Definitive Additional Materials

The

Committee

for

Concerned

Cyberonics,

Inc.

Shareholders

Proxy

Solicitation

Presentation

Cyberonics, Inc.

2006 Annual Meeting of

Shareholders

For Improved Corporate Governance,

Effective Oversight and Accountability

and

Maximized Shareholder Value

January 2007

Our Goals and Objectives

The Company is at a critical cross-roads.

We believe it must have representatives in the boardroom who are

nominated by the

shareholders and are committed to:

•

Corporate governance best practices

•

Effective management oversight and accountability

•

Exploring

all

alternatives

rebuild

and

maximize

shareholder

value

The Committee seeks to achieve these important objectives by electing The

Committee’s three nominees to the Company’s Board at the 2006 Annual Meeting of

Shareholders.

Our Message

Although our Nominees would represent a minority of the Cyberonics Board, their

election will send a strong message that the Company’s shareholders:

•

Are dissatisfied with the Company’s direction and performance

•

Strongly support long overdue corporate governance reforms

•

Demand effective management oversight and accountability

•

Advocate exploring all opportunities to maximize shareholder value

Challenges Facing the Company

Cyberonics faces significant problems, including:

•

Options back-dating and spring-loading scandal

•

Ongoing investigations by the SEC and U.S. Attorney into:

•

Inability to make timely 10-K and 10-Q filings

•

Potential delisting from NASDAQ

•

Default notice and acceleration demand from Trustee for $125 million in

convertible notes

•

Questions as to the Company’s viability as a going concern

•

Ineffective internal control over financial reporting

•

Forced resignation of the Company’s CEO and CFO

•

No meaningful succession plan

These issues ALL

arose on the watch of

incumbent members of the Board

Poor Stock Performance

The Company’s stock has consistently and substantially underperformed over the short,

intermediate and long term as compared to its industry peers.

Comparison of 1 Year Cumulative Total Return (as of September 8,

2006).*

* September 8, 2006 was the last trading day before The Committee announced its intent to run its own nominees for the Board

1-Year Performance

$20

$40

$60

$80

$100

$120

Cyberonics

Med Tech Index

Diminished Shareholder Value

Losses generated through January 10, 2007:

•

One year

(34.7%)

•

Three year

(40.1%)

•

Five year

(26.3%)

The Company’s stock price has only recently shown some modest, and erratic,

improvement.

However, we believe the improvement is largely attributable to the announcement of

our proxy contest on September 8, 2006 and the forced resignation of the Company’s

CEO and CFO under the cloud of the unfolding options backdating scandal and

required financial statement restatements.

Lack of Management Accountability

Good corporate governance requires that:

•

Senior management be held accountable for the Company’s performance

•

Directors be held accountable for failing to oversee and hold management

accountable for poor Company performance

Incumbent members of the Board have repeatedly and consistently failed to hold

management accountable for the Company’s record of poor performance.

Due to inadequate succession planning, about which the Board had

been warned by

Ronald A. Matricaria

as noted below, the

Board was forced to appoint one of its own

members to serve as interim CEO after the former Chairman and CEO was forced to

resign under pressure.

Shareholders should ask:

“Why did this Board fail to demand a succession plan when they were

specifically warned about this problem?”

The incumbent directors should be held accountable for these failings by being

replaced by The Committee’s three nominees to the Board.

Excessive Management Compensation

•

In July 2005, Ronald A. Matricaria, a non-management director who was the

Chairman of the Compensation Committee, resigned from the Cyberonics Board,

stating his opposition to:

“The direction of the governance practices of the Cyberonics board, in

particular

its

practices

regarding

CEO

compensation

and

succession.”

•

Shortly after Mr. Matricaria’s resignation, the remaining incumbent Directors

authorized a new five year employment agreement with Robert Cummins, the

Company’s

then

CEO,

despite

the

three

years

remaining

his

existing contract.

•

The new contract:

•

Increased the CEO’s annual base salary by more than 50%

•

Included a substantial grant of restricted stock and additional forms of

compensation

Excessive Management Compensation

•

Approximately a year later, incumbent Directors approved a severance package

valued at over $5 million, when Mr. Cummins resigned under the weight of the

options back-dating scandal.

•

The severance package includes:

•

Over $3.4 million in cash plus

a tax gross-up;

•

75,000 shares of restricted stock (valued at over $1.8 million, based on the

closing price on the date of grant); and

•

Accelerated vesting of all stock options and restricted stock.

Shareholders should ask:

“Did the Company’s consistently poor performance and the dramatic

diminution in shareholder

value

justify

increasing

the compensation of the

Company’s CEO?”

“How did this multi-million dollar severance package benefit the Company’s

shareholders?”

Poor Corporate Governance

The incumbent Directors have ignored corporate governance best practices, causing

significant damage to the Company and shareholder value.

For example, as a result of the Board’s option grant practices, first exposed in a

June 8, 2006 Robinson Humphrey analyst’s report questioning certain option grants

to the Company’s officers and employees:

•

The SEC and the U.S. Attorney for the Southern District of New York are

investigating the Company

•

The Company must take an $18.4 million charge to earnings (almost double the

Company’s

initial

$10

million

estimate

announced

November

2006)

•

Several years of the Company’s financial statements must be restated

•

The Company received a default notice and acceleration demand from the

Trustee for $125 million of its convertible notes

•

The Company faces substantial litigation

Option Grant Irregularities

According to the Robinson Humphrey analyst’s report, on the same day an FDA

advisory panel was scheduled to meet to recommend approval of the Company’s

application to treat Treatment Resistant Depression, the Company

granted stock

options to Robert P. Cummins, Richard L. Rudolph and Alan D. Totah for 150,000,

10,000 and 10,000 shares, respectively.

The pending FDA panel decision was viewed as so important that trading in the

Company’s stock was suspended all day pending the FDA’s announcement. After the

FDA panel issued its favorable recommendation and trading resumed, the Company’s

shares closed up more than 75%, giving Mr.

Cummins a virtually instantaneous gain

of $2.3 million and Dr.

Rudolph and Mr.

Totah virtually instantaneous gains of

$150,000 each, as a result of their “spring-loaded”

grants.

Option Grant Irregularities

The Company subsequently acknowledged other pervasive option grant irregularities,

including:

•

approving option grants after the purported “actual”

date of grant;

•

documenting the same option grants on multiple, differently-dated documents;

•

canceling and reissuing certain option grants at different prices than the original

grant; and

•

failing to properly record stock option grants to non-employees.

Shareholders should ask:

“Do

these

practices

demonstrate

adequate

care,

effective

internal

controls, and sound

oversight by the Board and Compensation Committee?”

Fallout From Option Grant Scandal

As a result of these option practices and the resulting restatements:

•

The Company is delinquent in its SEC filing obligations

•

The Company faces the potential delisting from NASDAQ

•

The Company has received a default notice and acceleration demand from the

Trustee for the holders of the Company’s $125 million in outstanding

convertible notes

•

The Company currently faces multiple lawsuits alleging impropriety in its option

granting and accounting practices

•

The Company failed to hold its 2006 Annual Shareholders Meeting within the

time period mandated by Delaware law, and only set a meeting date to settle

litigation we instituted to require the Company to follow the law

Fallout From Option Grant Scandal

The SEC also apparently is investigating:

•

The Company’s investor and analyst guidance practices

•

The Company’s financial results announced on May 1, 2006

•

The Company’s sales for the quarter ended April 28, 2006

•

Insurance coverage of the Company’s VNS Therapy System

•

Aging of the Company’s accounts receivable

In addition, the Company’s independent registered public accountants:

•

Issued an adverse opinion on the effectiveness of the Company’s internal

control over financial reporting

•

Included a going concern qualification in their report included in the Company's

belatedly filed 10-K for the 2006 fiscal year

Poor Corporate Governance

In addition:

•

Incumbent Directors have allowed Kevin Moore, a longstanding close friend of

Mr.

Cummins,

serve

the

Board

and

compensated

Board

member

for

nearly

three

years

without

ever

being

duly

elected

the

shareholders,

apparent violation of the Company’s by-laws and Delaware law. Only after the

Committee sent a letter threatening to file suit to force his removal did the

Cyberonics Board finally concede that Mr. Moore would actually have to stand

for election at the 2006 Annual Meeting.

•

The Company took nearly six months from the time the Committee first

suggested it to implement the very basic and accepted good corporate

governance practice of splitting the roles of CEO and Chairman, and only did so

after its then CEO and Chairman resigned under the weight of the

unfolding

options scandal.

•

Due to poor succession planning, an incumbent director had to be

appointed to

serve as an interim CEO after the former CEO resigned under pressure.

Poor Corporate Governance

•

reported

November

21,

2006

USA

Today

article

Elliot

Blair

Smith

entitled “SEC filings show new chairman got options 3 years before joining

board,”

Tony Coelho and Stanley Appel, both current or former members of the

Compensation Committee and both incumbent directors up for re-election at the

Annual Meeting, received discounted options grants from the Company years

before ever joining the Board. In light of this, we were particularly distressed that

as a result of having no meaningful succession plan, the Board recently appointed

Mr. Coelho as Board Chair after the Former Chairman and CEO was forced to

resign under pressure.

Shareholders should ask:

“Why

was

the

Board

complicit

granting

discounted

stock

options

to people with no

apparent role at the Company?”

“Should the recipients of such awards be on the Board of the Company, let alone

entrusted with approving compensation arrangements for management?”

“Can the Board effectively oversee and hold accountable one of its own members for

his performance as CEO?”

Damaged Company Credibility

The Company has lost credibility with its shareholders and other

members of the

investment community through its repeated failures to achieve management’s own

stated guidance.

•

On August 1, 2006, management lowered its guidance for the 2006 fiscal year

and

announced

that

the

Company

would

not

soon

turn

profitability;

•

Management previously assured the investment community in press releases in

February

and

again

May

that

the

Company

would

return

profitability

the

quarter ended October 2006.

In addition, in the Robinson Humphrey analyst’s report cited above, the analyst

noted:

“In our discussions with institutional investors regarding Cyberonics over the past

several years, it seems almost indisputable that management has been its own Achilles

Heel, drawing continued criticism over credibility.”

* This quote has been reprinted without the Committee seeking or obtaining the approval or endorsement of the quoted source.

Damaged Company Credibility

The Committee believes the Company’s shareholders are entitled to honesty and

candor from its Board and management, not repeated instances of over-promising and

under-delivery.

The credibility deficit created by management, and the failure of incumbent Directors

to hold management accountable for repeatedly failing to meet its own projections,

has severely damaged the Company’s credibility and is a prime reason that fresh faces

are needed in the boardroom.

Actions Speak Louder Than Words

In recent weeks, the incumbent Board members have sought credit for finally making

minimal and long overdue improvements to the Company’s corporate governance

practices. However, The Committee believes that the primary catalyst for the

minimal changes the Board has made, such as separating the positions of Chairman

and CEO, are the direct result of pressure from our proxy contest, litigation we have

threatened or instituted, or pressure from other outside constituencies who refuse to

accept the status quo.

Despite the current Board’s newly professed interest in corporate governance matters,

shareholders should ask:

“Do the incumbent Directors’

actions -

as compared to their recent rhetoric -

demonstrate a genuine commitment to good corporate governance, or are they self-

serving acts intended to protect their places on the Board?”

The Committee believes that the incumbent Directors’

words ring hollow and are

patently self-serving when compared to their past actions and demonstrated record of

inadequate oversight and accountability and deficient corporate governance policies.

Basic Shareholder Rights

The Committee feels that the incumbent Board members have not fulfilled their basic

duty to implement sound corporate governance practices.

We believe shareholders have a fundamental right to have Directors:

•

who are attuned and committed to corporate governance best practices;

•

who hold the interests of the Company’s shareholders first and foremost; and

•

who are proactive and address problems long before they are forced to act by

shareholder action, analyst investigations or newspaper reports.

The Company’s shareholders should send a loud and

clear message for change by electing our

three nominees to the Board at the Annual Meeting.

Why Our Nominees Should Be Elected

The

Committee

incentivized

maximize

shareholder

value

for

all

shareholders.

•

The Committee owns approximately 7.33% of the outstanding corporate stock of

Cyberonics -

our interests are directly aligned with the other shareholders of the

Company

Our Nominees are committed to vigorously and consistently fulfilling their fiduciary

duties

for

the

benefit

all

shareholders

the

Company

Why Our Nominees Should Be Elected

If elected, we expect our Nominees to:

•

Work to implement corporate governance best practices

•

Push for strong oversight and accountability by:

•

Participating in selecting the next CEO

•

Assisting with real CEO succession planning following the selection of

the new CEO

•

Provide an independent voice in the boardroom to help repair the

Company’s

credibility with its shareholders and the broader investment community

•

Advocate exploring all available alternatives to rebuild and maximize shareholder

value

Our Nominees

The Committee’s Nominees have significant and relevant experience.

•

Alfred J. Novak

has been a director on the boards of numerous companies,

including OrbusNeich Medical Technology Company, Ltd., a privately held

interventional cardiology company, ProRhythm, Inc., a company dedicated to

the treatment of atrial fibrillation through the use of ultrasound technologies,

Novoste Corporation, a publicly held interventional cardiology company,

Sutura, Inc., a vascular closure company and Biosense, Inc., an

electrophysiology company. Since September 1998, he was a founding

member of Syntheon, LLC, a privately held company that focuses on

minimally invasive medical devices for the gastroenterology and vascular

markets. Mr. Novak was employed by Cordis Corporation, a publicly held

cardiology company, from April 1984 until July 1996 and served as its Vice

President and Chief Financial Officer.

We believe Mr. Novak’s extensive

operational and financial expertise developed over decades in the Med-Tech

industry would make him an invaluable member of the Cyberonics Board, if

elected.

Our Nominees

•

Arthur J. Rosenthal

has served as Chairman of Labcoat, Ltd. since January

2002 and CEO from January 2005. He was a Senior Vice President,

Corporate Officer and Chief Development Officer of Boston Scientific

Corporation and from January 1994 though May 2000, was a Senior Vice

President, Chief Scientific Officer and Executive Committee Member of

Boston Scientific Corporation until his retirement in January 2005. Dr.

Rosenthal currently serves as a non-executive director and Chairman of the

Remuneration Committee for Renovo, Ltd., a UK publicly-traded

pharmaceutical company.

We believe Mr. Rosenthal’s scientific and business

background would make him a strong asset to the Cyberonics Board, if

elected.

Our Nominees

•

Jeffrey E. Schwarz

is presently the Chief Executive Officer of Metropolitan

Capital Advisors, Inc., KJ Advisors, Inc. and Metropolitan Capital III, Inc.,

investment management companies. Mr. Schwarz has served as non-

executive Co-Chairman of the Board of Directors of Bogen Communications

International, Inc, a provider of sound systems and telephone peripherals for

commercial, industrial and institutional applications and is also a member of

Bogen Communications' Audit, Compensation and Executive Committees.

We believe that Mr. Schwarz, with his understanding of and advocacy for

shareholder-friendly corporate governance policies would serve as a pivotal

voice in the boardroom for all Cyberonics' shareholders, if elected.

Help Us Improve Cyberonics For All

Shareholders

The members of the Committee have been continually disappointed by management’s

inability to meet its own projected targets and the Company’s consistently poor stock

performance. We also have been frustrated to watch the Company’s management and

incumbent Board sacrifice the Company’s credibility and allow shareholder value to

dissipate.

Based on past action, we are skeptical that the incumbent Directors would make the

necessary changes to the Company’s policies absent the pressure of our proxy fight.

We are asking for your vote at the 2006 annual meeting of shareholder to elect to the

Board of Directors our three highly-qualified nominees:

•

Alfred J. Novak

•

Arthur J. Rosenthal

•

Jeffrey E. Schwarz

We believe the Company has a valuable franchise and enviable market position. However,

we believe this value has been substantially damaged and the Company’s full potential

remains unrealized due to a prolonged and persistent lack of effective oversight and

deficient corporate governance policies.

Help Us Improve Cyberonics For All

Shareholders

We believe our highly-qualified nominees will bring an important outside perspective

to the Board and provide a catalyst for the important changes that must be made for

the

benefit

the

Company

and

all

its

shareholders.

Our nominees are committed to:

•

Implementing corporate governance best practices

•

Effective management oversight and accountability

•

Exploring

all

alternatives

rebuild

and

maximize

the

long

term

value

Cyberonics to its shareholders

If you agree with the Committee that change in the Cyberonics Boardroom is

long overdue, please vote FOR our three nominees at the 2006 Annual Meeting.

Vote the GOLD

Proxy Card Today!

A proxy statement regarding this proxy solicitation was filed with the Securities and

Exchange Commission on January 4, 2006.

You should read the proxy statement, as

it contains important information.

Copies of the proxy statement are available free of

charge at www.sec.gov or by calling D.F. King & Co, Inc. at the telephone number

listed

below.

The

GOLD

proxy

card

being

furnished

shareholders

connection

with the solicitation of proxies by the Committee for Concerned Cyberonics, Inc.

Shareholders and not on behalf of the incumbent board of directors of the Company.

The Committee is comprised of Metropolitan SPV, L.P.; Metropolitan SPV GP,

L.L.C.; Bedford Falls Investors, L.P.; Metropolitan Capital Advisors, L.P.;

Metropolitan Capital Advisors, Inc.; Metropolitan Capital Partners II, L.P.; KJ

Advisors, Inc.; Metropolitan Capital Advisors International Limited; Metropolitan

Capital Partners III, L.P.; Metropolitan Capital III, Inc.; Metropolitan Capital

Advisors Select Fund, L.P.; Metropolitan Capital Select, L.L.C.;

Jeffrey E. Schwarz

and Karen Finerman, together with their nominees Alfred J. Novak

and Arthur J.

Rosenthal.

Vote the GOLD Proxy Card Today!

If you have any questions concerning the Committee’s proxy statement, would like

additional copies of the proxy statement or the GOLD

proxy card, or if you need help

voting your shares, please contact our proxy solicitor:

D.F. KING & CO., INC.

48 WALL STREET NEW YORK, NY 10005

CALL TOLL-FREE: (888) 887-0082

BANKS AND BROKERAGE FIRMS CALL COLLECT: (212) 269-5550

THE FOLLOWING ARTICLE MAY BE DISTRIBUTED TO STOCKHOLDERS OF CYBERONICS, INC. AND PROXY ADVISORY FIRMS

Former U.S. congressman Tony Coelho received below-market stock options from Cyberonics (CYBX) in early 1994, three years before he joined the board, at a much deeper discount to the market price than the company’s stock-option plan provided for at the time, according to Securities and Exchange Commission filings.

On Monday, Coelho was named chairman of the medical device maker after its former chairman and CEO, Robert Cummins, resigned under pressure. Coelho did not respond to requests for comment through the company, his lawyer or the Epilepsy Foundation, which he chairs.

Coelho’s first options at Cyberonics, dated April 14, 1994, entitled him to buy 20,000 shares of company stock at a 32% discount to the stock’s market price on the grant date, according to a Form 3 stock ownership record he filed later with the SEC.

Cyberonics’ maximum discount on options it issued at the time was 15%, according to the company’s stock-option plan filed separately with the SEC that October.

In Cyberonics’ 1994 shareholder proxy filing, which contained a copy of the plan, company officials stated that all options under the plan had been issued at the stock’s fair market value.

Another member of the board’s compensation committee, neurologist Stanley Appel, also received below-market stock options in 1994, two years and three months before he joined the board. Appel got 50,000 options on Sept. 21, 1994, priced at $3.06, a 35% discount to the stock’s market price that day.

Since mid-1997, Coelho and Appel have served on the board’s compensation committee, forming a two-member panel during many of those years. The two directors administered Cyberonics’ stock-option plan and helped set CEO compensation.

Coelho, the former Democratic party whip in the House, resigned from Congress in June 1989 after failing to disclose on his congressional financial statement a “junk” bond investment he had obtained on favorable terms. In recent years, Coelho and Appel cashed out their below-market options from Cyberonics at different times, reaping nearly $1.1 million in combined profits, SEC filings show.

Appel had no comment. At the time Coelho and Appel received their below-market options, the head of the compensation committee was Cummins, who took the helm of the company in October 1995. Cummins also declined to comment.

Cyberonics is now under investigation by the SEC and the U.S. Attorney’s office in Manhattan, which are looking into the company’s history of awarding lucrative stock options to company officers and directors. Until Monday, the company denied any wrongdoing. It now says it has identified some irregularities, principally from 1999 to 2003.

According to Financial Accounting Standards Board rule APB 25, issued in 1993, Cyberonics should have recorded the 1994 below-market options as an expense for tax and accounting purposes.

In addition, the two men would have been required to report as personal income that year the difference between the Cyberonics options’ price and the stock’s market price.

“It is taxable income in the year in which the option is received. And the income is the difference between the strike price” — that is, the price at which the option is issued — “and the fair market value,” says tax lawyer Kenneth Rubinstein.

For Coelho, the taxable benefit would have been $50,000 on the grant date. For Appel, the benefit would have been $84,375 on the grant date.

Former longtime Cyberonics director Thomas Duerden, 76, whom company documents show served on the compensation committee in 1994 when Coelho and Appel were awarded the below-market options, said in an interview, “I don’t recall ever being a member of the compensation committee.” But he calls the below-market options to Appel and Coelho “very improbable.”

Duerden also is unable to say what Coelho and Appel did to earn their options. “I didn’t know Stan Appel from a bar of soap until he joined the board” in 1996, Duerden says.

And, he says, “It’s my memory that the first time I ever set eyes on Tony Coelho was when he joined the board” in 1997.

Appel first reported his below-market options to the SEC in December 1996, 27 months after the grant date. Appel cashed out half of this below-market grant on June 21, 2004, for a $639,249 profit. He also held onto 20,000 shares with a market value of $680,400 on that date.

Coelho first disclosed his April 1994 options grant in March 1997 upon joining the company’s board. Unlike most stock options that mature over four to five years, Coelho’s filing shows that these options could be cashed in immediately.

In June 2002, Coelho made another disclosure in a Form 5 stock ownership record filed with the SEC. In that filing, Coelho reported having received 20,000 options on March 8, 1994 — coinciding with the lowest price the stock traded at that month — rather than on April 14, 1994, but at the same price.

A key difference in the 2002 filing was that Coelho reported those options as vesting over five years rather than right away. He made a $444,420 profit when he cashed out the options in November 2003.

“Why did (Coelho) get an option grant three years before he joined the board? Why has the date moved? Why is the stock priced low? And (why), when they first reported them, (did) they (say) they were immediately vestable, and then later, they said, no, they vest over five years? Which one was it?” asks former SEC attorney Ronald Mueller, who specializes in executive compensation and disclosure issues.

Former SEC chairman Harvey Pitt says, “One of” Coelho’s filings “has to be wrong.”