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Exhibit
10.3
 LEASE AGREEMENT
  1.
    
    THE PARTIESLandlords Name and type of entity:
    
    Space Center Operating Associates, L.P.a New Mexico limited partnershipLandlord Address for Notices:
    
    c/o BGK Texas Property Management, Inc.
1235 North Loop West, Suite 1025 Houston, Texas
77008Landlords Payment Address:
    
    c/o BGK Texas Property Management, Inc.
1235 North Loop West, Suite
1025  Houston, Texas 77008Tenants Name and type of entity:
    
    Cyberonics, Inc.
a Texas corporationTenants Address for Notices:
    
    100 Cyberonics
Boulevard, Suite 600
Houston, Texas 770582.
    
    DEFINITIONS AND BASIC TERMSThe following definitions and basic terms shall have the indicated meanings when used in this
Lease:
 a.
    
    Building:
    
    The building known as the
Cyberonics Building located on the land
described on Exhibit A attached
hereto and whose street address is
16511 Space Center Boulevard.b.
    
    Premises:
    
    Suites 106, 107, 110 115, 127,
130, 140, 143, 150, 160, 202, 300, 400,
500, and 600 in the Building, The
Premises are outlined on the plan
attached to the Lease as Exhibit B-l
and Exhibit B-2.c.
    
    Property:
    
    The Building, the parcel of land
upon which the Building is situated and
any other improvements located
thereon.d.
    
    Tenants
Rentable
Square
Feet:
    
    122,513 rentable square feet as
herein defined and referred to as Space
A containing 95,327 rentable square
feet and Space B containing 27,186
rentable square feet.e.
    
    Total Rentable Square
Feet in the Building:
    
    144,346f.
    
    Tenants
Proportionate
Share:
    
    For the period between December
8, 2002 through December 31, 2003,
Tenants Proportionate Share shall be
66.0406%, Commencing January 1, 2004,
Tenants Proportionate Share shall
increase to 84.8745%. Tenants
Proportionate Share is defined as the
percentage obtained by dividing
(i)
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Tenants Rentable Square
Feet by (ii) the total Rentable
Square Feet in the
Building.g.
    
    Commencement Date:
    
    The Commencement Date for
Space A (95,327 square feet)
shall be December 8, 2002.The Commencement Date for
Space B (27,186 square feet)
shall be the date that Landlord
delivers possession of Space B
to Tenant vacant and in its
AS-IS condition, which is
estimated to be January 1, 2004,
but in no event will be earlier
than January 1, 2004.h.
    
    Term:
    
    The Term for Space A
shall be for a period of
Eighty-four (84) months and
twenty-four (24) days commencing
on the Commencement Date for
Space A and ending at 5:00 p.m.
December 31, 2009 subject to
adjustment and earlier
termination as provided in the
Lease.The Term for Space B
shall be for a period of
Seventy-two (72) months
commencing on the Commencement
Date for Space B and ending at
5:00 p.m. December 31, 2009
subject to adjustment and
earlier termination as provided
in the Lease.i .
    
    Base Rent:
 Space A
    
    Space B
    
    Total
    
    AnnualTenants Rentable
    
    Tenants Rentable
    
    Tenants Rentable
    
    Base Rent
    
    MonthlyLease Period
    
    Square Feet
    
    Square Feet
    
    Square Feet
    
    (PSF/YR)
    
    Base Rent12/08/02 -12/31/03
    
    
    95,327
    
    
    
    0
    
    
    
    95,327
    
    
    $
    17.00
    
    
    $
    135,046.5801/01/04-12/31/04
    
    
    95,327
    
    
    
    27,186
    *
    
    
    122,513
    *
    
    $
    17.20
    
    
    $
    175,601.97
    *01/01/05-12/31/05
    
    
    95,327
    
    
    
    27,186
    
    
    
    122,513
    
    
    $
    17.30
    
    
    $
    176,622.9101/01/06- 12/31/06
    
    
    95,327
    
    
    
    27,186
    
    
    
    122,513
    
    
    $
    18.25
    
    
    $
    186,321.8501/01/07-12/31/07
    
    
    95,327
    
    
    
    27,186
    
    
    
    122,513
    
    
    $
    18.50
    
    
    $
    188,874.2101/01/08 -12/31/08
    
    
    95,327
    
    
    
    27,186
    
    
    
    122,513
    
    
    $
    18.75
    
    
    $
    191,426.5601/01/09-12/31/09
    
    
    95,327
    
    
    
    27,186
    
    
    
    122,513
    
    
    
    S19.00
    
    
    $
    193,978.92
 
 *The foregoing is based on a Commencement Date for Space B of January 1,
2004. If the actual Commencement Date for Space B is a later date for any
reason, Base Rent with respect to Space B shall not commence until the actual
Commencement Date.
 j.
    
    Additional Rent:
    
    Additional Rent is defined in Section 6.k.
    
    Rent:
    
    Base Rent, Additional Rent and all other sums that Tenant may owe to
Landlord under this Lease.l.
    
    Security Deposit:
    
    $64,526.17m.
    
    Expense Stop/ Base
Year:
    
    Expense Stop: $0 
Base Year: 2003 for both Space A and Space B.n.
    
    Permitted Use:
    
    General Office Purposes, business and commercial use, scientific
research and development and high technology manufacturing and testing of
medical devices and related equipment.o.
    
    Property Management
Company/Address:
    
    BGK Texas Property Management, Inc. 
1235 North Loop West, Suite 1025

Houston, Texas 77008p.
    
    Maximum Construction
Allowance:
    
    (See Exhibit E-l and E-2)q.
    
    Landlords Broker
(name and address):
    
    N/A
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r.
    
    Tenants
Broker 
(name and address):
    
    Mr. Don R. Kugle Clear Lake Asset Management,
Inc. 2019 Enterprise Avenue League City, Texas
77573s.
    
    Guarantor(s) (name
and address):
    
    Nonet.
    
    Parking Spaces:
    
    Based on four (4) parking space per 1,000
square feet of rentable area 31 reserved parking spaces
based on 25 spaces per 1,000 square feet rentable
area.u.
    
    Parking Rent:
    
    $ -0- per month per Parking Space.
 3.
    
    LEASE OF PREMISESLandlord, in consideration of the Rent to be paid and the covenants and agreements to be
performed by Tenant, does hereby lease unto Tenant the Premises, together with the
non-exclusive right and easement to use the parking, if any, and any other common facilities
in or on the Building and the Property (including, without limitation, the driveways,
sidewalks, loading and unreserved parking areas, lobbies, and hallways) which may from time to
time be furnished by Landlord, in common with Landlord and the tenants and occupants of the
Building, and their respective agents, employees, customers and invitees; subject however to
reasonable restrictions by Landlord as to the use of such common facilities. In addition,
Tenant shall have the non-exclusive right to use (but not modify or alter) for the purpose of
installing Tenants cabling its Proportionate Share of the plenums, risers, and electric
closets located in the Building in connection with Tenants use and occupancy of the Premises,
at no additional cost, subject to Landlords reasonable right of approval with respect to the
type of use of such space and compliance with all of the terms and provisions of Section 10
below.4.
    
    TERMTenant is currently occupying Space A. If any present occupant of Space B holds over and
Landlord cannot deliver possession of Space B to Tenant on or before January 1, 2004 then
(a) Landlord shall not be in default hereunder or be liable for
damages therefore and (b)
Tenant shall accept possession of Space B when Landlord tenders possession thereof to Tenant
vacant and in its AS-IS condition. Notwithstanding the foregoing, if Landlord fails to
deliver possession of Space B to Tenant in its required condition by March 1, 2004, the
Tenant may terminate this Lease with respect to Space B only by delivering written notice
thereof to Landlord before Landlord delivers possession of Space B to Tenant. By occupying
the Premises, Tenant shall be deemed to have accepted the Premises in their condition as of
the date of such occupancy, except for completion of any punch-list items and latent defects.
Tenant shall execute and deliver to Landlord, within ten days after Landlord has requested
same, a letter confirming (i) the Commencement Date with respect to Space A and Space B,
(ii) that Tenant has accepted the Premises, and (iii) that Landlord has performed all of its
obligations with respect to the Premises (except for punch-list items specified in such
letter).5.
    
    PAYMENT OF RENTa. Payment. Tenant shall timely pay to Landlord, without demand deduction, abatement
or offset (except as otherwise expressly set forth herein), the Base Rent, Additional Rent and
all other rent at Landlords Payment Address. Base Rent shall be payable monthly in advance in
United States dollars.The first monthly installment of Base Rent (for the period from December 8, 2002 through
December 31, 2002) shall be due and payable on the Commencement Date for Space A;
thereafter, monthly installments of Base Rent for Space A and Space B shall be due on the
first day of each succeeding calendar month during the Term. Base Rent for any fractional
month shall be prorated based on 1/365 of the current annual Base Rent for each day of the
partial month this Lease is in effect, and shall be due on the respective Commencement Date
for Space A and Space B.
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b. Late Payments. With respect to each payment that is over five (5) business days
late, Landlord may charge Tenant a fee equal to 6% of any delinquent payment to reimburse
Landlord for its cost and inconvenience incurred as a consequence of Tenants delinquency. In
addition, Landlord may charge interest at the lessor of the Prime Rate (defined below) plus two
percent (2%) or the maximum rate permitted by applicable law for all payments which are over
five (5) business days late. In no event, however, shall the charges permitted under this
Section or elsewhere in this Lease, to the extent the same are considered to be interest under
applicable law, exceed the maximum rate of interest permitted by applicable law. As used herein,
the Prime Rate means the prime rate of interest published in the Money Rates section
of The Wall Street Journal,Southwest Edition on the due date for the payment in question.6.
    
    ADDITIONAL RENTa. Payment of Additional Rent. Tenant shall pay as Additional Rent an amount
equal to Tenants Proportionate Share multiplied by the difference of (a) the total annual Operating Expenses, as
defined below, for the calendar year in question and (b) the Operating Expenses for the Base Year, in
each case adjusted in accordance with Section 6d. Landlord may collect such amount in a lump sum, due
within 30 days after Landlord furnishes to Tenant an annual Operating Expense Statement as defined
below. Alternatively, Landlord may make a good faith estimate of the Additional Rent to be due by
Tenant for any calendar year or part thereof during the Term, and, unless Landlord delivers to Tenant a
revision of the estimated Additional Rent, Tenant shall pay to Landlord, on the Commencement Date and on the
first day of each calendar month thereafter, an amount equal to the estimated Additional Rent
for such calendar year or part thereof divided by the number of months in such calendar year during the
Term. From time to time during any calendar year (but not more than once in any calendar year),
Landlord may estimate and re-estimate the Additional Rent to be due by Tenant for that calendar year and
deliver a copy of the estimate or re-estimate to Tenant. Thereafter, the monthly installments of
Additional Rent payable by Tenant shall be appropriately adjusted in accordance with the estimations so that, by
the end of the calendar year in question, Tenant shall have paid all of the Additional Rent as estimated
by Landlord. Any amounts paid based on such an estimate shall be subject to adjustment pursuant
to Section 6c when actual Operating Expenses are available for each calendar year.For purposes of calculating Additional Rent under this Section 6, the Controllable Operating
Expenses (defined below) for each calendar year after the Base Year that may be included in
Operating Expenses for such calendar year shall not be more than 4% greater than the
Controllable Operating Expenses for the previous calendar year. Controllable Operating
Expenses shall mean all items of Operating Expenses which are within the reasonable
control of Landlord, but specifically excluding taxes, utilities, insurance, costs incurred to
comply with governmental requirements, wages and salaries affected by the minimum wage, and
other costs beyond the reasonable control of Landlord.b. Operating Expenses. Operating Expenses shall mean all expenses and
disbursements of every kind (subject to the limitations set forth below) which Landlord incurs, pays or becomes obligated to
pay in connection with the ownership, operation, and maintenance of the Property (including any parking
facilities), determined in accordance with generally accepted accounting principles
(GAAP), including but not limited to the following:
 Property Taxes
   4




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Operating Expense Statement
 Building
Occupancy
 5




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Feet in the Building thereof, the Operating Expenses for such period shall be increased to the
amount which would have been incurred had the Building been occupied to the extent of
ninety-five percent (95%) of the Total Rentable Square Feet in the Building thereof. Operating
Expenses grossed-up under this Section 6d shall include only those Operating Expenses that vary
with occupancy of the Building.e. Taxes. Upon written request from Tenant, Landlord shall provide to Tenant
a copy of the assessed value of the Property as determined by the applicable governmental
authority. If Tenant requests, Landlord shall protest or appeal the appraised value of the
Property in accordance with applicable law. However, if Landlord reasonably believes that such
protest would not be successful in reducing taxes for the time period in question, Landlord
shall promptly notify Tenant thereof and thereafter permit Tenant, at its expense, to protest
or appeal the appraised value of the Property. Subject to the preceding sentence, Tenant waives
all rights under the Texas Property Tax Code, now or hereafter in effect, including all rights
under Section 41.413 thereof, granting to tenants of real property or lessees of tangible
personal property the right to protest the appraised value, or receive notice of reappraisal,
of all or any part of the Property, irrespective of whether Landlord has elected to protest
such appraised value.f. Tenant Inspection Right. After giving Landlord 10-days prior written notice
thereof, Tenant may inspect or audit Landlords records relating to Operating Expenses for any
periods of time within two (2) years before the audit or inspection; provided, however, in no
event will Landlord be obligated to permit any such inspection or audit to be performed by a
consultant or firm that is compensated by Tenant on a contingent fee or percentage of recovery
basis. Tenant may not conduct an inspection or have an audit performed more than once during
any calendar year. If such inspection or audit reveals that an error was made in calculating
Operating Expenses, then Landlord shall refund to Tenant any overpayment of any such costs, or
Tenant shall pay to Landlord any underpayment of any such costs, as the case may be, within 30
days after notification thereof. Tenant shall pay the cost of such audit or inspection unless
the total Operating Expenses for the time period in question are finally determined to be in
error by more than 5% in the aggregate, in which case Landlord shall pay Tenants reasonable
out-of-pocket audit costs. Tenant shall maintain the results of each such audit or inspection
confidential.7.
    
    SECURITY DEPOSITContemporaneously with the execution of this Lease, Tenants security deposits totaling
564,526.17 shall be transferred from any and all prior Lease Agreements, which shall be held by
Landlord without liability for interest and as security for the performance by Tenant of its
obligations under this Lease. The Security Deposit is not an advance payment of Rent or a
measure or limit of Landlords damages upon an Event of Default
(defined below). Following an
Event of Default and prior to Tenants cure of the same, Landlord may, from time to time and
without prejudice to any other remedy, use all or a part of the Security Deposit to perform any
obligation which Tenant was obligated, but failed, to perform hereunder. Following any such
application of the Security Deposit, Tenant shall pay to Landlord on demand the amount so
applied in order to restore the Security Deposit to its original amount. Provided that Tenant
has performed all of its obligations in accordance with Chapter 93 of the Texas Property Code,
Landlord shall return to Tenant the balance of the Security Deposit not applied to satisfy
Tenants obligations within a reasonable time (but in no event more than thirty (30) days). If
Landlord transfers its interest in the Premises and the transferee assumes Landlords
obligations under this Lease, then Landlord may assign the Security Deposit to the transferee
and Landlord thereafter shall have no further liability for return of the Security Deposit.8.
    
    USETenant shall occupy and use the Premises only for the Permitted Use and shall comply with all
laws, orders, rules, and regulations relating to the use, condition, and occupancy of the
Premises. The Premises shall not be used for any use which is disreputable or creates
extraordinary fire hazards or results in an increased rate of insurance on the Building or its
contents or the storage of any hazardous materials or substances (other than materials and
substances used in connection with Tenants business in compliance with applicable laws). If,
because of Tenants acts, the rate of insurance on the Building or its contents increases, then
Tenant shall pay to Landlord the amount of such increase on demand, and acceptance of such
payment shall not constitute a waiver of any of Landlords rights. Tenant shall conduct its
business and control its agents, employees, and invitees in such a manner as not to create any
nuisance or unreasonably interfere with other tenants or Landlord in its management of the
Building.
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9.
    
    TENANT IMPROVEMENTSLandlord will provide a tenant improvement allowance as described in Exhibit E attached
hereto and made a part hereof:10.
    
    ALTERATIONSAll improvements to the Premises made after the Commencement Date shall be installed at
the expense of Tenant only (except for the tenant improvement allowance to be provided by
Landlord pursuant to Exhibit E) in accordance with plans and specifications which have been
previously submitted to and approved in writing by Landlord, which approval shall not be
unreasonably withheld, delayed or conditioned. After the initial Tenant improvements are made,
no alterations or physical additions in or to the Premises may be made without Landlords prior
written consent, which shall not be unreasonably withheld or delayed; however, Landlord may
withhold its consent to any alteration or addition that would adversely affect the Buildings
structure (i.e., the Buildings exterior walls, roof, elevator shafts, footings, foundations,
structural portions of load bearing walls, structural floors and subfloors and structural
columns and beams), or the Buildings HVAC, plumbing, electrical, or mechanical systems. Tenant
shall not paint or install lighting or decorations, signs, window or door lettering, or
advertising media of any type on or about the Premises that is visible from outside the Premises
without Landlords prior consent. Notwithstanding the foregoing, Tenant shall not be required to
obtain Landlords consent for repainting or recarpeting the Premises so long as the installation
thereof does not involve any core drilling or otherwise adversely affect the Building structure,
in each case provided that (1) Tenant delivers to Landlord written notice thereof and plans and
specifications therefor prior to commencing any such alterations, additions, or improvements and
(2) such alterations, additions and improvements will not adversely affect (A) the Buildings
structure, the provision of services to other Building tenants, or the Buildings electrical,
plumbing, HVAC, life safety or mechanical systems, (B) the exterior appearance of the Building,
or (C) the appearance of the Buildings common areas or elevator lobby areas. All alterations,
additions, or improvements (whether temporary or permanent in character, and including all
air-conditioning equipment and all other equipment that is in any manner connected to the
Buildings plumbing system, but excluding any manufacturing, testing or production equipment or
trade fixtures of Tenant (which manufacturing, testing and production equipment and trade
fixtures may be removed from the Premises by Tenant) made in or upon the Premises, either by
Landlord or Tenant, shall be Landlords property at the end of the Term and shall remain on the
Premises (unless Landlord requires removal of same by giving written notice thereof at the time
Landlord approves the plans and specifications with respect thereto) without compensation to
Tenant. Approval by Landlord of Tenants plans and specifications prepared in connection with
any improvements in the Premises shall not constitute a representation or warranty as to the
adequacy or sufficiency of such plans and specifications, or the improvements to which they
relate, for any use, purpose, or condition, but such approval shall merely be the consent of
Landlord as required hereunder. Tenant shall be responsible for the cost of all action required
to cause the Premises (other than restrooms and drinking fountains in the Premises) to comply
with the requirements of the Americans with Disabilities Act of 1990
(the ADA), and
all rules, regulations, and guidelines promulgated thereunder, as the same may be amended from
time to time, to the extent such action is necessitated by any installations, additions, or
alterations made in or to the Premises at the request of or by Tenant or by Tenants use of the
Premises (other than retrofit whose cost has been particularly identified as being payable by
Landlord in an instrument signed by Landlord and Tenant). If Landlords prior consent is
required under this Section 10, such consent shall not be unreasonably withheld, conditioned or
delayed; however, Landlord may withhold its consent to any such painting or installation which
would affect the appearance of the exterior of the Building or of any common areas of the
Building. Landlord shall be responsible for the cost of compliance with the ADA for all portions
of the Property not subject to the Premises or other leases with
tenants.The Tenant shall have the continuing right to act as either construction manager or general
contractor for any remodeling within its Premises. Any an all remodeling or renovations shall
be done only with prior written approval by the Landlord (not to be unreasonably withheld,
conditioned or delayed) based on plans submitted to Landlord by Tenant or its agents. All
construction/remodeling shall adhere to all State and City code requirements inclusive of ADA
regulations. Landlord will have the right to inspect such construction at any time.If Tenant desires to perform any work in the Premises thai requires Landlords approval or
consent under Section 10 and submits to Landlord plans and specifications therefor or change
orders thereto, then Landlord shall within seven (7) business days after its receipt of such
plans and specifications and within five (5) business days after its receipt of any such change
orders with respect thereto, notify
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Tenant whether it approves or disapproves the same; any notice of disapproval shall be
accompanied by a statement in reasonable detail of the reasons therefor.
 11.
    
    LANDLORDS SERVICES
 a. Services. landlord shall furnish to Tenant the services outlined on Exhibit
D attached hereto Landlord shall maintain the common areas of the Building in reasonably good
order and condition.
 b.
    
    Excess Utility Use. Tenant shall continue to pay for separately metered
electrical consumption for the following areas: (a) the 5-ton condensing unit in the
Server Room on the 5th floor, (b) the Termatron Units I and II on the
1st floor, (c) the Microbiology Lab Equipment in Suite 106 on the 1stfloor and Tenant shall pay monthly for electrical consumption on any other future
non-office equipment which will be monitored by the installation of separate meters.Landlord shall use reasonable efforts to furnish electrical current for computers,
electronic data processing equipment, special lighting, and other equipment whose electrical
energy consumption exceeds Building Standard Capacity (defined below) through the
then-existing feeders and risers serving the Building and the Premises, and Tenant shall pay
to Landlord the cost of such service within ten (10) days after Landlord has delivered to
Tenant an invoice therefor. The amount of such additional consumption
shall be paid by
Tenant and shall be determined by a separate meter in the Premises which shall be installed
by Landlord, at Tenants expense. Tenant shall not install any electrical equipment
requiring special wiring or exceeding Building Standard Capacity unless approved in advance
by Landlord. The use of electricity in the Premises shall not exceed the capacity of
existing feeders and risers to or wiring in the Premises without Landlords consent and
approval Any risers or wiring required to meet Tenants excess electrical requirements
shall, upon Tenants written request, be installed by Landlord, at Tenants cost, if, in
Landlords sole and absolute judgment, the same are necessary and shall not cause permanent
damage or injury to the Building or the Premises, cause or create a dangerous or hazardous
condition, entail excessive or unreasonable alterations, repairs, or expenses, or interfere
with or disturb other tenants of the Building. If Tenant uses machines or equipment (other
than general office machines, computers and electronic data processing equipment) in the
Premises which materially and adversely affect the temperature otherwise maintained by the
air conditioning system or otherwise overload any utility, and Tenant is unable or unwilling
to (1) reduce consumption or otherwise eliminate the cause of the increase in temperature
otherwise maintained by the air conditioning system or (2) install a supplemental air
conditioning system, Landlord may install supplemental air conditioning units or other
supplemental equipment in the Premises, and the cost thereof, including the cost of
installation, operation, use, and maintenance, shall be paid by Tenant to Landlord within
ten (10) days after Landlord has delivered to Tenant an invoice therefor.Landlord agrees to furnish Tenant electricity for ordinary office uses equivalent to six
(6) watts per rentable square foot connected load
(Building Standard Capacity).
Any electricity use for ordinary office use which exceeds Building Standard Capacity will
be billed by Landlord for such excess use with the exception of those areas separately
metered and billed.
 Change
 Restoration of Services; Abatement th
 Critical Services
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e.
    
    Additional Services. Should Tenant desire any additional services beyond those
described here or service outside the normal times Landlord provides such services,
Landlord may (at Landlords option), upon reasonable advance notice from Tenant, furnish
such services and Tenant shall pay Landlords actual cost plus 10% overhead for the
additional services provided. By way of illustration and not limitation, special equipment
requiring abnormal use of water or electricity used as a power source for data processing
machines, including air conditioning costs therefor, large business machines and similar
equipment of high electrical consumption shall not be standard and the costs thereof shall
be paid by Tenant within ten (10) days after Landlord delivers to Tenant an invoice
therefor. Landlord shall, at Tenants sole cost and expense, install separate meters for
measuring consumption of non-standard services within the Premises.
 12.
    
    REPAIRSa. Landlords Repair Obligations. Promptly following receipt of written notice from
Tenant of the necessity therefor, landlord shall make necessary repairs to maintain the
structure of the Premises and the Building. Structure or structural for purposes of this
Lease shall mean only the following: foundation, roof framing and
roof, weight bearing columns
and weight bearing walls (specifically excluding interior surfaces). If any repair in the
Building is required because of any act, neglect, or fault of Tenant, its employees, licenses,
or contractors, then, to the extent Landlord does not receive insurance proceeds to cover such
repairs, Tenant shall pay all costs therefor within ten (10) days after Landlord has delivered
the Tenant an invoice therefor.b. Tenants Repairs. Tenant agrees to promptly make all repairs (including
replacements and alterations where necessary) necessary to keep the interior of the Premises
in good order, repair and condition, except for those necessitated by reasonable use and wear
and to repair any damage caused by Tenant or Tenants agents, contractors, or invitees to any
of the Property. The interior shall include:
 (i)
    
    interior faces of the exterior walls of the
building;(ii)
    
    interior face of the ceilings;(iii)
    
    floor coverings;(iv)
    
    portion of the wiring, plumbing, pipes, conduits and other water, sewerage,
utility, and sprinkler fixtures and equipment in the Premises which serve the
Premises exclusively; and which are not located within the floors, walls or ceiling;
and(v)
    
    all interior glass.
 Performance of Work
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requirements and in a good and workmanlike manner so as not to damage any portion of the
Property. Any such work which may affect the HVAC, electrical system, or plumbing must be
approved by an engineer acceptable to Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed.d. Mechanics Liens. Tenant shall not permit any mechanics or other liens to be filed
against the Premises or the Property for any obligation incurred by or at the request of
Tenant. If such a lien is filed, then Tenant shall, no later than twenty (20) days after
Landlord has notified Tenant thereof in writing, either pay the amount of the lien or diligently
contest such lien and deliver to Landlord a bond or other security reasonably satisfactory to
Landlord. If Tenant fails to timely take either such action, then Landlord may pay the lien
claim without inquiry as to the validity thereof, and any amounts so paid, including expenses
and interest, shall be paid by Tenant to Landlord within ten (10) days after Landlord has
delivered to Tenant an invoice therefor. Tenant shall indemnify, defend (with counsel reasonably
acceptable to Landlord) and hold harmless the Landlord from and against all costs (including
attorneys fees and costs of suit), losses, liabilities, or causes of action arising out of or
relating to any mechanics or materialmens liens asserted in connection with alterations,
repairs, improvements or other work performed by Tenant or Tenants agents, contractors or
employees.13.
    
    TRANSFERSa. Transfers; Consent. Except as provided in Section 13c below, Tenant shall not,
without the prior written consent of Landlord (which Landlord shall not unreasonably withhold,
delay or condition): (a) assign, transfer, or encumber this Lease or any estate or interest
herein, whether directly or by operation of law; (b) permit any other entity to become Tenant
hereunder by merger, consolidation, or other reorganization; (c) if Tenant is an entity other
than a corporation whose stock is publicly traded, permit the transfer of an ownership interest
in Tenant so as to result in a change in the current control of Tenant(d) sublet any portion
of the Premises; (c) grant any license, concession, or other right of occupancy of any portion
of the Premises; or (f) permit the use of the Premises by any parties other than Tenant (any of
the events listed in clauses (a) through (f) being a Transfer). If Tenant requests
Landlords consent to a Transfer, then Tenant shall provide Landlord with a written description
of all terms and conditions of the proposed Transfer, copies of the proposed documentation, and
the following information about the proposed transferee: name and address; reasonably
satisfactory information about its business and business history; its proposed use of the
Premises; banking, financial, and other credit information; and general references sufficient
to enable Landlord to determine the proposed transferees credit worthiness and character.
Landlord agrees that it shall not unreasonably withheld, condition or delay consent if (a) the
nature and character of the proposed assignee or sublessee, its business and activities and
intended use of the Premises are in Landlords reasonable judgment consistent with the current
standards of the Building, (b) neither the proposed assignee or sublessee (nor any party which,
directly or indirectly, controls or is controlled by or is under common control with the
proposed assignee or sublessee) is a department, representative or agency of any governmental
body or then an occupant of any part of the Building or a party with whom Landlord is then
negotiating to lease space in the Building or in any adjacent Building owned by Landlord or an
affiliate of Landlord unless Landlord can not meet the expansion needs (on a per square foot
basis) of the proposed transferee in which case the proposed transferee may be an occupant of
any part of the Building or a party with whom Landlord is then negotiating to lease space in
the Building, (c) the form and substance of the proposed sublease or instrument of assignment
is acceptable to Landlord (which acceptance by Landlord shall not be unreasonably withheld,
conditioned or delayed) and is expressly subject to all of the terms and provisions of this
Lease and to any matters to which this Lease is subject, (d) the proposed occupancy would not
(1) materially increase the office cleaning requirements, (2) impose a materially extra burden
upon the services to be supplied by Landlord to Tenant hereunder, (3) violate the current rules
and regulations of the Building, (4) violate the provisions of any other leases of tenants in
the Building or (5) cause alterations or additions to be made to the Building (excluding the
Premises), and (e) the granting of such consent will not constitute a default under any other
agreement to which Landlord is a party or by which Landlord is bound. Tenant shall reimburse
Landlord for its reasonable attorneys fees and other out-of-pocket expenses incurred in
connection with considering any request for its consent to a
Transfer, up to a maximum of $500.00. If Landlord consents to a proposed Transfer, then the proposed transferee shall deliver to
Landlord a written agreement whereby it expressly assumes Tenants obligations hereunder;
however, any transferee of less than all of the space in the Premises shall be liable only for
obligations under this Lease that are properly allocable to the space subject to the Transfer,
and only to the extent of the rent it has agreed to pay Tenant
therefor. Landlords consent to a
Transfer shall not release Tenant from performing its obligations under this Lease, but rather
Tenant and its transferee shall be jointly and severally liable therefor and Tenant shall
execute any documents reasonably required by Landlord to confirm same. Landlords consent to
any Transfer shall not waive Landlords rights as to any
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b.
    
    Additional Compensation. Tenant shall pay to Landlord, immediately upon
receipt thereof, 50% of all compensation received by Tenant for a Transfer (whether permitted or not) that exceeds
the sum of (i) Rent paid by Tenant to Landlord for the applicable portion of the Premises covered
thereby and (ii) Tenants costs reasonably incurred with unaffiliated third parties in connection
with such Transfer (e.g., brokerage commissions, attorneys fees, tenant improvement allowances and the
like). Landlords acceptance of such Additional Compensation shall not constitute
Landlords approval of any Transfer that was not approved by
Landlord or permitted by this Lease.c.
    
    Permitted Transfers. Notwithstanding Section 13a, Tenant may Transfer all or
part of its interest in this Lease or all or part of the Premises (a Permitted Transfer) to the following without
the written consent of Landlord: (1) an Affiliate of Tenant; (2) any entity in which or with
which Tenant, or its corporate successors or assigns, is merged or consolidated, in accordance
with applicable statutory provisions governing merger and consolidation of business entities, so
long as Tenants obligations hereunder are assumed by the entity surviving such merger or created by
such consolidation and the net worth of the surviving or created corporation is not less than the
net worth of Tenant as of the execution date of this Lease; and (3) any entity acquiring all or
substantially all of Tenants assets if such entitys net worth after such acquisition is
not less than
the net worth of Tenant as of the execution date of this Lease. Tenant shall promptly
notify
Landlord of any such Permitted Transfer. Tenant shall remain liable for the performance of
all of
the obligations of Tenant hereunder, or if Tenant no longer exists because of a merger,
consolidation, or acquisition, the surviving or acquiring entity shall expressly assume in
writing the
obligations of Tenant hereunder. Additionally, the Permitted Transferee shall comply with
all of
the terms and conditions of this Lease, including the Permitted Use, and the use of the
Premises by
the Permitted Transferee may not violate any other agreements affecting the Premises, the
Building,
landlord or other tenants of the Building. Within ten (10) business days after the effective
date of
any Permitted Transfer, Tenant agrees to furnish Landlord with copies of the instrument
effecting
any of the foregoing Transfers. The occurrence of a Permitted Transfer shall not waive
Landlords
rights as to any subsequent Transfers.
 14.
    
    INDEMNITY & LIABILITY LIMITATIONa. Indemnity. Subject to Section 14b, Tenant shall, to the extent permitted by
applicable law, defend,
indemnify and hold harmless Landlord from all loss, claims, demand, damage, liability or
expense,
including, attorneys fees, resulting from any injury to or death of any person or any loss of
or damage to
any property caused by or resulting from any act, omission or negligence of Tenant or any
officer,
employee, agent contractor, licensee, guest, invitee or visitor of Tenant in or about the
Premises or the
Property. The foregoing provision shall not be construed to make Tenant responsible for loss,
damage,
liability or expense resulting from injuries caused by any act, omission or negligence of
Landlord or of
any officer, employee, agent, contractor, invitee or visitor of
Landlord. Landlord shall, to the
extent
permitted by applicable law, defend, indemnify and hold harmless Tenant from all loss, claims,
demand,
damage, liability or expense, including, attorneys fees, resulting from any injury to or death
of any
person or any loss of or damage to any property caused by or resulting from any act, omission or
negligence of Landlord or any officer, employee, agent contractor, licensee, guest, invitee or
visitor of
Landlord in or about the Premises or the Property. Except for negligence, Landlord shall not
be liable
for any loss or damage to person, property or Tenants business sustained by Tenant, or other
persons,
which may be caused by the Property or the Premises, or any appurtenances thereto, being out of
repair
or by the bursting or leakage of any water, gas, sewer or steam pipe, or by theft or by any act
of neglect
of any tenant or occupant of the Property, or any other person.b. Waiver of Claims and Subrogation. Landlord and Tenant each waives any claim it might have
against the other for any damage to or theft, destruction, loss or loss of use of any property
to the extent
the same is insured against under any property insurance policy that covers the Building, the
Premises
Landlords or Tenants fixtures, personal property, leasehold improvements or business (or would
have
been insured against if the property insurance required under this Lease had been maintained as
required) regardless of cause or origin, INCLUDING NEGLIGENCE, OTHER FAULT AND STRICT LIABILITY WITHOUT REGARD TO FAULT, OF THE OTHER PARTY HERETO
AND ITS AGENTS, EMPLOYEES, OFFICERS, PARTNERS, SERVANTS OR
SHAREHOLDERS.Each party also covenants that all property insurance policies carried by each
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shall contain provisions where the insurer waives their right of recovery under subrogation or
otherwise against such other party and shall provide evidence thereof to the other party.
 15.
    
    INSURANCEa. Insurance by Landlord. Landlord shall insure the Building, including the Premises,
against loss or
damage by fire or other hazards by maintaining a broad form property insurance policy for the
full
replacement cost of the Building, with extended coverages and traditional business interruption
coverage. Landlord shall not be obligated to insure against damage to Tenants personal
property, trade
fixtures or above Building standard improvements made to the Premises. Landlord shall also
obtain
and keep in effect commercial general liability insurance in an amount not less than $1,000,000
per
occurrence.b. Insurance by Tenant. Tenant shall obtain and keep in effect the following insurance
insuring Tenant,
Landlord and all mortgagees and any other person or entity designated in writing by Landlord as
having
an interest in the Property (as their interests may appear):
    Tenants Contractors Insurance.
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d. Tenants Additional Insurance. Landlord makes no representation that the limits of
liability specified to be carried by Tenant under the terms of this Lease are adequate to
protect Tenant against Tenants undertaking under this Section 15.16.
    
    CASUALTYa. Repair Estimate. If the Premises or the Building are damaged by fire or
other casualty (a Casualty), Landlord shall, within thirty (30) days after such Casualty, deliver to
Tenant a good faith
estimate (the Damage Notice) of the time needed to repair the damage caused by the
Casualty and
whether sufficient insurance proceeds will be available to Landlord to restore the Building and
Premises
to the extent required hereunder.b. Landlords and Tenants Rights. If,
because of a Casualty, Tenant is prevented from
conducting its
business in the Premises in a manner substantially comparable to that conducted immediately
before
such Casualty (Substantial Casualty), and Landlord estimates that the damage caused thereby
cannot
be repaired within thirty (30) days after the commencement of repair but can be repaired within
180
days after the date of the Casualty, then Landlord may, at its expense, and upon written
consent from
Tenant, which consent may be withheld at Tenants sole discretion, relocate Tenant to office
space in
the Building reasonably comparable to the Premises, provided that Landlord notifies Tenant of
its
intention to do so in the Damage Notice. If Landlord relocates Tenant, Rent shall be abated only
from
the date of such damage until the relocation premises are tendered to Tenant with all
improvements,
alterations or additions necessary to make such space substantially comparable to the Premises
immediately prior to such Casualty completed, and thereafter, Tenant shall pay to Landlord the
lesser of
the Rent or the fair market rental value of the replacement premises (including all additional
rent and
expenses associated therewith). Such relocation may be for a portion of or the entire remaining
Term.
Landlord shall complete any such relocation within thirty (30) days after Landlord has delivered
the
Damage Notice to Tenant and received Tenants written consent. If (1) Landlord does not elect
to
relocate Tenant following such Substantial Casualty, (2) if Tenant does not give written consent
to be
relocated, or (3) Landlord estimates that the damage caused by the Casualty in question cannot
be
repaired within 180 days after the Casualty, then, Tenant may terminate this Lease by delivering
written
notice to Landlord of its election to terminate within thirty (30) days after the Damage Notice
has been
delivered to Tenant and Tenant has declined to be relocated in writing. Following a Casualty,
if
Landlord does not relocate Tenant and Tenant does not terminate this Lease, then Landlord shall
repair
the Building or the Premises, as the case may be, as provided below, and Rent for any portion of
the
Premises that Tenant is unable to use in a manner substantially comparable to that used prior to
the
Casualty shall be reasonably abated from the date of damage until the completion of the repair.
Rent
shall not be abated or reduced for a Casualty which is not a Substantial Casualty.
Notwithstanding the
foregoing, if a Casualty damages a material portion of the Building, and Landlord makes a
reasonable
good faith determination that restoring the Premises would be uneconomical, or if Landlord is
required
to pay any material portion of the insurance proceeds arising out of the Casualty to Landlords
Mortgagee (defined below), then Landlord may terminate this Lease by giving written notice of
its
election to terminate within thirty (30) days after the Damage Notice has been delivered to
Tenant, and
Rent shall be abated as of the date of the Casualty.c. Repair Obligation. If neither party so elects to terminate this Lease following a
Casualty, then
Landlord shall, promptly begin to restore the Building and Premises to substantially the same or
better
condition as they existed immediately before such Casualty; however, Landlord shall not be
required to
repair or replace any part of the furniture, equipment, fixtures, and other improvements which
may have
been placed by, or at the request of, Tenant (other than Building standard improvements existing
in the
Premises on the date of this Lease, which Landlord shall be obligated to restore) or other
occupants in
the Building or the Premises, and Landlords obligation to repair or restore shall be limited to
the extent
of the insurance proceeds actually received by Landlord for the Casualty in question plus any
deductible
amounts on Landlords property insurance policies.17.
    
    CONDEMNATIONa. Eminent Domain. If any part of the Property is taken by right of eminent
domain or conveyed in lieu thereof (a Taking), and such Taking prevents Tenant from
conducting its business in the Premises in a manner substantially comparable to that conducted
immediately before such Taking then Landlord may, at its expense, and upon written consent from
Tenant, which consent may be withheld at Tenants sole discretion, relocate Tenant to space in
the Building reasonably comparable to the Premises, provided that Landlord notifies Tenant of
its intention to do so within thirty (30) days after the Taking. Such
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relocation shall be for the remaining Term. Landlord shall complete any such relocation within
thirty (30) days after Landlord has notified Tenant of its intention to relocate Tenant and
received Tenants written consent. If Landlord does not elect to relocate Tenant following such
Taking, or if Tenant does not give written consent to be relocated, then Tenant may terminate
this Lease as of the date of such Taking by giving written notice to landlord within sixty (60)
days after the Taking, and Rent shall be prorated on the later of the date of such Taking or
the date Tenant actually vacates the Premises. After a Taking, if Landlord does not terminate
this Lease or relocate Tenant and Tenant does not terminate this Lease, then Rent shall be
abated on a reasonable basis as to that portion of the Premises which Tenant is unable to use
in a manner substantially comparable to that used prior to the Taking.b. Taking- Landlords Rights. If all or any material portion of the Building becomes
subject to a Taking, or if Landlord is required to pay any material portion of the proceeds
received for a Taking to Landlords Mortgagee, then this Lease, at the option of Landlord,
exercised by written notice to Tenant within thirty (30) days after such Taking, shall
terminate and Rent shall be apportioned as of the date of such Taking.d. Award. If any Taking occurs, then Landlord shall receive the entire award or other
compensation for the Property taken, and Tenant may separately pursue a claim against the
condemning party for the value of Tenants moving costs, loss of business, and other claims it
may have.18.
    
    RULES AND REGULATIONSTenant shall comply with the rules and regulations of the Building which are attached hereto as
Exhibit C. Landlord may, from time to time, change such rules and regulations for the safety,
care, or cleanliness of the Building and related facilities, provided that such changes are
reasonable and are applicable to all tenants of the Building, will not unreasonably interfere
with Tenants use of the Premises and are enforced in a
non-discriminatory manner. Tenant shall
be responsible for the compliance with such rules and regulations by its employees, agents, and
invitees. If any inconsistency exists or arises between the terms of this Lease and such rules
and regulations, the terms of this Lease shall control.19.
    
    SUBORDINATION & MORTGAGEESa. Subordination. This Lease is subject and subordinate to any deeds of trust,
mortgages or other security instruments which now or, subject to the terms and provisions of
Section 19(e), hereafter encumber all of any portion of the Property or any interest of
Landlord therein. No further instrument shall be required to effect such subordination, but
upon request Tenant shall execute, acknowledge, and deliver to Landlord any further instruments
and certificates evidencing such subordination as Landlord or any mortgagee of Landlord (the
Landlords Mortgagee) shall reasonably require and
which are reasonably acceptable to Tenant.b. Attornment. Notwithstanding Section 19a, any Landlords Mortgagee shall have the
right at any time to subordinate any such deed of trust or mortgage to this Lease, or to any of
the provisions hereof on such terms and subject to such commercially reasonable conditions as
such mortgagee may consider appropriate in its reasonable discretion. At any time, before or
after the institution of any proceedings for the foreclosure of any such deed of trust or
mortgage, or the sale of the Building under any such deed of trust or mortgage, Tenant shall,
upon request of such mortgagee, any person succeeding to the interest of such mortgagee, or the
purchaser at any foreclosure sale (Successor Landlord), automatically become the
Tenant of the Successor Landlord, without change in the terms or other provisions of this Lease;
provided, however, that the Successor Landlord shall not be bound by any modification to this
Lease made without the consent of Landlords Mortgagee, except for those amendments and
modifications permitted to be made by landlord without Landlords Mortgagees consent pursuant
to the terms of the loan documents between Landlord and Landlords Mortgagee or expressly
contemplated by the terms of this Lease, or by any payment of Rent more than one (1) month in
advance, except for a security deposit previously paid to Landlord (and then only if such
security deposit has been deposited with and is under the control of
the Successor Landlord). The agreement of Tenant to attorn to a Successor Landlord shall survive any such foreclosure
sale, trustees sale, or conveyance in lieu thereof. Tenant shall, upon request, before or after
any such foreclosure or conveyance, execute, acknowledge, and deliver to the Successor Landlord
instruments evidencing such attornment as the Successor Landlord may
reasonably require.c. Estoppel Certificates. Tenant and Landlord shall, from time to time, within ten (10)
days after request from the other party, or from any mortgagee of Landlord, execute,
acknowledge and deliver in
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recordable form a certificate certifying, to the extent true, that this Lease is in full force
and effect and unmodified (or, if there have been modifications, that the same is in full force
and effect as modified and stating the modifications); that the Term has commenced and the full
amount of the Rent then accruing hereunder and the dates to which the Rent has been paid; that
Tenant has accepted possession of the Premises and that any improvements required by the terms
of this Lease to be made by Landlord have been completed to the satisfaction of Tenant; the
amount, if any, that Tenant has paid to Landlord as a security deposit; that no Rent under
this Lease has been paid more than thirty (30) days in advance of its due date; that the address
for notices to be sent to Tenant is as set forth in this Lease (or has been changed by notice
duly given and is as set forth in the certificate); that Tenant, as of the date of such
certificate, has no charge, lien, or claim of offset under this Lease or otherwise against Rent;
that, to the knowledge of the party giving such certificate, the other party to this Lease is
not then in default under this Lease; and such other matters as may be reasonably requested by
the requesting party or any mortgagee of Landlord. Any such certificate may be relied upon by
the requesting party, any successor of the requesting party, any mortgagees of Landlord or any
prospective purchaser of the Building.d. Notice to Mortgagee. No act or failure to act on the part of Landlord which would
entitle Tenant under the terms of this Lease, or by law, to be relieved of Tenants obligations hereunder or to
terminate this Lease, shall result in a release of Tenants obligations or termination of this Lease
unless (i) Tenant has given notice by certified mail to any mortgagee of Landlord whose address has been furnished
to Tenant, and (ii) Tenant offers such mortgagee of Landlord a reasonable time to cure the default
(in no event to be less than thirty (30) days or more than forty-five (45) days), including time to
obtain possession of the Building if such should prove necessary to effect a cure. No such mortgagee
of Landlord shall be obligated to Tenant to cure any default by Landlord hereunder, but if a
mortgagee elects in its discretion to effect a cure Tenant shall
accept same as though done by Landlord.e. Non-Disturbance. Notwithstanding anything to the contrary herein, Tenants
subordination agreement shall be subject to the requirement that Landlords Mortgagee shall attorn to Tenant
and shall not disturb Tenants possession of the Premises under
this Lease if, at the time of any such
foreclosure, trustees sale or conveyance in lieu thereof, by Landlords mortgagee, no Event of Default
exists hereunder. Landlord shall, within 30 days after the date of this Lease, obtain a
subordination, non-disturbance and attornment agreement in form acceptable to the current Landlords Mortgagee, and
shall use reasonable efforts to obtain a subordination, non-disturbance and attornment agreement
from any future Landlords Mortgagee.20.
    
    TAXESTenant shall be liable for all taxes levied or assessed against personal property, furniture,
or fixtures placed by Tenant in the Premises. If any taxes for which Tenant is liable are
levied or assessed against Landlord or Landlords property and Landlord elects to pay the same,
or if the assessed value of Landlords property is increased by inclusion of such personal
property, furniture or fixtures and Landlord elects to pay the taxes based on such increase,
then Tenant shall pay to Landlord, upon demand, that part of such taxes for which Tenant is
primarily liable hereunder, Landlord shall not pay such amounts if Tenant notifies Landlord
that it will contest the validity or amount of such taxes and thereafter diligently proceeds
with such contest in accordance with applicable law and in a manner that is not inconsistent
with the rights of Landlord or any other tenants of the Building and the non-payment thereof
does not; (a) pose a threat of loss or seizure of the Building or interest of Landlord therein;
or (b) result in the imposition of any fines, penalties or interest against Landlord.
Notwithstanding the foregoing, Landlord may (but shall never be obligated to do so) contest the
amount or validity of any such taxes.
 21.
    
    EVENTS OF DEFAULTThe occurrence of any one of the following events will be an event of default by Tenant (an
Event of Default) under this Lease:a. Tenant shall fail to pay Landlord any rental or other sum of money when due under this Lease
or under any other agreement with Landlord concerning the Premises after the expiration of five
(5) business days following Tenants receipt of written notice from Landlord that the same is
past due.b. Tenant shall fail to maintain any insurance that this Lease requires Tenant to maintain or
shall fail to deliver any certificate of such insurance when required by this Lease and Tenant
shall not cure the failure within thirty (30) days after Landlord notifies Tenant thereof
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22.
    
    REMEDIESa. Upon the occurrence of any Event of Default, Landlord shall have the option, without any
notice to Tenant (except as expressly provided below) and with or without judicial process, to
pursue any one or more of the following remedies:
      16




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23.
    
    LANDLORDS LIENLandlord waives all contractual, statutory, common law and constitutional liens it may have or
be entitled to on Tenants personal property, goods, equipment, inventory, furnishings,
chattels, accounts and assets.24.
    
    NON-WAIVERLandlords acceptance of Rent following an Event of Default (other than an Event of
Default in the payment of Rent that is fully cured by such acceptance) shall not waive
Landlords rights regarding such Event of Default. No waiver by Landlord of any violation or
breach of any of the terms contained herein shall waive Landlords rights regarding any future
violation of that term or any other term. No custom or practice which may occur or develop
between the parties in connection with the terms of this Lease shall be construed to waive or
lessen Landlords or Tenants right to insist upon strict performance of the terms of this
Lease.25.
    
    SURRENDER OF PREMISESNo act by Landlord shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless the same is in writing
and signed by Landlord. At the expiration or termination of this Lease, Tenant shall immediately
deliver to Landlord the Premises with all improvements located thereon in good repair and
condition, reasonable wear and tear excepted (and condemnation and Casualty damage, as to which
Sections 16 and 17 shall control), and shall deliver to Landlord all keys to the Premises and
access cards to the Building. Tenant may remove all unattached trade fixtures, furniture, and
personal property placed in the Premises by Tenant and any of Tenants manufacturing, testing
or production equipment or trade fixtures (but Tenant shall not remove any such item which was
paid for, in whole or in part, by Landlord as evidenced by written documentation).
Additionally, Tenant shall promptly remove such alterations, additions, improvements, trade
fixtures, equipment, wiring, and furniture as Landlord may request at the time Landlord
approves the plans and specifications therefor; however, Tenant shall not be required to remove
any addition or improvement to the Premises unless Landlord has specifically required such
removal in writing at the time Landlord approves the plans and specifications therefor that the
improvement or addition in question shall be removed. Tenant shall repair all damage caused by
such removal. All items not so removed shall be deemed to have been abandoned by Tenant and may
be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without notice
to Tenant and without any obligation to account for such items If Tenant fails to surrender the
Premises, Landlord shall have the right, without notice and without resorting to legal process,
to enter upon and take possession of the Premises and to expel or remove Tenant and its
effects. The provisions of this Section shall survive the end of the Term.26.
    
    HOLDING OVERIf Tenant fails to vacate the Premises at the end of the Term, then Tenant shall be at will
and, in addition to all other damages and remedies to which Landlord may be entitled for such
holding over, Tenant shall pay Base Rent equal to the greater of (a) 150% of the monthly Base
Rent payable during the last month of the Term, or (b) the prevailing rental rate in the
Building for similar space. In such event, Tenant shall pay Rent on a monthly basis and shall
not be entitled to a daily proration. In the event of any unauthorized holding over in excess
of sixty (60) days, Tenant shall also indemnify, defend (with counsel reasonably acceptable to
Landlord) and hold harmless Landlord against all claims for damages against Landlord as a
result of Tenants possession of the Premises, including, without limitation, claims for
damages by any other tenant to which Landlord may have leased all or any part of the Premises
effective upon the termination of this Lease.27.
    
    RIGHTS RESERVED BY LANDLORDProvided that the exercise of such rights does not unreasonably interfere with Tenants
occupancy of the Premises, Landlord has the following rights, exercisable without notice to
Tenant and without causing an eviction (constructive or actual) or disturbance of Tenants
possession of the Premises and without giving rise to any claim for setoff or abatement of rent:
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a. to install signs on the exterior and interior of the Building (but not in the Premises
unless required by applicable law);b. to designate and approve, prior to installation, all types of window shades, blinds, drapes,
awnings, window ventilators and other similar equipment, and to
control all internal lighting
that may be visible from the exterior of the Building;c. to enter upon the Premises at reasonable hours and following reasonable notice (which may be
verbal) to inspect, clean or make repairs or alterations (without implying any obligation to do
so) and to show the Premises to prospective lenders, purchasers and during the last nine months
of the Term to prospective tenants and, if the Premises are vacated, to prepare them for
reoccupancy; however, Landlord, its employees, agents and contractors shall not be entitled to
enter any areas identified by Tenant as controlled access areas unless accompanied by a
representative of Tenant (except in the case of an emergency); Landlord shall use reasonable
efforts to minimize any disruption to Tenants business during any such entry;d. to retain and use in appropriate instances keys to all doors into and within the Premises
(Tenant will not change or add locks without the prior written consent of Landlord) with the
exception of the file room which contains confidential patient medical information (and are
hereby identified as controlled access areas). Landlord and Tenant have agreed that said file
room shall have a separate key which will be kept in a combination lock box in the management
office; said key(s) and combination lock box shall be at the sole cost and expense of the
Tenant. The combination of said lock box will be known only to an authorized party within
Cyberonics (to be designated by Cyberonics), the Properly Manager of the Building, and the
President of BGK Texas Management, Inc. to be used only in the case of an emergency(ies). It is
also agreed that in the case of an emergency BGK Texas Management, Inc. will contact a member of
Cyberonics staff to be present, if possible, prior to entry to said room or as soon as possible
after entry of said room;e. to decorate and to make repairs, alterations, additions or improvements (whether structural
or otherwise) to and about the Building and, for such purposes, to enter upon the Premises, to
temporarily close doors, entryways, public space and corridors in the Building, to temporarily
suspend Building Services and facilities and to change the arrangement and location of entrances
or passageways, doors and doorways, corridors, elevators, stairs, toilets, or other Common
Areas, all without abatement of rent or impairing Tenants obligations so long as the Premises
remain reasonable accessible and fit for the use expressly permitted in this Lease, and in each
instance Landlord shall use reasonable efforts to minimize disruption to Tenants business in
the Premises and will provide Tenant reasonable advance notice to the extent practicable;f. to grant to anyone the exclusive right to conduct any business or render any service in or to
the Building (including the exclusive right to sell any food or beverages), provided such
exclusive right does not exclude Tenant from the use expressly permitted in this Lease;g. to approve the weight, size and location of safes and other heavy equipment and articles in
the Premises and to require that all such items and all furniture be moved into and out of the
Building and Premises at the times and in the manner directed by Landlord (movements of Tenants
property into or out of the Building and within the building are entirely at the risk and
responsibility of Tenant); andh. to take any measures (without implying any obligation to do so) Landlord deems advisable for
the security of the Building and its occupants, including the evacuation of the Building for
drill purposes and the closing of the Building after normal business hours, subject, however,
to Tenants right to admittance when the Building is closed under reasonable regulations
prescribed by Landlord from time to time.Notwithstanding the foregoing, (i) the building name is defined by rights granted to Tenant by
Landlord under provisions of Exhibit H and shall be subject to such rights during the Term of
this Lease; accordingly, Landlord shall not have the right to change the name of the Building
during the Term of this Lease, and (ii) Tenant has been granted approval by Landlord for the
street name change to Cyberonics Boulevard; accordingly, Landlord shall not have any right to
change the street name during the Term of this Lease;28.
    
    LANDLORDS DEFAULTa. All covenants of Tenant in this Lease are independent covenants, not conditioned upon
Landlords satisfaction of its obligations hereunder, except to the extent otherwise
specifically provided herein.
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Tenant waives any statutory lien it may have against the rent due under this Lease or against
Landlords property in Tenants possession.b. If Landlord defaults in the performance of any of its obligations under this Lease, Landlord
will have thirty (30) days to cure after Tenant notifies Landlord of the default; or if the
default is of a nature to require more than thirty (30) days to remedy, Landlord will have the
time reasonably necessary to cure it up to an additional
60 days.c. Whenever a period of time is prescribed in this Lease for action to be taken by Landlord or
Tenant, Landlord or Tenant, as the case may be, will not be liable or responsible for, and
there shall be excluded from the computation for any such period of time, any delays due to
strikes, riots, acts of God, shortages of labor or materials, war, Applicable Laws or any other
causes of any kind whatsoever which are beyond the reasonable control of Landlord or Tenant, as
applicable (collectively, Force Majeure); provided, however, with respect to Tenants
obligation to pay Base Rent, Additional Rent and any other amounts due under this Lease, Tenant
shall not be excused for any reason from making such payments when due under this Lease.29.
    
    RELOCATIONIntentionally Deleted30.
    
    PARKINGTenant shall be permitted to use its Parking Spaces in the parking garage or facility
associated with the Building (the Parking Garage) during the Term for vehicular
parking, subject to such terms, conditions and regulations as are from time to time applicable
to patrons of the Parking Garage. If, for any reason, Landlord fails or is unable to provide,
or Tenant is not permitted to use, all or any portion of the parking spaces to which it is
entitled hereunder, then Tenant for so long as Tenant does not have the use thereof, shall be
entitled to a reasonable credit against Tenants Rent (which shall never exceed Tenants
actual out of pocket cost of alternative and reasonable parking). This credit shall be in full
settlement of all claims that Tenant might otherwise have against Landlord because of
Landlords failure or inability to provide Tenant with such parking spaces. If Tenant sublets
any portion of the Premises or assigns any of its interest in this Lease, then the parking
spaces allocated to Tenant hereunder shall be reduced of the period of such subletting or for
the remainder of the Term in the event of an assignment to the extent the ratio between the
rentable square feet of the Premises and the parking spaces granted to Tenant hereunder
exceeds the Building standard ratio of parking space per rentable square foot as established
by Landlord from time to time.31.
    
    MISCELLANEOUSa. Landlord Transfer. Landlord may transfer, in whole or in part, the Building
and any of its rights under this Lease. If Landlord assigns its rights under this Lease, then
Landlord shall thereby be released from any further obligations hereunder.b. Landlords Liability. The liability of Landlord to Tenant for any default by
Landlord under the terms of this Lease shall be limited to Tenants actual direct, but not
consequential, damages therefor and Tenant specifically agrees to look solely to Landlords
interest in the Property for the recovery of any judgment from Landlord, it being agreed that
Landlord, its officers, directors, shareholders, partners, agents and employees shall never be
personally liable for any such judgment.c. Brokerage. Landlord and Tenant each warrant to the other that it has not dealt with
any broker or agent in connection with the negotiation or execution of this Lease except
Landlords Broker and Tenants Broker. Tenant and Landlord shall each indemnify the other
against all costs, expenses, attorneys fees, and other liability for commissions or other
compensation claimed by any broker or agent claiming the same by, through, or under the
indemnifying party. Commissions payable to Tenants Broker shall be paid by Landlord only if
a written commission agreement has been executed by and between Landlord and such broker.
Landlord shall be responsible for payment of all commissions to Landlords Broker and Tenants
Broker.d. Notices. All notices and other communications given pursuant to this Lease shall be
in writing and shall be (i) mailed by first class, United States Mail, postage prepaid,
certified, with return receipt requested, and addressed to the parties hereto at the address
specified in Section 1 of the Lease, (ii) hand delivered or sent by local courier or national
overnight delivery service to the intended address, or (iii) sent by facsimile transmission or
telex followed by a confirmatory letter given in a manner permitted
under (i) or (ii) above.
All notices to Landlord shall be delivered to the addresses set forth in the Section 1 and to
Landlords property management company at the address set forth in the Section 2 and
 20




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all notices to Tenant shall be to Tenants address(es) set forth in Section 1. Notice sent by
certified mail, postage prepaid, shall be deemed received two days after being deposited in the
United States Mail; notices sent by hand delivery or overnight courier shall be deemed received
upon delivery to the address of the addressee and notices sent by facsimile or telex shall be
deemed received when and if actually received by the individual to whom the notice is to be
directed. The parties hereto may change their addresses for notice or payment by giving notice
thereof to the other in conformity with this provision.e. Severability. It is the parties intention that this Lease be enforceable and that it
comply with all applicable laws. If any clause or provision of this Lease is illegal, invalid, or
unenforceable under present or future laws, then the remainder of this Lease shall not be
affected thereby and in lieu of such clause or provision, there shall be added as a part of this
Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause
or provision as may be possible and be legal, valid, and enforceable.f. Amendments; and Binding Effect. This Lease may not be amended except by instrument in
writing signed by Landlord and Tenant. No provision of this Lease shall be deemed to have been
waived by either party unless such waiver is in writing signed by
such party. The terms and
conditions contained in this Lease shall inure to the benefit of and be binding upon the parties
hereto, and upon their respective successors in interest and legal representatives, except as
otherwise herein expressly provided. This Lease is for the sole benefit of Landlord and Tenant,
and, other than Landlords mortgagee, no third party shall be deemed a third party beneficiary
hereof.g. Tenants Right of Possession. Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without hindrance from Landlord or any party claiming by, through, or
under Landlord, subject to the terms and conditions of this Lease.h. Joint and Several Liability. If there is more than one Tenant, then the obligations
hereunder imposed upon Tenant shall be joint and several. If there is a guarantor of Tenants
obligations hereunder, then the obligations hereunder imposed upon Tenant shall be the joint and
several obligations of Tenant and such guarantor, and Landlord need not first proceed against
Tenant before proceeding against such guarantor nor shall any such guarantor be released from its
guaranty for any reason whatsoever.i. Captions. The captions contained in this Lease are for convenience of reference only,
and do not limit or enlarge the terms and conditions of this Lease.j. No Merger. There shall be no merger of the leasehold estate hereby created with the
fee estate in the Premises or any part thereof if the same person or entity acquires or holds,
directly or indirectly, this Lease or any interest in this Lease and the corresponding fee estate
or any interest in such fee estate.k. No Offer. The submission of this Lease to Tenant shall not be construed as an offer,
nor shall Tenant have any rights under this Lease unless Landlord executes a copy of this Lease
and delivers it to Tenant.l. Exhibits. All exhibits added and attachments attached hereto are incorporated herein
by this reference.
 Exhibit A
    
    -  Legal DescriptionExhibit B-1
    
    -  Outline of Premises (Space A)Exhibit B-2
    
    -  Outline of Premises (Space B)Exhibit C
    
    -  Building Rules and RegulationsExhibit D
    
    -  Landlords ServicesExhibit E-1
    
    -  Tenant Improvements / Common Area ImprovementsExhibit E-2
    
    -  Unamortized Cost ScheduleExhibit F
    
    -  Option to RenewExhibit G
    
    -  Right of First RefusalExhibit H
    
    -  SignageExhibit I
    
    -  Security and Access ControlExhibit J
    
    -  Access and Use of Garage RoofExhibit K
    
    -  Additional Exclusions from Operating Expenses
 m. Entire Agreement. This Lease constitutes the entire agreement between Landlord and
Tenant regarding the subject matter hereof and supersedes all oral statements and prior writings
relating thereto. Except for those set forth in this Lease, no representations, warranties, or
agreements have been made by Landlord or Tenant to the other with respect to this Lease or the
obligations of Landlord or Tenant in connection therewith.
 21




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n. Property Management. Landlords Property Management Company is identified in
Section 2 of the Lease. Tenant acknowledges that the Property Management Company is an
independent contractor hired by Landlord to operate the Building.o. Choice of Law. This Lease shall be governed by the laws of the state in which the
Land is located and by the applicable laws of the United States of America.p. Construction and Interpretation. This Lease shall not be construed in favor of
either Landlord or Tenant regardless of who prepared the same. Whenever the terms hereof,
hereby, herein, or words of similar import are used herein they shall be construed as
referring to this Lease in its entirety rather than to a particular section or provision.
References to Sections and Exhibits refer to the sections of, and exhibits to, this Lease.
Whenever the term including is used herein, it shall be interpreted as meaning including,
but not limited to.q. Tenants Liability. Except with respect to Tenants indemnity obligations set forth in
Section 26, the liability of Tenant to Landlord for any monetary damages arising from any
Event of Default under the terms of this Lease shall be limited to Landlords actual direct,
but not consequential, special or punitive damages therefor. Nothing in this Section 31q shall
affect or limit Landlords right to file legal actions to recover possession of the Premises
or for injunctive relief against Tenant.32.
    
    REPRESENTATIONS, WARRANTIES AND COVENANTS OF TENANTTenant represents, warrants and covenants that it is now in a solvent condition; that no
bankruptcy or insolvency proceedings are pending or contemplated by or against Tenant or any
guarantor of Tenants obligations under this Lease; that all reports, statements and other data
furnished by Tenant to Landlord in connection with this Lease are true and correct in all
material respects; that the execution and delivery of this Lease by Tenant does not contravene,
result in a breach of, or constitute a default under any contract or agreement to which Tenant
is a party or by which Tenant may be bound and does not violate or contravene any law, order,
decree, rule or regulation to which Tenant is subject; and that there are no judicial or
administrative actions, suits, or proceedings pending or threatened against or affecting Tenant
or any guarantor of Tenants obligations under this Lease. If Tenant is a corporation or
partnership, each of the persons executing this Lease on behalf of Tenant represents and
warrants that Tenant is duly organized and existing, is qualified to do business in the state in
which the Premises are located, has full right and authority to enter into this Lease, that the
persons signing on behalf of Tenant are authorized to do so by appropriate corporate or
partnership action and that the terms, conditions and covenants in this Lease are enforceable
against Tenant. If Tenant is a corporation, Tenant shall deliver certified resolutions to
Landlord, upon request, evidencing that the execution and delivery of this Lease has been duly
authorized and properly executed, and will deliver such other evidence of existence, authority
and good standing as Landlord shall require.33.
    
    ENVIRONMENTAL PROVISIONSa. Terms defined below in this Section shall have the following meanings:
 Applicable Environmental Laws CERCLA RCRA
 Expenses
 Hazardous substance release
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Indemnified Party
 b. Tenant warrants and represents that to Tenants knowledge Tenants intended use of the
Premises will not violate Applicable Environmental Laws. Tenant shall not cause or permit the
Premises or Tenant to be in violation of, or do anything or permit anything to be done which will
subject the Landlord or the Premises or the Land to any remedial obligations under any Applicable
Environmental Laws, assuming disclosure to the applicable governmental authorities of all
relevant facts, conditions and circumstances, if any, pertaining to the Premises, the Property
and Tenant. Tenant shall promptly notify Landlord in writing of any existing, pending or, to the
knowledge of Tenant, threatened investigation or inquiry by any governmental authority in
connection with any violation of Applicable Environmental Laws by Tenant or the Premises. Tenant
shall take all steps necessary to determine during the Term of this Lease that no hazardous
substances or solid wastes are being disposed of or otherwise released on or to or from the
Premises in a manner that would violate Applicable Environmental Laws. Landlord may enter upon the
Premises at any time and without notice to verify compliance with this Section if Landlord
believes in good faith that a violation of this Section may have occurred or be threatened. Any
violation of this Section by Tenant that remain uncured after expiration of all applicable
notice, grace and cure periods shall constitute an event of default under this Lease.c. Tenant hereby agrees to assume liability for and to pay, indemnify, protect and hold harmless
every Indemnified Party on an after-tax basis from any and all Expenses imposed, incurred or
asserted (regardless of whether the Indemnified Party shall be indemnified by any other person or
entity) in any way relating to or arising out of (a) a violation of Applicable Environmental Laws
by the Premises or by Tenant during the term of this Lease or during any period of holdover by
Tenant after the Term of the Lease, or (b) a disposal or other release of any hazardous substance
or solid waste in violation of Applicable Environmental Laws on, to or from the Premises during
the Term of the Lease or during any such period of holdover. The Tenant acknowledges that it has
been given ample time to consult with counsel in agreeing to the indemnity set forth in this Lease
and fully understands it. This indemnity shall survive the termination or expiration of this
Lease. The foregoing indemnity shall not render Tenant liable to any Indemnified Party for any
Expenses that such Indemnified Party many incur as a result of its own willful misconduct or gross
negligence.d. If an Indemnified Party notifies Tenant of any claim or notice of the commencement of any
action, administrative or legal proceeding, or investigation as to which the indemnity may apply,
Tenant shall assume on behalf of the Indemnified Party and conduct with due diligence and in good
faith the defense thereof with counsel reasonable satisfactory to the Indemnified Party; provided,
that the Indemnified party shall have the right to be represented therein by advisory counsel of
its own selection and at its own expense; and provided further, that if any such claim, action,
proceeding or investigation involves both Tenant and the Indemnified Party and the Indemnified
Party shall have reasonably concluded that there may be legal defenses available to it which are
different from, additional to, or inconsistent with those available to Tenant, then the Indemnified
Party shall have the right to select separate counsel to participate in the defense of such claim,
action, proceeding or investigation on its own behalf at Tenants expense.e. If any claim, action, proceeding or investigation arises as to which the indemnity provided for
may apply, and Tenant fails to assume promptly (and in any event within ten (10) days after being
notified of the claim, action, proceeding or investigation) the defense of the Indemnified Party,
then the Indemnified Party may contest the claim, action, proceeding or investigation counsel
selected by the Indemnified Party. All reasonable costs and expenses incurred by the Indemnified
Party in connection with any such contest, settlement, or payment shall be payable within 30 days
after receipt of a reasonably detailed invoice with respect thereto.f. Other than as disclosed in that certain Phase I Site Assessment dated November 20, 2000 and
prepared by Consolidated Consulting Group, Landlord is not aware of the existence of any
Hazardous Substance present in the Building in violation of any Applicable Environmental Laws.
 23




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34.
    
    EFFECT OF THIS LEASE ON PRIOR LEASE
   th
 a.
    
    First Amendment dated as of the 25th day of March, 1998b.
    
    Second Amendment dated as of the 1st day of July, 1998c.
    
    Third Amendment dated as of the 1st day of November 1998d.
    
    Fourth Amendment dated as of the 1st day of March 1999e.
    
    Fifth Amendment dated as of the 1st day of July 1999f.
    
    Sixth Amendment dated as of the 1st day of May 2000g.
    
    Seventh Amendment dated as of the
1st day of May 2000h.
    
    Eighth Amendment dated as of the
15th day of May 2000i.
    
    Ninth Amendment dated as of the 1st day of May 2001j.
    
    Tenth Amendment dated as of the 20th day of February 2001k.
    
    Eleventh Amendment dated as of the 1st day of May 2001l.
    
    Twelfth Amendment dated as of the 3rd day of September 2001m.
    
    Thirteenth Amendment dated as of the 1st day of March 2002n.
    
    Fourteenth Amendment dated as of the 1st day of July 2002
   th st
  
 24




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LANDLORD:
 SPACE CENTER OPERATING ASSOCIATES, LPBy: BGK Equities, Inc., General PartnerBy:
    
    /s/ J. Peter MehlertName: J. Peter MehlertTitle:
    
    President
BGK Texas Property MGMT, INC.
AS AGENT FORDate: 12/5/02TENANT:CYBERONICS, INC.By:
    
    /s/ Pamela B. WestbrookName: Pamela B. WestbrookTitle: Vice President,
Finance & Administration, C.F.O.Date: November 27, 2002
 25




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LEGAL DESCRIPTION
 16511 SPACE CENTER BLVD.
           26




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EXHIBIT C
 BUILDING RULES AND REGULATIONS
 1.
    
    Sidewalks, doorways, vestibules, halls, stairways and similar areas shall not be
obstructed by tenants or their officers, agents, servants, and employees, or used for any
purpose other than ingress and egress to and from their respective leased premises and for
going from one part of the Building to another part of the Building.
 2.
    
    Plumbing fixtures and appliances shall be used only for the purposes for which constructed,
and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed
therein. Any stoppage or damage resulting to any such fixtures or appliances from misuse on
the part of a tenant or such tenants officers, agents, servants, and employees shall be paid
by such tenant.
 3.
    
    No signs, posters, advertisements, or notices shall be painted or affixed by or on behalf of
any tenant on any of the windows or doors, or other part of the Building, except lettering of
such color, size and style and in such places, as shall be first approved in writing by the
Landlords Building manager. No nails, hooks or screws (other than those which are necessary
to hang paintings, prints, pictures or other similar items on the Premises interior walls)
shall be driven into or inserted in any part of the Building, except by building maintenance
personnel.
 4.
    
    Directories may be placed by the Landlord, at Landlords own expense, in conspicuous places
in the Building. No other directories shall be permitted.
 5.
    
    Corridor doors, when not in use, shall be kept closed.
 6.
    
    All deliveries of furniture, freight, office-equipment or other materials for dispatch or
receipt by Tenant must be made a licensed commercial movers via the service entrance of the
Building in a manner and during hours set by Landlord from time to
time. Prior approval must
be obtained from the Landlords Building manager for any deliveries that might interfere with
the free movement of others through the public corridors and
elevators of the Building. All
hand trucks shall be equipped with rubber tires and rubber side
guards.
 7.
    
    Each tenant shall cooperate with Building employees in keeping the Building and their
respective leased premises neat and clean.
 8.
    
    Nothing shall be swept or thrown into the corridors, halls, elevator shafts or stairways. No
birds or animals (other than handicapped assistance animals) shall be brought into or kept in
or about the Building.
 9.
    
    Tenants shall not use or keep in the Building any illuminating material, unless it is battery
powered, UL approved.
 10.
    
    Tenants, employees, or agents, or anyone else who desire to enter the Building after normal
working hours will be required to close doors into the Building behind them. Locks to such
doors will not be tampered with.
 11.
    
    All electrical fixtures hung in the Premises must be fluorescent or of another type
reasonably approved by Landlord and of a quality, type, design, bulb, color, size and general
appearance approved by Landlord.
 12.
    
    Normal business hours for the Building shall be 6:30 a.m. through 6:30 p.m. on weekdays,
excluding legal holidays and 8:00 a.m. to 1:00 p.m. on Saturday.
 13.
    
    References to holidays and legal holidays in the leases to tenants in the Building shall
include the following:
 January 1st
    
    New Years DayLast Monday in May
    
    Memorial DayJuly 4th
    
    Independence DayFirst Monday in September
    
    Labor Day
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Fourth Thursday in November
    
    ThanksgivingDecember 25th
    
    Christmas
 14.
    
    The Landlord reserves the right to rescind any of these rules, other than the definition
of what constitutes holidays or legal holidays for purposes of this Lease (as to any
particular tenant or as to all tenants generally) and to make such other and further rules and
regulations as in the judgment of Landlord shall from time to time be needed for the safety,
protection, care and cleanliness of the Building, the operation thereof, the preservation of
good order therein, and the protection and comfort of its tenants, their agents, employees and
invitees, which rules when made and notice thereof given to a tenant shall be binding upon him
in like manner as if originally herein prescribed. In the event of any conflict,
inconsistency, or other difference between the terms and provisions of these Rules and
Regulations (as now or hereafter in effect) and the terms and provisions of any lease now or
hereafter in effect between Landlord and any other tenant in the Building, Landlord shall have
the right to rely on the term or provision in either such lease or such Rules and Regulations
which is most restrictive on such tenant.
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EXHIBIT D
 LANDLORDS SERVICES
  1.
    
    water (hot and cold) at those points of supply provided for general use of tenants of the
Building;
 2.
    
    heated and refrigerated air conditioning as appropriate, at such temperatures and in such
amounts as are standard for comparable office buildings and in any such air conditions shall
be sufficient to maintain the temperature in the Premises between 72 degrees Fahrenheit and 74
degrees Fahrenheit at less than 65% relative humidity, from 6:30 a.m. to 6:30 p.m., Monday
through Friday, and from 8:00 a.m. to 1:00 p.m. on Saturdays;
 3.
    
    janitorial service to the Premises on weekdays other than holidays for Building-standard
installations (Landlord reserves the right to bill Tenant separately for extra janitorial
service required for non-standard installations) and such window washing as may from time to
time in Landlords judgment be reasonably required;
 4.
    
    elevators for ingress and egress to the floor on which the Premises are located, in common with
other tenants, provided that Landlord may reasonably limit the number of elevators to be in
operation at times other than during customary business hours and on holidays;
 5.
    
    replacement of ballasts and fluorescent tubes in building-standard ceiling mounted fixtures
installed by Landlord and incandescent bulb replacement in all public areas of the Building;
 6.
    
    electrical current to furnish electricity seven days per week, twenty-four hours per day,
with a capacity of not less than Building Standard Capacity;
 7.
    
    landscaping; and
 8.
    
    snow and ice removal from primary ingress, egress and parking areas.
   January 1st
    
    New Years DayLast Monday in May
    
    Memorial DayJuly 4th
    
    Independence DayFirst Monday in September
    
    Labor DayFourth Thursday in November
    
    ThanksgivingDecember 25th
    
    Christmas
 After Hours HVAC
   31




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st st  st st  nd  rd  th  th  th
 32




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EXHIBIT E-1
 TENANT IMPROVEMENTS
    COMMON AREA IMPROVEMENTS
  33




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EXHIBIT E-2
 UNAMORTIZED
COST SCHEDULE
   UNAMORTIZED COSTS, CYBERONICS CURRENT LEASES
 CYBERONICS 5TH FLOOR (500,501)
 LEASE EXPIRATION
    
    31-Mar-03EARLY TERMINATION
    
    08-Dec-02UNAMORTIZED PERIOD
    
    
    
    3.71
    
    MONTHS
 TENANT
    
    TENANTTERM
    
    RENTAL
    
    TOTAL
    
    COMMISSION
    
    COMMISSION
    
    UNAMORTIZED
    
    UNAMORTIZED
    
    IMPROVEMENT
    
    IMPROVEMENT
    
    UNAMORTIZEDSUITE
    
    AREA
    
    COMMENCE
    
    EXPIRE
    
    (MONTHS)
    
    RATE
    
    RENT
    
    RATE
    
    PAID
    
    TERM (%)
    
    COMMISSION
    
    ($/SF)
    
    ($)
    
    T. I. ($)500
    
    
    
    9,340
    
    
    01-May-96
    
    31-Mar-03
    
    
    58.97
    
    
    $
    16.00
    
    
    $
    734,414.24
    
    
    
    6.00
    %
    
    $
    44,064.85
    
    
    
    6.30
    %
    
    $
    2,774.00
    
    
    $
    20.00
    
    
    $
    168,800.00
    
    
    $
    11,759.55501
    
    
    
    10,071
    
    
    01-Jul-98
    
    31-Mar-03
    
    
    56.97
    
    
    $
    16.00
    
    
    $
    764,982.41
    
    
    
    6.00
    %
    
    $
    45,698.94
    
    
    
    6.52
    %
    
    $
    2,991.11
    
    
    $
    20.00
    
    
    $
    201,420.00
    
    
    $
    13,125.99TOTALS
    
    $
    5,765.11
    
    
    
    
    
    
    
    
    
    
    $
    24,885.54TOTAL UNAMORTIZED COSTS:
    
    $
    30,650.65
 SATASSIGNMENT
(SUITE 127)
 LEASE EXPIRATION
    
    05-Mar-05EARLY TERMINATION
    
    08-Dec-02UNAMORTIZED PERIOD
    
    
    
    26.87
    
    MONTHS
 AVG
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TENANT
    
    TENANTTERM
    
    RENTAL
    
    TOTAL
    
    COMMISSION
    
    COMMISSION
    
    UNAMORTIZED
    
    UNAMORTIZED
    
    IMPROVEMENT
    
    IMPROVEMENT
    
    UNAMORTIZEDSUITE
    
    AREA
    
    COMMENCE
    
    EXPIRE
    
    (MONTHS)
    
    RATE
    
    RENT
    
    RATE
    
    PAID
    
    TERM (%)
    
    COMMISSION
    
    ($/SF)
    
    ($)
    
    T. I. ($)127
    
    
    
    3,852
    
    
    06-Mar-00
    
    05-Mar-05
    
    
    59.96
    
    
    $
    17.50
    
    
    $
    336,819.30
    
    
    
    4.00
    %
    
    $
    13,472.77
    
    
    
    44.62
    %
    
    $
    6,038.75
    
    
    $
    11.15
    
    
    $
    42,949.80
    
    
    $
    19,250.92TOTALS
    
    $
    6,038.75
    
    
    
    
    
    
    
    
    
    
    $
    19,250.92TOTAL UNAMORTIZED COSTS:
    
    $
    25,269.68
 WEBB
MURRAY ASSIGNMENT (SUITE 202)
 LEASE EXPIRATION
    
    20-Sep-05EARLY TERMINATION
    
    08-Dec-02UNAMORTIZED PERIOD
    
    
    
    33.41
    
    MONTHS
 AVG
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TENANT
    
    TENANTTERM
    
    RENTAL
    
    TOTAL
    
    COMMISSION
    
    COMMISSION
    
    UNAMORTIZED
    
    UNAMORTIZED
    
    IMPROVEMENT
    
    IMPROVEMENT
    
    UNAMORTIZEDSUITE
    
    AREA
    
    COMMENCE
    
    EXPIRE
    
    (MONTHS)
    
    RATE
    
    RENT
    
    RATE
    
    PAID
    
    TERM (%)
    
    COMMISSION
    
    ($/SF)
    
    ($)
    
    T. I. ($)202
    
    
    
    7,493
    
    
    21-Sep-98
    
    20-Sep-05
    
    
    83.98
    
    
    $
    14.64
    
    
    $
    767,814.70
    
    
    
    6.00
    %
    
    $
    46,068.88
    
    
    
    39.79
    %
    
    $
    18,330.22
    
    
    $
    11.68
    
    
    $
    87,503.25
    
    
    $
    34,816.44TOTALS
    
    $
    18,330.22
    
    
    
    
    
    
    
    
    
    
    $
    34,816.44TOTAL UNAMORTIZED COSTS:
    
    $
    53,148.66
 CYBERONICS
A-13, OAO A-1 (SUITE 150)
 LEASE EXPIRATION
    
    31-Mar-03EARLY TERMINATION
    
    08-Dec-02UNAMORTIZED PERIOD
    
    
    
    12.75
    
    MONTHS
 AVG
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TENANT
    
    TENANTTERM
    
    RENTAL
    
    TOTAL
    
    COMMISSION
    
    COMMISSION
    
    UNAMORTIZED
    
    UNAMORTIZED
    
    IMPROVEMENT
    
    IMPROVEMENT
    
    UNAMORTIZEDSUITE
    
    AREA
    
    COMMENCE
    
    EXPIRE
    
    (MONTHS)
    
    RATE
    
    RENT
    
    RATE
    
    PAID
    
    TERM (%)
    
    COMMISSION
    
    ($/SF)
    
    ($)
    
    T. I. ($)150
    
    
    
    1,683
    
    
    07-Feb-00
    
    31-Dec-03
    
    
    46.75
    
    
    $
    12.28
    
    
    $
    80,499.10
    
    
    
    6.00
    %
    
    $
    4,629.95
    
    
    
    27.27%
    
    $
    1,316.95
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00TOTALS
    
    $
    1,316.95
    
    
    
    
    
    
    
    
    
    
    $
    0.00TOTAL UNAMORTIZED COSTS:
    
    $
    1,316.95
  SUITE
    
    TOTAL COSTS500/501
    
    $
    30,650.65127
    
    $
    25,289.68202
    
    $
    53,146.66150
    
    $
    1,316.95$
    110,403.94




---



##### 



EXHIBIT F
 OPTION TO RENEW
 Renewal Option Renewal Term
 35




---



##### 



EXHIBIT G
 RIGHT OF FIRST REFUSAL
 Right of First Refusal Refusal Space
 36




---



##### 



EXHIBIT H
 SIGNAGE
   37




---



##### 



EXHIBIT I
 SECURITY AND ACCESS CONTROL
  38




---



##### 



EXHIBIT J
 ACCESS AND USE OF GARAGE ROOF
  39




---



##### 



EXHIBIT K
 ADDITIONAL EXCLUSIONS FROM OPERATING EXPENSES
               40




---



##### 



41




---



##### 



FIRST AMENDMENT TO LEASE
 rd
      1.
    
    PremisesEffective July 1, 2003, the Tenants Premises shall be amended to include Suite 203
located on the second floor of the Building known as Expansion Space 1 identified
in Exhibit A attached hereto and made part hereof.2.
    
    Tenants Rentable Square FeetEffective July 1, 2003, the Tenants Rentable Square
Feet shall be amended to include
Expansion Space I containing 3,947 square feet.3.
    
    Tenants Proportionate ShareEffective July 1, 2003 the Tenants Proportionate Share of the Building shall be
amended to 68.7750% to include Existing Space A and Expansion Space I; and
effective January 1, 2004 the Tenants Proportionate Share shall be amended to
87.6089% to include Existing Space B and the
Expansion Space I.4.
    
    TermThe Term (Expansion Term) for Expansion Space I shall be for a period of seventy
nine (79) months commencing July 1, 2003 and expiring December 31, 2009 to run
coterminous with Tenants existing term.5.
    
    Base RentThe Base Rental payable for Expansion Space I shall be due and payable on the first
day of each calendar month during the term of this Lease as follows:
 Annual Base Rental
    
    MonthlyLease Years
    

Per Rentable Square Foot
    
    Base Rental Payment07/01/03-12/31/03
    
    $
    17.00
    
    
    $
    5,591.5801/01/04-12/31/04
    
    $
    17.20
    
    
    $
    5,657.3701/01/05-12/31/05
    
    $
    17.30
    
    
    $
    5,690.2601/01/06-12/31/06
    
    $
    18.25
    
    
    $
    6,002.7301/01/07-12/31/07
    
    $
    18.50
    
    
    $
    6,084.9601/01/08-12/31/08
    
    $
    18.75
    
    
    $
    6,167.1901/01/09-12/31/09
    
    $
    19.00
    
    
    $
    6,249.42
 - 1 -




---



##### 



6.
    
    Additional RentEffective July 1, 2003, the Base Year for Expansion Space I shall be calendar year 2003,
calculated on a grossed-up basis to reflect a one ninety
five percent (95%) occupancy.7.
    
    Construction AllowanceLandlord at Landlords sole cost and expense, agrees to provide a Construction Allowance for
leasehold improvements to Expansion Space I at $3.00 per rentable square foot or
$11,841.00. Otherwise, Tenant agrees to accept Expansion Space I in its as-is condition.
Any and all other expenses shall be at the sole cost and expense of
the Tenant.
   LANDLORD:
  By:
    
    /s/ J. Peter MehlertName:
    
    J. PETER MEHLERT, PRESIDENTTitle:
    
    BGK TEXAS PROPERTY MGMT, INC.AS AGENT FOR
 TENANT:
 By:
    
    /s/ Pamela B. WestbrookName:
    
    Pamela B. WestbrookTitle:
    
    VP, Finance & Administration/CFO
 - 2 -




---



##### 



EXHIBIT A




---



##### 



SECOND AMENDMENT TO LEASE
        1.
    
    PremisesEffective February 1, 2004, the Tenants Premises shall be amended to include Suite 105
located on the first floor of the Building, known as Expansion Space II
identified in Exhibit A attached hereto and made part hereof.2.
    
    Tenants Rentable Square FeetEffective February 1, 2004, the Tenants Rentable Square Feet shall be amended to include
Expansion Space II containing 3,435 square feet.3.
    
    Tenants Proportionate ShareEffective February 1, 2004 the Tenants Proportionate Share of the Building shall be amended
to 89.9886% to include Existing Space A, Existing Space B, Expansion Space I and
Expansion Space II.4.
    
    TermThe Term (Expansion Term) for Expansion Space II shall be for a period of seventy
one (71) months commencing February 1, 2004 and expiring December 31, 2009 to run coterminous
with Tenants existing term.5.
    
    Base RentThe Base Rental payable for Expansion Space II shall be due and payable on the first day of
each calendar month during the term of this Lease as follows:
 -1-




---



##### 



Annual Base Rental
    
    MonthlyLease
Years
    
    Per Rentable Square Foot
    
    Base Rental Payment02/01/04 - 12/31/04
    
    $
    17.20
    
    
    $
    4,923.5001/01/05 - 12/31/05
    
    $
    17.30
    
    
    $
    4,952.1301/01/06 - 12/31/06
    
    $
    18.25
    
    
    $
    5,224.0601/01/07 - 12/31/07
    
    $
    18.50
    
    
    $
    5,295.6301/01/08 - 12/31/08
    
    $
    38.75
    
    
    $
    5,367.1901/01/09 - 12/31/09
    
    $
    19.00
    
    
    $
    5,438.75
 6.
    
    Additional RentEffective February 1, 2004, the Base Year for Expansion Space II shall be calendar year
2003, calculated on a grossed-up basis to reflect a ninety five percent (95%) occupancy.7.
    
    Construction AllowanceLandlord at Landlords sole cost and expense, agrees to provide a Construction Allowance for
leasehold improvements to Expansion Space II at $3.00 per rentable square foot or $10,305.00. Except as provided herein, the Tenant hereby accepts the Expansion Space in its as-is
condition. Additionally, any unused portion of the improvement allowance provided by Landlord
cannot be applied toward base rent or any other amounts owing to Landlord.
   LANDLORD:
 
  By:
    
    /s/ J. Peter MehlertName:
    
    J. PETER MEHLERT, PRESIDENTTitle:

    
    BGK TEXAS PROPERTY MGMT, INC.AS AGENT FOR
 TENANT:
 By:
    
    /s/ Pamela B. WestbrookName:
    
    Pamela B. WestbrookTitle:
    
    Vice President, Finance &
Administration
 -2-




---



##### 








---



##### 



THIRD AMENDMENT TO LEASE
 th
         Section 2b  Premises:
  Section 2d
 Tenants Rentable Square Feet:
  Section 2f Tenants Proportionate Share:
  Section 2g
 Commencement Date:
  Section 2h  Term:
  Section 2i  Base Rent:




---



##### 



Annual Base Rental
    
    Monthly BasePeriod
    
    Per Rentable Square Foot
    

Rental Payment02/09/04 - 12/31/04
    
    $
    17.20
    
    
    $
    4,923.5001/01/05 - 12/31/05
    
    $
    17.30
    
    
    $
    4,952.1301/01/06 - 12/31/06
    
    $
    18.25
    
    
    $
    5,224.0601/01/07 - 12/31/07
    
    $
    18.50
    
    
    $
    5,295.6301/01/08 - 12/31/08
    
    $
    18.75
    
    
    $
    5,367.1901/01/09 - 12/31/09
    
    $
    19.00
    
    
    $
    5,438.75
 Section 2j
 Additional Rent:
  Section 2p
 Maximum Construction Allowance:
    LANDLORD:
SPACE CENTER OPERATING ASSOCIATES, L.P.
  By:
    
    /s/ J. Peter MehlertName:
    
    J. PETER MEHLERT, PRESIDENTTitle:
    
    BGK TEXAS PROPERTY MGMT, LLCAS AGENT FOR
 TENANT:  CYBERONICS, INC.
 By:
    
    /s/ Pamela B. WestbrookName:
    
    Pamela B. WestbrookTitle:
    
    CFO, VP - Finance & Adm




---



##### 








---



##### 



RE:
    
    Tenant Notice Letter, Transfer of Ownership  100 Cyberonics Drive
    
    Maintenance & Billing /Administration
    
    Leasing
    
    Official NoticesConnie Speakes, Property Administrator
    
    Renee Dickens, Property Manager
    
    Legal DepartmentTriple Net Properties, LLC
    
    Triple Net Properties, LLC
    
    Triple Net Properties, LLC2563 Bay Area Boulevard
    
    2563 Bay Area Boulevard
    
    1551 N. Tustin Ave. #200Houston, Texas 77058
    
    Houston, Texas 77058
    
    Santa Ana, CA 92705(281) 486.6966 voice
    
    (281) 486.6966 voice
    
    (714) 667-8252(281) 486.4546 Fax
    
    (281) 486.4546 fax
    
    (714) 667-6860 fax




---



##### 



Agreement Cyberonics.
Inc Delaware
corporation Tenant 16511 Space Center Boulevard, Suite
600, Houston, TX 77058 Lender
 RECITALS
 A.
    
    Tenant is the tenant under that certain lease (the Original Lease) dated
December 5, 2002, by and between Tenant and Triple Net
Properties, LLC and/or its
assigns as successor in interest to Space Center Operating Associates, LP (the
Landlord), as landlord, as amended by those instruments described in Exhibit A
attached hereto and made part hereof (the Original Lease, as so amended, is herein called the
Lease), wherein Landlord leased to Tenant certain premises known as 126.460rsf on the
first, second, third, fourth, fifth and sixth floors (Suites 106,
107, 110, 115, 127, 130,
140, 143, 150, 160, 202, 300, 400, 500 & 600) (the Premises) and located on that
certain land described in Exhibit B attached hereto and made part hereof (the
Land); and
 B.
    
    Landlord is about to make, execute and deliver its Promissory Note (the Note) to Lender
which Note shall be secured by, among other security, the lien of a mortgage or deed of trust
(the Mortgage) encumbering the Land (such Mortgage and all other documents securing
the Note are herein collectively called the Security Documents); and
 C.
    
    Lender and Tenant desire to confirm their agreements with respect to the Lease and the
Security Documents.
 AGREEMENT
  1.
    
    Subordination. The Lease and all right, title and interest in the Land created
thereby (including without limitation, any purchase options, rights of first refusal or
similar rights possessed by Tenant with respect to the Premises) are, shall be and shall at
all times remain and continue to be subject and subordinate in all respects to the liens,
terms, covenants, provisions and conditions of the Security Documents, and all renewals,
modifications, extensions, consolidations and replacements thereof.
 2.
    
    Non-Disturbance. So long as the Lease is in full force and effect and Tenant is not
in default under the Lease (beyond any period given Tenant to cure such default) or under this
Agreement:
 (a)
    
    Tenants possession of the Premises and Tenants rights and privileges under the
Lease (other than any purchase options, rights of first refusal or similar rights
possessed by Tenant with respect to the Premises) shall not be diminished or




---



##### 



interfered with by Lender, and Tenants occupancy of the Premises shall not be disturbed
by Lender for any reason whatsoever during the term of the Lease or any extensions or
renewals thereof; and(b)
    
    Lender will not join Tenant as a party defendant in any action or proceeding to
foreclose the Mortgage or to enforce any rights or remedies of Lender under the Mortgage
which would cut-off, destroy, terminate or extinguish the Lease or Tenants interest and
estate under the Lease.
 Notwithstanding the foregoing provisions of this paragraph, if it would be procedurally
disadvantageous for Lender not to name or join Tenant as a party in a foreclosure proceeding
with respect to the Mortgage, Lender may so name or join Tenant without in any way diminishing
or otherwise affecting the rights and privileges granted to, or inuring to the benefit of,
Tenant under this Agreement.
 3.
    
    Attornment.
 (a)
    
    After notice is given by Lender that a default has occurred under the Mortgage and
that the rentals and all other payments to be made by Tenant under the Lease should be
paid to Lender, Tenant will pay to Lender, or in accordance with the directions of Lender,
all rentals and other monies due and to become due to Landlord under the Lease or
otherwise in respect to the Premises; such payments will be made regardless of any right
of set-off, counterclaim or other defense which Tenant may have against Landlord, whether
as tenant under the Lease or otherwise; and(b)
    
    In addition, if Lender (or its nominee or designee) shall succeed to the rights of
Landlord under the Lease through possession or foreclosure action, delivery of a deed or
otherwise, or another person purchases the Premises upon or following foreclosure of the
Mortgage, then at the request of Lender (or its nominee or designee) or such purchaser
(Lender, its nominees and designees, and such purchaser, each being a
Successor-Landlord), Tenant shall attorn to and recognize Successor-Landlord as
Tenants landlord under the Lease and shall promptly execute and deliver any instrument
that Successor-Landlord may reasonably request to evidence such
attornment. Upon such
attornment, the Lease shall continue in full force and effect as, or as if it were, a
direct lease between Successor-Landlord and Tenant upon all terms, conditions and
covenants as are set forth in the Lease, except that Successor-Landlord shall not:
 i)
    
    be liable for any previous act or omission of Landlord under the Lease;ii)
    
    be subject to any off-set, defense or counterclaim which shall
have previously accrued to Tenant against Landlord;iii)
    
    be bound by any modification of the Lease or by any previous prepayment of
rent or additional rent for more than one month which Tenant might have




---



##### 



paid to Landlord, unless such modification or prepayment shall have been expressly
approved in writing by Lender;iv)
    
    be bound by any purchase options, rights of first refusal or similar
rights possessed by Tenant with respect to the Premises, orv)
    
    be liable for any security deposited under the Lease unless such
security has been physically delivered to Lender.
 4.
    
    Lease Modifications. Tenant agrees that without the prior written consent of
Lender, it shall not: (a) amend or modify the Lease or any extensions or renewals thereof; (b)
terminate, cancel or tender a surrender of the Lease; (c) make a prepayment of any rent or
additional rent in excess of one (1) month; or (d) subordinate or permit the subordination of
the Lease to any lien subordinate to the Mortgage. Any such purported action without such
consent shall be void as against the holder of the Mortgage.
 5.
    
    Notice of Default; Opportunity to Cure.
 (a)
    
    Any notice required or permitted to be given by Tenant to Landlord shall be
simultaneously given also to Lender, and any right of Tenant dependent upon notice shall
take effect only after such notice to Lender is so given. Performance by Lender shall
satisfy any conditions of the Lease requiring performance by Landlord, and Lender shall
have a reasonable time to complete such performance as provided in section (b) below.(b)
    
    Without limiting the generality of the foregoing, Tenant shall promptly notify Lender
of any default, act or omission of Landlord which would give Tenant the right, immediately
or after the lapse of a period of time, to cancel or terminate the Lease or to claim a
partial or total eviction (a Landlord Default). In the event of a Landlord
Default, Tenant shall not exercise any rights available to it: (i) until it has given
written notice of such Landlord Default to Lender; and (ii) unless Lender has failed,
within a period of thirty (30) days beyond the time available to Landlord under the
Lease in which to cure the breach or default by Landlord, to cure or remedy the Landlord
Default or, if the same is not reasonably capable of being remedied by Lender within such
period, until a reasonable period for remedying such Landlord Default has elapsed
following the giving of such notice and following the time when Lender shall have become
entitled under the Security Documents to remedy the same (which reasonable period shall in
no event be less than the period to which Landlord would be entitled under the Lease or
otherwise, after similar notice, to effect such remedy); provided
that Lender shall with
due diligence commence and prosecute a remedy for such Landlord
Default. If Lender cannot
reasonably remedy a Landlord Default until after Lender obtains possession of the Land,
Tenant may not terminate or cancel the Lease or claim a partial or total eviction by
reason of such Landlord Default until the expiration of a reasonable period necessary for
the remedy after Lender




---



##### 



institutes proceedings to obtain possession of the Land through a foreclosure or otherwise,
or for the appointment of a receiver for the Land, provided that Lender institutes and
prosecutes such proceedings with due diligence. Lender shall have no obligation hereunder
to remedy any Landlord Default.
 6.
    
    Application of Casualty and Condemnation Proceeds. Tenant hereby agrees that,
notwithstanding anything to the contrary contained in the Lease, the terms and provisions of
the Mortgage shall control with respect to the application of casualty insurance proceeds and
condemnation awards.7.
    
    Notice of Lien. To the extent that the Lease entitles Tenant to notice of the
existence of any mortgage and the identity of any lender, this Agreement shall constitute such
notice to Tenant with respect to the Mortgage.8.
    
    Remedies. Upon and after the occurrence of a default under the Mortgage, Lender shall
be entitled, but not obligated, to exercise the claims, rights, powers, privileges and
remedies of Landlord under the Lease and shall be further entitled to the benefits of, and to
receive and enforce performance of, all of the covenants to be performed by Tenant under the
Lease as though Lender were named therein as Landlord.9.
    
    Limitation of Liability. Except as specifically provided in this Agreement, Lender
shall not, by virtue of this Agreement, the Mortgage or any other instrument to which Lender
may be a party, be or become subject to any liability or obligation to Tenant under the Lease
or otherwise. Notwithstanding any other provisions of this Agreement, Tenant shall have no
recourse against the Lender, any affiliate of Lender, any Successor Landlord, or any assets of
any of them, with respect to the failure of any such party to perform its obligations under
this Agreement or the Lease, other than any such partys interest in the Land, provided that
in no event shall Lenders rights and interests under the Security Documents be deemed to be
an interest in the Land.10.
    
    Priority.
 (a)
    
    Tenant acknowledges and agrees that this Agreement supersedes (but only to the extent
inconsistent with) any provisions of the Lease relating to the priority or subordination
of the Lease and the interests or estates created thereby to the
Mortgage.(b)
    
    Tenant agrees to enter into a subordination, non-disturbance and attornment agreement
with any entity which shall succeed Lender with respect to the Land, or any portion
thereof, provided such agreement is substantially similar to this
Agreement.
 11.
    
    Notices. Any notice, consent, request or other communication required or permitted to
be given hereunder shall be in writing and shall be: (a) personally delivered; (b) delivered
by Federal Express or other comparable overnight delivery service; or (c) transmitted by
postage prepaid registered or certified mail, return receipt requested.




---



##### 



All such notices, consents, requests or other communications shall be addressed to Tenant or
Lender at the `address for such party previously set forth in this Agreement, or to such other
address as Tenant or Lender shall in like manner designate in writing. All notices and other
communications shall be deemed to have been duly given on the first to occur of actual receipt
of the same or: (i) the date of delivery if personally delivered; (ii) one (1) business day
after depositing the same with the delivery service if by overnight delivery service; and (iii)
three (3) days following posting if transmitted by mail. Any party may change its address for
purposes hereof by notice to the other parties given in accordance with the provisions hereof.12.
    
    General. This Agreement may not be modified or terminated orally. This Agreement
shall inure to the benefit of and be binding upon the parties hereto, their successors and
assigns. The term Lender shall mean the then
holder of any interest in the Mortgage. The
term Landlord shall mean the then holder of the lessors interest in the Lease. The term
person shall mean any individual, joint venture, corporation, partnership, trust,
unincorporated association or other entity. All references herein to the Lease shall mean the
Lease as modified by this Agreement and any amendments or modifications to the Lease that are
consented to in writing by the Lender. Any inconsistency between the Lease and the provisions
of this Agreement shall be resolved in favor of this Agreement. This Agreement shall
automatically terminate upon the release or termination of the lien of the Security Documents
(and all renewals, modifications, extensions, consolidations and replacements thereof) upon
the Land.13.
    
    Waivers. Both Tenant and Lender hereby irrevocably waive all right to trial by jury
in any action, proceeding or counterclaim arising out of or relating
to this Agreement.14.
    
    Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State in which the Land is located.15.
    
    Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which when taken together shall
constitute one and the same Agreement.




---



##### 



LENDERPNC BANK, NATIONAL ASSOCIATIONDated: 3/17, 2004
    
    By:
    
    /s/ Jeannette ButlerJeannette Butler, Vice-PresidentTENANTCyberonics, Inc.a Delaware corporationDated: 3/10, 2004
    
    By:
    
    /s/ Pamela B. WestbrookPrinted Name: Pamela B. WestbrookTitle:.VP, Finance
& Adm         Chief Financial Officer
 AGREED AND CONSENTED TO:LANDLORDNNN 100 CYBERONICS DRIVE, LLCa Delaware Limited Liability CompanyBy:
    
    /s/ Diana LaingPrinted Name: Diana LaingTitle: CFO




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##### 



ACKNOWLEDGMENTS  [acknowledgment certificates should conform
to law of state where property is located]
 STATE OF KANSAS
    
    
    )) ss.COUNTY OF JOHNSON
    
    
    )
 th
  /s/ TERRY RICKETTSNotary Public
 STATE OF TEXAS
    
    
    )
    
    
    TERRY RICKETTS)ss.
    
    
    NOTARY PUBLIC-State of KansasCOUNTY OF HARRIS
    
    
    )
    
    
    My Appt. Exp. 10/10/07
 th corporation
  [SEAL]
DEBBY RICKAWAY
    
    /s/ Debby RickawayMY
COMMISSION EXPIRES
              December 6, 2006
    
    Notary Public




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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
 State of California
    
    }
    
    ssCounty of
Orange
 On
    
    March 15, 2004
    
    before me,
    
    Yena Han, Notary Public,Date
    
    
    
    Name and Title of Officer (eg. Jane Doo. Notary Public)
 personally appeared
    

Diana LaingName(s) of Signer(s)
 þ Personally known to meo proved to me on the basis of satisfactory
evidence[ SEAL ]
    
    YENA HAN 
Commission # 1402074
Notary Public- California
Orange County
My Comm. Expires Feb 23, 2007
    
    to be the person(s) whose name(s) is/are
subscribed to the within instrument and
acknowledged to me that he/she/they executed
the same in his/her/their authorized
capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)
acted, executed the instrument.WITNESS my hand and official seal/s/ Yena HanSignature of Notary Public
 OPTIONAL
 Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent
fraudulent removal and reattachment of this form to another document
 Description of Attached Document
 Title or Type of Document:
 Document Date:
    
    
    
    Number of Pages:
 Signer(s) Other Than Named Above:
 Capacity(ies) Claimed by Signer
 Signers Name:RIGHT THUMBPRINT OF SIGNER 
Top of thumb hereo Individualo Corporate Officer  Title(s):o Partner  o Limited o Generalo Attorney-in-Facto Trusteeo Guardian or Conservatoro Other:Signer is Representing:
 ©
1999 National Notary Association  9350 De Soto Ave. PO Box
2402  Chalsworth. CA 91313-2402  www.nationalnotary org
    
    Prod No. 5907
    
    Reorder: Call Toll-Free 1-800-876-6827




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Notary Public




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Description of Lease Amendments (see attachment)




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Legal Description
 Harris Texas,




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FOURTH AMENDMENT TO THE LEASE AGREEMENT
 THIS FOURTH AMENDMENT NNN 100 Cyberonics Drive, LLC, a Delaware limited liability company, 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 Cyberonics, Inc.,
 RECITALS
 A.
    
    Landlord and Tenant are parties to that certain Lease dated December 5, 2002, which Lease
has been previously amended by that certain First Amendment to the Lease Agreement dated
March 3, 2002, that certain Second Amendment to the Lease Agreement dated 2003 and that
certain Third Amendment dated 2004, (collectively, the Lease) Pursuant to the Lease,
Landlord has leased to Tenant space currently containing approximately 129,895 rentable
square feet (the Original Premises) described as Suites 105, 106, 107, 110, 115, 127, 130,
140, 143, 150, 160, 202, 203, 300, 400, 500 and 600 in the building located at 16511 Space
Center Boulevard, Houston, Texas (the Building).
 B.
    
    Prior lease documents stated Tenant is a Texas corporation. This amendment shall serve to
clarify that Tenant is and has always been a Delaware corporation.
 C.
    
    Tenant has requested that additional space containing approximately 560 rentable square feet
described as Suite No. 102 on the first floor shown on Exhibit Ahereto (the Expansion
Space) be added to the Premises and that the Lease be appropriately amended and Landlord is
willing to do the same on the following terms and conditions.
 NOW, THEREFORE,
 I.
    
    Expansion. Effective as of the Expansion Effective Date (defined below), the
Premises, as defined in the Lease, is increased from 129,985 rentable square feet to 130,545
rentable square feet by the addition of the Expansion Space, and from and after the Expansion
Effective Date, the Original Premises and the Expansion Space, collectively, shall be deemed
the Premises, as defined in the Lease. The Term for the Expansion Space shall commence on the
Expansion Effective Date and end on December 31, 2009 (Termination Date). The Expansion
Space is subject to all the terms and conditions of the Lease.The Expansion Effective Date shall be April 1, 2005.
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II.
    
    Base Rent.
 A.
    
    Original Premises Through Termination Date.The Base Rental, additional rent
and all other charges under the Lease shall be payable as provided therein with respect
to the Original Premises through and including the Termination Date.B.
    
    Expansion Space From Expansion Effective Date Through Termination Date.
As of the Expansion Effective Date, the schedule of Base Rental payable with respect
to the Expansion Space is the following:
 Months of Term or
    
    Annual Rate PerPeriod
    
    Square Foot
    
    Monthly Base Rent04/01/05-12/31/05
    
    $
    17.30
    
    
    $
    807.3301/01/06-12/31/06
    
    $
    18.25
    
    
    $
    851.6701/01/07-12/31/07
    
    $
    18.50
    
    
    $
    863.3301/01/08-12/31/08
    
    $
    18.75
    
    
    $
    875.0001/01/09-12/31/09
    
    $
    19.00
    
    
    $
    886.67
 All such Base Rental shall be payable by Tenant in accordance with the terms of the
Lease.
 III.
    
    Tenants Proportionate Share and Additional Expenses.For the period commencing
with the Expansion Effective Date and ending on the Termination Date, Tenants Proportionate
Share for the Premises is 90,4389%, based on total rentable square footage in the building of
144,346 rentable square feet. Tenants base year for the Expansion Space shall be the actual
operating costs for calendar year 2003, calculated on a grossed-up basis to reflect a
ninety-five percent (95%) occupancy.IV.
    
    Improvements to Expansion Space. Tenant has inspected the Expansion Space and
agrees to accept the same as is without any agreements, representations, understandings or
obligations on the part of Landlord to perform any alterations, repairs or improvements,
provided however, that Landlord shall provide to Tenant an allowance of up to $3.00 per
rentable square foot of the Expansion Space for reconstruction of the Premises including
demolition, construction of drywall partitions and fire protection systems. The allowance
shall be paid to Tenant upon delivery to Landlord of a Certificate of Occupancy and copies of
invoices for such work, lien waivers, and any other documentation or related information
reasonably required by Landlord.V.
    
    Tenants Representations and Warranties. Landlord and Tenant each represent and
warrant that, as of the date of this Amendment, neither party is aware of any breach of the
Lease by the other party.VI.
    
    Miscellaneous.
 A.
    
    This Amendment sets forth the entire agreement between the parties with respect
to the matters set forth herein. There have been no additional oral or written
representations or agreements.B.
    
    Except as herein modified or amended, the provisions, conditions and terms of
the Lease shall remain unchanged and in full force and effect.
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C.
    
    In the case of any inconsistency between the provisions of the Lease and this
Amendment, the provisions of this Amendment shall govern and control.D.
    
    The capitalized terms used in this Amendment shall have the same definitions as
set forth in the Lease to the extent that such capitalized terms are defined therein
and not redefined in this Amendment.E.
    
    Tenant hereby represents to Landlord that Tenant has dealt with no broker in
connection with this Amendment other than Donald R. Kugle, dba Clear Lake Asset
Management.F.
    
    Each signatory of this Amendment represents hereby that he or she has the
authority to execute and deliver the same on behalf of the party hereto for which such
signatory is acting.
 IN WITNESS WHEREOF,
 LANDLORD:Triple Net Properties Realty, Inc.Agent for LandlordBy:
    
    /s/ Richard G. BurnettName:
    
    Richard G. BurnettTitle:
    
    Sr. Asset ManagerTENANT:Cyberonics, Inc. a Delaware corporationBy:
    
    /s/ Pamela B. WestBrookName:
    
    Pamela B. WestBrookTitle:
    
    VP, Finance and Administration & CFOLegal ApprovalP.W(Initial)
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EXHIBIT A
 OUTLINE AND LOCATION OF EXPANSION SPACE
 
 10




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FIFTH AMENDMENT TO THE LEASE AGREEMENT
 THIS FIFTH AMENDMENT th NNN 100 Cyberonics Drive, LLC, a Delaware limited liability company, NNN 100
Cyberonics Drive 1, LLC, NNN 100 Cyberonics Drive 2, LLC NNN 100 Cyberonics 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 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 Cyberonics, Inc.,
 RECITALS
 A.
    
    Landlord and Tenant are parties to that certain Lease dated December 5, 2002, which
Lease has been previously amended by that certain First Amendment to the Lease Agreement
dated March 3, 2002, that certain Second Amendment to the Lease Agreement dated 2003, that
certain Third Amendment to the Lease Agreement dated 2004 and that certain Fourth Amendment
to the Lease Agreement dated March 23, 2005, (collectively, the Lease). Pursuant to the
Lease, Landlord has leased to Tenant space currently containing approximately 130,455
rentable square feet (the Premises) described as Suites 102, 105, 106, 107, 110, 115, 127,
130, 140, 143, 150, 160, 202, 203, 300, 400, 500 and 600 in the building located at 16511
Space Center Boulevard, Houston, Texas (the Building)B.
    
    Tenant has requested that Article I and Article III of the Fourth Amendment to the Lease
Agreement dated March 23, 2005 be modified to accurately reflect the Premises rentable square
feet and Tenants Proportionate Share and Additional Expenses prior to the Expansion
Effective Date and as of the Expansion Effective Date
 NOW, THEREFORE,
 1.
    
    Article I. of the Fourth Amendment is deleted and replaced with the following:
 I.
    
    Expansion. Effective as of the Expansion Effective Date (defined below), the
Premises, as defined in the Lease, is increased from 129,895rentable square feet to
130,455rentable square feet by the addition of the Expansion Space, and from and
after the Expansion Effective Date, the Original Premises and the Expansion Space,
collectively, shall be deemed the Premises, as defined in the Lease, The Term for the
Expansion Space shall commence on the Expansion Effective Date and end on December 31,
2009 (Termination Date) The Expansion Space is subject to all terms and conditions
of the Lease.The Expansion Effective Date shall be April 1, 2005.
 th
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2.
    
    Article III. of the Fourth Amendment is deleted and replaced with the following:
 III.
    
    Tenants Proportionate Share and Additional Expenses. For the period
commencing with the Expansion Effective Date and ending on the Termination Date, Tenants
Proportionate Share for the Premises is 90.3766%,based on total rentable square footage
in the building of 144,346 rentable square feet. Tenants base year for the Expansion Space
shall be the actual operating costs for calendar year 2003, calculated on a grossed-up
basis to reflect a ninety-five percent (95%) occupancy.
 3
    
    Tenants Representations and Warranties. Landlord and Tenant each represent and
warrant that, as of the date of this Amendment, neither party is aware of any breach of the
Lease by the other party.4.
    
    Miscellaneous.
 A.
    
    This Amendment sets forth the entire agreement between the parties with respect to
the matters set forth herein. There have been no additional oral or written
representations or agreements.B.
    
    Except as herein modified or amendment, the provisions, conditions and terms of the
Lease shall remain unchanged and in full force and effect.C.
    
    In the case of any inconsistency between the provisions of the Lease and this
Amendment, the provisions of this Amendment shall govern and control.D.
    
    The capitalized terms used in this Amendment shall have the same definitions as set
forth in the Lease to the extent that such capitalized terms are defined therein and not
redefined in this Amendment.E.
    
    Tenant hereby represents to Landlord that Tenant has
dealt with no broker in connection
with this Amendment other than Donald R. Kugle, dba Clear Lake Asset Management.F.
    
    Each
signatory of this Amendment represents hereby that he or she has the authority to
execute and deliver the same on behalf of the party hereto for which such signatory is
acting
 IN WITNESS WHEREOF,
 SIGNATURES ON FOLLOWING PAGE
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LANDLORD:Triple Net Properties Realty, Inc.
Agent for LandlordBy:
Name:
    
    /s/ Richard Burnett

RICHARD BURNETTTitle:
    
    SENIOR ASSET MANAGERTENANT:Cyberonics, Inc. a Delaware corporationBy:
    
    /s/ Pamela B. WestbrookName:
    
    PAMELA B. WESTBROOKTitle:
    
    V.P. & CFO
 Legal Approval/s/ P.W

(Initial)
 th
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SIXTH AMENDMENT TO THE LEASE AGREEMENT
 THIS SIXTH AMENDMENT th NNN 100 Cyberonics Drive, LLC, a Delaware limited liability
company, NNN 100 Cyberonics Drive 1, LLC, NNN 100 Cyberonics Drive 2, LLC NNN 100 Cyberonics 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 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 Cyberonics, Inc.,
 RECITALS
 A.
    
    Landlord and Tenant are parties to that certain Lease dated December 5, 2002, which
Lease has been previously amended by that certain First Amendment to the Lease
Agreement dated March 3, 2003, that certain Second Amendment to the Lease
Agreement dated October 2, 2003, that certain Third Amendment to the Lease
Agreement dated March 11, 2004, that certain Fourth Amendment to the Lease
Agreement dated March 23, 2005 and that certain Fifth Amendment to Lease Agreement
dated May 5, 2005, (collectively, the Lease). Pursuant to the Lease, Landlord has
leased to Tenant space currently containing approximately 130,455 rentable square feet
(the Premises) described as Suites 102, 105, 106, 107, 110, 115, 127, 130, 140, 143,
150, 160, 202, 203, 300, 400, 500 and 600 in the building located at 16511 Space Center
Boulevard, Houston, Texas (the Building).B.
    
    Tenant has requested that additional space containing approximately 3,692 rentable
square described as Suite 103 on the first floor shown on Exhibit Ahereto (the
Expansion Space) be added to the Premises and that the Lease be appropriately
amended and Landlord is willing to do the same on the following terms and conditions.
 NOW, THEREFORE,
 I.
    
    Expansion. Effective as of the Expansion Effective Date (defined below), the
Premises, as defined in the Lease, is increased from 130,455rentable square feet to
134,147rentable square feet by the addition of the Expansion Space, Suite 103 and
from and after the Expansion Effective Date, the Original Premises and the Expansion
Space collectively, shall be deemed the Premises, as defined in the Lease. The Term
for the Expansion Space shall commence on the Expansion Effective Date and end on
December 31, 2009 (Termination Date) The Expansion Space is subject to all terms and
conditions of the Lease.The Expansion Effective Date shall be October 1, 2005, however in the event it is
necessary to allow Chicago Title additional time to vacate the Expansion Space then
the Expansion Effective Date shall be delayed up to ninety
(90) days. Should a delay in
the Effective Date, become necessary Landlord shall notify Tenant not later than
September 1, 2005, providing a new Effective Date.
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II.
    
    Base Rent.Expansion Space From Expansion Effective Date Through Termination Date.As of the Expansion Effective Date, the schedule of Base Rental payable with respect
to the Expansion Space is the following:
 A.
    
    Annual Base Rent (First Year Only):
    
    $
    18.50
    /RSFMonthly Rent Installment (First Year Only):
    
    $
    5,691.83B.
    
    CONSUMER PRICE INDEX ESCALATION
  Index.
 Base Index Number.
 Current Index Number.
    th
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No Waiver.
 Survival.
 III.
    
    Tenants Proportionate Share and Additional Expenses. For the period
commencing with the Expansion Effective Date and ending on the Termination Date, Tenants
Proportionate Share for the Premises is 92.9343%,based on total rentable square footage
in the building of 144,346 rentable square feet. Tenants base year for the Expansion
Space shall be the actual operating costs for calendar year 2003, calculated on a
grossed-up basis to reflect a ninety-five percent (95%)
occupancy.IV.
    
    Improvements to Expansion Space. Tenant has inspected the Expansion Space
and agrees to accept the same as is without any agreements, representations,
understandings or obligations on the part of Landlord to perform any alterations, repairs
or improvements, provided however, that Landlord shall provide to Tenant an allowance of
up to $3.00 per rentable square foot of the Expansion Space for reconstruction of the
Expansion Space including demolition, construction of drywall partitions and fire
protection systems. The allowance shall be paid to Tenant upon Delivery to Landlord of a
Certificate of Occupancy and copies of invoices for such work, lien waivers and any other
documentation or related information reasonably required by Landlord.V.
    
    Tenants Representations and Warranties. Landlord and Tenant each represent
and warrant that, as of the date of this Amendment, neither party is aware of any
breach of the Lease by the other party.VI.
    
    Miscellaneous.
 A.
    
    This Amendment sets forth the entire agreement between the parties with
respect to the matters set forth herein. There have been no additional oral or
written representations or agreements.B.
    
    Except as herein modified or amended,
the provisions, conditions and terms of
the Lease shall remain unchanged and in full force and effect.C.
    
    In the case of
any inconsistency between the provisions of the Lease and this
Amendment, the provisions of this Amendment shall govern and control.D.
    
    The
capitalized terms used in this Amendment shall have the same definitions as
set forth in the Lease to the extent that such capitalized terms are defined
therein
and not redefined in this Amendment.E.
    
    Tenant hereby represents to Landlord
that Tenant has dealt with no broker in
connection with this Amendment other than Donald R. Kugle, dba Clear Lake
Asset Management.
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F.
    
    Each signatory of this Amendment represents hereby that he or she has
the authority to execute and deliver the same on behalf of the party hereto for
which such signatory is acting.
 IN WITNESS WHEREOF,
 LANDLORD:Triple Net Properties Realty, Inc.
Agent for LandlordBy:
    
    /s/ Richard BurnettName:
    
    RICHARD BURNETTTitle:
    
    EXECUTIVE VICE PRESIDNETTENANT:Cyberonics, Inc. a Delaware corporationBy:
Name:
    
    /s/ Pamela B. Westbrook

PAMELA B. WESTBROOKTitle:
    
    Vice President, Finance &
Admin., CFO
 Legal Approval/s/ P.W

(Initial)
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EXHIBIT A
 OUTLINE AND LOCATION EXPANSION SPACE