on November 21, 2006, Amendment No. 4 filed on November 28, 2006, Amendment No. 5 filed on November 30, 2006 and Amendment No. 6 filed on January 29, 2007 (as amended, the “Schedule 13D”) by Metropolitan SPV, L.P., a Delaware limited partnership (“SPV”); Metropolitan SPV GP, L.L.C., a Delaware limited liability company (“SPV GP”); Metropolitan Capital Advisors, L.P. (f/k/a Bedford Falls Investors, L.P.), a Delaware limited partnership (“MetCap Advisors”); Metropolitan Capital Partners IV, L.P. (f/k/a Metropolitan Capital Advisors, L.P.), a Delaware limited partnership (“MetCap”); Metropolitan Capital Advisors, Inc., a New York corporation (“MetCap GP”); Metropolitan Capital Partners II, L.P., a New York limited partnership (“Partners II”); KJ Advisors, Inc., a New York corporation (“Partners II GP”); Metropolitan Capital Advisors International Limited, a British Virgin Islands international business company (“MetCap International”); Metropolitan Capital Partners III, L.P., a Delaware limited partnership (“Partners III”); Metropolitan Capital III, Inc., a Delaware corporation (“Partners III GP”); Metropolitan Capital Advisors Select Fund, L.P., a Delaware limited partnership (“Select”); Metropolitan Capital Select, L.L.C., a Delaware limited liability company (“Select GP”) (each of the foregoing, collectively the “MetCap Entities”); Jeffrey E. Schwarz, a citizen of the United States of America (“Schwarz”); and Karen Finerman, a citizen of the United States of America (“Finerman,” and together with Schwarz and the MetCap Entities, collectively, the “Reporting Persons”), relating to the common stock, par value $0.01 per share (the “Shares”), of Cyberonics, Inc., a Delaware corporation (the “Issuer”). The principal executive offices of the Issuer are located at 100 Cyberonics Boulevard, Houston, Texas 77058.

1. ITEM 4 OF THE SCHEDULE 13D IS HEREBY AMENDED TO INCORPORATE THE FOLLOWING ADDITIONAL INFORMATION:

Item 4.

Purpose of Transaction.

Effective September 25, 2008, Schwarz resigned as a member of the Board of Directors of the Issuer.

In connection with a redemption request made by a partner of SPV, on September 26, 2008 SPV distributed 365,731 Shares beneficially owned by it to the partner who requested such redemption in connection with redeeming such partner’s interest in SPV.

2. ITEMS 5(a) AND 5(e) AND THE FIRST PARAGRAPH OF ITEM 5(b) OF THE SCHEDULE 13D ARE HEREBY AMENDED AND RESTATED IN THEIR ENTIRETY, AS SET FORTH BELOW, AND ITEM 5(c) IS HEREBY AMENDED TO INCORPORATE THE FOLLOWING ADDITIONAL INFORMATION:

Item 5.

Interest in Securities of the Issuer.

(a) As of the close of business on September 26, 2008, the Reporting Persons may be deemed to beneficially own (as that term is defined in Rule 13d-3 under the Act), in the aggregate, approximately 1,202,026 Shares, representing approximately 4.40% percent of the outstanding common stock of the Issuer, based on 27,344,394 Shares advised by the Issuer to be outstanding as of September 25, 2008.

(b) Each of SPV; MetCap Advisors; Partners II; Select; and MetCap International beneficially and directly own and has sole voting and sole dispositive power with regard to 432,781, 255,000, 211,900, 20,000 and 270,600 Shares, respectively, except to the extent that other Reporting Persons as described below may be deemed to have shared voting power and shared dispositive power with regard to such Shares. As a result of the transaction described under Item 4, SPV disclaims beneficial ownership of the 365,731 Shares distributed by SPV on September 26, 2008 to a partner of SPV in connection with a redemption request made by such partner. Schwarz may be deemed to have the sole power to vote or dispose of the 3,075 Shares of restricted stock granted to him which has vested under the Director Restricted Stock Agreements (as defined in Item 6), as reported in this Amendment No. 7. Schwarz disclaims beneficial ownership of the remaining 14,807 Shares of restricted stock granted to him under the Director Restricted Stock Agreements, which Shares of restricted stock have not yet vested and were forfeited to the Issuer on September 25, 2008 pursuant to the terms of the Director Restricted Stock Agreements, in connection with the effectiveness of Schwarz’s resignation as a member of the Board of Directors. Schwarz, by virtue of his familial relationship to either the trustee or the beneficiaries of the trusts and the fact that Schwarz is the Trustee and founder of the foundation that purchased Shares reported in this Amendment No. 7, may be deemed to have the shared power to vote or dispose of the 8,670 Shares acquired by such trusts and the foundation. Schwarz disclaims beneficial ownership of the 8,670 Shares owned by the trusts and the foundation for all other purposes.

(c) In connection with Schwarz’s resignation as a member of the Board of Directors, on September 25, 2008 Schwarz forfeited to the Issuer, for no consideration, 14,807 Shares of restricted stock of the Issuer granted to Schwarz which had not yet vested under the terms of the respective Director Restricted Stock Agreements. Pursuant to the terms of such Director Restricted Stock Agreements, such forfeiture occurred automatically and without further action by either party thereto. The foregoing discussion of the Director Restricted Stock Agreements is qualified in its entirety by the text of the Director Restricted Stock Agreements attached hereto as Exhibits 1-3 and incorporated by reference herein.

* * *

(e) As a result of the transaction described under Item 4, the Reporting Persons ceased to be the beneficial owners of more than five percent of the outstanding common stock of the Issuer on September 26, 2008.

3. ITEM 6 OF THE SCHEDULE 13D IS HEREBY AMENDED TO INCORPORATE THE FOLLOWING ADDITIONAL INFORMATION AS THE PENULTIMATE PARAGRAPH OF ITEM 6:

ITEM 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Pursuant to the terms of the Issuer’s 2005 Stock Plan and in connection with Schwarz becoming a member of the Board of Directors of the Issuer, on March 12, 2007 Schwarz received a grant of 10,000 Shares of restricted stock of the Issuer, of which 2,000 Shares have vested and are reported herein, pursuant to a Director Restricted Stock Agreement, dated February 27, 2007, as amended, between the Issuer and Schwarz (the “February 2007 Agreement”), in the form attached hereto as Exhibit 1 and incorporated by reference herein. Pursuant to the terms of the Issuer’s 1997 Stock Plan and in connection with Schwarz’s service as a member of the Board of Directors of the Issuer, on June 18, 2007 Schwarz received a grant of 4,300 Shares of restricted stock of the Issuer, of which 1,075 Shares have vested and are reported herein, pursuant to a Director Restricted Stock Agreement, dated June 18, 2007, between the Issuer and Schwarz (the “June 2007 Agreement”), in the form attached hereto as Exhibit 2

and incorporated by reference herein. Pursuant to the terms of the Issuer’s Amended and Restated 1997 Stock Plan and in connection with Schwarz’s service as a member of the Board of Directors of the Issuer, on June 16, 2008 Schwarz received a grant of 3,582 Shares of restricted stock of the Issuer, of which 0 Shares have vested and are reported herein, pursuant to a Director Restricted Stock Agreement, dated June 16, 2008, between the Issuer and Schwarz (the “June 2008 Agreement,” and together with the February 2007 Agreement and the June 2007 Agreement, collectively, the “Director Restricted Stock Agreements”), in the form attached hereto as Exhibit 3 and incorporated by reference herein. The Shares of restricted stock granted to Schwarz vested in accordance with the respective terms of the Director Restricted Stock Agreements and were subject to forfeiture prior to vesting upon Schwarz’s resignation as a member of the Board of Directors of the Issuer, as provided in the respective Director Restricted Stock Agreements. The foregoing description of the Director Restricted Stock Agreements is qualified in its entirety by the terms and provisions of the Director Restricted Stock Agreements attached hereto as Exhibits 1-3 and incorporated by reference herein.

4. ITEM 7 OF THE SCHEDULE 13D IS HEREBY AMENDED TO INCORPORATE THE FOLLOWING ADDITIONAL INFORMATION:

ITEM 7.

Material to be Filed as Exhibits.


		Document

Exhibit 1	-	Director Restricted Stock Agreement, dated February 27, 2007, between the Issuer and Jeffrey E. Schwarz, as amended.

Exhibit 2	-	Director Restricted Stock Agreement, dated June 18, 2007, between the Issuer and Jeffrey E. Schwarz.

Exhibit 3	-	Director Restricted Stock Agreement, dated June 16, 2008, between the Issuer and Jeffrey E. Schwarz.

Signature

After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct.

Dated: September 26, 2008


METROPOLITAN SPV, L.P.

/s/ Karen Finerman
By:		Karen Finerman
Title:		Managing Member of Metropolitan SPV GP, L.L.C., which is the general partner of Metropolitan SPV, L.P.

METROPOLITAN SPV GP, LLC

/s/ Karen Finerman
By:		Karen Finerman
Title:		Managing Member

METROPOLITAN CAPITAL ADVISORS, L.P. (f/k/a Bedford Falls Investors, L.P.)

/s/ Karen Finerman
By:		Karen Finerman
Title:		President of Metropolitan Capital Advisors, Inc., which is the general partner of Metropolitan Capital Partners IV, L.P., which is the general partner of Metropolitan Capital Advisors, L.P.

METROPOLITAN CAPITAL ADVISORS, INC.

/s/ Karen Finerman
By:		Karen Finerman
Title:		President of Metropolitan Capital Advisors, Inc.


METROPOLITAN CAPITAL PARTNERS IV, L.P. (f/k/a Metropolitan Capital Advisors, L.P.)

/s/ Karen Finerman
By:		Karen Finerman
Title:		President of Metropolitan Capital Advisors, Inc., which is the general partner of Metropolitan Capital Partners IV, L.P.

KJ ADVISORS, INC.

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Chief Executive Officer

METROPOLITAN CAPITAL PARTNERS II, L.P.

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Chief Executive Officer of KJ Advisors, Inc., which is the general partner of Metropolitan Capital Partners II, L.P.

METROPOLITAN CAPITAL III, INC.

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Chief Executive Officer

METROPOLITAN CAPITAL PARTNERS III, L.P.

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Chief Executive Officer of Metropolitan Capital III, Inc., which is the general partner of Metropolitan Capital Partners III, L.P.


METROPOLITAN CAPITAL ADVISORS SELECT FUND, L.P.

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Managing Member of Metropolitan Capital Select, L.L.C., which is the general partner of Metropolitan Capital Advisors Select Fund, L.P.

METROPOLITAN CAPITAL SELECT, L.L.C.

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Managing Member

METROPOLITAN CAPITAL ADVISORS INTERNATIONAL LIMITED

/s/ Jeffrey E. Schwarz
By:		Jeffrey E. Schwarz
Title:		Chief Executive Officer of Metropolitan Capital III, Inc., which is the general partner of Metropolitan Capital Partners III, L.P., which is the investment manager of Metropolitan Capital Advisors International Limited

/s/ Jeffrey E. Schwarz
Jeffrey E. Schwarz

/s/ Karen Finerman
Karen Finerman

Exhibit Index


		Document

Exhibit 1	-	Director Restricted Stock Agreement, dated February 27, 2007, between the Issuer and Jeffrey E. Schwarz, as amended.

Exhibit 2	-	Director Restricted Stock Agreement, dated June 18, 2007, between the Issuer and Jeffrey E. Schwarz.

Exhibit 3	-	Director Restricted Stock Agreement, dated June 16, 2008, between the Issuer and Jeffrey E. Schwarz.

EX-1 2 dex1.htm DIRECTOR RESTRICTED STOCK AGREEMENT, DATED FEBRUARY 27, 2007 Director Restricted Stock Agreement, dated February 27, 2007

Exhibit 1

DIRECTOR RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made effective as of February 27, 2007 (the “Grant Date”), between CYBERONICS, INC., a Delaware corporation (the “Company”), and Jeffrey E. Schwarz (“Director”), a member of the Board of Directors as of January 26, 2007 (the “Date of Election”).

1. Award. Pursuant to the CYBERONICS, INC. 2005 STOCK PLAN (the “Plan”), as of the Grant Date 10,000 shares (the “Restricted Shares”) of the Company’s common stock shall be issued as hereinafter provided in the Director’s name subject to certain restrictions thereon. The Director hereby acknowledges receipt of a copy of the Plan and the Prospectus relating thereto pursuant to the Securities Act of 1933, and agrees that this award of Restricted Shares shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof. All dividends and other distributions on a Restricted Share shall be subject to the same Forfeiture Restrictions (as hereinafter defined) as are applicable to such Restricted Share.

2. Restricted Shares. The Director hereby accepts the Restricted Shares when issued and agrees with respect thereto as follows:

(a) Forfeiture Restrictions. The Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions, and in the event of termination of the Director’s service relationship with the Company (as provided in Section 5) for any reason other than as provided in Section 2(b), the Director shall, for no consideration, forfeit to the Company all Restricted Shares then subject to the Forfeiture Restrictions. The prohibition against transfer and the Director’s obligation to forfeit and surrender the Restricted Shares to the Company upon the Director’s termination of service are herein referred to as the “Forfeiture Restrictions.” The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Shares.

(b) Vesting/Lapse of Forfeiture Restrictions. Until the Restricted Shares are fully vested or forfeited, on each anniversary of the Date of Election, so long as the Director continues in a service relationship with the Company (as provided in Section 5) on such anniversary date, 20% of the Restricted Shares shall vest and the Forfeiture Restrictions shall lapse on such vested shares. The number of shares that vest as of each anniversary date will be rounded down to the nearest whole share, with any remaining shares vesting on the final installment. Notwithstanding the foregoing vesting schedule, the Forfeiture Restrictions shall lapse in full as to all of the Restricted Shares on the earlier of (i) a Change of Control (as defined in the Plan) or (ii) the termination of the Director’s service relationship with the Company due to the Director’s death.

(c) Certificates. A certificate evidencing the Restricted Shares shall be issued by the Company in the Director’s name, pursuant to which the Director shall have all of the rights of a shareholder of the Company with respect to the Restricted Shares, including, without limitation, voting rights and the right to receive dividends (provided, however, that dividends paid in shares of the Company’s stock shall be subject to the Forfeiture Restrictions). The Director may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the Forfeiture Restrictions with respect to such shares have expired, and a breach of the terms of this Agreement shall cause a forfeiture of all then remaining Restricted Shares. The certificate shall contain an appropriate endorsement reflecting the Forfeiture Restrictions. The certificate shall be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Compensation Committee of the Board of Directors (the “Committee”) as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this award. On the date of this Agreement, the Director shall, if required by the Committee, deliver to the Company a stock power, endorsed in blank, relating to the Restricted Shares. Upon the lapse of the Forfeiture Restrictions without forfeiture of the Restricted Shares, the Company shall cause a new certificate or certificates to be issued without legend (except for any legend required pursuant to applicable securities laws or any other agreement to which the Director is a party) in the name of the Director in exchange for the certificate evidencing the Restricted Shares.

(d) Corporate Acts. The existence of the Restricted Shares shall not affect in any way the right or power of the Board of Directors of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. The prohibitions of Section 2(a) hereof shall not apply to the transfer of Restricted Shares pursuant to a plan of reorganization of the Company, but the stock, securities or other property received in exchange therefor shall also become subject to the Forfeiture Restrictions and provisions governing the lapsing of such Forfeiture Restrictions applicable to the original Restricted Shares for all purposes of this Agreement and the certificates representing such stock, securities or other property shall be legended to show such restrictions.

3. Withholding of Tax. The Director acknowledges that the Director, and not the Company, shall be liable for and shall pay all taxes engendered with respect to the grant or vesting of Restricted Shares and that, under current tax law, the Company is not required to withhold taxes with respect to this Award. If such tax laws change, the Director agrees to make arrangements for the withholding of taxes that are acceptable to the Company.

4. Status of Stock. The Director agrees that the Restricted Shares issued under this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. The Director also agrees that (i) the certificates representing the Restricted Shares may bear such legend or legends as the Committee deems appropriate in order to reflect the Forfeiture Restrictions and to assure compliance with

applicable securities laws, (ii) the Company may refuse to register the transfer of the Restricted Shares on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel satisfactory to the Company, of any applicable securities law, and (iii) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares.

5. Service Relationship. For purposes of this Agreement, the Director shall be considered to be in service to the Company as long as the Director remains a Director, a Consultant, or an Employee (as those terms are defined in the Plan). Nothing in the adoption of the Plan, nor the award of the Restricted Shares thereunder pursuant to this Agreement, shall confer upon the Director the right to continued service by or with the Company.

6. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Director, such notices or communications shall be effectively delivered if hand delivered to the Director at his principal place of employment or if sent by registered or certified mail to the Director at the last address the Director has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal executive offices.

7. Amendment. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by the Director or by any employee, officer, or representative of the Company or by any written agreement unless signed by the Director and by an officer of the Company who is expressly authorized by the Company to execute such document.

8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Director.

1. Controlling Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Director has executed this Agreement, all effective as of the Grant Date.


CYBERONICS, INC.

By:		/s/ John A. Riccardi
Name:		John A. Riccardi
Title:		Chief Financial Officer (Interim)

NAME: Jeffrey E. Schwarz

/s/ Jeffrey E. Schwarz

AMENDMENT TO DIRECTOR RESTRICTED STOCK AGREEMENT

This AMENDMENT TO DIRECTOR RESTRICTED STOCK AGREEMENT (the “Amendment”) is made on the 26 day of April, 2007 by and between Cyberonics, Inc., a Delaware corporation (the “Company”) and Jeffrey E. Schwarz (“Director”).

Whereas, the Company and Director previously entered into a Director Restricted Stock Agreement effective as of February 27, 2007 (the “Agreement”) pursuant to which Director was granted restricted stock in accordance with the terms contain in the Agreement; and

Whereas, the Agreement defined the term “Grant Date” as February 27, 2007; and

Whereas, the Company has subsequently discovered that the Agreement erroneously defined the Grant Date; and

Whereas, the Company and Director desire to correct such clerical error by mutually agreeing to amend the Agreement to modify the Grant Date;

Now, Therefore, for a good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. The first paragraph of the Agreement is hereby deleted and replaced in its entirety with the following:

This DIRECTOR RESTRICTED STOCK AGREEMENT (the “Agreement”) is made effective as of March 12, 2007 (the “Grant Date”) between Cyberonics, Inc., a Delaware corporation (the “Company”) and Jeffrey E. Schwarz (“Director”), a member of the Board of Director as of January 26, 2007 (the “Date of Election”).

2. This Amendment supersedes all prior agreements, amendments, understandings, negotiations, and discussion, oral or written, related to the subject matter addressed herein.

3. Except as expressly amended herein, the terms of the Agreement remain unchanged.

4. This Amendment may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile shall bind the parties hereto.


DIRECTOR		CYBERONICS, INC.

/s/ JEFFREY E. SCHWARZ	By:	/s/ JOHN A. RICCARDI
Jeffrey E. Schwarz		John A. Riccardi Interim Chief Financial Officer

EX-2 3 dex2.htm DIRECTOR RESTRICTED STOCK AGREEMENT, DATED JUNE 18, 2007 Director Restricted Stock Agreement, dated June 18, 2007

Exhibit 2

DIRECTOR RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made effective as of June 18, 2007 (the “Grant Date”), between CYBERONICS, INC., a Delaware corporation (the “Company”), and Jeffrey E. Schwarz (“Director”), a member of the Board of Directors.

1. Award. Pursuant to the CYBERONICS, INC. 1997 STOCK PLAN, as amended (the “Plan”), as of the Grant Date 4,300 shares (the “Restricted Shares”) of the Company’s common stock shall be issued as hereinafter provided in the Director’s name subject to certain restrictions thereon. The Director hereby acknowledges receipt of a copy of the Plan and the Prospectus relating thereto pursuant to the Securities Act of 1933, and agrees that this award of Restricted Shares shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof. All dividends and other distributions on a Restricted Share shall be subject to the same Forfeiture Restrictions (as hereinafter defined) as are applicable to such Restricted Share.

2. Restricted Shares. The Director hereby accepts the Restricted Shares when issued and agrees with respect thereto as follows:

(b) Vesting/Lapse of Forfeiture Restrictions. Until the Restricted Shares are fully vested or forfeited, on each anniversary of the Grant Date, so long as the Director continues in a service relationship with the Company (as provided in Section 5) and subject to the satisfaction of the tax liability under Section 3 on such anniversary date, 25% of the Restricted Shares shall vest and the Forfeiture Restrictions shall lapse on such vested shares. The number of shares that vest as of each anniversary date will be rounded down to the nearest whole share, with any remaining shares vesting on the final installment. Notwithstanding the foregoing vesting schedule, the Forfeiture Restrictions shall lapse in full as to all of the Restricted Shares on the earlier of (i) a Change of Control (as defined in the Plan) or (ii) the termination of the Director’s service relationship with the Company due to the Director’s death.

Forfeiture Restrictions). The Director may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the Forfeiture Restrictions with respect to such shares have expired, and a breach of the terms of this Agreement shall cause a forfeiture of all then remaining Restricted Shares. The certificate shall contain an appropriate endorsement reflecting the Forfeiture Restrictions. The certificate shall be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Compensation Committee of the Board of Directors (the “Committee”) as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this award. On the date of this Agreement, the Director shall, if required by the Committee, deliver to the Company a stock power, endorsed in blank, relating to the Restricted Shares. Upon the lapse of the Forfeiture Restrictions without forfeiture of the Restricted Shares, the Company shall cause a new certificate or certificates to be issued without legend (except for any legend required pursuant to applicable securities laws or any other agreement to which the Director is a party) in the name of the Director in exchange for the certificate evidencing the Restricted Shares.

3. Withholding of Tax. To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in compensation income to the Director for federal or state income tax purposes, the Director is responsible for taxes due from Director on such compensation income. Director agrees to remit estimated taxes to the Company prior to and as a condition of the receipt of the Restricted Shares or the lapse of any Forfeiture Rights becoming effective. In the event that the estimated taxes are insufficient to satisfy the taxes actually due from Director, Director agrees to (1) remit funds to satisfy such taxes; or (2) specifically authorize the Company in writing to withhold from amounts otherwise due to the Director. To the maximum extent permitted by applicable law, Director hereby authorizes such withholding.

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Shares on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel satisfactory to the Company, of any applicable securities law, and (iii) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares.

6. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Director, such notices or communications shall be effectively delivered if hand delivered to the Director at his principal place of employment or if sent by overnight courier, with confirmation, to the Director at the last address the Director has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by overnight courier, with confirmation to the Company at its principal executive offices.

7. Amendment. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by the Director or by any employee, officer, director, or representative of the Company or by any written agreement unless signed by the Director and by an officer of the Company who is expressly authorized by the Company to execute such document.

8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Director.

9. Controlling Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.


CYBERONICS, INC.

By:		/s/ George E. Parker III
Name:		George E. Parker III
Title:		Vice President, Human Resources

NAME (Jeffrey E. Schwarz)

/s/ Jeffrey E. Schwarz

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EX-3 4 dex3.htm DIRECTOR RESTRICTED STOCK AGREEMENT, DATED JUNE 16, 2008 Director Restricted Stock Agreement, dated June 16, 2008

Exhibit 3

DIRECTOR RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) is made effective as of June 16, 2008 (the “Grant Date”), between CYBERONICS, INC., a Delaware corporation (the “Company”), and JEFFREY E. SCHWARZ (“Director”), a member of the Board of Directors.

1. Award. Pursuant to the CYBERONICS, INC. AMENDED AND RESTATED 1997 STOCK PLAN (the “Plan”), as of the Grant Date 3,582 shares (the “Restricted Shares”) of the Company’s common stock shall be issued as hereinafter provided in the Director’s name subject to certain restrictions thereon. The Director hereby acknowledges receipt of a copy of the Plan and the Prospectus relating thereto pursuant to the Securities Act of 1933, and agrees that this award of Restricted Shares shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof. All dividends and other distributions on a Restricted Share shall be subject to the same Forfeiture Restrictions (as hereinafter defined) as are applicable to such Restricted Share.

2. Restricted Shares. The Director hereby accepts the Restricted Shares when issued and agrees with respect thereto as follows:

including, without limitation, voting rights and the right to receive dividends (provided, however, that dividends paid in shares of the Company’s stock shall be subject to the Forfeiture Restrictions). The Director may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the Forfeiture Restrictions with respect to such shares have expired, and a breach of the terms of this Agreement shall cause a forfeiture of all then remaining Restricted Shares. The certificate shall contain an appropriate endorsement reflecting the Forfeiture Restrictions. The certificate shall be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Compensation Committee of the Board of Directors (the “Committee”) as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this award. On the date of this Agreement, the Director shall, if required by the Committee, deliver to the Company a stock power, endorsed in blank, relating to the Restricted Shares. Upon the lapse of the Forfeiture Restrictions without forfeiture of the Restricted Shares, the Company shall cause a new certificate or certificates to be issued without legend (except for any legend required pursuant to applicable securities laws or any other agreement to which the Director is a party) in the name of the Director in exchange for the certificate evidencing the Restricted Shares.

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deems appropriate in order to reflect the Forfeiture Restrictions and to assure compliance with applicable securities laws, (ii) the Company may refuse to register the transfer of the Restricted Shares on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel satisfactory to the Company, of any applicable securities law, and (iii) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares.

6. Notices. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Director, such notices or communications shall be effectively delivered if hand delivered to the Director at his principal place of employment or if sent by overnight courier, with confirmation, to the Director at the last address the Director has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by overnight courier, with confirmation to the Company at its principal executive offices.

8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Director.

9. Controlling Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.


CYBERONICS, INC.

By:		/s/ Daniel J. Moore
		Daniel J. Moore, President & CEO

DIRECTOR:

/s/ Jeffrey E. Schwarz

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