form10_5.htm


    EXHIBIT
10.5


       

       

      SEVENTH AMENDMENT TO
LEASE

      


      THIS
Seventh Amendment to Lease (this “Amendment”) is entered into as
of December 28, 2007, between NNN 100 Cyberonics Drive, LLC, NNN 100
Cyberonics Drive 1, LLC, NNN 100 Cyberonics Drive 2, LLC,
NNN 100 Cyberonics Drive 3, LLC, NNN 100 Cyberonics Drive 4,
LLC, NNN 100 Cyberonics Drive 5, LLC, NNN 100 Cyberonics
Drive 6, LLC, NNN 100 Cyberonics Drive 7, LLC, NNN 100
Cyberonics Drive 8, LLC, NNN 100 Cyberonics Drive 9, LLC,
NNN 100 Cyberonics Drive 10, LLC, NNN 100 Cyberonics
Drive 11, LLC, NNN 100 Cyberonics Drive 12, LLC, NNN 100
Cyberonics Drive 13, LLC, NNN 100 Cyberonics Drive 14, LLC, each
one a Delaware limited liability company (“Landlord”), acting by and
through Triple Net Properties Realty, Inc. (“Agent for Landlord”),
successor-in-interest to and assignee  of  Space Center
Operating Associates, L.P., and CYBERONICS, INC., a Delaware corporation (“Tenant”).

      


      RECITALS:

      


      A.           Space
Center Operating Associates, L.P. and Tenant entered into a certain Lease
Agreement (the “Lease
Agreement”) dated effective December 5, 2002, as amended by amendment to
lease dated March 3, 2003 (the “First Amendment”) second
amendment to lease, dated October 2, 2003  (the “Second Amendment
“),  third amendment to lease dated March 11, 2004 (the “Third Amendment”), fourth
amendment to the lease agreement dated March 23, 2005 (the “Fourth Amendment”), fifth
amendment to the lease agreement dated May 5, 2005 (the “Fifth Amendment”), sixth
amendment to the lease agreement dated as of July 13, 2005 (the “Sixth Amendment”) (the Lease
Agreement, as previously amended, and this Amendment are hereinafter
collectively referred to as the “Lease”);

      


      B.           The
Premises leased under the Lease comprise a total of 134,147 Rentable Square
Feet, consisting of Suites 102, 103, 105, 106, 107, 110, 115, 127, 130, 140,
143, 150, 160, 202, 203, 300, 400, 500, and 600, and Tenant’s Proportionate
Share of the Building is 92.9343%; and

      


      C.           Tenant
now desires to surrender certain portions of the Premises, and Landlord and
Tenant now desire to evidence the agreement with respect to Tenant’s surrender
of portions of the Premises and to extend the term of the Lease subject to the
terms and conditions of this Amendment.

      


      NOW, THEREFORE, in
consideration of the sum of Ten and 00/100 Dollars ($10.00) and other valuable
consideration paid by each party to the other, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant do hereby amend the Lease as
follows:

      


      AGREEMENTS:

      


      1.           Definitions.  All
terms not otherwise defined herein shall have the meanings given them in the
Lease Agreement.

       

      2.           Premises.  Effective
on the dates set forth below (each, a “Surrender Date” and
collectively, the “Surrender
Dates”), Tenant shall vacate and surrender the portion of the Premises
identified in the columns adjacent to the Surrender Date by Suite number and
square footage (each, a “Surrendered Space” and
collectively, the “Surrendered
Spaces”), in the condition in which Section 25 of the
Lease Agreement requires the Premises to be surrendered at the expiration of the
Term.  From and after each Surrender Date, the Tenant’s Rentable
Square Feet shall be as set forth in the column entitled “Remaining RSF”, the term
“Premises” shall mean the space comprising the Remaining RSF, and Tenant’s
Proportionate Share of the Building shall be as set forth in the table
below.

       

      
        	
                Surrender
      Date

              	
                Suite
      No.

              	
                Square
      Footage of Surrendered Space

              	
                Remaining
      RSF

              	
                Proportionate
      Share following Surrender

              
	
                12/01/07

              	
                140

              	
                2,029

              	
                132,118

              	
                91.53%

              
	
                03/01/08

              	
                130
      and 102

              	
                2,055

              	
                130,063

              	
                90.11%

              
	
                06/01/08

              	
                127

              	
                3,852

              	
                126,211

              	
                87.44%

              
	
                09/01/08

              	
                200

              	
                11,440

              	
                114,771

              	
                79.51%

              


      

      


       

      From and
after the later of each Surrender Date or the actual vacation and surrender of
the Surrendered Space, neither party shall have any further obligations to the
other with respect to such Surrendered Space, except for obligations that by
their nature survive termination, including indemnity obligations and liability
for payment of (or return of) additional rent for the Surrendered Space
following receipt of Landlord’s annual Operating Expense statement for the year
in which the Surrendered Space is surrendered.  If Tenant holds over
in any portion of the Surrendered Space following the scheduled Surrender Date
for such space, Tenant shall pay holdover rent for the Surrendered Space as
provided in the Lease.

       

      3.           Extension.  The
Term of the Lease shall be extended for a period of 86 months, commencing
November 1, 2007 (the “Renewal
Effective Date”) and expiring December 31, 2014 (the “Renewal Term”), upon the same
terms and conditions as provided in the Lease, except as expressly modified
hereby.

       

      4.           Base
Rent.  Commencing on the Renewal Effective Date, Tenant shall
pay Base Rent as follows:

      


      
        	
                Lease
      Years

              	
                Annual
      Base Rent per Rentable Square Foot

              	
                Monthly
      Base Rent Payment

              
	
                11/
      01/07 – 11/30/07

              	
                $21.50

              	
                $240,346.71

              
	
                12/01/07
      – 12/31/07

              	
                $21.50

              	
                $236,711.42

              
	
                01/01/08
      – 02/29/08

              	
                $22.00

              	
                $242,216.33

              
	
                03/01/08
      – 05/31/08

              	
                $22.00

              	
                $238,448.83

              
	
                06/01/08
      – 08/30/08

              	
                $22.00

              	
                $231,386.83

              
	
                09/01/08
      – 12/31/08

              	
                $22.00

              	
                $210,413.50

              
	
                01/01/09
      – 12/31/09

              	
                $22.50

              	
                $215,195.63

              
	
                01/01/10
      – 12/31/ 10

              	
                $23.00

              	
                $219,977.75

              
	
                01/01/11
      – 12/31/11

              	
                $23.50

              	
                $224,759.88

              
	
                01/01/12
      – 12/31/12

              	
                $24.00

              	
                $229,542.00

              
	
                01/01/13
      – 12/31/13

              	
                $24.50

              	
                $234,324.13

              
	
                01/01/14
      – 12/31/14

              	
                $25.00

              	
                $239,106.25

              


      

      


      5.           Additional
Rent.  Effective as of the Renewal Commencement Date, the Base
Year for the Premises shall be calendar year 2007.  Effective January
1, 2008, the Base Year for the Premises shall be calendar year 2008, in each
case calculated on a “grossed-up” basis to reflect 95% occupancy.

      


      6.           Operating
Expenses.

      


      A.           The
second grammatical paragraph of Section 6.a. of the
Lease Agreement is modified, effective as of January 1, 2008, to provide that,
notwithstanding anything to the contrary contained in Section 6.a, the
Controllable Operating Expenses for each calendar year after Base Year 2008
shall not be more than 4% greater than the Controllable Operating Expenses for
the previous calendar year.

      


      B.           Section 6.b.(ii) of
the Lease Agreement is modified, effective as of the Renewal Commencement Date,
to delete the parenthetical and insert in its place:  “(including
management fees not to exceed three and one half percent (3.5%) of gross rentals
attributable to the Property)”.

      


      7.           Premises.  Tenant accepts the Premises in “AS
IS”, “WITH ALL FAULTS” condition as of the date of this
Amendment.  Landlord has no responsibility to make any
alterations or improvements to the Premises, except as expressly set forth in
this Amendment.  Tenant specifically acknowledges that Landlord has
made no representations or warranties whatsoever concerning the condition of any
aspect of the Premises, the Building, and the Property, or the present or future
suitability for Tenant’s use.  Landlord and its agents expressly
disclaim, and Tenant expressly waives, all implied warranties, including any
warranties of habitability, good and workmanlike construction, suitability of
design or fitness for a particular purpose.  Tenant expressly waives
any warranty as to the environmental condition of the Property, Building or
Premises, and the presence of or contamination by Hazardous
Materials.

       

      8.           Option to
Renew.  The option to renew set forth in Exhibit F to the
Lease Agreement is hereby modified as follows, and remains in full force and
effect, as modified:  Notwithstanding anything to the contrary in
Exhibit F,
Tenant’s election to renew the Lease shall be made in writing to Landlord not
more than fifteen (15) months and not less than twelve (12) months prior to
expiration of the Renewal Term.  There are no other rights or options
to renew the Lease or extend the Renewal Term.

       

      9.           Right of
First Refusal to Lease.  There are no
other rights or options to expand the area of the Premises except the right of
first refusal set forth in Exhibit G to the
Lease Agreement, which right of first refusal remains in full force and
effect.

       

      10.           Landlord’s
Right to Market.  The parties acknowledge and agree
that:  (a) Tenant is interested in surrendering an additional portion
of the Premises identified as Suite 103, being 3,692 Rentable Square Feet (the
“Give Back Space”), (b)
Landlord is willing to authorize Landlord’s Broker to use its reasonable efforts
to market the Give Back Space, (c) Landlord has no obligation whatsoever to
lease the Give Back Space, and (d) unless and until Landlord executes and
delivers a lease agreement with a third party agreeing to lease the Give Back
Space to such third party on terms and conditions satisfactory to Landlord in
Landlord’s sole discretion, the Give Back Space shall remain a part of the
Premises and Tenant shall remain obligated therefor.  Tenant agrees to
surrender the Give Back Space and execute a document provided by Landlord
terminating the Lease with respect to the Give Back Space upon the written
request of Landlord, and to vacate and surrender the Give Back Space upon the
date specified by Landlord, which date shall be not less than thirty (30) days’
after the date of Landlord’s notice.

       

      11.           Right of
First Refusal to Purchase.  Tenant shall have a right of first
refusal to purchase the Property as provided in Rider One to this
Amendment.

       

      12.           Insurance.  Section 15.b.(ii) of
the Lease Agreement is modified, effective as of the Renewal Commencement Date,
as follows:  Notwithstanding anything to the contrary contained in the
Lease, Tenant shall provide commercial general liability insurance with
inclusive limits of not less than Five Million Dollars ($5,000,000) for each
occurrence and in the aggregate.

       

      13.           Parking.  As
provided in Section
2.t. of the Lease Agreement, Tenant is entitled to four parking spaces
per 1,000 square feet of rentable area of the Premises, out of which Tenant may
designate .25 reserved parking spaces per 1,000 square feet of rentable
area.  As of the date hereof, Tenant is entitled to 536 spaces, of
which 34 are reserved.  Parking shall be recalculated as of each
Surrender Date.

       

      14.           Deletions.
Paragraph II B
(Consumer Price Index Escalation) of the Sixth Amendment is hereby deleted in
its entirety.  Additional Rent for Suite 103 shall be calculated in
accordance with the provisions of Section 6 and Exhibit K of the
Lease Agreement, as modified by Paragraph 6
above.  Exhibits E-1 (Tenant
Improvements) and E-2 (Unamortized Cost
Schedule) to the Lease Agreement, Paragraph 7
(Construction Allowance) to the First Amendment, and Paragraph 7
(Construction Allowance) to the Second Amendment, have been fulfilled and are
hereby deleted.

       

      15.           Brokerage.  Landlord
and Tenant each represent and warrant to the other that it has not dealt with
any broker or agent in connection with the negotiation or execution of this
Amendment except Clear Lake Asset Management (Tenant’s Broker) and Transwestern
Property Company SW GP, LLC (Landlord’s Broker), each of whom Landlord shall pay
pursuant to separate agreement.  Tenant and Landlord shall each
indemnify and hold the other harmless from all liability arising from any claim
by any broker other than the listed brokers claiming by, through or under the
indemnifying party.

       

      16.           Addresses
for Notice.  Section 1 is amended
as follows:

       

       

      
        	 Landlord's
      Address	 c/o Triple Net Properties,
  LLC
	 for
      notices:	 816 Congress,
      Suite 1540
	 	 Austin, TX
      78701
	 	 Attn:  Regional
      Asset Manager
	 	 
	 Landlord's
      Payment	 NNN 100
      Cyberonics Drive LLC
	 Address: 	 P.O. Box
      534157
	 	 Atlanta, GA
      30353-4157


      

                                         
17.           Full
Force and Effect.  Except as extended by this Amendment, all
terms and conditions of the Lease shall remain in full force and effect and
Landlord and Tenant shall be bound thereby.  Tenant hereby represents,
warrants and agrees that:  (a)  there exists no breach,
default or event of default by Landlord under the Lease, or any event or
condition which, with notice or passage of time or both, would constitute a
breach, default or event of default by Landlord under the Lease, (b) the Lease
continues to be a legal, valid and binding agreement and obligation of Tenant,
and (c) Tenant has no offset or defense to its performance or obligations under
the Lease.  Tenant hereby waives and releases all demands, charges,
claims, accounts or causes of action of any nature against Landlord or
Landlord’s employees or agents (including Agent), including without limitation,
both known and unknown demands, charges, claims, accounts, and causes of action
that have arisen out of or in connection with the Lease or Tenant’s occupancy of
the Premises under the Lease.

       

      18.           Authority.  Each
party represents and warrants that it has due power and lawful authority to
execute and deliver this Amendment and to perform its obligations under the
Lease; and the Lease and this Amendment are the valid, binding and enforceable
obligations of such party.

       

      


      EXECUTED
as of the date first written above.

      


       

      
        	 LANDLORD:	 	 TENANT:
	 	 	 
	 TRIPLE NET PROPERTIES REALTY,	 	 CYBERONICS, INC.
	 INC., Agent for Landlord	 	 
	 	 	 
	 	 	 
	 By:	 	 By: /s/
      DANIEL J MOORE
	 Name:	 	 Name: Daniel
      J Moore
	 Title:	 	 Title:
      President & CEO
	 	 	 
	 Date:         	 	 Date: December
      5, 2007


      

       

                                                                     


      
        

      



      RIDER
ONE

      


      RIGHT
OF FIRST REFUSAL TO PURCHASE

      


      
        	
                A.  

              	
                Purchase
      Right.  Tenant shall have a continuing right of first
      refusal to purchase the Property (the “Purchase
      Right”).  The Purchase Right shall become operative upon
      receipt of written notice from Landlord (the “Landlord Notice”) that a
      bona fide third party offer has been received (other than at a public
      auction) by Landlord from a prospective third-party purchaser (which does
      not have the power of eminent domain) to purchase the Property and that
      Landlord is willing to accept the terms of such offer.  As used
      herein, “bona fide” means that Landlord has determined that the
      prospective purchaser is financially qualified to purchase the Property,
      and that the written offer is sufficient to permit Landlord to proceed to
      contract with the prospective purchaser. Landlord shall deliver to Tenant
      within a reasonable time after it lists the Property for sale such due
      diligence materials as it expects to provide to any prospective purchaser
      (the “Due Diligence
      Materials”), together with the form of confidentiality and access
      agreement which it would expect a prospective purchaser to sign (the
      “Confidentiality
      Agreement”), which Tenant shall sign as a condition to its receipt
      at any time of the Due Diligence Materials.  Tenant shall have a
      period of thirty (30) calendar days after receipt of the Due Diligence
      Materials in which to review such materials and to give notice of any
      objections which it may have.

              


      

       

      
        	
                B.  

              	
                Terms.  The
      Landlord Notice shall include the economic terms and conditions, including
      purchase price and terms, earnest money, timing, contingencies, and
      conditions to the parties’ obligations (collectively, the “Terms”) which the third
      party has offered and Landlord is willing to accept.  An offer
      made by Landlord for the sale of the Property to a third party, other than
      in lieu of condemnation, shall give Tenant the same rights as if such
      offer were an acceptable offer made by a third party.  Landlord
      shall deliver, with the Landlord Notice, any Due Diligence Materials, or
      updates thereof, not previously delivered to Tenant.  Tenant
      shall be entitled to use the Exercise Period (defined below) period during
      which to review any such new Due Diligence Materials, review Property
      condition, and conduct such investigations as it deems necessary in
      connection with its decision to exercise the Purchase Right, subject to
      the terms of the Confidentiality
Agreement.

              


      

       

      
        	
                C.  

              	
                Exercise
      Period.  Upon receipt of the Landlord Notice, Tenant
      shall have thirty (30) calendar days to exercise its Purchase Right (the
      “Exercise Period”)
      by written notice to Landlord, upon the Terms set forth in the Landlord
      Notice.  Response by Tenant in the form of a counter-proposal to
      the terms in the Landlord Notice, or a failure to respond within the
      Exercise Period, will be deemed to be a rejection of Tenant’s Purchase
      Right, and Landlord may then proceed to negotiate with the prospective
      third-party purchaser and enter into a contract and sell the Property to
      the third-party, on any terms negotiated in such contract (the “Third Party PSA”), but
      this Lease shall continue otherwise on all the other terms and conditions
      hereof.

              


      

       

      
        	
                D.  

              	
                Purchase and Sale
      Agreement.  If Tenant responds affirmatively, Tenant must
      include in its response an executed copy of a purchase and sale agreement
      for the Property delivered by Landlord with Landlord’s Notice, containing
      the Terms and being otherwise in a form that Landlord is willing to sign
      with the third party purchaser (excluding any due diligence or ‘free look’
      provisions, because all due diligence will have been completed by Tenant
      during the Exercise Period).  Any modification to the purchase
      and sale agreement shall constitute a rejection of Tenant’s Purchase
      Right.

              


      

       

      
        	
                E.  

              	
                Material Change after
      execution of Third Party PSA.  Notwithstanding the
      foregoing, if Tenant rejects, or is deemed to have rejected Tenant’s
      Purchase Right, and should Landlord and the third-party purchaser
      renegotiate the Third Party PSA after its effective date and such
      renegotiation will result in an economically material, written and binding
      amendment of the Third Party PSA (the “Amendment”), then Tenant
      shall have the right to purchase the Property on the terms set forth in
      this subparagraph E
      (the “Revived Purchase
      Right”).  Before entering into the Amendment, Landlord
      shall deliver the Third Party PSA, any intervening amendments, and the
      Amendment to Tenant and Tenant shall have three (3) business days from the
      date of Landlord’s delivery to review the same (the “Revived Exercise
      Period”).  Tenant must exercise the Revived Purchase
      Right, if at all, by delivering to Landlord no later than 5 p.m. (Central
      Time) on the final day of the Revived Exercise Period a written and
      binding letter agreement to Landlord which letter agreement (i) exercises
      the Revived Purchase Right, (ii) acknowledges that Tenant shall become the
      purchaser of the Property under a contract in the form of the Third Party
      PSA, as may have been amended, (iii) acknowledges that Tenant will execute
      and enter into the Amendment, (iv) acknowledges that Tenant will waive all
      objections that may have been raised under the Third Party PSA by the
      third party purchaser, as if Tenant had been the third party purchaser,
      (v) confirms that Tenant has deposited all required earnest money into
      escrow with the title company specified in the Third Party PSA, (vi)
      agrees that Tenant will reimburse Landlord as seller under the Third Party
      PSA for any cost incurred by Landlord in terminating the Third Party PSA
      as a result of Tenant’s exercise of the Revived Purchase Right, and (vii)
      acknowledges that Tenant will close on the purchase of the Property on the
      same closing date as set forth in the Third Party PSA, as may have been
      amended.  A purchase price reduction under the Third Party PSA
      will not be deemed “economically material” unless such reduction is
      greater than five percent (5%) of the original purchase price set forth in
      the Third Party PSA. Response by Tenant in the form of a counter-proposal
      to the terms in the Amendment, or a failure to respond within the Revived
      Exercise Period, will be deemed to be a rejection of Tenant’s Revived
      Purchase Right and Landlord shall have no further obligation to offer the
      Property to Tenant in connection with the Third Party PSA, as may be
      amended.

              


      

       

      
        	
                F.  

              	
                Conditions. The
      Purchase Right may not be exercised if any Event of Default exists, after
      any cure periods, from the date upon which Landlord gives its Landlord
      Notice, and from the time of exercising the Purchase Right through the
      closing date.  The Purchase Right may not be exercised by any
      subtenant or assignee of Tenant.  The Purchase Right shall not
      be applicable to a transfer to or for a party related to
      Landlord.  The Purchase Right shall expire upon expiration of
      this Lease or earlier termination of Tenant’s right to
      possession.  Landlord has no obligation to Tenant to offer the
      Property for sale or to entertain any third party offer.  If for
      any reason a sale of the Property is not consummated with the prospective
      third-party purchaser within 180 days after Tenant’s rejection, Tenant’s
      Purchase Right shall be reinstated.